Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Veracyte Announces Third Quarter 2023 Financial Results By: Veracyte, Inc. via Business Wire November 07, 2023 at 16:05 PM EST Grew Total Revenue to $90.1 million, an Increase of 19% Grew Testing Revenue by 27% Conference Call and Webcast Today at 4:30 p.m. ET Veracyte, Inc. (Nasdaq: VCYT) today announced financial results for the third quarter ended September 30, 2023. “I am pleased to share we delivered another quarter of strong revenue growth, fueled by continued demand for our Decipher Prostate and Afirma tests,” said Marc Stapley, Veracyte’s chief executive officer. “These products are serving a critical unmet need for patients dealing with prostate and thyroid cancer, indications for which we believe there remains ample opportunity to fuel outsized, long-term growth.” Key Business Highlights Increased third quarter total revenue by 19% to $90.1 million, compared to the third quarter of 2022. Grew total test volume to 32,544, an increase of 23% compared to the third quarter of 2022. Presented 13 abstracts for our diagnostic tests and capabilities, as well as our biopharmaceutical offerings, at leading medical conferences. These included an oral presentation, at the American Society for Radiation Oncology (ASTRO) annual meeting, of findings from a phase 3, randomized trial demonstrating the Decipher Prostate Genomic Classifier’s performance as a tool to help guide therapeutic decisions for patients with prostate cancer. Published study findings in JCO Precision Oncology, which suggest the potential of Decipher Genomic Resource for Intelligent Discovery (GRID)-derived gene signatures to predict treatment response in patients with recurrent prostate cancer. Unveiled the Afirma GRID, a new research-use-only tool that leverages Veracyte’s Afirma-based whole-transcriptome sequencing platform to help identify new molecular hallmarks of thyroid nodules and cancer. Entered into a multi-year in vitro diagnostic agreement with Illumina to broaden availability of our tests for patients globally by offering them on Illumina’s NextSeq 550Dx next-generation sequencing instrument. Further strengthened the Veracyte leadership team with the additions of Phil Febbo, M.D., as chief scientific officer and chief medical officer and Marie-Claire Taine, Ph.D., as GM, IVD Business Unit. Generated $14.2 million of cash from operations and ended the third quarter with $202.5 million of cash and cash equivalents. Third Quarter 2023 Financial Results Total revenue for the third quarter of 2023 was $90.1 million, an increase of 19% compared to $75.6 million reported in the third quarter of 2022. Testing revenue was $82.0 million, an increase of 27% compared to $64.6 million in the third quarter of 2022, driven primarily by the strong performance of our Decipher Prostate and Afirma tests. Product revenue was $4.0 million, an increase of 21% compared to $3.3 million in the third quarter of 2022. Biopharmaceutical and other revenue was $4.1 million, a decrease of 47% compared to $7.7 million in the third quarter of 2022. Total gross margin for the third quarter of 2023, including the amortization of acquired intangible assets, was 64%, compared to 59% in the third quarter of 2022. Non-GAAP gross margin, excluding the amortization of acquired intangible assets and other acquisition related expenses was 69%, compared to 66% in the third quarter of 2022. Operating expenses, excluding cost of revenue, were $89.4 million, which included an impairment charge of $34.9 million associated with the nCounter Analysis System license given the company’s decision to move to a multi-platform strategy for its IVD tests. Non-GAAP operating expenses, excluding cost of revenue, amortization of acquired intangible assets, other acquisition related expenses and other restructuring costs, grew 13% to $57.7 million compared to $51.1 million in the third quarter of 2022. Net loss for the third quarter of 2023 was $29.6 million, an increase of 240% compared to the third quarter of 2022, primarily related to the impairment charge. Basic and diluted net loss per common share was $0.41, an increase of $0.29 compared to the third quarter of 2022. Net cash provided by operating activities in the first nine months of 2023 was $28.7 million, an improvement of $30.9 million compared to the same period in 2022. A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included in this press release. An explanation of these measures is also included below under the heading "Note Regarding Use of Non-GAAP Financial Measures." 2023 Financial Outlook The company is raising full-year 2023 total revenue guidance to $352 million to $354 million, representing year-over-year growth of approximately 19%, and an improvement compared to prior guidance of $342 million to $350 million. Conference Call and Webcast Details Veracyte will host a conference call and webcast today at 4:30 p.m. Eastern Time to discuss the company's financial results and provide a general business update. The conference call will be webcast live from the company’s website and will be available via the following link: https://edge.media-server.com/mmc/p/e88ivgzk. The webcast should be accessed 10 minutes prior to the conference call start time. A replay of the webcast will be available for one year following the conclusion of the live broadcast and will be accessible on the company’s website at https://investor.veracyte.com/events-presentations. The conference call dial-in can be accessed by registering at the following link: https://register.vevent.com/register/BI6a0979098d6445eba9396420f175fc44 About Veracyte Veracyte (Nasdaq: VCYT) is a global diagnostics company whose vision is to transform cancer care for patients all over the world. We empower clinicians with the high-value insights they need to guide and assure patients at pivotal moments in the race to diagnose and treat cancer. Our high-performing tests enable clinicians to make more confident diagnostic, prognostic and treatment decisions for some of the most challenging diseases such as thyroid, prostate, breast, bladder and lung cancers, as well as interstitial lung diseases. We help patients avoid unnecessary procedures and speed time to diagnosis and appropriate treatment. In addition to making our tests available in the U.S. through our central laboratories, we also aim to deliver our tests to patients worldwide through a distributed model to laboratories that can perform them locally. For more information, please visit www.veracyte.com and follow the company on Twitter (@veracyte). Cautionary Note Regarding Forward-Looking Statements This press release contains forward-looking statements, including, but not limited to, our statements related to our expected total revenue and other financial and operating results for 2023 and our plans, objectives, expectations (financial and otherwise) or intentions with respect to our tests and products, for use in diagnosing and treating diseases, and our commercial organization. Forward-looking statements can be identified by words such as: “appears,” "anticipate," "intend," "plan," "expect," "believe," "should," "may," "will," “positioned,” “designed” and similar references to future periods. Actual results may differ materially from those projected or suggested in any forward-looking statements. These statements involve risks and uncertainties, which could cause actual results to differ materially from our predictions, and include, but are not limited to: our ability to launch, commercialize and receive reimbursement for our products; to demonstrate the validity and utility of our genomic tests and biopharma offerings; to continue to integrate and expand the HalioDx and Decipher businesses and execute on our business plans; to continue to scale our global operations and enhance our internal control environment; the impact of the war in Ukraine on European economies and energy supply and other regional conflicts, as well as our facilities in France; the impact of the COVID-19 pandemic and its variants on our business and general economic conditions; the impact of foreign currency fluctuations, increasing interest rates, inflation, potential government shutdowns and turmoil in the global banking and finance system; and the performance and utility of our tests in the clinical environment. Additional factors that may impact these forward-looking statements can be found under the caption “Risk Factors” in our Annual Report on Form 10-K filed on March 1, 2023, and our Quarterly Report on Form 10-Q for the three months ended September 30, 2023 to be filed with the Securities and Exchange Commission. Copies of these documents, when available, may be found in the Investors section of our website at