Veracyte Announces Fourth Quarter and Full Year 2024 Financial Results

Grew fourth quarter total revenue to $118.6 million, an increase of 21%

Grew fourth quarter testing revenue to $112.2 million, an increase of 24%

Conference call and webcast today at 4:30 p.m. ET

Veracyte, Inc. (NASDAQ:VCYT) today announced financial results for the fourth quarter and full year ended December 31, 2024.

"I'm incredibly proud of what our team accomplished in 2024," said Marc Stapley, Veracyte's chief executive officer. "We ended the year with exceptional performance, delivering record revenue in Q4 and achieving our 10th consecutive quarter of 20% or greater testing revenue growth. Looking ahead to 2025, we see significant opportunities for Decipher and Afirma to impact more patients and drive growth for Veracyte. We are focused on moving forward with our exciting portfolio of strategic growth drivers while maintaining the financial discipline that has been core to our success."

Key Fourth Quarter 2024 Financial Highlights

For the three-month period ended December 31, 2024, as compared to the same period in 2023:

• Increased total revenue by 21% to $118.6 million and testing revenue by 24% to $112.2 million.
• Increased total volume by 22% to 41,271 tests and testing volume by 25% to 39,107 tests.
• Grew Decipher revenue by 44% and Afirma revenue by 4%.
• Grew Decipher volume by 45% to more than 22,400 tests and Afirma volume by 8% to more than 16,300 tests.
• Increased net income to $5.1 million, or 4.3% of revenue, and delivered adjusted EBITDA of $26.1 million, or 22.0% of revenue.
• Generated $24.5 million of cash from operations.

Key Full Year 2024 Financial Highlights

For the twelve-month period ended December 31, 2024, as compared to the same period in 2023:

• Increased total revenue by 23% to $445.8 million and testing revenue by 28% to $419.0 million.
• Increased total volume by 20% to 152,750 tests and testing volume by 23% to 142,925 tests.
• Grew Decipher revenue by 43% and Afirma revenue by 14%.
• Grew Decipher volume by 36% to more than 80,000 tests and Afirma volume by 12% to more than 60,000 tests.
• Increased net income to $24.1 million, or 5.4% of revenue, and delivered adjusted EBITDA of $91.9 million, or 20.6% of revenue.
• Generated $75.1 million of cash from operations to end the year with $289.4 million of cash, cash equivalents and short-term investments.

Key Business Highlights

• Through Level I evidence for the 22-Gene Genomic Classifier (GC) (Decipher), secured its position as the only gene expression test included in V1.2025 of the NCCN Clinical Practice Guidelines in Oncology (NCCN Guidelines®) for Prostate Cancer published in December 2024.¹
• Received approval from Molecular Diagnostic Services Program (MolDx) for the technical assessment submission for Decipher for use in the metastatic population.
• Announced 17 Decipher-focused abstracts to be presented at the 2025 ASCO GU Symposium demonstrating the power of the Veracyte diagnostics platform and Veracyte's commitment to continued leadership in supporting clinical research around urologic cancers.
• Published our 2024 Environmental, Social and Governance Report.

Fourth Quarter 2024 Financial Results

Total revenue for the fourth quarter of 2024 was $118.6 million, an increase of 21% compared to $98.2 million reported in the fourth quarter of 2023. Testing revenue was $112.2 million, an increase of 24% compared to $90.4 million in the fourth quarter of 2023, driven by the strong performance of our Decipher and Afirma tests. Product revenue was $3.0 million, a decrease of 18% compared to $3.7 million in the fourth quarter of 2023. Biopharmaceutical and other revenue was $3.5 million, a decrease of 17% compared to $4.1 million in the fourth quarter of 2023.

Total gross margin for the fourth quarter of 2024 was 66.4%, compared to 66.0% in the fourth quarter of 2023. Non-GAAP gross margin was 69.3%, compared to 70.6% in the fourth quarter of 2023.

Operating expenses were $74.6 million for the fourth quarter of 2024. Non-GAAP operating expenses were $57.9 million, flat compared to $57.9 million in the fourth quarter of 2023.

Net income for the fourth quarter of 2024 was $5.1 million, an improvement of 118% compared to the fourth quarter of 2023, representing 4.3% of revenue compared to (28.8%) in the same period in 2023. Diluted net earnings per common share was $0.06, an improvement of $0.45 compared to the fourth quarter of 2023. Non-GAAP diluted net earnings per common share was $0.36, an improvement of $0.15 compared to the fourth quarter of 2023. Net cash provided by operating activities in the fourth quarter of 2024 was $24.5 million, an improvement of $9.0 million compared to the same period in 2023.

