Greetings. And welcome to the CareDx, Inc. First Quarter 2023 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, May 10, 2023. It is now my pleasure to turn the conference over to Greg from the Gilmartin Group.

Thank you, Jennifer. Good afternoon, and thank you for joining us today. Earlier today, CareDx released financial results for the quarter ending March 31, 2023. The release is currently available on the company's website at www.caredx.com. Reg Seeto, Chief Executive Officer; Abhishek Jain, Chief Financial Officer; Alex Johnson, President of Patient Testing and Services; and Robert Woodward, Senior Vice President of R&D, will host this afternoon's call. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including, without limitation, our examination of historical operating trends, expectations regarding coverage decisions, pricing enrollment matters and our financial expectations and results are based upon current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please see our filings with the Securities and Exchange Commission. The information provided in this conference call speaks only to the live broadcast today, May 10, 2023. CareDx disclaims any intention or obligation, except as required by law, to update or revise any information, financial projections or forward-looking statements, whether because of new information, future events or otherwise. This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles. Reconciliation to the most directly comparable GAAP financial measure may be found in today's earnings release filed with the SEC. I will now turn the call over to Reg.

Thanks, Greg. Good afternoon, everyone, and thank you for joining us for CareDx's first quarter 2020 Earnings conference call. As you'll recall, we ended 2023 having been through a challenging environment in 2022. The four key challenges identified included the growth of the transplant market, marking the year at the low point in transplant since onset of COVID started 2022, changes in expectations and diagnostics sector, where we focus on achieving profitability and maintaining a strong cash position; three, an increase in the commercial payer mix with the full impact of Medicare Advantage and the increase in our commercial testing services volumes with new launches; and four, driving revenue growth also in our non-testing service business lines. I will address the revised billing articles from MolDx shortly. Before I do, I would like to highlight our strong operational performance that saw a successfully executed plan to address those forward challenges. We continued that effort into Q1 2023, where the company, one, delivered its highest ever patient testing services volume and grew faster than market by 8 share points compared to the prior quarter. Two, we delivered cash collections at 110% of testing services revenues for a second consecutive quarter, representing approximately 10% year-over-year increase. This maintained our strong cash position of $286 million and to help generate $0.7 million in net cash from operating activities. Three, we delivered our highest non-Medicare revenues through improved payer coverage and collections with a 19% increase in sequential revenues. Fourth, we delivered our highest ever patient and digital solutions revenue quarter as we doubled our contribution from our non-testing services business line. We are proud of these results and the strong operational performance and execution in Q1 2023. Now moving on to the billing article changes. We're now faced again with a new set…

Thank you, Reg. We are pleased to share results from the first quarter. The key takeaways are: number one, we had a good quarter despite the operational challenges associated with the implementation of the billing article; number two, we have some early lead indicators to start assessing the financial impact of the billing article; number three, we now have plans underway to mitigate the financial impact; number four, we are withdrawing guidance due to the factors outside of our control. We had a good first quarter where we delivered on our financial imperatives. Number one, we maintained a solid cash position of $286 million and generated positive cash from operations for the second consecutive quarter. Number two, our testing services volume growth beat market growth quarter-over-quarter and year-over-year. Number three, we maintained our momentum in collections that increased 10% year-over-year and were at 110% of our reported testing services revenues. The impact of improved collection has started to show on ASP dynamics. Number four, we had our highest ever quarterly revenue for patient and digital services business. And number five; all three businesses improved gross margin year-over-year. And it would have been a record quarter if we were to consider revenue associated with the impacted March tests of $8.9 million as we would have then reported our highest-ever testing services revenue and reported a positive adjusted EBITDA. Let me provide details. Firstly, with revenues. In Q1, we reported total revenues of $77.3 million, down 3% year-over-year. If we were to include the revenue associated with impacted March test, we would have delivered revenues of $86.2 million over adjusted revenue, representing a 5% increase as compared to the last quarter and 9% year-over-year. This would have been our highest ever revenue in a quarter. Testing Services revenue for the first quarter…

Thanks, Abhishek. I think let's have Greg, if you can work with the operator to open lines to the Q&A. Thank you.

