Veracyte, Inc.

At this time, all participants are in a listen-only mode. After the speaker's 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 then hear an automated message advising 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 speaker today, Shayla Gorman, Senior Director, Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining us today for a discussion of our fourth quarter and full year 2024 financial results. With me today are Mark Stapley, Verisight's Chief Executive Officer, and Rebecca Chambers, our Chief Financial Officer. Verisight issued a press release earlier this afternoon detailing our fourth quarter and full year 2024 financial results. This release and a copy of the presentation we will review during the call today are available in the investor relations section of our website at Verisight.com. Before we begin, I'd like to remind you that various 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 and 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 Verisight files with the Securities and Exchange Commission, including Verisight's most recent Forms 10Q and 10K. 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 IR section of Verisight's website. I will now turn the call over to Mark Stapley, Verisight's CEO.

Thank you, Shayla, and thanks, everyone, for joining us today. 2024 was a record year for Verisight. I could not be more proud of our team for their hard work on behalf of the patients we serve, which is the reason we come to work every day. Not only did their focus and dedication lead to approximately 150,000 patients benefiting from the information provided by our tests, It also enabled us to execute on our key strategic objectives and deliver a best-in-class financial profile. We capped off a record year with Q4 revenue totaling $119 million, or 21% year-over-year growth. This brought full-year total revenue to $446 million for robust growth of 23% year-over-year. Testing revenue, which now accounts for almost 95% of our business, grew 28% year over year. Fourth quarter testing revenue increased 24% over the prior year and marked our 10th consecutive quarter of 20% or greater testing revenue growth, demonstrating the durability and runway of Affirma and Decipher that we have consistently signaled. And we drove class leading bottom line performance, delivering full year adjusted EBITDA margin of 20.6% and cash generation of more than $70 million. Starting with Decipher, we further strengthened our position as the market leader with outstanding adoption over the course of 2024 as we delivered more than 80,000 tests representing volume growth of 36%. During the fourth quarter, Decipher volume grew 45% year over year to a new record of more than 22,400 tests. We are particularly proud of our land and expand approach in prostate cancer which has enabled us to go from an early beginning in RP only to adding biopsy almost a decade ago and growing that to be the vast majority of our testing today. In Q4, we saw 40 to 55% annual volume growth across each of the NCCN biopsy risk categories from low risk to intermediate risk and high risk. Importantly, low risk now represents an impressive 20% of our total Decipher volume. This is a testament to the value that Decipher brings to this population in better managing their disease from those that will benefit from active surveillance to those who have a worse prognosis and might need treatment. As a demonstration of the clinical utility of Decipher in the NCCN low-risk population, based on our extensive real-world evidence, about a third of those patients are reclassified to Decipher intermediate or high. Decipher's clinical validity and utility has already been demonstrated in approximately 85 clinical studies. This includes 42 on biopsy samples, more than a dozen of which could inform an active surveillance decision, and 43 on radical prostatectomy. Since our last earnings call, we added 20 new publications, posters, abstracts, and presentations highlighting the clinical utility for Decipher, as well as incremental disease insights powered by Decipher Grid. Looking ahead to further Decipher catalysts, we now estimate the growing prostate cancer market is approximately 40% penetrated, and we believe we have more than 65% market share, which we estimate increased by more than 500 basis points over the course of 2024. As we have previously shared, our goal is to drive at least 80% market penetration in all of our indications. With the 2025 updated NCCN guidelines for prostate cancer, Decipher is still the only gene expression test with Simon level 1 evidence, and we believe is now the only gene expression test that is recommended by the NCCM panel to make personalized treatment decisions for prostate cancer patients. Now to expanding Decipher to cover the entire risk spectrum for patients with prostate cancer, our metastatic technical assessment was approved in late December, and we secured New York State approval in January. We are well on our way to finalizing all the necessary commercialization and training activities to launch into this expanded population in the first half, with volumes benefiting in the back half of 2025 and beyond. Given our leadership position, the expansion of Decipher into the metastatic patient population, as well as significant greenfield opportunity ahead for our test in localized disease, we expect to drive meaningful Decipher growth for the foreseeable future. Moving to Affirma, volume growth continues to be very strong and increased 12% in 2024. Despite the challenging Q4 comp, we delivered more than 16,300 tests during the fourth quarter, growing 8% year over year, while revenue grew 4% given the large prior period collection in the fourth quarter of 2023. Deeper penetration into existing accounts, along with some sizable new customers, drove the majority of growth in the quarter. a