Veracyte Announces Second Quarter 2021 Financial Results

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:

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.