Veracyte at Morgan Stanley Conference: Strategic Growth and Innovation

On Tuesday, 09 September 2025, Veracyte Inc. (NASDAQ:VCYT) presented at the Morgan Stanley 23rd Annual Global Healthcare Conference, showcasing its robust performance and strategic vision for future growth. The company highlighted significant achievements in its Decipher and Afirma businesses while focusing on international expansion and innovative product launches. Despite facing a competitive market, Veracyte remains committed to leveraging data-driven strategies to enhance clinical utility and market adoption.

Key Takeaways

• Veracyte reported impressive growth in its Decipher and Afirma businesses, with Decipher volume up 32% year-to-date.
• The company is advancing its international expansion and focusing on launching new products like Prosigna and MRD in 2026.
• Strategic partnerships, such as the one with Helix for hereditary cancer testing, are pivotal for Veracyte’s growth.
• Veracyte maintains a strong profitability profile, with $320 million in cash, no debt, and positive free cash flow.
• The company is investing in digital pathology and whole genome-based MRD testing to drive innovation.

Financial Results

• Decipher volume increased by 32% year-to-date, exceeding expectations.
• Afirma volume grew by 9% year-to-date, meeting projections.
• The adjusted EBITDA margin guide for 2025 was raised to 23.5%.
• Veracyte holds $320 million in cash, with no debt and positive free cash flow.
• The company anticipates higher single-digit volume growth and 6-7% revenue growth for Afirma.

Operational Updates

• Veracyte launched a metastatic product for Decipher and an internal V2 transcriptome product.
• Enrollment for the Nightingale study (2,400 patients) for Percepta is complete.
• The company plans to launch Prosigna in early to mid-2026 and MRD in the first half of 2026.
• Veracyte has successfully restructured its French entity as part of its international strategy.

Future Outlook

• Veracyte is focusing on data-driven strategies to enhance market adoption.
• The company is investing in digital pathology studies for Decipher and expanding test utility across various cancer indications.
• New MRD indications are expected to launch annually from 2027.
• The Percepta nasal swab for lung cancer risk stratification is anticipated around 2029.

Q&A Highlights

• Veracyte aims to increase Decipher market penetration by addressing the entire incident population and leveraging NCCN level one guidelines.
• The company is generating evidence to expand Afirma’s utility across the care continuum.
• The market opportunity for the Percepta nasal swab includes 1.6 million incidental lung nodules, with a broader screening population.

In conclusion, Veracyte’s strategic focus on innovation and expansion positions it well for future growth. For a more detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - Morgan Stanley 23rd Annual Global Healthcare Conference:

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: I think we can get started. Callum Tichmarsh here from the Life Sciences team at Morgan Stanley. Really pleased to be joined by the team from Veracyte. We have Marc Stapley, CEO, and Rebecca Chambers, CFO. Before we get started, the good stuff, the disclosures. Please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. Thank you, everyone, for joining. Marc, maybe just to set the stage for us, can you walk us through how 2025’s played out so far versus your initial expectations? Beyond the numbers, what are you most proud of and what challenges would you maybe call out?

Marc Stapley, CEO, Veracyte: Yeah, I’m happy to, and thanks very much for having us here today. It’s our pleasure to be here. Maybe I can just cover some of the formalities as well and just remind everybody that to the extent we’d be making forward-looking statements that are expected to be covered under the safe harbor that can be found on our website at www.veracyte.com. With that said, I appreciate the question around 2025. It’s been an interesting year for Veracyte so far with a lot of accomplishments under our belt. We actually feel very good about where we are, especially relative to where we were coming into the year. A couple of things. If I think about, you know, starting on the top line, the growth across the businesses has been, the core business has been really encouraging and impressive.

We’ve Decipher growing 32% year to date and Afirma growing 9% year to date in volume terms. You know, Decipher very much exceeding our expectations and Afirma meeting our expectations as we came into the year. That’s an encouraging set of trends. If you think about it in terms of what we’ve accomplished on the product side, we launched our metastatic product for Decipher. We just launched our internal V2 transcriptome product that helps us in the lab and from a cost and scaling standpoint. We are making great progress on our long-term growth drivers in MRD, where we just completed the enrollment of Nightingale, the final patient there, 2,400 patients. You know, we’re making progress on our international strategy.

