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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 23, 2018

VERACYTE, INC.
(Exact name of registrant as specified in its charter)

DELAWARE
 
001-36156
 
20-5455398
(State or other jurisdiction of
incorporation)
 
Commission File Number
 
(IRS Employer Identification
No.)

6000 Shoreline Court, Suite 300, South San Francisco, California
 
94080
(Address of principal executive offices)
 
(Zip Code)

Registrant’s telephone number, including area code: (650) 243-6300

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x 






Item 2.02 Results of Operations and Financial Condition.

On July 23, 2018, Veracyte, Inc. issued a press release announcing its financial results for the quarter ended June 30, 2018. The full text of the press release is furnished as Exhibit 99.1 to this report.

The information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.
 
Description
 
 
 
 





SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



Dated:
July 23, 2018
 
 
 
 
 
 
 
 
VERACYTE, INC.
 
 
 
 
 
 
By:
/s/ Keith Kennedy
 
 
Name:
Keith Kennedy
 
 
Title:
Chief Financial Officer
 
 
 
(Principal Financial and Accounting Officer)




Exhibit


Exhibit 99.1

https://cdn.kscope.io/09fe7d64ee21e757f1d46a322812d197-veracytelogoa06.jpg

Veracyte Announces Second Quarter 2018 Financial Results

Revenue up 24% to $22.8 Million Compared to Second Quarter 2017

Increasing Revenue and Narrowing Cash Burn Guidance for Full-year 2018

Conference Call and Webcast Today at 4:30 p.m. ET


SOUTH SAN FRANCISCO, Calif., July 23, 2018 -- Veracyte, Inc. (Nasdaq: VCYT) today announced financial results for the second quarter ended June 30, 2018 and provided an update on recent business progress. For the second quarter of 2018, revenue was $22.8 million, an increase of 24%, compared to $18.4 million for the second quarter of 2017. Genomic test volume was 7,686, an increase of 18% compared to the same period in 2017.
“We delivered another exceptional quarter of revenue and genomic test volume growth,” said Bonnie Anderson, chairman and chief executive officer of Veracyte. “We saw strong growth in our Afirma business where our deep RNA sequencing platform is enabling us to further reduce surgeries in thyroid cancer diagnosis and inform treatment decisions. We accelerated uptake of Percepta in lung cancer diagnosis, while launching our Early Access Program to address strong physician demand for Envisia - and are already leveraging crossover business opportunities with these two pulmonology products.”

Second Quarter 2018 Financial Results

For the three-month period ended June 30, 2018, as compared to the second quarter of 2017:

•
Revenue was $22.8 million, an increase of 24%;
•
Genomic Test Volume was 7,686, an increase of 18%;
•
Gross Margin was 64%, an increase of 2%;
•
Operating Expenses, Excluding Cost of Revenue were $20.4 million, an increase of 13%;
•
Net Loss and Comprehensive Loss was ($6.2) million, an improvement of 14%;
•
Basic and Diluted Net Loss Per Common Share was ($0.18), an improvement of 18%;
•
Cash Burn1 was $3.6 million, an improvement of 28%; and
•
Cash and Cash Equivalents was $23.8 million at June 30, 2018.

For the six-month period ended June 30, 2018, as compared to the prior year period of 2017:

•
Revenue was $42.8 million, an increase of 23%;
•
Genomic Test Volume was 14,550, an increase of 18%;
•
Gross Margin was unchanged at 62%;




•
Operating Expenses, Excluding Cost of Revenue were $41.6 million, an increase of 16%;
•
Net Loss and Comprehensive Loss was ($15.4) million, an improvement of 1%;
•
Basic and Diluted Net Loss Per Common Share was ($0.45), an improvement of 2%; and
•
Cash Burn1 was $11.3 million, an improvement of 15%.

1A reconciliation of net cash used in operating activities to cash burn has been provided in the financial statement tables included in this press release. An explanation of cash burn is also included below under the heading “Non-GAAP Financial Measures.”
Second Quarter 2018 and Recent Business Highlights

Commercial Growth:
•
Tripled Percepta revenue for the second quarter of 2018, compared to the first quarter, with the number of physicians ordering the Percepta classifier increasing by over 50 percent during this period.
•
Received regulatory approval from the New York State Department of Health, enabling us to now move 100% of Afirma classifier testing to the Genomic Sequencing Classifier (GSC).
•
Commercially launched the Afirma Xpression Atlas, providing RNA sequencing-based insights to inform surgery and treatment decisions in patients with suspected thyroid cancer.
•
Booked our first biopharmaceutical service revenue of $0.5 million based on the Afirma Xpression Atlas platform.
•
Launched the Envisia Early Access Program to select sites across the United States in response to physician demand, further preparing for commercial expansion in 2019.

Evidence Development:
•
Published clinical validation data for the Afirma GSC in JAMA Surgery, demonstrating the next-generation test’s ability to help approximately 70% of patients with indeterminate thyroid nodules avoid unnecessary surgery.
•
Strong performance and clinical utility data for our two flagship products, the Afirma GSC and the Percepta classifier, were shared in five presentations at major endocrinology and pulmonology conferences.