Adjusted EBITDA for the fourth quarter of 2024 was $26.1 million, an improvement of 76% compared to the fourth quarter of 2023, representing 22.0% of revenue compared to 15.1% of revenue in the same period of 2023.

Full Year 2024 Financial Results

Total revenue for 2024 was $445.8 million, an increase of 23% compared to $361.1 million in 2023. Testing revenue was $419.0 million, an increase of 28% compared to $326.5 million in 2023, driven by the strong performance of our Decipher and Afirma tests. Product revenue was $13.7 million, a decrease of 12% compared to $15.6 million in 2023. Biopharmaceutical and other revenue was $13.2 million, a decrease of 30% compared to $18.9 million in 2023.

Total gross margin for the full year 2024 was 66.9%, compared to 63.6% in 2023. Non-GAAP gross margin was 70.0%, compared to 69.3% in 2023.

Operating expenses were $282.0 million for the full year 2024. Non-GAAP operating expenses grew 7% to $227.6 million compared to $212.5 million in 2023.

Net income for the full year 2024 was $24.1 million, an improvement of 132% compared to 2023, representing 5.4% of revenue compared to (20.6%) in 2023. Diluted net earnings per common share was $0.31, an improvement of $1.33 compared to 2023. Non-GAAP diluted net earnings per common share was $1.19, an improvement of $0.61 compared to 2023. Net cash provided by operating activities in 2024 was $75.1 million, an improvement of $30.9 million compared to 2023.

Adjusted EBITDA for the full year 2024 was $91.9 million, an improvement of 102% compared to 2023, representing 20.6% of revenue compared to 12.6% of revenue in 2023.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included in this press release. An explanation of these measures is also included below under the heading "Note Regarding Use of Non-GAAP Financial Measures."

Update on Marseille Operations

Veracyte is evaluating its ownership and operations of the company's French subsidiary, Veracyte SAS, whose business is located in Marseille, France and includes Veracyte's immune-oncology biopharma business, contract development and manufacturing, and support for Veracyte's IVD development and manufacturing. Veracyte recently notified Veracyte SAS that, as sole shareholder of Veracyte SAS, it is considering no longer funding the French entity. Accordingly, Veracyte SAS will engage with its works council, as is required by French law, over the next few months.

Seeking external buyer(s) for a potential divestiture of all or part of the French entity's activities is an option that is actively being explored. Without Veracyte Inc.'s continued funding or identification of a buyer for all or part of the Veracyte SAS assets, Veracyte SAS may be required to begin bankruptcy proceedings following its works council consultation period.

Management will provide further details on this process and its potential impact on Veracyte's 2025 financial outlook during the conference call this afternoon.

2025 Financial Outlook

The company expects 2025 testing revenue to be in the range of $470 million to $480 million, or 12% to 15% year-over-year growth. Adjusting for the impact of the paused Envisia test, the guidance implies testing revenue growth of 14% to 16%. Given the number of variables impacting its Marseille, France operations, the company is not providing total company revenue guidance at this time and expects to provide its total revenue outlook for 2025 once there is more clarity on the timing and impact of the process underway.

The company also expects adjusted EBITDA as a percentage of revenue in 2025 to be approximately 21.6% compared to 20.6% in 2024.

The company is unable to provide a quantitative reconciliation of expected adjusted EBITDA as a percentage of revenue to the most directly comparable forward-looking GAAP measure, without unreasonable effort, because of the inherent difficulty in accurately forecasting the occurrence and financial impact of the various adjusting items necessary for such reconciliations that have not yet occurred, that are dependent on various factors, are out of the company's control, or that cannot be reasonably predicted. Such adjustments include, but are not limited to, acquisition related expenses, and other adjustments. Any associated estimate of these items and their impact on GAAP performance for the guidance period could vary materially. For more information on the non-GAAP financial measures, please refer to the section titled "Note Regarding Use of Non-GAAP Financial Measures" at the end of this press release.

Conference Call and Webcast Details

Veracyte will host a conference call and webcast today at 4:30 p.m. Eastern Time to discuss the company's financial results and provide a general business update. The conference call will be webcast live from the company's website and will be available via the following link: https://edge.media-server.com/mmc/p/8em9yd38. The webcast should be accessed 10 minutes prior to the conference call start time. A replay of the webcast will be available for one year following the conclusion of the live broadcast and will be accessible on the company's website at https://investor.veracyte.com/events-presentations.

The conference call dial-in can be accessed by registering at the following link: https://register.vevent.com/register/BId0a04e7e33824346ad0b7e5eb4eb2525.

