VERACYTE, INC. [VCYT] Filings

10-Q 1 vcyt-20240630.htm 10-Q vcyt-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-36156

VERACYTE, INC.

(Exact name of registrant as specified in its charter)

Delaware

20-5455398

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

6000 Shoreline Court, Suite 300

South San Francisco, California 94080

(Address of principal executive offices, zip code)

(650) 243-6300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value, $0.001 per share

VCYT

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐

No x

As of August 2, 2024, there were 76,812,124 shares of common stock, par value $0.001 per share, outstanding.

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VERACYTE, INC.

INDEX


						Page No.
PART I. — FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)						1
Condensed Consolidated Balance Sheets as of June 3 0 , 2024 and December 31, 2023						1
Condensed Consolidated Statements of Operations for the Three and Six Month Periods Ended June 3 0 , 2024 and 2023						2
Condensed Consolidated Statements of Comprehensive Income (Loss ) for the Three and Six Month Periods Ended June 3 0 , 2024 and 2023						3
Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Month Periods Ended June 3 0 , 2024 and 2023						4
Condensed Consolidated Statements of Cash Flows for the Six Month Periods Ended June 3 0 , 2023 and 2023						6
Notes to Condensed Consolidated Financial Statements						7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						20
Item 3. Quantitative and Qualitative Disclosures About Market Risk						32
Item 4. Controls and Procedures						33
PART II. — OTHER INFORMATION
Item 1A. Risk Factors						34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						71
Item 3. Defaults Upon Senior Securities						71
Item 4. Mine Safety Disclosures						71
Item 5. Other Information						71
Item 6. Exhibits						71
SIGNATURES						73

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VERACYTE, INC.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements concerning our business strategy and plans, future operating results and financial position, as well as our objectives and expectations for our future operations, are forward-looking statements.

In some cases, you can identify forward-looking statements by such terminology as “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” and similar expressions that convey uncertainty of future events or outcomes, although not all forward-looking statements contain these words. Forward-looking statements include, but are not limited to, statements about:

•the factors that may impact our financial results;

•our expectations regarding total revenue and total test volume;

•our expectations with respect to our future research and development, general and administrative and selling and marketing expenses and our anticipated uses of our funds;

•our expectations with respect to the impact of inflation, volatile interest rates and foreign exchange fluctuations, the war in Ukraine and the ongoing conflict in the Middle East, any impacts of the upcoming U.S. election, energy and supply chain disruptions, and the resulting market volatility on our business;

•our beliefs with respect to importance of maintaining libraries of clinical evidence;

•our expectations regarding the Percepta Nasal Swab classifier for early lung cancer classification;

•our expectations regarding the addition of minimal residual detection capabilities to our diagnostic platform;

•our expectations regarding the timing and success of our transition to offering more of our tests as in vitro diagnostic tests on multiple platforms worldwide;

•our ability to continue to receive quality reagents and other raw materials from certain single source suppliers, and to manufacture our in vitro diagnostics, or IVD, products;

•our ability to successfully integrate C2i Genomics, Inc., or C2i, HalioDx and Decipher Biosciences into our business and our ability to run our tests on the nCounter Analysis System, as well as other platforms worldwide;

•our expectations regarding our partnerships and agreements;

•our expectations regarding capital expenditures, our anticipated cash needs and our estimates regarding our capital requirements and profitability;

•our business strategy and our ability to execute on our strategy;

•our ability to obtain and maintain Medicare, other government payer, and other commercial third party payer reimbursement at acceptable levels and our expectations regarding the timing of reimbursement;

•our expectations with regard to the estimated number of patients eligible for our tests and the attributes and potential benefits of our tests and any future tests we may develop to patients, physicians, and payers;

•our expectations on our ability to drive demand for and reimbursement of our tests; our sales, marketing and distribution capabilities and strategy;

•our intellectual property position;

•the impact of government laws and regulations, policies, guidance agency interpretations and judicial decisions; and

•our beliefs in our competitive position.

We caution you that the foregoing list does not contain all of the forward-looking statements made in this report. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, and financial needs. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. We disclaim any intention or obligation to publicly update or revise any forward-looking statements for any reason or to conform such statements to actual results or revised expectations, except as required by law.

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PART I. — FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements-(Unaudited)

VERACYTE, INC.

Condensed Consolidated Balance Sheets

(unaudited)

(In thousands, except share and par value amounts)


	June 30, 2024		December 31, 2023
			(See Note 1)
Assets
Current assets:
Cash and cash equivalents	$	235,915	$	216,454

Accounts receivable	50,304		40,378
Supplies and inventory	19,258		16,128
Prepaid expenses and other current assets	15,629		12,661
Total current assets	321,106		285,621
Property, plant and equipment, net	22,291		20,584
Right-of-use assets, operating leases	18,116		10,277
Intangible assets, net	112,532		88,593
Goodwill	752,107		702,984
Restricted cash	1,088		876
Other assets	7,087		5,971
Total assets	$	1,234,327	$	1,114,906
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	12,084	$	12,943
Accrued liabilities	43,455		38,427
Current portion of deferred revenue	2,195		2,008
Current portion of acquisition-related contingent consideration	7,348		2,657
Current portion of operating lease liabilities	7,185		5,105
Current portion of other liabilities	72		101
Total current liabilities	72,339		61,241

Deferred tax liabilities	1,483		734
Acquisition-related contingent consideration, net of current portion	13,889		518
Operating lease liabilities, net of current portion	13,553		7,525
Other liabilities	540		786
Total liabilities	101,804		70,804
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized, no shares issued and outstanding as of June 30, 2024 and December 31, 2023	—		—
Common stock, $0.001 par value; 125,000,000 shares authorized, 76,743,663 and 73,264,738 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	77		73
Additional paid-in capital	1,627,307		1,536,168
Accumulated deficit	(464,251)		(468,121)
Accumulated other comprehensive loss	(30,610)		(24,018)
Total stockholders’ equity	1,132,523		1,044,102
Total liabilities and stockholders’ equity	$	1,234,327	$	1,114,906

The accompanying notes are an integral part of these condensed consolidated financial statements.

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VERACYTE, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue:
Testing revenue	$	106,970	$	81,749	$	197,273	$	154,145
Product revenue	3,906		4,011		7,443		7,903
Biopharmaceutical and other revenue	3,552		4,562		6,556		10,696
Total revenue	114,428		90,322		211,272		172,744
Cost of revenue:
Cost of testing revenue	27,920		23,333		53,899		42,981
Cost of product revenue	1,874		2,315		4,518		4,477
Cost of biopharmaceutical and other revenue	3,812		4,040		6,650		8,459
Intangible asset amortization - cost of revenue	2,909		4,814		5,824		9,618
Total cost of revenue	36,515		34,502		70,891		65,535
Gross profit	77,913		55,820		140,381		107,209
Operating expenses:
Research and development	16,465		12,541		32,430		25,310
Selling and marketing	24,216		25,756		47,998		51,886
General and administrative	31,745		25,047		57,955		46,100
Impairment of long-lived assets	—		—		429		1,410
Intangible asset amortization - operating expenses	881		527		1,619		1,052
Total operating expenses	73,307		63,871		140,431		125,758
Income (loss) from operations	4,606		(8,051)		(50)		(18,549)
Other income (loss), net	2,755		(226)		5,503		2,181
Income (loss) before income taxes	7,361		(8,277)		5,453		(16,368)
Income tax provision	1,627		125		1,583		125
Net income (loss)	$	5,734	$	(8,402)	$	3,870	$	(16,493)
Earnings (loss) per share:
Basic	$	0.07	$	(0.12)	$	0.05	$	(0.23)
Diluted	$	0.07	$	(0.12)	$	0.05	$	(0.23)
Shares used to compute earnings (loss) per common share:
Basic	76,538,325		72,478,662		75,649,057		72,327,897
Diluted	77,163,149		72,478,662		76,600,079		72,327,897

The accompanying notes are an integral part of these condensed consolidated financial statements.

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VERACYTE, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(In thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income (loss)	$	5,734	$	(8,402)	$	3,870	$	(16,493)
Other comprehensive income (loss):
Change in currency translation adjustments	(1,703)		(917)		(6,592)		3,563








Net comprehensive income (loss)	$	4,031	$	(9,319)	$	(2,722)	$	(12,930)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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VERACYTE, INC.

