Veracyte (VCYT) 2025 Conference Summary Company Overview - **Company**: Veracyte, a leader in molecular diagnostics focused on cancer care [3][4] - **Core Products**: Afirma (thyroid diagnostics) and Decipher (prostate cancer prognosis) [5][6] Industry Insights - **Market Dynamics**: The cancer diagnostics market is expanding, with Veracyte aiming to serve patients globally, not just in the U.S. [3][4] - **Patient Impact**: Over 600,000 patients served to date, with significant clinical evidence supporting the utility of their tests [5][6] Financial Performance - **2024 Performance**: Achieved 28% testing revenue growth and a 20.6% adjusted EBITDA margin [5][19] - **Q1 2025 Performance**: Continued momentum with 19% testing revenue growth, marking the eleventh consecutive quarter of over 20% testing volume growth [6][18] - **Revenue Composition**: Decipher and Afirma accounted for 95% of total revenue in 2024 [6] Product Development and Pipeline - **Decipher Growth**: Over 275,000 patients tested, with a 45% CAGR from 2019 to 2024; aims for 80% market penetration [7][8] - **Afirma Updates**: Over 350,000 patients tested, with 60% avoiding unnecessary surgeries; expects high single-digit revenue growth [10][11] - **New Products**: Prosigna for breast cancer and MRD tests for muscle invasive bladder cancer are in development [13][15] Market Expansion - **Geographic Strategy**: Plans to launch tests in Europe, targeting HR positive breast cancer and prostate cancer markets [16][17] - **Innovative Solutions**: Development of the Percepta nasal swab for lung cancer detection, addressing a significant market need [17] Competitive Landscape - **MRD Competition**: Acknowledges competition but emphasizes differentiation through a whole genome approach and existing channels [31][34] - **Market Potential**: The MRD market is large, and Veracyte aims to carve out a significant share despite being a late entrant [32][34] Future Outlook - **2025 Guidance**: Anticipates 12% to 15% testing revenue growth for the full year, with adjusted EBITDA guidance raised to 22.5% [19][20] - **Long-term Goals**: Focused on achieving a 25% adjusted EBITDA margin and expanding product offerings [20][34] Key Takeaways - **Investor Perception**: The growth potential of pipeline products like MRD and Prosigna may not be fully recognized by investors [22][24] - **Capital Allocation**: Actively assessing M&A opportunities, with a high bar for potential targets [26][28] - **Resource Management**: Internal prioritization of resources is a challenge due to numerous growth opportunities [29]

Summary of Veracyte Conference Call Company Overview - **Company**: Veracyte - **Industry**: Molecular diagnostics, specifically focused on cancer care Core Points and Arguments 1. **Mission and Vision**: Veracyte aims to transform cancer care through specialized molecular diagnostics, focusing on generating actionable insights for clinicians to improve patient treatment outcomes [6][7] 2. **Testing Portfolio**: The company offers a range of diagnostic tests for various cancers, including thyroid, prostate, bladder, and breast cancer, with a focus on early detection and treatment monitoring [8] 3. **Patient Impact**: Veracyte has served 600,000 patients and has over 500 publications validating the performance of its tests, which supports commercial adoption and a strong financial profile [9] 4. **Financial Performance**: In 2024, Veracyte achieved 28% testing revenue growth and a 20.6% adjusted EBITDA margin, with core products Afirma and Decipher accounting for 95% of total revenue [9] 5. **Decipher Test Growth**: The Decipher test for prostate cancer saw a 37% volume growth in Q1, with over 275,000 patients tested. The market for prostate cancer is estimated to be 40% penetrated, with Decipher holding about 65% market share [10][11] 6. **Afirma Test Performance**: Afirma, the market leader in thyroid diagnostics, has tested over 350,000 patients, with 60% avoiding unnecessary surgeries. The market is estimated to be 65% penetrated, with Afirma holding 52% market share [13][14] 7. **Product Development Pipeline**: Veracyte has a robust pipeline, including the launch of Prosigna for breast cancer and MRD tests for bladder cancer, with commercial launches expected in 2026 [16][18] 8. **Geographic Expansion**: The company plans to expand its tests as IVDs in Europe, targeting significant patient populations for both breast and prostate cancer [19][20] 9. **Innovative Products**: The Percepta nasal swab for lung cancer is in development, addressing a large market of incidental lung nodules and aiming to improve early risk classification [20][21] Financial Outlook 1. **Revenue Growth**: Veracyte expects 12% to 15% testing revenue growth in 2025, with adjusted EBITDA margin guidance raised to 22.5% [22] 2. **Profitability Strategy**: The company is focused on balancing growth with financial discipline, aiming for a long-term adjusted EBITDA target of 25% [23][29] 3. **Cost Management**: Initiatives include a COGS reduction roadmap and transitioning to more cost-effective sequencing technology for Afirma [15][28] Additional Insights 1. **Market Dynamics**: The Decipher test is evolving from a prognostic tool to a clinical decision support tool, enhancing its role in managing prostate cancer [34][35] 2. **Reimbursement Landscape**: Continuous efforts are being made to improve reimbursement coverage, which is crucial for sustaining revenue growth [39][40] 3. **Organizational Readiness**: The company is preparing its sales teams for new product launches while maintaining profitability [31][33] This summary encapsulates the key points discussed during the Veracyte conference call, highlighting the company's strategic direction, financial performance, and growth initiatives in the molecular diagnostics industry.

