Veracyte Announces Fourth Quarter and Full-Year 2022 Financial Results

Grew Fourth Quarter Revenue to $80.3 Million

Grew 2022 Total Revenue to $296.5 Million

Conference Call and Webcast Today at 4:30 p.m. ET

SOUTH SAN FRANCISCO, Calif.–(BUSINESS WIRE)–Veracyte, Inc. (Nasdaq: VCYT) today announced financial results for the fourth quarter and full year ended December 31, 2022.

“We had an outstanding fourth quarter, driving record revenue and operating cash flows, achieving the best quarter ever for both our Decipher prostate and Afirma thyroid tests,” said Marc Stapley, Veracyte’s chief executive officer. “Moreover, throughout 2022, we invested in our long-term growth drivers to deliver on our promise of empowering clinicians with high-value insights to guide and assure patients at pivotal moments in the race to diagnose and treat cancer. Moving into 2023, we have a clear strategy, strong financial position, and significant momentum to advance our vision of transforming cancer care for patients all over the world.”

Key Business Highlights:

Grew total test volume to 28,001 in the fourth quarter and 102,524 for the full-year 2022, an increase of 26% and 30%, respectively, compared to the prior year.

Launched an updated Decipher Genomics Resource for Intelligent Discovery (GRID) patient report, providing physicians who order the Decipher Prostate Genomic Classifier with expanded precision-medicine insights, on a Research Use Only basis.

Submitted the Envisia Genomic Classifier to the Notified Body for CE marking in the European Union, ahead of schedule.

Published data in the International Journal of Radiation Oncology, Biology, Physics demonstrating that the Decipher Prostate Genomic Classifier can improve risk stratification among men with clinically high-risk prostate cancer.

Published a meta-analysis of 13 independent studies for the Afirma Genomic Sequencing Classifier in the Journal of Clinical Endocrinology & Metabolism, confirming the test’s strong real-world performance in informing thyroid nodule diagnosis.

Published data in Frontiers in Endocrinology suggesting that insights derived from Veracyte’s comprehensive thyroid nodule database of whole-transcriptome sequencing may help personalize care for patients with thyroid nodules.

Generated $9.7 million in cash from operating activities in the fourth quarter and $7.5 million for the full-year 2022. Ended the fourth quarter of 2022 with cash, cash equivalents and short-term investments of $178.9 million, compared to $177.2 million at the beginning of 2022.

Promoted Annie McGuire to General Counsel and Chief People Officer.

Fourth Quarter 2022 Financial Results

Total revenue for the fourth quarter of 2022 was $80.3 million, an increase of 19% compared to $67.3 million in the fourth quarter of 2021. Testing revenue was $70.3 million, an increase of 32% compared to $53.4 million in the fourth quarter of 2021 driven primarily by the strong performance of our Decipher and Afirma tests. Product revenue was $3.2 million, an increase of 17% compared to $2.8 million in the fourth quarter of 2021. Biopharmaceutical and other revenue was $6.8 million, a decrease of 39% compared to $11.2 million, driven primarily by a milestone payment received in the prior year period.

Total gross margin for the fourth quarter of 2022, including the amortization of acquired intangible assets, was 61%, compared to 59% in the fourth quarter of 2021. Non-GAAP gross margin, excluding the amortization of acquired intangible assets and other acquisition related expenses was 67% compared to 66% in the fourth quarter of 2021.

Operating expenses, excluding cost of revenue, were $58.9 million, an increase of 4% compared to the fourth 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 $46.2 million in the fourth quarter of 2021.

Net loss for the fourth quarter of 2022 was $3.8 million, an improvement of 63% compared to the fourth quarter of 2021. Basic and diluted net loss per common share was $0.05, an improvement of 67% compared to the fourth quarter of 2021.

Full Year 2022 Financial Results

Total revenue for 2022 was $296.5 million, an increase of 35% compared to $219.5 million in 2021. Testing revenue was $250.5 million, an increase of 33% compared to $188.2 million in 2021 driven primarily by the strong performance of our Decipher and Afirma tests. Product revenue was $12.6 million, an increase of 10% compared to $11.5 million in 2021. Biopharmaceutical and other revenue was $33.4 million, an increase of 68% compared to $19.9 million in 2021, driven primarily by the contribution of the HalioDx acquisition.