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

(In thousands)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount
Balance at March 31, 2024	76,425	$	76	$	1,617,465	$	(469,985)	$	(28,907)	$	1,118,649
Issuance of common stock on exercise of stock options and vesting of restricted stock units	319	1		1,291		—		—		1,292

Tax portion of vested restricted stock units	—	—		(1,303)		—		—		(1,303)
Stock-based compensation expense (employee)	—	—		9,573		—		—		9,573
Stock-based compensation expense (ESPP)	—	—		281		—		—		281
Net income	—	—		—		5,734		—		5,734
Other comprehensive loss	—	—		—		—		(1,703)		(1,703)
Balance at June 30, 2024	76,744	$	77	$	1,627,307	$	(464,251)	$	(30,610)	$	1,132,523

Balance at December 31, 2023	73,265	$	73	$	1,536,168	$	(468,121)	$	(24,018)	$	1,044,102
Issuance of common stock and options for acquisition	2,698	3		74,142		—		—		74,145
Issuance of common stock upon exercise of stock options and vesting of restricted stock units	701	1		2,562		—		—		2,563
Issuance of common stock under employee stock purchase plan (ESPP)	80	—		1,697		—		—		1,697
Tax portion of vested restricted stock units	—	—		(5,135)		—		—		(5,135)
Stock-based compensation expense (employee)	—	—		17,301		—		—		17,301
Stock-based compensation expense (ESPP)	—	—		572		—		—		572
Net income	—	—		—		3,870		—		3,870
Other comprehensive loss	—	—		—		—		(6,592)		(6,592)
Balance at June 30, 2024	76,744	$	77	$	1,627,307	$	(464,251)	$	(30,610)	$	1,132,523

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	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount
Balance at March 31, 2023	72,383	$	72	$	1,509,861	$	(401,808)	$	(26,866)	$	1,081,259
Issuance of common stock on exercise of stock options and vesting of restricted stock units	260	1		1,286		—		—		1,287

Tax portion of vested restricted stock units	—	—		(890)		—		—		(890)
Stock-based compensation expense (employee)	—	—		9,882		—		—		9,882
Stock-based compensation expense (ESPP)	—	—		499		—		—		499
Net loss	—	—		—		(8,402)		—		(8,402)
Other comprehensive loss	—	—		—		—		(917)		(917)
Balance at June 30, 2023	72,643	$	73	$	1,520,638	$	(410,210)	$	(27,783)	$	1,082,718

Balance at December 31, 2022	71,959	$	72	$	1,500,191	$	(393,717)	$	(31,346)	$	1,075,200
Issuance of common stock upon exercise of stock options and vesting of restricted stock units	592	1		3,275		—		—		3,276
Issuance of common stock under ESPP	92	—		1,974		—		—		1,974
Tax portion of vested restricted stock units	—	—		(3,168)		—		—		(3,168)
Stock-based compensation expense (employee)	—	—		17,494		—		—		17,494

Stock-based compensation expense (ESPP)	—	—		872		—		—		872
Net loss	—	—		—		(16,493)		—		(16,493)
Other comprehensive income	—	—		—		—		3,563		3,563
Balance at June 30, 2023	72,643	$	73	$	1,520,638	$	(410,210)	$	(27,783)	$	1,082,718

The accompanying notes are an integral part of these condensed consolidated financial statements.

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VERACYTE, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Six Months Ended June 30,
	2024		2023
Operating activities
Net income (loss)	$	3,870	$	(16,493)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	11,328		13,529
Loss on disposal of property, plant and equipment	68		136
Stock-based compensation	17,873		18,366
Deferred income taxes	23		125
Noncash lease expense	2,287		1,977
Revaluation of acquisition-related contingent consideration	863		(344)
Effect of foreign currency on operations	896		(167)
Impairment loss	429		1,410
Changes in operating assets and liabilities:
Accounts receivable	(10,086)		1,789
Supplies and inventory	(3,266)		2,782
Prepaid expenses and other current assets	(2,183)		(2,530)
Other assets	(1,213)		(1,048)
Operating lease liabilities	(2,446)		(2,091)
Accounts payable	(1,706)		792
Accrued liabilities and deferred revenue	3,872		(3,734)
Net cash provided by operating activities	20,609		14,499
Investing activities
Acquisition of C2i, net of cash acquired	5,012		—
Purchase of short-term investments	—		(19,700)
Proceeds from sale of short-term investments	—		39,773
Proceeds from maturity of short-term investments	—		5,000

Purchases of property, plant and equipment	(4,904)		(4,662)
Net cash provided by investing activities	108		20,411
Financing activities
Payment of taxes on vested restricted stock units	(5,135)		(3,168)
Proceeds from the exercise of common stock options and employee stock purchases	4,260		5,250
Net cash (used in) provided by financing activities	(875)		2,082
Increase in cash, cash equivalents and restricted cash	19,842		36,992
Effect of foreign currency on cash, cash equivalents and restricted cash	(169)		43
Net increase in cash, cash equivalents and restricted cash	19,673		37,035
Cash, cash equivalents and restricted cash at beginning of period	217,330		154,996
Cash, cash equivalents and restricted cash at end of period	$	237,003	$	192,031
Supplementary cash flow information:
Purchases of property, plant and equipment included in accounts payable and accrued liability	$	1,891	$	110

Cash paid for tax	$	17	$	—

Cash, Cash Equivalents and Restricted Cash:


	June 30, 2024		December 31, 2023
Cash and cash equivalents	$	235,915	$	216,454
Restricted cash	1,088		876
Total cash, cash equivalents and restricted cash	$	237,003	$	217,330

The accompanying notes are an integral part of these condensed consolidated financial statements.

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VERACYTE, INC.

Notes to Financial Statements

(unaudited)

1. Organization, Description of Business and Summary of Significant Accounting Policies

Veracyte, Inc., or Veracyte, or the Company, is a global diagnostics company that provides clinicians with tests for patients with, or potentially facing, a cancer diagnosis. Veracyte's tests are used by clinicians for diagnostic, prognostic and treatment decisions.

Veracyte was incorporated in the state of Delaware on August 15, 2006, as Calderome, Inc. Calderome, Inc. operated as an incubator until early 2008. On March 4, 2008, the Company changed its name to Veracyte, Inc. The Company’s headquarters are in South San Francisco, California, and it also has operations in San Diego, California; Austin, Texas; and Marseille, France.

The Company currently offers tests in prostate cancer (Decipher Prostate); thyroid cancer (Afirma); breast cancer (Prosigna); and bladder cancer (Decipher Bladder). The Company’s Percepta Nasal Swab test is being run in its Clinical Laboratory Improvement Amendments of 1988, or CLIA, certified lab in support of clinical studies and its test for lymphoma is in development as a companion diagnostic.

The Company serves global markets with two complementary models. In the United States, it offers laboratory developed tests, or LDTs, through its centralized, CLIA certified laboratories in South San Francisco and San Diego, California, supported by its cytopathology expertise in Austin, Texas. Additionally, primarily outside of the United States, the Company provides its Prosigna test to patients through distribution to laboratories and hospitals that can perform the tests locally as an IVD test.

In February 2024, the Company acquired C2i, a minimal residual disease, or MRD, detection company. Refer to Note 4 Business Combination for additional information.

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet as of June 30, 2024, the condensed consolidated statements of operations for the three and six months ended June 30, 2024 and 2023, the condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2024 and 2023, the condensed consolidated statements of stockholders' equity for the three and six months ended June 30, 2024 and 2023, and the condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2023 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of its financial position, operating results, stockholders' equity and cash flows for the periods presented. The condensed consolidated balance sheet as of December 31, 2023 has been derived from audited financial statements. The results for the three and six months ended June 30, 2024 are not indicative of the results expected for the full year or any other period. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company operates in one segment.

The accompanying interim period condensed consolidated financial statements and related financial information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Reclassifications

Certain prior period balances have been reclassified to conform to current period presentation of the Company’s consolidated financial statements and accompanying notes. Such reclassifications have no effect on previously reported results of operations, accumulated deficit, subtotals of operating, investing or financing cash flows or consolidated balance sheet totals; however, for the six months ended June 30, 2023, the Company reclassified $1.4 million of impairment of long-lived assets from the general and administrative caption in the condensed consolidated statements of operations to a separate caption within operating expenses and for the three and six months ended June 30, 2023, the Company reclassified $4.8 million and $9.6 million, respectively, of amortization of intangible assets from the intangible asset amortization - operating expense

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VERACYTE, INC.

Notes to Financial Statements

(unaudited)

caption in the condensed consolidated statements of operations to a separate caption, intangible asset amortization - cost of revenue, within a new cost of revenue section.

