Veracyte Q1 2026 Earnings Call - Profitability Surges as Core Franchises Accelerate and New Launches Loom

Operator: Good day, and thank you for standing by. Welcome to Veracyte First Quarter 2026 Financial Results webcast call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will hear an automated message advising you your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Kelly Gura, Director of Investor Relations.

Kelly Gura, Director of Investor Relations, Veracyte: Good afternoon, everyone. Thank you for joining us today to review Veracyte’s first quarter 2026 financial results. Joining me on the call are Marc Stapley, our Chief Executive Officer, and Rebecca Chambers, our Chief Financial Officer. Dr. John Leite, our Chief Commercial Officer, will also be available for Q&A. Earlier this afternoon, we issued a press release detailing our first quarter financial results. We posted an accompanying presentation in the investor section of our website. Before we begin, I’d like to remind you that statements we make during this call will include forward-looking statements as defined under applicable securities laws. Forward-looking statements are subject to risks and uncertainties. The company can give no assurance they will prove to be correct. Additionally, we are not under any obligation to provide further updates on our business trends or our performance during the quarter.

To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Veracyte files with the Securities and Exchange Commission, including the most recent Form 10-Q and Form 10-K. In addition, this call will include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures are included in today’s earnings release, accessible from the investors section of Veracyte’s website. I am also pleased to highlight Veracyte’s newly redesigned website, which makes it easier to access information on our test portfolio, including a publication search tool to help navigate our extensive and growing clinical evidence base. I will now turn the call over to Marc Stapley, Veracyte’s CEO.

Marc Stapley, Chief Executive Officer, Veracyte: Thank you, Kelly, and thank you all for joining us today. We had an excellent start to 2026. In the 1st quarter, we delivered strong double-digit revenue and volume growth, exceeded our profitability expectations, and continued advancing key catalysts that position us well for long-term growth. This quarter highlights years of disciplined execution that have transformed Veracyte into a stronger, more focused, scalable company. Five years ago, we set out to make Decipher a commercial success, grow our core franchises, expand operations, enhance clinical evidence, and build a strong pipeline. We revitalized Afirma, made Decipher the top prostate cancer gene expression test, increased lab capacity threefold, improved turnaround time and the no-result rate, and surpassed a 25% adjusted EBITDA margin. Today, Veracyte is a diversified, profitable company with a unique platform, multiple growth drivers, expanding clinical evidence, and strong clinician relationships, all achieved through consistent strategic execution.

We believe we’re approaching an inflection point that will shape the next five years for Veracyte. We’re on the cusp of our two most significant product launches since Afirma. First, Prosigna LDT, supported by the OPTIMA trial with a key presentation ASCO in June. Second, TruMRD launching initially in muscle-invasive bladder cancer. Together, these launches will expand our addressable market, extend our platform into new clinical settings, and position us for what we expect will be an even more transformative next five years for Veracyte and the industry. I will spend time discussing both of these growth catalysts shortly. First, turning to our core business. Starting with Decipher. Since our acquisition in early 2021, the business has delivered consistent growth of more than 20% quarter after quarter.

That momentum continued in the first quarter as we delivered approximately 28,000 tests, representing 24% year-over-year volume growth. This strong performance was driven by continued expansion in ordering providers and orders per physician, and it reflects Decipher’s differentiated position as the only gene expression test supported by high-quality clinical evidence and inclusion in NCCN guidelines, advantages that continue to drive adoption across the full spectrum of prostate cancer risk. Over the last few quarters, we’ve seen particularly strong traction in advanced disease, where we believe there remains significant opportunity for Decipher. In the first quarter, we delivered nearly 30% growth across high-risk categories, including radical prostatectomy, biochemical recurrence, and metastatic disease. As we see more evidence supporting the use of Decipher in patients with advanced disease, we expect to see continued growth over time.

For example, we’re excited about upcoming results from the ENZAMET Phase III trial, which will assess Decipher’s ability to identify metastatic patients who benefit from triplet therapy. Those data will be featured in an oral presentation at ASCO later this month. ENZAMET is one part of a broader evidence pipeline that continues to advance. 4 Phase III trials evaluating Decipher Prostate in treatment intensification and de-intensification have now completed enrollment, including the GUIDANCE trial, which reached that milestone in the 1st quarter meaningfully ahead of schedule. GUIDANCE includes more than 2,000 patients and is designed to evaluate how the Decipher score can function as an integral biomarker to guide treatment decisions for men with unfavorable intermediate-risk prostate cancer. PredictRT has a similar goal in high-risk disease. These studies move beyond prognostic validation to prospectively demonstrate real-world clinical utility in forming treatment choices.