Total gross margin for the full year 2022, including the amortization of acquired intangible assets, was 59%, compared to 60% in 2021. Non-GAAP gross margin, excluding the amortization of acquired intangible assets and other acquisition related expenses was 66%, flat to 2021.

Operating expenses, excluding cost of revenue, were $236.0 million, an increase of 4% compared to 2021. Non-GAAP operating expenses, excluding cost of revenue, amortization of acquired intangible assets, other acquisition related expenses and other restructuring costs, were $200.3 million compared to $158.4 million in 2021.

Net loss for the full year 2022 was $36.6 million, an improvement of 52% compared to 2021. Basic and diluted net loss per common share was $0.51, an improvement of 54% compared to 2021. Net cash provided by operating activities in 2022 was $7.5 million, an improvement of $39.2 million compared to 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.”

2023 Financial Outlook

Veracyte is initiating 2023 annual total revenue guidance of $325 million to $335 million, assuming currency rates as of February 22, 2023. This range includes mid-teens year-over-year growth of testing and product revenue, and a decline in Biopharmaceutical and other revenue for fiscal 2023 compared to fiscal 2022.

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: https://edge.media-server.com/mmc/p/6vvggrow. 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 https://investor.veracyte.com/events-presentations.

The conference call dial-in can be accessed by registering at the following link: https://register.vevent.com/register/BIbe54a1af06be4083968e88a7edfb6679

About Veracyte

Veracyte (Nasdaq: VCYT) is a global diagnostics company whose vision is to transform cancer care for patients all over the world. We empower clinicians with the high-value insights they need to guide and assure patients at pivotal moments in the race to diagnose and treat cancer. Our high-performing tests enable clinicians to make more confident diagnostic, prognostic and treatment decisions for some of the most challenging diseases such as thyroid, prostate, breast, bladder and lung cancers, as well as interstitial lung diseases. We help patients avoid unnecessary procedures and speed time to diagnosis and appropriate treatment. In addition to making our tests available in the U.S. through our central laboratories, we also aim to deliver our tests to patients worldwide through a distributed model to laboratories that can perform them locally. Veracyte is based in South San Francisco, California. For more information, please visit www.veracyte.com and follow the company on Twitter (@veracyte).

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, our statements related to our expected total revenue for 2023 and our plans, objectives, expectations (financial and otherwise) or intentions with respect to our tests and products. Forward-looking statements can be identified by words such as: “appears,” “anticipate,” “intend,” “plan,” “expect,” “believe,” “should,” “may,” “will,” “positioned,” “designed” and similar references to future periods. Actual results may differ materially from those projected or suggested in any forward-looking statements. These statements involve risks and uncertainties, which could cause actual results to differ materially from our predictions, and include, but are not limited to: our ability to launch, commercialize and receive reimbursement for our products; to demonstrate the validity and utility of our genomic tests and biopharma offerings to continue to integrate and expand the HalioDx and Decipher businesses and execute on our business plans; to continue to scale our global operations and enhance our internal control environment; the impact of the war in Ukraine on European economies and energy supply, as well as our facilities in France; the impact of the COVID-19 pandemic and its variants on our business and general economic conditions; the impact of foreign currency fluctuations, increasing interest rates and inflation; and the performance and utility of our tests in the clinical environment. Additional factors that may impact these forward-looking statements can be found under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the three months ended September 30, 2022, filed on November 3, 2022, and our Annual Report on Form 10-K to be filed for the year ended December 31, 2022. Copies of these documents, when available, may be found in the Investors section of our website at www.investor.veracyte.com. These forward-looking statements speak only as of the date hereof and, except as required by law, we specifically disclaim any obligation to update these forward-looking statements or reasons why actual results might differ, whether as a result of new information, future events or otherwise.