investor.veracyte.com. These forward-looking statements speak only as of the date hereof and, except as required by law, we specifically disclaim any obligation to update these forward-looking statements or reasons why actual results might differ, whether as a result of new information, future events or otherwise. Veracyte, the Veracyte logo, Decipher, Afirma, Percepta, Envisia, Prosigna, Lymphmark, TMExplore, Brightplex, Immunosign, “Know by Design” and “More about You” are registered trademarks of Veracyte, Inc. and its subsidiaries in the U.S. and selected countries. Immunoscore IC® is a trademark of Veracyte SAS registered in France. Immunoscore is a registered trademark of Inserm used by Veracyte under license. nCounter is the registered trademark of NanoString Technologies used by Veracyte under license. Note Regarding Use of Non-GAAP Financial Measures In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release and the accompanying tables contain, and reference certain non‐GAAP results including non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP loss from operations. These measures are not meant to be considered superior to or a substitute for financial measures calculated in accordance with GAAP, and investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. We use non-GAAP measures to internally evaluate and analyze financial results. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures. However, the non-GAAP measures we present may be different from those used by other companies. We exclude amortization of acquired intangible assets, acquisition-related expenses relating to our acquisitions of Decipher Biosciences and HalioDx, impairment charges associated with the nCounter license intangible assets and certain costs related to restructuring from certain of our non-GAAP measures. Management has excluded the effects of these items in non-GAAP measures to help investors gain a better understanding of the core operating results and future prospects of the company, consistent with how management measures and forecasts the company's performance, especially when comparing such results to previous periods or forecasts. The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non‐GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between our GAAP results and non‐GAAP financial measures are presented in the tables of this release. VERACYTE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except share and per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenues: Testing revenue $ 82,012 $ 64,577 $ 236,157 $ 180,275 Product revenue 4,020 3,314 11,923 9,401 Biopharmaceutical and other revenue 4,076 7,701 14,772 26,563 Total revenue 90,108 75,592 262,852 216,239 Operating expenses (1): Cost of testing revenue 21,827 19,816 64,808 55,923 Cost of product revenue 2,436 1,981 6,913 5,202 Cost of biopharmaceutical and other revenue 3,347 4,211 11,806 13,626 Research and development 13,322 10,773 38,632 29,316 Selling and marketing 24,344 25,678 76,230 73,433 General and administrative 16,334 17,600 62,434 54,992 Impairment of long-lived assets 34,900 — 36,310 3,318 Intangible asset amortization 5,337 5,213 16,007 16,090 Total operating expenses 121,847 85,272 313,140 251,900 Loss from operations (31,739 ) (9,680 ) (50,288 ) (35,661 ) Other income, net 1,967 805 4,148 2,675 Loss before income taxes (29,772 ) (8,875 ) (46,140 ) (32,986 ) Income tax benefit (154 ) (152 ) (29 ) (270 ) Net loss $ (29,618 ) $ (8,723 ) $ (46,111 ) $ (32,716 ) Net loss per common share, basic and diluted $ (0.41 ) $ (0.12 ) $ (0.64 ) $ (0.46 ) Shares used to compute net loss per common share, basic and diluted 72,804,770 71,656,694 72,488,601 71,456,008 1. Cost of revenue, research and development, sales and marketing and general and administrative expenses include the following stock-based compensation related expenses: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of revenue $ 502 $ 290 $ 1,386 $ 947 Research and development 1,135 1,692 3,831 4,801 Selling and marketing 2,521 2,015 7,126 4,721 General and administrative 3,174 3,445 13,539 9,954 Total stock-based compensation expense $ 7,332 $ 7,442 $ 25,882 $ 20,423 VERACYTE, INC. CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (Unaudited) (In thousands) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net loss $ (29,618 ) $ (8,723 ) $ (46,111 ) $ (32,716 ) Other comprehensive income (loss): Change in currency translation adjustments (6,414 ) (16,016 ) (2,851 ) (38,983 ) Net comprehensive loss $ (36,032 ) $ (24,739 ) $ (48,962 ) $ (71,699 ) VERACYTE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) September 30, December 31, 2023 2022 (Unaudited) (See Note 1) Assets Current assets: Cash and cash equivalents $ 202,463 $ 154,247 Short-term investments — 24,605 Accounts receivable 39,297 44,021 Supplies and inventory 15,887 14,294 Prepaid expenses and other current assets 13,516 11,469 Total current assets 271,163 248,636 Property, plant and equipment, net 19,288 17,702 Right-of-use assets, operating leases 11,297 13,160 Intangible assets, net 123,567 174,866 Goodwill 693,176 695,891 Restricted cash 870 749 Other assets 5,582 5,418 Total assets $ 1,124,943 $ 1,156,422 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 12,531 $ 11,911 Accrued liabilities 34,828 37,774 Current portion of deferred revenue 2,214 2,613 Current portion of acquisition-related contingent consideration 2,574 6,060 Current portion of operating lease liabilities 5,007 4,070 Current portion of other liabilities 106 186 Total current liabilities 57,260 62,614 Deferred tax liabilities 3,644 4,531 Acquisition-related contingent consideration, net of current portion 484 2,498 Operating lease liabilities, net of current portion 8,720 10,648 Other liabilities 776 931 Total liabilities 70,884 81,222 Total stockholders’ equity 1,054,059 1,075,200 Total liabilities and stockholders’ equity $ 1,124,943 $ 1,156,422 1. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited financial statements at that date included in the Company's Form 10-K filed with the Securities and Exchange Commission dated March 1, 2023. VERACYTE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Nine Months Ended September 30, 2023 2022 Operating activities Net loss $ (46,111 ) $ (32,716 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 20,852 19,372 Loss on disposal of property, plant and equipment 136 72 Stock-based compensation 25,629 19,867 Deferred income taxes (843 ) (270 ) Interest on end-of-term debt obligation — 161 Noncash lease expense 3,130 2,487 Revaluation of acquisition-related contingent consideration (5,500 ) (80 ) Effect of foreign currency on operations 657 1,563 Impairment loss 36,310 3,318 Changes in operating assets and liabilities: Accounts receivable 4,650 (4,356 ) Supplies and inventory (1,636 ) (2,841 ) Prepaid expenses and other current assets (1,578 ) (25 ) Other assets (586 ) 160 Operating lease liabilities (3,225 ) (2,570 ) Accounts payable 185 (325 ) Accrued liabilities and deferred revenue (3,400 ) (6,026 ) Net cash provided by (used in) operating activities 28,670 (2,209 ) Investing activities Purchase of short-term investments (19,700 ) (8,972 ) Proceeds from sale of short-term investments 39,773 — Proceeds from maturity of short-term investments 5,000 12,696 Purchases of property, plant and equipment (7,464 ) (6,677 ) Net cash provided by (used in) investing activities 17,609 (2,953 ) Financing activities Payment of long-term debt — (94 ) Payment of taxes on vested restricted stock units (5,614 ) (2,639 ) Proceeds from the exercise of common stock options and employee stock purchases 7,806 6,134 Net cash provided by financing activities 2,192 3,401 Increase (decrease) in cash, cash equivalents and restricted cash 48,471 (1,761 ) Effect of foreign currency on cash, cash equivalents and restricted cash (134 ) (1,324 ) Net increase (decrease) in cash, cash equivalents and restricted cash 48,337 (3,085 ) Cash, cash equivalents and restricted cash at beginning of period 154,996 173,946 Cash, cash equivalents and restricted cash at end of period $ 203,333 $ 170,861 CASH, CASH EQUIVALENTS AND RESTRICTED CASH (Unaudited) (In thousands) September 30, December 31, 2023 2022 Cash and cash equivalents $ 202,463 $ 154,247 Restricted cash 870 749 Total cash, cash equivalents and restricted cash $ 203,333 $ 154,996 Reconciliation of U.S. GAAP to Non-GAAP Financial Measures (Unaudited) (In thousands) Identified Expenses GAAP Acquisition Related Expenses (1) Intangible Assets Amortization Expense Other (4) Total Non-GAAP Measure Three Months Ended September 30, 2023 Total revenue $ 90,108 $ — $ — $ — $ 90,108 Cost of testing revenue 21,827 — — — 21,827 Cost of product revenue 2,436 — — — 2,436 Cost of biopharmaceutical and other revenue 