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Veracyte Announces Third Quarter 2021 Financial Results
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Nov 9, 2021

Veracyte Announces Third Quarter 2021 Financial Results

Total Revenue of $60.4 Million and Volume of 20,972 Tests

Company Launches Percepta Nasal Swab and Decipher Bladder Genomic Tests; Completes Acquisition of HalioDx

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

SOUTH SAN FRANCISCO, Calif.--(BUSINESS WIRE)--Nov. 9, 2021-- Veracyte, Inc. (Nasdaq: VCYT) today announced financial results for the third quarter ended September 30, 2021.

“We are pleased with our third quarter performance as we experienced strong year-over-year revenue growth despite the headwind of the COVID-19 Delta variant,” said Marc Stapley, Veracyte’s chief executive officer. “With the completion of our acquisition of HalioDx, the launch of our novel noninvasive Percepta Nasal Swab test for early lung cancer risk assessment and of our Decipher Bladder test to help guide bladder cancer treatment decisions, the pieces are coming together to transform our company into a global cancer diagnostics leader.”

Third Quarter 2021 Financial Results

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

  • Total Revenue was $60.4 million, an increase of 94%, including $4.7 million of HalioDx revenue;
  • Gross Margin was 64%, a decrease of 300 basis points including the impact of HalioDx and the associated purchase accounting; Gross Margin equaled 68%, an increase of 100 basis points, before the impact of HalioDx;
  • Operating Expenses, Excluding Cost of Revenue, were $55.4 million, an increase of 123%, including $7.5 million of HalioDx expenses and $5.8 million in acquisition-related expenses;
  • Net Loss was $14.1 million, an increase of 243%, including $5.8 million of acquisition-related expenses and $6.3 million of HalioDx net loss;
  • Basic and Diluted Net Loss Per Common Share was $0.20, an increase of 150%;
  • Net Cash Used in Operating Activities was $1.4 million including $3.9 million of acquisition-related expenses; and
  • Cash and Cash Equivalents were $164.0 million at September 30, 2021.

For the nine months ended September 30, 2021, compared to the prior year:

  • Total Revenue was $152.2 million, an increase of 83%, including $4.7 million of HalioDx revenue;
  • Gross Margin was 66%, an increase of 200 basis points including the impact of HalioDx and the associated purchase accounting; Gross Margin equaled 68%, an increase of 400 basis points, before the impact of HalioDx;
  • Operating Expenses, Excluding Cost of Revenue, were $170.2 million, an increase of 113%, including $7.5 million of HalioDx expenses and $45.3 million of acquisition-related expenses;
  • Net Loss was $65.0 million, an increase of 142%, including $45.3 million of acquisition-related expenses and $6.3 million of HalioDx net loss;
  • Basic and Diluted Net Loss Per Common Share was $0.97, an increase of 87%, including $0.68 per share attributable to acquisition-related expenses recorded in general and administrative expenses; and
  • Net Cash Used in Operating Activities was $40.1 million, including $43.4 million of acquisition-related expenses.

Third Quarter 2021 and Recent Business Highlights

Commercial Growth:

  • Grew volume to 20,972 tests, including a small contribution from the Immunoscore Colon Cancer test, an increase of 79% compared to the same period in 2020.
  • Gained a new Blues coverage policy for Decipher Prostate, making the test a covered benefit for the plan’s 5 million members and bringing the total number of covered lives to over 150 million. Also secured contracts for the test with a large Blues plan and national government payer.

Evidence Development and Guideline Inclusion:

  • Six abstracts demonstrating the performance and utility of our genomic pulmonology and urology tests were presented at the 2021 American College of Chest Physicians (CHEST) and American Society for Radiation Oncology (ASTRO) annual meetings, respectively.
  • New long-term clinical utility data for the Afirma Genomic Sequencing Classifier were published in the Journal of the Endocrine Society and showed that the test helped reduce unnecessary surgeries in patients with indeterminate thyroid nodule cytology.
  • Data published in the Journal of Urology demonstrated that the Decipher Bladder genomic test accurately identifies bladder tumors that are most likely to respond to chemotherapy prior to radical cystectomy.
  • New NCCN Clinical Practice Guidelines for Oncology were published and include specific treatment recommendations for men with prostate cancer uniquely based on their Decipher Prostate RP genomic classifier score.
  • New Pan-Asian adapted ESMO Clinical Practice Guidelines recommended the Immunoscore Colon Cancer test to refine the prognosis of stage 2 and stage 3 colon cancer patients in conjunction with traditional assessment.

Pipeline Advancement:

  • Began offering the Percepta Nasal Swab test to a limited number of sites as part of a clinical utility study to build the clinical evidence needed to support reimbursement.
  • Commenced the commercial launch of the Decipher Bladder test following Medicare coverage.

