Veracyte at William Blair Growth Stock Conference: Strategic Insights Unveiled

On Tuesday, 03 June 2025, Veracyte Inc (NASDAQ:VCYT) presented at the 45th Annual William Blair Growth Stock Conference, offering a detailed look into its strategic initiatives and financial performance. The company emphasized its mission to transform cancer care through molecular diagnostics, highlighting both growth prospects and challenges. While Veracyte reported strong financial results, the company also acknowledged the need for careful balance between expansion and financial discipline.

Key Takeaways

• Veracyte reported a 28% testing revenue growth in 2024, with a 20.6% adjusted EBITDA margin.
• The company aims for a 12% to 15% testing revenue growth in 2025, with a 22.5% adjusted EBITDA margin.
• Key growth drivers include the Decipher and Afirma products, with significant market penetration.
• Strategic initiatives include the launch of Prosigna for the U.S. breast cancer market and the development of an MRD platform for bladder cancer.
• The company plans to manage costs through operational efficiencies, including the liquidation of Marseille operations.

Financial Results

Veracyte’s financial performance in 2024 was robust, with a 28% increase in testing revenue and a 20.6% adjusted EBITDA margin. The momentum continued into the first quarter of 2025, showing a 19% growth in testing revenue. The company has set a guidance for 2025, targeting a 12% to 15% increase in testing revenue and an adjusted EBITDA margin of 22.5%, marking an improvement of nearly 200 basis points from the previous year.

Operational Updates

Veracyte’s core products, Afirma and Decipher, played a pivotal role in its revenue, accounting for 95% of total revenue in 2024. The company reported that over 275,000 patients have been tested with Decipher, which holds a 65% market share. The launch of Decipher Prostate for metastatic populations is expected to further expand its market. Meanwhile, Afirma has tested over 350,000 patients, sparing more than 60% from unnecessary thyroidectomy, and is expected to see high single-digit revenue growth in 2025.

Looking ahead, Veracyte plans to launch Prosigna as a laboratory-developed test (LDT) for the U.S. breast cancer market in mid-2026 and is developing an MRD platform for muscle invasive bladder cancer, with a commercial launch anticipated in the first half of 2026.

Future Outlook

Veracyte is focused on balancing growth expectations with financial discipline, aiming for a long-term adjusted EBITDA margin target of 25%. The company is also planning to expand its MRD indications annually beginning in 2027. Additionally, the completion of the Percepta nasal swab Nightingale study enrollment is expected in the third quarter of 2025, which could further enhance its product offerings.

Q&A Highlights

During the Q&A session, Veracyte executives discussed various profitability levers, including the liquidation of Marseille operations, which is expected to result in a $20 million flow down to the operating expense line. The company also plans to implement a cost of goods sold (COGS) reduction roadmap. The expansion of Decipher into metastatic disease risk stratification and potential reimbursement tailwinds were highlighted as significant growth drivers.

Organizational readiness was also addressed, with existing channels expected to support initial MRD indications and Decipher growth, minimizing the need for additional sales personnel. However, the Prosigna launch will require building a dedicated sales team, aligned with revenue growth expectations.

In conclusion, Veracyte’s presentation at the William Blair Growth Stock Conference provided a comprehensive overview of its strategic direction and financial targets. For further details, readers are encouraged to refer to the full transcript below.

Full transcript - 45th Annual William Blair Growth Stock Conference:

Andrew Brackman, Diagnostics Analyst, William Blair: We all set in the back? Alright. Hi, everyone. Good afternoon. Thanks for joining us today as we wrap up the first day of the William Blair growth growth stock conference.

If you haven’t heard me yet so far today, I’m Andrew Brackman. I’m the diagnostics analyst here at William Blair that covers Veracyte. We’re pleased to have the team from Veracyte here today, doctor John Lott Light, and then Rebecca Chambers, the CFO, representing from the team. For a full list of research disclosures, I am required to tell you to visit william blair dot com. With that, I’ll turn it over to John.

John, thanks for being here.

John Lott Light, Veracyte: Thank you. In spite of my youthful appearance, I am gonna need these to read my notes.

Andrew Brackman, Diagnostics Analyst, William Blair: Let’s see here. I need

Rebecca Chambers, CFO, Veracyte: to do anything else? There we go.

John Lott Light, Veracyte: Yep. Still no. Okay, great. All right, good afternoon. Thank you.