On that note, we completed our activities with our French entity, and that’s now to a point where we go forward now with a third-party contract manufacturer, which is the great outcome and one that we really strived hard to achieve without interrupting our international business. From a profitability standpoint, I couldn’t be more pleased with how we performed relative to our expectations coming into the year, with some very strong performance on the adjusted EBITDA line. When I net all that out, I think it’s fair to say that 2025 has got off to an extremely good start.

Rebecca Chambers, CFO, Veracyte: Just one quick thing to add. I think as we look into 2026 and beyond, with the metastatic launch, the Stampede publication that came to bear last week or so is actually quite impactful for that metastatic indication as well. Obviously, as we go through any given year, we’re trying to satisfy the catalyst for that year as well as ensure there’s future catalysts. We put the Stampede piece into that future catalyst category.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Great. Lots to dig into there. Maybe let’s start with Decipher. You know, your market leader here, I think 65% share, market itself is around 40% penetrated. What are some of the strategies you’re implementing to further increase penetration from here?

Marc Stapley, CEO, Veracyte: Yeah, thanks for that question. First and foremost, I think it’s fair to say that Decipher is the only test on the market that addresses the entire incident population for prostate cancer now with the addition of metastatic. We’ve been making great progress in low risk, intermediate risk, high risk, and now we expect to do the same in metastatic. That is the, I’d say, the number one kind of push for us. The second is, Decipher has NCCN level one guidelines, and those guidelines have been, I think, a really strong catalyst to help us grow in the localized setting. At some point, especially with reference to the Stampede data and the other studies that Rebecca mentioned, we should be able to get guidelines as well for metastatic.

I think that would be a helpful catalyst, not necessarily needed to start penetration because we proved that in the localized setting. The guidelines are helpful, but they’re not necessary to get going. Then, continuing to drive our core strategy of more data drives more insights, which drives more evidence and drives more penetration. We are consistently coming out with and seeing others launch new data and new studies and new publications that include Decipher, and just continue to grow on the body of evidence that we already have.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Coverage obviously pretty strong now, 200 million covered lives. Afirma obviously closer to 275, I believe. It’s like now, I guess, a smaller tail of lives you need covered. Just talk us through whether you can bridge that gap further from here.

Marc Stapley, CEO, Veracyte: Yeah, it is. I mean, there’s a distinction there in terms of for prostate cancer, it’s more like two-thirds Medicare population. Obviously, we have the Medicare rate, whereas for thyroid cancer, it’s more like one-third. Those two have a very different Medicare dynamic. To your point around covered lives, that’s a commercial payer concept. We have a little way to go on the Decipher side, but we’ve gotten a lot of the big payers along the way, including last year when we had an announcement around one significant one that we added. A little bit more room to grow there, which of course will help bridge that gap between where we are from a Medicare standpoint and our ASP as we get to higher coverage. I’d say there’s a lot of blocking and tackling, and it takes multiple years to get to where Afirma is.

It took multiple years for Afirma to get there. We’ll get there with Decipher. It’ll just take time.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: One of the things that isn’t really captured in the covered lives number is coverage gaps. I’m wondering if there are any that you feel stand out today that are worth targeting?

Marc Stapley, CEO, Veracyte: Not really. I mean, you know, again, it’s that difference between 200 and 270 and making sure that we, you know, we contract with commercial payers and that we do it the right way. Medicaid continues to be for both, you know, our core tests a gap, but that’s with small single digit to a maximum of 10% of the volume there.

Rebecca Chambers, CFO, Veracyte: Yeah, and I would just add, I mean, as Marc mentioned earlier, we’re in the portion where each payer is maybe a couple hundred thousand, maybe a million lives. I think it is an equal amount of work to get those as it is those that are 20, 30 million covered lives. The progress over the last three or four years has been amazing. The team has done a really fabulous job. I expect that their success will continue. It’s just the impact of their success on that pareto of payers is going to be less meaningful in any given year. Over a five-year timeframe, we should absolutely be able to achieve ASP gains on the Decipher side.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Fantastic. You noted an uptick in interest from physicians for NCCN high-risk patients. Help us to understand how meaningful that interest is. I think you suggested the pool represents about 25% of the incidence population.

