Veracyte (VCYT) Q2 Revenue Jumps 14%

Veracyte (VCYT -4.16%), a leader in advanced cancer diagnostics, reported results for Q2 2025 on August 6, 2025. The headline news: the company outperformed expectations on both revenue and profitability, driven by strong expansion in its core prostate cancer genomic testing platform. Revenue (GAAP) was $130.2 million, beating the average analyst estimate of $121.04 million (GAAP). Non-GAAP earnings per share reached $0.44 for Q2 2025, compared to the $0.26 GAAP EPS expectation. Management raised full-year 2025 total revenue guidance to $496 million to $504 million, underscoring continued traction in Decipher and improvements across its testing business. Overall, the quarter showed notable top-line growth, with GAAP total revenue increasing 14% to $130.2 million, expanding profitability, and increases in test volume, while also navigating one-time costs related to the wind-down of its French manufacturing operations.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

About Veracyte: Business Model and Recent Focus

Veracyte specializes in advanced genomic testing for cancer diagnosis and treatment guidance. Its main business is providing diagnostic tests that help clinicians more accurately diagnose and manage diseases such as thyroid, prostate, lung, and breast cancer. The company’s revenue comes primarily from its testing business, where physicians order genomic classifiers that aid treatment decisions.

In recent quarters, Veracyte’s strategic priorities have focused on expanding into new cancer testing markets, particularly minimal residual disease (MRD) monitoring, and broadening the reach of distributed in vitro diagnostic (IVD) products internationally. Success hinges on volume growth of tests like Decipher Prostate and Afirma Thyroid, obtaining payer reimbursement, proving the utility of new products through clinical studies, and optimizing laboratory efficiency to expand margins.

Quarter in Review: Key Highlights and Financial Details

The period was defined by outstanding testing revenue growth, margin expansion, and a raised outlook. Testing revenue (GAAP) jumped 14% year over year to $122.3 million, as total test volumes reached 42,441, up 18%. Decipher Prostate genomic classifier (used for prostate cancer) was the main driver, generating $76.3 million in revenue (up 24%) as physicians broadly adopted the test for more patient populations. Decipher test volume increased 28% compared to Q2 2024, marking the thirteenth consecutive quarter of over 25% year-over-year volume growth for Decipher, and further benefited from its commercial launch for metastatic patients in June 2025.

The Afirma genomic test (used for thyroid cancer) produced $43.4 million in revenue. This represented a 5% increase in revenue and an 8% increase in volumes compared to the same period in 2024. Volume growth outpaced revenue due to a shift in payer mix and normalization of prior period collections. Meanwhile, product revenue (GAAP) slipped 8% and Biopharmaceutical and other revenue rose 21%.

Gross and profit margins (GAAP and non-GAAP) improved, powered by higher test volumes and ongoing efforts to cut laboratory costs. Non-GAAP gross margin reached 71.5%, up 0.3 percentage points. Adjusted EBITDA grew 49% year over year to $35.8 million, representing 27.5% of revenue (adjusted EBITDA, non-GAAP). However, the company recorded a $20.5 million impairment charge from the liquidation of its French subsidiary and reported a GAAP net loss of $1.0 million, reflecting that one-time event. Non-GAAP operating expenses grew only 2%.

Cash flow from operating activities (GAAP) for the first half of 2025 was $39.0 million, This was an improvement of $18.4 million compared to the same period in 2024. Liquidity remained strong, with $320.7 million in cash, cash equivalents, and short-term investments as of Q2 2025, underlining the breadth of Veracyte’s diagnostic footprint.

Decipher and Afirma remain the company’s core revenue sources. Decipher (prostate genomic test) accounted for the majority of revenue growth, helped by an expanded use case in metastatic prostate cancer that targets a new pool of roughly 30,000 U.S. patients annually. The test’s inclusion as Level 1 in the National Comprehensive Cancer Network (NCCN) guidelines further supports payer coverage and positions it favorably in the market. Afirma’s volume trends were healthy, with ongoing clinical study publications highlighting the test’s clinical utility, Revenue growth was lower than volume growth, driven by the prior period collection benefit in 2024 as well as the negative impact of a lab benefit manager’s mistaken coverage policy change last year.

Other product families include Prosigna (breast cancer IVD test), which is expanding in global markets and is set to debut in the U.S. as a lab-developed test (LDT) in 2026, and Percepta Nasal Swab, a lung cancer risk classifier still in development with ongoing clinical studies. MRD (Minimal Residual Disease) is a forthcoming new product space for the company, focusing on early detection of cancer recurrence—No MRD sales were booked, but the first commercial launch (bladder cancer) is targeted for the first half of 2026.

Notably, Veracyte completed the sale and deconsolidation of its French manufacturing subsidiary (Veracyte SAS) as of August 1, 2025. The $20.5 million impairment cost (GAAP) was booked in Q2 2025 but is anticipated to reduce future product and biopharma revenue as those operations wind down. Leadership noted that the product development of international IVD offerings is now U.S.-based, with revised completion timelines: Decipher PCR IVD and Prosigna NGS IVD are targeted for end of 2026. The company continues to invest in evidence generation, with dozens of abstracts and publications supporting Decipher and Afirma, aiming to strengthen clinical adoption and secure wider reimbursement.

Looking Forward: Guidance and Risk Factors

Management raised guidance for 2025, now projecting total revenue (GAAP) of $496–504 million for FY2025, up 11–13% from the previous year. Testing revenue is guided at $477–483 million for FY2025. This range excludes the impact of the recently paused Envisia test for FY2025 and now reflects 16–17% underlying testing revenue growth for FY2025. Adjusted EBITDA margin is expected to reach 23.5%, up from the prior outlook of 22.5% for full-year 2025.

Leadership expressed confidence in continued Decipher growth, aided by its recent metastatic indication launch, and signaled ongoing investment in new product opportunities such as MRD and international IVDs. Investors may want to monitor the pace of Afirma revenue growth versus volume, as in Q1 2025 Afirma revenue grew 6% while volume grew 10% year-over-year, and the cost structure of new MRD tests as those platforms ramp toward commercial launch.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.