3,347 26 — — 3,321 Intangible asset amortization (2) 4,811 — 4,811 — — Gross margin $ 57,687 26 4,811 — 62,524 Gross margin % 64 % 69 % Research and development 13,322 17 — — 13,305 Selling and marketing 24,344 537 — — 23,807 General and administrative 16,334 (4,294 ) — — 20,628 Impairment of long-lived assets 34,900 — — 34,900 — Intangible asset amortization 526 — 526 — — Total operating expenses excluding cost of revenue (3) 89,426 (3,740 ) 526 34,900 57,740 Loss from operations $ (31,739 ) $ (3,714 ) $ 5,337 $ 34,900 $ 4,784 Three Months Ended September 30, 2022 Total revenue $ 75,592 $ — $ — $ — $ 75,592 Cost of testing revenue 19,816 49 — 18 19,749 Cost of product revenue 1,981 — — 3 1,978 Cost of biopharmaceutical and other revenue 4,211 62 — — 4,149 Intangible asset amortization (2) 4,703 — 4,703 — — Gross margin $ 44,881 111 4,703 21 49,716 Gross margin % 59 % 66 % Research and development 10,773 251 — — 10,522 Selling and marketing 25,678 923 — 493 24,262 General and administrative 17,600 1,272 — — 16,328 Impairment of long-lived assets — — — — — Intangible asset amortization 510 — 510 — — Total operating expenses excluding cost of revenue (3) 54,561 2,446 510 493 51,112 Loss from operations $ (9,680 ) $ 2,557 $ 5,213 $ 514 $ (1,396 ) 1. Includes transaction related expenses as well as post-combination compensation expenses. For each of the three months ended September 30, 2022, and September 30, 2023, adjustments consist primarily of remeasurement of contingent consideration related to our adoption of a multi-platform IVD strategy and post-combination compensation expenses associated with the acquisition of HalioDx. 2. Includes only amortization of intangible assets identified as developed technology assets through purchase accounting transactions, which otherwise would have been allocated to cost of revenue. 3. Includes only amortization of intangible assets, which otherwise would have been allocated to research and development, selling and marketing or general and administrative expense and excludes the cost of revenue ($27.6 million and $26.0 million) and the amortization of intangible assets which would have been allocated to the cost of revenue ($4.8 million and $4.7 million) for the three months ended September 30, 2023 and for the three months ended September 30, 2022 respectively. 4. For the three months ended September 30, 2023, includes $34.9 million expense related to the impairment charge associated with the nCounter license intangible assets. For the three months ended September 30, 2022, includes $0.5 million related to restructuring costs. Reconciliation of U.S. GAAP to Non-GAAP Financial Measures (Unaudited) (In thousands) Identified Expenses GAAP Acquisition Related Expenses (1) Intangible Assets Amortization Expense Other (4) Total Non-GAAP Measure Nine Months Ended September 30, 2023 Total revenue $ 262,852 $ — $ — $ — $ 262,852 Cost of testing revenue 64,808 83 — — 64,725 Cost of product revenue 6,913 — — — 6,913 Cost of biopharmaceutical and other revenue 11,806 94 — — 11,712 Intangible asset amortization (2) 14,429 — 14,429 — — Gross margin $ 164,896 177 14,429 — 179,502 Gross margin % 63 % 68 % Research and development 38,632 58 — — 38,574 Selling and marketing 76,230 2,316 — — 73,914 General and administrative 62,434 (1,538 ) — 1,371 62,601 Impairment of long-lived assets 36,310 — — 36,310 — Intangible asset amortization 1,578 — 1,578 — — Total operating expenses excluding cost of revenue (3) 215,184 836 1,578 37,681 175,089 Loss from operations $ (50,288 ) $ 1,013 $ 16,007 $ 37,681 $ 4,413 Nine Months Ended September 30, 2022 Total revenue $ 216,239 $ — $ — $ — $ 216,239 Cost of testing revenue 55,923 153 — 18 55,752 Cost of product revenue 5,202 — — 3 5,199 Cost of biopharmaceutical and other revenue 13,626 261 — — 13,365 Intangible asset amortization (2) 14,526 — 14,526 — — Gross margin $ 126,962 414 14,526 21 141,923 Gross margin % 59 % 66 % Research and development 29,316 1,186 — — 28,130 Selling and marketing 73,433 2,997 — 493 69,943 General and administrative 54,992 3,877 — — 51,115 Impairment of long-lived assets 3,318 — — 3,318 — Intangible asset amortization 1,564 — 1,564 — — Total operating expenses excluding cost of revenue (3) 162,623 8,060 1,564 3,811 149,188 Loss from operations $ (35,661 ) $ 8,474 $ 16,090 $ 3,832 $ (7,265 ) 1. Includes transaction related expenses as well as post-combination compensation expenses, adjustments consist primarily of remeasurement of contingent consideration related to our adoption of a multi-platform IVD strategy and of post-combination compensation expenses associated with the acquisition of HalioDx. 2. Includes only amortization of intangible assets identified as developed technology assets through purchase accounting transactions, which otherwise would have been allocated to cost of revenue. 3. Includes only amortization of intangible assets, which otherwise would have been allocated to research and development, selling and marketing or general and administrative expense and excludes the cost of revenue ($83.5 and $74.8 million) and the amortization of intangible assets which would have been allocated to the cost of revenue ($14.4 and $14.5 million) for the first nine months of 2023 and 2022 respectively. 4. 2022 includes $3.3 million expense related to the impairment charge associated with certain developed technology intangible assets; 2023 includes $34.9 million expense related to the impairment charge associated with the nCounter license intangible assets and $1.4 million related to the departure of the former executive chair and $1.4 million related to restructuring costs. View source version on businesswire.com: https://www.businesswire.com/news/home/20231107248167/en/Contacts Investor Contact: 619-393-1545 investors@veracyte.com Media Contact: Tracy Morris Vice President of Global Corporate Communications 650-380-4413 tracy.morris@veracyte.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Veracyte Announces Third Quarter 2023 Financial Results By: Veracyte, Inc. via Business Wire November 07, 2023 at 16:05 PM EST Grew Total Revenue to $90.1 million, an Increase of 19% Grew Testing Revenue by 27% Conference Call and Webcast Today at 4:30 p.m. ET Veracyte, Inc. (Nasdaq: VCYT) today announced financial results for the third quarter ended September 30, 2023. “I am pleased to share we delivered another quarter of strong revenue growth, fueled by continued demand for our Decipher Prostate and Afirma tests,” said Marc Stapley, Veracyte’s chief executive officer. “These products are serving a critical unmet need for patients dealing with prostate and thyroid cancer, indications for which we believe there remains ample opportunity to fuel outsized, long-term growth.” Key Business Highlights Increased third quarter total revenue by 19% to $90.1 million, compared to the third quarter of 2022. Grew total test volume to 32,544, an increase of 23% compared to the third quarter of 2022. Presented 13 abstracts for our diagnostic tests and capabilities, as well as our biopharmaceutical offerings, at leading medical conferences. These included an oral presentation, at the American Society for Radiation Oncology (ASTRO) annual meeting, of findings from a phase 3, randomized trial demonstrating the Decipher Prostate Genomic Classifier’s performance as a tool to help guide therapeutic decisions for patients with prostate cancer. Published study findings in JCO Precision Oncology, which suggest the potential of Decipher Genomic Resource for Intelligent Discovery (GRID)-derived gene signatures to predict treatment response in patients with recurrent prostate cancer. Unveiled the Afirma GRID, a new research-use-only tool that leverages Veracyte’s Afirma-based whole-transcriptome sequencing platform to help identify new molecular hallmarks of thyroid nodules and cancer. Entered into a multi-year in vitro diagnostic agreement with Illumina to broaden availability of our tests for patients globally by offering them on Illumina’s NextSeq 550Dx next-generation sequencing instrument. Further strengthened the Veracyte leadership team with the additions of Phil Febbo, M.D., as chief scientific officer and chief medical officer and Marie-Claire Taine, Ph.D., as GM, IVD Business Unit. Generated $14.2 million of cash from operations and ended the third quarter with $202.5 million of cash and cash equivalents. Third Quarter 2023 Financial Results Total revenue for the third quarter of 2023 was $90.1 million, an increase of 19% compared to $75.6 million reported in the third quarter of 2022. Testing revenue was $82.0 million, an increase of 27% compared to $64.6 million in the third quarter of 2022, driven primarily by the strong performance of our Decipher Prostate and Afirma tests. Product revenue