VCYT - Earnings call transcript Q4 2017

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Operator

Good afternoon, ladies and gentlemen, and welcome to Veracyte’s Fourth Quarter and Full-Year 2017 Financial Results Conference Call. At this time, all participants are in a listen only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to turn the conference over to your host, Ms. the Chief of Officer. Chairman Anderson, Board Executive and Bonnie

You may begin.

Bonnie Anderson

and everyone XXXX us call. thanks today afternoon financial for conference full-year joining and for Good quarter our results fourth

Chris Kennedy, Financial Keith Operating are today and Chief me Officer Joining and Hall, President Officer. Chief

will Keith through us begin statement. the we Harbor take Before Safe

Keith Kennedy

Good afternoon everyone.

under like remind this forward-looking include call that begin, applicable laws. statements various defined securities we Before to that I will statements would you we during as make

financial other strategy, and our growth, fact. future are opinions plans, attributes statements these and performance achievements materially performance, and statements pipeline, correct. subject guidance, not assurance future will results, reflected expectations in, Forward-looking statements and forward-looking and to discussed the product any are include regarding no expectations prospects they regarding to statements historical such goals drivers to of and results in prove assumptions, differ company reimbursement Management’s that risks from and forward-looking or uncertainties implied may or be by, cause give statements, can and/or actual that

to today’s press company’s uncertainties the in Securities addition with risks those the described Exchange filings are and and Commission. release, In

in results. Releases.” quarter our when are Part and released of available this landing clicking-through the of top-right call on Additionally financial Please “Investors” results investor We to cover call. be our to of announce earnings which to the the and tables measures fourth the these GAAP our “Press portion release corner measures. I non-GAAP financial call reference which in comparable clicking I'll discussed a this and relations full-year website and financial website on then refer also page for later our reconciliation financial will measures presentation, Veracyte.com, conference our a the our XXXX on website, directly most we by of “Menus” our

the the presentation under over to same find “Investors” now turn “Events Bonnie. may call I Presentations.” in will the section, financial You &

Bonnie Anderson

successes. pleased to marketing sustained on growth, foundational excited now sales a update scientific also I'm XXXX three believe year recap our of expectations most performance reimbursement And readiness of of to you, solid you expansion, commercial to importantly, portfolio and product growth. Thank future Keith. our will accelerate in products share we And of to for the lead growth our plans a I'm and which to XXXX. and operations the innovation

Let's the using begin key we XXXX year with recap throughout to define use metrics the success. the

We XX% at XX, grew momentum top test slightly Sequencing revenue the of launched the to avoid potentially sequencing XXXX. by for the to on customers diagnosis. XX% current among coming is and growth as over first million XXXX grew higher the we in volume in increase our closing in year genomic a reported built The at We of XX% the over out $XX previous expansion. our XX% toward guidance revenue year at just end for QX was commercial country year. surgery XXX year. thyroid Response of Afirma our institutions generation Percepta end strong. Genomic the next We unnecessary over revenue. our and machine our expanded XXXX been the around by platform began We booking technology more RNA adoption and enabling the Classifier XX learning GSC and to or the patients cancer has growth

penetrating the beyond Percepta in our by further stage XXXX the expanded market Afirma today. estimated setting hold XX% over drive sales while growth in team position we XX% XXXX we Lastly, the multiproduct to

physician adoption to into also to relationship their drive the We further work AmeriPath continue networks. with Quest

making benefit to million plans. Medicare coverage Afirma more contracted be the plans plans from indication This over a networks one of XXX number for covered in and Afirma health exception. for nearly approximately in including XXXX. new XXX because million XX At a reimbursement leading likely Afirma key nearly from than of rate physicians million The U.S. all XXXX their more XXXX a dozen people by the lives second We of to to very new tests bringing covered of the XX XXXX has Blues for that insurers. lives much reimbursement end progress. adding medical and million received few necessary had for by members to Afirma any policies tests reimbursement which medically Anthem, the through in million is per as for test per no are order We been a the pillar to rate genomic as XXXX people million Through including we important access are health test of is milestone progress approximately Coverage XX PAMA years increased success implementation their members. Veracyte's secured was in total X, Medicare available XXX XXXX the patients. Afirma of a Blues increased January over nearly

modification forward, sales coverage CMS for became through the MolDX clients and institutional to our which coming program nearly for XXXX available fully XXXX. billing rule into the billing recipients Medicare requirements of Medicare finally challenging May Percepta the greately XX-day and us in Lastly, the of making million effective streamlines to test the manage process process the will XX going allow removed

success of development. evidence is third Our measurement

Oncology Journal clinical utility showcasing in abstracts GSC. We of our major Percepta positive seven our included clinical publications XXXX Here too including Afirma Thoracic abstract also success we published new utility study five four at This medical at XX effectiveness conferences meetings. Afirma long-term with three endocrinology presentations across and experienced studies performance of We presented presented cost Classifier XX data a the on portfolio. from and the over the studies. key in significant for abstracts