Use of Estimates

The preparation of unaudited interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates include: revenue recognition; the useful lives of property, plant and equipment; the recoverability of long-lived assets; the incremental borrowing rates for leases; accounting for acquisitions; the estimation of the fair value of intangible assets and contingent consideration; stock based compensation; income tax uncertainties, including a valuation allowance for deferred tax assets; credit related losses on investments; and allowance for credit losses and contingencies. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenue and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions.

Concentrations of Credit Risk and Other Risks and Uncertainties

The majority of the Company’s cash and cash equivalents are deposited with two major financial institutions in the United States. Deposits in these institutions may exceed the amount of insurance provided on such deposits. The Company has not realized any losses on its deposits of cash and cash equivalents other than exchange rate losses related to foreign currency denominated accounts.

Several of the components of the Company’s sample collection kits and test reagents, IVD products and associated systems, as well as the systems service and service kits, are obtained from single-source suppliers. If these single-source suppliers fail to satisfy the Company’s requirements on a timely basis, or are unable to provide the Company with reagents that perform to specifications, the Company could suffer delays in being able to deliver its diagnostic solutions, suffer a possible loss of revenue, or incur higher costs, any of which could adversely affect its operating results.

Through June 30, 2024, the Company has derived most of its revenue from the sale of Decipher Prostate and Afirma testing. To date, Decipher Prostate and Afirma testing have been delivered primarily to physicians in the United States.

The Company is also subject to credit risk from its accounts receivable related to its sales. Credit risk for accounts receivable from testing revenue is incorporated in testing revenue accrual rates as the Company assesses historical collection rates and current developments to determine accrual rates and amounts the Company will ultimately collect. The Company generally does not perform evaluations of customers’ financial condition for testing revenue and generally does not require collateral. The Company assesses credit risk and the amount of accounts receivable the Company will ultimately collect for product, biopharmaceutical and other revenue based on collection history, current developments and credit worthiness of the customer. The estimate of credit losses is not material at June 30, 2024.

The Company’s total third-party payers and other customers in excess of 10% of total revenue and their related revenue as a percentage of total revenue were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Medicare	31	%	32	%	31	%	32	%
UnitedHealthcare	14	%	11	%	14	%	11	%
	45	%	43	%	45	%	43	%

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VERACYTE, INC.

Notes to Financial Statements

(unaudited)

The Company's significant third-party payers in excess of 10% of total accounts receivable and their related accounts receivable balance as a percentage of total accounts receivable were as follows:


	June 30, 2024		December 31, 2023
Medicare	17	%	20	%
UnitedHealthcare	14	%	7	%

Cash and Cash Equivalents

The Company considers demand deposits in a bank, money market funds and highly liquid investments with an original maturity of 90 days or less to be cash equivalents.

Restricted Cash

The Company had deposits of $1.1 million and $0.9 million included in long-term assets as of June 30, 2024 and December 31, 2023, respectively, restricted from withdrawal and held by banks in the form of collateral for irrevocable standby letters of credit held as security for the Company's leases.

Revenue Recognition

The Company recognizes revenue in accordance with the provisions of ASC 606, Revenue from Contracts with Customers, or ASC 606. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. Performance obligations are considered satisfied once the Company has completed a service or transferred control of a product to the customer.

In arrangements involving more than one service or good, each required service or good is evaluated to determine whether it qualifies as a distinct performance obligation based on whether (i) the customer can benefit from the service or good either on its own or together with other resources that are readily available and (ii) the service or good is separately identifiable from other promises in the contract. The consideration under the arrangement is then allocated to each separate distinct performance obligation based on its respective relative stand-alone selling price. The estimated selling price of each deliverable reflects the Company's best estimate of what the selling price would be if the deliverable was regularly sold by the Company on a stand-alone basis or using an adjusted market assessment approach if selling price on a stand-alone basis is not available. The consideration allocated to each distinct performance obligation is recognized as revenue when control is transferred which may be at a point in time or over time.

Testing Revenue

The Company recognizes revenue from the sale of tests performed for customers, including patients and institutions, at the time test results are reported to physicians. Most tests requested by customers are sold without a written agreement; however, the Company determines that an implied contract exists with its customers for whom a physician will order the test. The Company identifies each sale of its test to a customer as a single performance obligation. A stated contract price does not exist and the transaction price for each implied contract with a customer represents variable consideration. The Company estimates the variable consideration under the portfolio approach and considers the historical reimbursement data from third-party commercial and governmental payers and patients, as well as known or anticipated reimbursement trends not reflected in the historical data. The Company monitors the estimated amount to be collected in the portfolio at each reporting period based on actual cash collections in order to assess whether a revision to the estimate is required. Both the estimate and any subsequent revision contain uncertainty and require the use of significant judgment in the estimation of the variable consideration and application of the constraint for such variable consideration. The Company analyzes its actual cash collections over the expected reimbursement period and compares it with the estimated variable consideration for each payer group and any difference is recognized as an adjustment to estimated revenue after the expected reimbursement period, subject to assessment of the risk of future revenue reversal. For the three and six months ended June 30, 2024 and 2023, the Company recorded

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VERACYTE, INC.

Notes to Financial Statements

(unaudited)

$4.0 million and $6.9 million and $2.3 million and $4.6 million as revenue, respectively, resulting from cash collections exceeding the estimated variable consideration related to tests reported in previous years, including revenue received from successful appeals of reimbursement denials, net of recoupments.

Product Revenue

The Company's product revenue primarily consists of the Prosigna IVD breast cancer assay, related diagnostic kits and services. Product revenue from diagnostic kits is generally recognized upon shipment. Shipping and handling costs incurred for product shipments are included in product revenue. Revenue is presented net of the taxes that are collected from customers and remitted to governmental authorities.

Biopharmaceutical and Other Revenue

The Company enters into arrangements to license or provide access to its assets or services, including clinical and testing services, research and development, contract manufacturing and development, as well as other services, which are classified under biopharmaceutical and other revenue. Such arrangements may require the Company to deliver various rights, data, test results, manufactured diagnostic test kits, services and/or samples, including intellectual property rights/licenses and biopharmaceutical research and development services. The Company receives consideration in the form of upfront license fees; payments on delivery of data, test results or manufactured products; costs of service plus margin; and development and commercial performance milestone payments.

The Company develops estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation which determines how the transaction price is allocated among the performance obligations. The estimation of the stand-alone selling price may include independent evidence of market price, forecasted revenue or costs, development timelines, discount rates, and probabilities of technical and regulatory success. The Company evaluates each performance obligation to determine if the obligation can be satisfied at a point in time or over time, and it measures the services delivered to the collaborative partner which are periodically reviewed based on the progress of the related program. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time. The effect of any change made to an estimated input component and, therefore revenue or expense recognized, would be recorded as a change in estimate. In addition, variable consideration must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.

At the inception of each arrangement that includes milestone payments (variable consideration), the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price. Milestone payments that are not within either party’s control, such as non-operational developmental and regulatory approvals, are generally not considered probable of being achieved until those approvals are received. At the end of each reporting period, the Company re-evaluates the probability of achievement of milestones that are within either party’s control, such as operational developmental milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and earnings in the period of adjustment. Revisions to the Company’s estimate of the transaction price may also result in negative revenue and earnings in the period of adjustment. One collaboration arrangement with milestone payments falls under the scope of ASC Topic 808, Collaborative Arrangements, or ASC 808. These milestone payments are recognized in the same manner as milestone payments from customers and are classified under biopharmaceutical and other revenue.

Accounts receivable from biopharmaceutical and other revenue was $3.3 million at June 30, 2024 and $6.0 million at December 31, 2023. There was $2.2 million and $2.0 million of deferred revenue related to these agreements at June 30, 2024 and December 31, 2023, respectively. Revenue included in biopharmaceutical and other revenue for the three and six months ended June 30, 2024 and 2023 was as follows (in thousands of dollars):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Biopharmaceutical revenue	$	1,702	$	3,310	$	2,656	$	7,758
Contract manufacturing and testing	1,850		1,252		3,900		2,938
Total	$	3,552	$	4,562	$	6,556	$	10,696

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VERACYTE, INC.

Notes to Financial Statements

(unaudited)

Cost of Testing Revenue

The components of the Company's cost of testing services are laboratory expenses, sample collection expenses, compensation expense, license fees and royalties, depreciation, other expenses such as equipment and laboratory supplies, and allocations of facility and information technology expenses. Costs associated with performing tests are expensed as the test is processed regardless of whether and when revenue is recognized with respect to that test.

Cost of Product Revenue

Cost of product revenue consists primarily of costs of purchasing diagnostic kit components, labor, installation, service and packaging and delivery costs. In addition, cost of product includes royalty costs for licensed technologies included in the Company’s products. Cost of product revenue is recognized in the period the related revenue is recognized. Shipping and handling costs incurred for product shipments are included in cost of product in the condensed consolidated statements of operations.