was $4.0 million, an increase of 21% compared to $3.3 million in the third quarter of 2022. Biopharmaceutical and other revenue was $4.1 million, a decrease of 47% compared to $7.7 million in the third quarter of 2022. Total gross margin for the third quarter of 2023, including the amortization of acquired intangible assets, was 64%, compared to 59% in the third quarter of 2022. Non-GAAP gross margin, excluding the amortization of acquired intangible assets and other acquisition related expenses was 69%, compared to 66% in the third quarter of 2022. Operating expenses, excluding cost of revenue, were $89.4 million, which included an impairment charge of $34.9 million associated with the nCounter Analysis System license given the company’s decision to move to a multi-platform strategy for its IVD tests. Non-GAAP operating expenses, excluding cost of revenue, amortization of acquired intangible assets, other acquisition related expenses and other restructuring costs, grew 13% to $57.7 million compared to $51.1 million in the third quarter of 2022. Net loss for the third quarter of 2023 was $29.6 million, an increase of 240% compared to the third quarter of 2022, primarily related to the impairment charge. Basic and diluted net loss per common share was $0.41, an increase of $0.29 compared to the third quarter of 2022. Net cash provided by operating activities in the first nine months of 2023 was $28.7 million, an improvement of $30.9 million compared to the same period in 2022. A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included in this press release. An explanation of these measures is also included below under the heading "Note Regarding Use of Non-GAAP Financial Measures." 2023 Financial Outlook The company is raising full-year 2023 total revenue guidance to $352 million to $354 million, representing year-over-year growth of approximately 19%, and an improvement compared to prior guidance of $342 million to $350 million. Conference Call and Webcast Details Veracyte will host a conference call and webcast today at 4:30 p.m. Eastern Time to discuss the company's financial results and provide a general business update. The conference call will be webcast live from the company’s website and will be available via the following link: https://edge.media-server.com/mmc/p/e88ivgzk. The webcast should be accessed 10 minutes prior to the conference call start time. A replay of the webcast will be available for one year following the conclusion of the live broadcast and will be accessible on the company’s website at https://investor.veracyte.com/events-presentations. The conference call dial-in can be accessed by registering at the following link: https://register.vevent.com/register/BI6a0979098d6445eba9396420f175fc44 About Veracyte Veracyte (Nasdaq: VCYT) is a global diagnostics company whose vision is to transform cancer care for patients all over the world. We empower clinicians with the high-value insights they need to guide and assure patients at pivotal moments in the race to diagnose and treat cancer. Our high-performing tests enable clinicians to make more confident diagnostic, prognostic and treatment decisions for some of the most challenging diseases such as thyroid, prostate, breast, bladder and lung cancers, as well as interstitial lung diseases. We help patients avoid unnecessary procedures and speed time to diagnosis and appropriate treatment. In addition to making our tests available in the U.S. through our central laboratories, we also aim to deliver our tests to patients worldwide through a distributed model to laboratories that can perform them locally. For more information, please visit www.veracyte.com and follow the company on Twitter (@veracyte). Cautionary Note Regarding Forward-Looking Statements This press release contains forward-looking statements, including, but not limited to, our statements related to our expected total revenue and other financial and operating results for 2023 and our plans, objectives, expectations (financial and otherwise) or intentions with respect to our tests and products, for use in diagnosing and treating diseases, and our commercial organization. Forward-looking statements can be identified by words such as: “appears,” "anticipate," "intend," "plan," "expect," "believe," "should," "may," "will," “positioned,” “designed” and similar references to future periods. Actual results may differ materially from those projected or suggested in any forward-looking statements. These statements involve risks and uncertainties, which could cause actual results to differ materially from our predictions, and include, but are not limited to: our ability to launch, commercialize and receive reimbursement for our products; to demonstrate the validity and utility of our genomic tests and biopharma offerings; to continue to integrate and expand the HalioDx and Decipher businesses and execute on our business plans; to continue to scale our global operations and enhance our internal control environment; the impact of the war in Ukraine on European economies and energy supply and other regional conflicts, as well as our facilities in France; the impact of the COVID-19 pandemic and its variants on our business and general economic conditions; the impact of foreign currency fluctuations, increasing interest rates, inflation, potential government shutdowns and turmoil in the global banking and finance system; and the performance and utility of our tests in the clinical environment. Additional factors that may impact these forward-looking statements can be found under the caption “Risk Factors” in our Annual Report on Form 10-K filed on March 1, 2023, and our Quarterly Report on Form 10-Q for the three months ended September 30, 2023 to be filed with the Securities and Exchange Commission. Copies of these documents, when available, may be found in the Investors section of our website at investor.veracyte.com. These forward-looking statements speak only as of the date hereof and, except as required by law, we specifically disclaim any obligation to update these forward-looking statements or reasons why actual results might differ, whether as a result of new information, future events or otherwise. Veracyte, the Veracyte logo, Decipher, Afirma, Percepta, Envisia, Prosigna, Lymphmark, TMExplore, Brightplex, Immunosign, “Know by Design” and “More about You” are registered trademarks of Veracyte, Inc. and its subsidiaries in the U.S. and selected countries. Immunoscore IC® is a trademark of Veracyte SAS registered in France. Immunoscore is a registered trademark of Inserm used by Veracyte under license. nCounter is the registered trademark of NanoString Technologies used by Veracyte under license. Note Regarding Use of Non-GAAP Financial Measures In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release and the accompanying tables contain, and reference certain non‐GAAP results including non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP loss from operations. These measures are not meant to be considered superior to or a substitute for financial measures calculated in accordance with GAAP, and investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. We use non-GAAP measures to internally evaluate and analyze financial results. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures. However, the non-GAAP measures we present may be different from those used by other companies. We exclude amortization of acquired intangible assets, acquisition-related expenses relating to our acquisitions of Decipher Biosciences and HalioDx, impairment charges associated with the nCounter license intangible assets and certain costs related to restructuring from certain of our non-GAAP measures. Management has excluded the effects of these items in non-GAAP measures to help investors gain a better understanding of the core operating results and future prospects of the company, consistent with how management measures and forecasts the company's performance, especially when comparing such results to previous periods or forecasts. The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non‐GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between our GAAP results and non‐GAAP financial measures are presented in the tables of this release. VERACYTE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except share and per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenues: Testing revenue $ 82,012 $ 64,577 $ 236,157 $ 180,275 Product revenue 4,020 3,314 11,923 9,401 Biopharmaceutical and other revenue 4,076 7,701 14,772 26,563 Total revenue 90,108 75,592 262,852 216,239 Operating expenses (1): Cost of testing revenue 21,827 19,816 64,808 55,923 Cost of product revenue 2,436 1,981 6,913 5,202 Cost of biopharmaceutical and