and presented catalysts also pulmonary is We fibrosis us this tests robust IPF. gain Envisia verification. or for to for XXXX evidence for Medicare And coverage Envisia abstracts demonstrating We five metric of diagnostic for clinical will financial meetings was at key XXXX. success Envisia diagnosis our final key analytical idiopathic the of first test the discipline. Classifier, pulmonology clinical our to Genomic Medicare utility, for improve validity, clinical Genomic coverage that believe enable one

cash burn was Our improvement an XXXX. over of XX% full million, year $XX.X

progress new efficiently We with revenue us strategic we our the growth are all generating are significant profitable the commercial advance as goal a To in We for we've are early pathway for growth to activities. business you in and resources to our remains and appointments XXXX pipeline deploying announced future made ensure important toward a burn of this end, on company. realignment cash and effectively this to our believe we managing we our growth while advancing a pleased remind key our that want effectively. and

genomic XXXX. we move that a the into have. full-year for the turn is we we and financial will over now to in three Keith operationally I tests As results advance quarter more XXXX stronger, to to our fourth are efficient the primed call market leading review organization growth

Keith Kennedy

Thank you, Bonnie.

mentioned presentation I find our conclude about to earlier, and our As fourth and quarter you with speak results on may Events XXXX at & and website our Presentations. guidance. financial Investors www.veracyte.com plan then under XXXX then

increased are Turning fourth indicators compared or performance the six year as million as KPIs to quarter, Revenue follows: of the quarter $XX.X against the X Page X%. to of presentation, XXXX for key prior performance our of

prior the time at revenue cash page, million million periods in bottom the current in our cash cash and recognition standard. testing reporting revenue the the quarter. for of the not in we is $X.X year did at of the noted drivers quarter included period the reporting revenue As the Cash in prior project revenue meet $X.X a

of XXXX third reported the quarter a for we in As reminder, all substantially accruing revenue volume. began cash

cash welcome smaller revenue a to portion Now it and we is our continue revenue. of pursue becoming

the grew million $X.X XX% XX% included cytopathology million excluding including was cash revenue Excluding accrued which revenue. $X.X Accrued cytopathology revenue previously $XX.X revenue it. of of revenue mentioned, million and

that revenue revenue underlying in reported accrued all Given volumes. accrued growth to attributable believe reflects we cash more reported periods, we rate our accurately substantially both volume

to Percepta our second and genomic reported test Moving Afirma reported results. XX XX% increased volume included of XXXX tests results KPI, test and XXXX

margin performed gross periods. in to with by XX% collected improved KPI was margins basis prior impacted revenue margins Gross Gross accrued declined on XX%. third to XX% XXX cash tests are Our from favorably revenue points. respect

XX% excluding while principally R&D our million. declined. due KPI operating our was was fourth Our revenue The our and sales organization, spend in G&A expenses marketing cost investment and $XX.X to of increase

of mentioned fifth loss a of net well to property by paid we define in $X.X KPI, million operating of million equipment. as activities previously that million net in net fee reduction $X.X sixth net measure $X.X a XX% as to non-GAAP as exit operating cash million Our we loan as burn, expense. capital a KPI, plus principally increase in expenditure $X.X million senior items which offset activities purchases interest increased a secured increased due net And our to s recorded in $X.X to used our the cash XX% cash and refinance used

XXXX in the performance page, misleading revenue our prior in million may of as revenue tests includes the $X.X and our $X.X included the revenue for revenue of revenue for reported year X XXXX is full of services drivers cash all against XXXX million to we full Page cytopathology Afirma tests of third XXXX not substantially presentation, are that to the as comparison reported these revenue our periods. million other KPIs for than therefore quarter year and at solution. part prior for $XX million against XX% results volume of offered shown. same prior follows: accruing of we the compared and started of in of be test increased bottom the Turning the year accrued from accrued $XX.X revenue Since as year

the revenue services, grew cytopathology Excluding year. prior XX% over

XX,XXX results. Our XX% reported volume XX reported increased included Percepta XXX tests tests of $XX,XXX, second Afirma genomic and KPI, test and

XX% prior and gross to third the Our was KPI, margin, flat year.

the gross revenue margins respect accrued XX%. were to For with XXXX year full

KPIs. A that $X.X the of and The equipment. quarter year of the recognized we quarter loss our next expenses investment of used fifth and $XX.X our of operating principally organization, our million revenue X% of marketing guidance due and excluding improvement highlighted in $X.X of revenue improved while incremental few Page to in observations, R&D incurring line in reduction of collection. to was each $XX $X.X million a our our instead property $XX.X X due spend underlying results, and the test we financial of began The or decreased end when cash purchases declined. in million KPI, results reported our our and pages KPI, net KPI, And six fourth higher sixth net of sales increase G&A revenue, burn million Our full million. were of million year-over-year third sequential cost the on and operating we net a principally we revenue cash with $X activities cash in XX% million X% outline of in plus XXXX quarter

result XXXX. a our believe do transition As accrual not adoption of ASC mid-XXXX, we revenue full we of in January of upon have transition XXX will a of adjustment X, on

significant contracts Bonnie obtaining As as progress coverage test. Afirma made for policy well we as previously mentioned,

As midpoint increase using $XXXX Afirma result $XXXX average to to in a $XXXX XXXX, a X% both XXXX in our test improved for from reimbursement $XXXX to the of ranges.