We believe they can support high-level evidence standards for guideline and coverage. While advanced disease is a compelling growth factor, we also continue to see physicians leveraging Decipher in the low-risk setting. Since launch, we’ve delivered results for more than 80,000 patients in this population, creating a substantial real-world evidence database that continues to inform clinical utility. We believe there is a long runway to expand Decipher’s role in active surveillance, supported by a growing body of evidence. Recent data published in European Urology Oncology demonstrated Decipher’s ability to stratify risk among patients undergoing active surveillance, and we were encouraged to see enrollment completed in G-MAJOR, a large prospective phase III randomized study evaluating how gene expression classifiers can inform active surveillance decisions.

Taken together, these achievements in our robust pipeline of ongoing studies reflect more than a decade of sustained investment in evidence generation and position us for a steady cadence of high-quality data readouts over the coming years. As our evidence base expands, we’re also enhancing our clinical offerings. Through evidence generated using our Decipher GRID research use-only database, we’re incorporating additional predictive biomarkers including PAM50, PORTOS, and PTEN. Over time, we plan to add select biomarkers to the Decipher clinical report to further support informed decision-making in high risk and advanced prostate disease. We are also advancing complementary initiatives in digital pathology and AI-powered analysis, which we view as complementary to molecular profiling. As previously shared, we’ve been scanning our Decipher database and are close to digitizing all historical slides for U.S. patients, more than 350,000 images.

We plan to leverage this extensive data set together with whole transcriptome data in collaborations with leading academic centers to better define where these technologies can add value in clinical practice. Across recent urology conferences, we have seen the field shifting toward biology-driven treatment strategies for bladder cancer, with Decipher Bladder emerging as a natural extension of our platform. This momentum will be on display at the upcoming AUA annual meeting, where six studies will be presented highlighting our Decipher Bladder portfolio’s ability to advance personalized care in bladder cancer, including insights generated from our GRID research use only database. These presentations build on the strong Decipher Bladder data shared at ASCO GU and support the early but growing adoption we’re seeing in the field. Overall, we’re very pleased with Decipher’s start to the year.

We believe the franchise is well-positioned with unmatched scale, depth of evidence, and commercial reach in urology. With only 1 in 3 men with prostate cancer in the U.S. currently benefiting from the insights that Decipher offers against a spectrum of disease, we believe it can continue to be a durable long-term growth engine, and we see meaningful extensibility into bladder disease as an incremental growth driver in the coming years. Turning to Afirma, we delivered approximately 17,200 tests in the first quarter, representing 12% year-over-year volume growth. This reflects both solid demand across our customer base and strong execution on operational initiatives that improve patient access to actionable results. As we’ve discussed previously, we completed the full transition to our V2 transcriptome workflow in the fourth quarter, establishing a more scalable and cost-effective platform.

Importantly, this transition has also enhanced our ability to deliver definitive results for a broader set of patients, including historically challenging low input RNA samples. That momentum continued in Q1, with our no result rate improving both sequentially and year-over-year. As a result, more patients and physicians received actionable Afirma results to guide clinical decision-making, contributing approximately 400 basis points to our volume growth in the quarter. Encouragingly, we saw healthy new account wins, increased utilization, and a high number of ordering providers in the quarter, reflecting strong engagement and the effectiveness of our strategy. We remain focused on expanding the already robust clinical evidence foundation supporting Afirma. Through our Afirma GRID research use only database, we continue to generate a steady cadence of new data and incorporate additional molecular signatures into the latest version of GRID.

We believe this growing data set increasingly reinforces Afirma GRID as a critical research use only tool to advance the understanding of thyroid nodules and thyroid cancer. Importantly, our commitment to evidence-backed research translates into real-world clinical and economic impact. A recent independent study analyzing Medicare payment data from 2016 to 2023 found that increased adoption of Afirma was associated with a meaningful reduction in thyroid surgery rates among Medicare beneficiaries. These findings highlight how Afirma test results help physicians more confidently rule out surgery when it isn’t warranted, supporting better-informed treatment decisions, reducing overall healthcare costs, and helping patients avoid unnecessary surgery and its long-term consequences. The study also reinforced Afirma’s position as the leading molecular test for indeterminate thyroid nodules.

