Veracyte(VCYT) - 2025 Q2 - Quarterly Results

Executive Summary Veracyte achieved strong Q2 2025 revenue growth and improved adjusted EBITDA, driven by increased test volumes and strategic product launches, despite a GAAP net loss from an impairment charge Second Quarter 2025 Performance Highlights Veracyte achieved significant year-over-year growth in total revenue and testing revenue, driven by increased test volumes for Decipher and Afirma, with adjusted EBITDA showing strong improvement despite a GAAP net loss due to one-time impairment charges Q2 2025 Key Financial and Volume Highlights | Metric | Q2 2025 | Q2 2024 | YoY Change | | :------------------------------------ | :-------------- | :-------------- | :--------- | | Total Revenue | $130.2 million | $114.4 million | +14% | | Testing Revenue | $122.3 million | $107.0 million | +14% | | Total Volume | 44,966 tests | N/A | +15% | | Testing Volume | 42,441 tests | N/A | +18% | | Decipher Revenue | $76.3 million | N/A | +24% | | Afirma Revenue | $43.4 million | N/A | +5% | | Decipher Volume | ~25,500 tests | N/A | +28% | | Afirma Volume | ~16,950 tests | N/A | +8% | | GAAP Net Loss | $1.0 million | $5.7 million (Net Income) | -117% | | Adjusted EBITDA | $35.8 million | $24.0 million | +49% | | Cash from Operations (Q2) | $33.6 million | N/A | N/A | | Cash, Cash Equivalents, Short-term Investments (as of June 30, 2025) | $320.7 million | N/A | N/A | Key Business Developments Veracyte initiated its high-risk and metastatic growth strategy with the full launch of Decipher for metastatic populations, presented extensive clinical data for its Decipher, Afirma, and Prosigna tests, and completed the restructuring of its French entity - Launched Decipher for use in the metastatic population, initiating a high-risk and metastatic growth strategy[4] - Demonstrated utility of Decipher Prostate and Decipher Bladder Genomic Classifiers, as well as Decipher GRID research capabilities, through 29 abstracts and 9 new publications[4] - Completed the French entity restructuring process, including the sale of the Veracyte SAS product manufacturing business and deconsolidation of operations[4] Second Quarter 2025 Financial Results This section details Veracyte's Q2 2025 financial performance, highlighting revenue growth, gross margin improvements, and the impact of an impairment charge on net income Revenue Performance Total revenue increased by 14% year-over-year, primarily driven by a 14% increase in testing revenue from Decipher Prostate and Afirma tests, with biopharmaceutical and other revenue also growing significantly Q2 2025 Revenue Breakdown | Revenue Type | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | | :-------------------------------- | :----------------- | :----------------- | :--------- | | Total Revenue | $130.2 | $114.4 | +14% | | Testing Revenue | $122.3 | $107.0 | +14% | | Product Revenue | $3.6 | $3.9 | -8% | | Biopharmaceutical and other revenue | $4.3 | $3.6 | +21% | Gross Margin and Operating Expenses GAAP gross margin improved to 69% from 68% year-over-year, with non-GAAP gross margin also increasing, while operating expenses rose significantly due to a $20.5 million impairment charge related to the French subsidiary Q2 2025 Gross Margin and Operating Expenses | Metric | Q2 2025 | Q2 2024 | Change | | :------------------------ | :------ | :------ | :----- | | Total Gross Margin (GAAP) | 69% | 68% | +1 p.p. | | Non-GAAP Gross Margin | 72% | 71% | +1 p.p. | | Operating Expenses (GAAP) | $95.0 million | $73.3 million | +$21.7 million | | Non-GAAP Operating Expenses | $60.3 million | $59.0 million | +2% | - Operating expenses for Q2 2025 included a $20.5 million impairment charge due to the partial sale and liquidation proceedings of the French subsidiary[6] Net Income (Loss) and Adjusted EBITDA The company reported a GAAP net loss of $1.0 million, a significant decrease from the prior year's net income, primarily due to the impairment charge, though Adjusted EBITDA surged by 49% to $35.8 million, representing 27.5% of revenue Q2 2025 Net Income (Loss) and Adjusted EBITDA | Metric | Q2 2025 | Q2 2024 | YoY Change | | :------------------------------------ | :-------------- | :-------------- | :--------- | | GAAP Net Loss | $1.0 million | $5.7 million (Net Income) | -117% | | Diluted Net Loss Per Share (GAAP) | $0.01 | $0.07 (EPS) | -$0.08 | | Non-GAAP Diluted Net Earnings Per Share | $0.44 | $0.30 | +$0.14 | | Adjusted EBITDA | $35.8 million | $24.0 million | +49% | | Adjusted EBITDA as % of Revenue | 27.5% | 21.0% | +6.5 p.p. | | Net Cash Provided by Operating Activities (YTD) | $39.0 million | $20.6 million | +$18.4 million | Operational Updates This section