Veracyte's (VCYT) Q4 Loss Widens, Gross Margin Expands
Veracyte VCYT delivered a diluted loss of 39 cents per share in the fourth quarter of 2023 compared to a loss of 5 cents per share in the year-ago period. The reported figure is also wider than the Zacks Consensus Estimate of a loss of 7 cents per share.
For the full year, the diluted loss of $1.02 per share came in higher than the loss of 51 cents per share in the year-ago period and the Zacks Consensus Estimate of 70 cents.
Revenues
Revenues reported in the fourth quarter increased 22.3% year over year to $98.2 million. Moreover, revenues exceeded the Zacks Consensus Estimate by 2.8%.
Total revenues for 2023 were $361.1 million, reflecting 21.8% growth from the year-ago period. The figure beat the Zacks Consensus Estimate by 0.8%.
Quarterly Details
Testing revenues were $90.4 million in the reported quarter, up 28.6% year over year. This is mainly driven by the strong performance of Decipher Prostate and Afirma tests.
Product revenues increased 13.4% year over year to $3.7 million.
Veracyte, Inc. Price, Consensus and EPS Surprise
Veracyte, Inc. price-consensus-eps-surprise-chart | Veracyte, Inc. Quote
Biopharmaceutical and other revenues of $4.1 million reflected a 39% decrease compared to last year’s figure. This was mainly affected by the overall spending constraints across the industry.
Margins
The total cost of revenues (product, testing, biopharmaceutical and other) during the reported quarter was $29.4 million, up 9.5% year over year.
The gross profit rose 28.7% to $68.8 million. The gross margin expanded 350 basis points (bps) to 70.1% in the fourth quarter.
SG&A expenses rose 30.7% to 23.8 million, while Selling and Marketing expenses increased 4.7% to $25 million. R&D expenses totaled $18.7 million, up 65.4% year over year. The company delivered an operating profit of $1.1 million in the fourth quarter compared to an operating loss of $0.16 million during last year’s comparable period.
Cash, Capital Structure and Solvency
Veracyte exited 2023 with cash and cash equivalents of $216.5 million compared with $154.2 million at the end of 2022. The cumulative net cash provided by operating activities at the end of 2023 was $44.2 million compared with $7.5 million at the end of 2022.
Guidance
Vertacyte reaffirmed its financial outlook for 2024, as was announced during the release of preliminary results for the full year 2023.
Revenues for 2024 are expected between $394 million and $402 million (unchanged). The Zacks Consensus Estimate presently stands at $396.9 million.
Our Take
Veracyte reported a higher-than-expected loss, with revenues beating estimates in the fourth quarter of 2023. The company achieved another record quarter of Afirma tests, with growth driven by both new and existing accounts, including competitive wins. Veracyte delivered its second consecutive year of positive cash flow, simultaneously benefiting from its investment in its strategic growth drivers.
The expansion of the gross margin is encouraging. The company intends to leverage the Veracyte Diagnostics Platform to continue to drive near-and long-term revenues. During the quarter, Veracyte announced an in vitro diagnostic agreement with Illumina to broaden the availability of its tests for patients globally.
Meanwhile, spending constraints across the industry resulted in a Biopharma revenue decline in the quarter under review. Escalating expenses also remain a concern.
Zacks Rank and Other Key Picks
Veracyte currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks from the broader medical space are Stryker Corporation SYK, Cencora, Inc. COR and Cardinal Health CAH.
Stryker, carrying a Zacks Rank #2 (Buy), reported a fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.
Cencora, carrying a Zacks Rank #2, reported a first-quarter fiscal 2024 adjusted EPS of $3.28, which beat the Zacks Consensus Estimate by 14.7%. Revenues of $72.3 billion outpaced the Zacks Consensus Estimate by 5.1%.
COR has an earnings yield of 5.75% compared with the industry’s 1.85%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 6.7%.
Cardinal Health, sporting a Zacks Rank #1, reported second-quarter fiscal 2024 adjusted earnings of $1.82, which beat the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion improved 11.6% on a year-over-year basis and also topped the Zacks Consensus Estimate by 1.1%.
CAH has a long-term estimated earnings growth rate of 15.3% compared with the industry’s 11.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%.
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