Taken together, Afirma’s improving operational performance, expanding clinical evidence, and demonstrated real-world impact give us confidence in the franchise’s ability to sustain healthy growth in 2026 and beyond. We believe our Afirma test remains well-positioned to deliver value for patients, physicians, and payers while serving as a stable and durable growth engine within our portfolio. Building on the momentum across our core franchises-Prosigna LDT represents 1 of 2 major upcoming product launches that we believe marks an important next phase of growth. Prosigna is built on the well-established and scientifically validated PAM50 signature and provides deeper insights into the biological classification of breast cancer. By reporting the risk of recurrence using intrinsic subtype and proliferation scores to get the 10-year probability of distant recurrence, Prosigna is designed to inform treatment decisions at a critical point in a patient’s care journey.

We see a significant opportunity in the U.S. market, where approximately 225,000 breast cancer patients are diagnosed annually with early-stage hormone receptor-positive disease and are eligible for Prosigna testing. This is a large clinically meaningful population where improved biological insight has the potential to enhance outcomes and help avoid unnecessary treatment. Clinical evidence will be a key driver of adoption, as it always is. We look forward to the upcoming presentation of results from OPTIMA, a large phase III randomized prospective trial enrolling approximately 4,500 patients. I’m pleased to share that this presentation has now been confirmed on the agenda for ASCO later this month. If positive, we believe these results could be practice-changing and further strengthen Prosigna’s already robust clinical foundation.

Beyond OPTIMA, there are additional studies underway that we expect will continue to expand the evidence base and support share gains over time. We remain on track to commercially launch Prosigna LDT by mid-year. In preparation, we’re scaling our commercial and medical science liaison teams and deepening engagement with key opinion leaders. Our 2 major upcoming launch is TruMRD, our whole genome sequence-based MRD platform and a key step in expanding into minimal residual disease. We remain on track to launch TruMRD in MIBC by the end of the second quarter and plan to leverage the strength of the Decipher brand and our established commercial channels in urology and radiation oncology, where we believe 70% of patients with MIBC are seen. Our initial focus will be on recurrence monitoring in patients who have completed curative intent therapy, representing the majority of patients treated in this setting.

We believe the initial TruMRD test launch addresses a significant unmet clinical need and represents an important proof point for our broader platform as we enter the large and growing MRD market. Early data and strong engagement from leading academic institutions reinforce our confidence that our TruMRD platform’s differentiated whole genome approach positions us well to drive adoption and capture meaningful share over time. The TruMRD platform is highly scalable, with applications well beyond bladder cancer. We’re building an expanding body of clinical evidence, with several studies completed across bladder, colorectal, and lung cancer, as well as additional indications. Our pipeline continues to grow, with more than 10 studies currently in testing or analysis, 12 in contracting, and 29 in active planning, spanning muscle-invasive and non-muscle invasive bladder cancer, breast, lung, colorectal, prostate, and kidney cancer, as well as immunotherapy treatment response.

We’re also seeing growing external validation of this approach. At the recent American Association for Cancer Research annual meeting in San Diego, we hosted a spotlight theater focused on the clinical utility of the TruMRD platform for tumor-informed ctDNA analysis. The session was well-attended, underscoring the strong and growing interest in our differentiated approach to MRD. Investigators presented previously shared data from multiple large clinical trials, including TOMBOLA, UMBRELLA, and Neoblast. As a reminder, Neoblast is the first prospective interventional study utilizing TruMRD results and is designed to assess the feasibility of active surveillance in bladder cancer patients with negative ctDNA. As we expand our portfolio and advance our pipeline, we’re also investing in the leadership and organizational capabilities required to support our next phase of growth. I’m pleased to welcome Dr. Kevin Haas, who recently joined Veracyte as our Chief Development and Technology Officer.

Kevin brings deep expertise in product innovation, development, and software, with a strong track record of translating complex science into clinically impactful solutions. His leadership will be instrumental as we continue to advance our product roadmap and extend our reach to more clinicians and patients globally. I’d also like to welcome Tracy Ward, our new Chief Human Resources Officer, who will play an important role as we scale the organization in helping us to grow our culture and people, key ingredients to our success. In closing, we believe Veracyte is well-positioned with a long runway to deliver durable double-digit growth through execution of our long-term strategy. None of this would be possible without the execution of our team, and I’m proud of what they’ve accomplished as we reach more patients than ever before.

