SOUTH SAN FRANCISCO, Calif.--(BUSINESS WIRE)--Veracyte, Inc. (Nasdaq: VCYT) today announced financial results and business progress for the quarter and full year ended December 31, 2017, and provided financial guidance for 2018.
“We delivered a solid year of growth in 2017,” said Bonnie Anderson, chairman and chief executive officer of Veracyte. “We continued to grow the Afirma franchise in thyroid cancer diagnosis and expanded payer coverage and contracts. We also launched our RNA sequencing-based Afirma Genomic Sequencing Classifier and will soon introduce our Afirma Xpression Atlas platform. We believe these advances will offer physicians a one-stop shop in thyroid cancer diagnosis and position us well for further growth and future product innovation.”
“In pulmonology, we built a strong foundation to advance market uptake of the Percepta classifier in lung cancer screening and diagnosis and moved our Envisia Genomic Classifier for the diagnosis of idiopathic pulmonary fibrosis toward Medicare reimbursement and expanded commercialization. We enter 2018 with a stronger, more efficient operational structure and a robust, multi-product commercial team that we believe is poised to drive revenue growth across our endocrinology and pulmonology franchises.”
Fourth Quarter and Full-Year 2017 Financial Results
For the three- and twelve-month periods ended December 31, 2017, compared to the prior year:
- Revenue was $19.6 million and $72.0 million, respectively, an increase of 7% and 11%;
- Genomic Volume was 7,153 and 26,026 reported tests, respectively, an increase of 13% and 12%;
- Gross Margin was 60% and 61%, respectively, a decline of 4% and flat to prior year;
- Operating Expenses, Excluding Cost of Revenue, were $17.9 million and $70.3 million, respectively, an increase of 16% and 3%;
- Net Loss and Comprehensive Loss was ($8.4) million and ($31.0) million, respectively, an increase of 92% and decrease of 1%;
- Basic and Diluted Net Loss Per Common Share was ($0.24) and ($0.91), respectively, an increase of 71% and decrease of 17%;
- Cash Burn1 was $6.1 million and $25.2 million, respectively, an increase of 31% and improvement of 22%; and
- Cash and Cash Equivalents was $33.9 million at December 31, 2017.
1 A reconciliation of net cash used in operating activities to cash burn has been provided in the financial statement tables included in this press release. An explanation of cash burn is also included below under the heading “Non-GAAP Financial Measures.”
2017 and Recent Business Highlights
- In January 2018, achieved the milestone of 100,000 Afirma tests performed to date, with an estimated 40,000 unnecessary thyroid surgeries saved, penetrating the market by an estimated 35%.
- Launched the next-generation Afirma Genomic Sequencing Classifier on our RNA sequencing platform, further improving the test’s performance and expanding our comprehensive biorepository of genomic content to fuel future product innovation.
- Announced upcoming launch of the Afirma Xpression Atlas platform, providing physicians the most comprehensive genomic data available in a single assay to further inform surgery and treatment decisions for patients with suspected thyroid cancer.
- During the year, structured and significantly expanded our multi-product sales team by over 40% during the year, in preparation for driving Percepta growth in 2018.
- Expanded the number of covered lives for Afirma by 70 million during 2017, bringing the total number of patients covered for the genomic test through their health insurers to over 275 million, including nearly 120 million Blues plan members, as of December 31, 2017.
- Expanded the number of contracted lives for Afirma by nearly 20 million during 2017, making the test an in-network covered benefit for over 175 million people, including nearly 45 million Blues plan members, as of December 31, 2017.
- Gained final Medicare coverage for Percepta through the MolDX program in May 2017, making it the first genomic test to be covered for use in lung cancer screening and diagnosis. The test is now available as a covered benefit for the nearly 60 million Medicare enrollees nationwide.
- Achieved Medicare pricing stability and transparency for Afirma through the Protecting Access to Medicare Act of 2014 (PAMA) implementation in January 2018, resulting in an increased reimbursement rate of approximately $3,600 per test from approximately $3,200 per test.
- Completed the package of clinical evidence needed to target Medicare coverage for the Envisia Genomic Classifier in 2018.
- Afirma – Presented 14 Afirma abstracts at four medical conferences, including four clinical utility studies demonstrating the long-term durability of a benign genomic test result during up to six years of follow-up and seven studies showing the enhanced Afirma GSC’s ability to identify significantly more benign thyroid nodules than the original Afirma test.
- Percepta – Presented three studies at major medical meetings demonstrating the clinical utility of the Percepta classifier and published a study in the Journal of Thoracic Oncology demonstrating the genomic test’s cost-effectiveness.
- Envisia – Presented five abstracts at leading pulmonology meetings and published three studies demonstrating the clinical validity, clinical utility and/or analytical verification of the Envisia classifier.
