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VI

VERACYTE, INC. (VCYT)·Q2 2025 Earnings Summary

Executive Summary

  • Strong beat and raised outlook: Q2 revenue $130.2M and non-GAAP EPS $0.44 exceeded S&P Global consensus ($120.9M revenue; $0.296 EPS), driven by Decipher and Afirma testing strength; non-GAAP EBITDA margin reached 27.5% as lab efficiencies and operating discipline outpaced planned spend . Consensus values from S&P Global: see Estimates Context.*
  • Mix/one‑offs explained GAAP optics: GAAP net loss ($1.0M; -0.8% margin) reflected a $20.5M impairment tied to the French subsidiary’s sale/liquidation and deconsolidation effective Aug 1; management raised FY25 testing revenue and EBITDA margin guidance and initiated total revenue guidance .
  • Execution levers: Decipher volume +28% YoY to ~25.5k (13th straight quarter >25% growth), Afirma volume +8% YoY to ~16.95k; testing ASP of $2,881 (roughly flat ex-PPCs) and elevated testing gross margin (non-GAAP 73.9%) supported profitability .
  • Near-term path: Q3 total revenue to decline sequentially on SAS deconsolidation; testing revenue roughly flat q/q; non-GAAP opex up to $5M sequentially as investments accelerate. Full-year EBITDA margin raised to 23.5% despite stepped-up H2 spend .

What Went Well and What Went Wrong

  • What Went Well
    • Decipher outperformance and breadth: “thirteenth consecutive quarter of over 25% year-over-year volume growth” with ~25.5k tests; management believes Decipher holds ~65% market share and is the only test across the entire risk spectrum (localized to metastatic) .
    • Profitability inflection: Adjusted EBITDA $35.8M (27.5% margin) on higher lab efficiency; non-GAAP testing gross margin 73.9% surpassed expectations, validating 25% adjusted EBITDA long-term goal trajectory .
    • Guidance raised: FY25 testing revenue to $477–483M (from $470–480M) and FY25 adjusted EBITDA margin to 23.5% (from 22.5%); initiated total revenue outlook $496–504M post-France resolution .
  • What Went Wrong
    • GAAP earnings hit by France: $20.5M impairment on French subsidiary (Veracyte SAS) and deconsolidation led to GAAP net loss and an anomalous 178% Q2 GAAP tax rate; management still expects full-year GAAP tax in high single digits .
    • Product margin pressure ahead: With SAS sale and transition to contract manufacturing, product gross margin expected to decline in H2, partially offsetting testing margin gains .
    • Q3 near-term revenue step-down: Total revenue to decline sequentially due to removal of SAS biopharma revenue; testing revenue roughly flat q/q amid typical Afirma seasonality and lower prior period collections .

Financial Results

Overall performance vs prior periods

MetricQ4 2024Q1 2025Q2 2025
Revenue ($M)$118.6 $114.5 $130.2
GAAP Diluted EPS$0.06 $0.09 -$0.01
Non-GAAP Diluted EPS$0.36 $0.31 $0.44
GAAP Gross Margin %66.4% 69% 69%
Non-GAAP Gross Margin %69.3% 72% 71.5%
Adjusted EBITDA Margin %22.0% 21.6% 27.5%
GAAP Net Income (Loss) Margin %4.3% 6.2% -0.8%

Results vs S&P Global consensus (Q2 2025)

MetricQ2 2025 ActualQ2 2025 Consensus*
Revenue ($M)$130.2 $120.9*
Primary EPS ($)$0.44 $0.296*

Segment and revenue mix detail

MetricQ2 2024Q1 2025Q2 2025
Testing Revenue ($M)$107.0 $107.3 $122.3
Product Revenue ($M)$3.9 $3.6 $3.6
Biopharma & Other Revenue ($M)$3.6 $3.6 $4.3
Decipher Revenue ($M)$61.5 (calc from +24% to $76.3) $66.6 $76.3
Afirma Revenue ($M)$41.3 (calc from +5% to $43.4) $38.3 $43.4

KPIs and operating metrics

KPIQ2 2024Q1 2025Q2 2025
Total Tests (All)—40,655 44,966
Testing Volume (Tests)38,000 (approx; 23% YoY to 38,078) 38,078 42,441
Decipher Volume (Tests)~19,900 (calc from +28% to ~25,500) ~22,600 ~25,500
Afirma Volume (Tests)~15,700 (calc from +8% to ~16,950) ~15,500 ~16,950
Testing ASP ($)—$2,818 $2,881; ~$2,825 ex-PPCs
Cash from Operations ($M)—$5.4 $33.6
Cash, Equivalents & ST Inv. ($M)—$287.4 $320.7

Explanatory items:

  • Q2 GAAP net loss driven by $20.5M asset impairment related to Veracyte SAS sale/liquidation; entity deconsolidated Aug 1, 2025 .
  • Non-GAAP excludes amortization, stock-based comp, acquisition-related items, and SAS-related costs per policy .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Testing RevenueFY 2025$470–$480M $477–$483M Raised
Total RevenueFY 2025—$496–$504M Initiated
Adjusted EBITDA Margin %FY 202522.5% 23.5% Raised
Testing Revenue (Seq.)Q3 2025—Roughly flat q/q Commentary
Total Revenue (Seq.)Q3 2025—Down q/q (SAS deconsolidation) Commentary
Non-GAAP Operating ExpensesQ3 2025—Up to +$5M q/q Commentary

