Grew Total Revenue to $90.1 million, an
Increase of 19% Grew Testing Revenue by 27%
Conference Call and Webcast Today at 4:30 p.m.
ET
Veracyte, Inc. (Nasdaq: VCYT) today announced financial results
for the third quarter ended September 30, 2023.
“I am pleased to share we delivered another quarter of strong
revenue growth, fueled by continued demand for our Decipher
Prostate and Afirma tests,” said Marc Stapley, Veracyte’s chief
executive officer. “These products are serving a critical unmet
need for patients dealing with prostate and thyroid cancer,
indications for which we believe there remains ample opportunity to
fuel outsized, long-term growth.”
Key Business Highlights
- Increased third quarter total revenue by 19% to $90.1 million,
compared to the third quarter of 2022.
- Grew total test volume to 32,544, an increase of 23% compared
to the third quarter of 2022.
- Presented 13 abstracts for our diagnostic tests and
capabilities, as well as our biopharmaceutical offerings, at
leading medical conferences. These included an oral presentation,
at the American Society for Radiation Oncology (ASTRO) annual
meeting, of findings from a phase 3, randomized trial demonstrating
the Decipher Prostate Genomic Classifier’s performance as a tool to
help guide therapeutic decisions for patients with prostate
cancer.
- Published study findings in JCO Precision Oncology, which
suggest the potential of Decipher Genomic Resource for Intelligent
Discovery (GRID)-derived gene signatures to predict treatment
response in patients with recurrent prostate cancer.
- Unveiled the Afirma GRID, a new research-use-only tool that
leverages Veracyte’s Afirma-based whole-transcriptome sequencing
platform to help identify new molecular hallmarks of thyroid
nodules and cancer.
- Entered into a multi-year in vitro diagnostic agreement with
Illumina to broaden availability of our tests for patients globally
by offering them on Illumina’s NextSeq 550Dx next-generation
sequencing instrument.
- Further strengthened the Veracyte leadership team with the
additions of Phil Febbo, M.D., as chief scientific officer and
chief medical officer and Marie-Claire Taine, Ph.D., as GM, IVD
Business Unit.
- Generated $14.2 million of cash from operations and ended the
third quarter with $202.5 million of cash and cash
equivalents.
Third Quarter 2023 Financial Results
Total revenue for the third quarter of 2023 was $90.1 million,
an increase of 19% compared to $75.6 million reported in the third
quarter of 2022. Testing revenue was $82.0 million, an increase of
27% compared to $64.6 million in the third quarter of 2022, driven
primarily by the strong performance of our Decipher Prostate and
Afirma tests. Product revenue was $4.0 million, an increase of 21%
compared to $3.3 million in the third quarter of 2022.
Biopharmaceutical and other revenue was $4.1 million, a decrease of
47% compared to $7.7 million in the third quarter of 2022.
Total gross margin for the third quarter of 2023, including the
amortization of acquired intangible assets, was 64%, compared to
59% in the third quarter of 2022. Non-GAAP gross margin, excluding
the amortization of acquired intangible assets and other
acquisition related expenses was 69%, compared to 66% in the third
quarter of 2022.
Operating expenses, excluding cost of revenue, were $89.4
million, which included an impairment charge of $34.9 million
associated with the nCounter Analysis System license given the
company’s decision to move to a multi-platform strategy for its IVD
tests. Non-GAAP operating expenses, excluding cost of revenue,
amortization of acquired intangible assets, other acquisition
related expenses and other restructuring costs, grew 13% to $57.7
million compared to $51.1 million in the third quarter of 2022.
Net loss for the third quarter of 2023 was $29.6 million, an
increase of 240% compared to the third quarter of 2022, primarily
related to the impairment charge. Basic and diluted net loss per
common share was $0.41, an increase of $0.29 compared to the third
quarter of 2022. Net cash provided by operating activities in the
first nine months of 2023 was $28.7 million, an improvement of
$30.9 million compared to the same period in 2022.
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."