I’m excited to walk you through Veracyte’s recent progress and specifically where we’re heading next as we continue to improve cancer care for patients all around the world, which is our mission. I am going to be reminding you that I’ll be making some forward looking statements. Our Safe Harbor can be found in this presentation as well as on our website at veracyte.com. Okay. So at Veracyte, our vision is in fact to transform cancer care through highly specialized molecular diagnostics.

We say it all the time: patients are our purpose, And our work is fundamentally grounded in translating test results into meaningful and actionable insights to clinicians, to their staff, so that patients can receive the right treatment at the right time. And importantly our vision is to serve cancer patients all over the world and not just in The United States. Our fundamental strategy is founded upon the notion that our diagnostic tests should be designed to ensure that more data is generated upfront, genomic and multiomic, and can be leveraged through research to fuel deeper insights, which generates stronger evidence substantiating the clinical utility of these tests and expands their use case and ultimately leads to even more data. And so this flywheel is the foundation of the Veracyte diagnostic platform. And this is a novel approach that we expect will continue to drive growth.

We are leveraging our platform to serve patients throughout the cancer journey from early detection to diagnosis, treatment selection, and with our recent addition of minimal residual disease or MRD, treatment effectiveness and monitoring. I’m proud of our portfolio today with tests spanning thyroid, prostate, bladder, breast cancer tests. Our focus is on serving patients with cancer on patients suspected of having cancer. And looking ahead, we have a rich and exciting portfolio of products into development over the next few years which will expand our indication as well as our reach across the cancer continuum with our MRD and Percepta nasal swabs. And I’ll share more details on the pipeline plans shortly.

Our platform continues to drive meaningful impact, with 600,000 patients served to date and more than 500 publications validating the performance and the clinical utility of our tests. Our strong clinical evidence not only drives commercial adoption but also supports a uniquely differentiated financial profile. In 2024 we delivered 28% testing revenue growth and 20.6% adjusted EBITDA margin which is an incredible statement of the testament of the team’s hard work and our execution. This strong financial performance is driven by the testing revenue of our two core products, Afirma and Decipher. Together, these tests account for 95% of our total revenue in 2024.

This momentum continued in the first quarter with testing revenue growth of 19% and Q1 represented our eleventh consecutive quarter of 20% or more testing volume growth. We’re encouraged by the ongoing durability of our testing business, and we’re confident in delivering our expectations for this year and beyond. Now taking a closer look at our Decipher test. We’re very pleased with the 37% volume growth that we saw for Decipher in Q1 and we have now tested over 275,000 patients at the end of this quarter. That’s driven by our strong body of evidence spanning over 90 clinical studies demonstrating clinical validity and utility.

This is evidence that’s fueling incredible growth in adoption, enabling Decipher to become the market leading test for prostate cancer prognosis and prediction. Notably in the first quarter, we saw both a record number of ordering providers, up over 20% over the prior year, and an increase in orders per physician. For Decipher, the market is large and unfortunately it is still growing, with approximately 314,000 patients diagnosed with prostate cancer on an annual basis, including metastatic patients. We estimate the market was 40% penetrated as of the end of twenty twenty four and that Decipher is about 65% of that market share. Our long term goal is to drive to at least 80% market penetration in all of our indications.

Now Decipher has grown very well in the last few years with a three year revenue CAGR of over 45% through last year 19% to 20% growth implied in 2025 guidance and strong double digit revenue expected going forward. This is driven by expanding our market penetration and favorable market share dynamics. We’re proud that Decipher is the only gene expression test recommended in NCCN guidelines, which we believe is a key differentiator for us commercially. We continue to see broad based expansion across all National Comprehensive Cancer Network or the NCCN risk categories, which is something that we’re particularly proud of with roughly similar growth across low, intermediate, and high risk categories. We’re also pleased to recently announce that Decipher Prostate will now be available for use in the metastatic population on a limited basis and will be available broadly this month.

This launch meaningfully expands the population appropriate for Decipher testing, serving an incremental thirty thousand patients diagnosed annually and increasing our TAM by about ten percent. We’ll soon be addressing the entire risk profile of prostate cancer, further strengthening our confidence in the test’s long term growth trajectory and entrenching Decipher firmly in clinicians’ minds in supporting more of their prostate cancer patients. Shifting gears to Afirma, where we’re the market leader in thyroid diagnostics. We have tested now more than 350,000 patients as of the end of the first quarter and over sixty percent of these patients were spared an unnecessary thyroidectomy through the utility of our test. We now have over 160 publications to date and in the first quarter again drove double digit volume growth.

