Veracyte Announces First Quarter 2022 Financial Results

Grew Total Revenue to $67.8 million, an Increase of 85%

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

Veracyte, Inc. (Nasdaq: VCYT) today announced financial results for the first quarter ended March 31, 2022.

"I am extremely pleased with our team’s strong results in the first quarter,” said Marc Stapley, Veracyte’s chief executive officer. “Last year we assembled the critical elements needed to drive near and long-term growth, including our acquisitions of Decipher Biosciences and HalioDx, complementing our prior acquisition of the nCounter diagnostic platform. We opened this year with the organization re-aligned to fully execute our strategic plan initiatives. With our innovative lab-based business and international reach, enabled by the automated nCounter platform, we are positioned to achieve our vision of improving outcomes for patients all over the world.”

Key Business Highlights:

• Increased first quarter total revenue by 85% to $67.8 million, compared to the first quarter of 2021;
• Grew test volumes to 23,245, an increase of 61% compared to the first quarter of 2021;
• Announced that new, expanded data will be presented at the upcoming American Thoracic Society (ATS) 2022 International Conference on the Percepta Nasal Swab test’s performance in current and former smokers with lung nodules, regardless of their smoking history burden;
• Announced that three abstracts will be presented at the upcoming American Urological Association conference highlighting new data on the genomic underpinnings of prostate and bladder cancers, derived from analyses of the Decipher GRID database;
• Introduced the Veracyte Biopharma Atlas, a unique pan-cancer database of comprehensive biomarkers linked to clinical outcome data leveraging Veracyte’s unique multi-omic and immuno-oncology capabilities, at the American Association for Cancer Research annual meeting in April;
• Announced that an updated clinical practice guideline, as well as a review article and separate commentary, were published in journals of the American Thoracic Society and highlight the role of the Envisia Genomic Classifier in the diagnosis of idiopathic pulmonary fibrosis (IPF); and
• Ended the first quarter of 2022 with cash and cash equivalents of $163.6 million.

First Quarter 2022 Financial Results

Total revenue for the first quarter of 2022 was $67.8 million, compared to $36.7 million in the first quarter of 2021. Testing revenue was $56.0 million, an increase of 69% compared to $33.1 million in the first quarter of 2021 driven by the strong performance of our Decipher urology portfolio. Product revenue was $3.0 million, a decrease of 3% compared to $3.1 million in the first quarter of 2021 as volume growth was offset by an approximately 5% currency headwind due to a decline in exchange rates. Biopharmaceutical and other revenue was $8.8 million, an increase of $8.2 million compared to $0.6 million in the first quarter of 2021, driven primarily by the contribution of the HalioDx acquisition.

Total gross margin for the first quarter of 2022, including the amortization of acquired intangible assets, was 58%, compared to 62% in the first quarter of 2021. Non-GAAP gross margin, excluding the amortization of acquired intangible assets and other acquisition related expenses was 65%, compared to 66% in the first quarter of 2021.

Operating expenses, excluding cost of revenue, were $54.4 million, a decrease of 20% compared to the first quarter of 2021. Non-GAAP operating expenses, excluding the cost of revenue, amortization of acquired intangible assets and other acquisition related expenses, were $49.1 million compared to $31.9 million in the first quarter of 2021.

First quarter 2022 net loss was $14.5 million, an improvement of 65% compared to the first quarter of 2021. Basic and diluted net loss per common share was $0.20, an improvement of 70% compared to the first quarter of 2021. Net cash used by operating activities in the first quarter of 2022 was $8.9 million, an improvement of $31.7 million compared to the first quarter of 2021.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included in this press release. An explanation of these measures is also included below under the heading "Note Regarding Use of Non-GAAP Financial Measures."

2022 Financial Outlook

The company is currently projecting full year 2022 total revenue of $265 million to $275 million, representing year-over-year growth of 21% to 25% compared to the prior year. This compares to our prior 2022 total revenue guidance of $260 million to $275 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 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/iy7oapub. 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 diagnostics company that improves patient care by answering important clinical questions to inform diagnosis and treatment decisions. Our growing menu of advanced diagnostic tests help patients avoid risky, costly procedures and interventions, and reduce time to appropriate treatment. Our tests address eight of the ten most prevalent cancers as defined by incidence in the United States. In addition to making our tests available in the United States through our central laboratories, our exclusive license to our best-in-class diagnostics instrument positions us to deliver our tests to patients worldwide through laboratories that can perform them locally. 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 2022 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 tests and products, including our biopharma atlas, 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 our ability to launch, commercialize and receive reimbursement for our products, to successfully integrate the HalioDx and Decipher businesses and execute on our business plans; continue to scale our global operations and enhance our internal control environment; the impact of the COVID-19 pandemic and its variants on our business and general economic conditions; and the performance and utility of our 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 on February 28, 2022, and our Quarterly Report on Form 10-Q to be filed for the three months ended March 31, 2022. Copies of these documents, when available, may be found in the Investors section of our website at www.investor.veracyte.com. These forward-looking statements speak only as of the date hereof and, except as required by law, we specifically disclaim 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, Decipher, Decipher GRID, Afirma, Percepta, Envisia, Prosigna, LymphMark, Immunoscore, TMExplore, Brightplex, Immunosign, “Know by Design” and “More about You” are registered trademarks of Veracyte, Inc. and its subsidiaries 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.

Note Regarding Use of Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release and the accompanying tables contain, and reference certain non‐GAAP results including non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP loss from operations. These measures are not meant to be considered superior to or a substitute for financial measures calculated in accordance with GAAP, and investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool.

We use non-GAAP measures to internally evaluate and analyze financial results. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures. However, the non-GAAP measures we present may be different from those used by other companies.

We exclude amortization of acquired intangible assets, acquisition-related expenses relating to our acquisitions of Decipher Biosciences and HalioDx from certain of our non-GAAP measures. Management has excluded the effects of these items in non-GAAP measures to help investors gain a better understanding of the core operating results and future prospects of the company, consistent with how management measures and forecasts the company's performance, especially when comparing such results to previous periods or forecasts. The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non‐GAAP information and the reconciliation between these presentations, to more fully understand its business.

Reconciliations between our GAAP results and non‐GAAP financial measures are presented in the tables of this release.

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