Page would observations. X, two to make I genomic Turning volume,

in to observed this the compared growth we and First, some represent expect year to business in as would observed green chart seasonal our we bars in continue. than Sequentially indicated left, XXXX our seasonal We the in trends our the rate inherently year. on And quarter. bar the increased over second, prior XXXX. year-over-year growth more genomic is volume

for our gross and half XXXX of transition to Turning and were margins second half third to of revenue impacted XXXX Slide margins. of the of for margin, of XX%. was our Gross earlier, gross full the favorably the The as quarter accrued accrual respect with X, revenue XXXX, stipulated second measure in year full same cost XX%.

sales and marketing no hiring expenses We staff account We Slide In Genzyme co-promotion the the X%. ended and operations our XX spend. second genomic quarters, increased of X, million sales offset XXXX volume the was XXXX Reductions after the quarter quarter general G&A quarter loss by increased field. spend net year of on XX% sales for the operating only of significant QX operating the in XX% cash from quarter to increase provide detail revenue half our four were X Genzyme of Genzyme XXXX and and and improved quarter last increased quarter revenue. staff in to progress to XX% transition. expenses the third over expenses, with In believe for average third per were in do $X.X to approximately QX loss XXXX loss, burn, while XX we XXXX, agreement eight XX%. per per cash R&D Turning terminated and the XXXX. enough the Slides agreement total early XX, co-promotion expense we or period or September ended in over the made the ratio more position. not There XXXX,

over recorded lower our cash expense we XXXX $X.X debt the interest cash also our $XX.X of fee and $XX to December results million. range year improvement million, current to XXXX. prior an accrued rate of had secured over $XX the revenue following midpoint genomic in an $XX million and and million achieve annual we revenue facility. million, the Guidance, the We the our estimated on of of At of refinance in XX% in we increase senior $XX expect XXXX XX% QX growth the paid $XX including Annual equivalents to $X.X exit over supported to in XX, burn XXXX interest cash million range. at of test XX% to prior the million of of million XX% year an with volume

from expect QX and being continue including QX business with quarter-over-quarter to to of our trends seasonality with business, across and XX% a X% QX decline We quarterly quarters. similar to our two QX trends QX growth our QX namely across flatness our volume associated

points [indiscernible] the As and generate we for and year be XXX could depressed margins as Afirma more to XXXX. in expect our earlier averaging margins recover ramp we volume basis in Percepta, in we year later XXX the some in GSC the

sales to expect million. million approximately expenses and As to $XX by $X million previously announced $XX our from we increase marketing

excluding and revenue. spend we of XX% to is XX% with Compensation cost expected which inflation G&A to in increase cost estimate X%. approximately at annual line approximately cost Our R&D X% compensation is our of to operating

to payroll benefits now and milestones tend will result over turn higher corporate discuss for a Bonnie call As back the in to quarter. to be I first XXXX. taxes the

Bonnie Anderson

There Commercial long-term growth importantly set and reported and tests. us be from key development metrics are, Keith. of tests are will the for evidence performance our by that genomic scientific believe five Thank expansion, you, up the discipline. those revenue drive we innovation, They commercial reimbursement growth, XXXX and in financial will number generated success. measured

we revenue the into majority greater do Percepta Afirma expected success. and of significant removal just ordering trained adoption, XX% the have rule nationwide While billing will out, vast highly constraints and with that coverage we of believe to the a fuel test than now the monitoring expect Medicare the At XX-day we significantly of early expanded Keith be gain our we that track the laid stage coming traction the institutions sales will of team XXXX. physicians number and to Percepta the

more clinically that uptake is market aware are significant It they lung to other shifting useful, research will do over in lung makes bronchoscopy other latest as Our costly. having XX% Percepta because bronchoscopies product less We cancer bronchoscopy. pulmonologists evaluate Percepta biopsies result quite a physicians Percepta. diagnostics to report prefer profile encouraging. once from bronchoscopy risky procedures invasive physicians more shows more of planned our a much less a compliment nearly of with is less and as nodules Because know proven it utilization physicians expensive, that