Certainly. [Operator Instructions] And our first question is from the line of Matt Sykes from Goldman Sachs. Please proceed with your question.

Hi, good afternoon. Thanks for taking my questions. Maybe the first one for you. I appreciate the color on the percentage of forms. And Abhishek, I know you said that testing volumes were lower as you've seen it recently. But maybe just help us frame the impact and maybe provide a little more granularity on sort of what testing volumes have trended to date and what it looked like in April and the first start of May, just so we can kind of help frame sort of the revenue picture?

Yeah, Matt, thanks for the question. I'll make some introductions. Matt, and I'll hand over to Abhishek for part of that. And I think we have some early read on the market volume. And clearly, there's a bit of interim flux that we've gone through, a few of the complexities as part of that process. For example, some of the centers with EMRs, we actually need them to actually update the forms on their side, which has created a bit of an issue. So there is a bit of this transition dynamic. But I'll hand over to Abhishek for the specifics.

Thanks, Reg. And as we were saying, Matt, that this is a complex change. And there are still a lot of education that the clinicians and the centers need to go through and transition their new processes. And of course, as we said that in the first quarter, our testing services volume were pretty solid. But after we have implemented this new test requisition forms, it has started to basically -- due to the change management of this whole exercise, it started to kind of drop a little bit from that standpoint. It's in the range of high-teens as of right now based on the early indications like the first three or four weeks, and we'll basically see as to how this shapes up in the next few weeks.

Got it. Thanks for that color. And then maybe just in terms of like one of the debates post this has been sort of the frequency of tests. And I suppose you can change the forms and reeducate the centers. Do you foresee a drop in frequency for some of your tests in terms of that waterfall that you've traditionally had for your testing services?

Yeah, I'll add some color, and then I'll have Abhishek talk. So I mean, what we've found out during this process, the key is really getting operationally ready. I mean, I think centers with focus less on, is this trying to full course of event. The question is when will centers be ready and operation ready. That's the most important thing. And I think with 550-plus centers we've had to reach out and with many of these centers that weren't ready, that's the key bottleneck. It's this operational implementation. We've had thousands of interactions. If these aren't up, then that sort of discussion goes away. So I think what we're seeing is this trend of how do we get the centers up and running and then how do we get these forms in the right format. So I think that's why the team under Alex has made decent progress going from this 50% at the end of April and now in the start of May, we're starting seeing about the 60% range. But I'll let Abhishek add some more color.

Yeah. I think you have covered it pretty well, Reg. We are still trying to assess and I don't know, Matt, if you know that there was another billing article that came late last week. And we're still trying to interpret everything that is out there, and we will basically make that assessment.

Yeah, there are some positives out of that new billing articles that have come through as well, Matt, which removes some of the earlier sort of issues that were raised such as this, what was known as this seven-day rule. And also the requirement for a center to have the center protocol, for example, to shift more of the physician side. Robert will cover that more in detail as questions come up, but there have been some changes that I think will address that as well.

Got it. If I could squeeze one more in. Just Abhishek, just on the $40 million to $50 million annualized cost savings. In terms of how we should think about that phasing in over the course of this year, could you maybe help with a little additional color on that?

Yeah, sure, absolutely. So we have already started to take the actions. And then my sense is that you will start to see in Q3, a proportionate impact will start to happen, right? Not necessarily the full one fourth of that $40 million to $50 million, but I would say still a significant portion of that you will start to see in Q3 and then you'll start to build from there. And then Q4 and Q1, we'll probably start to see one fourth of that impact and the benefits start to show up.

Great. Thank you very much.

And our next question comes from the line of Andrew Cooper with Raymond James. Please go ahead.