Marc Stapley, CEO, Veracyte: It does. We’ve been, you know, in a localized setting, gaining penetration into that high-risk market, albeit, you know, intermediate risk is obviously where the greatest penetration typically is and would be. You expect that. On the high-risk side, I think, you know, it’s early days yet because we haven’t had the product fully launched for long, but it’s starting to initiate conversations with patients because we have the metastatic test now who are dealing with high-risk patients. Before, they might have thought, okay, I have a clear pathway, you know, and a way to treat these patients. Now that Decipher metastatic, including some of the studies that have come out in support of it, cover both high-risk and metastatic patients, I actually might be using Decipher going forward to give me a better prognostic outcome for that patient or even, you know, potentially a predictive outcome.

I think what’s encouraging is starting to initiate those conversations. It’s too early to say whether that actually translates to orders in the high-risk setting, but it certainly gives us positive encouragement.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: You touched on it here, but the metastatic side, how’s early feedback been from the broader launch? It’s been two months, so appreciate.

Marc Stapley, CEO, Veracyte: I’d say very positive. We’ve yet to find customers of ours who say they’re not interested in some way in the metastatic. There’s nobody that we’re aware of that has said, no, I wouldn’t use it. I think the level of interest is there. I think you’re going to find physicians from those who say, absolutely, I’m now going to include that on every metastatic patient to the ones who say, I need to see more evidence. A couple of studies are good. Stampede is good, but I want to see more to those who say, I’m going to wait till it’s in guidelines and everything in between those categories.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: You’re continuing to invest in digital pathology studies for Decipher. Maybe just dive into that and give us some color on what excites you.

Marc Stapley, CEO, Veracyte: Yeah, I invest in and enable investment in digital pathology studies. As we did when we launched Decipher, we want to enable research. We want researchers to be able to look at the data both with and without necessarily the molecular diagnostics. They’re able to look at the digital pathology. They’re able to look at outcomes. We’ve scanned 90,000 slides so far across 50,000 patients, and we’re scanning on an ongoing basis. It just gives our researchers the opportunity to do whatever studies they want to do. It gives us the opportunity to fund or support whatever studies we want to support. We continue to believe that it has potential complementary, you know, it could be potentially complementary to molecular diagnostics, but doesn’t replace molecular diagnostics. You don’t get the level of resolution that you get with molecular, with a digital pathology-based test with or without AI.

You just don’t get to that level of detail. We’ve consistently seen that, and some of the early studies have indicated that as well. As the research creates evidence, that evidence could or could not turn into a commercial opportunity. We’ll see how that plays out in the future.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: On the Helix partnership, maybe just walk us through the rationale there and what change you’re hoping to drive with that.

Marc Stapley, CEO, Veracyte: Now that we’ve launched the metastatic test, there are guidelines that suggest that those patients should be getting a hereditary cancer test. Helix is one of the market leaders in terms of capability, in our opinion, around a whole exome-based approach to hereditary cancer. We’ve entered into a partnership with them. Helix takes, as I mentioned, a whole exome approach, which is so consistent with our approach of more data driving more insights. It’s a very natural partnership for us. I should disclose I have a relationship with Helix. I’m on the board. I’m great to see these two companies coming together and being able to create this opportunity so that we can serve our physician customers with a hereditary solution should they need it without necessarily creating a product ourselves that, frankly, we decided we don’t need to do. We’ll let Helix do that.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: How impactful could Stampede be?

Marc Stapley, CEO, Veracyte: Very impactful. I mean, it’s certainly impactful for the patient. If you think about what Stampede tells the physician, which is for, and just to reiterate, for many of the patients who are metastatic, not every patient is going to benefit from docetaxel. In fact, of those patients that aren’t going to benefit, they’re going through the toxicity of the chemotherapy that they don’t necessarily need to go through. In the past, the physicians have had a blunt instrument, if you like, tumor volume to help guide that decision. Stampede’s demonstrated that tumor volume isn’t necessarily the right indicator. It’s not the biomarker. Decipher is a very strong biomarker for which patients will and will not benefit. The opportunity to de-escalate confidently is what Stampede demonstrates. I think that will really help us drive Decipher in the metastatic population. The metastatic population is about 10%.

Call it 30,000 patients per year.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Exciting. I want to shift now onto the thyroid side. Similar question to what I had with Decipher, but I think penetration, thyroid now around 65%. How are you looking to bridge to that 80% that I think you’ve spoken about?

Marc Stapley, CEO, Veracyte: Yeah, and I mean, to continue to get Afirma to the market share and the market penetration that we ultimately think it can get to, I think it’s a lot of continuing to do what we’re already doing. That’s the good news, right? We have a great test. It’s extremely well validated. There’s great evidence for it. With our recent launch of the GRID research tool, we’re enabling more evidence, which again fits in with the whole Veracyte philosophy and strategy around data drives insights, drives evidence, drives adoption. Just a reminder that we run a whole transcriptome in the case of Afirma, just like we do with Decipher. That’s what’s enabling this research to be done. You’ve seen some publications around that recently.