Core Insights - Veracyte's shares have increased by 30.9% over the past year, outperforming the industry's decline of 13.1% and the S&P 500's gain of 12.1% [1] - The company holds a Zacks Rank 3 (Hold) and continues to benefit from the strong performance of its Afirma and Decipher tests, indicating promising future growth potential [1] Company Overview - Veracyte, based in San Francisco, CA, specializes in advanced genomic tests that enhance diagnostic, prognostic, and treatment decisions for cancer and other complex diseases, ultimately helping patients avoid unnecessary procedures [2] - The company provides tests through its central laboratories in the U.S. while expanding global access via partnerships with local labs [2] Growth Catalysts - The increase in share price is attributed to the strong performance of Afirma and Decipher Prostate tests, with Afirma test volumes growing by 10% in Q1 2025, totaling approximately 15,500 tests [3] - The growth was primarily driven by deeper penetration into existing accounts and the addition of significant new customers [3] - Decipher has experienced a remarkable adoption rate, with a record volume growth of 37% year over year, resulting in nearly 22,600 tests and a 33% revenue growth in Q1 2025 [4] - Veracyte is expanding its tests to cover the entire prostate cancer risk spectrum, with plans to launch into this expanded population in the first half of 2025 [5] Financial Estimates - The Zacks Consensus Estimate for Veracyte's 2025 earnings per share (EPS) has increased by 18.5% to $1.28, with projected revenues growing by 10.7% to $493.3 million in 2025 and reaching $542.8 million in 2026 [8]

Core Insights - Veracyte, Inc. reported a significant increase in first-quarter 2025 earnings, with earnings per share (EPS) of 31 cents, a 63.2% improvement from 19 cents in the same period last year, and exceeding the Zacks Consensus Estimate by 55% [1] - The company achieved revenues of $114.5 million, reflecting an 18.3% year-over-year increase, surpassing the Zacks Consensus Estimate by 3.2% [2] - The company reaffirmed its full-year 2025 testing revenue guidance, expecting revenues between $470 million and $480 million, indicating a 12-15% year-over-year growth [7] Financial Performance - Adjusted EPS was reported at 9 cents, compared to a loss of 2 cents per share in the prior year [1] - Testing revenues reached $107.3 million, a 19% increase year-over-year, driven by Decipher and Afirma revenue growth of 33% and 6%, respectively [2] - Gross profit rose by 27.3% to $79.5 million, with gross margin expanding by 495 basis points to 69.5% [4] Cost and Expenses - Total cost of revenues was $35 million, up 1.7% year-over-year [4] - Selling and marketing expenses increased by 2.8% to $24.4 million, while general and administrative expenses rose by 29% to $33.8 million [5] - Research and development expenses totaled $17.7 million, an 11% increase year-over-year [5] Cash and Solvency - At the end of Q1 2025, Veracyte had cash and cash equivalents of $186.1 million, down from $239.1 million at the end of Q4 2024 [6] - The net cash provided from operating activities was $5.4 million, compared to a net cash used of $9 million in the previous year [6] Strategic Developments - The company launched Decipher for metastatic prostate cancer patients and published analytical validity data for the Percepta Nasal Swab during the first quarter [10] - The growth in product revenues and biopharmaceutical revenues, which also increased by 19% to $3.6 million, is seen as encouraging [3]

Core Viewpoint - Veracyte (VCYT) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in a company's earnings picture, which is crucial for near-term stock price movements [2][4]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in stock price movements [4]. Company Performance and Outlook - The upgrade indicates an improvement in Veracyte's underlying business, which is expected to positively influence its stock price [5]. - Veracyte is projected to earn $1.20 per share for the fiscal year ending December 2025, reflecting a year-over-year change of 0.8% [8]. Analyst Sentiment and Consensus - Over the past three months, the Zacks Consensus Estimate for Veracyte has increased by 10.6%, indicating a positive trend in analyst sentiment [8]. - The Zacks rating system maintains a balanced approach, with only the top 20% of stocks receiving a 'Strong Buy' or 'Buy' rating, highlighting Veracyte's strong position in earnings estimate revisions [9][10].