Hey, everybody. Thanks for your question. Maybe first, you gave a lot of those comments on kind of the rate of completed forms. But I just want to understand, when you say completed forms, are those completed in a way that, to your knowledge, does meet the requirements for reimbursement or just completing the information that then CMS, or MolDx, or Noridian would need to contemplate to decide whether or not to actually reimburse for that test? Meaning in the indication where you need to be replacing a biopsy, is it just that there's commentary to support? Or is it, you think this is enough to actually justify the payment?

Yeah, Andrew. So I'll make a few comments, and then I'll let Robert make additional comments there. The way we have rolled out the new test requisition forms, we basically specifically ask the information that ensures that whether they are meeting the requirements of the new billing article. So yes, if they are complete, that would mean that they are billable. And what the numbers that we have been sharing in our call, I would say the 90% plus of those forms, they are basically billable to Medicare.

Okay. That's helpful. And then I think when we initially spoke kind of after the first of the billing articles came out, there was some conversation around some incremental data, some things you could do on multi-modality sooner versus later. I think potentially the comment was within sort of a month of that early March start. Can you give us an update for where you are in terms of driving more confidence in multimodality as opposed to single modality as a path forward?

Yeah. Andrew, I mean, I think multimodality, I'll make some comments and hand over to Robert, but this is an area where we've obviously seen a lot of cleaner utility and demand from the marketplace given to the [Indiscernible] technologies that will come. And I think we've had very good active dialogue with MolDx as part of that. So Robert?

Yeah. We certainly believe there's sufficient evidence to demonstrate the validity and the utility of heart care, our primary multimodality that we've been discussing. There's even several independent publications on that utility. So we discussed our approach with MolDx and they requested we submit some data. So we're preparing a detailed analysis that we will submit very shortly to them for consideration.

Great. That's good to know. And then lastly, I know you made sure to point out not anticipating a need for cash, we did see during the call, a shelf get filed. So just a little bit of thought is that just corporate housekeeping? Anything we should be thinking about kind of any comments in regards to those two things as they fit together?

Sure. I'll take this one, Andrew. And then I just want to highlight that we as a company have been extremely prudent and you would be able to see this from our performance in the last few quarters that we have been very focused on managing our cash. We ended the quarter at $286 million in Q1 when last year, we used almost like $20 million. This year, we were positive on the operating cash flow generation. So that basically shows the importance of cash for us as a management team. And this is going to stay the focus that as we assess and as we basically build a better understanding of the financial impact here, we will continue to make sure that we are doing the right things so that we don't have to raise cash.

Yeah, it's just part of standard housekeeping. And as we made in the prepared remarks, there's no plan to do any raising in Q2.

Great. I'll stop here. Thanks, guys.

And our next question is from the line of Brandon Couillard from Jefferies. Please proceed with your question.

Hi, thanks. Good afternoon. Abhishek, on the $8 million to $9 million in delayed March orders that you expect to submit in 2Q. Is there a chunk of initial orders in April and May that are also maybe getting deferred? So how do you just think about recouping that but also a portion of it that you're not going to be able to recognize again in 2Q as well sort of kind of be helpful right now.

It was very difficult to hear you, Brandon. I'm sorry. If I were to retrace, you're talking about the $8.9 million of test that we did not submit in Q1 that we plan to submit in Q2. So is the question around the revenue recognition for those tests? We cannot hear you, Brandon.

Yeah, that's right. I'm talking about the $8 million to $9 million that you didn't submit in March, but you expect to recognize in 2Q. Isn't there another chunk in 2Q that would also get pushed out? So how do you think about the magnitude, I guess, of those two numbers?

No. I think that's the part of the complexity, right, Brandon, that we are trying to get better handle on. So for example, the adoption of the new -- or the new test acquisitions that we are seeing where the adoption has been about 50% and it has improved to 60%. There's still the remaining 30% to 40% that will come in Q2 that we will have to go back and supplement the information so that, that meets the requirement of the new billing article. And then to your point, until the time we have been able to collect that information on those set of forms, we will not be able to recognize that revenue. So you are right that there will be more like a lag now on some of those tests that we were able to recognize revenue very easily in the past.