Veracyte, the Veracyte logo, Decipher, Decipher GRID, Afirma, Percepta, Envisia, Prosigna, Lymphmark, TMExplore, Brightplex, Immunosign, “Know by Design” and “More about You” are registered trademarks of Veracyte, Inc. and its subsidiaries in the U.S. and selected countries. Immunoscore IC® is a trademark of Veracyte SAS registered in France. Immunoscore is a registered trademark of Inserm used by Veracyte under license. nCounter is the registered trademark of NanoString Technologies used by Veracyte under license.

Note Regarding Use of Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release and the accompanying tables contain, and reference, certain non‐GAAP results including non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP loss from operations. These measures are not meant to be considered superior to or a substitute for financial measures calculated in accordance with GAAP, and investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool.

We use non-GAAP measures to internally evaluate and analyze financial results. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures. However, the non-GAAP measures we present may be different from those used by other companies.

We exclude amortization of acquired intangible assets, acquisition-related expenses relating to our acquisitions of Decipher Biosciences and HalioDx and certain costs related to restructuring from certain of our non-GAAP measures. Management has excluded the effects of these items in non-GAAP measures to help investors gain a better understanding of the core operating results and future prospects of the company, consistent with how management measures and forecasts the company’s performance, especially when comparing such results to previous periods or forecasts. The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non‐GAAP information and the reconciliation between these presentations, to more fully understand its business.

Reconciliations between our GAAP results and non‐GAAP financial measures are presented in the tables of this release.

VERACYTE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands of dollars, except share and per share amounts)

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

2022

 

2021

 

2022

 

2021

Revenues:

 

 

 

 

 

 

 

Testing revenue

$

70,269

 

 

$

53,414

 

 

$

250,544

 

 

$

188,182

 

Product revenue

 

3,231

 

 

 

2,758

 

 

 

12,632

 

 

 

11,464

 

Biopharmaceutical and other revenue

 

6,797

 

 

 

11,164

 

 

 

33,360

 

 

 

19,868

 

Total revenue

 

80,297

 

 

 

67,336

 

 

 

296,536

 

 

 

219,514

 

 

 

 

 

 

 

 

 

Operating expenses (1):

 

 

 

 

 

 

 

Cost of testing revenue

 

19,394

 

 

 

16,366

 

 

 

75,317

 

 

 

58,860

 

Cost of product revenue

 

2,618

 

 

 

1,583

 

 

 

7,820

 

 

 

5,887

 

Cost of biopharmaceutical and other revenue

 

4,819

 

 

 

4,933

 

 

 

18,445

 

 

 

9,653

 

Research and development

 

11,287

 

 

 

10,252

 

 

 

40,603

 

 

 

29,843

 

Selling and marketing

 

24,127

 

 

 

22,212

 

 

 

97,560

 

 

 

79,840

 

General and administrative

 

18,208

 

 

 

18,849

 

 

 

76,518

 

 

 

101,353

 

Intangible asset amortization

 

5,264

 

 

 

5,474

 

 

 

21,354

 

 

 

15,981

 

Total operating expenses

 

85,717

 

 

 

79,669

 

 

 

337,617

 

 

 

301,417

 

Loss from operations

 

(5,420

)

 

 

(12,333

)

 

 

(41,081

)

 

 

(81,903

)

Other income, net

 

1,979

 

 

 

1,016

 

 

 

4,654

 

 

 

254

 

Loss before income taxes

 

(3,441

)

 

 

(11,317

)

 

 

(36,427

)

 

 

(81,649

)

Income tax provision (benefit)

 

403

 

 

 

(789

)

 

 

133

 

 

 

(6,086

)

Net loss

$

(3,844

)

 

$

(10,528

)

 

$

(36,560

)

 

$

(75,563

)

Net loss per common share, basic and diluted

$

(0.05

)

 

$

(0.15

)

 

$

(0.51

)

 

$

(1.11

)

Shares used to compute net loss per common share, basic and diluted

 

71,825,754

 

 

 

71,064,467

 

 

 

71,549,204

 

 

 

67,890,328

 