I think that helps to gain share as we think about Afirma as a high-performing test that has a lot of evidence behind it and growing evidence behind it. The other thing is we, as I mentioned before, we launched our V2 transcriptome assay, which is the backbone next-gen sequencing test, the new version of that that we have in our lab. That got launched a couple of weeks ago. The initial patient reports have gone out and everything, thanks to the incredible efforts of our team, has gone very, very well. It’s exciting to see that. That platform will form the backbone of the new tests that we launch like Prosigna as well. It’s a scalable, durable platform for the future of Veracyte.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Will you need to expand the sales force meaningfully to get some of those targets, do you think?

Marc Stapley, CEO, Veracyte: Yeah, it’s a great question. The answer is no. You know, we have, in both Afirma and Decipher, we have, call it, 50+ sales reps who are doing an amazing job. We grow that sales force, you know, between low single digit and five or six people, a handful, every year. That is proving to be not only sufficient but optimal. The territory management is a key component of designing and optimizing the sales team. They do a really good job of that. They’ve built great relationships, and they’re continuing to do so. I couldn’t be happier with both our sales teams, on the urology and the endocrinology side. We don’t see the need for significant outside growth in those teams going forward.

Rebecca Chambers, CFO, Veracyte: The reason for that does come back to the data piece, right? Because we are generating so much data and driving publications that demonstrate the clinical utility, we effectively have a strong podium presence. The leverage, while it is higher cost, obviously, to do a whole transcriptome versus a qPCR panel or something similar, the leverage that it affords us on the R&D and the sales and marketing side is actually quite, quite attractive. We really love this model of having more data to drive more insights and more utility. That translates into the rest of the P&L.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Fantastic. I want to hit on the LCD from last year. I think you talked about up to 30,000 patients annually with that specific nodule classification. How’s that been thus far?

Marc Stapley, CEO, Veracyte: Yeah, I mean, you know, it’s going well. I wouldn’t say it’s huge numbers, and we didn’t expect it to be huge numbers. I mean, in that indication of Bethesda-5, we’re starting to see some traction there. I think it just helps to, again, reinforce the breadth and depth of our test. We added TERT promoter gene a couple of years ago as well for a very similar reason. The more the utility can expand across the care continuum and across indications like we have with Decipher as well, the more we’re able to service our customers and be an ally to them in giving them more insights. We’re starting to see some physicians who are interested in Afirma for B5, but the bulk of the growth is continuing to come from the indeterminate B3B4.

Rebecca Chambers, CFO, Veracyte: Just one thing to add, about a third of those 30,000 are actually Medicare patients. That’s what the LCD covers. For commercial coverage, some do, some don’t. We would have to grind all the way up to that 30,000. When you think about the prioritization of our managed care team, they’re obviously going to go after Decipher before they focus on B5, right? Also, contracting more on the Afirma side. That’s just one thing. That’s one of the reasons why it’s not as large of a driver as metastatic. Metastatic conversely has the same patient population, but two thirds is Medicare. It’s going to be a much more meaningful driver.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Right. Got it. Just, you know, framing up volume growth, I think you’re expecting higher single digits this year.

Rebecca Chambers, CFO, Veracyte: Yes.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Six or seven % revenue growth. Is this the right framework to be thinking about Afirma over the mid to long term?

Rebecca Chambers, CFO, Veracyte: Yeah, so when it comes down to it, you’re having incidence growth of around 3%. We have share gains and we have penetration, right? Those are the three vectors by which we will continue to grow Afirma. We haven’t officially guided, you know, what we would expect Afirma revenue growth to be outside of 2025. There’s no reason to think that a mid to high single digit type delivery of volume growth isn’t achievable. At some point in time, that does start to peter out. We thought it was going to be 2022, 2027, 2028, 2029. We’re just going to have to, you know, I think we have a good line of sight on a rolling 12-month basis.

Given where we are at in the penetration curve and the life cycle, obviously share and incidence growth is going to be increasingly important for us to be able to continue to deliver mid to high single digits.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Understood. You touched on GRID. I think new version coming later in the year. Just talk us through some of the features we should expect with the new version and how it improves upon what we have today.