With that, I’ll now turn the call over to Rebecca to review our first quarter financial results and walk you through our outlook for 2026.

Rebecca Chambers, Chief Financial Officer, Veracyte: Thanks, Mark. The first quarter was a very strong start to the year and reflects the disciplined execution and scale we’ve built over the past several years. We delivered total revenue of $139.1 million, representing 21% year-over-year growth. Total volume increased to approximately 47,600 tests, up 17% compared to the same period in 2025. We generated $35.2 million of cash from operations, ending the quarter with $439.1 million in cash equivalents, and short-term investments. Testing revenue for the quarter was $135.1 million, an increase of 26% year-over-year, driven by Decipher and Afirma growth of 30% and 21% respectively. Total testing volume was approximately 45,200 tests, representing 19% growth year-over-year.

Testing ASP was $2,986, up 6% compared to the prior year, and inclusive of approximately $4 million of prior period collections, or PPCs. Excluding PPCs, normalized ASP increased 3% to $2,900, driven by continued strong collections. Turning to gross margin and operating expenses, I’ll focus on our non-GAAP results. Non-GAAP gross margin was 75.7%, up 350 basis points year over year, driven by strength in our testing business and an improved business mix. Testing gross margin increased 230 basis points to 76.4%, reflecting operational efficiencies from our V2 transcriptome workflow and higher prior period collections in the quarter as well. Non-GAAP operating expenses increased 7% year over year to $64.6 million.

As Marc highlighted, with the addition of our new Chief Development and Technology Officer, certain IT expenses associated with software development and project management previously reported in G&A have been moved directly into R&D, as they are fully dedicated to our product development objectives. As a result, R&D expense increased $8.5 million year-over-year to $24.1 million, driven by our organizational changes and clinical investment, partially offset by a reduction of allocated expenses. Sales and marketing expense increased $2.2 million to $24.7 million, reflecting hiring and investments to support our existing portfolio and prepare for the upcoming launches of Prosigna LDT and TruMRD and MIBC. G&A expense decreased $6.6 million to $15.8 million, primarily due to the organizational changes previously mentioned.

From a profitability standpoint, we delivered GAAP net income of $28.7 million in the quarter. Adjusted EBITDA was $42.8 million, or 30.8% of revenue, up 73% year-over-year and well above our long-term target of 25%. This level of profitability underscores the operating leverage we’ve built over the last five years and provides the flexibility to continue investing in our growth drivers while generating meaningful cash. Turning to our 2026 outlook, we are raising full year total revenue guidance to $582 million-$592 million, representing 13%-14% year-over-year growth compared to our prior range of $570 million-$582 million.

This reflects expected testing revenue growth of 16%-18%, excluding the contribution of new tests, with Decipher revenue growth of approximately 20% and Afirma revenue growth in the high single-digit to low double-digit range, benefiting from improvements in our no result rate. As a reminder, our guidance excludes any potential prior period collections in future quarters. Given the strong start to the year, we are also increasing our full year adjusted EBITDA guidance to greater than 26%. This outlook reflects our updated revenue expectations and continued investment to support our growth initiatives throughout the year. As always, while we plan expenses on an annual basis, adjusted EBITDA may fluctuate quarter-to-quarter due to the timing of investments and PPC variability. In closing, the financial performance we delivered this quarter reflects the significant transformation Mark described.

Five years of disciplined execution that have created a much more scalable, profitable, and resilient business. As we approach the next inflection point with multiple important product launches ahead, we are well-positioned to build on this momentum, further strengthen our financial foundation, and continue expanding our impact. Most importantly, we remain focused on supporting more patients across their cancer care journey while creating long-term shareholder value. We will now move into the Q&A portion of the call. Operator, please open the lines.

Operator: Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question comes from the line of Puneet Souda of Leerink Partners. Your line is now open.

Puneet Souda, Analyst, Leerink Partners: Thanks again. Thanks for taking my questions here. Maybe Marc or Rebecca, wanted to understand on the no result rate and the improvement that you’re getting from transcriptome, could you talk about what’s the feeling there? How should we think about the next set of quarters as that benefit continues to both give you upside on the top line as well as the bottom line?