other revenue 3,347 4,211 11,806 13,626 Research and development 13,322 10,773 38,632 29,316 Selling and marketing 24,344 25,678 76,230 73,433 General and administrative 16,334 17,600 62,434 54,992 Impairment of long-lived assets 34,900 — 36,310 3,318 Intangible asset amortization 5,337 5,213 16,007 16,090 Total operating expenses 121,847 85,272 313,140 251,900 Loss from operations (31,739 ) (9,680 ) (50,288 ) (35,661 ) Other income, net 1,967 805 4,148 2,675 Loss before income taxes (29,772 ) (8,875 ) (46,140 ) (32,986 ) Income tax benefit (154 ) (152 ) (29 ) (270 ) Net loss $ (29,618 ) $ (8,723 ) $ (46,111 ) $ (32,716 ) Net loss per common share, basic and diluted $ (0.41 ) $ (0.12 ) $ (0.64 ) $ (0.46 ) Shares used to compute net loss per common share, basic and diluted 72,804,770 71,656,694 72,488,601 71,456,008 1. Cost of revenue, research and development, sales and marketing and general and administrative expenses include the following stock-based compensation related expenses: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of revenue $ 502 $ 290 $ 1,386 $ 947 Research and development 1,135 1,692 3,831 4,801 Selling and marketing 2,521 2,015 7,126 4,721 General and administrative 3,174 3,445 13,539 9,954 Total stock-based compensation expense $ 7,332 $ 7,442 $ 25,882 $ 20,423 VERACYTE, INC. CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (Unaudited) (In thousands) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net loss $ (29,618 ) $ (8,723 ) $ (46,111 ) $ (32,716 ) Other comprehensive income (loss): Change in currency translation adjustments (6,414 ) (16,016 ) (2,851 ) (38,983 ) Net comprehensive loss $ (36,032 ) $ (24,739 ) $ (48,962 ) $ (71,699 ) VERACYTE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) September 30, December 31, 2023 2022 (Unaudited) (See Note 1) Assets Current assets: Cash and cash equivalents $ 202,463 $ 154,247 Short-term investments — 24,605 Accounts receivable 39,297 44,021 Supplies and inventory 15,887 14,294 Prepaid expenses and other current assets 13,516 11,469 Total current assets 271,163 248,636 Property, plant and equipment, net 19,288 17,702 Right-of-use assets, operating leases 11,297 13,160 Intangible assets, net 123,567 174,866 Goodwill 693,176 695,891 Restricted cash 870 749 Other assets 5,582 5,418 Total assets $ 1,124,943 $ 1,156,422 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 12,531 $ 11,911 Accrued liabilities 34,828 37,774 Current portion of deferred revenue 2,214 2,613 Current portion of acquisition-related contingent consideration 2,574 6,060 Current portion of operating lease liabilities 5,007 4,070 Current portion of other liabilities 106 186 Total current liabilities 57,260 62,614 Deferred tax liabilities 3,644 4,531 Acquisition-related contingent consideration, net of current portion 484 2,498 Operating lease liabilities, net of current portion 8,720 10,648 Other liabilities 776 931 Total liabilities 70,884 81,222 Total stockholders’ equity 1,054,059 1,075,200 Total liabilities and stockholders’ equity $ 1,124,943 $ 1,156,422 1. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited financial statements at that date included in the Company's Form 10-K filed with the Securities and Exchange Commission dated March 1, 2023. VERACYTE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Nine Months Ended September 30, 2023 2022 Operating activities Net loss $ (46,111 ) $ (32,716 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 20,852 19,372 Loss on disposal of property, plant and equipment 136 72 Stock-based compensation 25,629 19,867 Deferred income taxes (843 ) (270 ) Interest on end-of-term debt obligation — 161 Noncash lease expense 3,130 2,487 Revaluation of acquisition-related contingent consideration (5,500 ) (80 ) Effect of foreign currency on operations 657 1,563 Impairment loss 36,310 3,318 Changes in operating assets and liabilities: Accounts receivable 4,650 (4,356 ) Supplies and inventory (1,636 ) (2,841 ) Prepaid expenses and other current assets (1,578 ) (25 ) Other assets (586 ) 160 Operating lease liabilities (3,225 ) (2,570 ) Accounts payable 185 (325 ) Accrued liabilities and deferred revenue (3,400 ) (6,026 ) Net cash provided by (used in) operating activities 28,670 (2,209 ) Investing activities Purchase of short-term investments (19,700 ) (8,972 ) Proceeds from sale of short-term investments 39,773 — Proceeds from maturity of short-term investments 5,000 12,696 Purchases of property, plant and equipment (7,464 ) (6,677 ) Net cash provided by (used in) investing activities 17,609 (2,953 ) Financing activities Payment of long-term debt — (94 ) Payment of taxes on vested restricted stock units (5,614 ) (2,639 ) Proceeds from the exercise of common stock options and employee stock purchases 7,806 6,134 Net cash provided by financing activities 2,192 3,401 Increase (decrease) in cash, cash equivalents and restricted cash 48,471 (1,761 ) Effect of foreign currency on cash, cash equivalents and restricted cash (134 ) (1,324 ) Net increase (decrease) in cash, cash equivalents and restricted cash 48,337 (3,085 ) Cash, cash equivalents and restricted cash at beginning of period 154,996 173,946 Cash, cash equivalents and restricted cash at end of period $ 203,333 $ 170,861 CASH, CASH EQUIVALENTS AND RESTRICTED CASH (Unaudited) (In thousands) September 30, December 31, 2023 2022 Cash and cash equivalents $ 202,463 $ 154,247 Restricted cash 870 749 Total cash, cash equivalents and restricted cash $ 203,333 $ 154,996 Reconciliation of U.S. GAAP to Non-GAAP Financial Measures (Unaudited) (In thousands) Identified Expenses GAAP Acquisition Related Expenses (1) Intangible Assets Amortization Expense Other (4) Total Non-GAAP Measure Three Months Ended September 30, 2023 Total revenue $ 90,108 $ — $ — $ — $ 90,108 Cost of testing revenue 21,827 — — — 21,827 Cost of product revenue 2,436 — — — 2,436 Cost of biopharmaceutical and other revenue 3,347 26 — — 3,321 Intangible asset amortization (2) 4,811 — 4,811 — — Gross margin $ 57,687 26 4,811 — 62,524 Gross margin % 64 % 69 % Research and development 13,322 17 — — 13,305 Selling and marketing 24,344 537 — — 23,807 General and administrative 16,334 (4,294 ) — — 20,628 Impairment of long-lived assets 34,900 — — 34,900 — Intangible asset amortization 526 — 526 — — Total operating expenses excluding cost of revenue (3) 89,426 (3,740 ) 526 34,900 57,740 Loss from operations $ (31,739 ) $ (3,714 ) $ 5,337 $ 34,900 $ 4,784 Three Months Ended September 30, 2022 Total revenue $ 75,592 $ — $ — $ — $ 75,592 Cost of testing revenue 19,816 49 — 18 19,749 Cost of product revenue 1,981 — — 3 1,978 Cost of biopharmaceutical and other revenue 4,211 62 — — 4,149 Intangible asset amortization (2) 4,703 — 4,703 — — Gross margin $ 44,881 111 4,703 21 49,716 Gross margin % 59 % 66 % Research and development 10,773 251 — — 10,522 Selling and marketing 25,678 923 — 493 24,262 General and administrative 17,600 1,272 — — 16,328 Impairment of long-lived assets — — — — — Intangible asset amortization 510 — 510 — — Total operating expenses excluding cost of revenue (3) 54,561 2,446 510 493 51,112 Loss from operations $ (9,680 ) $ 2,557 $ 5,213 $ 514 $ (1,396 ) 1. Includes transaction related expenses as well as post-combination compensation expenses. For each of the three months ended September 30, 2022, and September 30, 2023, adjustments consist primarily of remeasurement of contingent consideration related to our adoption of a multi-platform IVD strategy and post-combination compensation expenses associated with the acquisition of HalioDx. 2. Includes only amortization of intangible assets identified as developed technology assets through purchase accounting transactions, which otherwise would have been allocated to cost of revenue. 3. Includes only amortization of intangible assets, which otherwise would have been allocated to research and development, selling and marketing or general and administrative expense and excludes the cost of revenue ($27.6 million and $26.0 million) and the amortization of intangible assets which would have been allocated to the cost of revenue ($4.8 million and $4.7 million) for the three months ended September 30, 2023 and for the three months ended September 30, 2022 respectively. 