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Decipher momentum & share80k+ tests in 2024; ~65% share; Level 1 evidence; 40% market penetration 37% vol. growth; record ordering providers; expansion across NCCN categories 13th straight >25% YoY volume growth; ~25.5k tests; metastatic launch in June, halo in high-risk Positive
Afirma growth/ASPAfirma +8% vol. in Q4; expanded LCD tailwind 10% vol.; LBM issue resolving; GRID evidence building; V2 transcriptome to cut COGS 8% vol. growth; ASP $2,881 (flat ex-PPCs); next GRID version this year; 2026 set-up Stable to improving
Digital Pathology & AIData asset: 50k+ slides scanned 70k slides/40k patients; RUO models; complementary to molecular >90k slides; implement scanning as production workflow; complement genomics Building evidence
MRD platform (WGS)Lab workflow set; MolDX process starting MolDX TA submitted; MIBC first; UMBRELLA/TOMBOLA data MolDX back-and-forth; NEOGLAST trial; launch 1H26; pursue annual indications from 2027 On track
International/IVD (France)Considering no longer funding SAS; exploring buyers; timelines impact Bankruptcy petition accepted; expect full resolution by YE25 Sale of manufacturing to Helio Diagnostics; deconsolidation; expect IVD submissions by 2026 Transitioning
Tariffs/Supply chain—V2 transcriptome to mitigate tariff impacts Tariff surcharge risk contemplated in guide; COGS mitigation in flight Managed risk

Management Commentary

  • “Testing growth continues to exceed our expectations, driven by Decipher which achieved its thirteenth consecutive quarter of over 25% year-over-year volume growth.” — Marc Stapley, CEO .
  • “We delivered adjusted EBITDA of $35.8 million or 27.5% of revenue… validating our sustained 25% adjusted EBITDA goal.” — Rebecca Chambers, CFO .
  • On metastatic launch halo: “We have observed a noticeable uptick in interest from physicians for NCCN high risk patients… reflecting a halo effect in the test expansion into the metastatic setting.” — CEO .
  • On Afirma cost roadmap: “We are planning to transition Afirma onto V2… to reduce our COGS… mitigate tariff impacts.” — CEO .
  • On France restructuring: “The sale… closed on August 1, 2025… we took a $20.5 million impairment… and have deconsolidated the entity as of August 1.” — 8-K .

Q&A Highlights

  • Decipher growth durability: Management targets multi-year double-digit growth supported by penetration, share gains, metastatic expansion, and evidence pipeline; FY25 Decipher revenue implied ~22.5–24% growth in guide construct .
  • Metastatic contribution: Early launch traction is encouraging but not a “meaningful” FY25 revenue driver; halo effect in high-risk is more impactful near term .
  • Afirma ASP dynamics: Q2 testing ASP $2,881; excluding PPCs ~$2,825 (roughly flat YoY); LBM issue from 2024 laps in Nov 2025, setting up cleaner ASPs for 2026 .
  • MRD reimbursement and scope: MolDX TA submitted; launch MIBC in 1H26 with reimbursement in place; whole-genome approach emphasized for earlier detection vs imaging and longitudinal tumor evolution insights .
  • Capital allocation/valuation: Company acknowledges optionality (M&A, repurchases) but prioritizes investing in growth drivers; sees ripe asset landscape .
  • Q3 setup: Total revenue down q/q on SAS deconsolidation; testing revenue roughly flat; non-GAAP opex up to +$5M q/q to fund pipeline .

Estimates Context

  • Q2 2025 results vs S&P Global consensus: Revenue $130.2M vs $120.9M*; Primary EPS $0.44 vs $0.296* — both exceeded Street expectations . Values retrieved from S&P Global.*
  • Forward snapshot (as of current consensus): Q3 2025 revenue $124.9M*, EPS $0.320*; Q4 2025 revenue $131.7M*, EPS $0.392* — implying continued sequential growth trajectory into year-end, though management flagged Q3 total revenue sequential step-down on SAS deconsolidation.*
  • Implications: Expect Street to lift FY25 testing revenue and EBITDA margin models post-raise; some quarterly cadence risk in Q3 given mix and opex ramp, but full-year profitability improving.*

Key Takeaways for Investors

  • Q2 was a clean top- and bottom-line beat with a high-quality mix (testing-led), robust non-GAAP margins, and raised FY25 guidance — a positive revision catalyst .
  • Decipher remains the primary growth engine with durable volume momentum (metastatic launch + high-risk halo), deepening evidence, and share leadership; Afirma holds steady with structural efficiency gains and 2026 tailwinds (LBM lap, GRID upgrades) .
  • Near-term caution: Expect a Q3 total revenue dip and higher opex as investments accelerate; management reiterated confidence in delivering the higher full-year EBITDA margin despite H2 spend .
  • Structural profitability: Testing gross margin and EBITDA margin trajectories showcase operating leverage from lab efficiencies and platform scale, supporting the 25% adjusted EBITDA long-term target .
  • France restructuring is largely de-risked: Deconsolidation clarifies P&L optics; contract manufacturing supports Prosigna continuity while freeing U.S. resources for IVD development .
  • Pipeline catalysts over 12–18 months (Prosigna LDT mid-2026; MRD MIBC 1H26; NIGHTINGALE completion/publication) provide optionality for medium-term re-rating if evidence and reimbursement land as planned .
  • Cash-rich, no-debt balance sheet and consistent cash generation (Q2 CFO $33.6M; liquidity $320.7M) underpin continued investment and optional capital deployment .

Notes and Sources:

  • Press Release and 8-K Q2 2025 financials, guidance, and reconciliations: .
  • Q2 2025 Earnings Call Transcript for ASP, margins, Q3 cadence, strategic commentary: .
  • Q1 2025 release/call (trend context): .
  • Q4 2024 release/call (trend context): .
  • Other Q2 2025 press releases: metastatic Decipher launch (Apr 25) and ASCO abstracts (May 28): .
  • Estimates and consensus values marked with an asterisk () are retrieved from S&P Global. Values retrieved from S&P Global.