Veracyte Q3 Earnings Beat Estimates, 2024 Guidance Raised

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]