4. For the three months ended September 30, 2023, includes $34.9 million expense related to the impairment charge associated with the nCounter license intangible assets. For the three months ended September 30, 2022, includes $0.5 million related to restructuring costs. Reconciliation of U.S. GAAP to Non-GAAP Financial Measures (Unaudited) (In thousands) Identified Expenses GAAP Acquisition Related Expenses (1) Intangible Assets Amortization Expense Other (4) Total Non-GAAP Measure Nine Months Ended September 30, 2023 Total revenue $ 262,852 $ — $ — $ — $ 262,852 Cost of testing revenue 64,808 83 — — 64,725 Cost of product revenue 6,913 — — — 6,913 Cost of biopharmaceutical and other revenue 11,806 94 — — 11,712 Intangible asset amortization (2) 14,429 — 14,429 — — Gross margin $ 164,896 177 14,429 — 179,502 Gross margin % 63 % 68 % Research and development 38,632 58 — — 38,574 Selling and marketing 76,230 2,316 — — 73,914 General and administrative 62,434 (1,538 ) — 1,371 62,601 Impairment of long-lived assets 36,310 — — 36,310 — Intangible asset amortization 1,578 — 1,578 — — Total operating expenses excluding cost of revenue (3) 215,184 836 1,578 37,681 175,089 Loss from operations $ (50,288 ) $ 1,013 $ 16,007 $ 37,681 $ 4,413 Nine Months Ended September 30, 2022 Total revenue $ 216,239 $ — $ — $ — $ 216,239 Cost of testing revenue 55,923 153 — 18 55,752 Cost of product revenue 5,202 — — 3 5,199 Cost of biopharmaceutical and other revenue 13,626 261 — — 13,365 Intangible asset amortization (2) 14,526 — 14,526 — — Gross margin $ 126,962 414 14,526 21 141,923 Gross margin % 59 % 66 % Research and development 29,316 1,186 — — 28,130 Selling and marketing 73,433 2,997 — 493 69,943 General and administrative 54,992 3,877 — — 51,115 Impairment of long-lived assets 3,318 — — 3,318 — Intangible asset amortization 1,564 — 1,564 — — Total operating expenses excluding cost of revenue (3) 162,623 8,060 1,564 3,811 149,188 Loss from operations $ (35,661 ) $ 8,474 $ 16,090 $ 3,832 $ (7,265 ) 1. Includes transaction related expenses as well as post-combination compensation expenses, adjustments consist primarily of remeasurement of contingent consideration related to our adoption of a multi-platform IVD strategy and of post-combination compensation expenses associated with the acquisition of HalioDx. 2. Includes only amortization of intangible assets identified as developed technology assets through purchase accounting transactions, which otherwise would have been allocated to cost of revenue. 3. Includes only amortization of intangible assets, which otherwise would have been allocated to research and development, selling and marketing or general and administrative expense and excludes the cost of revenue ($83.5 and $74.8 million) and the amortization of intangible assets which would have been allocated to the cost of revenue ($14.4 and $14.5 million) for the first nine months of 2023 and 2022 respectively. 4. 2022 includes $3.3 million expense related to the impairment charge associated with certain developed technology intangible assets; 2023 includes $34.9 million expense related to the impairment charge associated with the nCounter license intangible assets and $1.4 million related to the departure of the former executive chair and $1.4 million related to restructuring costs. View source version on businesswire.com: https://www.businesswire.com/news/home/20231107248167/en/Contacts Investor Contact: 619-393-1545 investors@veracyte.com Media Contact: Tracy Morris Vice President of Global Corporate Communications 650-380-4413 tracy.morris@veracyte.com
Grew Total Revenue to $90.1 million, an Increase of 19% Grew Testing Revenue by 27% Conference Call and Webcast Today at 4:30 p.m. ET
Veracyte, Inc. (Nasdaq: VCYT) today announced financial results for the third quarter ended September 30, 2023. “I am pleased to share we delivered another quarter of strong revenue growth, fueled by continued demand for our Decipher Prostate and Afirma tests,” said Marc Stapley, Veracyte’s chief executive officer. “These products are serving a critical unmet need for patients dealing with prostate and thyroid cancer, indications for which we believe there remains ample opportunity to fuel outsized, long-term growth.” Key Business Highlights Increased third quarter total revenue by 19% to $90.1 million, compared to the third quarter of 2022. Grew total test volume to 32,544, an increase of 23% compared to the third quarter of 2022. Presented 13 abstracts for our diagnostic tests and capabilities, as well as our biopharmaceutical offerings, at leading medical conferences. These included an oral presentation, at the American Society for Radiation Oncology (ASTRO) annual meeting, of findings from a phase 3, randomized trial demonstrating the Decipher Prostate Genomic Classifier’s performance as a tool to help guide therapeutic decisions for patients with prostate cancer. Published study findings in JCO Precision Oncology, which suggest the potential of Decipher Genomic Resource for Intelligent Discovery (GRID)-derived gene signatures to predict treatment response in patients with recurrent prostate cancer. Unveiled the Afirma GRID, a new research-use-only tool that leverages Veracyte’s Afirma-based whole-transcriptome sequencing platform to help identify new molecular hallmarks of thyroid nodules and cancer. Entered into a multi-year in vitro diagnostic agreement with Illumina to broaden availability of our tests for patients globally by offering them on Illumina’s NextSeq 550Dx next-generation sequencing instrument. Further strengthened the Veracyte leadership team with the additions of Phil Febbo, M.D., as chief scientific officer and chief medical officer and Marie-Claire Taine, Ph.D., as GM, IVD Business Unit. Generated $14.2 million of cash from operations and ended the third quarter with $202.5 million of cash and cash equivalents. Third Quarter 2023 Financial Results Total revenue for the third quarter of 2023 was $90.1 million, an increase of 19% compared to $75.6 million reported in the third quarter of 2022. Testing revenue was $82.0 million, an increase of 27% compared to $64.6 million in the third quarter of 2022, driven primarily by the strong performance of our Decipher Prostate and Afirma tests. Product revenue was $4.0 million, an increase of 21% compared to $3.3 million in the third quarter of 2022. Biopharmaceutical and other revenue was $4.1 million, a decrease of 47% compared to $7.7 million in the third quarter of 2022. Total gross margin for the third quarter of 2023, including the amortization of acquired intangible assets, was 64%, compared to 59% in the third quarter of 2022. Non-GAAP gross margin, excluding the amortization of acquired intangible assets and other acquisition related expenses was 69%, compared to 66% in the third quarter of 2022. Operating expenses, excluding cost of revenue, were $89.4 million, which included an impairment charge of $34.9 million associated with the nCounter Analysis System license given the company’s decision to move to a multi-platform strategy for its IVD tests. Non-GAAP operating expenses, excluding cost of revenue, amortization of acquired intangible assets, other acquisition related expenses and other restructuring costs, grew 13% to $57.7 million compared to $51.1 million in the third quarter of 2022. Net loss for the third quarter of 2023 was $29.6 million, an increase of 240% compared to the third quarter of 2022, primarily related to the impairment charge. Basic and diluted net loss per common share was $0.41, an increase of $0.29 compared to the third quarter of 2022. Net cash provided by operating activities in the first nine months of 2023 was $28.7 million, an improvement of $30.9 million compared to the same period in 2022. A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included in this press release. An explanation of these measures is also included below under the heading "Note Regarding Use of Non-GAAP Financial Measures." 2023 Financial Outlook The company is raising full-year 2023 total revenue guidance to $352 million to $354 million, representing year-over-year growth of approximately 19%, and an improvement compared to prior guidance of $342 million to $350 million. Conference Call and Webcast Details Veracyte will host a conference call and webcast today at 4:30 p.m. Eastern Time to discuss the company's financial results and provide a general business update. The conference call will be webcast live from the company’s website and will be available via the following link: https://edge.media-server.com/mmc/p/e88ivgzk. The webcast should be accessed 10 minutes prior to the conference call start time. A replay of the webcast will be available for one year following the conclusion of the live broadcast and will be accessible on the company’s website at https://investor.veracyte.com/events-presentations. The conference call dial-in can be accessed by registering at the following link: https://register.vevent.com/register/BI6a0979098d6445eba9396420f175fc44 About Veracyte Veracyte (Nasdaq: VCYT) is a global diagnostics company whose vision is to transform cancer care for patients all over the world. We empower clinicians with the high-value insights they need to guide and assure patients at pivotal moments in the race to diagnose and