Veracyte Announces Second Quarter 2023 Financial Results

2023-08-08

财报

Grew Total Revenue to $90.3 million, an Increase of 24% Conference Call and Webcast Today at 4:30 p.m. ET SOUTH SAN FRANCISCO, Calif.--(BUSINESS WIRE)-- Veracyte, Inc. (Nasdaq: VCYT) today announced financial results for the second quarter ended June 30, 2023. “We delivered outstanding second quarter results, with revenue and test volume that exceeded our expectations. We also generated a record $17 million in cash from operations this quarter, driven by our exceptional top-line performance and strong cash collections,” said Marc Stapley, Veracyte’s chief executive officer. “The compelling clinical data we shared this quarter demonstrates our focus on producing further evidence that our tests are helping to better guide patient care at pivotal moments in the race to diagnose and treat cancer.” Key Business Highlights Increased second quarter total revenue by 24% to $90.3 million, compared to the second quarter of 2022. Grew total test volume to 31,809, an increase of 28% compared to the second quarter of 2022. Presented 12 abstracts for our diagnostic tests and biopharmaceutical offerings at major medical conferences. Study findings demonstrate our tests’ positive real-world impact on patient care, and also advance the scientific understanding of a number of diseases that we and our biopharmaceutical customers address. Published real-world Decipher Prostate Genomic Classifier findings in JNCI Cancer Spectrum from a population-based study of the National Cancer Institute Cancer Institute’s SEER program database. The findings reinforce the ability of our Decipher Prostate Genomic Classifier to help guide personalized treatment approaches for men with prostate cancer. Generated approximately $17 million of cash from operating activities, ending the second quarter with cash, cash equivalents and short-term investments of $191 million, compared to $178 million at the end of the first quarter. Second Quarter 2023 Financial Results Total revenue for the second quarter of 2023 was $90.3 million, an increase of 24% compared to $72.9 million reported in the second quarter of 2022. Testing revenue was $81.7 million, an increase of 37% compared to $59.7 million in the second 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 29% compared to $3.1 million in the second quarter of 2022. Biopharmaceutical and other revenue was $4.6 million, a decrease of 55% compared to $10.0 million in the second quarter of 2022. Total gross margin for the second quarter of 2023, including the amortization of acquired intangible assets, was 62%, compared to 59% in the second quarter of 2022. Non-GAAP gross margin, excluding the amortization of acquired intangible assets and other acquisition related expenses was 67%, compared to 66% in the second quarter of 2022. Operating expenses, excluding cost of revenue, were $63.9 million, an increase of 19% compared to the second quarter of 2022. Non-GAAP operating expenses, excluding cost of revenue, amortization of acquired intangible assets, other acquisition related expenses and other restructuring costs, were $59.3 million compared to $49.0 million in the second quarter of 2022. Net loss for the second quarter of 2023 was $8.4 million, an improvement of 12% compared to the second quarter of 2022. Basic and diluted net loss per common share was $0.12, an improvement of 8% compared to the second quarter of 2022. Net cash provided by operating activities in the first six months of 2023 was $14.5 million, an improvement of $23.7 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 $342 million to $350 million, representing year-over-year growth of 15% to 18%, and an improvement compared to prior guidance of $330 million to $340 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: . 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 . The conference call dial-in can be accessed by registering at the following link: 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 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, including our biopharma atlas, 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, 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, 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 June 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 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 Revenues: Testing revenue $ 81,749 $ 59,718 $ 154,145 $ 115,698 Product revenue 4,011 3,108 7,903 6,087 Biopharmaceutical and other revenue 4,562 10,038 10,696 18,862 Total revenue 90,322 72,864 172,744 140,647 