Veracyte (VCYT) Q1 FY26 earnings call: guidance and Q&A

What is the ceiling for the Afirma no result rate improvement from the V2 transcriptome, and how will it impact top and bottom line in future quarters?

The 400 basis points contribution to Q1 volume growth is likely the peak. For the full year, a 2-3% contribution is expected, lower than Q1 due to typical summer RNA degradation and a tougher prior-year comparable. The improvement significantly benefits patients and physicians by providing more actionable results.

“During the quarter, it was a 400-basis point good guide to volume growth. And so, I do think that's about as good as it's going to get. ... for the full year, we're now expecting a 2% to 3% good guide from no result rate.”

asked by Puneet Souda · answered by Rebecca Chambers

How should we think about the ramp of new products (Prosigna LDT, TrueMRD) given they are not in current guidance? Also, how does Decipher maintain its competitive moat against newer digital pathology or AI-based competitors?

New products are not in the current guide, with launches managed for customer impact and lab scaling. Prosigna enters a penetrated market, focusing on demonstrating superiority with evidence. TrueMRD enters an underpenetrated market requiring education. Decipher's moat is its decade-plus evidence base. Digital pathology/AI are newer, and customers are skeptical of discordant results; Veracyte plans to leverage its extensive digitized slide database for research to define their utility alongside molecular diagnostics.

“Prosigna, we're launching that into a market that is very well penetrated. ... what we do have to do is, on the back of strong evidence, demonstrate why Prosigna is a better test for patients. ... Through MRD, of course, while people call it a competitive market, it's fairly well underpenetrated at this point.”

asked by Unknown Analyst · answered by Marc Stapley

Given Decipher's 15 consecutive quarters of 20%+ volume growth and 33% market penetration, how sustainable is this growth, and what are the drivers (penetration, new practices, share capture)?

Decipher's growth trajectory is expected to continue due to only 1/3 market penetration, strong NCCN guideline support, and coverage across all prostate cancer indications (low, intermediate, high, metastatic, biochemical recurrent). The company sees continued growth opportunities in high-risk categories (30% YoY growth in Q1) and upcoming studies in low-risk/active surveillance.

“The market is about 33% penetrated. ... To me, what that says is 2/3 of men dealing with prostate cancer are not getting the benefit of the insights that Decipher provides. ... I don't see any reason why it would slow.”

asked by Douglas Schenkel · answered by Marc Stapley

What constitutes a 'good enough' result from the OPTIMA trial at ASCO to aggressively lean into the Prosigna launch, and how might it expand TAM or lead to differentiated reimbursement?

A positive outcome on the primary endpoint, demonstrating non-inferiority against the control for the predictive claim, is required. This would merit Level 1a evidence and hopefully NCCN guideline inclusion, positioning Prosigna on par with or better than existing products. The breadth of the OPTIMA study, including nodal status and menopausal status, is important for potential TAM expansion and differentiation.

“It will require a positive outcome on the primary endpoint, which is a demonstration of non-inferiority against the control for the predictive claim. And we've said all along, we believe we need to have that data to merit Level 1a evidence, that would drive, we hope, inclusion into the guidelines.”

asked by Douglas Schenkel · answered by John Leite

The guidance raise is more than the beat, primarily driven by Afirma. Can you elaborate on Decipher volume/ASP expectations? Also, what are the strategic priorities for selecting the next TrueMRD indication beyond MIBC?

The guidance raise is mainly due to Afirma's strong performance. Decipher's outlook remains around 20% growth, with ASP up meaningfully ex-PTCs. For TrueMRD, the priority is launching MIBC and securing reimbursement. The next indication selection is part of a regular strategic planning process, driven by evidence and timing, and will not be publicly disclosed in advance due to potential changes and competitive considerations.

“The outlook for the rest of the year is kind of around that 20% guide that we had coming into the year. ... In the meantime, our priority remains getting our MIBC product launched, getting our reimbursement coverage for that and then starting to penetrate that muscle invasive bladder cancer market.”

asked by Subhalaxmi Nambi · answered by Rebecca Chambers

Given strong profitability and cash balance, how does Veracyte think about capital allocation, particularly M&A? What attributes are attractive in a potential target (e.g., large TAM, nearing reimbursement)?

There is no change in the capital allocation philosophy. Veracyte is discerning in M&A, focusing on oncology-based, data-driven strategies that align with its existing platform. While open to tuck-ins and technology plays, any potential acquisition is evaluated for its dilutive impact on the company's strong revenue growth and profitability.

“For us, we have a strategy. It's oncology-based strategy. It's whole data-driven strategy as well. And so, things that fit with that would make most sense. ... we think about if other assets will be dilutive to that, and we take that into account accordingly.”

asked by Kyle Mikson · answered by Marc Stapley