VERACYTE, INC. (VCYT)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered total revenue of $114.5M (+18% y/y) with testing revenue of $107.3M (+19% y/y); GAAP diluted EPS was $0.09 and non-GAAP diluted EPS was $0.31, with adjusted EBITDA of $24.7M (21.6% margin) .
• Results beat S&P Global consensus: revenue $114.5M vs $111.0M estimate and non-GAAP EPS $0.31 vs $0.205 estimate; GAAP EPS $0.09 not directly comparable to “Primary EPS” consensus *.
• Management reiterated FY2025 testing revenue guidance of $470–$480M (12–15% y/y; 14–16% ex-Envisia) and raised adjusted EBITDA margin guidance to 22.5% from 21.6% .
• Catalysts: Decipher Prostate metastatic launch (limited access now, broad in June), evidence momentum in urology and MRD; watch for Marseille (France) exit process impacts on product/biopharma revenues and gross margin in Q2 .

Note: Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

• Eleventh consecutive quarter of ≥20% testing volume growth; Decipher volume +37% (~22,600 tests) and revenue +33% ($66.6M); Afirma volume +10% (~15,500 tests) and revenue +6% ($38.3M) .
• Margin execution: GAAP gross margin 69% (from 65% y/y), non-GAAP gross margin 72% (from 68% y/y); adjusted EBITDA margin 21.6% (from 14.9% y/y) .
• Strategic progress: limited access launch of Decipher Prostate for metastatic patients (Medicare-covered), target broad orders in June; strong evidence pipeline (AUA/ESMO/ASCO GU, GRID); MRD platform data showing earlier recurrence detection vs imaging (median 93 days earlier) .

Quote: “We delivered a healthy adjusted EBITDA margin of 21.6%… and ended the quarter with a strong balance sheet” – CEO Marc Stapley .

What Went Wrong

• Afirma revenue growth lagged volume due to 2024 prior-period collection tailwinds and lingering claim adjudication from a lab benefit manager coverage error; testing ASP down ~3% y/y to $2,818 (≈$2,800 ex-PPC) .
• Marseille subsidiary bankruptcy process to conclude by year-end; expect lower fixed-cost absorption and biopharma/product headwinds near-term; annual SAS loss ~$20M and one-time cash costs ~$15M flagged previously .
• Q2 outlook embeds sequential step-down in gross margin from Marseille and consumable timing; product revenue ~$2.5M and biopharma/other ~$1.5M as SAS winds down .

Financial Results

Segment breakdown (Q1 2025):

KPIs:

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Q1 total revenue of $114.5 million… fueled by testing revenue, which grew 19% y/y… we delivered a healthy adjusted EBITDA margin of 21.6%” – Marc Stapley, CEO .
• “Testing gross margin was 74%… benefit of automation and lab efficiency programs… we are raising adjusted EBITDA margin guidance… to 22.5%” – Rebecca Chambers, CFO .
• “Decipher Prostate is available for use in the metastatic population on a limited basis and will be available broadly in June” .
• “We submitted our tech assessment to MolDx [for MRD] and remain on track for commercial launch in the first half of 2026 once we have reimbursement in place” .

Q&A Highlights

• Guidance clarity: Street beat came from product/biopharma, not testing; testing guidance right on top of Street; maintained FY testing revenue due to Marseille uncertainty on total revenue .
• Afirma dynamics: 10% volume vs 6% revenue (+PPC in 2024; LBM coverage error still working through payers); targeting high-single-digit revenue growth for 2025 .
• Marseille: annual loss $20M; confidence in completing proceedings by end-2025; expect gross margin pressure and onetime cash costs ($15M) .
• Decipher ASP/volume trajectory: metastatic ASP slightly higher (Medicare mix) but offset by non-Medicare coverage ramp; volume growth implied in guide (19–22% revenue growth) .
• MRD differentiation: whole-genome approach prioritized for lead time vs imaging and specificity; goal to be adjusted EBITDA accretive over multiyear despite higher sequencing COGS; will launch with reimbursement .
• Prosigna LDT strategy: evidence-led differentiation in a penetrated U.S. market; measured build-out of med onc channel .

Estimates Context

• Veracyte beat consensus revenue and Primary EPS in each of the last three quarters; Q1 2025 outperformance aligns with margin execution and Decipher strength .
• Implications: Street models likely to lift FY non-GAAP EPS and EBITDA margin assumptions following the guidance raise to 22.5% and evidence of lab efficiencies; testing revenue guide held steady, but Q2 sequential step-up expected .

Note: Values retrieved from S&P Global.*

Key Takeaways for Investors

• Core testing engine remains robust: Decipher and Afirma volume growth, margin improvements, and cash generation support sustained double-digit growth .
• Strategically important launch: Decipher metastatic expands TAM (~30k U.S. metastatic cases annually) and should support share gains; June broad availability is a near-term catalyst .
• Profitability trajectory improving: Raised FY2025 adjusted EBITDA margin to 22.5%; expect Q2 gross margin step-down but second-half projects to benefit margins .
• Watch Marseille unwind: Near-term headwind to product/biopharma revenues and fixed cost absorption; process expected to conclude by year-end .
• MRD platform building differentiation: TOMBOLA specificity advantage and earlier detection vs imaging; reimbursement path advancing via MolDx submission .
• Afirma revenue vs volume reconciling: Expect normalization as claim adjudication completes and v2 transcriptome mitigates tariffs/COGS .
• Medium-term thesis: Multiple launch catalysts (Decipher metastatic, Prosigna LDT, MRD) layered onto a high-evidence platform and disciplined cost execution should expand margins while driving top-line growth .

Additional Source Details

• 8-K 2.02 and Q1 2025 press release include full financial statements, non-GAAP reconciliations, and FY guide changes .
• Prior quarters press releases (Q4 2024, Q3 2024) used for y/y trend and evidence milestones .
• Other relevant press releases (Decipher metastatic availability; MRD TOMBOLA data) inform strategic drivers and upcoming catalysts .