Marc Stapley, CEO, Veracyte: Yeah, I mean, we listen to our customers as they complete this research and look at the data, the extraneous data that is provided by that. Our goal is always to take some of those features and move them into the clinical report over time if they have value and utility. That’s something that we look at on both the Decipher and Afirma side. No clarity yet on what those indications are, but it’s based on what the customers’ physicians are telling us that they’re interested in.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Understood. Shifting onto Percepta, talk us through the market opportunity for nasal swab and how you go about addressing that unmet need.

Marc Stapley, CEO, Veracyte: Yeah, so a reminder for everybody, the Percepta nasal swab is a, it’s what it says. It’s a nasal swab, quite simply, that is used to classify patients as low, intermediate, and high risk for lung cancer. Think of it as a truly non-invasive test for patients who’ve got a lung nodule. These patients are either current or former smokers who meet that criteria. This test is able to be used, as I said, to help classify their risk of lung cancer. The population is significant. The largest population today is the incidental population, patients who are found to have a lung nodule when they’re undergoing some other procedure. They’re not there for screening. That is about 1.6 million patients a year in the U.S. alone. The screening population is much larger. There’s about 15 million patients who should be getting lung cancer screening in the U.S.

every year, according to the NCCN guidelines. Only a very small % of those patients are actually getting screened today. That results in around another 300,000 lung nodules discovered. Call it combined, roughly 2 million today that could grow as screening penetration grows, which it should and it needs to. When we launch this test, we’ll be able to address that roughly 2 million or whatever number it is at that time. I say when we launch this test, we’ve just completed the 2,400 Nightingale studies I mentioned with the last patient from the Dorna. Huge congratulations to all of our investigators and our team for that massive lung study. It’ll take us a while, a year or two, to follow up those patients and see how the clinical utility of the test is demonstrated in that population. Of course, we’re going to need to get a peer-reviewed publication.

We’re going to need to get Medicare reimbursement. We’re not looking to launch the test without reimbursement. That’s what this Nightingale study is all about and sort of will drive. We’ve got a little bit of work to do ahead of us and excited to launch our test when it’s ready.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: When should we be expecting something in the market?

Marc Stapley, CEO, Veracyte: I think if you look at the timeframe I’ve said, that one to two years plus publication plus Medicare reimbursement, it’s not in the next three years. This is a meaningful driver in our 10-year plan, but not in our three-year plan. We’re thinking in the timeframe of 2029 or thereabouts.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Okay, and keeping on the theme of innovation, with Prosigna, you’re targeting that launch early to mid-2026. How are you thinking about the U.S. market opportunity here, given it’s a pretty well-established breast cancer market?

Marc Stapley, CEO, Veracyte: Yeah, to take a step back and describe that a little bit, we already have the Prosigna test. It’s based on the well-respected, scientifically robust PAM-50 signature. We’ve owned that test since 2019. It’s sold in Europe today as an IVD, and you know that’s where we’re getting some traction. The whole object of this LDT launch is for the U.S. market, which, as you mentioned, is a very significant market. It’s around 225,000 patients per year who are identified with breast cancer that could benefit from the Prosigna test. It’s a very well-covered market today. It’s a competitive market. The key to the launch of that will be just like it is with any test that we launch or anybody else has launched.

It’s all about evidence and what that evidence tells you and how that evidence is viewed by the key opinion leaders and the academics and the physicians who utilize the test and whether it gives them incremental utility and helps them, as I said before, in the prostate case with deciding the right pathway for their patient. We believe, which is why we’re investing in this now, we believe that Prosigna, when we launch it mid-next year, in conjunction with new data that will come out, that it will provide physicians with incremental insights that will be valuable. Therefore, we’ll be able to start to sell that test in the U.S. market as an LDT.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Fantastic. MRD targeting the launch in MRD in the first half of 2026. What are the next steps for securing reimbursement? I think you had some feedback from the tech assessment submitted in March. Just give us the update there.

Marc Stapley, CEO, Veracyte: Yeah, so again, we’re taking a little bit of a step back on MRD and reminding everybody that we acquired a whole genome-based MRD platform. When I say whole genome-based, I mean every step of the way. Not just that initial tissue and blood sample, but every surveillance sample thereafter would be a whole genome. We believe in that. It fits in with our philosophy of more data drives more insights, more evidence, and so on. You’ll keep hearing us talk about that. This is a great way for us to enter the MRD market. It will address multiple indications of cancer, but we’re starting in muscle invasive bladder cancer for two very simple reasons. One is we have a channel to the urologist where a lot of the decisions are made, not all of them, but a lot of them are made around patients with muscle invasive bladder cancer.