2023 Financial Outlook
The company is raising full-year 2023 total revenue guidance to
$352 million to $354 million, representing year-over-year growth of
approximately 19%, and an improvement compared to prior guidance of
$342 million to $350 million.
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/e88ivgzk.
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/BI6a0979098d6445eba9396420f175fc44
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 high-performing tests enable
clinicians to make more confident diagnostic, prognostic and
treatment decisions for some of the most challenging diseases such
as thyroid, prostate, breast, bladder and lung cancers, as well as
interstitial lung diseases. We help patients avoid unnecessary
procedures and speed time to diagnosis and appropriate treatment.
In addition to making our tests available in the U.S. through our
central laboratories, we also aim to deliver our tests to patients
worldwide through a distributed model to laboratories that can
perform them locally. For more information, please visit
www.veracyte.com and follow the company on Twitter (@veracyte).
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements,
including, but not limited to, our statements related to our
expected total revenue and other financial and operating results
for 2023 and our plans, objectives, expectations (financial and
otherwise) or intentions with respect to our tests and products,
for use in diagnosing and treating diseases, and our commercial
organization. Forward-looking statements can be identified by words
such as: “appears,” "anticipate," "intend," "plan," "expect,"
"believe," "should," "may," "will," “positioned,” “designed” 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;
to demonstrate the validity and utility of our genomic tests and
biopharma offerings; to continue to integrate and expand the
HalioDx and Decipher businesses and execute on our business plans;
to continue to scale our global operations and enhance our internal
control environment; the impact of the war in Ukraine on European
economies and energy supply and other regional conflicts, as well
as our facilities in France; the impact of the COVID-19 pandemic
and its variants on our business and general economic conditions;
the impact of foreign currency fluctuations, increasing interest
rates, inflation, potential government shutdowns and turmoil in the
global banking and finance system; 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
March 1, 2023, and our Quarterly Report on Form 10-Q for the three
months ended September 30, 2023 to be filed 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, Afirma, Percepta,
Envisia, Prosigna, Lymphmark, TMExplore, Brightplex, Immunosign,
“Know by Design” and “More about You” are registered trademarks of
Veracyte, Inc. and its subsidiaries in the U.S. and selected
countries. Immunoscore IC® is a trademark of Veracyte SAS
registered in France. Immunoscore is a registered trademark of
Inserm used by Veracyte under license. nCounter is the registered
trademark of NanoString Technologies used by Veracyte under
license.
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, and non-GAAP loss from operations. These
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 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
measures we present may be different from those used by other
companies.
We exclude amortization of acquired intangible assets,
acquisition-related expenses relating to our acquisitions of
Decipher Biosciences and HalioDx, impairment charges associated
with the nCounter license intangible assets and certain costs
related to restructuring from certain of our non-GAAP measures.
Management has excluded the effects of these items in non-GAAP
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, as well as its supplemental
non‐GAAP information and the reconciliation between these
presentations, to more fully understand its business.
Reconciliations between our GAAP results and non‐GAAP financial
measures are presented in the tables of this release.
VERACYTE, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(Unaudited)
(In thousands, except share and
per share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenues:
Testing revenue
$
82,012
$
64,577
$
236,157
$
180,275
Product revenue
4,020
3,314
11,923
9,401
Biopharmaceutical and other revenue
4,076
7,701
14,772
26,563
Total revenue
90,108
75,592
262,852
216,239
Operating expenses (1):
Cost of testing revenue
21,827
19,816
64,808
55,923
Cost of product revenue
2,436
1,981
6,913
5,202
Cost of biopharmaceutical and other
revenue
3,347
4,211
11,806
13,626
Research and development
13,322
10,773
38,632
29,316
Selling and marketing
24,344
25,678
76,230
73,433
General and administrative
16,334
17,600
62,434
54,992
Impairment of long-lived assets
34,900
—
36,310
3,318
Intangible asset amortization
5,337
5,213
16,007
16,090
Total operating expenses
121,847
85,272
313,140
251,900
Loss from operations
(31,739
)
(9,680
)
(50,288
)
(35,661
)
Other income, net
1,967
805
4,148
2,675
Loss before income taxes
(29,772
)
(8,875
)
(46,140
)
(32,986
)
Income tax benefit
(154
)
(152
)
(29
)
(270
)
Net loss
$
(29,618
)
$
(8,723
)
$
(46,111
)
$
(32,716
)
Net loss per common share, basic and
diluted
$
(0.41
)
$
(0.12
)
$
(0.64
)
$
(0.46
)
Shares used to compute net loss per common
share, basic and diluted
72,804,770
71,656,694
72,488,601
71,456,008
1. Cost of revenue, research and development, sales and
marketing and general and administrative expenses include the
following stock-based compensation related expenses:
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Cost of revenue
$
502
$
290
$
1,386
$
947
Research and development
1,135
1,692
3,831
4,801
Selling and marketing
2,521
2,015
7,126
4,721
General and administrative
3,174
3,445
13,539
9,954
Total stock-based compensation expense
$
7,332
$
7,442
$
25,882
$
20,423
VERACYTE, INC.
