Core Insights - Veracyte reported third-quarter 2024 earnings of 19 cents per share, a significant improvement from a loss of 3 cents per share in the same period last year, exceeding the Zacks Consensus Estimate by 850% [1] - The company adjusted earnings per share (EPS) were 33 cents, reflecting a 94.1% year-over-year improvement [1] Revenue Performance - Revenues increased by 28.6% year over year to $115.9 million, surpassing the Zacks Consensus Estimate by 5.8% [2] - Testing revenues totaled $109.5 million, up 34% year over year, driven by Decipher and Afirma revenue growth of 48% and 19%, respectively [3] - Product revenues fell by 21% year over year to $3.2 million, with testing volume down 21% to approximately 2,200 tests due to supply challenges [3] - Biopharmaceutical and other revenues decreased by 23% to $3.1 million, attributed to overall spending constraints across the industry [4] Margin Analysis - Total cost of revenues increased by 22.9% year over year to $33.9 million, while gross profit rose by 31.1% to $81.9 million, leading to a gross margin expansion of 135 basis points to 70.7% [5] - Selling and marketing expenses decreased by 7.1% to $22.6 million, while general and administrative expenses increased by 57.6% to $25.7 million [6] - R&D expenses totaled $17.6 million, up 31.9% year over year, resulting in an operating profit of $15.9 million, an 88.3% increase year over year, with an operating margin expansion of 438 basis points to 13.8% [6] Cash and Guidance - Veracyte ended the third quarter with cash and cash equivalents of $274.1 million, up from $235.9 million at the end of the second quarter of 2024 [7] - The company raised its 2024 revenue guidance to a range of $442-$445 million, reflecting a year-over-year growth of 22-23% [8] - Testing revenue growth is now expected to be approximately 28%, up from the previous estimate of 25% [8] - Cash, cash equivalents, and short-term investments at the end of 2024 are now expected to be between $280 million and $285 million, an increase from prior guidance [9] Overall Assessment - Veracyte's third-quarter results exceeded expectations, with strong growth from Decipher Prostate and Afirma tests, achieving a new quarterly volume record [10] - Despite declines in product and biopharmaceutical revenues due to supply issues and industry constraints, margin expansion and raised revenue guidance provide optimism [11]

Revenue and Growth - Revenue primarily derived from Decipher Prostate and Afirma tests, with Medicare contributing 31% and UnitedHealthcare 13% for the three months ended September 30, 2024[115]. - Testing revenue increased by $27.5 million (34%) for the three months ended September 30, 2024, driven by a 24% volume increase and an 8% average selling price increase[129]. - Total revenue for the three months ended September 30, 2024, was $115.9 million, a $25.8 million (29%) increase compared to the same period in 2023[128]. - For the nine months ended September 30, 2024, total revenue increased by $64.3 million (24%) to $327.1 million, primarily due to a $70.7 million increase in testing revenue[130]. - The company aims to expand its base of prescribing physicians and increase penetration in existing accounts to drive revenue growth[100]. Expenses and Costs - Research and development expenses are significant and can vary substantially by quarter due to clinical trial timing and sample acquisition[114]. - General and administrative expenses increased by $9.4 million (58%) to $25.7 million for the three months ended September 30, 2024[128]. - Research and development expenses for the three months ended September 30, 2024, were $17.6 million, a $4.3 million (32%) increase compared to the same period in 2023[128]. - Cost of testing revenue increased by $7.2 million, or 33%, for the three months ended September 30, 2024, and by $18.1 million, or 28%, for the nine months ended September 30, 2024, due to increased testing volume and higher staffing[133][134]. - Selling and marketing expense decreased by $1.7 million, or 7%, for the three months ended September 30, 2024, and by $5.6 million, or 7%, for the nine months ended September 30, 2024, primarily due to reduced sales support for the Envisia product[141][142]. Profitability - The company reported a net income of $15.2 million for the three months ended September 30, 2024, compared to a net loss of $29.6 million in the same period in 2023[128]. - Gross profit for the three months ended September 30, 2024, was $79.0 million, reflecting a $21.3 million (37%) increase from the prior year[128]. Cash Flow and Liquidity - Cash provided by operating activities for the nine months ended September 30, 2024, was $50.6 million, compared to $28.7 million in the same period of 2023[159]. - As of September 30, 2024, the company had cash and cash equivalents of $274.1 million, an increase of $57.6 million during the nine months[152]. - Cash used in investing activities for the nine months ended September 30, 2024, was $2.1 million, primarily for the purchase of property, plant, and equipment[162]. Market and Economic Conditions - The company operates in a challenging macroeconomic environment, with potential impacts from inflation and currency fluctuations[97]. - The company is exposed to market risks primarily related to interest rates and foreign currency[166][167]. - Inflation has not had a material effect on the company's business, financial condition, or operating results to date[168]. - The company faces inflation headwinds in compensation, travel, supply, and inventory costs[168]. Acquisitions and Investments - The company acquired C2i in February 2024 to enhance its role in the cancer patient journey, focusing on monitoring treatment success[96]. - The company expects to incur significant expenses as it invests in the continued development of its innovation engine and early-stage products[121]. - The company expects to pay up to an additional $25.0 million in contingent consideration related to the C2i Acquisition, with $5.0 million forecasted to be paid within the next 12 months[156]. Accounting and Estimates - There have been no material changes to the company's critical accounting policies and estimates compared to the previous Annual Report[165]. - The company believes that its accounting policies are critical to understanding its historical and future performance[165]. - The company’s estimates and assumptions are based on historical experience and other reasonable factors[165].