Secondly, clear path to reimbursement. To your point around the tech assessment, we submitted that earlier this year. We’re going through the normal back and forth as you would expect. Ultimately, our goal is to get a reimbursement decision with a rate that is to be determined that hopefully reflects the true value of this approach and this test. We’re ready to launch that test. Our expectation is that test launches in the first half of next year.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: How do you go about competing in a market with these, you know, up-and-comers that also have established themselves quite well? I think you have two angles here. You have these competitors, but also you have a really underpenetrated population. Maybe just talk us through that.

Marc Stapley, CEO, Veracyte: I think you’ve hit the nail on the head. I mean, you do have an underrepresented population. There’s plenty of room for multiple players to grow. The rising tide lifts all boats. It’s great to see others investing in really driving, as well as us in driving the utility of MRD. I mean, it’s becoming very clear that it has utility in multiple indications. It makes sense for us to be a part of that. We need to deal with a differentiated test, and that’s where the whole genome comes in. We believe in that, and it comes with its downside. Its downside is it costs a lot more initially.

If you think about it in 10 years’ time, it’s hard to imagine as that cost curve evolves, which I think we all expect it will, that everybody isn’t thinking about whole genome in MRD because of the richness of the data that you’re going to be able to get there. We feel good about that. Of course, in muscle invasive bladder cancer as an indication, we feel fairly bullish because of our presence in the channel and how well regarded and our strong brand. Beyond that, we’re going to launch new indications every year from 2027, and in some of those cases, we’re going to have to build the channel. Then we’ll be competing on a different playing field.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: You hit on the data side, and it’s an interesting angle that we’re seeing more so in the industry now. How are you going about leveraging that data, or how do you plan on going about leveraging that?

Marc Stapley, CEO, Veracyte: It’s an excellent question. I mean, we leverage the data first and foremost to drive evidence around our core tests. The way we’ve talked about it before, like for example, GRID. That is the first. You don’t put a line on the spreadsheet for revenue associated with that because that isn’t driving revenue. We’re not monetizing data. We also aren’t leaning in today heavily on the BioPharma side. As we enter into whole genome-based MRD, it’s pretty clear that the level of interest from BioPharma, especially around the whole genome, is going to be meaningful. Over time, that could potentially be a focus area for us. Not yet. We’re still very focused on launching our clinical test, which is really our core business. We’ll see how that plays out over time.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Outside of MRD, you again, loosely tasked from it, but which other indications interest you?

Marc Stapley, CEO, Veracyte: We haven’t guided to which indications we’re going to launch in yet and when. There are a lot of factors that influence that. If you think about Veracyte today, we have tests in prostate, thyroid. We’re going to be launching in lung, breast, bladder. Five key indications today, and many or some of those would be key targets potentially for MRD. It could go beyond that too. This test, we believe it has utility across multiple indications. We’ll launch in the right ones at the right time.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Great. A lot of the focus of the discussion so far has been U.S. I wanted to touch on international. Maybe just give us the State of the Union outside of the U.S. and what you’re seeing.

Marc Stapley, CEO, Veracyte: Yeah, to talk a little bit about our strategy there, we’ve got these great tests that we’ve developed for the U.S. market. I just mentioned the five kind of key indications there. We’ve got tremendous evidence behind our tests as well, especially the ones that are on the market already. We’re generating evidence for those that are not. There are patients, in fact, in many cases, more patients in, let’s just start with Europe, who could benefit from these tests. Take prostate cancer, right? We’re dealing with 300,000 patients annually in the U.S. and growing. There’s about half a million patients outside the U.S. and Europe who could benefit from the test. It’s almost a travesty that those patients are being treated without the benefit of a molecular diagnostic. There’s a reason for that. Getting into those markets is difficult. Reimbursement is a challenge.

You have to go country by country. We believe that we’ve got the right approach. We’re launching our tests as IVDs. We’re going to have our Decipher PCR-based test and our Prosigna MGS-based test ready by the end of next year. Now that we’ve gone through the process we went through with France, we will get IVDR approval for those tests at some point. We will get reimbursement for those tests country by country. The sales force that we actually already have will be able to add that menu to what they’re selling to those labs. We’ll be able to launch those tests outside the U.S. as well. While it’s a different margin profile to the U.S., from a bottom line perspective, we think we can make it viable.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Is the sales team, the structure outside the U.S., is it similar to what you have in the U.S.?