While the endocrinology market is more mature than prostate, we estimate the market was approximately sixty five percent penetrated as of the end of twenty twenty four. There’s still a long runway to get to about the eighty percent penetration target I mentioned earlier. Of that sixty five percent, we believe that Afirma has about 52% of the market share. We expect Afirma to deliver high single digit revenue growth this year driven by gains in incidence, penetration, and share in 2025. We saw increased year on year utilization per account and growth was further driven by the expanded local coverage determination that now includes reimbursement for Medicare and for the Bethesda-five population.

Despite Afirma being on market for thirteen years, the volume strength that we’re seeing as well as indication expansion and product enhancements we’ve delivered makes us confident on a go forward durability of the Afirma franchise. Additionally, as part of our overall COGS reduction roadmap, we’ve now been working to transition Afirma onto version two of our Veracyte transcriptome that’s running most robust and cost effective sequencing technology. We’ll launch Afirma on the updated assay this summer. We’re very proud of the ability to grow our US CLIA tests with Decipher and Afirma making up the majority of our revenue today. We have a number of other strategic growth drivers that we’re focused on beyond growing Afirma and Decipher, including adding indications in The United States, serving more of the patient journey through mineral residual disease, and expanding geographically with our IVD strategy, and in solving new cancer challenges with tests like our nasal swab.

I’m excited to share our progress across each of these initiatives now. Starting with Prosigna. On our earnings call last month, we announced our decision to launch Prosigna as an LDT for The U. S. Breast Cancer market, given that there’s tremendous opportunity we see in the years going ahead.

There are over three hundred thousand patients diagnosed annually with breast cancer in The United States and approximately two hundred and twenty five thousand of those have early stage hormone receptor HER2 negative disease that would be eligible for the test. Prosigna is based on well known, scientifically respected, and backed by decades of research on the PAM50 signature, can provide physicians and their patients with additional insight on biological classification of the cancer and the risk of recurrence to help inform treatment decisions. Now while Prosigna is currently available only as an IVD on the nCounter platform, the Prosigna LDT will be run out of our CLIA laboratory using our brand new V2 Veracyte transcriptome. Commercial availability will begin, expected in mid-twenty twenty six, and we believe key trial data readouts, one of which was recently shared at ESMO Breast Conference, will support adoption of Prosigna, augmenting Decipher and Afirma growth in the near to mid term. As always, we’re focused on driving evidence for the test through the Veracyte diagnostic platform to continue to support research for patients navigating this highly stressful diagnosis and the associated treatment paths.

Moving on to MRD. Our MRD approach is differentiated in that it is based on a whole genome every step of the way, including the initial baseline sequencing followed by sequencing of serial testing samples of plasma. This approach is backed by our fundamental strategy that more data upfront drives more insights, drives more clinical evidence, more payer coverage, and therefore is more durable to driving adoption. We’ve made good progress in advancing our MRD platform for our first indication which is muscle invasive bladder cancer, and that’ll leverage our strong Decipher brand and channel that serves urologists and radiation oncologists. We remain on track for commercial launch in the first half of twenty twenty six once we have reimbursement in place.

While we’re initially focusing on muscle invasive bladder cancer beginning in 2027, we plan to deliver indication expansion on an annual basis, serving more patients across more indications each year. Turning now to our geographic expansion. As a growth driver, where we’re committed to launching our tests as IVDs to address patient needs outside The US. There are approximately two hundred and seventy thousand patients diagnosed with HER hormone positive HER2 negative breast cancer in Europe each year. Today we have the Prosigna test available for those patients on the nCounter platform, but to further expand the reach of our tests we are developing Prosigna as an IVD on next generation sequencing technology.

Similarly, there are over 450,000 patients each year in Europe diagnosed with prostate cancer that don’t have access to a test like Decipher which is why we’re developing Decipher as an IVD on qPCR technology as a distributable test to serve this patient population. We expect CipherPCR IVD and Prosigna NGS IVD product development work to be completed by the end of twenty twenty six and will submit to the regulatory body for IVDR approval at that point. Moving on to our last growth driver of solving new cancer challenges. With innovative products like Percepta nasal swab, lung cancer is the leading cause of death worldwide and there are over one point six million incidental lung nodules detected each year, approximately fifteen million people who should be getting screened for lung cancer. This is a massive market, and we believe that effective early risk classification to indicate whether invasive or surgical management is appropriate downstream, and a non invasive test like a Percepta is the key to properly treat patients with an identified lung nodule and would further result in the expansion of the lung cancer screening market overall.