So, at that per Percepta to as a of rate exiting we throughout believe year momentum we'll build XXXX year. the be the we quarter, reported run success XXX results

among coverage third the innovation we Afirma including to invasive in classifies that plan expanding XX% on for we've with generate important of network facilitated cancer. among of over as the assembled We is to contracts expansion. secure we'll laid adoptions. the to the commercialization policies in metric converting test pulmonology further collection on help for success toward XXXX. is And users data positive existing Also risk payer utility reimbursement network showing of eye Envisia Percepta be Afirma. success We Scientific will the of patients into clinical procedures impressive Percepta reducing we've by fuel our the low for believe use evidence are commercial our The by on with across payers from our focus track building decisions metric. second foundation board an key early who is Medicare coverage strong for coverage with in

will world-class continue a innovation scientific to leveraging machine team RNA Our of learning sequencing boundries capabilities. push and the

deeper the clinical believe as can dig sample the indications array we the content we believe content and inform from of can anything underpinnings size into genomic across surpasses genomic scope, we else the each genomic disease. available First, market. our understanding decisions We extract rich in and data on treatment particularly of this potentially

first We will this capability thyroid cancer. deploy in

in XXXX. new decisions to fusions Xpression over as will loss GSC more genes help one-stop pleased am of new the will want of provide and Platform guide the us Afirma and genomic our This variants more offering upcoming mitochondrial Afirma thyroid XXX further launch options. of they tell in announce to than extension second I in fact, and shop treatment XXX cancer. Atlas In well to quarter information data Physicians physicians of on a approach the our over XXX as heterozygosity and surgery content

suggests then fill research an to allowing more patients the us account a product in market current per test offering need form will decisions. broader augment the important market we treatment that of set our Our and and believe

be fuel to repository samples move more access the extension product We will developers Further, precision second therapies. medicine about we genomic through quarter. expensive to of including rich will of our potentially efforts as innovation our continued product interest share the information our ability help bio and

over XXX, our for is advanced penetrate than the market. these indication have growing database XXX Afirma patients in and touched performed more genomic leader continue diagnosis tests to market the as numbers our we've this date we As XXX,XXX To are cancer thyroid significant. most of and example, with

collaborate leaders patients to we early thought risk lung swab top improve in of new to Finally, main the in to are that at which technology Institute our in published lung detection. Percepta cast to to scientists break and found of also in nasal nose. plan injury cancer in airway that of the changes cancer for field the lung will associated stratify with Boston genomic field injury the same can in further pursue a where cancer We evaluated ground who plan better Cancer field year uses the on with last exciting researchers Journal findings National the detected build showed be University lung the and

this We expect during collaborations year the program. enhance significant to to advance

in would will believe RNA ever and Afirma other impact platform test fusions, demonstrate of the mutations Afirma we studies development is substantially the Atlas is known new of must study, demonstrating This Our care. evidence utilizes with vast showing to of only approaches. data test. content test including studies GSC of of impact BRAVE, task There unnecessary is England world diagnosis avoid patients to first This It fourth the and to because which of test sequencing of Afirma clinical clinical standard the is the the our throughout XX prospective utility ability establishing scientific their more will validation our in for Medicine clinical driver abnormalities, study nearly of of is data to from which we for To detect than study which evidence having ability amounts other our our year. several married our from performance this key further be clinical driving care or Journal the technological us improve the end, well innovation as cancer more to study Percepta original shows allows show genomic surgery, examples site which the collected can test's XX% prospectively of success genomic help and the test same validation that and IPF, GSC Envisia, be as part deep improve as published diagnosis. in adoption key expect The New last, outcomes. which And and presented of of screening lung decision-making. equation. the a for the patient demonstrate library validation patient performance our Xpression our reimbursement study the

cash scientific user reimbursement tests that as on exciting Percepta fuel A cancer and for We achieving well and call and innovation gain emerge outcomes. robust to sales our see our also integrated market patient to structure experience to for This lung clinical for our diagnosis that the That into business expect use future burn and both growing and and will up This Moreover, expertise products respectively. responsibly. I would bring believe the ask integrated focus of execution to and and discipline. to expansion. by both Afirma ensuring data is with practice XXXX operator clinical tests to work final and resources. up exceptionally goals set in strategic five and we we management us spending and like all value and open of the product the growth, continue team to from for three these XXXX foundation position intend now year Veracyte metric, success will thyroid move metrics that include to shareholder is creating brings revenue payers committed will We questions. We drive Afirma continue remain that new changing improve expanded to for traction sales we patients, on platforms our multiproduct value change financial volume will this our tremendous our careful that users care and in into these both Percepta. physicians believe me future. in with reducing

Operator

Thank Our Souda of comes Instructions] line from Puneet Partners. LEERINK [Operator of first you. the question

is line now open. Your

Puneet Souda

a this, how I of also estimate how Yes, and hi gave accelerate you correct? in Bonnie. question, us I potentially, could test guide numbers again of the so can Percepta, that those much remind sense XXXX you could Thanks you is the give for from that missed to maybe think on us XXX a XXXX

