Veracyte(US:VCYT)2022-08-03 12:01Business Expansion and Acquisitions - Veracyte reported a significant expansion in its genomic testing menu with the acquisition of Decipher Biosciences, enhancing capabilities in urologic cancers [122]. - The acquisition of HalioDx in August 2021 allowed Veracyte to manufacture its own IVD test kits, strengthening its position in immuno-oncology [123]. - The integration of acquired assets from Decipher Biosciences and HalioDx may impact revenue growth and operational results as functions are consolidated [130]. Financial Performance - Total revenue for the three months ended June 30, 2022, was $72.864 million, representing a 32% increase compared to $55.105 million in the same period of 2021 [155]. - Testing revenue increased by 18% to $59.718 million for the three months ended June 30, 2022, compared to $50.793 million in the same period of 2021 [155]. - Biopharmaceutical and other revenue surged by 518% to $10.038 million for the three months ended June 30, 2022, compared to $1.624 million in the same period of 2021 [155]. - The company reported a net loss of $9.532 million for the three months ended June 30, 2022, a 5% increase from a net loss of $9.038 million in the same period of 2021 [155]. - The company recorded a net loss of $24.0 million for the six months ended June 30, 2022, with an accumulated deficit of $381.2 million as of the same date [174]. Testing Volume and Revenue - Total test volume increased by 19% to 24,904 tests for the three months ended June 30, 2022, compared to 20,856 tests in the same period of 2021 [155]. - Revenue increased by $17.8 million for the three months ended June 30, 2022, primarily due to a $8.9 million increase in testing revenue driven by a 19% volume increase in diagnostic tests [157]. - For the six months ended June 30, 2022, revenue increased by $48.8 million, with a $31.8 million increase in testing revenue driven by a 40% volume increase in diagnostic tests [158]. Expenses and Costs - Research and development expenses rose by 50% to $9.377 million for the three months ended June 30, 2022, compared to $6.249 million in the same period of 2021 [155]. - Selling and marketing expenses increased by 22% to $24.001 million for the three months ended June 30, 2022, compared to $19.662 million in the same period of 2021 [155]. - General and administrative expenses increased by $4.3 million (28%) for the three months ended June 30, 2022, compared to the same period in 2021, primarily due to compensation related to the acquisition of HalioDx and headcount additions [168]. - Compensation expense in research and development increased by 44% for the three months ended June 30, 2022, reflecting higher headcount and annual compensation increases [163]. Cash Flow and Financial Position - Cash used in operating activities for the six months ended June 30, 2022, was $9.2 million, a significant decrease from $38.7 million in the same period in 2021 [182]. - Cash used in investing activities for the six months ended June 30, 2022, was $11.8 million, compared to $574.1 million in the same period in 2021, which included the acquisition of Decipher Biosciences [186]. - Cash provided by financing activities for the six months ended June 30, 2022, was $1.9 million, a sharp decline from $592.9 million in the same period in 2021, which was primarily from a public offering [188]. - The company expects its existing cash and cash equivalents of $164.0 million as of June 30, 2022, to be sufficient to meet anticipated cash requirements for at least the next 12 months [175]. Market and Operational Challenges - The company has faced challenges in test volumes due to COVID-19, particularly affecting tests that require hospital procedures, such as Percepta and Envisia [125]. - Veracyte's Decipher Prostate test remained resilient during the pandemic, primarily due to its customer base being community-based urology practices [125]. - The company is facing inflation headwinds in compensation, travel, and supply costs, but does not believe inflation has materially affected its business or financial condition [194]. Research and Development - The company expects significant research and development expenses as it continues to invest in developing additional products and evaluating various platforms [148]. - The operations of HalioDx contributed approximately $8.8 million to the cost of biopharmaceutical and other revenue for the six months ended June 30, 2022 [162]. - Research and development expenses rose by $3.1 million, or 50%, for the three months ended June 30, 2022, with HalioDx operations contributing approximately $2.2 million to this increase [163]. Reimbursement and Revenue Recognition - Revenue growth is contingent on securing broader reimbursement from third-party payers and expanding the base of prescribing physicians [129]. - The average reimbursement rates for tests are subject to change based on payer coverage decisions and contractual agreements [137]. - Veracyte's testing revenue is recognized upon completion of tests, with billing occurring at the time results are delivered [133].