About Veracyte

Veracyte (NASDAQ:VCYT) is a global diagnostics company whose vision is to transform cancer care for patients all over the world. We empower clinicians with the high-value insights they need to guide and assure patients at pivotal moments in the race to diagnose and treat cancer. Our Veracyte Diagnostics Platform delivers high-performing cancer tests that are fueled by broad genomic and clinical data, deep bioinformatic and AI capabilities, and a powerful evidence-generation engine, which ultimately drives durable reimbursement and guideline inclusion for our tests, along with new insights to support continued innovation and pipeline development. For more information, please visit www.veracyte.com or follow us on LinkedIn or X (Twitter).

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to our statements related to our plans, objectives, and expectations (financial and otherwise), including with respect to our Marseille, France operations; 2025 and 2026 financial and operating results; and our intentions with respect to our tests and products, for use in diagnosing and treating diseases, in and outside of the United States. Forward-looking statements can be identified by words such as: "appears," "anticipate," "intend," "plan," "expect," "believe," "should," "may," "could," "would," "will," "enable," "positioned," "offers," "designed," "ultimately," "strategic," "outlook," "guidance" and similar references to future periods. Actual results may differ materially from those projected or suggested in any forward-looking statements. These statements involve risks and uncertainties, which could cause actual results to differ materially from our predictions, and include, but are not limited to: our ability to launch, commercialize and receive reimbursement for our products; our ability to execute on our business strategies relating to the C2i Genomics acquisition, integration of the business and the realization of expected benefits and synergies; our ability to demonstrate the validity and utility of our genomic tests and biopharma and other offerings; our ability to continue executing on our business plan; our ability to continue to scale our global operations and enhance our internal control environment; the impact of the war in Ukraine and other regional conflicts on European economies and our facilities in France; the impact of foreign currency fluctuations, volatile interest rates, inflation, the new U.S. administration and turmoil in the global banking and finance system; the ongoing conflicts in Russia and Ukraine and in the Middle East and the performance and utility of our tests in the clinical environment. Additional factors that may impact these forward-looking statements can be found under the caption "Risk Factors" in our Annual Report on Form 10-K filed on February 29, 2024, and our subsequent Quarterly Reports on Form 10-Q, as well as in other documents that we may file from time to time with the Securities and Exchange Commission. Copies of these documents, when available, may be found in the Investors section of our website at investor.veracyte.com. These forward-looking statements speak only as of the date hereof and, except as required by law, we specifically disclaim any obligation to update these forward-looking statements or reasons why actual results might differ, whether as a result of new information, future events or otherwise.

Veracyte, the Veracyte logo, Decipher, C2i Genomics, and Afirma are registered trademarks of Veracyte, Inc., and its subsidiaries in the U.S. and selected countries.

Note Regarding Use of Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release and the accompanying tables contain, and reference certain non‐GAAP results including non-GAAP gross margin, non-GAAP operating expenses, adjusted EBITDA, adjusted EBITDA as a percentage of revenue, non-GAAP net income, non-GAAP earnings per share (EPS) and non-GAAP weighted average shares outstanding. These non-GAAP financial measures are not meant to be considered superior to or a substitute for financial measures calculated in accordance with GAAP, and investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool.

We use non-GAAP financial measures to internally evaluate and analyze financial results. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures. However, the non-GAAP financial measures we present may be different from those used by other companies, including similarly titled measures.

We compute these non-GAAP measures by adjusting the applicable GAAP measure to remove the impact of certain recurring and non-recurring charges and gains and to adjust for the impact of income tax items related to such adjustments to our GAAP financial statements. In particular, we exclude amortization of acquired intangible assets, acquisition-related expenses relating to our acquisitions of Decipher Biosciences, HalioDx and C2i Genomics, impairment charges associated with the nCounter license and other biopharmaceutical services related to HalioDx intangible assets, all stock-based compensation and certain costs related to restructuring from all of our non-GAAP financial measures, as well as depreciation and income tax items from our adjusted EBITDA and adjusted EBITDA as a percentage of revenue. Beginning in the second quarter of 2024, we changed our non-GAAP policy to exclude all stock-based compensation to align with our peers and we have also excluded all stock-based compensation from our prior period non-GAAP financial measures. Management has excluded the effects of these items in non-GAAP financial measures to help investors gain a better understanding of the core operating results and future prospects of the company, consistent with how management measures and forecasts the company's performance, especially when comparing such results to previous periods or forecasts. The company encourages investors to carefully consider its results under GAAP, together with its supplemental non‐GAAP information and the reconciliation between these presentations. See "Reconciliation of U.S. GAAP to Non-GAAP Financial Measures" for a reconciliation of each non-GAAP measure presented to the comparable GAAP financial measure.

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