CONDENSED CONSOLIDATED STATEMENT
OF COMPREHENSIVE LOSS
(Unaudited)
(In thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net loss
$
(29,618
)
$
(8,723
)
$
(46,111
)
$
(32,716
)
Other comprehensive income (loss):
Change in currency translation
adjustments
(6,414
)
(16,016
)
(2,851
)
(38,983
)
Net comprehensive loss
$
(36,032
)
$
(24,739
)
$
(48,962
)
$
(71,699
)
VERACYTE, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
September 30,
December 31,
2023
2022
(Unaudited)
(See Note 1)
Assets
Current assets:
Cash and cash equivalents
$
202,463
$
154,247
Short-term investments
—
24,605
Accounts receivable
39,297
44,021
Supplies and inventory
15,887
14,294
Prepaid expenses and other current
assets
13,516
11,469
Total current assets
271,163
248,636
Property, plant and equipment, net
19,288
17,702
Right-of-use assets, operating leases
11,297
13,160
Intangible assets, net
123,567
174,866
Goodwill
693,176
695,891
Restricted cash
870
749
Other assets
5,582
5,418
Total assets
$
1,124,943
$
1,156,422
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
12,531
$
11,911
Accrued liabilities
34,828
37,774
Current portion of deferred revenue
2,214
2,613
Current portion of acquisition-related
contingent consideration
2,574
6,060
Current portion of operating lease
liabilities
5,007
4,070
Current portion of other liabilities
106
186
Total current liabilities
57,260
62,614
Deferred tax liabilities
3,644
4,531
Acquisition-related contingent
consideration, net of current portion
484
2,498
Operating lease liabilities, net of
current portion
8,720
10,648
Other liabilities
776
931
Total liabilities
70,884
81,222
Total stockholders’ equity
1,054,059
1,075,200
Total liabilities and stockholders’
equity
$
1,124,943
$
1,156,422
1. The condensed consolidated balance
sheet at December 31, 2022 has been derived from the audited
financial statements at that date included in the Company's Form
10-K filed with the Securities and Exchange Commission dated March
1, 2023.