Financial Data and Key Metrics Changes - Q3 2024 revenue totaled $115.9 million, a 29% year-over-year increase, driven by testing revenue growth of 34% [6][32] - Total testing volume increased to approximately 39,000 tests, a 20% increase compared to the same period in 2023 [32] - Non-GAAP gross margin was 71%, up approximately 130 basis points year-over-year, while testing gross margin was 74%, up approximately 10 basis points [35] Business Line Data and Key Metrics Changes - Decipher testing revenue grew by 48% year-over-year, with a record 21,250 tests delivered, up 36% year-over-year [32][8] - Afirma testing revenue increased by 19%, with close to 15,100 tests delivered, up 12% from the prior year [32][19] - Product revenue was $3.2 million, down 21% year-over-year due to ongoing supply challenges [34] Market Data and Key Metrics Changes - The NCCN guidelines have positively impacted Decipher's adoption across all localized risk categories, driving growth among existing and new physicians [49] - The market for Decipher is expected to expand with the addition of the metastatic indication, potentially adding 30,000 new patients annually [72] Company Strategy and Development Direction - The company aims to expand Decipher's market size and penetration while continuing strong growth for Afirma [22] - Long-term growth drivers include launching IVD products globally, expanding into minimal residual disease testing, and addressing new cancer challenges [23] - The decision to pause the Envisia CLIA test reflects a strategic focus on more promising growth areas [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering robust revenue growth in the near and mid-term, supported by strong demand for Decipher and Afirma [22] - The company raised its 2024 total revenue guidance to $442 million to $445 million, reflecting improved outlook for the testing business [38] - Management highlighted the importance of generating clinical evidence to drive guideline inclusion and reimbursement for Decipher [9][92] Other Important Information - The company generated $38 million in cash during Q3, ending the quarter with $274.1 million in cash and cash equivalents [37] - The company plans to launch an MRD test in muscle invasive bladder cancer in the first half of 2026 [26] Q&A Session Summary Question: Future growth and strategic direction - Management indicated that the focus will remain on existing successful products while continuing to invest in strategic initiatives for long-term growth [46] Question: Drivers of Decipher's growth - Growth is attributed to consistent adoption across risk categories and the impact of NCCN guidelines, with both new and existing physicians increasing usage [48] Question: 2025 growth expectations - Management noted that while specific numbers for 2025 are not yet available, they expect continued growth driven by Decipher's expansion into the metastatic market [56] Question: Product revenue decline - The decline in product revenue is partly intentional as the company manages demand amid supply chain challenges [78] Question: Impact of clinical studies on Decipher - Management emphasized the importance of clinical studies like STAMPEDE in driving guideline inclusion and adoption of Decipher [92]

Group 1 - Veracyte reported quarterly earnings of $0.19 per share, significantly exceeding the Zacks Consensus Estimate of $0.02 per share, and compared to a loss of $0.03 per share a year ago, representing an earnings surprise of 850% [1] - The company achieved revenues of $115.86 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 5.81%, and this is an increase from year-ago revenues of $90.11 million [2] - Veracyte has consistently surpassed consensus EPS estimates over the last four quarters, indicating strong performance [2] Group 2 - The stock has gained approximately 30.6% since the beginning of the year, outperforming the S&P 500's gain of 21.2% [3] - The future performance of Veracyte's stock will depend on management's commentary during the earnings call and the company's earnings outlook [4][6] - The current consensus EPS estimate for the upcoming quarter is $0.07 on revenues of $116.31 million, and for the current fiscal year, it is $0.16 on revenues of $437.08 million [7] Group 3 - The Medical - Instruments industry, to which Veracyte belongs, is currently ranked in the top 36% of over 250 Zacks industries, suggesting a favorable outlook for the sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor decisions [5]

