Veracyte Inc’s Earnings Call Highlights Robust Growth and Strategic Milestones

Veracyte Inc ((VCYT)) has held its Q2 earnings call. Read on for the main highlights of the call.

Veracyte’s latest earnings call exuded a positive sentiment, marked by robust revenue and volume growth, alongside significant strategic milestones. The company showcased promising future product launches, despite facing some financial challenges such as a decline in product revenue and increased operating expenses. However, these challenges were overshadowed by the positive highlights, setting a hopeful tone for the company’s future.

Strong Revenue and Volume Growth

Veracyte reported a commendable 14% year-over-year revenue growth, achieving a total revenue of $130 million. This growth was accompanied by a 15% increase in test volume, with Decipher and Afirma tests showing impressive volume growth. Notably, Decipher experienced a 28% increase in volume year-over-year, underscoring the company’s strong market presence.

Decipher Test Milestones

The Decipher test achieved significant milestones, delivering approximately 25,500 tests and is on track to exceed 100,000 tests annually for the first time. This marks the 13th consecutive quarter of over 25% year-over-year volume growth, highlighting the test’s growing importance in the market.

Adjusted EBITDA Margin

Veracyte’s financial performance was further bolstered by an adjusted EBITDA margin of 27.5%, surpassing expectations. This achievement reflects the company’s strong operational efficiency and financial health.

Progress in Geographic Expansion

In a strategic move, the French Commercial Court approved the sale of the contract manufacturing portion of Veracyte SAS. This decision ensures the continuity of supply for the Prosigna IVD on nCounter, facilitating Veracyte’s geographic expansion efforts.

Launch of New Offerings

Veracyte is set to launch Prosigna as a Laboratory Developed Test (LDT) in the U.S. breast cancer market by mid-2026. This launch will leverage the PAM50 signature to inform treatment decisions, marking a significant step in the company’s product development strategy.

Decline in Product Revenue

Despite the overall positive performance, Veracyte experienced an 8% year-over-year decline in product revenue, totaling $3.6 million. This decline was attributed to the transition to a contract manufacturing model following the sale of Veracyte SAS.

Operating Expenses Increase

The company’s non-GAAP operating expenses rose by 2% year-over-year, driven by increases in sales and marketing expenses due to higher personnel costs. This increase reflects the company’s investment in expanding its market reach.

Impact of Noncash Impairments

Veracyte recorded a GAAP net loss of $1 million, which included $20.5 million of noncash impairments related to Veracyte SAS. This financial impact highlights the challenges faced during the transition period.

Forward-Looking Guidance

Looking ahead, Veracyte provided an optimistic outlook with a 14% year-over-year revenue growth, totaling $130 million, primarily driven by a 14% increase in testing revenue. The company aims for a full-year 2025 revenue guidance ranging from $496 million to $504 million, with an updated adjusted EBITDA margin guidance of 23.5%. Strategic initiatives include the successful launch of Decipher Prostate for metastatic patients, a partnership with Helix, and plans to expand its MRD platform.

In summary, Veracyte’s earnings call painted a positive picture, with strong revenue and volume growth, strategic milestones, and promising future product launches. Despite some financial challenges, the company’s forward-looking guidance and strategic initiatives suggest a bright future, making it an attractive prospect for investors and stakeholders.