outlines significant operational changes, including the restructuring of Marseille operations and its financial implications Marseille Operations Restructuring The Commercial Court of Marseille approved the sale of Veracyte SAS's manufacturing operations to Helio Diagnostics SAS, which closed on August 1, 2025, leading to a $20.5 million impairment charge in Q2 and the deconsolidation of the entity - On July 16, 2025, the Marseille Commercial Court approved the sale of Veracyte SAS's manufacturing operations to Helio Diagnostics SAS, with the sale closing on August 1, 2025[10] - The sale and subsequent liquidation proceedings resulted in a $20.5 million impairment charge on related assets in Q2 and the deconsolidation of the entity as of August 1, 2025[10] Financial Outlook Veracyte updated its full-year 2025 financial guidance, raising testing and total revenue projections and increasing adjusted EBITDA expectations Full-Year 2025 Guidance Veracyte raised its full-year 2025 testing revenue guidance and initiated total revenue guidance, reflecting confidence in continued growth and the resolution of the French subsidiary proceedings, also increasing its guidance for adjusted EBITDA as a percentage of revenue Full-Year 2025 Financial Guidance | Metric | New Full-Year 2025 Guidance | Prior Guidance | YoY Growth | | :-------------------------- | :-------------------------- | :------------- | :--------- | | Testing Revenue | $477 million - $483 million | $470 million - $480 million | 14% - 15% | | Total Revenue | $496 million - $504 million | N/A (initiated) | 11% - 13% | | Adjusted EBITDA as % of Revenue | 23.5% | 22.5% | +1 p.p. | - Adjusting for the paused Envisia test, the testing revenue guidance implies 16% to 17% year-over-year growth[12] Company Information This section provides an overview of Veracyte's diagnostic platform and mission, alongside important cautionary notes on forward-looking statements About Veracyte Veracyte is a global diagnostics company focused on transforming cancer care by providing high-value insights to clinicians through its AI-powered Veracyte Diagnostics Platform, which leverages genomic and clinical data to drive test reimbursement and innovation - Veracyte is a global diagnostics company with a vision to transform cancer care for patients worldwide, empowering clinicians with high-value insights[18] - The Veracyte Diagnostics Platform delivers high-performing cancer tests fueled by broad genomic and clinical data, deep bioinformatic and AI capabilities, and an evidence-generation engine[18] Cautionary Note Regarding Forward-Looking Statements The press release contains forward-looking statements concerning future plans, objectives, and financial expectations, which are subject to risks and uncertainties that could cause actual results to differ materially from projections - This press release contains forward-looking statements regarding plans, objectives, and financial expectations, including those related to Marseille operations and 2025 financial results[19] - Actual results may differ materially due to various risks and uncertainties, including commercialization, reimbursement, business strategy execution, global operations, and macroeconomic factors[19] Non-GAAP Financial Measures This section explains the company's use of non-GAAP financial measures and provides detailed reconciliations to their GAAP equivalents Explanation of Non-GAAP Measures Veracyte uses non-GAAP measures like gross margin, operating expenses, adjusted EBITDA, and EPS to provide useful supplemental information, enable period-over-period comparisons, and align with how management evaluates performance, offering insights into core operating results - Non-GAAP financial measures are used to internally evaluate and analyze financial results, providing investors with useful supplemental information and enabling comparisons[21][22] - These measures are computed by adjusting GAAP figures to remove the impact of certain recurring and non-recurring charges and gains, including amortization of acquired intangibles, acquisition-related expenses, impairment charges, stock-based compensation, and restructuring costs[23] - Beginning in Q2 2024, the non-GAAP policy was changed to exclude all stock-based compensation to align with peers, with prior periods restated[23] Reconciliation of Non-GAAP Measures This section provides detailed reconciliations of GAAP to non-GAAP financial measures for cost of revenue, gross margin, operating expenses, adjusted EBITDA, net income, and earnings per share for the three and six months ended June 30, 2025, and 2024 Reconciliation of GAAP to Non-GAAP Gross Margin (in thousands) | Metric | Three Months Ended June 30, 2025 (GAAP) | Three Months Ended June 30, 2025 (Non-GAAP) | Three Months Ended June 30, 2024 (GAAP) | Three Months Ended June 30, 2024 (Non-GAAP) | | :---------------- | :-------------------------------------- | :------------------------------------------ | :-------------------------------------- | :------------------------------------------ | | Gross Profit | $89,769 | $93,076 | $77,913 | $81,426 | | Gross Margin | 69.0% | 71.5% | 68.1% | 71.2% | Reconciliation of GAAP to Non-GAAP Operating Expenses (in thousands) | Metric | Three Months Ended June 30, 2025 (GAAP) | Three Months Ended June 30, 2025 (Non-GAAP) | Three Months Ended June 30, 2024 (GAAP) | Three Months Ended June 30, 2024 (Non-GAAP) | | :----------------------- | :-------------------------------------- | :------------------------------------------ | :-------------------------------------- | :------------------------------------------ | | Total Operating Expenses | $95,037 | $60,315 | $73,307 | $59,037 | Reconciliation of GAAP to Non-GAAP Net Income and Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2025 (GAAP) | Three Months Ended June 30, 2025 (Non-GAAP) | Three Months Ended June 30, 2024 (GAAP) | Three Months Ended June 30, 2024 (Non-GAAP) | | :-------------------- | :-------------------------------------- | :------------------------------------------ | :-------------------------------------- | :------------------------------------------ | | Net Income (Loss) | $(980) | $34,952 | $5,734 | $23,403 | | Adjusted EBITDA | N/A | $35,776 | N/A | $24,040 | | Diluted EPS | $(0.01) | $0.44 | $0.07 | $0.30 | Condensed Consolidated Financial Statements (GAAP) This section presents Veracyte's condensed consolidated GAAP financial statements, including statements of operations, comprehensive income, balance sheets, and cash flows Statements of Operations The condensed consolidated statements of operations show total revenue of $130.2 million for Q2 2025, a gross profit of $89.8 million, and a net loss of $1.0 million, with detailed stock-based compensation expenses Q2 2025 Condensed Consolidated Statements of Operations (Selected Data, in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | | Total Revenue | $130,164 | $114,428 | | Total Cost of Revenue | $40,395 | $36,515 | | Gross Profit | $89,769 | $77,913 | | Total Operating Expenses | $95,037 | $73,307 | | Income (loss) from operations | $(5,268) | $4,606 | | Net income (loss) | $(980) | $5,734 | | Diluted EPS | $(0.01) | $0.07 | Stock-Based Compensation Expense by Category (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | | Cost of revenue | $608 | $604 | | Research and development | $2,008 | $1,895 | | Selling and marketing | $2,198 | $2,142 | | General and administrative | $6,171 | $5,213 | | Total stock-based compensation expense | $10,985 | $9,854 | Statement of Comprehensive Income (Loss) For Q2 2025, the company reported a net comprehensive income of $15.7 million, significantly higher than the net loss, primarily due to a positive change in currency translation adjustments Q2 2025 Condensed Consolidated Statement of Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net income (loss) | $(980) | $5,734 | | Change in currency translation adjustments | $16,682 | $(1,703) | | Net comprehensive income (loss) | $15,702 | $4,031 | Balance Sheets As of June 30, 2025, Veracyte reported total assets of $1,344.1 million, an increase from December 31, 2024, driven by growth in current assets, particularly short-term investments, while total liabilities remained stable and total stockholders' equity increased Condensed Consolidated Balance Sheets (Selected Data, in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total Assets | $1,344,104 | $1,300,035 | | Total Current Assets | $414,681 | $372,267 | | Cash and cash equivalents | $219,499 | $239,087 | | Short-term investments | $101,220 | $50,354 | | Goodwill | $773,255 | $745,800 | | Total Liabilities | $123,047 | $124,069 | | Total Stockholders' Equity | $1,221,057 | $1,175,966 | Statements of Cash Flows For the first six months of 2025, net cash provided by operating activities significantly increased to $39.0 million, while investing activities resulted in a net cash outflow primarily due to purchases of short-term investments, and financing activities also used cash Condensed Consolidated Statements of Cash Flows (Selected Data, in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $38,967 | $20,609 | | Net cash (used in) provided by investing activities | $(52,042) | $108 | | Net cash used in financing activities | $(7,050) | $(875) | | Cash, cash equivalents and restricted cash at end of period | $221,153 | $237,003 |