Financial Performance - Total revenue for Q3 2024 reached $115.9 million, a 29% increase compared to $90.1 million in Q3 2023[5] - Testing revenue grew to $109.5 million, marking a 34% increase from $82.0 million in Q3 2023[5] - Net income for Q3 2024 was $15.2 million, an improvement of 151% year-over-year[7] - Adjusted EBITDA for Q3 2024 was $27.3 million, representing 24% of revenue, up from 14% in Q3 2023[8] - Total revenue for the three months ended September 30, 2024, was $115,860, a 28.6% increase from $90,108 in the same period of 2023[17] - Net income for the three months ended September 30, 2024, was $15,155, a significant improvement from a net loss of $29,618 in the same period of 2023[19] - Non-GAAP Net Income for the nine months ended September 30, 2024, was $64,019,000, compared to $28,046,000 for the same period in 2023, reflecting a growth of about 128%[24] Revenue Guidance and Growth - The company raised its full-year 2024 total revenue guidance to $442 million to $445 million, reflecting year-over-year growth of 22% to 23%[8] - Decipher revenue increased by 48% to approximately 21,250 tests, while Afirma revenue grew by 19% to close to 15,100 tests compared to Q3 2023[3] Cash and Assets - Cash generated from operations in Q3 2024 was $30.0 million, ending the quarter with $274.1 million in cash and cash equivalents[3] - Cash and cash equivalents increased to $274,079 as of September 30, 2024, up from $216,454 at the end of 2023, representing a 26.6% increase[20] - Total assets as of September 30, 2024, were $1,275,021, an increase from $1,114,906 at the end of 2023, representing a 14.4% growth[20] Operating Expenses - Operating expenses for Q3 2024 were $67.0 million, with non-GAAP operating expenses growing 11% to $57.6 million[6] - Operating expenses for the three months ended September 30, 2024, totaled $66,993, down from $89,426 in the same period of 2023, indicating a 25% reduction[17] - Non-GAAP total operating expenses for the three months ended September 30, 2024, were $57,642,000, compared to $51,751,000 for the same period in 2023, showing an increase of 11.0%[23] Profitability Metrics - Total gross margin for Q3 2024 was 68%, compared to 64% in Q3 2023[6] - GAAP gross profit for the three months ended September 30, 2024, was $79,010,000, compared to $57,687,000 for the same period in 2023, resulting in a 37.0% increase[22] - Non-GAAP gross margin improved to 71% for the three months ended September 30, 2024, compared to 70% for the same period in 2023[23] Research and Development - Research and development expenses for the nine months ended September 30, 2024, were $50,004, compared to $38,632 for the same period in 2023, marking a 29.3% increase[17] - The company is focused on expanding clinical evidence for Decipher Prostate and enhancing its strategic growth drivers[4] Stock and Acquisitions - The company completed the acquisition of C2i, resulting in a cash outflow of $5,012 during the nine months ended September 30, 2024[21] - Acquisition-related expenses for Q3 2024 were $75,000, while the previous year reported a benefit of $(4,581,000), indicating a shift in expense recognition[24] Future Outlook - Future outlook includes continued investment in new technologies and potential market expansions following recent acquisitions[25] - The company is focusing on a multi-platform IVD strategy, which has influenced its financial adjustments and performance metrics[25]

Veracyte's (VCYT) progress with the three long-term growth drivers exhibits robust growth potential for the upcoming quarters. The record volume growth of the Decipher Prostrate test instills optimism, supported by the distinct recognition from the NCCN (National Comprehensive Cancer Network). The Afirma GRID offering can help the company extend its reach into the endocrinology market. Meanwhile, declining biopharma revenues and macroeconomic issues are worries for Veracyte. In the past year, this Zacks Ran ...

A month has gone by since the last earnings report for Veracyte (VCYT) . Shares have added about 9.2% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Veracyte due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. Veracyte's Q2 Earnings Top Estimates,'24 Sales View Up Ver ...

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After reaching an important support level, Veracyte, Inc. (VCYT) could be a good stock pick from a technical perspective. VCYT recently experienced a "golden cross" event, which saw its 50-day simple moving average breaking out above its 200-day simple moving average. There's a reason traders love a golden cross -- it's a technical chart pattern that can indicate a bullish breakout is on the horizon. This kind of crossover is formed when a stock's short-term moving average breaks above a longer-term moving ...

Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both. Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor. Zacks Premium also includes the Zacks Style Scores. What are the Zacks Style Scores? The Zacks Style ...