Bonnie Anderson

you’re commercial you here? don’t take effort that, why Chris the Yes, leading

Christopher Hall

shooting force is about start took rate tremendous a beginning getting run script year. We're to indeed tests and field QX at off about for. the a talked Yes, as of that's which is the significant both all force products we've products we both selling had we like really off and kick this them been the of what of our Sure. you'll going in year the selling tasked spend start and time to amount to in driving to about - this remember to field we're year that's of Percepta. them we XXXX a date well the XXX the of we of our And through quarter. We feel

One and of of is Bonnie day the about this and of that spot of positioning more valuable. to the the talked things the product it's making that script key really improve because physicians is what bronchoscopy do traction in every that the hitting usefulness sweet getting

as come really this getting - out product as and year, the driving optimistic from we So here. about come we feel we traction into

Bonnie Anderson

Medicare, assume And that, setting about you reimbursement you tests solid say to with XX% think and of to can growth. be XXX Puneet we'd from XX metric XXXX if just up see strong year add revenue a to about this really of year reported that then our existing for

we so like to last so about are XXX and far Percepta XXX from can significant year having tell talked institutions of We sharing of feel now a great we traction over this metric samples and samples you MDs, have off just also submitting receiving year. we already we coming this XX over institutions quarter

Puneet Souda

could analysis have COGS take what's guidelines? in to to extension, and that and maybe that and can Keith test you product what Okay, changes to CMS and you include that if maybe provide production and file and change your great make timing with the you in of anything peers on the payment do do the the have and

Bonnie Anderson

the year We of value. the indications but future it and the QX will from of as see bring others certainly across all It portfolio this to a genomic actually be Xpression meaningful which don't help to other changes, launch provide decisions. extendibility said. our treatment outlets, potentially curves, reimbursement will guide have expect Yes, some of Xpression will will in outlets we platform revenue that used

Keith Kennedy

a basis on talked guidance of I the large swing that appreciate we And XXX could not purchases. of big terms when fairly XXX, number in about year, to little XXX, the kits margin side, basis tend and these revenue that XXX can margins points a very and bit large as sequencing our can your the but terms covered gross you compressed and is that I assay’s and like in million dollars be earlier and in points, buy are cost things

Puneet Souda

Okay last last year how the firm terms contracted stood sort you reach us at that and I you that where of the what's $XXX one currently, then this can could have a in of reported, it's stage? XX% up that’s think million remind contracted your, soon and you the

Bonnie Anderson

for be when do the whole know. will that have plan and we're Yes, we I from I'm sure that XXXX that we coverage catalysts one mean the contracted key that priority I world think essentially will working key have a and major and not yet achieve with so [indiscernible],

Puneet Souda

Thanks right. all guys. Okay,

Bonnie Anderson

you. Thank

Operator

Thank you.

of Our William next Murphy question comes from Amanda Blair. the of line

Your line is now open.

Amanda Murphy

thanks. Hi,

you line and on saw just it you you I will I user up Percepta, drive anything your so adoption? just correlate what may there Just Puneet’s and with trending with just how to of if follow Afirma difference the with if to be what Percepta ramp the you're is Percepta it’s a applying realize then could, question Afirma, expectations a I in now curious ahead to maybe end know, that that, did learn to terms in if was you

Bonnie Anderson

great Yes, question.

market few only from remember test. about where Genzyme's to in with have with first us that and really of and make the entered own adopt we the In adoption. Afirma, were most decision exclusively growing is different to and practices to a to-date Percepta difference driving 'XX, the of you better sample institutions segment the their that that almost for the a the 'XX, we would physician get market market XXXX the efforts need one cytopathology work if 'XX. that market and that to focused cytopathology be the couple the there's years So to continued we had stakeholder about have we run office ours things handle they collect Afirma of would we you into then And market for that because the sample Afirma, XX% following where were a of from where began large segment base the rapidly Afirma for to operationalize operationally read and and through

be those institutions key and surgeons in is is Afirma with Percepta years we gaining and and health but that. all the would radiologists, for institutional the Percepta, So a and and leverage pathologists in cell specialist stakeholders applicable very with in and is which Afirma we've directly what pulmonologists that segment we why create along endocrinologists to operationalizing and are that's learned systems in that would applicable through learned pull last three wanted making to decision structure for what that

Keith Kennedy

There this, is introduction as I stakeholders Percepta. certainly that Yes, I commercial with on that the Keith point in are a Afirma Bonnie learned overlap institutions been we've this relationships the all along to one would we've far the so many with to the been that's and that institutions part true their so us that has that leverage know with is with able is you good know to to the spot of pleasantly and feel way we have there add in because own processes, pathologist, multiple would to just about local we pathology the institution we the entrees have that really doing hospital an been these important surprising of the that hospital and reading have the provide about have and these that us been people sales and say of Afirma situation people the relationships me made dimension. able the also to leverage some know gotten in progress the get and help mentions we've labs journey Percepta. samples same to help so an business to of walked to and

