CareDx, Inc.

A securities class action has been filed against CareDx, Inc. (CDNA) on behalf of all persons or entities who purchased CareDx common stock between February 24, 2021 through May 5, 2022.  This case has been filed in the USDC – N.D.CA.

CareDx is a diagnostics company that provides services and products to the organ transplant recipient community, offering diagnostic testing services, products, and digital healthcare software for transplant patients and care providers. The information gathered through the Company’s surveillance and tests purportedly enables clinicians to make treatment decisions in the event of signs of organ rejection.

During the Class Period, testing services for kidney and heart transplant recipients was by far the Company’s largest segment, representing at least 85% of the Company’s total revenues since the beginning of 2020. The Company’s AlloSure® blood test for transplant recipients was, and is, the Company’s primary source of revenue.

The Company r eceived a higher payment for testing services from Medicare reimbursement than from commercial payers. As a result, the number of tests for which the Company was able to get Medicare reimbursement corresponded with the Company’s reporting a higher average sales price (“ASP”) for testing services. Although the Company did not specifically report ASPs during the Class Period, investors were able to easily calculate ASP by dividingtesting service revenue by the number or volume of reported tests per financial reporting period.

Throughout the Class Period, CareDx reported growing revenue and strong demand in the Company’s testing services segment. On February 24, 2021, the first day of the Class Period, Defendants reported a 51% year-over-year increase in total revenue, with testing services revenue increasing from $104.6 million in 2019 to $163.5 million in 2020. Defendants instructed investors during the Class Period that they “should be focused” on the testing services segment. Defendants presented the testing services segment as the Company’s “growth driver” for which “demand continued unabated.” Moreover, Defendants described the Company’s testing services segment as having “a winning formula” that would allow the Company to capture a massive totaladdressable market (“TAM”).

Defendants also emphasized to investors the success of the Company’s RemoTraC service – a remote, home-based, blood-drawing service that the Company launched in response to the Covid-19 pandemic – as part of the “winning formula.” Investors were told throughout the Class Period that the RemoTraC service was a massive success that gave the Company the ability to “drive margins” for testing services.

Undisclosed to investors, however, throughout the Class Period, Defendants had engaged in a variety of improper and illegal schemes to inflate testing services revenue, including: (i) pushing protocols for surveillance of organ rejection through inaccurate marketing materials and in violation of Medicare standards; (ii) offering extravagant inducements or kickbacks to physicians and other providers; and (iii) improperly bundling expensive testing services with other blood tests as part of the RemoTraC service. These practices, and others, subjected CareDx to an undisclosed risk of regulatory scrutiny and rendered the Company’s testing services revenue and demand reported throughout the Class Period artificially inflated. As a result, Defendants’ positivestatements about the Company’s business, operations, and prospects were materially false and/or misleading and/or lacked a reasonable basis.

Investors began to learn the truth regarding Defendants’ Class Period misrepresentations after the financial markets closed on October 28, 2021, when CareDx filed its quarterly report for the third quarter of 2021 on Form 10-Q with the SEC. Under the heading “United States Department of Justice and United States Securities and Exchange Commission Investigation,” Form 10-Q revealed for the first time that CareDx was the subject of at least three government investigations. Specifically, the Form 10-Q reported (1) the Company had “recently received” a civil investigative demand (“CID”) from the U.S. Department of Justice (“DOJ”) requesting the Company produce documents in connection with the DOJ’s False Claims Act investigation; (2) the Company received a subpoena from the SEC in relation to an investigation by the SEC “in respect to matters similar to those identified in the CID, as well as certain of our accounting and public reporting practices” and (3) the Company received an information request from an unnamed state regulatory agency (collectively “government investigations”).

In response to the disclosures of the government investigations, the price of CareDx shares declined more than 27% the next trading day, from a closing price of $70.34 per share on October 28, 2021, to a closing price of $51.00 per share on October 29, 2021.

The Company then remained silent on the status of the government investigations for several months. But investors learned more about the extent of the Company’s misconduct and the nature of the government investigations on April 15, 2022, when the Company’s former Head of Community Nephrology, Dr. Michael Olymbios, filed a complaint in California Superior Court1 that provided extensive detail about: (1) Defendants’ misconduct, including the use of RemoTraC to improperly bundle the Company’s most expensive testing services, including AlloSure, with other blood tests, that led to the government investigations; (2) Defendants’ knowledge of the misconduct throughout the Class Period; and (3) their attempts tomisconduct. In response to the revelations in the Olymbios Complaint, the price of CareDx stock fell an additional 8% to close trading the next trading day, April 18, 2022, at $32.55 per share.

Investors further learned the impact of Defendants’ misconduct and the resulting government investigations on CareDx’s business prospects after the markets closed on May 5, 2022. In connection with the announcement of the Company’s results for the first quarter of 2022, Defendants reported testing service revenue that fell well short of analysts’ expectations and yet another decline in ASP in which the Company’s average price declined by approximately 4.9% versus the last quarter of 2021, or what one analyst described as “another big deterioration in price.”

In response to these disclosures, the price of CareDx stock declined another 18.5% the following trading day, from a closing price of $31.66 per share on May 5, 2022, to a closingprice of $25.87 per share on May 6, 2022.

As the market digested the disclosure of Defendants’ misconduct, more than $1 billion in shareholder value was erased.

As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s common stock when the truth was disclosed, Plaintiff and other Class members have suffered significant losses and damages.