1. Cost of revenue, research and development, sales and marketing and general and administrative expenses include the following stock-based compensation related expenses:

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

2022

 

2021

 

2022

 

2021

Cost of revenue

$

408

 

$

354

 

$

1,355

 

$

835

Research and development

 

1,332

 

 

 

1,555

 

 

 

6,132

 

 

 

4,747

 

Selling and marketing

 

1,297

 

 

 

1,197

 

 

 

6,018

 

 

 

4,638

 

General and administrative

 

3,997

 

 

 

3,708

 

 

 

13,951

 

 

 

12,748

 

Total stock-based compensation expense

$

7,034

 

 

$

6,814

 

 

$

27,456

 

 

$

22,968

VERACYTE, INC.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

2022

 

2021

 

2022

 

2021

Net loss

$

(3,844

)

 

$

(10,528

)

 

$

(36,560

)

 

$

(75,563

)

Other comprehensive loss:

 

 

 

 

 

 

 

Change in currency translation adjustments

 

22,720

 

 

 

(6,943

)

 

 

(16,263

)

 

 

(15,083

)

 

 

 

 

 

 

 

 

Net comprehensive income (loss)

$

18,876

 

 

$

(17,471

)

 

$

(52,823

)

 

$

(90,646

)

VERACYTE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

 

 

December 31,

 

December 31,

 

2022

 

2021

 

(Unaudited)

 

(See Note 1)

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

154,247

 

$

173,197

Short-term investments

 

24,605

 

 

 

3,964

 

Accounts receivable

 

44,021

 

 

 

41,461

 

Supplies and inventory

 

14,294

 

 

 

11,225

 

Prepaid expenses and other current assets

 

11,469

 

 

 

13,255

 

Total current assets

 

248,636

 

 

 

243,102

 

Property and equipment, net

 

17,702

 

 

 

15,098

 

Right-of-use assets, operating leases

 

13,160

 

 

 

16,043

 

Intangible assets, net

 

174,866

 

 

 

202,731

 

Goodwill

 

695,891

 

 

 

707,904

 

Restricted cash

 

749

 

 

 

749

 

Other assets

 

5,418

 

 

 

2,198

 

Total assets

$

1,156,422

 

 

$

1,187,825

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

11,911

 

 

$

12,360

 

Accrued liabilities

 

37,774

 

 

 

39,475

 

Current portion of long-term debt

 

 

 

 

1,127

 

Current portion of deferred revenue

 

2,613

 

 

 

4,646

 

Current portion of acquisition-related contingent consideration

 

6,060

 

 

 

2,682

 

Current portion of operating lease liabilities

 

4,070

 

 

 

3,630

 

Current portion of other liabilities

 

186

 

 

 

231

 

Total current liabilities

 

62,614

 

 

 

64,151

 

Deferred revenue, net of current portion

 

 

 

 

343

 

Deferred tax liabilities

 

4,531

 

 

 

5,592

 

Acquisition-related contingent consideration, net of current portion

 

2,498

 

 

 

5,722

 

Operating lease liabilities, net of current portion

 

10,648

 

 

 

14,096

 

Other liabilities

 

931

 

 

 

1,407

 

Total liabilities

 

81,222

 

 

 

91,311

 

Total stockholders’ equity

 

1,075,200

 

 

 

1,096,514

 

Total liabilities and stockholders’ equity

$

1,156,422

 

 

$

1,187,825

 

 

 

 

 

1. The condensed consolidated balance sheet at December 31, 2021 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 February 28, 2022.