Amanda Murphy

you've obviously given will to of and have And it to how ASP in [indiscernible] ’XX you, Percepta guidance about continuing but got Okay, if price I of in terms terms realized it. you're then Keith, I’m for then not, just ramping. the traction sort curious you gain Afirma so think got I is or guess while of

So guess now, breaking out to just don't know think guess two right, aggregate. about about if but how on if any can probably the thinking the I I give trends, you businesses I curious you're perspective you're

Keith Kennedy

up - about the Yes, care improved test. per know situations. analysts, contracted the on X,XXX end perspective of are later seems year. all you hopefully some the the I $X,XXX that looks that on managed generally try and the its and then what give year, call be let other so you $XXX from like, is side started the impact to different And more $XXX on growth we the just quarter plus timing so historically and rate XX the in Afirma started on push I Percepta and we be so rate third the Afirma side to on increase last We me sort so see but the XX to see model increasing $X,XXX so when contracting different side, that in around would we had expect with that the of going on to we to we'd getting to people rate, ways, with Medicare to

we the So a third fourth I’d quarter Afirma bit the at end there and sort of the a tick of little Medicare of starts just see the up beginning on year then say for quarter. the of

at by figure back indication, year very come number revenue our looking early of the three small whole if your quarter what’s quarter continue first total the a best think the double it's and bigger the gets then quarter. and and fourth our year, best which a to be establishing and in as you that number Moving and big the all is quarter to for and it of out team a quarter, Afirma, in to did to we of and end but so I stuff, the to funnel year Percepta, coding XXX other year, will won't about think the at that as large sort is it be to of to can we in to commercial back have I don't those XXXX in Bonnie it's the relationships the So out relative we're the indication tests were get you're expect like surely quarter-over-quarter. that what’s the trying look feels on and bigger you seasonally a way quarters said first the We number it first very and they

so will in increase which early you on similar is growth. this at and in product? terms would it in you later This and We about dollars percentage be, So be XX% tests going a a if terms with things. on and if XX% That doubled that XXX and at to this to the will, revenue you to it's side that's if Afirma we stage that half get number now and revenue that midpoint, going are significant guiding of for gets you that, XX.X% not growth we for revenue I don't those. XX% year Afirma sure yet, currently our be not say X.XX, refine think X.XX your do I'm X,XXX what get assume I'd at better do that end we of to you at commercial double between to million I success accrue walking revenue to in know map midpoint and couple the all is just through just the I'm just of be and I model is and of you on say Afirma rate how we expect year. second accrued X,XXX those expect assume would up showing Percepta relative you Medicare. that to I that the and those

Amanda Murphy

that sense. Yes, makes

the I this not, collection in building much there, us even you least how Percepta, about Okay there? of maybe are obviously good underlying an this such an you longer second you're but this because on what just of term thinking curious got sort getting at hate the context you've give out methodology just of and how then of are lung, leg terms update ask you’ve proprietary of how and I kind could to done job but in gene about this algorithms thinking so third you pipeline don't beyond a know sort lung and of Envisia, or

Bonnie Anderson

decision extensive we the to made important platform we've tests from does continue our bio answer this because think develop questions. to content, is on very of it I gives can genomic And develop which content other what that products. Yes, leverage us to clinically an amazing repository

then at out exact technology using bringing that and so variants done we've physicians form options. what virtually additional then to pull that And help look GSC other you of same and some when out these can treatment

might other aggressive. that's radioactive thyroid So that that one pretty physicians so iodine out of is like in toxic when happening that would able into and over time to that cancers replace to and so cancer the is treatments things not figure look may be be at

but and our within we that stage So by Every then injury very going be to that’s as informing able deck you that thirdly which position it questions. UIP to rich that slide field is getting puts one series once nose risk will clinical much even genomic questions true our portfolio, cancer of track. - laboratory of earlier of we're can thing inform Envisia, will look lung those IPF, to detection patients our used samples this that come be clinical And through in great in same early moving you'll lung at in new is in advance pattern Envisia other which to on in the collected have on have us on launch patient IPF. a in the we diagnose content all a answer. our the see is with work pipeline we stratification both The the earlier to

with ourselves from start to having and line product we've it's not technology capability and a without I scratch, that think very extend set us platform from will learning with expertise evolve start machine having to allow our powerful. to So continue over, up to

Amanda Murphy

Thanks very it. much. Got

Operator

you. Thank

of the Our next from Ji BTIG. Nam question Sung line of comes

Your line is now open.