Operating expenses (1): Cost of testing revenue 23,333 18,584 42,981 36,107 Cost of product revenue 2,315 1,646 4,477 3,221 Cost of biopharmaceutical and other revenue 4,040 4,800 8,459 9,415 Research and development 12,541 9,377 25,310 18,543 Selling and marketing 25,756 24,001 51,886 47,755 General and administrative 25,047 19,798 47,510 40,710 Intangible asset amortization 5,341 5,391 10,670 10,877 Total operating expenses 98,373 83,597 191,293 166,628 Loss from operations (8,051 ) (10,733 ) (18,549 ) (25,981 ) Other income (loss), net (226 ) 1,086 2,181 1,870 Loss before income taxes (8,277 ) (9,647 ) (16,368 ) (24,111 ) Income tax expense (benefit) 125 (115 ) 125 (118 ) Net loss $ (8,402 ) $ (9,532 ) $ (16,493 ) $ (23,993 ) Net loss per common share, basic and diluted $ (0.12 ) $ (0.13 ) $ (0.23 ) $ (0.34 ) Shares used to compute net loss per common share, basic and diluted 72,478,662 71,476,966 72,327,897 71,354,002 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 Cost of revenue $ 497 $ 386 $ 884 $ 657 Research and development 1,439 1,452 2,696 3,108 Selling and marketing 2,494 1,660 4,606 2,705 General and administrative 6,019 2,627 10,364 6,510 Total stock-based compensation expense $ 10,449 $ 6,125 $ 18,550 $ 12,980 VERACYTE, INC. CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (Unaudited) (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net loss $ (8,402 ) $ (9,532 ) $ (16,493 ) $ (23,993 ) Other comprehensive income (loss): Change in currency translation adjustments (917 ) (17,369 ) 3,563 (22,967 ) Net comprehensive loss $ (9,319 ) $ (26,901 ) $ (12,930 ) $ (46,960 ) VERACYTE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) June 30, 2023 December 31, 2022 (Unaudited) (See Note 1) Assets Current assets: Cash and cash equivalents $ 191,142 $ 154,247 Short-term investments — 24,605 Accounts receivable 42,365 44,021 Supplies and inventory 11,572 14,294 Prepaid expenses and other current assets 14,401 11,469 Total current assets 259,480 248,636 Property, plant and equipment, net 18,510 17,702 Right-of-use assets, operating leases 12,455 13,160 Intangible assets, net 164,744 174,866 Goodwill 698,920 695,891 Restricted cash 889 749 Other assets 6,116 5,418 Total assets $ 1,161,114 $ 1,156,422 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 12,895 $ 11,911 Accrued liabilities 34,427 37,774 Current portion of deferred revenue 2,378 2,613 Current portion of acquisition-related contingent consideration 3,359 6,060 Current portion of operating lease liabilities 4,973 4,070 Current portion of other liabilities 119 186 Total current liabilities 58,151 62,614 Deferred tax liabilities 4,707 4,531 Acquisition-related contingent consideration, net of current portion 4,855 2,498 Operating lease liabilities, net of current portion 9,891 10,648 Other liabilities 792 931 Total liabilities 78,396 81,222 Total stockholders’ equity 1,082,718 1,075,200 Total liabilities and stockholders’ equity $ 1,161,114 $ 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) Six Months Ended June 30, 2023 2022 Operating activities Net loss $ (16,493 ) $ (23,993 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 13,529 13,048 Loss on disposal of property, plant and equipment 136 — Stock-based compensation 18,366 12,584 Deferred income taxes 125 (118 ) Interest on end-of-term debt obligation — 107 Noncash lease expense 1,977 1,638 Revaluation of acquisition-related contingent consideration (344 ) (48 ) Effect of foreign currency on operations (167 ) 716 Impairment loss 1,410 3,318 Changes in operating assets and liabilities: Accounts receivable 1,789 (2,936 ) Supplies and inventory 2,782 (3,654 ) Prepaid expenses and other current assets (2,530 ) (1,830 ) Other assets (1,048 ) 284 Operating lease liabilities (2,091 ) (1,680 ) Accounts payable 792 (1,373 ) Accrued liabilities and deferred revenue (3,734 ) (5,298 ) Net cash provided by (used in) operating activities 14,499 (9,235 ) 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 2,175 Purchases of property, plant and equipment (4,662 ) (4,963 ) Net cash provided by (used in) investing activities 20,411 (11,760 ) Financing activities Payment of long-term debt — (97 ) Payment of taxes on vested restricted stock units (3,168 ) (1,865 ) Proceeds from the exercise of common stock options and employee stock purchases 5,250 3,877 Net cash provided by financing activities 2,082 1,915 Increase (decrease) in cash, cash equivalents and restricted cash 36,992 (19,080 ) Effect of foreign currency on cash, cash equivalents and restricted cash 43 (670 ) Net increase (decrease) in cash, cash