• Revenue: $115.9 million, a 29% increase year over year.
• Testing Revenue: $109.5 million, a 34% increase year over year.
• Total Testing Volume: Approximately 36,800 tests, a 20% increase over the prior year period.
• Testing ASP: Approximately $2,975, including $3.5 million of prior period collections; adjusted ASP would be approximately $2,875, up 7% year over year.
• Decipher Revenue Growth: 48% year over year.
• Afirma Revenue Growth: 19% year over year.
• Non-GAAP Gross Margin: 71%, up approximately 130 basis points year over year.
• Testing Gross Margin: 74%, up approximately 10 basis points year over year.
• Product Revenue: $3.2 million, down 21% year over year.
• BioPharma and Other Revenue: $3.1 million, down 23% year over year.
• Non-GAAP Operating Expenses: $57.6 million, up 11% year over year.
• GAAP Net Income: $15.2 million.
• Adjusted EBITDA: $27.3 million, or 24% of revenue.
• Cash and Cash Equivalents: $274.1 million at the end of Q3.
• 2024 Revenue Guidance: Raised to $442 million to $445 million.
• 2024 Adjusted EBITDA Margin Guidance: Expected to be slightly more than 20%.

• Warning! GuruFocus has detected 5 Warning Sign with VCYT.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Veracyte Inc (NASDAQ:VCYT) reported a record Q3 revenue of $115.9 million, marking a 29% year-over-year growth.
• Testing revenue grew by 34% compared to the prior year, driven by strong volume and ASP improvements.
• Decipher delivered a record 21,250 tests in Q3, up 36% year-over-year, with growth across all NCCN and localized risk categories.
• The company raised its 2024 total revenue guidance to $442 million to $445 million, reflecting an improved outlook.
• Veracyte Inc (NASDAQ:VCYT) achieved a Non-GAAP gross margin of 71%, up approximately 130 basis points compared to the prior year period.

Negative Points

• Product revenue was down 21% year-over-year due to ongoing supply challenges.
• BioPharma and other revenue decreased by 23% year-over-year.
• The company faces a $6 million headwind in 2025 due to the Envisia portfolio planning decision.
• Veracyte Inc (NASDAQ:VCYT) decided to pause offering the Envisia test due to low penetration and high lifecycle management costs.
• The company is managing demand for its product line due to supply chain issues, leading to muted expectations for Q4 and 2025.

Q & A Highlights

Q: As you think about 2025 and beyond, what comes next for Veracyte? Is it more of the same, or are there other legs to the stool that remain to be unveiled? A: Marc Stapley, CEO: We will continue focusing on our successful portfolio of products that drive revenue growth and profitability. We will also invest in three strategic initiatives for long-term growth, including MRD (Minimal Residual Disease) testing. We are partway through our long-term journey and remain focused on achieving our goals.

Q: Could you help us understand the underlying adoption growth drivers for Decipher? Is it mostly new physicians adopting or existing physicians increasing order volumes? A: Marc Stapley, CEO: Growth is consistent across low, intermediate, and high-risk categories, driven by existing physicians expanding their use of Decipher and new physicians adopting it. The NCCN guidelines and commercial payer coverage are significant drivers. We are also working on expanding into the metastatic indication, which will add more patients.

Q: How are you thinking about testing volume growth for 2025, and what are the drivers or headwinds for Decipher and Afirma? A: Marc Stapley, CEO: We are not ready to provide specific numbers for 2025 yet, but we expect continued growth driven by the metastatic indication for Decipher and expanded market penetration. Afirma is expected to grow in high single digits, supported by expanded reimbursement.

Q: Can you discuss the sustainability of pricing improvements seen this year and how they might continue into next year? A: Rebecca Chambers, CFO: Pricing improvements have been driven by effective managed care and billing teams securing contracts and coverage. While we have seen significant gains, we expect the rate of improvement to eventually flatten. However, we continue to see opportunities for incremental gains.

Q: Regarding the MRD test, when do you expect it to start generating meaningful revenue? A: Marc Stapley, CEO: We plan to launch the MRD test for bladder cancer in the first half of 2026, with a ramp-up expected thereafter. MRD is a platform, and we plan to expand into other indications over time, leveraging our whole genome approach.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.