Yeah. And Brandon, part of that is why also Abhishek factored that into the considering guidance. I would break this into the time point of March 31, the effective date. And I think the test from the pre-effective date was submitted. I think what you're hearing from us is that given the changes in the billing article requirement, different forms, that if we had them complete on the new forms and in the right format, then those will be submitted. And I think we've communicated they're trending at the 50% mark. In May, now trending at the 60% mark. We continue that to increase. For those other tests, we will go back to the centers and request that information. So that's the lag period that you're talking about. But we'll have a better feel on that adoption rate, which is why that's so critical.

Okay. That's helpful. And then the $40 million to $50 million of targeted cost savings, can you bucket that for us between the three OpEx lines, R&D, SG&A and sales and marketing? And is that net of additional remediation costs that you have to spend, all the education efforts and handholding with customers?

So I would say that, yes, in sort of providing you the color -- break down the cost and the OpEx. I think this is kind of so recent that we are still -- I'd probably just tell you that it's primarily related to the headcount, a lot of actions that we have already taken. And then those headcounts are basically cutting across, I would say, different P&L lines on the R&D, on S&M and the G&A. On the cost side, you will not see a lot of headcount reduction as of right now because we are still processing the tests that we are receiving. And as we basically build more understanding of the volumes and everything, we'll probably see, but at the same time, any actions that we were supposed to be taking on the headcount, we've already taken those actions. And then, of course, some of the other pieces that I highlighted that we're looking into the distribution spend, the legal spend and focusing on the rightful studies, on the clinical trials and everything. So there are a lot of pieces there. And I would say that we are looking across all functions. It's fairly sizable from a magnitude standpoint.

Okay. Last one. You do have a buyback authorization out there. Is that currently being contemplated, given the selloff in the stock? And number two, what are the prerequisites exactly to feeling comfortable enough to reestablish guidance? Just help us understand what you need to see, get clarity on when we're feeling comfortable putting that back out there. Thanks.

Sure. So on the share buyback, we put a pause on the buyback after the billing article came. So that's the first answer, Brandon. And once we get more understanding then we will make a decision on that one.

Yeah. I think also on the guidance, I'll make some comments, and I'll also let Abhishek talk more. But I think we've talked about -- we're four weeks in. So we have some leading indicators now. And I think the other things that Abhishek was going through. I think the key ones is understanding that adoption, for example, and that uptake, which we're trending at the moment. I think the other thing is understanding when, for example, Noridian adopts the first or the second of the billing articles. They haven't as of this time point. I think also a discussion with MolDx. They've done two revisions within 8 weeks as well during this time. I think one of the other key variables is that out of our control centers. And so I think, for example, we've gone back to some of the centers and these large institutions. And they're fully supportive of what we do as a company and have gone back to the IT systems. That takes a couple of weeks, and then we have the meeting with the IT systems. That takes a couple of weeks. So in other words, with best practice, you have centers wanting to work with us. And as you're aware, to schedule these IT sort of meetings, sometimes in a normal scheme of things takes up to a year. So I do think there are these variables, which I think we will have more insight into. And I think we communicated in the prepared remarks, we'll look at that at the next quarter. But I do think we'll have certainly more of these leading indicators and sort of more understanding of some of these uncertain variables. Abhishek, anything else to add?

You got it right.

And our next question is from the line of Mark Massaro with BTIG. Please proceed.

Hey, guys. Thanks for taking the questions. And sorry to hear the headaches from this new policy. My first question, I understand, of course, that you suspended the 2023 revenue guidance. I just wanted to make sure that it would be logical that you're also suspending your adjusted EBITDA positivity goal in the first half of '23.

And that's true, Mark. We never guided the adjusted EBITDA. That was basically our goal. The guidance was around the revenues, and that's the reason we were more explicit in calling that one out. But of course, given all the impacts and everything, the adjusted EBITDA goal for the second quarter is not there anymore.

