Yahoo Finance Veracyte Inc (VCYT) (Q1 2024) Earnings Call Transcript Highlights: Strong Start with Revenue ...
Revenue: $96.8 million, up 17% year-over-year.
Testing Revenue: $90.3 million, a 25% increase from the previous year.
Total Testing Volume: Approximately 31,000 tests.
Testing Average Selling Price (ASP): Approximately $2,900, adjusted ASP around $2,800 excluding out-of-period payments.
Product Volume: Approximately 2,500 tests.
Product Revenue: $3.5 million, down 9% year-over-year.
Biopharmaceutical and Other Revenue: $3 million, down 51% year-over-year.
Non-GAAP Gross Margin: 68%, a decrease of about 70 basis points from the previous year.
Testing Gross Margin: 71%, down 160 basis points year-over-year.
Product Margin: 25%, decreased due to start-up costs.
Biopharmaceutical and Other Gross Margin: 6%, decreased due to lower fixed cost absorption.
Non-GAAP Operating Expenses: $61.6 million, up 6% year-over-year.
GAAP Net Loss: $1.9 million, including significant acquisition-related expenses and stock-based compensation.
Cash and Cash Equivalents: Ended the quarter with $209.2 million.
2024 Revenue Guidance: Raised to $402 million to $410 million.
2024 Cash Guidance: Expected to end with $236 million to $240 million.
Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Veracyte Inc (NASDAQ:VCYT) reported a strong start to 2024 with first quarter revenue of $96.8 million, a 17% increase year-over-year.
The testing business grew by 25%, driven by the performance of the Decipher Prostate and Afirma tests.
Veracyte Inc (NASDAQ:VCYT) achieved a new quarterly volume record with 16,500 Decipher Prostate tests, indicating strong market penetration and adoption.
Updated NCCN guidelines have included the Decipher Prostate test with a high evidence rating, enhancing its credibility and utility in clinical decisions.
Veracyte Inc (NASDAQ:VCYT) signed a significant contract with a major commercial payer, expanding network coverage for the Decipher Prostate test to nearly 30 million members.
Negative Points
Despite overall growth, product revenue was down 9% year-over-year due to supplier issues impacting demand.
Biopharmaceutical and other revenue declined by 51% year-over-year, reflecting spending constraints across the industry.
Non-GAAP gross margin decreased slightly by approximately 70 basis points compared to the prior year period.
The pace of patient enrollment for the Percepta Nasal Swab test is tracking below updated expectations, which may delay completion.
Veracyte Inc (NASDAQ:VCYT) downsized commercial support for the ViziLite test, indicating a shift in strategic focus and potential challenges in that product segment.
Q & A Highlights
Q: Can you parse out the growth rate for Decipher, and how should we think about market penetration impacts versus share wins or incidence growth moving forward? A: (Marc Stapley - CEO) Decipher's growth is driven by market penetration, overall market growth for molecular diagnostics, and significant share gains. The volume grew roughly 30% year over year, and revenue grew by about 36%. The updated NCCN guidelines and a new commercial contract are expected to bolster ASP and further drive growth. The goal is to drive the total market to a place where 80% of patients are treated with a molecular diagnostic, predominantly using Decipher.
Q: What might be driving the slowdown in enrollment for the Nightingale trial? A: (Marc Stapley - CEO) The slowdown is attributed to typical challenges faced by large multi-site pulmonology trials, not due to a lack of physician interest or market potential. The trial's design prioritizes robust scientific and clinical rigor, which may limit patient eligibility and affect enrollment rates. The company is focused on ensuring the trial is conducted correctly rather than speeding through enrollment.
Q: Regarding the MRD for muscle-invasive bladder cancer, can you comment on your development strategy given the competition? A: (Marc Stapley - CEO) The strategy involves leveraging an existing LCD for muscle-invasive bladder cancer, focusing on internal development and necessary tech assessments for reimbursement. The whole-genome sequencing approach of the MRD platform is expected to provide a robust body of clinical data, aiding in commercial traction and future expansion into other indications.
Q: How are you thinking about the FDA final rule on LDTs and its impact on Veracyte? A: (Marc Stapley - CEO) Veracyte is well-prepared for the new regulations, having already established robust quality systems and regulatory approvals (CLIA, New York State). While additional regulation may introduce some cost burdens, these are expected to be offset by cost optimizations elsewhere in the business. The company views itself as well-regulated and ready to comply with any new requirements.
Q: Can you discuss the traction and demand for the Affirma and Decipher tests at the AUA conference? A: (Marc Stapley - CEO) The conference had a strong focus on the updated NCCN guidelines and the inclusion of metastatic coverage for Decipher. The presentations and abstracts were well-received, indicating strong ongoing support and interest from the medical community. The company continues to see opportunities to expand and grow in all indications and markets for both Affirma and Decipher.
Q: What are the revenue expectations for Decipher and Affirma within the context of the updated guidance? A: (Marc Stapley - CEO) Testing overall is exceeding expectations, with Decipher being a larger driver of growth. The company has raised its guidance for testing revenue growth to 15%-18%, reflecting strong performance and positive market reception. Decipher and Affirma are both expected to contribute significantly to revenue growth, supported by strategic initiatives and market expansion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