Veracyte expects to achieve full-year 2018 revenue in the range of $81 million to $83 million, with a cash burn in the range of $18 million to $22 million.
The above guidance for the full year of 2018 includes the adoption of ASC 606, which is effective January 1, 2018. We believe that the adoption of ASC 606 will not result in a material cumulative catch-up adjustment under the modified retrospective method, or have a material impact on our financial position or results of operations. We have not reconciled our guidance with respect to cash burn to net cash used in operating activities because certain items that impact this measure are uncertain or out of our control, or cannot be reasonably predicted. Accordingly, a reconciliation of cash burn to net cash used in operating activities is not available without unreasonable effort.
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 call may be accessed as follows:
Veracyte Fourth Quarter 2017 Conference Call
4:30 p.m. ET Today
|Dial-in number (U.S.):||(855) 541-0980|
|International number:||(970) 315-0440|
The webcast replay will be available on the company’s website approximately two hours following completion of the call.
Veracyte (Nasdaq: VCYT) is a leading genomic diagnostics company that is providing trustworthy and actionable answers that fundamentally improve patient care when current diagnostic tests are uncertain. The company's products uniquely combine genomic technology, clinical science and machine learning to provide answers that give physicians and patients a clear path forward without risky, costly surgery that is often unnecessary. Since its founding in 2008, Veracyte has commercialized three genomic tests, which are transforming the diagnosis of thyroid cancer, lung cancer and idiopathic pulmonary fibrosis and collectively target a $2 billion market opportunity. Veracyte is based in South San Francisco, California. For more information, please visit www.veracyte.com and follow the company on Twitter (@veracyte).
Veracyte, Afirma, Percepta, Envisia, the Veracyte logo, and the Afirma logo are trademarks of Veracyte, Inc.
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "expect," "believe," "should," "may," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our belief that we have a strong foundation in place to drive revenue growth, our beliefs regarding momentum in our business and potential drivers of future growth, our expectations regarding full-year 2018 revenue and cash burn, our introduction of our Afirma Xpression Atlas platform, our expectations regarding our ability to receive Medicare reimbursement and expand commercialization of our Envisia Genomic Classifier and our ability to drive revenue growth across our endocrinology and pulmonology franchises. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, anticipated events and trends, the economy and other future conditions. Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially, and reported results should not be considered as an indication of future performance. These risks and uncertainties include, but are not limited to our history of losses since inception; our ability to enhance the performance of our Afirma classifier; our ability to successfully transition to our next-generation Afirma Genomic Sequencing Classifier; the performance and acceptance of our Percepta and Envisia classifiers; our ability to increase usage of and reimbursement for the Afirma and Percepta classifiers and to obtain adequate reimbursement for our Envisia classifier, as well as any future products we may develop or sell; our ability to continue our momentum and growth; our dependence on a few payers for a significant portion of our revenue; the complexity, time and expense associated with billing and collecting from payers for our classifiers; laws and regulations applicable to our business, including potential regulation by the Food and Drug Administration or other regulatory bodies; our ability to develop and commercialize new products and the timing and speed of commercialization; the amount by which use of our products is able to reduce invasive procedures and reduce healthcare costs; our ability to achieve sales penetration in complex commercial accounts; the occurrence and outcome of clinical studies; the timing and publication of study results; the applicability of clinical results to actual outcomes; the continued application of clinical guidelines to our products and their inclusion in such clinical practice guidelines; our ability to compete; our ability to obtain capital when needed; and other risks set forth in the company's filings with the Securities and Exchange Commission, including the risks set forth in the company's Annual Report on Form 10-K for the year ended December 31, 2017. These forward-looking statements speak only as of the date hereof and Veracyte specifically disclaims any obligation to update these forward-looking statements.
Non-GAAP Financial Measures
To supplement our financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP), we monitor and consider cash burn, which is a non-GAAP financial measure. This non-GAAP financial measure is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similarly-titled measures presented by other companies. We define cash burn as net cash used in operating activities plus net capital expenditures, such as net purchases of property and equipment. We believe cash burn to be a liquidity measure that provides useful information to management and investors about the amount of cash consumed by the operations of the business, including our purchases of property and equipment. A limitation of using this non-GAAP measure is that cash burn does not represent the total change in cash and cash equivalents for the period because it excludes cash provided by or used for other investing and financing activities. We account for this limitation by providing information about our capital expenditures and other investing and financing activities in the statements of cash flows in our financial statements in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K and by presenting cash flows from investing and financing activities in our reconciliation of cash burn. In addition, it is important to note that other companies, including companies in our industry, may not use cash burn, may calculate cash burn in a different manner than we do or may use other financial measures to evaluate their performance, all of which could reduce the usefulness of cash burn as a comparative measure.