Yeah. One thing, Mark, I think it's an excellent question because I think in our prepared remarks, we really wanted to focus on the -- at least mention the operational execution in the plan that we had in 2022 and how we continue that into 2021. I mean I think what we demonstrated, once you included the impact of March test, we had the adjusted EBITDA of $2.5 million, which happened during what we had sort of projected and why we had this operational focus. And we thought part of that commentary might have been lost if we didn't mention it upfront. So I think it's a good reminder of what we've executed as an organization, particularly over the last six to nine months to get there and focusing on those 3Cs, which remain unabated and a core focus for us. But yes, I think Abhishek has answered where we are with regards to the billing article.

Medicare is not your only payer. So I'm curious if you've had conversations with any commercial health plans, whether or not they have any intent of following the new Medicare policy.

Yeah, Mark, that's excellent. We talked about the 3Cs. And I think what we've demonstrated with firstly, the first, collections, is that we can build an excellent plan and execute on it. And I think that's where you're seeing the collections exceeding the revenues and adding to the cash each quarter. So we're really excited by what we've been able to do there. On the prepared remarks, you probably heard about coverage. And I think this is an area where you're right, there's significant opportunities in other areas, including where we've covered ISHLT guidelines, getting the coverage on the AlloMap. And I think also as we look at some of the areas, both we have active areas of both on the kidney and the heart side that we're working on to share some news within the next few months, which I think will be positive for the organization. So I do think this is the next stage of an area of significant opportunity for us. I do think there are multiple areas working with payers where we can talk about all the great work that we've developed, the science supporting our products. And I think this is well underway. So we feel good about what we'll be able to share in the next few months on the commercial side of things. Again, it all starts with the plan, Mark. And I think we did this deliberately last year with the 3Cs. We're really executing on the collection side. You're seeing that flow through. And I think now as we work with our commercial coverage team, we're starting to see some really exciting good discussions, which we'll share more in the next few months.

Okay. You guys have been committed to data development and one of the large studies you're working on is the SHORE study. It would seem that if you could publish perhaps an interim readout of that. I think the goal is to enroll, I think, 3,000 patients. But I think if you were to put out an interim readout that might help satisfy perhaps CMS. Can you give us a sense for, one, whether or not you think that's true? And two, what are your plans to potentially show interim data? Like when do you think we might be able to see that?

This is Robert. So we're actively working on that. As you know, when you start one of these clinical trials, you start enrollment, but it takes time to get the full enrollment started and then you have to follow each of those patients for the assigned amount of time. And in the middle of SHORE, COVID happened. And so enrollment took longer than we expected. That kind of explains where we are today. However, we do have the same goal that you've mentioned of a readout as soon as we can put one together. So we're actively in analysis of the data we have and working with our clinical operations group to ensure we've got the quality data that we're working with to produce a publication.

Okay. Thanks. Maybe last one for me. I think this has been asked, but maybe I'll try again. So you guys talked about the 50% in April, now 60% on the forms. I think what we're trying to extrapolate is does that suggest the sort of an impact of up to 40% of volumes going forward? And I think related to that, I think another transplant player in the space talked about, I think, headwinds of somewhere around 10% to 15%. So I guess I'm trying to marry the 10% to 15% I heard yesterday to trying to interpret the 60% metric that you gave tonight.

Yeah. Let me take a shot at it, Mark. So the adoption rate that we are providing of the new TRS at 50%, and it has gone up to 60% in May. So for the remaining 30% to 40%, we will still go back to those transplant centers and we will require or request for that information. So there's an additional administrative burden there, but that doesn't mean that you cannot recognize the revenue. So it's not lost. So I think I just want to make sure that that's pretty clear. The other piece that you're probably looking for, I don't know, what is that 10% to 15%. But maybe the other piece that we discussed on the call was around this initial impact on the volumes, the early indicators that we have seen that I basically discussed earlier. So that's the only other piece that on the volumes, the early indicators, some of the headwinds that we are seeing.