VERACYTE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands of dollars)

 

 

 

 

 

Twelve Months Ended

 

2022

 

2021

Operating activities

 

 

 

Net loss

$

(36,560

)

 

$

(75,563

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

 

25,928

 

 

 

19,593

 

Loss on disposal of property and equipment

 

206

 

 

 

 

Stock-based compensation

 

26,734

 

 

 

22,519

 

Provision for (benefit from) income taxes

 

133

 

 

 

(6,258

)

Interest on end-of-term debt obligation

 

161

 

 

 

216

 

Noncash lease expense

 

3,320

 

 

 

1,632

 

Revaluation of acquisition-related contingent consideration

 

154

 

 

 

810

 

Effect of foreign currency on operations

 

522

 

 

 

1,211

 

Impairment of intangible assets

 

3,318

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

1,096

 

 

 

(8,571

)

Supplies and inventory

 

(3,011

)

 

 

(1,464

)

Prepaid expenses and other current assets

 

(4,201

)

 

 

(3,316

)

Other assets

 

(3,049

)

 

 

(216

)

Operating lease liabilities

 

(3,448

)

 

 

(1,794

)

Accounts payable

 

152

 

 

 

5,155

 

Accrued liabilities and deferred revenue

 

(3,920

)

 

 

14,425

 

Net cash provided by (used in) operating activities

 

7,535

 

 

 

(31,621

)

Investing activities

 

 

 

Acquisition of Decipher Biosciences, net of cash acquired

 

 

 

 

(574,411

)

Acquisition of HalioDx, net of cash acquired

 

 

 

 

(162,419

)

Purchase of short-term investments

 

(33,519

)

 

 

 

Proceeds from maturity of short-term investments

 

12,681

 

 

 

 

Proceeds from sale of equity securities

 

 

 

 

3,000

 

Purchases of property and equipment

 

(8,549

)

 

 

(5,376

)

Net cash used in investing activities

 

(29,387

)

 

 

(739,206

)

Financing activities

 

 

 

Proceeds from the issuance of common stock in a public offering, net of issuance costs

 

 

 

 

593,821

 

Payment of long-term debt

 

(1,281

)

 

 

 

Payment of taxes on vested restricted stock units

 

(3,167

)

 

 

(9,029

)

Proceeds from the exercise of common stock options and employee stock purchases

 

7,942

 

 

 

11,528

 

Net cash provided by financing activities

 

3,494

 

 

 

596,320

 

Decrease in cash, cash equivalents and restricted cash

 

(18,358

)

 

 

(174,507

)

Effect of foreign currency on cash, cash equivalents and restricted cash

 

(592

)

 

 

(1,514

)

Net decrease in cash, cash equivalents and restricted cash

 

(18,950

)

 

 

(176,021

)

Cash, cash equivalents and restricted cash at beginning of period

 

173,946

 

 

 

349,967

 

Cash, cash equivalents and restricted cash at end of period

$

154,996

 

 

$

173,946

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH

(Unaudited)

(In thousands of dollars)

 

 

 

 

 

December 31,

 

December 31,

 

2022

 

2021

Cash and cash equivalents

$

154,247

 

$

173,197

Restricted cash

 

749

 

 

 

749

 

Total cash, cash equivalents and restricted cash

$

154,996

 

 

$

173,946

 

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

 

 

 

 

(Unaudited)

 

 

 

 

(In thousands of dollars)

 

 

 

 

 

 

 

Identified Expenses

 

 

 

GAAP

 

Acquisition

Related

Expenses (1)

 

Intangible

Assets

Amortization

Expense

 

Other

(4)

 

Total Non-GAAP

Measure

Three Months Ended December 31, 2022

 

 

 

 

 

 

 

 

Total revenue

$

80,297

 

 

$

 

$

 

$

 

$

80,297

 

Cost of testing revenue

 

19,394

 

 

 

50

 

 

 

 

 

 

 

 

 

19,344

 

Cost of product revenue

 

2,618

 

 

 

 

 

 

 

 

 

 

 

 

2,618

 

Cost of biopharmaceutical and other revenue

 

4,819

 

 

 

64

 

 

 

 

 

 

 

 

 

4,755

 

Intangible asset amortization (2)

 

4,747

 

 

 

 

 

 

4,747

 

 

 

 

 

 

 

Gross margin $

 

48,719

 

 

 

114

 

 

 

4,747

 

 

 

 

 

 

53,580

 

Gross margin %

 

61

%

 

 

 

 

 

 

 

 

67

%

 

 

 

 

 

 

 

 

 

 