Sung Ji Nam

questions. whole items to FDA dossier you items do for the questions, just taking so there you thanks of or submitting to be before the ready to to the have bunch are Bonnie, before Hi, quick I much Envisia outstanding submit pretty go? guide the to for to clarification are a

Bonnie Anderson

to We coverage for of have the assembled what to be and timing believe us to the get getting is able is entire decision comment we a that dossier in to Medicare right needed XXXX.

Sung Ji Nam

Okay.

Christopher Hall

FDA. not That’s the CMS

Bonnie Anderson

Medicare. yes Yes, I'm sorry,

Sung Ji Nam

quarter severe of A then or kind weather your impacting quarter weather? severe are in factoring lot on you also year-to-date the based guys that and first peers seasonality, well? have bleeding through And guidance on that Keith, your the first does of in in as factor commented

Keith Kennedy

you're is two, about on day XXX can impact talking that call do a currently We severe there one in so use to some tests any We three event, a quarter’s average, to XXX days. it try or weather if not so hit accomplish impact, an able our what we hit but year-over-year. or generally guidance obviously going we impact to think, if as other same our did excuse the don’t stats saw, we're to we people be reflects we think see numbers. But

Christopher Hall

that if you three years last three, I that years nasty did of we to Keith has experienced Coast. think the seen numbers. been years slightly in weather through year. been that, in two or down we've you pretty the New thought chunk of over every mean I flat guidance a so some we've the last lived we're we've to about all tough that I that but seasonality seasonality there's on weather the QX see mean bad year, York and we the as East four seeing over traditional talked weather a back And just I'll and add, quarter it’s This look traditionally all through

Sung Ji Nam

salesforce I end quarter I build you year. in your or to XX by around last heard Okay color be some could end up the I terms the and you last give may of you that? the think finally think and where of on if are by of had you getting guess mentioned out, then year mentioned more that correctly, I Is us XX

Keith Kennedy

and side sales to middle direct we the the on expect XX the XX Around of add year. by

Christopher Hall

building plans out that we're And on spot, that for through group. like we're out. our now are good feel we're already internal in way on the a our I and building

Sung Ji Nam

thank great Okay, you.

Bonnie Anderson

Thank you.

Operator

you. Thank

the of Piper of Quirk comes question Bill line next Our from Jaffray.

line now Your open. is

AlexanderNowak

Great, good on for Alex Bill. is afternoon everyone. This Nowak

at end back to the midpoint. growth XX% about November So you now to XXXX growth something closer guidance, is looking and for XX% we're of guided about there

sense just what trying to So get of I'm a and now between happened November?

Keith Kennedy

of to top guided looking I revenue, total perspective number we and growth so XX% cash revenue to impacted, prior it guidance our mean it started when accrued and at all revenue. that revenue. XX% line is accrued volume revenue XX% from revenue we think is our of So our you're XX% occurring I

and with talking this that's that if we XXXX cash in XXXX, generated XXXX an at collected basis, we volume hasn’t we in So we anything what when about. on so look and you attach do any that apples-to-apples to did cash in were

I think that by was not clearly understood all.

nuance. Some been catch over a to transition to people difficult accrual. point did It's to that we investors some people didn't as and full communicate

Alexander Nowak

understood. Okay,

the of of So I benefit at guidance, diving for and again we up into the panel both just those revenue guess, the all so if XXXX. roughly estimating together screwed Percepta X% growth

for of for the You faster the we’re have mean only really XX% test. Afirma about is growth to in that you have at maybe reimbursement XX% press market growth stated release we force, revenue this a point? full already bigger you're I you so I'm sales guidelines, around So calling curious from during just seeing XXXX? the you're in core adopted why

Christopher Hall

with want it? it. start me You can take to You to

Keith Kennedy

on three we That clear I of guidance our we're exceed midpoint launching meet year this and sales the our guidance the thoughtful force. Look that business to into products two the sort this to our and with gets seasonality we XX% or range Afirma. about year. And if the want in across to you guidance think of missed Okay, want you be are back correct. we last

we we quarter-over-quarter. increased can feel But to like volume you Afirma hopefully continue quarter-over-quarter. this with our So revisit

that last saw year year-over-year You to year. continue. our trend this of growth We'd see rate increased like

Street. so gave to we continue, where expect that's trend to the guidance We the

Bonnie Anderson

all it that care Now and happen. change that is, payers with practice, markets Alex, network with serving make change often physicians products, I not takes their think time the to thing in effort. sometimes to we've to And the being going other in we're that get our complicates

you're every an we're the the about new upward a and we're of right market very of markets platform, we still can to are very are. uptick where great in GSC that and we we certainly encouraged lot a the think we there's Atlas confident I so achieve We penetration a with had single of have Xpression get, year to X% So continue had place we're introduction penetration with confident, strong, that.