HalioDx Acquisition:

  • Completed the acquisition of HalioDx for $321 million on August 2, 2021, bringing to Veracyte IVD manufacturing and development capabilities, deep scientific expertise in immuno-oncology and the Immunoscore Colon Cancer test.

2021 Financial Outlook

Veracyte is updating its 2021 annual total revenue guidance to $210 million to $218 million, from the previous guidance range of $200 million to $208 million, with HalioDx expecting to contribute approximately $10 million. This range represents 79% to 86% total revenue growth for fiscal 2021 compared to fiscal 2020.

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/3rcxuu6u. 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.:

9065288

About Veracyte

Veracyte (Nasdaq: VCYT) is a global 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 diagnostic 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, colon cancer, and idiopathic pulmonary fibrosis are available to patients and its renal cancer and lymphoma subtyping tests are in development, the latter as a companion diagnostic. With Veracyte’s exclusive global license to a best-in-class diagnostics instrument platform, the company is positioned to deliver its genomic 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 total revenue and other financial and operating 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, 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 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. Copies 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, HalioDx, Brightplex, 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. Immunoscore is the registered trademark of Inserm in the U.S. and selected countries, and is used by HalioDx under license.

VERACYTE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

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

 

 

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2021

 

2020

 

2021

 

2020

Revenues:(1)

 

 

 

 

 

 

 

Testing revenue

$

50,897

 

 

$

28,270

 

 

$

134,768

 

 

$

70,473

 

Product revenue

2,959

 

 

2,027

 

 

8,706

 

 

7,149

 

Biopharmaceutical and other revenue

6,514

 

 

824

 

 

8,704

 

 

5,325

 

Total revenue

60,370

 

 

31,121

 

 

152,178

 

 

82,947

 

 

 

 

 

 

 

 

 

Operating Expenses:(1)(2)

 

 

 

 

 

 

 

Cost of testing revenue

16,073

 

 

9,118

 

 

42,494

 

 

26,157

 

Cost of product revenue

1,491

 

 

1,048

 

 

4,304

 

 

3,539

 

Cost of biopharmaceutical and other revenue

4,079

 

 

204

 

 

4,720

 

 

572

 

Research and development

8,006

 

 

4,042

 

 

19,591

 

 

12,618

 

Selling and marketing

21,670

 

 

10,955

 

 

57,628

 

 

39,240

 

General and administrative

20,749

 

 

8,546

 

 

82,504

 

 

24,316

 

Intangible asset amortization

4,983

 

 

1,274

 

 

10,507

 

 

3,822

 

Total operating expenses

77,051

 

 

35,187

 

 

221,748

 

 

110,264

 

Loss from operations

(16,681

)

 

(4,066

)

 

(69,570

)

 

(27,317

)

Other income (loss), net

1,202

 

 

(58

)

 

(762

)

 

452

 

Loss before income tax benefit

(15,479

)

 

(4,124

)

 

(70,332

)

 

(26,865

)

Income tax benefit

(1,350

)

 

 

 

(5,297

)

 

 

Net loss

$

(14,129

)

 

$

(4,124

)

 

$

(65,035

)

 

$

(26,865

)

Net loss per common share, basic and diluted

$

(0.20

)

 

$

(0.08

)

 

$

(0.97

)

 

$

(0.52

)

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

69,743,733

 

 

54,858,052

 

 

66,820,654

 

 

51,632,750

 

(1) The financial results of HalioDx are included from the date of acquisition which contributed the following revenue and operating expenses for the three and nine months ended September 30, 2021:

Revenues:

 

Testing revenue

$

75

 

Biopharmaceutical revenue

4,645

 

Total revenue

$

4,720

 

 

 

Operating Expenses:

 

Cost of testing revenue

$

269

 

Cost of biopharmaceutical revenue

3,735

 

Research and development

1,201

 

Selling and marketing

1,508

 

General and administrative

3,568

 

Intangible asset amortization

1,259

 

Other income (loss), net

(526

)

Total operating expenses

$

11,014

 

(2) 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,

 

2021

 

2020

 

2021

 

2020

HalioDx stock-based compensation expense

2,567

 

 

 

 

2,567

 

 

 

Other stock-based compensation expense

5,667

 

 

3,090

 

 

13,587

 

 

9,354

 

Total stock-based compensation expense

8,234

 

 

3,090

 

 

16,154

 

 

9,354

 

VERACYTE, INC.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2021

 

2020

 

2021

 

2020

Net loss

$

(14,129

)

 

$

(4,124

)

 

$

(65,035

)

 

$

(26,865

)

Other comprehensive loss:

 

 

 

 

 

 

 

Change in currency translation adjustments

(8,140

)

 

 

 

(8,140

)

 

 

 

 

 

 

 

 

 

 

Net comprehensive loss

$

(22,269

)

 

$

(4,124

)

 

$

(73,175

)