Cost of Biopharmaceutical and Other Revenue

Cost of biopharmaceutical and other revenue consists of costs of performing activities under arrangements that require the Company to license or provide access to its assets or services, including clinical and testing services, research and development, contract manufacturing and development, as well as other services.

Pension Liability

The Company offers a defined benefit pension plan to certain non-U.S. employees of its Veracyte SAS subsidiary. As of June 30, 2024 and December 31, 2023, the total pension obligation was $0.5 million and $0.8 million, respectively, and is included in other liabilities on the condensed consolidated balance sheets.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). This update requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. This ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. This ASU will result in the required additional disclosures being included in the Company's consolidated financial statements, once adopted.

2. Net Income (Loss) Per Common Share

Basic earnings (loss) per share, or EPS, is computed based on the weighted average number of common shares outstanding during the period. Diluted EPS is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. In loss periods, basic and diluted loss per share are identical since the effect of potentially dilutive common shares is antidilutive and therefore excluded. Potentially dilutive common shares from equity awards are determined using the average share price for each period under the treasury stock method. In addition, proceeds from exercises of equity awards and the average amount of unrecognized compensation expense

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VERACYTE, INC.

Notes to Financial Statements

(unaudited)

for equity awards are assumed to be used to repurchase shares. The following table sets forth the computation of basic and diluted EPS (in thousands, except per-share amounts):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Numerator for basic and diluted EPS — net income (loss) (A)	$	5,734	$	(8,402)	$	3,870	$	(16,493)
Denominator for basic EPS — weighted average shares (B)	76,538		72,479		75,649		72,328
Effect of potentially dilutive common stock from:
Shares of common stock subject to outstanding options	433		—		509		—
Restricted stock units	147		—		405		—
Employee stock purchase plan	45		—		37		—
Dilutive potential common shares	625		—		951		—
Denominator for diluted EPS — adjusted weighted average shares and assumed conversions (C)	77,163		72,479		76,600		72,328
Basic EPS (A / B)	$	0.07	$	(0.12)	$	0.05	$	(0.23)
Diluted EPS (A / C)	$	0.07	$	(0.12)	$	0.05	$	(0.23)
Common stock equivalent shares excluded from the dilutive calculation due to antidilutive effect:
Shares of common stock subject to outstanding options	2,410		3,972		2,406		3,870
Restricted stock units	2,963		2,980		408		2,667
Employee stock purchase plan	—		23		—		37
Anti-dilutive potential common shares	5,373		6,975		2,814		6,574

3. Balance Sheet Components

Goodwill

The changes in the carrying amounts of goodwill were as follows (in thousands of dollars):


	Amounts
Balance as of December 31, 2023	$	702,984
Goodwill acquired - C2i	55,974
Effect of foreign currency translation on Goodwill acquired - HalioDx	(6,851)
Balance as of June 30, 2024	$	752,107

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Intangible Assets, Net

Intangible assets include finite-lived product technology, customer relationships, licenses and trade names and indefinite-lived in-process research and development. Intangible assets consisted of the following (in thousands of dollars):


	June 30, 2024						December 31, 2023						Weighted Average Remaining Amortization Period (Years)
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Percepta product technology	$	16,000	$	(9,867)	$	6,133	$	16,000	$	(9,333)	$	6,667	6
Prosigna product technology	4,120		(1,259)		2,861		4,120		(1,122)		2,998		10
Prosigna customer relationships	2,430		(2,228)		202		2,430		(1,985)		445		0
LymphMark product technology	990		(648)		342		990		(577)		413		2
Decipher product technology	90,000		(29,734)		60,266		90,000		(25,234)		64,766		7
Decipher trade names	4,000		(2,643)		1,357		4,000		(2,243)		1,757		2
HalioDx developed technology	1,393		(406)		987		1,435		(346)		1,089		7
HalioDx customer relationships	2,678		(1,560)		1,118		2,760		(1,331)		1,429		2
HalioDx customer backlog	4,135		(2,966)		1,169		4,258		(2,529)		1,729		1
C2i developed technology	25,300		(703)		24,597		—		—		—		15
Total finite-lived intangibles	151,046		(52,014)		99,032		125,993		(44,700)		81,293		8.5
In-process research and development	13,500		—		13,500		7,300		—		7,300
Total intangible assets	$	164,546	$	(52,014)	$	112,532	$	133,293	$	(44,700)	$	88,593

Acquisition-related intangibles are generally finite-lived and are carried at cost less accumulated amortization. Amortization of the finite-lived intangible assets is recognized on a straight-line basis over their estimated lives, which approximates the pattern in which the economic benefits of the intangible assets are expected to be realized.

Amortization expense of $3.8 million and $5.3 million was recognized for the three months ended June 30, 2024 and 2023, respectively, and expense of $7.4 million and $10.7 million was recognized for the six months ended June 30, 2024 and 2023, respectively.

The estimated future aggregate amortization expense as of June 30, 2024 is as follows (in thousands of dollars):


Year Ending December 31,	Amounts
2024 remainder of year	$	7,534
2025	14,241
2026	12,770
2027	12,168
2028	12,168
Thereafter	40,151
Total	$	99,032

Impairment of Long-Lived Assets

There was no impairment of long-lived assets for the three months ended June 30, 2024 and 2023. Impairment of long-lived assets for the six months ended June 30, 2024 and 2023 was $0.4 million and $1.4 million, respectively, of impairment of right-of-use and fixed assets in relation to exiting our Watertown and Richmond facilities.

Supplies and Inventory

Supplies and inventory consisted of lab supplies and reagents to be used in the performance of testing services and inventory related to finished and semi-finished goods used in the assembly of IVD kits related to product sales as well as raw

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materials consumed in the contract manufacturing process. As of June 30, 2024 and December 31, 2023, supplies and inventory consisted of the following (in thousands of dollars):


	June 30, 2024		December 31, 2023
Supplies	$	12,239	$	12,152
Inventory	7,019		3,976
Total supplies and inventory	$	19,258	$	16,128

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands of dollars):


	June 30, 2024		December 31, 2023
Accrued compensation expenses	$	24,556	$	26,430
Accrued other	18,899		11,997
Total accrued liabilities	$	43,455	$	38,427

4. Business Combination

On February 5, 2024, or the Closing Date, the Company acquired 100% of the outstanding equity interests of C2i, or the C2i Acquisition. C2i was a privately-held company that developed a novel method for estimating tumor burden in cancer patients by analyzing a patient’s cell free DNA sequence and offered post-treatment monitoring of cancer recurrence and progression by analyzing subtle changes in the pattern of the tumor’s DNA. The consideration to acquire C2i was $100.2 million, comprised of $73.3 million in the form of approximately 2.7 million shares of the Company’s common stock based on the Company's share price on the Closing Date, $0.8 million of pre-combination portion of replacement stock options issued to C2i’s continuing employees, $17.2 million of contingent consideration that has been agreed to be paid on achievement of certain milestones and the remainder in cash. The Company incurred $5.1 million of transaction costs related to the of C2i Acquisition, which were recorded as general and administrative expense.

As part of the agreement, the Company deposited $8.0 million of the cash consideration into escrow for meeting any unresolved or unsatisfied claims for indemnifiable damages against C2i and any special tax claims. The balance after meeting these indemnification obligations will be paid directly to the securityholders of C2i. After deducting the expenses for indemnifiable damages and tax claims the escrow amount of $5.0 million will be released 18 months from the Closing Date and the balance of $3.0 million will be released 36 months after the Closing Date. As this payment is dependent on the resolution of claims that existed as of the Closing Date, the amount deposited into escrow is included in the purchase price.

In addition, pursuant to the Agreement and Plan of Merger, dated as of January 5, 2024, by and among the Company, C2i, Canary Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of the Company, Veracyte Diagnostics, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company, and Fortis Advisors LLC, as the securityholders’ agent, or the Merger Agreement, the C2i noteholders are entitled to receive from the Company up to $25.0 million in contingent consideration that is dependent on the achievement of specified training requirements, licensing, regulatory and commercialization milestones and are payable in cash or shares of the Company’s common stock, at the Company's election.

The Company included financial results of C2i in its consolidated financial statements from the acquisition date, which contributed zero and $1.9 million of revenue and operating loss, respectively, during the three months ended June 30, 2024 and zero and $6.1 million of revenue and operating loss, respectively, during the six months ended June 30, 2024 including $1.3 million of severance and retention charges and $0.7 million of impairment of right-of-use asset and intangible asset amortization.