Yeah, Mark, I think just to be consistent, I think the initial disruption volume trends, I think we're fairly consistent with what others have said actually. If I looked at the range, I think Abhishek shared, it was the teams, right? And I think that's consistent with what we've heard from others. I think what we're sharing here is that we, as a company, we take what we do seriously. And I think at the same time, what we're doing is the forms have to be updated, and we know that systems have to be updated, and we are responsibly doing that, which is what we're doing. I think if certain centers who are on EMRs, and we're dependent on them, we can't say, let's submit all the forms just because they've been sent over because they need to be -- when you go back and say, can you please clarify? I just want to make that important distinction, Mark, because as a company, that's important for us to follow that process and that's what has been requested. So the good thing about that is there's time to go back to those centers as part of what's allowed in this process. But we just want to make clear that it doesn't mean it's lost volume. It means that what you do is that you want to make sure what you submit is what's being required. And I don't know if others certainly have emails where they can certainly -- if they haven't changed them, then they need to be updated at those centers.

Okay. Yeah, that make sense. Thank you for the clarification.

Absolutely. Thank you.

And our next question is from the line of Alex Nowak with Craig-Hallum Capital. Please go ahead.

Hey, good afternoon, everyone. Maybe a similar question along the same vein. The $8.9 million of revenue that was withheld from reimbursement here in Q1, is that basically an absolute worst-case scenario of what the impact of revenue and volume could be from March 7 to the end of Q1?

So basically, these are the tests for our AlloSure Kidney, Medicare, and these are the -- all the tests, every single test because we did not bill anything during that period. So yes, you are right.

But it includes for cause and for surveillance, I guess I'm trying to understand it. Or is it only surveillance?

No, it includes every single Medicare test.

Okay. Understood. And then I just want to be clear. So on one hand, you're making these big cost cuts, you're laying off 12% of the workforce at Cardiac. But on the other hand, you're also saying you're going to challenge already Noridian directly. You're saying that the billing articles aren't consistent with the LCDs you opened up with that, that Noridian still needs to pay for these tests. So is that challenge to Noridian, a bit of a hall marry out there and potentially pushing them to maybe not implement the MolDx policy?

This is Robert. I think what we said was that we believe these are changes. I don't know that we -- there's a specific challenge to Noridian there. We will, of course, follow them as the -- we've worked with MolDx to make sure that we understand and what we need to follow. We do believe that these are changes, and we'll work to address that as we've seen in the professional societies that have addressed them as well.

Yeah, Alex, I think in our prepared remarks, we had numerous discussions with MolDx and plan for discussions with them. We also reached out to CMS in the matter and plans to reach out to Noridian. So I think this is dialogue.

And from the CAC meetings that were in November and also from the coverage policy that came out, it looked like it was pretty clear that Medicare wanted more utility data on the surveillance population. I think they even said that in one of the KOAR, said that during the CAC meetings. So beyond new forms, you had the KOR study, which did have a big surveillance aspect. When should we expect to see more data from KOAR get published in a peer-reviewed journal? And then other than forms, what other data could you show to generate why using cell free DNA? Why you think gene expression to monitor these patients is ultimately better for patient care in both for cost and the surveillance setting?

Yeah, Alex, I'll let Robert talk about it but I just want to go back to what we shared before. I think ourselves and others have seen this team's sort of impact, what we're sharing is that with the remaining -- those percentages -- is what we're working with is getting that updated. And I think that's the key. And I think what we've seen is the getting the right forms is the focus and the faster we do that, the better. So I do think that has been the focus of how do we ensure that as with others have had this team impact, then what do we do with all the forms that are coming out? It's making sure they're compliant in what we see per the billing article request. So Robert, I don't know if you want to add more in terms of KOAR data parcel. So some of the areas that Alex asked about.