Marc Stapley, Chief Executive Officer, Veracyte: Thanks, Puneet. Happy to. You know, I’ll start, and then Rebecca will talk about the financial impact of it. Just to remind everybody what the benefit of the no result rate is actually coming from. As you know, we transitioned our entire Afirma workflow to the new V2 transcriptome. That was a kind of a staged launch in Q4 with a full launch by the end of the quarter. Now, of course, we’re seeing our first quarter of full benefit from that. Frankly, you know, it’s surprising us in terms of how much better that particular assay is of being able to recover those samples that previously would have otherwise been lost.

I think, most importantly, there’s a great financial impact, but most importantly, there’s a real patient and physician customer impact of being able to provide a result and an answer more often than we were previously. Yeah, I couldn’t be happier or more proud of our team for having accomplished that project. By the way, it was not a simple project.

It was a long and complex project. The great benefit of it is that same platform is now available to our other tests and the first and next test that’s gonna use it post-Afirma is actually gonna be our Prosigna test. I’ll hand over to Rebecca to talk about the financial impact.

Rebecca Chambers, Chief Financial Officer, Veracyte: Yeah, happy to. Thanks for the question, Puneet. During the quarter, it was a 400 basis points good guide to volume growth. I do think that’s about as good as it’s going to get. It’s obviously way above our expectations that we cited in our original guide coming into the year for Afirma. If you recall, that original guide included a no result rate expectation of 0%-2% for that mid-to-high single-digit Afirma revenue growth guide. We’ve updated it to be high single-digit to low double-digit growth, and that includes a 2%-3% assumption. One thing to note on that, the reason why that assumption is below what we saw in the 4th quarter was because there’s two main factors.

One, no result rate tends to spike over the summer months with heat, and RNA degradation accordingly. Two, we do have a comp from the fourth quarter that, as we started to transition and see the benefit and we cited the benefit in the fourth quarter of 25. For those two reasons, for the full year, we’re now expecting a 2%-3% good guide from no result rate that flows down at 100%. Obviously, huge benefit to patients as Marc cited, and also a huge thank you to the team who has just done an amazing job on this project, and we’re excited to launch Prosigna on the back of the backbone of the new transcriptome as well here shortly.

Marc Stapley, Chief Executive Officer, Veracyte: Thanks, Rebecca. Thanks, Puneet.

Operator: Thank you. Our next question comes from the line of Tycho Peterson of Jefferies & Co. Your line is now open.

Dr. John Leite, Chief Commercial Officer, Veracyte0: Hey, team. This is Lauren on for Tycho. A couple from me. First for the momentum in testing revenue, how should we think about the exit philosophy of this business, heading into the launch of the new products? I know you’re not baking into the revenue guidance raise, but kinda just in terms of growth in the back half of the year. Second around the competitive moat for Decipher, how is the sales team in particular kind of positioning Decipher against newer, potentially lower cost digital pathology or AI-based competitors? Thanks.

Marc Stapley, Chief Executive Officer, Veracyte: Yeah. happy to deal with both of those. On the, you know, on the new product introductions and the momentum in the business, you know, as we’ve said, we’re not including our new products, Prosigna or TruMRD in our guides for this year, on the basis that, you know, we’re going to obviously manage those launches, mostly for good customer and patient impact, scale, as we start to see, you know, the level of interest and our ability to, you know, functionalize and operationalize that in the lab. You know, in terms of how you think about the ramp going forward, I think, you know, it’s hard to particularly call off any particular analog here for these two products.

I mean, if you think about Prosigna, we’re launching that into a market that is very well penetrated. What we don’t have to do, that we’ve had to do with all of our other tests, is educate physicians on why molecular diagnostics make sense in this particular patient population. What we do have to do is on the back of strong evidence, demonstrate why Prosigna is a better test for patients. That’s going to obviously have a different ramp and a different, you know, strategy than brand new tests in the greenfield. TruMRD, of course, while people call it a competitive market, it’s fairly well under-penetrated at this point. There’s still a lot of education to do, particularly in the Muscle-Invasive Bladder Cancer setting. Anything to add? Otherwise, I’ll go to John.

Dr. John Leite, Chief Commercial Officer, Veracyte0: No, please do.

Marc Stapley, Chief Executive Officer, Veracyte: On the competitive moat around Decipher, you know, it’s the same as we’ve always said, whether you’re talking about DPI or other molecular diagnostics or anything else in the future that may come, that purports to provide prognostic or predictive information to patients in a prostate cancer setting. We have so much evidence that’s been generated for Decipher over more than a decade. Remember, most of these studies you have to have started, you know, that long ago in order to read out in this particular disease state, that it creates quite a competitive moat. It’s actually, you know, people would have had to have started those studies a long time ago. Moving specifically to DPI, I think, you know, it sits in the category of it’s a recent test. It’s launched in the marketplace.

