Veracyte Announces Second Quarter 2021 Financial Results

SOUTH SAN FRANCISCO, Calif.–()–Veracyte, Inc. (Nasdaq: VCYT) today announced financial results for the second quarter ended June 30, 2021, and provided an update on recent business progress.

Our business demonstrated significant momentum in the second quarter, with particularly strong growth in our thyroid and urologic cancer product lines,” said Marc Stapley, Veracyte’s chief executive officer. “The pending HalioDx acquisition is expected to further fuel our global cancer diagnostics growth and leadership. Importantly, we also added key new hires to the executive team and are well-positioned to execute on our compelling vision of improving outcomes for patients all over the world at every step of their journey.”

Second Quarter 2021 Financial Results

For the second quarter of 2021, as compared with the second quarter of 2020:

  • Total Revenue was $55.1 million, an increase of 166%;
  • Gross Margin was 68%, an increase of 500 basis points;
  • Operating Expenses, Excluding Cost of Revenue, were $45.1 million, an increase of 87%;
  • Net Loss and Comprehensive Loss was $9.0 million, an improvement of 18%;
  • Basic and Diluted Net Loss Per Common Share was $0.13, an improvement of 41%;
  • Net Cash Provided by Operating Activities was $1.9 million, an improvement of 122%; and
  • Cash and Cash Equivalents were $327.5 million at June 30, 2021.

For the six months ended June 30, 2021, compared to the prior year:

  • Total Revenue was $91.8 million, comprising $89.6 million in testing and product revenue and $2.2 million in biopharmaceutical partnership and collaboration revenue, an increase of 77%;
  • Gross Margin was 67%, an increase of 500 basis points;
  • Operating Expenses, Excluding Cost of Revenue, were $114.8 million, including $39.5 million of acquisition-related expenses, an increase of 108%;
  • Net Loss and Comprehensive Loss was $50.9 million, including $39.5 million of acquisition-related expenses, an increase of 124%;
  • Basic and Diluted Net Loss Per Common Share was $0.78, including $0.60 per share attributable to the acquisition-related expenses recorded in general and administrative expenses, an increase of 73%; and
  • Net Cash Used in Operating Activities was $38.7 million.

Second Quarter 2021 and Recent Business Highlights

Commercial Growth:

  • Grew total volume to 20,856 genomic tests, an increase of 215% compared to the same period in 2020 and 44% compared to the first quarter of 2021.
  • Achieved key managed care milestones for our genomic tests:

    • Received final Medicare coverage policy for the Decipher Bladder test from Noridian, our Medicare Administrative Contractor, through the MolDX program.
    • Signed a managed care contract with a major health plan, making the Decipher Prostate test an in-network benefit for eligible patients among the plan’s approximately 20 million members nationally.
    • Granted reimbursement for the Prosigna breast cancer test in Germany for eligible patients with HR+/HER2- early-stage breast cancer, enabling hospitals and laboratories in Germany to perform the test locally.

Evidence Development and Pipeline Advancement:

  • Presented 14 abstracts demonstrating the performance and utility of our current and pipeline genomic tests at the American Thoracic Society (ATS), American Society of Clinical Oncology (ASCO) and European Society of Medical Oncology (ESMO) Breast Cancer annual meetings. This included the presentation of pivotal clinical validation data at the ASCO meeting demonstrating the ability of the Percepta Nasal Swab test to improve the early assessment of lung cancer.
  • Published data demonstrating the prognostic utility of Veracyte’s Decipher Prostate genomic classifier:

    • Data published in JAMA Oncology suggest that, among men with non-metastatic castration-resistant prostate cancer (nmCRPC), the Decipher test can help identify those patients most likely to benefit from treatment with apalutamide, a second-generation androgen receptor signaling inhibitor (ARSi), in addition to androgen-deprivation therapy (ADT).
    • Findings from a study published in Prostate Cancer and Prostatic Diseases suggest the Decipher test may help guide treatment decisions for men with early-stage prostate cancer who are candidates for active surveillance.

Global Expansion Progress:

  • Announced the planned acquisition of HalioDx to further accelerate growth and strengthen Veracyte’s global leadership in cancer diagnostics. The acquisition is intended to provide three strategic benefits to Veracyte:

    • Accelerate IVD test development and manufacturing operations in Europe;
    • Expand the company’s scientific expertise into the emerging immuno-oncology field; and
    • Broaden Veracyte’s cancer diagnostics scope into eight of the top 10 cancers by U.S. incidence.
  • Added key new hires to further strengthen the executive team and position the company to scale globally:

    • Rebecca Chambers as executive vice president and chief financial officer;
    • Rob Brainin as executive vice president and chief business officer; and
    • Bill Zondler as senior vice president and chief information officer.