Marc Stapley, CEO, Veracyte: No, it’s very different. You’re selling to other labs. Yeah, it’s very different. The good news side of that is it’s the same team that would sell multiple indications.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Yeah. Rebecca, for you, just on the profitability front, you raised the 2025 adjusted EBITDA margin guide to, I think, 23.5% last quarter. That’s closing in on that 25% long-term target. From this point onwards, how do you think about weighing up, you know, wanting to keep that profitability scaling and also wanting to keep that top line moving up as well?

Rebecca Chambers, CFO, Veracyte: Yeah, our focus is absolutely on ensuring we maintain a very attractive profitability profile, while augmenting revenue growth, right? We have a set of opportunities in front of us to invest that can serve, in the end, more patients. Given patients are our purpose, that is effectively what’s driving our investment. As we look here for the next five years, we have a great opportunity set in front of us. We are going to invest accordingly. At some point in time, we’ll deliver that 25%. Above and beyond that, I don’t actually think that’s the best thing for the company because we are at a stage where we have so many great opportunities to invest. I think as you think about the next three to five years, I would think about us funneling those incremental profits back into the organization to drive organic revenue growth.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Great. I have to ask a shorter-term question.

Rebecca Chambers, CFO, Veracyte: Of course.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: We obviously heard from you only a month and a half back. Anything changed from the messaging from the second quarter to where we are today?

Rebecca Chambers, CFO, Veracyte: Nothing that has changed at this point in time. No, of course.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Good to know. On capital allocation, I think $320 million of cash, no debt, positive free cash flow.

Rebecca Chambers, CFO, Veracyte: Very good.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: How are you thinking about capital allocation from this standpoint? What are your priorities mid-term, longer term as well?

Rebecca Chambers, CFO, Veracyte: Yeah, so for the last three or four years, we’ve really focused on setting the foundation for the company, right? We have focused on our systems, our G&A organizations in an effort to be able to fully scale and bring in more assets. As we look for the next three to five years, I think we’ve become more offensive. That doesn’t mean anything materially potentially will change. We could become more offensive while also, you know, saying no to a lot of things. I would say our bar isn’t necessarily changing. I think when it comes down to it, we now have that foundation in place. There are a number of assets out there we’re not willing to take on because they’re science experiments, but there are also a number of assets out there that are starting to become more interesting.

We are absolutely keeping a very high bar, but at the same time, you know, actively thinking about what would make sense.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: A couple of minutes left. Last one, and I’d like an answer from both of you.

Rebecca Chambers, CFO, Veracyte: Oh, no.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: What’s something you wish investors asked you more often or paid more attention to? What should we be asking you that perhaps we haven’t?

Marc Stapley, CEO, Veracyte: Yeah, I think that’s an excellent question. I think investors understand our core business and the growth opportunity that we have there. I think as you think about the long-term growth drivers, we should be getting a lot of credit for what we’re planning to do there before we hit some of the milestones. What I mean by that is, we delivered and executed on this business quarter after quarter consistently. We’ve launched new products. We’ve driven a path to profitability very, very well, ahead of actually our own expectations. Our intentions, we got, what is it now, in these two years, some behind us, some ahead of us, roughly six product launches, including the internal facing stuff as well as the completion of Nightingale. I think we’ve continued to deliver. Of course, the work that we went through with FAS, which was very complex and somewhat time-consuming as well.

We are now in a really strong position. I think it would be helpful for investors to focus a little bit on the positives around the pipeline and talk a little bit more about that and not assume that, while these are competitive markets, remember, Decipher was launched into a competitive market. Decipher was the third test. It wasn’t the first test. Through that data-forward approach and our commitment to evidence and good strong science and our strong commercial team, we’ve become the market leader. We’ve got a track record of doing that.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: You have one minute.

Rebecca Chambers, CFO, Veracyte: I have one minute. I don’t know if I have anything to add, which is a first. We’ll leave it there.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Okay, great. Marc, Rebecca, thank you so much.

Rebecca Chambers, CFO, Veracyte: Thank you.

Marc Stapley, CEO, Veracyte: Thank you.

Callum Tichmarsh, Life Sciences Team, Morgan Stanley: Appreciate it.

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