I think at this point, customers are quite skeptical, especially when they have discordant results, which have been demonstrated over and over again. Our answer to that is, you know, scan every slide that we’ve got, and I mentioned 350,000 of those, and make that information along with the GRID transcriptomes available to the community to do the appropriate research and demonstrate the utility of that particular test alongside molecular diagnostics. Remember, you know, physicians don’t tend to trade one thing for another. More information is better as long as it’s been clinically proven. That’s our strategy. John, I know you might want to add something there on the competitive, you know, landscape for Decipher and, you know, our other tests too.

Dr. John Leite, Chief Commercial Officer, Veracyte: Yeah. Anything else I would add would be repetitive, Marc. I think you hit everything. The only thing that I would say is that on the pricing side, I’ve not seen that pricing alone motivates a physician. Then the pricing would be a very late consideration in terms of driving the adoption or selection of a test.

Marc Stapley, Chief Executive Officer, Veracyte: Great. Thank you.

Operator: Thank you. Our next question comes from the line of Doug Schenkel of Wolfe Research. Your line is now open.

Doug Schenkel, Analyst, Wolfe Research: Hi, good afternoon, thank you for taking my questions. The first topic, you know, is really a follow-up on Decipher. You know, this is the 15th consecutive quarter of 20% plus volume growth. The market’s about 33% penetrated. I think incidence growth is around 6% per year. As we sit here today, you know, how do you think about the multi-year sustainability of 20% growth? Can you disaggregate how you’re gonna be able to do that? You know, how much of it’s deeper penetration of existing practices, opening up new practices and/or share capture? That’s, that’s the first topic. The second is really pivoting to Optima and the upcoming ASCO readout in June.

One, I’d love for you to just help us understand what’s a good enough result, you know, and what would be good enough to justify really leaning in aggressively on this launch in the back half of the year. If things do go well here, you know, OPTIMA enrolled patients with up to nine nodes. Oncotype DX’s approved for up to three nodes. How do you think about this in the context of expanding the TAM, you know, and potentially getting a differentiated label and differentiated reimbursement? Thank you.

Marc Stapley, Chief Executive Officer, Veracyte: Great. Thanks, Doug. I’m actually gonna take the first question real quick and then ask John if he wants to add anything to that, then he can talk to you about OPTIMA as he’s extremely close to our launch plans around that as well as our, you know, our strategy there. If you think about the Decipher growth, thanks for calling out, you know, the consecutive and long-term growth that we’ve been seeing there. Yeah, Decipher’s been on this, you know, very steady volume growth. You know, obviously over time penetrate more into various risk categories, and the denominator gets larger, but the volume growth has been consistently large year-over-year and growing. You know, we seem to be very much on that trajectory still.

I think given the fact that we’re only about 1/3 penetrated, you know, to me that what that says is 2/3 of men dealing with prostate cancer are not getting the benefit of the insights that Decipher provides. With the level of evidence in the NCCN guidelines supporting that test, they should. The fact that we cover every indication from low, intermediate, high, very high metastatic biochemical recurrence RP with evidence now, you know, every single 1 of those patients potentially over time should be getting the Decipher test. That’s why I think we continue to see growth. I’m not guiding to whether it be 20% or more in the future, but in terms of volume, I don’t see any reason why it would slow. Across the categories, you know, intermediate is the largest penetrating, becoming more.

As I cited on the call today, you know, we saw 30% quarter year-over-year growth in the first quarter in the high-risk categories. We’ve got multiple studies coming out in the next few years that cover low risk and active surveillance as well. Those are the things that we’re gonna continue to drive growth in Decipher for, I think, many years to come.

Rebecca Chambers, Chief Financial Officer, Veracyte: We’re quite excited about the ENZAMET trial that will be for the metastatic population here at ASCO as well.

Marc Stapley, Chief Executive Officer, Veracyte: Yeah. There’s a steady drumbeat of evidence around Decipher that keeps it going. On OPTIMA, John, do you wanna answer Doug’s questions?

Dr. John Leite, Chief Commercial Officer, Veracyte: Certainly. Thanks, Doug, for the question. You know, I think unfortunately the bar is quite high on OPTIMA. It’ll require a positive outcome on the primary endpoint, which is a demonstration of non-inferiority against the control for the predictive claim. 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 so that we can minimally be on par with a product on market today. Hope to differentiate with the latest clinical utility data and the performance of the test.