Research and development

 

11,287

 

 

 

232

 

 

 

 

 

 

 

 

 

11,055

 

Selling and marketing

 

24,127

 

 

 

917

 

 

 

 

 

 

 

 

 

23,210

 

General and administrative

 

18,208

 

 

 

1,368

 

 

 

 

 

 

 

 

 

16,840

 

Intangible asset amortization

 

517

 

 

 

 

 

 

517

 

 

 

 

 

 

 

Total operating expenses excluding cost of revenue (3)

 

54,139

 

 

 

2,517

 

 

 

517

 

 

 

 

 

 

51,105

 

Income (loss) from operations

$

(5,420

)

 

$

2,631

 

 

$

5,264

 

 

$

 

 

$

2,475

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2021

 

 

 

 

 

 

 

 

Total revenue

$

67,336

 

 

$

 

 

$

 

 

$

 

 

$

67,336

 

Cost of testing revenue

 

16,366

 

 

 

55

 

 

 

 

 

 

 

 

 

16,311

 

Cost of product revenue

 

1,583

 

 

 

 

 

 

 

 

 

 

 

 

1,583

 

Cost of biopharmaceutical and other revenue

 

4,933

 

 

 

165

 

 

 

 

 

 

 

 

 

4,768

 

Intangible asset amortization (2)

 

4,936

 

 

 

 

 

 

4,936

 

 

 

 

 

 

 

Gross margin $

 

39,518

 

 

 

220

 

 

 

4,936

 

 

 

 

 

 

44,674

 

Gross margin %

 

59

%

 

 

 

 

 

 

 

 

66

%

 

 

 

 

 

 

 

 

 

 

Research and development

 

10,252

 

 

 

667

 

 

 

 

 

 

 

 

 

9,585

 

Selling and marketing

 

22,212

 

 

 

1,046

 

 

 

 

 

 

 

 

 

21,166

 

General and administrative

 

18,849

 

 

 

3,399

 

 

 

 

 

 

 

 

 

15,450

 

Intangible asset amortization

 

538

 

 

 

 

 

 

538

 

 

 

 

 

 

 

Total operating expenses excluding cost of revenue (3)

 

51,851

 

 

 

5,112

 

 

 

538

 

 

 

 

 

 

46,201

 

Loss from operations

$

(12,333

)

 

$

5,332

 

 

$

5,474

 

 

$

 

 

$

(1,527

)

 

 

 

 

 

 

 

 

 

 

1. Includes transaction related expenses as well as post-combination compensation expenses. For 2021, adjustments consist primarily of transaction-related expenses associated with the acquisition of Decipher Biosciences. For 2022, adjustments consist primarily of post-combination compensation expenses associated with the acquisition of HalioDx.

2. Includes only amortization of intangible assets identified as developed technology assets through purchase accounting transactions, which otherwise would have been allocated to cost of revenue.

3. Includes only amortization of intangible assets, which otherwise would have been allocated to research and development, selling and marketing or general and administrative expense and excludes the cost of revenue ($26.8 and $22.9 million) and the amortization of intangible assets which would have been allocated to the cost of revenue ($4.7 and $4.9 million) for Q4 2022 and 2021 respectively.

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

 

 

 

 

(Unaudited)

 

 

 

 

(In thousands of dollars)

 

 

 

 

 

 

 

Identified Expenses

 

 

 

GAAP

 

Acquisition

Related

Expenses (1)

 

Intangible

Assets

Amortization

Expense

 

Other

(4)

 

Total Non-GAAP

Measure

Twelve Months Ended December 31, 2022

 

 

 

 

 

 

 

 

Total revenue

$

296,536

 

 

$

 

$

 

$

 

$

296,536

 

Cost of testing revenue

 

75,317

 

 

 

203

 

 

 

 

 

 

18

 

 

 

75,096

 

Cost of product revenue

 

7,820

 

 

 

 

 

 

 

 

 

3

 

 

 

7,817

 

Cost of biopharmaceutical and other revenue

 

18,445

 

 

 

325

 

 

 

 

 

 