testament to Affirma's differentiated level of evidence, service, and overall performance. As a reminder, an expanded LCB for Affirma went into effect in July 2024, adding reimbursement for Medicare and Medicare Advantage patients with Bethesda 5 thyroid nodules. Revenue for Bethesda 5 and 6 grew more than 80% year-over-year in the fourth quarter. We expect this to be a moderate ASP tailwind in 2025, as the clinical utility is further developed and resonates more with physicians. Meanwhile, the research use only grid data is driving interest in evidence generation from the KOL and academic community. We look forward to sharing a number of upcoming publications and poster presentations leveraging this data in 2025, as we continue to build on our commitment to patients and physicians to advance thyroid cancer research. The endocrinology market is still only about 65% penetrated as of the beginning of 2025, and we estimate is growing in the low single digits. We believe Affirma grew share in 2024, continues to serve the majority of the market, and will make gains in both share and penetration to deliver strong revenue growth of high single digits this year. We are confident that Decipher and Affirma have ample growth runway ahead to bridge this to our longer-term growth drivers, which I will discuss next. First, I'll start by providing a quick update on the status of our Nightingale study for nasal swab. To date, we have enrolled more than 85% of the 2,400 patients that we are targeting and look forward to sharing when enrollment is fully completed. Next, I'd like to provide an update on our effort to serve more of the patient journey through MRD and recurrence testing. Our MRD approach is differentiated in that it is whole genome every step of the way, including the initial baseline sequencing, followed by the sequencing of serial testing samples. This approach is backed by our fundamental belief that more data drives more insights, more clinical evidence, more payer coverage, and therefore more durable adoption. As we have shared, we are working on the first indication of our MRD platform for muscle invasive bladder cancer. This indication will leverage our strong decipher channel that serves urologists and radiation oncologists. We are also focused on expanding into other indications where we already have a commercial presence. We have completed setting up the workflow in our lab and submitted for New York State approval. Further, we recently submitted to MoldyX our proposed Z codes and expect to submit our tech assessment this quarter. These are critical steps for us to be able to launch, and we're pleased with the progress we're making. As is our strategy across our platform, we are committed to having reimbursement in place. and all development managed care and commercial activities are progressing well so that we can launch our inaugural MRD test in the first half of 2026. Finally, turning to our longer term strategic growth driver of international expansion. Here we are dedicated to launching our tests as IVDs to address patient needs outside the US. As you know, our French subsidiary, Verisight SAS or SAS, has been focused on supporting our IVD strategy as well as a legacy biopharma and third-party contract development manufacturing business. Given the declines in biopharma and our manufacturing supply challenges for ProSigma, we believe that to continue to support such a large operation and infrastructure may be inconsistent with our core strategy and may not be in the best interest of Verisight. Given this, we notified SAS that Verisight Inc. is considering no longer funding their operations. As a result, SAS will engage in consultation proceedings with the Works Council over the coming months, while in parallel seeking to identify one or more buyers for all or part of the SAS activities. Without Verisight Inc.' 's continued funding or identification of a buyer, SAS may be required to commence bankruptcy proceedings this year. Consequently, Verisight Inc. would no longer own or operate the Marseilles facility by year end, if not sooner. Our first priority is to our patients, and so we will do our utmost to maintain continuity of ProSigna and Council supplies for the foreseeable future, which will depend in part on finding a buyer for this portion of the business. Further, we remain committed to our IBD strategy and our ongoing development programs. Having said that, this potential change is expected to impact our timeline, and we are diligently reassessing our development roadmaps. In terms of the financial impact this year, This is, of course, highly dependent on the final outcome and the timing of that. Rebecca will share what she can to help you bracket the potential impacts. Our Marseille team has worked hard on behalf of customers and patients, and I truly appreciate their efforts. As we always do, we will compassionately support our employees during this information and consultation period. Despite these challenges in what is now a very small part of our business, I don't want to lose sight of the success we are having in the core business. As you can see, Q4 was another incredible quarter that capped off a truly exceptional year for Verisight. My sincere thanks to our team for their relentless focus on our mission to serve patients. It is their hard work that sets us apart as we transform cancer care for patients around the world. This year, we are committed to continuing to deliver robust testing revenue growth as we execute on a number of key catalysts that will expand our reach both further along the patient journey and geographically. We look forward to sharing more details with you as we progress towards these goals. With that, I will now turn to Rebecca to review our financial results for the fourth quarter and full year 2024, as well as our outlook for 2025. Thanks, Mark.