Marc Stapley, Chief Executive Officer, Veracyte: Thanks, John. Doug, I think the nodal status there is an important component. I think but more than that, it’s the breadth of what the OPTIMA study actually addressed, you know, how it dealt with both the premenopausal and postmenopausal as well. Just, you know, it’s a very well, well-designed, well-engineered study. You know, of course, our launch is dependent on it reading out appropriately and favorably. We hope that’ll be the case on the 30th of May, which is Saturday coming up at the end of the month.

Rebecca Chambers, Chief Financial Officer, Veracyte: Importantly, also the hiring is going quite well. We’re building the team, if we saw, you know, positive OPTIMA readout, guideline inclusion, publication, all that stuff, we would turn to be more aggressive there, Doug. I would think that would be kind of an exiting the year sort of decision. We’re, you know, we’re excited about the opportunity for Prosigna to be a multi-year growth driver here for the company going forward.

Doug Schenkel, Analyst, Wolfe Research: Okay. Thanks very much, team.

Marc Stapley, Chief Executive Officer, Veracyte: Yeah.

Operator: Thank you. Our next question comes from the line of Subbu Nambi of Guggenheim.

Subbu Nambi, Analyst, Guggenheim: Hey, guys. Thank you for taking my questions. You’re raising guidance by a few million more than the beat. The guidance still does not include the impact of new tests. It sounds like most of the raise is for Afirma, as you reiterated your Decipher revenue growth outlook of approximately 20%. Is there any additional detail you can share as to what are you expecting now for Decipher volume and ASPs?

Rebecca Chambers, Chief Financial Officer, Veracyte: Yeah. Thanks for the question, Subu. You’re absolutely right. We raised the guidance by the beat and then a little bit more at the midpoint for the raise in Afirma. Decipher, you know, plus or minus a day of volume at any given point in time is kind of what we expect, and this quarter was no different. It was a good quarter. The outlook for the rest of the year is kind of around that 20% guide that we had coming into the year. In prior years, we had a really big step up sequentially in the second quarter for Decipher, given the timing of guidelines. This year, the timing of guidelines was in the back half of the prior year.

That is 1 factor we have taken into account in this guide on a sequential basis. Competitively, we remain incredibly strong. The outlook for Decipher is immensely strong. ASP, as I cited on the call, was up meaningfully ex PPCs. You know, I think when it comes down to it, the trends of the business are immensely strong and the raise of the guide reflects those trends, as well as the fact that we only have 1 quarter under our belt.

Subbu Nambi, Analyst, Guggenheim: Thank you for that, Rebecca. One additional question. As you think about your next commercial indication for TruMRD beyond MIBC, you mentioned studies have been completed in MIBC, CRC, lung and ongoing studies in other indications. Can you help us understand where are you in the process of selecting the next indication and what your strategic priorities will be for the next indication?

Marc Stapley, Chief Executive Officer, Veracyte: Yeah, as I mentioned on the call, we’ve got a lot of studies, and you cited them, in progress, that keeps growing. You know, we have a regular strategic planning process. Our next, kind of readout on that and, you know, coming together, huddling on that is in the summer, in July. You know, we’ll continue to advance our thinking around that there. In the meantime, our priority remains, you know, getting our MIBC product launched, getting our reimbursement coverage for that, and then, you know, starting to penetrate that muscle-invasive bladder cancer market. No new updates on the next launch and when that will be.

Again, as I’ve said it multiple times, I think, you know, typically won’t necessarily give the, you know, what’s coming when because, again, we don’t wanna do R&D in public as things change so often, and we may flip the order of things. Sometimes that can be viewed as, you know, something’s negative changing when in fact it’s not. We have better opportunities. We’re constantly trading off here and it’s all gonna be driven by the evidence and timing of the evidence coming out.

Subbu Nambi, Analyst, Guggenheim: Perfect. Thank you so much.

Marc Stapley, Chief Executive Officer, Veracyte: Thanks.

Operator: Thank you. Our next question comes from the line of Mason Carrico of Stephens Inc. Your line is now open.

Mason Carrico, Analyst, Stephens Inc.: Hey, guys. Thanks for taking the questions. In terms of the Prosigna LDT, if the OPTIMA study reads out in June, do you think it could be published before the NCCN Breast Cancer Panel meeting that I think is in August so that it could be included in that review?