 

$

(26,865

)

VERACYTE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

 

 

September 30, 2021

 

December 31, 20201

 

(Unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

164,029

 

 

$

349,364

 

Accounts receivable

40,309

 

 

18,461

 

Supplies

9,824

 

 

4,657

 

Prepaid expenses and other current assets

15,146

 

 

3,197

 

Total current assets

229,308

 

 

375,679

 

Property and equipment, net

14,868

 

 

8,990

 

Right-of-use assets, operating lease

16,001

 

 

7,843

 

Intangible assets, net

209,521

 

 

59,924

 

Goodwill

714,273

 

 

2,725

 

Restricted cash

749

 

 

603

 

Other assets

1,636

 

 

1,399

 

Total assets

$

1,186,356

 

 

$

457,163

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

11,201

 

 

$

3,116

 

Accrued liabilities

29,044

 

 

11,705

 

Current portion of deferred revenue

3,440

 

 

371

 

Current portion of acquisition-related contingent consideration

2,646

 

 

 

Current portion of operating lease liability

3,465

 

 

1,589

 

Current portion of other liabilities

241

 

 

 

Total current liabilities

50,037

 

 

16,781

 

Long-term debt

1,075

 

 

810

 

Deferred revenue, net of current portion

552

 

 

829

 

Deferred tax liability

6,234

 

 

 

Acquisition-related contingent consideration, net of current portion

5,251

 

 

7,594

 

Operating lease liability, net of current portion

14,236

 

 

9,917

 

Other liabilities

1,891

 

 

 

Total liabilities

79,276

 

 

35,931

 

Total stockholders’ equity

1,107,080

 

 

421,232

 

Total liabilities and stockholders’ equity

$

1,186,356

 

 

$

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)

 

 

 

 

 

Nine Months Ended

September 30,

 

2021

 

2020

Operating activities

 

 

 

Net loss

$

(65,035

)

 

$

(26,865

)

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

 

 

 

Depreciation and amortization

13,189

 

 

5,919

 

Stock-based compensation

15,787

 

 

9,354

 

Benefit from income taxes

(5,297

)

 

 

Interest on end-of-term debt obligation

161

 

 

162

 

Write-down of excess supplies

 

 

1,088

 

Noncash lease expense

1,566

 

 

714

 

Revaluation of acquisition-related contingent consideration

303

 

 

332

 

Effect of foreign currency on operations

1,601

 

 

(17

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

(6,285

)

 

1,742

 

Supplies

4

 

 

1,262

 

Prepaid expenses and other current assets

(1,905

)

 

(923

)

Other assets

353

 

 

134

 

Operating lease liability

(1,710

)

 

(1,040

)

Accounts payable

3,872

 

 

(534

)

Accrued liabilities and deferred revenue

3,329

 

 

(3,300

)

Net cash used in operating activities

(40,067

)

 

(11,972

)

Investing activities

 

 

 

Acquisition of Decipher Biosciences, net of cash acquired

(574,411

)

 

 

Acquisition of HalioDx, net of cash acquired

(163,645

)

 

 

Proceeds from sale of equity securities

3,000

 

 

 

Purchase of equity securities

 

 

(1,000

)

Purchases of property and equipment

(4,535

)

 

(1,949

)

Net cash used in investing activities

(739,591

)

 

(2,949

)

Financing activities

 

 

 

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

593,821

 

 

193,831

 

Payment of long-term debt

 

 

(100

)

Payment of taxes on vested restricted stock units

(8,307

)

 

(3,161

)

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

10,633

 

 

10,114

 

Net cash provided by financing activities

596,147

 

 

200,684

 

(Decrease) increase in cash, cash equivalents and restricted cash

(183,511

)

 

185,763

 

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

(1,678

)

 

 

Net (decrease) increase in cash, cash equivalents and restricted cash

(185,189

)

 

185,763

 

Cash, cash equivalents and restricted cash at beginning of period

349,967

 

 

159,920

 

Cash, cash equivalents and restricted cash at end of period

$

164,778

 

 

$

345,683

 

 

 

 

 

Supplementary cash flow information:

 

 

 

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

$

31

 

 

$

355

 

Interest paid on debt

$

9

 

 

$

3

 

Issuance of common stock for acquisition of HalioDx

$

147,089

 

 

$

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH

(Unaudited)

(In thousands of dollars)

 

 

 

 

 

September 30,

 

December 31,

 

2021

 

2020

Cash and cash equivalents

$

164,029

 

 

$

349,364

 

Restricted cash

749

 

 

603

 

Total cash, cash equivalents and restricted cash

$

164,778

 

 

$

349,967

 

 

Investor and Media Contact:
Tracy Morris
Vice President of Corporate Communications & Investor Relations
650-380-4413
tracy.morris@veracyte.com

Source: Veracyte, Inc.