 

 

 

18,120

 

Intangible asset amortization (2)

 

19,273

 

 

 

 

 

 

19,273

 

 

 

 

 

 

 

Gross margin $

 

175,681

 

 

 

528

 

 

 

19,273

 

 

 

21

 

 

 

195,503

 

Gross margin %

 

59

%

 

 

 

 

 

 

 

 

66

%

 

 

 

 

 

 

 

 

 

 

Research and development

 

40,603

 

 

 

1,418

 

 

 

 

 

 

 

 

 

39,185

 

Selling and marketing

 

97,560

 

 

 

3,914

 

 

 

 

 

 

493

 

 

 

93,153

 

General and administrative

 

76,518

 

 

 

5,245

 

 

 

 

 

 

3,318

 

 

 

67,955

 

Intangible asset amortization

 

2,081

 

 

 

 

 

 

2,081

 

 

 

 

 

 

 

Total operating expenses excluding cost of revenue (3)

 

216,762

 

 

 

10,577

 

 

 

2,081

 

 

 

3,811

 

 

 

200,293

 

Loss from operations

$

(41,081

)

 

$

11,105

 

 

$

21,354

 

 

$

3,832

 

 

$

(4,790

)

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended December 31, 2021

 

 

 

 

 

 

 

 

Total revenue

$

219,514

 

 

$

 

 

$

 

 

$

 

 

$

219,514

 

Cost of testing revenue

 

58,860

 

 

 

81

 

 

 

 

 

 

 

 

 

58,779

 

Cost of product revenue

 

5,887

 

 

 

 

 

 

 

 

 

 

 

 

5,887

 

Cost of biopharmaceutical and other revenue

 

9,653

 

 

 

217

 

 

 

 

 

 

 

 

 

9,436

 

Intangible asset amortization (2)

 

14,491

 

 

 

 

 

 

14,491

 

 

 

 

 

 

 

Gross margin $

 

130,623

 

 

 

298

 

 

 

14,491

 

 

 

 

 

 

145,412

 

Gross margin %

 

60

%

 

 

 

 

 

 

 

 

66

%

 

 

 

 

 

 

 

 

 

 

Research and development

 

29,843

 

 

 

1,027

 

 

 

 

 

 

 

 

 

28,816

 

Selling and marketing

 

79,840

 

 

 

1,755

 

 

 

 

 

 

 

 

 

78,085

 

General and administrative

 

101,353

 

 

 

49,814

 

 

 

 

 

 

 

 

 

51,539

 

Intangible asset amortization

 

1,490

 

 

 

 

 

 

1,490

 

 

 

 

 

 

 

Total operating expenses excluding cost of revenue (3)

 

212,526

 

 

 

52,596

 

 

 

1,490

 

 

 

 

 

 

158,440

 

Loss from operations

$

(81,903

)

 

$

52,894

 

 

$

15,981

 

 

$

 

 

$

(13,028

)

 

 

 

 

 

 

 

 

 

 

1. Includes transaction related expenses as well as post-combination compensation expenses. For 2021, adjustments consist primarily of transaction-related expenses associated with the acquisition of Decipher Biosciences. For 2022, adjustments consist primarily of post-combination compensation expenses associated with the acquisition of HalioDx.

2. Includes only amortization of intangible assets identified as developed technology assets through purchase accounting transactions, which otherwise would have been allocated to cost of revenue.

3. Includes only amortization of intangible assets, which otherwise would have been allocated to research and development, selling and marketing or general and administrative expense and excludes the cost of revenue ($101.6 and $74.4 million) and the amortization of intangible assets which would have been allocated to the cost of revenue ($19.3 and $14.5 million) for the full year 2022 and 2021 respectively

4. Includes $3.3 million expense related to the impairment charge associated with certain developed technology intangible assets and $0.5 million related to restructuring costs

Contacts

Investor Contact:
Shayla Gorman

Director, Investor Relations

619-393-1545

[email protected]

Media Contact:
Tracy Morris

Vice President of Global Corporate Communications

650-380-4413

[email protected]

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