Our pivotal Nightingale study is now close to ninety five percent enrolled, with enrollments expected to be completed in the third quarter. And we’re pleased that our analytical validity data was published in a BMC Cancer paper in the first quarter demonstrating the robustness of the test. These are the key steps to bringing this important test to patients. Now taking a closer look at our financials, we saw very strong growth for both total revenue and testing revenue in 2024 and continued this momentum going into 2025. We’ve delivered 18% total revenue and 19% testing revenue growth in Q1 and I couldn’t be more proud of our team and our accomplishments.

Moving on to profitability metrics. Our financial profile continues to be best in class driven by our disciplined approach. In 2024, we recorded $24,000,000 of GAAP net income, dollars 20,600,000.0 adjusted EBITDA margin, and we ended the year with $289,000,000 in cash and short term investments. Looking ahead to our outlook for 2025, we’ve now guided to 12% to 15% testing revenue growth on our Q1 earnings call and when adjusting for our portfolio decision we’ve made earlier around the Envisia test which was a non oncology product in our portfolio, our testing revenue is expected to grow 14% to 16% year on year. On our Q1 earnings call we raised our 2025 adjusted EBITDA margin expectations to 22.5 that represents a nearly 200 basis points improvement from 20.6 in 2024.

We are focused on balancing our strong growth expectations with financial discipline to reach our longer term adjustable EBITDA target of 25%. We’re really proud of our ability to drive a differentiated profitability profile. With this strong revenue and profitability growth profile as the backdrop, we’re now on solid footing to deliver upon our rich and exciting pipeline of products in development over the next few years and beyond. To date, 2025 is shaping up to be another great year for Veracyte and above all, we remain deeply committed to our mission of transforming cancer care and improving patient lives all over the world. With that I’m going bring it to a close and just say thank you.

Andrew Brackman, Diagnostics Analyst, William Blair: Thanks, John. Before we turn the microphones off for the purposes of our breakout session, I’ll just ask a couple of questions in terms of fireside, and then we’ll fill the mics and do the breakout in this room. John, Rebecca, maybe start off where you left on the presentation, the adjusted EBITDA target, right? It was this time last year at this conference where you provided the longer term target of 25%, right? Now a year later, we’re guiding to over 22% in 2025.

So as I sort of think about the building blocks to that, can you discuss the levers that you need to pull to get to your current target, your longer term target, and then if we think longer term, what’s the peak target?

Rebecca Chambers, CFO, Veracyte: Yeah, I probably will defer on the last piece of that obviously, but really the goal with our profitability is to deliver a best in class profile, which you know, think we have come a long ways. Last year in the first quarter I think we were just shy of around 15%. This year in the first quarter we were at 20.6%. Our goal of 22.5% for 2025 is predicated on us delivering you know effectively our plans that we have in place and we manage our portfolio quite carefully such that we can do so. And so I think at this point in time unless something you know knock on wood unexpected happens we’re well on our way.

We are setting the stage for continued profitability. There are two primary programs that we really focus on to do so. The first and we’ve talked about extensively is the Marseille operations. They are currently undergoing the liquidation process. That has a $20,000,000 flow down to the operating expense line, 7,000,000 of which we’ll reinvest and that is expected to be completed this year so you know to the extent that $13,000,000 can lend itself to investing in the plethora of growth drivers that John mentioned or it can, you know, a portion of that could be dropped to the bottom line.

That is a process that we’ll figure out the actual balance of which over the course of the remainder of this year as we budget for next. The other is our COGS reduction roadmap. This is quite extensive and we’re sharing the Afirma V2 transcriptome will be launched you know here shortly and over the summer and we’ll have the benefit of a quarter or two of it, but looking forward to next year we have a full year benefit of it, right? And so that will also be a driver which will balance between profitability and reinvestment for growth. Overall our philosophy is to do our best to drive a double, you know, an attractive revenue growth profile, balancing that with that profitability.

25% I do think is reasonable to, you know, to have us hit here in the coming years. We have not put a timeframe on it. It is absolutely a prioritization exercise between making sure we’re giving the business what it needs such that we can deliver on our incredibly exciting growth profile and growth drivers while making sure we also have a very differentiated profile from an adjusted EBITDA and cash perspective. So you know all of that is called portfolio management. Everyone in this room does it day in day out.

We are no different. We just have a different set of things we’re managing and so you know as we sit and make these types of decisions with our peers and obviously with Mark and the board, that’s what we’re balancing. We’re balancing making sure revenue growth is on the come and at the same time making sure there’s not a lot of waste in the system and that every dollar being spent has a very high return.