Sure. We've got multiple approaches to this aspect of evidence generation in surveillance. And one of those, of course, is KOAR, as you mentioned. It is a more mature study. It's been around longer than SHORE. And it faces all of the same requirements that I mentioned for SHORE. But the additional requirement that as -- if you're looking for to have a measure of surveillance, you need to have the full-time course for all of the patients. And so as that nears completion this year, then we'll start working on those and analysis and publications. We don't have a time line yet.

Okay. Understood. And then just a last question, just any status update on the DoJ investigation, the state inquiries. Were any of these inquiries related to the reimbursement that MolDx ultimately changed? And then I saw there's a lawsuit you filed against your liability insurance provider. Just what was that for?

Yeah. There isn't any material update on the DoJ and the SEC side of the side. And I didn't catch the second part of your question, if there was any.

Yeah, I mentioned -- it was in the 10-Q. It mentioned CareDx filed a lawsuit against your liability insurance provider.

Yeah. So maybe that is basically that we might have initiated some things with our insurance provider to recover some of the expenses that we have incurred on some of these legal cases.

Got it, okay. Thanks for the update.

And our next question is from the line of Mason Carrico from Stephens. Please go ahead.

Hey, guys. Maybe one just on how you're thinking about the market overall sizing it up at this point, assuming this policy plays out as it's written, I guess. So how do you think about the overall testing opportunity for AlloSure Kidney, thinking about the number of new kidney transplants each year as well as the number of patients living with the kidney who would be more likely surveilled? I guess, just how do you -- how are you thinking about the testing opportunity now?

Yes, it's a really good question about the market dynamics. I think one thing that hasn't been covered as much. I think we've talked about the impact on the market. And we obviously continue to beat the market growth as a company. But as particularly at IHSC, for example, and in other meetings, there's a real excitement about what some of these organ transfer, organ provision companies can do, plus also with some of the other latest approaches to expand the organ base such as using NRP. And so as we look at this, and we've always had this as part of our longer-term look at the transplant market is that it has potential to double the number of transplants in the space. It's a really good point because I do think transplant is a fairly unique space. And I think it's one which still has that ability to grow. I think we talked a bit about the kidney side with living donors being sort of the most impacted during that COVID period and hadn't reached its sort of previous peak point post-COVID. But I do think if you look at the space overall, there are multiple players entering to say how can we sort of increase the number of organs or increase the viability of organs, or how do we expand alternative types of organs for this space. So it remains active but at the end of the day, Mason, what you have is basically a lot of patients who don't have enough organs available. And so that unmet need remains, and you have essentially a large number of patients who get an organ, but this organ doesn't last a lifetime. And so I think you see the importance, for example, there was New York Times article by one of the -- unfortunately, one of the patients who shared her experience with this, where she did pristine management of her organ but where ultimately she was dealt with some of the secondary issues of long-time immunosuppression with malignancy. So I do think it's a really good point of transplants can double, but also at the same time that we continue to play a role in this space because I think this space still has a lot of areas to grow, particularly if you think of the impact of immunosuppression and other areas that we can address. So really, really nice points Mason.

Yeah. Thanks for that. And maybe to expand there a little bit in terms of the change in testing frequency, if surveillance patients, if you can only use these non-invasive tests, when a surveillance biopsy would be used -- be used for for-cause biopsy, that's the only time these tests could potentially be reimbursed. I know we're still figuring that out. But do you feel like AlloSure's TAM has shrunk? Do you still feel confident that it's a large opportunity based on this new billing policy? I guess just any additional color there?