Scientific Innovation:
•
Assembled over 2,000 patient samples to advance our field-of-injury research to fuel development of a nasal swab test for early detection of lung cancer.
Updated 2018 Financial Outlook
Veracyte is increasing its 2018 annual revenue guidance to between $87 million and $89 million, from its previously updated guidance of between $83 million and $86 million. The company is narrowing its annual cash burn guidance to between $18 million and $21 million, from between $18 million and $22 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 call may be accessed as follows:

Veracyte Second Quarter 2018 Conference Call
4:30 p.m. ET Today
Website:
http://investor.veracyte.com
Dial-in number (U.S.):
(855) 541-0980
International Number:
(970) 315-0440
Conference ID:
7784825

The webcast replay will be available on the company's website approximately two hours following completion of the call.

About Veracyte
Veracyte, Inc. (Nasdaq: VCYT) is a leading genomic diagnostics company that is providing trustworthy and actionable answers that fundamentally improve patient care when current diagnostic tests are uncertain. The company's products uniquely combine genomic technology, clinical science and machine learning to provide answers that give physicians and patients a clear path forward without risky, costly surgery that is often unnecessary. Since its founding in 2008, Veracyte has commercialized three genomic tests, which are transforming




the diagnosis of thyroid cancer, lung cancer and idiopathic pulmonary fibrosis and collectively target a $2 billion market opportunity. Veracyte is based in South San Francisco, California. For more information, please visit www.veracyte.com and follow the company on Twitter (@veracyte).

Veracyte, Afirma, Percepta, Envisia, the Veracyte logo, and the Afirma logo are trademarks of Veracyte, Inc.

Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "expect," "believe," "should," "may," "will" and similar references to future periods. Examples of forward-looking statements include, among others, our belief that we have a strong foundation in place to drive revenue growth, our beliefs regarding momentum in our business and potential drivers of future growth, our expectations regarding full-year 2018 revenue and cash burn, our ability to move Afirma classifier testing to the GSC, commercial expansion of Envisia in 2019, our development of a nasal swab test for early detection of lung cancer, and our ability to drive revenue growth across our endocrinology and pulmonology franchises. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, anticipated events and trends, the economy and other future conditions. Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially, and reported results should not be considered as an indication of future performance. These risks and uncertainties include, but are not limited to our history of losses since inception; our ability to enhance the performance of our Afirma classifier; our ability to successfully transition to our next-generation Afirma GSC; the performance and acceptance of our Percepta and Envisia classifiers; our ability to increase usage of and reimbursement for the Afirma and Percepta classifiers and to obtain adequate reimbursement for our Envisia classifier, as well as any future products we may develop or sell; our ability to continue our momentum and growth; our dependence on a few payers for a significant portion of our revenue; and other risks set forth in the company's filings with the Securities and Exchange Commission, including the risks set forth in the company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018. These forward-looking statements speak only as of the date hereof and Veracyte specifically disclaims any obligation to update these forward-looking statements.
Non-GAAP Financial Measures
To supplement our consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP), we monitor and consider cash burn, which is a non-GAAP financial measure. This non-GAAP financial measure is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similarly-titled measures presented by other companies. We define cash burn as net cash used in operating activities plus net capital expenditures, such as net purchases of property and equipment. We believe cash burn to be a liquidity measure that provides useful information to management and investors about the amount of cash consumed by the operations of the business, including our purchases of property and equipment. A limitation of using this non-GAAP measure is that cash burn does not represent the total change in cash and cash equivalents for the period because it excludes cash provided by or used for other investing and financing activities. We account for this limitation by providing information about our capital expenditures and other investing and financing activities in the statements of cash flows in our financial statements in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K and by presenting cash flows from investing and financing activities in our reconciliation of cash burn. In addition, it is important to note that other companies, including companies in our industry, may not use cash burn, may calculate cash burn in a different manner than we do or may use other financial measures to evaluate their performance, all of which could reduce the usefulness of cash burn as a comparative measure.
Because of these limitations, cash burn should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of cash burn to net cash used in operating activities provided in the tables below.





VERACYTE, INC.
CONDENSED 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,
 
2018
 
2017
 
2018
 
2017
Revenue
$
22,751

 
$
18,406

 
$
42,792

 
$
34,838

Operating expenses:
 
 
 
 
 
 
 
Cost of revenue
8,246

 
6,960

 
16,113

 
13,257

Research and development
4,601

 
3,603

 
8,276

 
7,633

Selling and marketing
9,623

 
7,994

 
21,166

 
15,330

General and administrative
5,932

 
6,192

 
11,576

 
12,211

Intangible asset amortization
266

 
266

 
533

 
533

Total operating expenses
28,668

 
25,015

 
57,664

 
48,964

Loss from operations
(5,917
)
 
(6,609
)
 
(14,872
)
 
(14,126
)
Interest expense
(481
)
 
(808
)
 
(929
)
 