treat cancer. Our high-performing tests enable clinicians to make more confident diagnostic, prognostic and treatment decisions for some of the most challenging diseases such as thyroid, prostate, breast, bladder and lung cancers, as well as interstitial lung diseases. We help patients avoid unnecessary procedures and speed time to diagnosis and appropriate treatment. In addition to making our tests available in the U.S. through our central laboratories, we also aim to deliver our tests to patients worldwide through a distributed model to laboratories that can perform them locally. For more information, please visit www.veracyte.com and follow the company on Twitter (@veracyte). Cautionary Note Regarding Forward-Looking Statements This press release contains forward-looking statements, including, but not limited to, our statements related to our expected total revenue and other financial and operating results for 2023 and our plans, objectives, expectations (financial and otherwise) or intentions with respect to our tests and products, for use in diagnosing and treating diseases, and our commercial organization. Forward-looking statements can be identified by words such as: “appears,” "anticipate," "intend," "plan," "expect," "believe," "should," "may," "will," “positioned,” “designed” and similar references to future periods. Actual results may differ materially from those projected or suggested in any forward-looking statements. These statements involve risks and uncertainties, which could cause actual results to differ materially from our predictions, and include, but are not limited to: our ability to launch, commercialize and receive reimbursement for our products; to demonstrate the validity and utility of our genomic tests and biopharma offerings; to continue to integrate and expand the HalioDx and Decipher businesses and execute on our business plans; to continue to scale our global operations and enhance our internal control environment; the impact of the war in Ukraine on European economies and energy supply and other regional conflicts, as well as our facilities in France; the impact of the COVID-19 pandemic and its variants on our business and general economic conditions; the impact of foreign currency fluctuations, increasing interest rates, inflation, potential government shutdowns and turmoil in the global banking and finance system; and the performance and utility of our tests in the clinical environment. Additional factors that may impact these forward-looking statements can be found under the caption “Risk Factors” in our Annual Report on Form 10-K filed on March 1, 2023, and our Quarterly Report on Form 10-Q for the three months ended September 30, 2023 to be filed with the Securities and Exchange Commission. Copies of these documents, when available, may be found in the Investors section of our website at investor.veracyte.com. These forward-looking statements speak only as of the date hereof and, except as required by law, we specifically disclaim any obligation to update these forward-looking statements or reasons why actual results might differ, whether as a result of new information, future events or otherwise. Veracyte, the Veracyte logo, Decipher, Afirma, Percepta, Envisia, Prosigna, Lymphmark, TMExplore, Brightplex, Immunosign, “Know by Design” and “More about You” are registered trademarks of Veracyte, Inc. and its subsidiaries in the U.S. and selected countries. Immunoscore IC® is a trademark of Veracyte SAS registered in France. Immunoscore is a registered trademark of Inserm used by Veracyte under license. nCounter is the registered trademark of NanoString Technologies used by Veracyte under license. Note Regarding Use of Non-GAAP Financial Measures In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release and the accompanying tables contain, and reference certain non‐GAAP results including non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP loss from operations. These measures are not meant to be considered superior to or a substitute for financial measures calculated in accordance with GAAP, and investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. We use non-GAAP measures to internally evaluate and analyze financial results. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures. However, the non-GAAP measures we present may be different from those used by other companies. We exclude amortization of acquired intangible assets, acquisition-related expenses relating to our acquisitions of Decipher Biosciences and HalioDx, impairment charges associated with the nCounter license intangible assets and certain costs related to restructuring from certain of our non-GAAP measures. Management has excluded the effects of these items in non-GAAP measures to help investors gain a better understanding of the core operating results and future prospects of the company, consistent with how management measures and forecasts the company's performance, especially when comparing such results to previous periods or forecasts. The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non‐GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between our GAAP results and non‐GAAP financial measures are presented in the tables of this release. VERACYTE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except share and per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenues: Testing revenue $ 82,012 $ 64,577 $ 236,157 $ 180,275 Product revenue 4,020 3,314 11,923 9,401 Biopharmaceutical and other revenue 4,076 7,701 14,772 26,563 Total revenue 90,108 75,592 262,852 216,239 Operating expenses (1): Cost of testing revenue 21,827 19,816 64,808 55,923 Cost of product revenue 2,436 1,981 6,913 5,202 Cost of biopharmaceutical and other revenue 3,347 4,211 11,806 13,626 Research and development 13,322 10,773 38,632 29,316 Selling and marketing 24,344 25,678 76,230 73,433 General and administrative 16,334 17,600 62,434 54,992 Impairment of long-lived assets 34,900 — 36,310 3,318 Intangible asset amortization 5,337 5,213 16,007 16,090 Total operating expenses 121,847 85,272 313,140 251,900 Loss from operations (31,739 ) (9,680 ) (50,288 ) (35,661 ) Other income, net 1,967 805 4,148 2,675 Loss before income taxes (29,772 ) (8,875 ) (46,140 ) (32,986 ) Income tax benefit (154 ) (152 ) (29 ) (270 ) Net loss $ (29,618 ) $ (8,723 ) $ (46,111 ) $ (32,716 ) Net loss per common share, basic and diluted $ (0.41 ) $ (0.12 ) $ (0.64 ) $ (0.46 ) Shares used to compute net loss per common share, basic and diluted 72,804,770 71,656,694 72,488,601 71,456,008 1. Cost of revenue, research and development, sales and marketing and general and administrative expenses include the following stock-based compensation related expenses: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of revenue $ 502 $ 290 $ 1,386 $ 947 Research and development 1,135 1,692 3,831 4,801 Selling and marketing 2,521 2,015 7,126 4,721 General and administrative 3,174 3,445 13,539 9,954 Total stock-based compensation expense $ 7,332 $ 7,442 $ 25,882 $ 20,423 VERACYTE, INC. CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (Unaudited) (In thousands) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net loss $ (29,618 ) $ (8,723 ) $ (46,111 ) $ (32,716 ) Other comprehensive income (loss): Change in currency translation adjustments (6,414 ) (16,016 ) (2,851 ) (38,983 ) Net comprehensive loss $ (36,032 ) $ (24,739 ) $ (48,962 ) $ (71,699 ) VERACYTE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) September 30, December 31, 2023 2022 (Unaudited) (See Note 1) Assets Current assets: Cash and cash equivalents $ 202,463 $ 154,247 Short-term investments — 24,605 Accounts receivable 39,297 44,021 Supplies and inventory 15,887 14,294 Prepaid expenses and other current assets 13,516 11,469 Total current assets 271,163 248,636 Property, plant and equipment, net 19,288 17,702 Right-of-use assets, operating leases 11,297 13,160 Intangible assets, net 123,567 174,866 Goodwill 693,176 695,891 Restricted cash 870 749 Other assets 5,582 5,418 Total assets $ 1,124,943 $ 1,156,422 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 12,531 $ 11,911 Accrued liabilities 34,828 37,774 Current portion of deferred revenue 2,214 2,613 Current portion of acquisition-related contingent consideration 2,574 6,060 Current portion of operating lease liabilities 5,007 4,070 Current portion of other liabilities 106 186 Total current liabilities 57,260 62,614 Deferred tax liabilities 3,644 4,531 Acquisition-related contingent consideration, net of current portion 484 2,498 Operating lease liabilities, net of current portion 8,720 10,648 Other liabilities 776 931 Total liabilities 70,884 81,222 Total stockholders’ equity 1,054,059 1,075,200 Total liabilities and stockholders’ equity $ 1,124,943 $ 1,156,422 1. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited financial statements at that date included in the Company's Form 10-K filed with the Securities and Exchange Commission dated March 1, 2023. VERACYTE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Nine Months Ended September 30, 2023 2022 Operating activities Net loss $ (46,111 ) $ (32,716 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 20,852 19,372 Loss on disposal of property, plant and equipment 136 72 Stock-based compensation 25,629 19,867 Deferred income taxes (843 ) (270 ) Interest on end-of-term debt obligation — 161 Noncash lease expense 3,130 2,487 Revaluation of acquisition-related contingent consideration (5,500 ) (80 ) Effect of foreign currency on operations 657 1,563 Impairment loss 36,310 3,318 Changes in operating assets and liabilities: Accounts receivable 4,650 (4,356 ) Supplies and inventory (1,636 ) (2,841 ) Prepaid expenses and other current assets (1,578 ) (25 ) Other assets (586 ) 160 Operating lease liabilities (3,225 ) (2,570 ) Accounts payable 185 (325 ) Accrued liabilities and deferred revenue (3,400 ) (6,026 ) Net cash provided by (used in) operating activities 28,670 (2,209 ) Investing activities Purchase of short-term investments (19,700 ) (8,972 ) Proceeds from sale of short-term investments 39,773 — Proceeds from maturity of short-term investments 5,000 12,696 Purchases of property, plant and equipment (7,464 ) (6,677 ) Net cash provided by (used in) investing activities 17,609 (2,953 ) Financing activities Payment of long-term debt — (94 ) Payment of taxes on vested restricted stock units (5,614 ) (2,639 ) Proceeds from the exercise of common stock options and employee stock purchases 7,806 6,134 Net cash provided by financing activities 2,192 3,401 Increase (decrease) in cash, cash equivalents and restricted cash 48,471 (1,761 ) Effect of foreign currency on cash, cash equivalents and restricted cash (134 ) (1,324 ) Net increase (decrease) in cash, cash equivalents and restricted cash 48,337 (3,085 ) Cash, cash equivalents and restricted cash at beginning of period 154,996 173,946 Cash, cash equivalents and restricted cash at end of period $ 203,333 $ 170,861 CASH, CASH EQUIVALENTS AND RESTRICTED CASH (Unaudited) (In thousands) September 30, December 31, 2023 2022 Cash and cash equivalents $ 202,463 $ 154,247 Restricted cash 870 749 Total cash, cash equivalents and restricted cash $ 203,333 $ 154,996 Reconciliation of U.S. GAAP to Non-GAAP Financial Measures (Unaudited) (In thousands) Identified Expenses GAAP Acquisition Related Expenses (1) Intangible Assets Amortization Expense Other (4) Total Non-GAAP Measure Three Months Ended September 30, 2023 Total revenue $ 90,108 $ — $ — $ — $ 90,108 Cost of testing revenue 21,827 — — — 21,827 Cost of product revenue 2,436 — — — 2,436 Cost of biopharmaceutical and other revenue 3,347 26 — — 3,321 Intangible asset amortization (2) 4,811 — 4,811 — — Gross margin $ 57,687 26 4,811 — 62,524 Gross margin % 64 % 69 % Research and development 13,322 17 — — 13,305 Selling and marketing 24,344 537 — — 23,807 General and administrative 16,334 (4,294 ) — — 20,628 Impairment of long-lived assets 34,900 — — 34,900 — Intangible asset amortization 526 — 526 — — Total operating expenses excluding cost of revenue (3) 89,426 (3,740 ) 526 34,900 57,740 Loss from operations $ (31,739 ) $ (3,714 ) $ 5,337 $ 34,900 $ 4,784 Three Months Ended September 30, 2022 Total revenue $ 75,592 $ — $ — $ — $ 75,592 Cost of testing revenue 19,816 49 — 18 19,749 Cost of product revenue 1,981 — — 3 1,978 Cost of biopharmaceutical and other revenue 4,211 62 — — 4,149 Intangible asset amortization (2) 4,703 — 4,703 — — Gross margin $ 44,881 111 4,703 21 49,716 Gross margin % 59 % 66 % Research and development 10,773 251 — — 10,522 Selling and marketing 25,678 923 — 493 24,262 General and administrative 17,600 1,272 — — 16,328 Impairment of long-lived assets — — — — — Intangible asset amortization 510 — 510 — — Total operating expenses excluding cost of revenue (3) 54,561 2,446 510 493 51,112 Loss from operations $ (9,680 ) $ 2,557 $ 5,213 $ 514 $ (1,396 ) 1. Includes transaction related expenses as well as post-combination compensation expenses. For each of the three months ended September 30, 2022, and September 30, 2023, adjustments consist primarily of remeasurement of contingent consideration related to our adoption of a multi-platform IVD strategy and post-combination compensation expenses associated with the acquisition of HalioDx. 2. Includes only amortization of intangible assets identified as developed technology assets through purchase accounting transactions, which otherwise would have been allocated to cost of revenue. 3. Includes only amortization of intangible assets, which otherwise would have been allocated to research and development, selling and marketing or general and administrative expense and excludes the cost of revenue ($27.6 million and $26.0 million) and the amortization of intangible assets which would have been allocated to the cost of revenue ($4.8 million and $4.7 million) for the three months ended September 30, 2023 and for the three months ended September 30, 2022 respectively. 4. For the three months ended September 30, 2023, includes $34.9 million expense related to the impairment charge associated with the nCounter license intangible assets. For the three months ended September 30, 2022, includes $0.5 million related to restructuring costs. Reconciliation of U.S. GAAP to Non-GAAP Financial Measures (Unaudited) (In thousands) Identified Expenses GAAP Acquisition Related Expenses (1) Intangible Assets Amortization Expense Other (4) Total Non-GAAP Measure Nine Months Ended September 30, 2023 Total revenue $ 262,852 $ — $ — $ — $ 262,852 Cost of testing revenue 64,808 83 — — 64,725 Cost of product revenue 6,913 — — — 6,913 Cost of biopharmaceutical and other revenue 11,806 94 — — 11,712 Intangible asset amortization (2) 14,429 — 14,429 — — Gross margin $ 164,896 177 14,429 — 179,502 Gross margin % 63 % 68 % Research and development 38,632 58 — — 38,574 Selling and marketing 76,230 2,316 — — 73,914 General and administrative 62,434 (1,538 ) — 1,371 62,601 Impairment of long-lived assets 36,310 — — 36,310 — Intangible asset amortization 1,578 — 1,578 — — Total operating expenses excluding cost of revenue (3) 215,184 836 1,578 37,681 175,089 Loss from operations $ (50,288 ) $ 1,013 $ 16,007 $ 37,681 $ 4,413 Nine Months Ended September 30, 2022 Total revenue $ 216,239 $ — $ — $ — $ 216,239 Cost of testing revenue 55,923 153 — 18 55,752 Cost of product revenue 5,202 — — 3 5,199 Cost of biopharmaceutical and other revenue 13,626 261 — — 13,365 Intangible asset amortization (2) 14,526 — 14,526 — — Gross margin $ 126,962 414 14,526 21 141,923 Gross margin % 59 % 66 % Research and development 29,316 1,186 — — 28,130 Selling and marketing 73,433 2,997 — 493 69,943 General and administrative 54,992 3,877 — — 51,115 Impairment of long-lived assets 3,318 — — 3,318 — Intangible asset amortization 1,564 — 1,564 — — Total operating expenses excluding cost of revenue (3) 162,623 8,060 1,564 3,811 149,188 Loss from operations $ (35,661 ) $ 8,474 $ 16,090 $ 3,832 $ (7,265 ) 1. Includes transaction related expenses as well as post-combination compensation expenses, adjustments consist primarily of remeasurement of contingent consideration related to our adoption of a multi-platform IVD strategy and of post-combination compensation expenses associated with the acquisition of HalioDx. 2. Includes only amortization of intangible assets identified as developed technology assets through purchase accounting transactions, which otherwise would have been allocated to cost of revenue. 3. Includes only amortization of intangible assets, which otherwise would have been allocated to research and development, selling and marketing or general and administrative expense and excludes the cost of revenue ($83.5 and $74.8 million) and the amortization of intangible assets which would have been allocated to the cost of revenue ($14.4 and $14.5 million) for the first nine months of 2023 and 2022 respectively. 4. 2022 includes $3.3 million expense related to the impairment charge associated with certain developed technology intangible assets; 2023 includes $34.9 million expense related to the impairment charge associated with the nCounter license intangible assets and $1.4 million related to the departure of the former executive chair and $1.4 million related to restructuring costs. View source version on businesswire.com: https://www.businesswire.com/news/home/20231107248167/en/
Investor Contact: 619-393-1545 investors@veracyte.com Media Contact: Tracy Morris Vice President of Global Corporate Communications 650-380-4413 tracy.morris@veracyte.com