Marc Stapley, Chief Executive Officer, Veracyte: I don’t I mean, I don’t know, Jon, if you have any more information, but I don’t, I don’t think so. I think that might be a little bit too optimistic. Remember the, you know, the way that the I mean, the public Let me be clear. The publication might come out before then, but whether it influences the guidelines, we just don’t know. You know, frankly, again, if you look at our past history on other indications, we haven’t needed guidelines to get good traction. Guidelines have been an additional catalyst further down the road. Jon, anything else you got on the publication or guidelines for breast?

Dr. John Leite, Chief Commercial Officer, Veracyte: Well, you know, you answered it appropriately. We just don’t know. I think if the publication comes out early enough, it’s entirely possible, with a high enough impact that the NCCN would consider late-breaking data and have a discussion that’s sufficiently robust to perhaps include it in the guidelines, but that’s purely speculative. It’s not outside the realm of possibilities, but, you know, we don’t know what they may or may not do.

Mason Carrico, Analyst, Stephens Inc.: Got it. Were Decipher volumes impacted at all in the quarter by weather? If so, could you quantify that impact?

Rebecca Chambers, Chief Financial Officer, Veracyte: Yeah, Mason. You know, the weather was slightly worse than it was, you know, versus the prior year, but it got primarily caught up during the quarter, as we exceeded our expectations during the quarter. I don’t wanna quantify it. You know, we’ve always said plus or minus a day of volume, which tends to be, you know, 4 500 samples or so can fall on any given side of a quarter. You know, I think we were pleased with the performance of the Decipher franchise during the first quarter this year, despite challenging weather.

Mason Carrico, Analyst, Stephens Inc.: Got it. Thank you, guys.

Operator: Thank you. Our next question comes from Kyle Mikson of Canaccord Genuity. Your line is now open.

Kyle Mikson, Analyst, Canaccord Genuity: Hey, guys. Thanks for the questions. Congrats on the great quarter. On Afirma, I guess like on the pricing stuff, can you just talk about prior period collections for that test specifically and how you sort of think about visibility and ASC upside to that test? It seems like volume growth is, you know, relatively could be steady, so I think that pricing could be the one variable perhaps. Let me know if I’m wrong. Thanks.

Rebecca Chambers, Chief Financial Officer, Veracyte: The guide of high single digits to low double digits includes the Q1 prior periods. The Q1 prior periods for Afirma was about half of the total $4 million of prior periods, which is much more than usual. We don’t assume prior periods in our guide going forward. Ex-prior periods, Afirma ASP was up around 100 basis points, and Decipher was up, you know, above that to get to that blended average of 3. I don’t think there’s as much room on Afirma just given the duration of how long it’s been on the market and the 280 million covered lives here. There’s more upside in Decipher over a multi-year period and that ex PPCs is what manifested during the quarter.

Kyle Mikson, Analyst, Canaccord Genuity: Thanks, Rebecca. You know, you guys have been profitable for a while. You have a bunch of cash, just really outstanding EBITDA margins quarter and quarter out. How do you guys think about capital allocation going forward? If with respect to M&A, what would be some attractive attributes to a potential target? You know, is the large TAM important? Is near and reimbursement critical? Just maybe talk about that a bit.

Marc Stapley, Chief Executive Officer, Veracyte: I think no real change in our philosophy there. You know, we’re always active in the market with BD. You know, we look at everything, but we’re quite discerning. You know, for us, we have a strategy. It’s oncology-based strategy. It’s whole, you know, whole data driven strategy as well. Things that fit with that would make most sense. That doesn’t mean we wouldn’t do, you know, other tie-ins as well and technology plays and things that help us advance that strategy. You know, with our financial profile, you know, the strong revenue growth that we’re consistently delivering and the strong profitability, you know, we think about, you know, if other assets would be diluted to that and we take that into account accordingly.

Kyle Mikson, Analyst, Canaccord Genuity: All right. Thanks, Marc.

Marc Stapley, Chief Executive Officer, Veracyte: Thanks.

Operator: Thank you. Our next question comes from the line of Keith Hinton of Freedom Capital Markets. Your line is now open. Are you there, Keith? Okay.

Dr. John Leite, Chief Commercial Officer, Veracyte: All right.

Operator: Okay.

Dr. John Leite, Chief Commercial Officer, Veracyte: I think that was that the last question?

Operator: Yes. Okay, I am showing no further questions at this time. Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.