Assets acquired and liabilities assumed are recorded based on valuations derived from estimated fair value assessments and assumptions used by the Company. While the Company believes that its estimates and assumptions underlying the

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VERACYTE, INC.

Notes to Financial Statements

(unaudited)

valuations are reasonable, different estimates and assumptions could result in different valuations assigned to the individual assets acquired and liabilities assumed, and the resulting amount of goodwill. The following table summarizes the preliminary fair values of assets acquired and liabilities assumed in the C2i Acquisition at the Closing Date (in thousands):


	Amount
Assets acquired:
Cash and cash equivalents	$	13,677
Prepaid expenses and other current assets	998
Property, plant and equipment, net	277
Right of use assets, operating leases	1,277
Intangible assets, net	31,500
Restricted cash	188
Total identifiable assets acquired	47,917
Accounts payable	(59)
Accrued Liabilities	(1,540)
Current portion of deferred revenue	(94)
Current portion of operating lease liabilities	(441)
Deferred tax liability	(726)
Operating lease liabilities, net of current portion	(836)
Net identifiable assets acquired	44,221
Goodwill	55,974
Total purchase price	$	100,195

Based on the guidance provided in ASC 805 Business Combinations, the Company accounted for the C2i Acquisition as a business combination in which the Company determined that C2i was a business which combines inputs and processes to create outputs, and substantially all of the fair value of gross assets acquired was not concentrated in a single identifiable asset or group of similar identifiable assets.

The Company's purchase price allocation for the C2i Acquisition is preliminary and subject to revision as additional information about the fair value of the assets and liabilities becomes available. The fair values assigned to tangible and intangible assets acquired, and liabilities assumed, are based on management’s estimates and assumptions and may be subject to change as additional information is received. Primary areas that are not yet finalized are related to certain income tax items, intangible assets and goodwill. Additional information that existed as of the closing date but not known at the time of this filing may become known to the Company during the remainder of the measurement period, a period not to exceed 12 months from the Closing Date.

The intangible assets acquired included IPR&D assets and developed technology. The preliminary fair value of the Company's intangible assets as of the acquisition date and the method used to value these assets as well as the estimated economic lives for amortizable intangible assets were as follows (in thousands, except useful life which is in years):

Fair Value

Estimated Useful Life

Valuation Method

Intangible Assets Acquired:

Developed Technology

25,300

Relief from royalty method

IPR&D assets

6,200

Indefinite

Multi-period excess earnings method

Total intangible assets acquired

31,500

The amortization expense for all acquired intangible assets will be recognized on a straight-line basis and recorded within intangible asset amortization.

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VERACYTE, INC.

Notes to Financial Statements

(unaudited)

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The C2i acquisition resulted in the recognition of $56.0 million of goodwill which the Company believes consists primarily of expanded market and product opportunities, including an MRD platform, which will enable new areas of genomic testing.

In connection with the C2i Acquisition, a net deferred tax liability was assumed with a fair value of $0.7 million which primarily relates to future intangible asset amortization which is not deductible for income tax purposes.

Pro forma financial information (unaudited)

The supplemental pro forma financial information has been prepared using the acquisition method of accounting and is based on the historical financial information of C2i. The supplemental pro forma financial information does not necessarily represent what the combined companies' revenue or results of operations would have been had the acquisitions been completed on January 1, 2023, nor is it intended to be a projection of future operating results of the combined company. It also does not reflect any operating efficiencies or potential cost savings that might be achieved from synergies of combining C2i and the Company.

The unaudited supplemental pro forma financial information has been calculated after adjusting the results of the combined company to reflect incremental amortization expense resulting from the fair value adjustments for acquired intangible assets. Further, adjustments related to transaction costs and stock- based compensation expense are also reflected in the pro forma financial information in the table below:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Total revenue	$	114,428	$	90,544	$	211,272	$	172,966
Net income (loss)	$	5,306	$	(15,878)	$	1,287	$	(35,965)

5. Fair Value Measurements

The Company records certain of its financial assets and liabilities at fair value. The accounting guidance for fair value provides a framework for measuring fair value and clarifies the definition of fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

•Level I: Inputs which include quoted prices in active markets for identical assets and liabilities;

•Level II: Inputs other than Level I that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

•Level III: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of certain financial instruments of the Company, including cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. The fair value of the Company’s financial assets includes money market funds and deposits for leases of the Company's facilities. Money market funds, included in cash and cash equivalents in the accompanying condensed consolidated balance sheets, were $19.3 million and $1.4 million as of June 30, 2024 and December 31, 2023, respectively, and are Level I assets as described above. The deposits for the leases, included in restricted cash, were $1.1 million and $0.9 million as of June 30, 2024 and December 31, 2023, respectively, and are Level I assets as described above. There were no transfers between Levels 1, 2 or 3 for the three and six months ended June 30, 2024 and 2023.

As part of the Company’s agreement to acquire the exclusive global diagnostic license to the nCounter Analysis System, the Company may pay up to an additional $10.0 million in cash, contingent upon first achievement or occurrence, by or on behalf of the Company, of the commercial launch of the first, second and third diagnostic tests for use on the nCounter multiplex analysis system. This contingency was valued at $6.1 million as of the acquisition date and is remeasured to fair value

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VERACYTE, INC.

Notes to Financial Statements

(unaudited)

at each reporting date until the contingent consideration is settled, with the corresponding changes included in general and administrative expense in the Company's condensed consolidated statements of operations. As of June 30, 2024 and December 31, 2023, this contingency was remeasured to $3.2 million and $3.2 million, respectively. For both the three and six months ended June 30, 2024, an expense of $0.1 million was recorded. For the three and six months ended June 30, 2023, expense of $0.1 million and reversals of expense of $0.3 million, respectively, were recorded. As of June 30, 2024, the achievement of one of the milestones is forecasted to occur within the next 12 months. As a result, $2.7 million of the contingent consideration is included in short term liabilities at June 30, 2024. In addition, the contingent consideration related to the C2i Acquisition as discussed in Note 4, is dependent on the achievement of certain milestones and is payable in cash or shares of the Company’s common stock, at the Company’s election, of up to $25 million and was valued at $17.2 million. The fair value of the contingent consideration related to the C2i Acquisition will be remeasured to fair value at each reporting date until the contingent consideration is settled, with the corresponding changes included in general and administrative expense. As of June 30, 2024, this contingency was remeasured to $18.0 million. For both the three and six months ended June 30, 2024, $0.8 million expense was recorded. As of June 30, 2024, the achievement of one of the milestones is forecasted to occur within the next 12 months. As a result, $4.6 million of the contingent consideration is included in short term liabilities at June 30, 2024. The fair value of contingent consideration includes inputs that are not observable in the market and thus represents a Level III financial liability. The estimation of the fair value of the contingent consideration is based on the present value of the expected payments calculated by assessing the likelihood of when the related milestones would be achieved and estimating the Company's borrowing rate. These estimates form the basis for making judgments about the carrying value of the contingent consideration that are not readily apparent from other sources. Changes to the forecasts for the achievement of the milestones and the borrowing rate can significantly affect the estimated fair value of the contingent consideration. As of June 30, 2024 and December 31, 2023, the Company calculated the estimated fair value of the milestones using the following significant unobservable inputs:


	Value or Range (Weighted-Average)
Unobservable input	June 30, 2024	December 31, 2023
Discount rate	5.5% - 6.6% (5.6%)	6.8%
Probability of achievement	0% - 95% (88%)	10% - 80% (69%)

6. Commitments and Contingencies

Operating Leases

The Company leases office and laboratory facilities in South San Francisco and San Diego, California; Austin, Texas; Marseille, France; Richmond, Virginia; and Watertown, Massachusetts, and leases certain equipment under various non-cancelable lease agreements. The lease terms extend to May 2036 and contain extension of lease terms and expansion options. The leases have a weighted average remaining lease term of 6.3 years as of June 30, 2024. The Company had deposits of $1.1 million and $0.9 million included in long-term assets as of June 30, 2024 and December 31, 2023, respectively, restricted from withdrawal and held by banks in the form of collateral for irrevocable standby letters of credit held as security for the leases.

The Company determined its operating lease liabilities using payments through their current expiration dates and a weighted average discount rate of 9.7% based on the rate that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments in a similar economic environment. Operating lease liabilities along with the associated right-of-use assets are disclosed in the accompanying condensed consolidated balance sheets. After the adoption of ASC 842, Leases, or ASC 842, the Company classified its deferred rent for tenant improvements with its operating lease right-of-use assets on the consolidated balance sheets.

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VERACYTE, INC.

