UBS Global Healthcare Conference - VERACYTE INC

Explicit Guidance:

• FY2027 Volume Growth: Expecting 12,000–15,000 additional Decipher tests annually (mid-single-digit revenue growth due to mix and collection headwinds), with a baseline starting point of 12,000 tests and upside to 15,000+ via new catalysts and sales force expansion.
• FY2027 Revenue/Cash Flow: Projected mid-single-digit revenue growth (approx. 5% implied by volume/mix guidance), with a target EBITDA margin of 25% maintained.
• FY2027 Product Mix: Implied volume of 5,000+ tests combined from ProSigna and Bladder products; ProSigna ASP estimated at ~$3,800 with reimbursement expected from CMS and commercial payers.
• Biopharma Revenue: Not included in guidance due to uncertainty; revenue typically materializes in even years once signed.
• Buybacks: Initiated a $100 million share buyback program.

Business-Segment Outlook:

• Decipher (Prostate): Operating at a normalized level of 12,000–15,000 tests post-2023/24 guideline boost; long-term penetration goal remains 80% (currently 35%), implying significant future doubling. Low-risk segment facing headwinds from guideline changes and reduced patient identification, but expected to grow in the low single-digits while intermediate/high-risk segments drive differentiation.
• ProSigna (Breast): Viewed as a major near-term growth driver; targeting the 225,000 patient ER+ HER2- early-stage market (potentially $250–$500M opportunity) pending full Optima study publication and guideline integration.
• Bladder Oncology: Expected to become a meaningful growth contributor in 2028 and beyond. Timeline includes new UROAMP indications (mid-2027), TruMRD MIBC launches, and full pipeline validation over 2027–2028, covering non-muscle invasive to muscle-invasive stages.
• Affirma: Sustained mid-single-digit growth (5%) driven by low "no-result" rates and competitive moat; future growth in Bethesda 5/6 categories expected via new genomic signatures over the next 3–5 years.

Market and Competitive Outlook:

• Competition: Digital Pathology AI (DPAI) is currently consuming sales team time; managed via a "science-first" approach to launch a validated Decipher-DPAI algorithm as a clinical product in the future.
• Demand Trends: Prostate cancer indication growing 3–6% overall; low-risk patients shrinking proportionally, favoring Decipher's differentiation in intermediate/high-risk/metastatic segments.
• Share Shifts: Anticipated recovery in Decipher growth velocity as evidence continues to refute competitive noise and as sales force capacity increases.

Macro / Industry Outlook:

• Reimbursement: Progressing on CMS and commercial coverage for ProSigna; multiple managed care wins reported in Q3.
• Regulatory/Guidelines: Pending Optima study publication and NCCN guideline updates for ProSigna and Metastatic Decipher; low-risk guidelines not expected to change favorably for new entrants soon.
• Collection/ASP Headwinds: Mix shift toward lower ASP products (ProSigna, Bladder) and prior-period collection headwinds (Cigna) impacting 2027 revenue growth relative to volume.

Strategic Initiatives:

• Sales Force Expansion: Adding significant new sales reps, medical liaisons, and leadership to counter DPAI mindshare erosion; impact expected to materialize in late 2027–2028.
• M&A: Committed to using strong cash flow to fuel ongoing M&A; recent acquisition (non-accretive in short term) integrated into portfolio strategy.
• Product Launches:
  • UROAMP: New predictive claims launching in late 2027/mid-2028.
  • True MRD MIBC: Focusing on treatment response monitoring indications in 2028+.
  • Metastatic Decipher (Enzomat): Publication and guideline update expected within quarters, not years; represents a ~10% (30k patient) opportunity.
• Scientific Evidence: Continued "evidence engine" flywheel with studies on low-risk, metastatic, and bladder indications to drive future guideline inclusions.

Risks and Headwinds to Outlook:

• Guideline Volatility: Continued changes in NCCN guidelines (specifically low-risk exclusion) could dampen volume growth.
• Competitive Disruption: New technologies like digital pathology AI and competitive testing modalities taking sales attention and potentially impacting market share if not effectively countered.
• Evidence Timeline: Dependence on publication and subsequent guideline adoption for ProSigna and Metastatic Decipher; delays could push upside realization beyond 2027.
• Low-Risk Market Contraction: Shrinking proportion of low-risk patients treated; penetration beyond low single digits requires new evidence for treatment decisions, likely taking years.
• Mix/ASP Dilution: Growth in volume may be offset by lower ASPs on new product launches (ProSigna, Bladder) and collection timing issues.

Management Tone on the Future:

• Confidence Level: High long-term confidence despite 2027 anomaly; management characterizes the 2027 slowdown as a "guide anomaly" rather than a structural business shift.
• Growth Narrative: Reiterated view that VeriSight remains a double-digit revenue grower in the long term, driven by volume growth and portfolio diversification beyond Decipher.
• Hedges: Acknowledges 2027 is an "anomaly" due to mix and collection headwinds; expects revenue growth to better approximate volume growth in 2028+ as headwinds normalize.
• Strategic Focus: Emphasis on the "formula" of evidence generation, reimbursement, and guideline inclusion; willing to invest heavily in sales and R&D to maintain 25% EBITDA while pursuing growth.

Miscellaneous:

• Run Rate: Current run rate (Q3 actuals + Q4 early data) supports the 12,000 test baseline.
• Market Cap Context: Management notes the market is currently valuing the company as a single-product entity (Decipher) rather than the broader portfolio (Affirma, ProSigna, Bladder).
• Patient Milestone: Company reached a milestone of serving millions of patients.