PART I. — FINANCIAL INFORMATION [Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, show a significant turnaround, with the company reporting a net income of $7.0 million compared to a net loss of $1.9 million in the prior-year period, driven by an 18% increase in total revenue, primarily from testing services, while total assets increased slightly to $1.315 billion and total liabilities decreased, strengthening the company's balance sheet [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were $1.315 billion, a slight increase from $1.300 billion at year-end 2024, driven by an increase in short-term investments and goodwill, partially offset by a decrease in cash and cash equivalents, while total liabilities decreased to $120.5 million from $124.1 million, and stockholders' equity grew to $1.195 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $186,120 | $239,087 | | Short-term investments | $101,235 | $50,354 | | Total current assets | $383,152 | $372,267 | | Goodwill | $754,272 | $745,800 | | Total assets | $1,315,411 | $1,300,035 | | **Liabilities & Equity** | | | | Total current liabilities | $75,125 | $78,633 | | Total liabilities | $120,475 | $124,069 | | Total stockholders' equity | $1,194,936 | $1,175,966 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2025, Veracyte reported total revenue of $114.5 million, an 18% increase year-over-year, achieving income from operations of $2.9 million, a significant improvement from a loss of $4.7 million in Q1 2024, resulting in net income of $7.0 million, or $0.09 per diluted share, compared to a net loss of $1.9 million, or ($0.02) per share, in the prior-year period Q1 2025 vs. Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Testing revenue | $107,309 | $90,303 | | Total revenue | $114,473 | $96,844 | | Gross profit | $79,508 | $62,468 | | Income (loss) from operations | $2,904 | $(4,656) | | Net income (loss) | $7,047 | $(1,864) | | Diluted EPS | $0.09 | $(0.02) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first three months of 2025, net cash provided by operating activities was $5.4 million, a reversal from the $9.0 million used in the same period of 2024, while net cash used in investing activities was $51.8 million, primarily for the purchase of short-term investments, and net cash used in financing activities was $6.5 million, mainly for tax payments on vested restricted stock units Cash Flow Summary for Three Months Ended March 31 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $5,362 | $(8,966) | | Net cash (used in) provided by investing activities | $(51,818) | $2,878 | | Net cash used in financing activities | $(6,484) | $(864) | | Net decrease in cash, cash equivalents and restricted cash | $(52,866) | $(7,060) | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 18% year-over-year revenue growth to a 23% increase in diagnostic test volume, particularly for Decipher Prostate and Afirma tests, with gross profit improving by 27% to $79.5 million, leading to profitability with a net income of $7.0 million, while key strategic focuses include expanding the minimal residual disease (MRD) portfolio and transitioning more tests to IVD formats for global markets, maintaining a strong liquidity position with $287.4 million in cash, cash equivalents, and short-term investments [Overview](index=25&type=section&id=Overview) Veracyte is a global diagnostics company focused on providing tests for cancer diagnosis, prognosis, and treatment decisions, operating with a dual model of laboratory developed tests (LDTs) in the U.S. and in vitro diagnostics (IVDs) internationally, with a key strategic initiative being the expansion into minimal residual disease (MRD) testing to monitor post-treatment cancer recurrence - The company's current U.S. offerings include tests for prostate (Decipher Prostate), thyroid (Afirma), breast (Prosigna), and bladder (Decipher Bladder) cancer[103](index=103&type=chunk) - Veracyte serves global markets through two models: centralized CLIA labs in the U.S. and IVD test distribution primarily outside the U.S.[104](index=104&type=chunk) - The company is expanding its portfolio to include minimal residual disease (MRD) assays to monitor therapeutic success and patient outcomes[105](index=105&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Total revenue for Q1 2025 increased by 18% to $114.5 million, driven by a 19% rise in testing revenue from higher volumes, with gross profit growing 27% to $79.5 million, while operating expenses increased 14% to $76.6 million, largely due to higher general and administrative costs, including one-time expenses related to a subsidiary's bankruptcy proceeding and an acquisition, despite which the company shifted from an operating loss of $4.7 million in Q1 2024 to an operating income of $2.9 million in Q1 2025 Q1 2025 vs. Q1 2024 Results of Operations (in thousands) | Line Item | Q1 2025 | Q1 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $114,473 | $96,844 | $17,629 | 18% | | Gross profit | $79,508 | $62,468 | $17,040 | 27% | | Total operating expenses | $76,604 | $67,124 | $9,480 | 14% | | Income (loss) from operations | $2,904 | $(4,656) | $7,560 | (162)% | | Net income (loss) | $7,047 | $(1,864) | $8,911 | (478)% | - Testing revenue increased by **$17.0 million (19%)** due to a **23% increase in test volume**, primarily from Decipher Prostate and Afirma tests[138](index=138&type=chunk) - General and administrative expenses rose by **$7.6 million (29%)**, driven by a **$7.3 million increase in professional fees**, which included **$3.8 million** for a subsidiary's bankruptcy proceeding and a **$3.3 million** payment for the C2i Acquisition[146](index=146&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, Veracyte had a strong liquidity position with $287.4 million in cash, cash equivalents, and short-term investments, having generated $5.4 million in cash from operations in Q1 2025, and management believes existing cash and future cash flows from revenue will be sufficient to meet anticipated requirements for at least the next 12 months, with material future cash requirements including operating lease payments totaling $93.2 million and potential acquisition-related contingent consideration payments up to $26.0 million - The company held **$287.4 million** in cash, cash equivalents, and short-term investments as of March 31, 2025[150](index=150&type=chunk) - Management believes current liquidity is sufficient for at least the next 12 months[152](index=152&type=chunk) - Material cash requirements include **$93.2 million** in future minimum lease payments and up to **$26.0 million** in contingent consideration for the C2i and nCounter acquisitions[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rates, foreign currency fluctuations, and inflation, however, management does not believe these risks have had a material effect on the company's financial condition or operating results to date, and a hypothetical 10% change in interest rates or the U.S. dollar-to-Euro exchange rate would not have a material impact - Interest Rate Risk: Exposure exists through **$287.4 million** in cash and investments, but a hypothetical **10% change** in rates is not considered material[165](index=165&type=chunk) - Foreign Currency Risk: Exposure from **$3.4 million** in Euro-denominated deposits is not considered material[166](index=166&type=chunk) - Inflation Risk: The company is facing inflation headwinds in costs but does not believe it has had a material effect on results[167](index=167&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation as of March 31, 2025, the company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective at a reasonable assurance level, and there were no material changes to the company's internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of March 31, 2025[170](index=170&type=chunk) - No changes in internal control over financial reporting occurred in Q1 2025 that have materially affected, or are reasonably likely to materially affect, internal controls[171](index=171&type=chunk) PART II. — OTHER INFORMATION [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) On May 1, 2025, Veracyte initiated legal action by filing a complaint in federal court against Sonic Healthcare USA, Inc., alleging infringement of three of Veracyte's patents concerning molecular testing of thyroid nodules and seeking damages and injunctive relief - On May 1, 2025, Veracyte filed a patent infringement complaint against Sonic Healthcare USA, Inc. related to thyroid nodule testing technology[90](index=90&type=chunk) - The company is seeking treble damages, attorneys' fees, costs, and an injunction against Sonic Healthcare[90](index=90&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes in the company's risk factors from those described in the most recent Annual Report on Form 10-K[174](index=174&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the quarter - None[175](index=175&type=chunk) [Other Information](index=39&type=section&id=Item%205.%20Other%20Information) During the first quarter of 2025, director Robert Epstein adopted a new Rule 10b5-1 trading plan to sell an aggregate of 21,473 shares of common stock, with no other Section 16 officers adopting, modifying, or terminating such plans - Director Robert Epstein adopted a new Rule 10b5-1 trading plan on March 6, 2025, to sell **21,473 shares**, with the first trade scheduled for around June 5, 2025[178](index=178&type=chunk)