Notes to Financial Statements

(unaudited)

Future minimum lease payments under non-cancelable operating leases as of June 30, 2024 are as follows (in thousands of dollars):


Year Ending December 31,	Amounts
Remainder of 2024	$	3,935
2025	7,775
2026	3,218
2027	1,968
2028	1,933
Thereafter	9,793
Total future minimum lease payments	28,622
Less: amount representing interest	7,884
Present value of future lease payments	20,738
Less: short-term lease liabilities	7,185
Long-term lease liabilities	$	13,553

The Company recognizes operating lease expense on a straight-line basis over the non-cancelable lease period. The following table summarizes operating lease expense and cash paid for amounts included in the measurement of lease liabilities (in thousands of dollars):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating lease expense	$	1,422	$	1,278	$	2,964	$	2,401
Cash paid for amounts included in the measurement of lease liabilities	$	1,534	$	1,362	$	3,163	$	2,539

The company has leased laboratory equipment under various financing leases. The total right-of-use assets and total financing lease liabilities for these financing leases were $0.1 million and $0.1 million, respectively, as of both June 30, 2024 and December 31, 2023, and are included in property, plant and equipment, net and other liabilities in the accompanying condensed consolidated balance sheets.

The Company entered into a lease agreement for a newly constructed facility in Marseille, France. The lease commenced during the three months ended June 30, 2024 and the Company recorded a lease liability and a corresponding ROU asset of $8.0 million. The initial term of the lease is twelve years with annual rent of approximately $1.3 million, excluding common area maintenance costs.

Contingencies

From time to time, the Company may be involved in legal proceedings arising in the ordinary course of business. The Company believes there is no litigation pending that could have, either individually or in the aggregate, a material impact on the Company's consolidated financial statements.

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7. Stockholders’ Equity

Common Stock

The Company had reserved shares of common stock for issuance as follows:


	June 30, 2024	December 31, 2023
Stock options and restricted stock units issued and outstanding	6,987,117	6,318,389
Stock options and restricted stock units available for grant under stock option plans	3,730,380	5,194,399
Common stock available for the Employee Stock Purchase Plan	1,109,722	1,189,513
Total	11,827,219	12,702,301

8. Components of Other Income

Other income, net consists of the following (in thousands of dollars):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
French research tax credits	$	353	$	(1,483)	$	923	$	(474)
Interest income	2,699		1,258		5,394		2,447
Interest expense	(1)		(3)		(1)		(10)
Loss on currency revaluation	(171)		(82)		(731)		146
Other	(125)		84		(82)		72
	$	2,755	$	(226)	$	5,503	$	2,181

9. Income Taxes

The provision for income taxes is based on the current estimate of the annual effective tax rate applied to the Company’s year to date income or loss and is adjusted for discrete items recorded in the period. For the three months ended June 30, 2024 and 2023, the Company’s effective tax rate was 22.1% and (1.5)%, respectively. For the six months ended June 30, 2024 and 2023, the Company’s effective tax rate was 29.0% and (0.8)% respectively. For the six months ended June 30, 2024, the primary difference between the effective tax rate and the federal statutory rate is driven by unfavorable permanent differences and foreign and state taxes offset by the full valuation allowance the Company has established on its federal, state and foreign net operating losses and credits. For the six months ended June 30, 2023, the primary difference between the effective tax rate and the federal statutory rate is driven by the full valuation allowance the Company has established on its federal, state and foreign net operating losses and credits.

The Company recorded income tax expense of $1.6 million and $0.1 million for the three months ended June 30, 2024 and 2023, respectively, and recorded income tax expense of $1.6 million and $0.1 million for the six months ended June 30, 2024 and 2023, respectively. The provision for income taxes recorded in the three and six months ended June 30, 2024 consists primarily of federal, state and foreign income taxes, offset partially by reductions in deferred tax liabilities from acquired entities. The provision for income taxes recorded in the three and six months ended June 30, 2023 consists primarily of state and foreign income taxes.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q.

As discussed in the section titled “Special Note Regarding Forward Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those set forth in the section titled “Risk Factors” under Part II, Item 1A.

When used in this report, all references to "Veracyte," the "company," "we," "our" and "us" refer to Veracyte, Inc., together with its consolidated subsidiaries, unless otherwise noted.

Veracyte, Afirma, Percepta, Envisia, Prosigna, Lymphmark, Decipher, GRID, HalioDx, TMExplore, Brightplex, Immunosign, C2i Genomics, C2intelligence, C2inform and the Veracyte logo are registered or pending trademarks of Veracyte, Inc. and its subsidiaries in the United States and selected countries. nCounter is the registered trademark of NanoString Technologies, Inc., or NanoString, now owned by Bruker Corporation as part of Bruker Corporation’s asset acquisition of NanoString, in the United States and selected countries and used by Veracyte under license. Immunoscore is the registered trademark of Institut National de la Santé et de la Recherche Médicale, or Inserm, in the United States and selected countries and used by Veracyte under license.

Overview

We are a global diagnostics company that empowers clinicians with the high-value insights they need to guide and assure patients at pivotal moments in the race to diagnose and treat cancer. Our high-performing tests enable clinicians to make more confident diagnostic, prognostic and treatment decisions, helping patients avoid unnecessary procedures and interventions, and accelerating time to appropriate treatment, thereby improving outcomes for patients all over the world.

We currently offer tests in prostate cancer (Decipher Prostate); thyroid cancer (Afirma); breast cancer (Prosigna); and bladder cancer (Decipher Bladder). Our Percepta Nasal Swab test is being run in our CLIA lab in support of clinical studies and our test for lymphoma is in development as a companion diagnostic.

We serve global markets with two complementary models. In the United States, we offer LDTs through our centralized CLIA certified laboratories in South San Francisco and San Diego, California, supported by our cytopathology expertise in Austin, Texas. Additionally, primarily outside of the United States, we provide tests to patients through distribution to laboratories and hospitals that can perform the tests locally. Today, this includes our Prosigna test, and in the future, we intend to offer Decipher Prostate and Percepta Nasal Swab as IVD tests. We believe our broad menu of advanced diagnostic tests, combined with our ability to deliver them globally, differentiates us in the diagnostics industry.

In February 2024, we acquired C2i, a MRD detection company, which aims to expand our role across the patient cancer journey, moving from providing early decision support to following the patient through treatment, where we will be able to help monitor the success of a therapeutic or surgical intervention, and determine the best course of action for each patient.

Macroeconomic Factors

Recent interest rate changes and inflation in the United States and other markets globally, as well as the macroeconomic environment, have heightened the risk of an economic downturn, recession or heightened volatility in the capital or credit markets in the United States and globally. Moreover, the continued fluctuation of the U.S. dollar compared to other currencies, has impacted and may continue to impact our results of operations. We intend to continue to monitor macroeconomic conditions closely and may determine to take certain financial or operational actions in response to such conditions as appropriate. In addition, regional conflicts like those between Russia and Ukraine may adversely impact our business and operating results. Finally, the ongoing conflict in the Middle East may disrupt our Israel business operations and employees that we acquired through the C2i Acquisition.

The extent of the macroeconomic factors on our future liquidity and operational performance will depend on certain developments, the impact on our customers' operations; the impact to our sales and renewal cycles; changes in central bank policies and interest rates; rates of inflation; and changes in foreign currency exchange rates. See "Risk Factors" for further discussion.

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Factors Affecting Our Performance

Reported Total Test Volume

Our performance depends on the number of tests that we perform and report as completed in our CLIA-certified laboratories and Prosigna tests purchased by our customers. Factors impacting the number of tests that we report as completed include, but are not limited to:

•the number of samples that we receive that meet the medical indication for each test performed;

•the quantity and quality of the sample received;

•receipt of the necessary documentation, such as physician order and patient consent, required to perform, bill and collect for our tests;

•the patient's ability to pay or provide necessary insurance coverage for the tests performed;

•the time it takes us or our customers to perform our tests and report the results, including as a result of supply chain challenges (including quality of single-source reagents);

•the seasonality inherent in our business, such as the impact of workdays per period, timing of industry conferences and timing of when patient deductibles are exceeded, which also impacts the reimbursement we receive from insurers; and

•our ability to obtain prior authorization or meet other requirements instituted by payers, benefit managers, or regulators necessary to be paid for our tests.