equivalents and restricted cash 37,035 (19,750 ) Cash, cash equivalents and restricted cash at beginning of period 154,996 173,946 Cash, cash equivalents and restricted cash at end of period $ 192,031 $ 154,196 CASH, CASH EQUIVALENTS AND RESTRICTED CASH (Unaudited) (In thousands) June 30, 2023 December 31, 2022 Cash and cash equivalents $ 191,142 $ 154,247 Restricted cash 889 749 Total cash, cash equivalents and restricted cash $ 192,031 $ 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 June 30, 2023 Total revenue $ 90,322 $ — $ — $ — $ 90,322 Cost of testing revenue 23,333 — — — 23,333 Cost of product revenue 2,315 — — — 2,315 Cost of biopharmaceutical and other revenue 4,040 25 — — 4,015 Intangible asset amortization (2) 4,814 — 4,814 — — Gross margin $ 55,820 25 4,814 — 60,659 Gross margin % 62 % 67 % Research and development 12,541 17 — — 12,524 Selling and marketing 25,756 889 — — 24,867 General and administrative 25,047 1,720 — 1,437 21,890 Intangible asset amortization 527 — 527 — — Total operating expenses excluding cost of revenue (3) 63,871 2,626 527 1,437 59,281 Loss from operations $ (8,051 ) $ 2,651 $ 5,341 $ 1,437 $ 1,378 Three Months Ended June 30, 2022 Total revenue $ 72,864 $ — $ — $ — $ 72,864 Cost of testing revenue 18,584 51 — — 18,533 Cost of product revenue 1,646 — — — 1,646 Cost of biopharmaceutical and other revenue 4,800 65 — — 4,735 Intangible asset amortization (2) 4,869 — 4,869 — — Gross margin $ 42,965 116 4,869 — 47,950 Gross margin % 59 % 66 % Research and development 9,377 293 — — 9,084 Selling and marketing 24,001 858 — — 23,143 General and administrative 19,798 (285 ) — 3,318 16,765 Intangible asset amortization 522 — 522 — — Total operating expenses excluding cost of revenue (3) 53,698 866 522 3,318 48,992 Loss from operations $ (10,733 ) $ 982 $ 5,391 $ 3,318 $ (1,042 ) 1. Includes transaction related expenses as well as post-combination compensation expenses. For each of the three months ended June 30, 2022, and June 30, 2023, adjustments consist primarily 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 ($29.7 million and $25.0 million) and the amortization of intangible assets which would have been allocated to the cost of revenue ($4.8 million and $4.9 million) for the three months ended June 30, 2023 and for the three months ended June 30, 2022 respectively. 4. For the three months ended June 30, 2022, $3.3 million expense included related to the impairment charge associated with certain developed technology intangible assets. For the three months ended June 30, 2023, includes $1.4 million related to the departure of the former executive chair. 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 Six Months Ended June 30, 2023 Total revenue $ 172,744 $ — $ — $ — $ 172,744 Cost of testing revenue 42,981 83 — — 42,898 Cost of product revenue 4,477 — — — 4,477 Cost of biopharmaceutical and other revenue 8,459 68 — — 8,391 Intangible asset amortization (2) 9,618 — 9,618 — — Gross margin $ 107,209 151 9,618 — 116,978 Gross margin % 62 % 68 % Research and development 25,310 41 — — 25,269 Selling and marketing 51,886 1,779 — — 50,107 General and administrative 47,510 2,756 — 2,781 41,973 Intangible asset amortization 1,052 — 1,052 — — Total operating expenses excluding cost of revenue (3) 125,758 4,576 1,052 2,781 117,349 Loss from operations $ (18,549 ) $ 4,727 $ 10,670 $ 2,781 $ (371 ) Six Months Ended June 30, 2022 Total revenue $ 140,647 $ — $ — $ — $ 140,647 Cost of testing revenue 36,107 104 — — 36,003 Cost of product revenue 3,221 — — — 3,221 Cost of biopharmaceutical and other revenue 9,415 198 — — 9,217 Intangible asset amortization (2) 9,823 — 9,823 — — Gross margin $ 82,081 302 9,823 — 92,206 Gross margin % 58 % 66 % Research and development 18,543 935 — — 17,608 Selling and marketing 47,755 2,074 — — 45,681 General and administrative 40,710 2,605 — 3,318 34,787 Intangible asset amortization 1,054 — 1,054 — — Total operating expenses excluding cost of revenue (3) 108,062 5,614 1,054 3,318 98,076 Loss from operations $ (25,981 ) $ 5,916 $ 10,877 $ 3,318 $ (5,870 ) 1. Includes transaction related expenses as well as post-combination compensation expenses, adjustments consist primarily 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 ($55.9 and $48.7 million) and the amortization of intangible assets which would have been allocated to the cost of revenue ($9.6 and $9.8 million) for the first six 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 $1.4 million related to the departure of the former executive chair and $1.3 million related to restructuring costs.