John Lott Light, Veracyte: Maybe I

Andrew Brackman, Diagnostics Analyst, William Blair: guess just along the same lines of profitability, a question that I asked on the last quarter call was organizational readiness as you enter this new phase of growth from the pipeline. So in that lens, can you talk about organizational readiness and the need to spend additional capital as you get to the launch of these products?

Rebecca Chambers, CFO, Veracyte: Yeah, I’ll take it and John can weigh in as well because it’s his organization that needs to be ready. So I love talking for you. But no, our organizational readiness, so if you look at the growth drivers whether it’s the first indication for MRD or the metastatic growth driver, both of those will be serviced by the urology channel which today is well established and are already immensely productive. And so I think when it comes down to it, yes, you know we might add a couple of sales heads here or there for the urology channel just like we do every year, but I don’t necessarily worry about that team. They know how to do this.

With regard to the Prosigna growth driver, we will have to prime the organization and build a sales team. That will be very much a measured approach as we see revenue growth come in. We’ll have a small initial investment but nothing that’s going to dramatically alter our profitability profile. And you know for the indications above and beyond on the MRD front, we will also need to build that channel but that will be very much overlapping with the Prosigna side of the house. Anything I missed?

Andrew Brackman, Diagnostics Analyst, William Blair: No. And maybe just last one here before we turn the webcast off, Decipher. Decipher has obviously been a massive growth engine for you guys over the last few years since you acquired that. Now as you

Andrew Brackman, Diagnostics Analyst, William Blair: look to ’25 and beyond, can you

Andrew Brackman, Diagnostics Analyst, William Blair: just walk through the levers of growth, be that NCCN, metastatic, reimbursement wins, etcetera?

John Lott Light, Veracyte: Yeah. I mean, it’s very clear that we’re very, very proud of the performance of Decipher. I’m even more proud of the transformative impact that it’s had on how prostate cancer gets managed. One area that we never really fully quantify is the value that our sales team brings to the relationships with docs every day. We’re literally having those meaningful engagements and transforming how these patients are managed on a day to day basis.

Decipher has gone very much from a prognostic tool now to almost a therapy clinical decision support tool, and we’re expanding that across low, intermediate, high risk and localized disease and now expanding into metastatic disease. So I think about the growth drivers, there’s still a lot of growth to go in terms of overall penetration. I think there’s still more favorable tailwinds in terms of our ability to gain more share. And ultimately there’s still more to be gained in terms of the overall use of the test. So I’ll give you an example.

Our launching of the metastatic disease test started to prompt more questions about, are you telling me that I can risk stratify metastatic disease? I thought all metastatic disease was just bad and when I see a metastatic patient I just want to treat them as aggressively as I possibly can. Now you have a test like Decipher to say that there’s grades of risk within the metastatic state, and there are patients that you can afford to take a more measured approach and more conservative, and others where you know they should be treating more aggressively. And just having that as a backstop has now created a whole new conversation around high risk prostate cancer. And high risk on localized disease used to be the case that I don’t necessarily need to order a Decipher test.

I know these are high risk, I know I’m going to treat them aggressively. Now having that backstop on the metastatic setting tells me well maybe I should take a more measured approach on a high risk as well, risk stratify those with decipher, see if I can reclassify those to an intermediate state, and if that’s the case now I can afford to treat that patient a little bit more conservatively. We’re going see growth in areas where we’ve traditionally not seen growth historically.

Andrew Brackman, Diagnostics Analyst, William Blair: And then on the reimbursement side, any sort of tailwinds associated with it?

John Lott Light, Veracyte: I mean we’re never done on the reimbursement side. That’s the great part of job security in that role. But certainly there’s always room to get more favorable coverage policies and covering more of the overall profile of the disease. And then there’s still contracts for us to go get. I think we’ve gotten some of the really big ones so you don’t see these step functions in ASP anymore, but there’s still a lot of regional players and that’s the long tail that we have to continue to pursue.

Rebecca Chambers, CFO, Veracyte: John is absolutely right. Obviously this year given the prior period collections of last year, there’s a decent ASP headwind and so our revenue growth guidance for Decipher takes that into account. We would expect volume growth to be greater than that revenue growth contributing, but over a five year timeframe ASP should absolutely normalize those types of dynamics and be a tailwind.

Andrew Brackman, Diagnostics Analyst, William Blair: Okay. So with that we’ll kill the webcast.

Andrew Brackman, Diagnostics Analyst, William Blair: Thank you.

Andrew Brackman, Diagnostics Analyst, William Blair: Good? All right.

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