2021 Financial Outlook

Veracyte is increasing its 2021 annual total revenue guidance to a range of $200 million to $208 million from its previous guidance range of $190 million to $200 million. This range represents 69% to 76% total revenue growth for fiscal 2021 compared to fiscal 2020, and increased from Veracyte’s prior estimate of 61% to 69% total revenue growth.

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/ces2j4at. 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 can be accessed as follows:

U.S./Canada participant dial-in number (toll-free):

(855) 541-0980

International participant dial-in number:

(970) 315-0440

Conference I.D.:

1997209

About Veracyte

Veracyte (Nasdaq: VCYT) is a global genomic diagnostics company that improves patient care by providing answers to clinical questions, informing diagnosis and treatment decisions throughout the patient journey in cancer and other diseases. The company’s growing menu of genomic tests leverages advances in genomic science and technology, enabling patients to avoid risky, costly diagnostic procedures and quicken time to appropriate treatment. The company’s tests in lung cancer, prostate cancer, breast cancer, thyroid cancer, bladder cancer and idiopathic pulmonary fibrosis are available to patients and its lymphoma subtyping and renal cancer tests are in development. With Veracyte’s exclusive global license to a best-in-class diagnostics instrument platform, the company is positioned to deliver its tests to patients worldwide. Veracyte is based in South San Francisco, California. 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 financial results for 2021 and our plans, objectives, expectations (financial and otherwise) or intentions with respect to our Prosigna, Afirma, Percepta, Envisia, LymphMark, Decipher Prostate, Percepta Nasal Swab, Percepta Genomic Atlas and Decipher Bladder test and products for use in diagnosing and treating diseases, our expectations regarding our full-year 2021 total revenue, our expectations regarding Medicare coverage, 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 Veracyte’s ability to launch, commercialize and receive reimbursement for our products, to successfully complete our proposed acquisition of HalioDx, to successfully integrate the HalioDx and Decipher Biosciences businesses and execute on our business plans; and the performance and utility of Veracyte’s 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 with the SEC on February 22, 2021 and our subsequent quarterly reports on Form 10-Q. A copy of these documents can be found at the Investors section of our website at www.veracyte.com. The risks and uncertainties may be amplified by the COVID-19 pandemic, which has caused significant economic uncertainty. The extent to which the COVID-19 pandemic impacts Veracyte’s businesses, operations, and financial results, including the duration and magnitude of such effects, will depend on numerous factors, which are unpredictable, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. These forward-looking statements speak only as of the date hereof and, except as required by law, Veracyte specifically disclaims 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, Decipher GRID, Afirma, Percepta, Envisia, Prosigna, Lymphmark, “Know by Design” and “More about You” are registered trademarks of Veracyte, Inc. and its affiliates in the U.S. and selected countries. nCounter is the registered trademark of NanoString Technologies, Inc. in the U.S. and selected countries and used by Veracyte under license.

VERACYTE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands of dollars, except share and per share amounts)

 

 

 

 

 

 

 

 

 

Three Months Ended June

30,

 

Six Months Ended June

30,

 

2021

 

2020

 

2021

 

2020

Revenues:

 

 

 

 

 

 

 

Testing revenue

$

50,793

 

 

$

15,212

 

 

$

83,871

 

 

$

42,203

 

Product revenue

2,688

 

 

1,713

 

 

5,747

 

 

5,122

 

Biopharmaceutical revenue

1,624

 

 

3,779

 

 

2,190

 

 

4,501

 

Total revenue

55,105

 

 

20,704

 

 

91,808

 

 

51,826

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

Cost of testing revenue

15,589

 

 

6,471

 

 

26,421

 

 

17,039

 

Cost of product revenue

1,323

 

 

932

 

 

2,813

 

 

2,491

 

Cost of biopharmaceutical revenue

560

 

 

252

 

 

641

 

 

368

 

Research and development

6,249

 

 

4,169

 

 

11,585

 

 

8,576

 

Selling and marketing

19,662

 

 

10,701

 

 

35,958

 

 

28,285

 

General and administrative

15,473

 

 

7,957

 

 

61,755

 

 

15,770

 

Intangible asset amortization

3,723

 

 

1,273

 

 

5,524

 

 

2,548

 

Total operating expenses

62,579

 

 

31,755

 

 

144,697

 

 

75,077

 

Loss from operations

(7,474

)

 

(11,051

)

 

(52,889

)

 

(23,251

)

Interest expense

(63

)

 

(65

)

 

(116

)

 

(120

)

Other (loss) income, net

(1,653

)

 

91

 

 

(1,848

)

 

630

 

Loss before income tax benefit

(9,190

)

 

(11,025

)

 

(54,853

)

 

(22,741

)

Income tax benefit

(152

)

 

 

 

(3,947

)

 

 

Net loss and comprehensive loss

$

(9,038

)

 

$

(11,025

)

 

$

(50,906

)

 

$

(22,741

)

Net loss per common share, basic and diluted

$

(0.13

)

 

$

(0.22

)

 