Continued Adoption of and Reimbursement for our Products

Revenue growth depends on our ability to secure coverage decisions, achieve broader reimbursement from third-party payers, expand our base of prescribing physicians and increase our penetration in existing accounts. Because some payers consider our products experimental and investigational, we may not receive payment for tests and payments we receive may not be at acceptable levels. We expect our revenue growth to increase if more payers make a positive coverage decision and as payers enter into contracts with us, which should enhance our revenue and cash collections. Our sales teams are aligned under our general manager-based structure to focus on specific products and global markets. If we are unable to expand the base of prescribing physicians and penetration within these accounts at an acceptable rate, or if we are not able to execute our strategy for increasing reimbursement and associated collections, we may not be able to effectively increase our revenue. We expect to continue to see pressure from payers to limit the utilization of tests, generally, and we believe more payers are deploying cost containment tactics, such as pre-authorization, reduction of the payer portion of reimbursement and employing laboratory benefit managers to reduce utilization rates. Revenue growth also depends on our ability to secure reimbursement from government payers at a reimbursement rate that is consistent with past reimbursement rates.

How We Recognize Revenue

We recognize revenue in accordance with the provisions of ASC 606, Revenue from Contracts with Customers, or ASC 606. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied.

Testing Revenue

We bill for testing services at the time of test completion as defined by the delivery of test results. We recognize revenue based on estimates of the amount that will ultimately be realized. In determining the amount to accrue for a delivered test, we consider factors such as payment history, payer coverage, whether there is a reimbursement contract between the payer and us, payment as a percentage of agreed upon rate (if applicable), amount paid per test and any current developments or changes that could impact reimbursement. These estimates require significant judgment by management. Actual results could differ from those estimates and assumptions.

Generally, cash we receive is collected within 12 months of the date the test is billed. We cannot provide any assurance as to when, if ever, or to what extent, any of these amounts will be collected. Notwithstanding our efforts to obtain payment for these tests, payers may deny our claims, in whole or in part, and we may never receive payment for these tests.

We bill list price regardless of contract rate, but only recognize revenue from amounts that we estimate are collectible and meet our revenue recognition criteria. Revenue may not be equal to the billed amount due to a number of factors that we

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consider when determining revenue accrual rates, including differences in reimbursement rates, the amounts of patient co-payments and co-insurance, the existence of secondary payers, claims denials and the amount we expect to ultimately collect. Finally, when we increase our list price, it will increase the cumulative amounts billed but may not positively impact accrued revenue. In addition, payer contracts generally include the right of offset and payers may offset payments prior to resolving disputes over tests performed.

Generally, we determine accrual rates by calculating an average of reimbursement from all payers for tests performed over a four-quarter period as it reduces the effects of temporary volatility and seasonality. The periods selected to determine accrual rates typically are at least six months old because it takes a significant period of time to collect from some payers. We may also determine accrual rates based on other factors such as coverage decisions, contracts, or more recent reimbursement data as appropriate.

The average test reimbursement rates will change over time due to a number of factors, including medical coverage decisions by payers, the effects of contracts signed with payers, changes in allowed amounts by payers, our ability to successfully win appeals for payment, and our ability to collect cash payments from third-party payers and individual patients. Historical average reimbursement is not necessarily indicative of future average reimbursement.

We incur expense for tests in the period in which the test is conducted and recognize revenue for tests in the period in which our revenue recognition criteria are met.

Product Revenue

Our products consist primarily of the Prosigna breast cancer assay, related diagnostic kits, and services. We recognize product revenue when control of the promised goods is transferred to our customers, in an amount that reflects the consideration expected to be received in exchange for those products. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer, either on its own or together with other resources that are readily available to the customer, and is separately identified in the contract. Performance obligations are considered satisfied once we have transferred control of a product to the customer, meaning the customer has the ability to use and obtain the benefit of the product. We recognize product revenue for satisfied performance obligations only when there are no uncertainties regarding payment terms or transfer of control. Shipping and handling costs incurred for product shipments are charged to our customers and included in product revenue. Revenue is presented net of the taxes that are collected from customers and remitted to governmental authorities.

Biopharmaceutical and Other Revenue

We enter into arrangements to license or provide access to our assets or services, including clinical and testing services, research and development, contract manufacturing and development, as well as other services. Such arrangements may require us to deliver various rights, data, services, manufactured diagnostic test kits, access and/or testing services to partner biopharmaceutical and other companies. The underlying terms of these arrangements generally provide for consideration paid to us in the form of nonrefundable fees; payments on delivery of data, test results or manufactured products; costs of service plus margin; performance milestone payments; expense reimbursements and possibly royalty and/or other payments. Net sales of data or other services to our customers are recognized in accordance with ASC 606 and are classified under biopharmaceutical and other revenue. Payments received that are not related to sales or services to a customer are recorded as offsets against research and development expense or cost of biopharmaceutical and other revenue in our consolidated statements of operations.

In arrangements involving more than one good or service delivered to a customer, each good or service is evaluated to determine whether it qualifies as a distinct performance obligation based on whether (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available and (ii) the good or service is separately identifiable from other promises in the contract. The consideration under the arrangement is then allocated to each separate distinct performance obligation based on its respective relative stand-alone selling price. The estimated selling price of each deliverable reflects our best estimate of what the selling price would be if the deliverable was regularly sold by us on a stand-alone basis or using an adjusted market assessment approach if the selling price on a stand-alone basis is not available.

The consideration allocated to each distinct performance obligation is recognized as revenue when control is transferred which may be at a point in time or over time. Consideration associated with at-risk substantive performance milestones is recognized as revenue when it is probable that a significant reversal of the cumulative revenue recognized will not occur.

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Should there be royalties, we utilize the sales and usage-based royalty exception in arrangements that resulted from the license of intellectual property, recognizing revenue generated from royalties or profit sharing as the underlying sales occur.

Timing of Our Research and Development Expenses

We spend a significant amount on activities to secure clinical trial results in support of our testing and product development portfolio and on-market tests, as well as clinical validation and utilization studies. We also deploy state-of-the-art and costly genomic technologies in our discovery experiments, and our spending on these technologies may vary substantially from quarter to quarter. The timing of these research and development activities is difficult to predict, as is the timing of clinical trial enrollments and sample acquisitions. If a substantial number of clinical samples are acquired in a given quarter or if a high-cost experiment is conducted in one quarter versus the next, the timing of these expenses can affect our financial results. We conduct clinical studies to validate our new products, as well as on-going clinical studies to further the published evidence to support our commercialized tests. As these studies are initiated, start-up costs for each site can be significant and concentrated in a specific quarter. Spending on research and development, for both experiments and studies, may vary significantly by quarter depending on the timing of these various expenses.

Financial Overview

Revenue

Through June 30, 2024, we derived most of our revenue from the sale of Decipher Prostate and Afirma tests, delivered primarily to physicians in the United States. We generally invoice third-party payers upon delivery of a patient report to the prescribing physician. As such, we take the assignment of benefits and the risk of cash collection from the third-party payer and individual patients. Third-party payers and other customers in excess of 10% of total revenue and their related revenue as a percentage of total revenue were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Medicare	31	%	32	%	31	%	32	%
UnitedHealthcare	14	%	11	%	14	%	11	%
	45	%	43	%	45	%	43	%

For tests performed, we recognize the related revenue upon delivery of a patient report to the prescribing physician based on the amount that we expect to ultimately receive. In determining the amount to accrue for a delivered test, we consider factors such as payment history, payer coverage, whether there is a reimbursement contract between the payer and us, payment as a percentage of agreed upon reimbursement rate (if applicable), amount paid per test and any current development or changes that could impact reimbursement. Upon ultimate collection, the amount received is compared to previous estimates and the amount accrued is adjusted accordingly. Our ability to increase our revenue will depend on our ability to penetrate the market, obtain positive coverage policies from additional third-party payers, obtain reimbursement and/or enter into contracts with additional third-party payers for our current and new tests, and increase reimbursement rates for tests performed. Finally, should the judgments underlying our estimated reimbursement change, our accrued revenue and financial results could be negatively impacted in future periods.

Cost of Testing Revenue

The components of our cost of testing revenue are sample collection kit costs, reagent expenses, compensation expense, license fees and royalties, depreciation, other expenses such as equipment and laboratory supplies, and allocations of facility and information technology expenses. Costs associated with performing tests are recorded as the test is processed regardless of whether and when revenue is recognized with respect to that test. As a result, our cost of testing revenue as a percentage of testing revenue may vary significantly from period to period because we may not recognize all revenue in the period in which the associated costs are incurred. We expect cost of testing revenue in absolute dollars to increase as the number of tests we perform increases. However, we expect that the cost per test will decrease over time due to leveraging fixed costs, efficiencies we may gain as test volume increases and process enhancements such as automation, and other cost reductions. As we introduce new tests, initially our cost of testing revenue will be high as we expect to run suboptimal batch sizes, run quality control batches, test batches, registry samples, and generally incur costs that may suppress or reduce gross margins. This will disproportionately increase our aggregate cost of testing revenue until we achieve processing efficiencies for these new tests.