Core Insights - Veracyte reported quarterly earnings of $0.31 per share, exceeding the Zacks Consensus Estimate of $0.20 per share, and showing a significant improvement from a loss of $0.02 per share a year ago, resulting in an earnings surprise of 55% [1] - The company achieved revenues of $114.47 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 3.17% and reflecting a year-over-year increase from $96.84 million [2] - Veracyte has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The future performance of Veracyte's stock will largely depend on management's commentary during the earnings call and the sustainability of the recent earnings surprise [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.31, with projected revenues of $122.71 million, and for the current fiscal year, the consensus EPS is $1.09 on revenues of $490.64 million [7] Industry Context - The Medical - Instruments industry, to which Veracyte belongs, is currently ranked in the top 35% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked using tools like the Zacks Rank [5][6]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $114.5 million, representing an 18% year-over-year growth, driven by testing revenue growth of 19% year-over-year [6][28] - Adjusted EBITDA margin was 21.6%, significantly higher than expected, with a strong balance sheet of $287 million in cash and short-term investments [6][28] - Non-GAAP gross margin was 72%, up approximately 400 basis points year-over-year, while testing gross margin was 74%, up approximately 200 basis points [31] Business Line Data and Key Metrics Changes - Decipher saw a 37% year-over-year volume growth, resulting in approximately 22,600 tests and revenue growth of 33% [7][9] - Afirma experienced a 10% year-over-year volume growth, resulting in approximately 15,500 tests, but revenue growth was lower at 6% due to prior period collection benefits [12][66] - Product line revenue was $3.6 million, up 1% year-over-year, while biopharmaceutical and other revenue was also $3.6 million, up 19% year-over-year [30] Market Data and Key Metrics Changes - The company reported a record number of ordering providers for Decipher, up over 20% from the prior year, indicating strong market penetration [7][60] - The Decipher prostate metastatic test is expected to expand the population eligible for testing by an additional 30,000 patients annually [10] - The MRD platform is being developed for muscle invasive bladder cancer, with a commercial launch expected in the first half of 2026 [17] Company Strategy and Development Direction - The company is focused on expanding its existing tests, Decipher and Afirma, and launching new products like Prosigna in the U.S. breast cancer market [15][16] - Strategic initiatives include international expansion and addressing novel cancer challenges with innovative products [6][25] - The company aims to leverage its Veracyte Diagnostics platform to generate clinical evidence and support product adoption [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering strong growth despite a challenging macro environment, citing ongoing durability in core testing business [6][34] - The company reiterated its 2025 testing revenue guidance of $470 million to $480 million, raising adjusted EBITDA margin guidance to 22.5% [33][34] - Management highlighted the importance of evidence generation and reimbursement in ensuring successful product launches [49][90] Other Important Information - The company is undergoing a restructuring process in France, with its subsidiary Veracyte SAS filing for bankruptcy, which may impact product development timelines [21][22] - The launch of the Prosigna LDT is expected in mid-2026, targeting over 300,000 patients diagnosed with breast cancer annually in the U.S. [15][16] Q&A Session Summary Question: Thoughts on portfolio optimization and pipeline value of MRD and nasal swab - Management emphasized a focus on portfolio management and expanding indications, with confidence in the pipeline value of MRD and nasal swab initiatives [36][38][42] Question: Organizational readiness for upcoming product launches - Management discussed the importance of evidence generation and thoughtful launch plans, ensuring investments align with growth opportunities [48][49][53] Question: Clarification on guidance and Afirma growth rate - Management clarified that the guidance reflects testing revenue only, with expectations of high single-digit growth for Afirma [62][66] Question: Differentiation of Prosigna in a competitive market - Management highlighted the evidence-based differentiation of Prosigna and the strategy to gain market share similar to Decipher's success [72][75]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $114.5 million, representing an 18% year-over-year growth, driven by testing revenue growth of 19% year-over-year [5][28] - Adjusted EBITDA margin was 21.6%, significantly higher than expected, with a strong balance sheet of $287 million in cash and short-term investments [5][28] - Non-GAAP gross margin was 72%, up approximately 400 basis points year-over-year, while