$

(0.78

)

 

$

(0.45

)

Shares used to compute net loss per common share, basic and diluted

67,316,065

 

50,212,123

 

65,334,890

 

50,002,377

VERACYTE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

 

June 30, 2021

December 31, 20201

 

(Unaudited)

 

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

$

327,545

$

349,364

Accounts receivable

 

31,864

 

 

18,461

 

Supplies

 

6,674

 

 

4,657

 

Prepaid expenses and other current assets

 

5,263

 

 

3,197

 

Total current assets

 

371,346

 

 

375,679

 

Property and equipment, net

 

11,813

 

 

8,990

 

Right-of-use assets, operating lease

 

14,559

 

 

7,843

 

Intangible assets, net

 

155,700

 

 

59,924

 

Goodwill

 

471,764

 

 

2,725

 

Restricted cash

 

749

 

 

603

 

Other assets

 

1,504

 

 

1,399

 

Total assets

$

1,027,435

 

$

457,163

 

Liabilities and Stockholders’ Equity

 

 

Current liabilities:

 

 

Accounts payable

$

8,472

 

$

3,116

 

Accrued liabilities

 

20,756

 

 

11,705

 

Current portion of deferred revenue

 

566

 

 

371

 

Current portion of acquisition-related contingent consideration

 

3,375

 

 

 

Current portion of operating lease liability

 

2,936

 

 

1,589

 

Total current liabilities

 

36,105

 

 

16,781

 

Long-term debt

 

917

 

 

810

 

Deferred revenue, net of current portion

 

662

 

 

829

 

Deferred tax liability

 

773

 

 

 

Acquisition-related contingent consideration, net of current portion

 

4,467

 

 

7,594

 

Operating lease liability, net of current portion

 

13,334

 

 

9,917

 

Total liabilities

 

56,258

 

 

35,931

 

Total stockholders’ equity

 

971,177

 

 

421,232

 

Total liabilities and stockholders’ equity

$

1,027,435

 

$

457,163

 

 

 

 

1 The condensed balance sheet at December 31, 2020 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 February 22, 2021.

VERACYTE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands of dollars)

 

 

 

 

 

Six Months Ended June 30,

 

2021

 

2020

Operating activities

 

 

 

Net loss

$

(50,906

)

 

$

(22,741

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

7,050

 

 

3,929

 

Stock-based compensation

7,919

 

 

6,265

 

Benefit from income taxes

(3,947

)

 

 

Interest on end-of-term debt obligations

107

 

 

107

 

Write-down of excess supplies

 

 

1,088

 

Noncash lease expense

885

 

 

469

 

Revaluation of acquisition-related contingent consideration

247

 

 

(140

)

Effect of foreign currency on operations

1,866

 

 

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

(6,713

)

 

4,023

 

Supplies

(375

)

 

(1,323

)

Prepaid expenses and other current assets

(1,288

)

 

(664

)

Other assets

(30

)

 

166

 

Operating lease liability

(1,017

)

 

(682

)

Accounts payable

2,758

 

 

122

 

Accrued liabilities and deferred revenue

4,770

 

 

(4,343

)

Net cash used in operating activities

(38,674

)

 

(13,724

)

Investing activities

 

 

 

Acquisition of business, net of cash acquired

(574,411

)

 

 

Proceeds from sale of equity securities

3,000

 

 

 

Purchases of property and equipment

(2,723

)

 

(1,314

)

Net cash used in investing activities

(574,134

)

 

(1,314

)

Financing activities

 

 

 

Proceeds from the issuance of common stock in a public offering, net of issuance costs

593,821

 

 

 

Payment of taxes on vested restricted stock units

(7,484

)

 

(2,678

)

Proceeds from the exercise of common stock options and employee stock purchases

6,595

 

 

5,849

 

Net cash provided by financing activities

592,932

 

 

3,171

 

Decrease in cash, cash equivalents and restricted cash

(19,876

)

 

(11,867

)

Effect of foreign currency on cash, cash equivalents and restricted cash

(1,797

)

 

 

Net decrease in cash, cash equivalents and restricted cash

(21,673

)

 

(11,867

)

Cash, cash equivalents and restricted cash at beginning of period

349,967

 

 

159,920

 

Cash, cash equivalents and restricted cash at end of period

$

328,294

 

 

$

148,053

 

 

 

 

 

Supplementary cash flow information:

 

 

 

Purchases of property and equipment included in accounts payable and accrued liability

$

1,019

 

 

$

 

Interest paid on debt

$

9

 

 

$

3

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH

(Unaudited)

(In thousands of dollars)

 

 

 

 

 

June 30,

 

December 31,

 

2021

 

2020

Cash and cash equivalents

$

327,545

 

 

$

349,364

 

Restricted cash

749

 

 

603

 

Total cash, cash equivalents and restricted cash

$

328,294

 

 

$

349,967

 

 

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