(1,608
)
Other income, net
150

 
119

 
376

 
219

Net loss and comprehensive loss
$
(6,248
)
 
$
(7,298
)
 
$
(15,425
)
 
$
(15,515
)
Net loss per common share, basic and diluted
$
(0.18
)
 
$
(0.22
)
 
$
(0.45
)
 
$
(0.46
)
Shares used to compute net loss per common share, basic and diluted
34,314,234

 
33,873,128

 
34,320,793

 
33,848,645






VERACYTE, INC.
CONDENSED BALANCE SHEETS
(In thousands)
 
 
June 30, 2018
 
December 31, 2017
 
(Unaudited)
 
(1)
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
23,758

 
$
33,891

Accounts receivable
13,006

 
12,716

Supplies inventory
3,049

 
5,324

Prepaid expenses and other current assets
1,822

 
1,997

Total current assets
41,635

 
53,928

Property and equipment, net
9,035

 
9,688

Finite-lived intangible assets, net
12,533

 
13,067

Goodwill
1,057

 
1,057

Restricted cash
603

 
603

Other assets
598

 
326

Total assets
$
65,461

 
$
78,669

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
1,962

 
$
3,853

Accrued liabilities
8,429

 
8,175

Total current liabilities
10,391

 
12,028

Long-term debt
25,103

 
24,938

Capital lease liability, net of current portion
156

 
308

Deferred rent, net of current portion
4,005

 
4,170

Total liabilities
39,655

 
41,444

Total stockholders’ equity
25,806

 
37,225

Total liabilities and stockholders’ equity
$
65,461

 
$
78,669

 
 
 
 
(1) The condensed balance sheet at December 31, 2017 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 27, 2018.






VERACYTE, INC.
Condensed Statements of Cash Flows
(Unaudited)
(In thousands of dollars)
 
Six Months Ended June 30,
 
2018
 
2017
Operating activities
 

 
 

Net loss
$
(15,425
)
 
$
(15,515
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
1,969

 
1,846

Stock-based compensation
2,906

 
3,214

Other income
(93
)
 
—

Amortization of debt issuance costs
16

 
53

Interest on end-of-term debt obligations
149

 
—

Changes in operating assets and liabilities:
 
 
 

Accounts receivable
(290
)
 
(2,271
)
Supplies inventory
2,275

 
158

Prepaid expenses and current other assets
98

 
25

Other assets
(272
)
 
—

Accounts payable
(1,912
)
 
266

Accrued liabilities and deferred rent
67

 
(772
)
Net cash used in operating activities
(10,512
)
 
(12,996
)
Investing activities
 

 
 

Purchases of property and equipment
(761
)
 
(728
)
Proceeds from sale of property and equipment
—

 
440

Net cash used in investing activities
(761
)
 
(288
)
Financing activities
 

 
 

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

 
200

Proceeds from legal settlement regard short swing profits
403

 
—

Payment of capital lease liability
(144
)
 
(135
)
Proceeds from the exercise of common stock options and employee stock purchases
881

 
463

Net cash provided by financing activities
1,140

 
528

Net decrease in cash, cash equivalents and restricted cash
(10,133
)
 
(12,756
)
Cash, cash equivalents and restricted cash at beginning of period
34,494

 
59,942

Cash, cash equivalents and restricted cash at end of period
$
24,361

 
$
47,186

Supplementary cash flow information of non-cash investing and financing activities:
 

 
 

Purchases of property and equipment included in accounts payable
$
63

 
$
—

Interest paid on debt
$
741

 
$
1,540














CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(Unaudited)
(In thousands of dollars)
 
June 30, 2018
 
December 31, 2017
Cash and cash equivalents
$
23,758

 
$
33,891

Restricted cash in long term assets, deposit for lease security
603

 
603

Total cash, cash equivalents and restricted cash
$
24,361

 
$
34,494




RECONCILIATION OF NET CASH USED IN OPERATING ACTIVITIES TO CASH BURN
(Unaudited)
(In thousands of dollars)
 
Three Months Ended June 30,
 
2018
 
2017
Net cash used in operating activities
$
(3,099
)
 
$
(4,910
)
Plus purchases of property and equipment
(534
)
 
(113
)
Cash burn
$
(3,633
)
 
$
(5,023
)
Net cash used in investing activities
$
(534
)
 
$
(113
)
Net cash provided by (used in) financing activities
$
239

 
$
(20
)
 
 
 
 
 
Six Months Ended June 30,
 
2018
 
2017
Net cash used in operating activities
$
(10,512
)
 
$
(12,996
)
Plus purchases of property and equipment
(761
)
 
(728
)
Less proceeds from the sale of property and equipment
—

 
440

Cash burn
$
(11,273
)
 
$
(13,284
)
Net cash used in investing activities
$
(761
)
 
$
(288
)
Net cash provided by financing activities
$
1,140

 
$
528

 
 
 
 


#  #  #

Media:
Tracy Morris            
650-380-4413
tracy.morris@veracyte.com

Investors:
Keith Kennedy
650-243-6371
keith@veracyte.com