testing gross margin was 74%, up approximately 200 basis points [30][32] Business Line Data and Key Metrics Changes - Decipher testing revenue grew by 33% year-over-year, with volume growth of 37%, totaling approximately 22,600 tests [6][28] - Afirma testing volume increased by 10% year-over-year, resulting in approximately 15,500 tests, but revenue growth was lower due to prior period collection benefits [12][28] - Product line revenue was $3.6 million, up 1% year-over-year, while biopharmaceutical and other revenue was also $3.6 million, up 19% year-over-year [29] Market Data and Key Metrics Changes - The company reported a record number of ordering providers for Decipher, up over 20% from the prior year, indicating strong market penetration [6][28] - The Decipher prostate metastatic test is expected to launch broadly in June 2025, expanding the population eligible for testing [9][10] - The MRD platform is advancing with a focus on muscle invasive bladder cancer, with commercial launch expected in the first half of 2026 [18][19] Company Strategy and Development Direction - The company is focused on expanding its existing tests, Decipher and Afirma, and launching new products like Prosigna in the U.S. breast cancer market [16][17] - Strategic initiatives include international expansion and addressing novel cancer challenges with innovative products [6][25] - The company aims to leverage its Veracyte Diagnostics platform to generate clinical evidence and support product adoption [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering strong growth despite a challenging macro environment, citing positive trends in testing volume and provider engagement [5][6] - The company reiterated its 2025 testing revenue guidance of $470 million to $480 million, raising adjusted EBITDA margin guidance to 22.5% [33][34] - Management emphasized the importance of evidence generation and reimbursement for new product launches, ensuring organizational readiness for upcoming launches [48][52] Other Important Information - The company is undergoing a bankruptcy process for its French subsidiary, Veracyte SAS, which will not impact its overall strategy or revenue models for the next five years [21][24] - The launch of the Prosigna LDT is expected to begin in mid-2026, targeting a significant market of over 300,000 breast cancer patients annually in the U.S. [16][17] Q&A Session Summary Question: Thoughts on portfolio optimization and pipeline value of MRD and nasal swab - Management is focused on portfolio management, ensuring investments have appropriate evidence and reimbursement, and is excited about the broad pipeline of new products [37][40] - The MRD and nasal swab initiatives are seen as having significant market potential, with upcoming milestones expected to validate their value [42][43] Question: Organizational readiness for upcoming product launches - The company has a thoughtful launch plan in place, ensuring that investments are made in line with growth opportunities and that commercial activities are well-prepared [48][52] Question: Clarification on guidance and growth expectations for Afirma - Afirma is expected to see high single-digit revenue growth for the year, with volume growth driven by prior period collections and market dynamics [66][67] Question: Differentiation of Prosigna in a competitive market - Management believes Prosigna is differentiated based on evidence generation and a strong playbook similar to Decipher, aiming to gain market share in the U.S. [73][75]

Financial Performance - GAAP Gross Profit for the three months ended March 31, 2025 was $79508 thousand, resulting in a GAAP Gross Margin of 695%[42] - Non-GAAP Gross Profit for the three months ended March 31, 2025 was $82613 thousand, yielding a Non-GAAP Gross Margin of 722%[42] - Adjusted EBITDA for the three months ended March 31, 2025, reached $24715 thousand, representing 216% of revenue[47] - GAAP Net Income for the three months ended March 31, 2025, was $7047 thousand, or 62% of revenue[47] - Non-GAAP Net Income for the three months ended March 31, 2025, amounted to $24476 thousand[55] Strategic Initiatives and Product Development - Prosigna LDT is expected to be commercially available in mid-2026[19] - The company submitted a tech assessment to MolDx for MIBC in March 2025, with commercial launch and reimbursement expected in the first half of 2026[22] - NIGHTINGALE pivotal trial enrollment is approximately 95% complete, with completion expected in Q3[28] Operational Expenses - Non-GAAP research and development expenses for the three months ended March 31, 2025, were $15654 thousand[44] - Non-GAAP sales and marketing expenses for the three months ended March 31, 2025, totaled $22496 thousand[44] - Non-GAAP general and administrative expenses for the three months ended March 31, 2025, were $22348 thousand[44]