UBS Global Healthcare Conference - VERACYTE INC

Explicit Guidance:

• 2027 Revenue & Volume: Guidance reflects mid-single-digit revenue growth and double-digit volume growth; revenue growth is depressed by "mix" and prior-period collection headwinds rather than business fundamentals.
• 2027 Volume Decipher: Reset baseline expectation of 12,000 to 15,000 tests for 2027 (anchored at 12,000 based on current evidence/resources, with 15,000+ requiring new catalysts).
• 2027 Volume Mix: Implied volume of 5,000+ tests for ProSigna and Bladder combined (currently ~100/quarter), expected to augment significantly in 2027 to reach the guide.
• Margins: Committed to 25% adjusted EBITDA margin long-term; Q3 achieved 27%.
• Cash Flow & Capital Allocation: Generated >$40 million cash in Q3; initiated $100 million share buyback program.
• ProSigna ASP: Current ASP ~$3,850 (higher than $25 expected), driven by Medicare/Medicare Advantage reimbursement.

Business-Segment Outlook:

• Decipher (Prostate): Long-term penetration goal remains 80% (vs. current 35%); volume expected to double eventually. Immediate growth driven by intermediate/high-risk segments and new predictive claims; low-risk growth limited to low-single digits pending new evidence.
• ProSigna (Breast): Positioned as a major near-term growth driver; targeting the 225,000 patient ER+/HER2- early-stage market. Potential $250–$500 million market opportunity; payback period described as "quite quick" due to existing infrastructure.
• Bladder Cancer: Multiple analytes (UroAmp, Decipher Bladder, True MRD) expected to create a full-journey solution. Meaningful contribution expected in 2028+, with proof points (publications for UroAmp/TruMRD) starting in 2027.
• Affirma (Urology/Cervical): Expected mid-single-digit growth (5%) for 2027; growth driven by incidence and share gains. New signatures (Genomic Classifiers) for 2027–2030 to expand into 5/6 risk categories.
• Metastatic Prostate (Enzomat): Potential to add volume from 30,000 patient pool (10% of total prostate diagnosis); catalysts (publication/guidelines) expected in "quarters, not years."

Market and Competitive Outlook:

• Competition (DPAI): Digital pathology AI (DPAI) is currently diverting sales team time; mitigated by adding sales reps and medical liaisons (impact expected late 2027 into 2028).
• Guideline Sensitivity: Growth relies on evidence generation to secure guideline updates (e.g., low-risk, metastatic). Decipher's flywheel depends on continuous publication of positive studies (e.g., RTOG 015, Optima).
• Reimbursement: ProSigna reimbursement rollout (CMS/Medicare) is a key near-term catalyst; commercial coverage for Decipher in low-risk and metastatic categories remains a long-term goal.

Macro / Industry Outlook:

• Guideline Dynamics: 2023/2024 NCCN updates created a 2-year accelerative effect (20k+ incremental tests); growth now normalized to structural levels.
• Patient Identification: Decline in "low-risk" patient identification and treatment rates is viewed as a long-term differentiator for VeriSight (higher-risk focus).
• Economic/Regulatory: Biopharma revenue excluded from guidance due to timing/magnitude uncertainty; revenue expected to normalize in 2028+ as these cycles align.

Strategic Initiatives:

• Sales Force Expansion: Significant addition of sales reps, medical liaisons, and sales leadership to counter DPAI mindshare and educate on new predictive claims; hiring to be executed thoughtfully with impact realized late 2027/2028.
• M&A: Willing to invest M&A capital to fuel growth; prior acquisitions (e.g., bladder assets) viewed as successful and integrated.
• Product Launches: Launch of ProSigna LDT; full bladder menu (UroAmp/True MRD) rollout expected to gain traction 2028+.
• Research/Evidence: Continued investment in clinical studies for low-risk, metastatic, and intermediate categories to drive future guideline inclusions; DPAI algorithm development pending validation for future clinical product launch.

Risks and Headwinds to Outlook:

• Guideline Stalls: Lack of new positive studies could delay guideline updates for low-risk or metastatic categories, limiting growth velocity.
• Competitive Displacement: Digital pathology AI could erode market share if not successfully countered by evidence and sales force expansion.
• Reimbursement Delays: Slow adoption of CMS/commercial reimbursement for ProSigna could delay revenue realization.
• Biopharma Timing: Uncertainty in magnitude/timing of biopharma revenue streams creates volatility in annual guidance.

Management Tone on the Future:

• Confidence Level: High confidence in 2027 volume growth (double digits) and long-term 80% penetration potential; management views Q3 miss as a "bump in the road" rather than a structural change.
• Strategic Pivot: Explicitly rejecting the narrative that VeriSight is no longer a double-digit grower; emphasizing portfolio diversification (Prostate, Breast, Bladder, Urology) to sustain growth.
• Financial Discipline: Balanced approach of aggressive top-line investment to maintain growth while preserving 25% EBITDA targets.

Miscellaneous:

• Safe Harbor: Standard warning regarding forward-looking statements provided at the start of the call.
• Productivity: 1,000-test Q3 miss in Decipher viewed as a result of normalized post-guideline volume and competitive noise, not a fundamental penetration issue.