Because of these limitations, cash burn should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of cash burn to net cash used in operating activities provided in the tables below.
|CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS|
|(In thousands of dollars, except share and per share amounts)|
Three Months Ended
|Year Ended December 31,|
|Cost of revenue||7,769||6,515||28,195||25,462|
|Research and development||3,202||3,590||13,881||15,324|
|Selling and marketing||9,045||5,832||32,260||28,248|
|General and administrative||5,357||5,725||23,088||23,787|
|Intangible asset amortization||267||267||1,067||1,067|
|Total operating expenses||25,640||21,929||98,491||93,888|
|Loss from operations||(6,044||)||(3,672||)||(26,538||)||(28,803||)|
|Other income, net||123||75||476||202|
|Net loss and comprehensive loss||$||(8,439||)||$||(4,403||)||$||(31,003||)||$||(31,358||)|
|Net loss per common share, basic and diluted||$||(0.24||)||$||(0.14||)||$||(0.91||)||$||(1.09||)|
|Shares used to compute net loss per common share, basic and diluted||34,055,524||31,705,603||33,925,617||28,830,472|
|CONDENSED BALANCE SHEETS|
|December 31,||December 31,|
|Cash and cash equivalents||$||33,891||$||59,219|
|Prepaid expenses and other current assets||1,997||2,057|
|Total current assets||53,928||73,627|
|Property and equipment, net||9,688||11,480|
|Finite-lived intangible assets, net||13,067||14,133|
|Liabilities and Stockholders’ Equity|
|Total current liabilities||12,028||11,534|
|Capital lease liability, net of current portion||308||599|
|Deferred rent, net of current portion||4,170||4,402|
|Total stockholders’ equity||37,225||59,581|
|Total liabilities and stockholders’ equity||$||78,669||$||101,034|
(1) The condensed balance sheet at December 31, 2016 has been derived from the audited financial statements at that date included in the Company's Form 10-K filed with the Securities and Exchange Commission dated March 1, 2017.
|CONDENSED STATEMENT OF CASH FLOWS|
|(in thousands of dollars)|
|Year Ended December 31,|
|Adjustments to reconcile net loss to net cash used in operating activities:|
|Depreciation and amortization||3,841||3,511|
|Bad debt expense||-||68|
|Loss on disposal of property and equipment||12||12|
|Genzyme co-promotion fee amortization||-||(948||)|
|Conversion of accrued interest on long-term debt||-||385|
|Amortization and write-off of debt discount and issuance costs||472||173|
|Interest on end-of-term debt obligation and prepayment penalty||1,589||206|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other current assets||(7||)||(415||)|
|Accrued liabilities and deferred rent||(1,163||)||451|
|Net cash used in operating activities||(23,915||)||(27,982||)|
|Purchases of property and equipment||(1,755||)||(4,210||)|
|Proceeds from sale of property and equipment||440||-|
|Change in restricted cash||120||(2||)|
|Net cash used in investing activities||(1,195||)||(4,212||)|
|Proceeds from the issuance of long-term debt, net of debt issuance costs||24,880||24,452|
|Proceeds from issuance of common stock in a public offering, net of issuance costs||200||31,949|
|Payment of long-term debt||(25,385||)||(5,000||)|
|Payment of end-of-term debt obligation and prepayment penalty||(1,536||)||(288||)|
|Payment of capital lease liability||(274||)||-|
|Proceeds from the exercise of common stock options and employee stock purchases||1,897||1,216|
|Net cash (used in) provided by financing activities||(218||)||52,329|
|Net (decrease) increase in cash and cash equivalents||(25,328||)||20,135|
|Cash and cash equivalents at beginning of year||59,219||39,084|
|Cash and cash equivalents at end of year||$||33,891||$||59,219|
|Supplementary cash flow information of non-cash investing and financing activities:|
|Net receivable for reimbursement of public offering issuance costs||$||-||$||144|
|Purchases of property and equipment included in accounts payable and accrued liabilities||$||42||$||363|
|Supplementary cash flow information:|
|Cash paid for interest on debt||$||2,718||$||2,149|
|Cash paid for tax||$||21||$||7|
Reconciliation of net cash used in operating activities to cash burn:
(Unaudited, in thousands of dollars)
Three Months Ended
|Year Ended December 31,|
|Net cash used in operating activities||$||(5,816||)||$||(4,232||)||$||(23,915||)||$||(27,982||)|
|Plus purchases of property and equipment||(300||)||(450||)||(1,755||)||(4,210||)|
|Less proceeds from the sale of property and equipment||-||-||440||-|
|Net cash used in investing activities||$||(300||)||$||(450||)||$||(1,195||)||$||(4,212||)|
|Net cash (used in) provided by financing activities||$||(1,188||)||$||32,202||$||(218||)||$||52,329|