BRISBANE, CA—CareDx (NASDAQ:CDNA), Inc., a medical diagnostics company, announced today that the Department of Justice (DOJ) has closed its investigation into the company's business practices. The inquiry, which focused on CareDx's kidney testing and phlebotomy services, was initiated following a False Claims Act complaint by a former employee.
The DOJ's decision not to intervene in the whistleblower's lawsuit was revealed in a court document unsealed on Monday. While the DOJ has withdrawn, CareDx has stated its intention to "vigorously defend" against the allegations should the private plaintiff continue with the lawsuit.
This development follows a September 19, 2023, communication from the Securities and Exchange Commission (SEC) indicating the conclusion of its separate investigation into CareDx. The SEC, examining issues similar to those in the DOJ's probe as well as certain accounting and public reporting practices, has decided not to recommend enforcement action against the company.
CareDx, with its headquarters at 8000 Marina Boulevard, specializes in services classified under Medical Laboratories. The company, listed on The Nasdaq Stock Market LLC under the ticker NASDAQ:CDNA, has consistently denied any wrongdoing related to the allegations.
The information regarding these developments is based on a press release statement and the company's recent SEC filing. CareDx's President and Chief Executive Officer, John W. Hanna, signed the 8-K report confirming the aforementioned events and updates. The company, incorporated in Delaware and formerly known as XDx, Inc., has its fiscal year-end on December 31.
Investors and stakeholders in CareDx may view this announcement as a positive step, potentially alleviating some of the legal uncertainties that have surrounded the company since the investigations were made public.
In other recent news, CareDx, a precision medicine company, has seen several significant developments. The Department of Justice (DOJ) has concluded its investigation into the company without pursuing any charges, a decision that follows a similar conclusion by the U.S. Securities and Exchange Commission (SEC).
The company also reported a robust 31% year-over-year increase in Q2 2024 revenue, reaching $92.3 million, with growth observed across Testing Services, Patient and Digital Solutions, and Lab Products segments.
In addition, CareDx was upgraded from Neutral to Buy by a BTIG analyst following Medicare contractor Palmetto GBA's decision not to finalize its draft Local Coverage Determination.
The Centers for Medicare and Medicaid Services (CMS) decided not to proceed with a policy that could have limited coverage for certain non-invasive surveillance tests used to detect early signs of organ transplant rejection, reinstating longstanding Medicare coverage for CareDx's AlloSure and AlloMap tests, as well as HeartCare.
Furthermore, CareDx expanded its leadership team with the appointment of two new senior executives, Keith Kennedy as Chief Operating Officer and Jessica Meng as Chief Commercial Officer, while Marica Grskovic took on the role of Chief Strategy Officer. These recent developments reflect the continued growth and strategic direction of CareDx.
InvestingPro Insights
The closure of the DOJ and SEC investigations into CareDx (NASDAQ:CDNA) appears to have bolstered investor confidence, as reflected in the company's recent stock performance. According to InvestingPro data, CareDx has seen a remarkable 394.62% price total return over the past year, with a particularly strong 237.88% return in the last six months. This surge has brought the stock to 93% of its 52-week high, suggesting a significant recovery in market sentiment.
InvestingPro Tips indicate that management has been aggressively buying back shares, which could be interpreted as a sign of confidence in the company's future prospects following the resolution of these legal uncertainties. Moreover, CareDx holds more cash than debt on its balance sheet, potentially providing financial flexibility as it moves forward from these investigations.
While the company was not profitable over the last twelve months, analysts predict that CareDx will be profitable this year, with net income expected to grow. This optimistic outlook is further supported by three analysts revising their earnings upwards for the upcoming period.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for CareDx, providing a deeper understanding of the company's financial health and market position.
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