Yes. I think what we've seen along with others is this teen sort of impacting the first four weeks, that's a lead indicator that we both have. And I think the goal now is of other tests that we received, just how do you make sure that they can be put in the right forms. But I think us and others have seen sort of a similar impact, which is around the teens, right, the high-teens, yeah, is what was described. So I think for us, transplant at the end of the day is a set of patients who we think should be treated in a way that gives them every opportunity to have that organ for life. And I think in many ways, they are a very unique group who actually have to face this lifelong immunosuppression. They're a group who know that the organs historically have failed. So for us, it's important to support that patient group. At the end of the day, that's our mission as an organization to do that. And I think that's really important. So I think it's still early. It's a really good question. But I think one of the things is we've highlighted, it's early. We have four weeks of data and now have a week of May to talk about. And I think the good thing is more and more information will come through during this time as part of that process. But the goal is to operationally focus. We've demonstrated during the course of 2022 that we were able to operationally focus, which is why we sort of wanted to get out front the Q1 results and also how we were able to deliver on that. And now we have a new plan, which is Alex and his team, how do they ensure that the centers are operationally updated, the key gating step obviously being system. So we can't force centers to update their EMRs, but there will be a subset of centers, which will not have those EMRs up to date, right, and it will take time. So I think that's really important for us to focus on as well.

Yeah, thanks for that. And last one for me here, and I apologize if you guys have answered this, but in terms of the centers that have integrated their systems and are up and running, so to speak, have you seen a difference or a decrease in orders from those centers in general? Are they still using AlloSure Kidney at the same frequency as they previously were? Or has that changed at all? Are there any early indicators about how that's shaking out?

Yeah. I think everything's center by center. I think what we've seen is similar to others about this teens impact. So I think at a macro level, that's probably what we observed, what others have observed as well. I don't know if there's any additional commentary the team has to that, but I think that covers what we're seeing and others have seen at the moment across the business.

And our next question is from the line of Yi Chen with H.C. Wainwright. Please go ahead.

Hey. This is Jay on behalf of Yi Chen. Sorry if I missed this during your prepared remarks, but could you provide color on the total number of centers you anticipate to educate every quarter and subsequently hope to see implementation of these new processes?

Yeah. What we shared is that the complete universe of heart, kidney and looking at not just centers but also practice or community practices as well. I think we shared there were more than 550 in that total universe. And the team has focused on where 90% of the volume is and that they've had 80% of those centers now currently educated as part of that process.

Okay. Great. Thank you. And the last one on future catalysts. I know you made a brief remark about it, but -- and also you have just a few in your question-and-answer session. But are there any other readouts or complications that we need to keep an eye out for in this year?

Yeah. I think a lot of the good questions came out in terms of when do we have some additional updates on areas which heart care is being prepared based on MolDx feedback for resubmission. I think also some of the other analysts have talked about on the kidney side and on the heart sites, and the studies we're doing, so they're more prepared. I think when we talk about Catalyst Flow, we were specifically talking about some of the new introductions. And so there would be things such as we're in active discussions. So on the AlloSure line, for example, I think another area was UroMap, which I think is a new modality, which provides a really interesting approach to the portfolio, just given there are no commercially available urine tests out there and this comes from Cornell by the world-leading expert there. And also multiple New England journal publications. So I do think this space is welcome to additional types of what we call catalyst offerings, which I think the day is bringing new innovation to the space. And so yeah, there are other areas that we would look at, particularly for UroMap for this year. Robert, anything else you want to add?

I think asked specifically about publications. And I think I've mentioned that those are things that we work on as soon as we can from the output from the KOAR study and an interim readout on the SHORE study. Others are always in the works, but it's difficult to predict timing of publications that involve peer review, et cetera. So hard to comment on timing of those. As Reg mentioned, we still are pursuing all of our catalysts. They're all things that are of high impact to patient care, and we want to make sure that we make those available for patient care as soon as we can.

Thank you.

And there are no further questions in the queue at this time. I will now turn the call back over for closing remarks.

Thanks very much. I want to thank the analysts and the investors listening to this call and if there are any different folks, patients, for example, as well. And I think we know that it's been a tough time. We also know that what we do is a very unique space and one where I think there's obviously been some changes. And I think for us, we had a specific plan in 2022, which I think we've continued to deliver on Q1. I think moving forward, we have an updated plan, which the team is committed to executing on now as well and addressing some of the new challenges that come through. And again, we thank you for your support, and we thank you for your commitment to transplant patients. Thank you again.

That does conclude your conference call for today. We thank you for your participation and ask that you please disconnect your lines.