VERACYTE, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited)
(In thousands)
Nine Months Ended September
30,
2023
2022
Operating activities
Net loss
$
(46,111
)
$
(32,716
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
20,852
19,372
Loss on disposal of property, plant and
equipment
136
72
Stock-based compensation
25,629
19,867
Deferred income taxes
(843
)
(270
)
Interest on end-of-term debt
obligation
—
161
Noncash lease expense
3,130
2,487
Revaluation of acquisition-related
contingent consideration
(5,500
)
(80
)
Effect of foreign currency on
operations
657
1,563
Impairment loss
36,310
3,318
Changes in operating assets and
liabilities:
Accounts receivable
4,650
(4,356
)
Supplies and inventory
(1,636
)
(2,841
)
Prepaid expenses and other current
assets
(1,578
)
(25
)
Other assets
(586
)
160
Operating lease liabilities
(3,225
)
(2,570
)
Accounts payable
185
(325
)
Accrued liabilities and deferred
revenue
(3,400
)
(6,026
)
Net cash provided by (used in) operating
activities
28,670
(2,209
)
Investing activities
Purchase of short-term investments
(19,700
)
(8,972
)
Proceeds from sale of short-term
investments
39,773
—
Proceeds from maturity of short-term
investments
5,000
12,696
Purchases of property, plant and
equipment
(7,464
)
(6,677
)
Net cash provided by (used in) investing
activities
17,609
(2,953
)
Financing activities
Payment of long-term debt
—
(94
)
Payment of taxes on vested restricted
stock units
(5,614
)
(2,639
)
Proceeds from the exercise of common stock
options and employee stock purchases
7,806
6,134
Net cash provided by financing
activities
2,192
3,401
Increase (decrease) in cash, cash
equivalents and restricted cash
48,471
(1,761
)
Effect of foreign currency on cash,
cash equivalents and restricted cash
(134
)
(1,324
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
48,337
(3,085
)
Cash, cash equivalents and restricted
cash at beginning of period
154,996
173,946
Cash, cash equivalents and restricted
cash at end of period
$
203,333
$
170,861
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH
(Unaudited)
(In thousands)
September 30,
December 31,
2023
2022
Cash and cash equivalents
$
202,463
$
154,247
Restricted cash
870
749
Total cash, cash equivalents and
restricted cash
$
203,333
$
154,996
Reconciliation of U.S. GAAP to Non-GAAP
Financial Measures
(Unaudited)
(In thousands)
Identified Expenses
GAAP
Acquisition Related Expenses
(1)
Intangible Assets Amortization
Expense
Other (4)
Total Non-GAAP Measure
Three Months Ended September 30,
2023
Total revenue
$
90,108
$
—
$
—
$
—
$
90,108
Cost of testing revenue
21,827
—
—
—
21,827
Cost of product revenue
2,436
—
—
—
2,436
Cost of biopharmaceutical and other
revenue
3,347
26
—
—
3,321
Intangible asset amortization (2)
4,811
—
4,811
—
—
Gross margin $
57,687
26
4,811
—
62,524
Gross margin %
64
%
69
%
Research and development
13,322
17
—
—
13,305
Selling and marketing
24,344
537
—
—
23,807
General and administrative
16,334
(4,294
)
—
—
20,628
Impairment of long-lived assets
34,900
—
—
34,900
—
Intangible asset amortization
526
—
526
—
—
Total operating expenses excluding cost of
revenue (3)
89,426
(3,740
)
526
34,900
57,740
Loss from operations
$
(31,739
)
$
(3,714
)
$
5,337
$
34,900
$
4,784
Three Months Ended September 30,
2022
Total revenue
$
75,592
$
—
$
—
$
—
$
75,592
Cost of testing revenue
19,816
49
—
18
19,749
Cost of product revenue
1,981
—
—
3
1,978
Cost of biopharmaceutical and other
revenue
4,211
62
—
—
4,149
Intangible asset amortization (2)
4,703
—
4,703
—
—
Gross margin $
44,881
111
4,703
21
49,716
Gross margin %
59
%
66
%
Research and development
10,773
251
—
—
10,522
Selling and marketing
25,678
923
—
493
24,262
General and administrative
17,600
1,272
—
—
16,328
Impairment of long-lived assets
—
—
—
—
—
Intangible asset amortization
510
—
510
—
—
Total operating expenses excluding cost of
revenue (3)
54,561
2,446
510
493
51,112
Loss from operations
$
(9,680
)
$
2,557
$
5,213
$
514
$
(1,396
)
1.
Includes transaction related expenses as
well as post-combination compensation expenses. For each of the
three months ended September 30, 2022, and September 30, 2023,
adjustments consist primarily of remeasurement of contingent
consideration related to our adoption of a multi-platform IVD
strategy and post-combination compensation expenses associated with
the acquisition of HalioDx.
2.
Includes only amortization of intangible
assets identified as developed technology assets through purchase
accounting transactions, which otherwise would have been allocated
to cost of revenue.
3.
