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Veracyte Q3 Revenues Up 51 Percent

NEW YORK (GenomeWeb) – Veracyte reported after the close of the markets on Thursday that its third quarter revenues rose 51 percent, largely due to strong sales of the company’s Afirma gene expression classifier thyroid test. 

For the three months ended Sept. 30, Veracyte's revenues climbed to $18.6 million from $12.3 million in the year-ago quarter, beating the average Wall Street estimate of $16.7 million. Prior to Veracyte's release of its preliminary Q3 results last month, analysts' consensus estimate was $15.8 million.

Contributing to the revenue growth was a 14 percent rise in Afirma test volume over last year's third quarter to 5,740 tests, as well as improved predictability of payments that allowed the company to accrue revenues that previously would have been recognized upon cash receipt.

"The increase in accruals is important for several reasons," Veracyte President and CEO Bonnie Anderson said during a conference call to discuss the financial results. "First, it underscores the growing predictability and history of Afirma GEC payments from insurers. It also reflects our success in converting payor medical coverage policies into contracts, particularly with the Blues plan."

She added that the Afirma volume growth, while less than in Q2, was in line with expectations.

"Historically, the third quarter has been flat to slightly down from second quarter due to physicians taking vacations," Anderson said. "Last year was an exception to this pattern because we were in an aggressive growth mode in institutional sectors, which camouflaged this typical seasonal cadence."

Veracyte's Q3 net loss narrowed to $5.6 million, or $.20 per share, from $8.9 million, or $.32 a share, the same period last year, easily beating analysts' average loss per share estimate of $.36. Before the company's pre-announcement last month, analysts' average loss per share estimate was $.39.

The firm’s R&D spending in the quarter rose 11 percent to $4.0 million from $3.6 million, primarily as a result of personnel increases and expenditures for research materials. SG&A costs rose 10 percent to $12.9 million from $11.7 million, in part due to an increased number of sales reps and associated commissions. Veracyte also paid $4 million to Sanofi Genzyme in Q3 as part of their co-promotion arrangement for Afirma. This completes all payments due to Sanofi Genzyme now that the deal has concluded, Veracyte CFO Shelly Guyer noted during the call.

At the end of the third quarter, Veracyte had cash and cash equivalents totaling $31.7 million.

Looking ahead, Veracyte said it has increased its 2016 revenue guidance to between $62 million and $65 million from a previous guidance of $59 million to $63 million. Afirma test volume for the year, meantime, is expected to be at the lower end of the previously guided range of 24,000 o 25,500 tests. Analysts on average expect FY 2016 revenues of $62.2 million.

The company is also aiming to expand its sales force next year as it ramps up commercialization efforts around the Percepta bronchial genomic classifier, which is designed to identify patients at low risk of lung cancer following inconclusive bronchoscopy. Anderson said that Veracyte expects to end this year with about 50 sales reps and will add15 to 20 more during 2017.

Promotion of Veracyte's newly introduced Envisia genomic classifier for diagnosing idiopathic pulmonary fibrosis, meanwhile, will be kept to a "limited number of institutions around the country as we build the clinical utility and other evidence that support coverage and reimbursement," Anderson said.

During early Friday morning trading on the Nasdaq, shares of Veracyte were flat at $6.12.