On November 2, 2022 Veracyte, Inc. (Nasdaq: VCYT) reported financial results for the third quarter ended September 30, 2022 (Press release, Veracyte, NOV 2, 2022, View Source [SID1234622795]).

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"Our third quarter results were robust given test adoption growth across our key products, new reimbursement contracts and expanded clinical evidence for our tests," said Marc Stapley, Veracyte’s chief executive officer. "We continue to invest in our long-term growth drivers, while maintaining our firm focus on financial discipline. I’m delighted with our team’s progress as we pursue our global vision of improving outcomes for patients all over the world through our exceptional diagnostic tests."

Key Business Highlights:

Increased third quarter total revenue by 25% to $75.6 million, compared to the third quarter of 2021.
Grew total test volume to 26,374, an increase of 26% compared to the third quarter of 2021.
Bolstered commercial reimbursement:
Received positive coverage decisions for the Decipher Prostate Genomic Classifier from three commercial payers representing over 20 million members, bringing the total number of covered lives for the test to 195 million; and
Signed four new commercial payer contracts for the Afirma Genomic Sequencing Classifier, bolstering the test’s in-network coverage to over 230 million health plan members.
Further reinforced the value and utility of our portfolio offerings through guideline inclusion and expanded clinical evidence:
Received a "Level 1" evidence designation in the National Comprehensive Cancer Network (NCCN)’s update to the 2023 prostate cancer guidelines, making the Decipher Prostate Genomic Classifier the first and only prostate cancer gene expression test to achieve this status;
Published data from a prospective, multi-site, Phase 2 clinical study in the Journal of the National Cancer Institute suggesting that the Decipher Prostate test may help identify African American men with early, localized prostate cancer who are most likely to harbor aggressive disease;
Shared data from Phase 3 of the multi-center, randomized STAMPEDE trial at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) conference, which confirm the Decipher Prostate test’s ability to identify men with advanced prostate cancer who are more likely to benefit from intensified treatment, potentially expanding the test’s use;
Presented data at the American Thyroid Association’s annual meeting suggesting that Veracyte’s Afirma thyroid database and whole-transcriptome capabilities may enable identification of genomic signatures to help predict tumor behavior in thyroid cancer;
Presented data at the European Respiratory Society and American College of Chest Physicians (CHEST 2022) annual meetings suggesting the Envisia Genomic Classifier’s ability to provide prognostic information for people with suspected interstitial lung disease;
Published a study in Nature Medicine examining the predictive and prognostic potential of Veracyte’s immuno-oncology biomarkers and insight into factors associated with response to CAR T-cell therapy among patients with large B-cell lymphoma; and
Presented preliminary clinical utility data at the CHEST meeting for the Percepta Nasal Swab test, which suggest that the noninvasive genomic test may classify more lung nodule patients as low-risk or high-risk for lung cancer, as compared to the standard-of-care approach, which consists of a physician’s own assessment of clinical factors along with CT imaging.
Appointed Eliav Barr, M.D., to our Board of Directors and named John Leite, Ph.D. as general manager for Pulmonology and Market Access.
Generated $7.0 million in cash from operating activities and ended the third quarter of 2022 with cash, cash equivalents and short-term investments of $170.1 million, compared to $164.0 million at the end of the second quarter of 2022.
Third Quarter 2022 Financial Results

Total revenue for the third quarter of 2022 was $75.6 million, an increase of 25% compared to $60.4 million in the third quarter of 2021. Testing revenue was $64.6 million, an increase of 27% compared to $50.9 million in the third quarter of 2021 driven primarily by the strong performance of our Decipher and Afirma tests. Product revenue was $3.3 million, an increase of 12% compared to $3.0 million in the third quarter of 2021. Biopharmaceutical and other revenue was $7.7 million, an increase of 18% compared to $6.5 million in the third quarter of 2021, driven primarily by the contribution of the HalioDx acquisition.

Total gross margin for the third quarter of 2022, including the amortization of acquired intangible assets, was 59%, compared to 57% in the third quarter of 2021. Non-GAAP gross margin, excluding the amortization of acquired intangible assets and other acquisition related expenses was 66%, compared to 64% in the third quarter of 2021.

Operating expenses, excluding cost of revenue, were $54.6 million, an increase of 5% compared to the third quarter of 2021. Non-GAAP operating expenses, excluding cost of revenue, amortization of acquired intangible assets, other acquisition related expenses and other restructuring costs, were $51.1 million compared to $42.4 million in the third quarter of 2021.

Net loss for the third quarter of 2022 was $8.7 million, an improvement of 38% compared to the third quarter of 2021. Basic and diluted net loss per common share was $0.12, an improvement of 40% compared to the third quarter of 2021. Net cash used by operating activities in the first nine months of 2022 was $2.2 million, an improvement of $37.9 million compared to the same period in 2021.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included in this press release. An explanation of these measures is also included below under the heading "Note Regarding Use of Non-GAAP Financial Measures."

2022 Financial Outlook

The company is raising full-year 2022 total revenue expectations to $288 million to $293 million, representing year-over-year growth of 31% to 33%, assuming currency rates as of November 2, 2022. This represents an improved outlook compared to our prior guidance of $272 million to $280 million.

Conference Call and Webcast Details

Veracyte will host a conference call and webcast today at 4:30 p.m. Eastern Time to discuss the company’s financial results and provide a general business update. The conference call will be webcast live from the company’s website and will be available via the following link: View Source The webcast should be accessed 10 minutes prior to the conference call start time. A replay of the webcast will be available for one year following the conclusion of the live broadcast and will be accessible on the company’s website at View Source