Alexander Nowak

cash that's the I call, flow on missed this just the Okay then did and breakeven reiterate you helpful one XXXX? end by of

Keith Kennedy

now point. business I is and didn't, three breakeven flow two, I breakeven quarter. revenue here around of cash believe million spent of a $XX.X getting have been months, time We a flow a year about cash I've $XX.X got and the lot so for and to this the I million around

two rollout to on getting drive close steps add our to we've what think of steps these line. how get the products increase and we side. single the Two, I the line then steps to year. to maintaining achieve three have growth your over do we're $XX in to products So a effectiveness our the through so I of that have spend you you million your accelerate and at we're execution say to and million. sales our and lab three is midpoint but on digit commercially think critical, that years clear taking to cost steps. better, is that change how manufacturing to in take to you're years top what up million number. range we're and are, price you a of products going to of from the close One at lab. we two growth to XX% $XXX R&D so learned over to the revenue And get on and taking one top get to the how low fronts, growth the going XX% to better getting taking call diligent need there marketing $XXX refine of G&A terms in and fast continue I'd you $X learn test we're to and and midpoint And

conservative to consistently margins factored Street. we've met of we that into terms we the been our we've how of and have So the that guided sort number in

The that and book G&A on spend wise building from to and function for step third seen and as especially and KPIs, we diligently that cost operating structure be we and have shareholder, thing the lean. at we're and a because our we you is dollars this and you've expense force XX% spend sales I out our driving we're step manage, structure value headcount able year we peer to sales January products that our that steps that to revenue and on is wouldn't linearly have saw how that we our And been of R&D that's represents group, but our will to way to we're incremental the multiple laying Genzyme you'll in investments we're very we're behind. active to we manage function and of XX% making we a that you project in need we've found carrying taken as hopefully look our appreciate transition organization relative and how think KPIs our as the that dollars marketing up

we we that in are forefront run the we taking Genzyme we cash when And of but the so keep year, last the breakeven our very when confident how to hike internally as the at look burn where look doesn’t steps especially fourth great, you business. it was quarter at relationship, active flow feel

Alexander Nowak

Understood, thank you.

Bonnie Anderson

Thank you.

Operator

you. question Janney. line Paul comes Instructions] of Knight next Thank [Operator from of Our

now Your line is open.

Carolina Ibanez-Ventoso

remind of on in in payers This previous is [indiscernible] ahead is Annual to the of in Percepta current Paul be is $XXXX revised you. determined? this us investment to Ibanez-Ventoso the is Knight. the pricing Republic Afirma’s similar [indiscernible] of basis for $X,XXX? So July to Meeting what pricing? is Carolina the the thank Bonnie, when So payment price to going going Hi, of of can you terms

Bonnie Anderson

No.

Keith Kennedy

individual whole local cross kick walk gap price have - it to not chosen we've and No, the that code cross-walk Medicare not we intermediary to of pursued and not point walk, fill our get we that gap and off or as we product Percepta. this priced process have try would at now XX,XX at its own for to

I you products before you think pull do really with them the further happen to that that journey what need commercial needs trigger. these really is to take to along

stage you're not term early not that, pricing, evidence to much During significant to when pursue a as risk we're pursuing and for and you at so much there Medicare long as isn't support known year. the puts as going evidence well not his we're payer that

Carolina Ibanez-Ventoso

Yes, a large private researched that need with more have clinical do perform you good, utility that or several may enough studies still studies you okay think got of you that? evidence reached it. reimbursements you And Percepta, utility now also the secure to clinical so performed to body of on

Bonnie Anderson

that's studies lot we end. studies, we have published as of for I of a the as long Well, a out. Afirma never presented even mean, say year data even lot last been whereas

will and published coverage have this that's will get year. year payers certainly priority start that presented more library but private us and by behind So evidence this continue, been studies published studies the to Percepta with that of is a evidence of big decisions journey the the worthy a definitely for

Carolina Ibanez-Ventoso

great. Okay, you Thank so much.

Bonnie Anderson

you. Thank

Operator

Bonnie remarks. turn now Chairman for Anderson, I’ll you. Executive back call over the to closing and Officer Thank

Bonnie Anderson

improve Thank healthcare patient the answers you launch They to that Afirma to for our our Veracyte for catalysts key contract and joining want Anthem Xpression the overall with for and relating We to reduce in summarizes data of us commitment refer the portfolio. highlights helping that thyroid which ’XX. I us we're Atlas and outcomes and slide in presentation for to financial of providing include achieve the costs. goals the our diagnostic today. business, last your Afirma platform new and appreciate

and Medicare from to this payer catalysts be momentum for coverage guideline year; Envisia and gain key commercial inclusion the clinical We decision expect new Precepta utility data will coverage.

forward to and our we successes progress call. you keeping updated speak look our soon to QX Thank on these will on you. With

Operator

participation. Thank today's concludes conference your This you. you for call. Thank

You disconnect. may now

Veracyte (VCYT) 27 Feb 182017 Q4 Earnings call transcript