Includes only amortization of intangible
assets, which otherwise would have been allocated to research and
development, selling and marketing or general and administrative
expense and excludes the cost of revenue ($27.6 million and $26.0
million) and the amortization of intangible assets which would have
been allocated to the cost of revenue ($4.8 million and $4.7
million) for the three months ended September 30, 2023 and for the
three months ended September 30, 2022 respectively.
4.
For the three months ended September 30,
2023, includes $34.9 million expense related to the impairment
charge associated with the nCounter license intangible assets. For
the three months ended September 30, 2022, includes $0.5 million
related to restructuring costs.
Reconciliation of U.S. GAAP to Non-GAAP
Financial Measures
(Unaudited)
(In thousands)
Identified Expenses
GAAP
Acquisition Related Expenses
(1)
Intangible Assets Amortization
Expense
Other (4)
Total Non-GAAP Measure
Nine Months Ended September 30,
2023
Total revenue
$
262,852
$
—
$
—
$
—
$
262,852
Cost of testing revenue
64,808
83
—
—
64,725
Cost of product revenue
6,913
—
—
—
6,913
Cost of biopharmaceutical and other
revenue
11,806
94
—
—
11,712
Intangible asset amortization (2)
14,429
—
14,429
—
—
Gross margin $
164,896
177
14,429
—
179,502
Gross margin %
63
%
68
%
Research and development
38,632
58
—
—
38,574
Selling and marketing
76,230
2,316
—
—
73,914
General and administrative
62,434
(1,538
)
—
1,371
62,601
Impairment of long-lived assets
36,310
—
—
36,310
—
Intangible asset amortization
1,578
—
1,578
—
—
Total operating expenses excluding cost of
revenue (3)
215,184
836
1,578
37,681
175,089
Loss from operations
$
(50,288
)
$
1,013
$
16,007
$
37,681
$
4,413
Nine Months Ended September 30,
2022
Total revenue
$
216,239
$
—
$
—
$
—
$
216,239
Cost of testing revenue
55,923
153
—
18
55,752
Cost of product revenue
5,202
—
—
3
5,199
Cost of biopharmaceutical and other
revenue
13,626
261
—
—
13,365
Intangible asset amortization (2)
14,526
—
14,526
—
—
Gross margin $
126,962
414
14,526
21
141,923
Gross margin %
59
%
66
%
Research and development
29,316
1,186
—
—
28,130
Selling and marketing
73,433
2,997
—
493
69,943
General and administrative
54,992
3,877
—
—
51,115
Impairment of long-lived assets
3,318
—
—
3,318
—
Intangible asset amortization
1,564
—
1,564
—
—
Total operating expenses excluding cost of
revenue (3)
162,623
8,060
1,564
3,811
149,188
Loss from operations
$
(35,661
)
$
8,474
$
16,090
$
3,832
$
(7,265
)
1.
Includes transaction related expenses as
well as post-combination compensation expenses, adjustments consist
primarily of remeasurement of contingent consideration related to
our adoption of a multi-platform IVD strategy and of
post-combination compensation expenses associated with the
acquisition of HalioDx.
2.
Includes only amortization of intangible
assets identified as developed technology assets through purchase
accounting transactions, which otherwise would have been allocated
to cost of revenue.
3.
Includes only amortization of intangible
assets, which otherwise would have been allocated to research and
development, selling and marketing or general and administrative
expense and excludes the cost of revenue ($83.5 and $74.8 million)
and the amortization of intangible assets which would have been
allocated to the cost of revenue ($14.4 and $14.5 million) for the
first nine months of 2023 and 2022 respectively.
4.
2022 includes $3.3 million expense related
to the impairment charge associated with certain developed
technology intangible assets; 2023 includes $34.9 million expense
related to the impairment charge associated with the nCounter
license intangible assets and $1.4 million related to the departure
of the former executive chair and $1.4 million related to
restructuring costs.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231107248167/en/
Investor Contact: 619-393-1545 investors@veracyte.com
Media Contact: Tracy Morris Vice President of Global
Corporate Communications 650-380-4413 tracy.morris@veracyte.com
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