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Cost of Product Revenue

Our cost of product revenue consists primarily of costs of purchasing diagnostic kit components, labor, installation, service and packaging and delivery costs. In addition, cost of product revenue includes royalty costs for licensed technologies included in our products. As our Prosigna test kits are sold in various configurations with different number of tests, our product cost per test will vary based on the specific kit configuration purchased by customers.

Cost of Biopharmaceutical and Other Revenue

Our cost of biopharmaceutical and other revenue are the costs of performing activities under arrangements that require us to perform research and development, contract testing services, commercialization, and contract manufacturing and development. This expense is mainly composed of compensation, manufacturing and laboratory supplies, and pass-through costs.

Intangible Asset Amortization - Cost of Revenue

Our finite-lived intangible assets, acquired in business combinations, are being amortized over 4 to 15 years, using the straight-line method. Intangible asset amortization - cost of revenue includes amortization of finite-lived intangible assets related to developed and product technology utilized in our current product and service offerings and customer backlog.

Research and Development

Research and development expenses include expenses incurred to collect clinical samples and conduct clinical studies to develop and support our products and pipeline, as well as develop future technology. These expenses consist of compensation expenses, direct research and development expenses such as laboratory supplies and costs associated with setting up and conducting clinical studies at domestic and international sites, professional fees, depreciation and amortization, other miscellaneous expenses and allocation of facility and information technology expenses. We expense all research and development costs in the periods in which they are incurred. We incurred a majority of our research and development expenses in 2023 in support of our early-stage products, including Percepta Nasal Swab, as well as the development of new IVD products and discovery. In the six months ended June 30, 2024, our research and development expenses also included support for our MRD tests. Going forward, we expect to incur significant expense as we invest in the continued development of our innovation engine, early-stage products including our MRD tests, required clinical studies and the development of current tests on multiple IVD platforms.

Selling and Marketing

Selling and marketing expenses consist of compensation expenses, direct marketing expenses, professional fees, other expenses such as travel and communications costs, as well as allocation of facility and information technology expenses. Our sales team of approximately 110 representatives is organized by business unit in the U.S., with separate teams calling on thyroid cancer, and urologic cancer physicians. The business units have dedicated marketing support, as well as a marketing operations team that serves the commercial organization broadly. Prosigna sales outside of the U.S. are led by country managers and sales teams that call on laboratories and breast cancer oncologists, with dedicated marketing support.

General and Administrative

General and administrative expenses include compensation expenses for executive officers and administrative, billing and client service personnel, professional fees for legal and audit services, occupancy costs, depreciation and amortization, and other expenses such as information technology, acquisition related costs and miscellaneous expenses, offset by allocation of facility and information technology expenses to other functions. We expect general and administrative expenses to continue to increase as we build our infrastructure to scale revenue growth, and to decline as a percentage of revenue thereafter.

Intangible Asset Amortization - Operating Expenses

Our finite-lived intangible assets, acquired in business combinations, are being amortized over 4 to 15 years, using the straight-line method. Intangible asset amortization - operating expenses includes amortization of finite-lived intangible assets related to developed technology utilized in the development of future product and service offerings, trade names and customer relationships.

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Other Income (Loss), Net

Other income (loss), net consists primarily of interest income from our cash held in interest bearing accounts, realized and unrealized gains and losses on foreign currency transactions, and French research tax credits. The French research tax credits (crédit d’impôt recherche, or CIR) are generated by our wholly owned subsidiary, Veracyte SAS, in connection with its research efforts performed in Marseille, France.

Foreign Currency Translation

The functional currency of our foreign subsidiaries, Veracyte SAS and C2i Genomics, Ltd., are the Euro and the Israeli Shekel, respectively. Assets and liabilities denominated in foreign currencies are translated to U.S. dollars using the exchange rates at the balance sheet date. Foreign currency translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity. Revenue and expenses from our foreign subsidiaries are translated using the monthly average exchange rates in effect during the period in which the transactions occur. Foreign currency transaction gains and losses are recorded in other income (loss), net, on the condensed consolidated statements of operations.

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Results of Operations

Comparison of the three and six months ended June 30, 2024 and 2023 (in thousands of dollars, except percentages and test volume):


	Three Months Ended June 30,							Six Months Ended June 30,
	2024		2023		Change		%	2024		2023		Change		%
Revenue:
Testing revenue	$	106,970	$	81,749	$	25,221	31%	$	197,273	$	154,145	$	43,128	28%
Product revenue	3,906		4,011		(105)		(3)%	7,443		7,903		(460)		(6)%
Biopharmaceutical and other revenue	3,552		4,562		(1,010)		(22)%	6,556		10,696		(4,140)		(39)%
Total revenue	114,428		90,322		24,106		27%	211,272		172,744		38,528		22%
Cost of revenue:
Cost of testing revenue	27,920		23,333		4,587		20%	53,899		42,981		10,918		25%
Cost of product revenue	1,874		2,315		(441)		(19)%	4,518		4,477		41		1%
Cost of biopharmaceutical and other revenue	3,812		4,040		(228)		(6)%	6,650		8,459		(1,809)		(21)%
Intangible asset amortization - cost of revenue	2,909		4,814		(1,905)		(40)%	5,824		9,618		(3,794)		(39)%
Total cost of revenue	36,515		34,502		2,013		6%	70,891		65,535		5,356		8%
Gross profit	77,913		55,820		22,093		40%	140,381		107,209		33,172		31%
Operating expenses:
Research and development	16,465		12,541		3,924		31%	32,430		25,310		7,120		28%
Selling and marketing	24,216		25,756		(1,540)		(6)%	47,998		51,886		(3,888)		(7)%
General and administrative	31,745		25,047		6,698		27%	57,955		46,100		11,855		26%
Impairment of long-lived assets	—		—		—		N/M	429		1,410		(981)		(70)%
Intangible asset amortization - operating expenses	881		527		354		67%	1,619		1,052		567		54%
Total operating expenses	73,307		63,871		9,436		15%	140,431		125,758		14,673		12%
Income (loss) from operations	4,606		(8,051)		12,657		(157)%	(50)		(18,549)		18,499		(100)%
Other income (loss), net	2,755		(226)		2,981		(1,319)%	5,503		2,181		3,322		152%
Income (loss) before income taxes	7,361		(8,277)		15,638		(189)%	5,453		(16,368)		21,821		(133)%
Income tax provision	1,627		125		1,502		1,202%	1,583		125		1,458		1,166%
Net income (loss)	$	5,734	$	(8,402)	$	14,136	(168)%	$	3,870	$	(16,493)	$	20,363	(123)%
Other Operating Data:
Diagnostic tests reported	36,057		29,061		6,996		24%	67,026		54,909		12,117		22%
Product tests sold	2,966		2,748		218		8%	5,421		5,688		(267)		(5)%
Total test volume	39,023		31,809		7,214		23%	72,447		60,597		11,850

VERACYTE, INC. [VCYT] Filings
10-Q	[2024-08-07]
10-Q	[2024-05-08]
10-K	[2024-02-29]
10-Q	[2023-11-08]
10-Q	[2023-08-09]
10-Q	[2023-05-05]
10-K	[2023-03-01]
10-Q	[2022-11-03]
10-Q	[2022-08-03]
10-Q	[2022-05-04]
10-K	[2022-02-28]
10-Q	[2021-11-09]
10-Q	[2021-07-29]
10-Q	[2021-05-10]
10-K	[2021-02-22]
10-Q	[2020-11-02]
10-Q	[2020-07-30]
10-Q	[2020-05-06]
10-K	[2020-02-25]
10-Q	[2019-10-22]
10-Q	[2019-07-30]
10-Q	[2019-04-30]
10-K	[2019-02-25]
10-Q	[2018-10-29]
10-Q	[2018-07-23]
10-Q	[2018-05-01]
10-K	[2018-02-27]
10-Q	[2017-11-07]
10-Q	[2017-07-31]
10-Q	[2017-05-03]
10-K	[2017-03-01]
10-Q	[2016-11-03]
10-Q	[2016-08-03]
10-Q	[2016-05-05]
10-K	[2016-03-14]
10-Q	[2015-11-05]
10-Q	[2015-08-13]
10-Q	[2015-05-15]
10-K	[2015-03-25]
10-Q	[2014-11-13]
10-Q	[2014-08-14]
10-Q	[2014-05-09]
10-K	[2014-03-20]
10-Q	[2013-11-25]
S-1	[2013-09-20]