Veracyte Beats Earnings Estimates but Stock Falls as It Weighs French Unit Exit

Veracyte, Inc. (Nasdaq: VCYT) reported strong financial results for the fourth quarter and full year of 2024, beating analysts' estimates. However, the company's stock price fell as investors reacted to Veracyte's decision to consider exiting its French unit, Veracyte SAS. The company's shares were down 2.90% at $38.23 during the premarket session on Tuesday, February 26, 2025.

Financial Performance

Veracyte's fourth quarter total revenue grew by 21% year over year (YoY) to $118.6 million, driven by a 24% increase in testing revenue to $112.2 million. The company's testing volume also increased by 25% to 39,107 tests. Veracyte's Decipher and Afirma tests, which focus on prostate and thyroid cancer, respectively, contributed to this growth. Decipher revenue grew by 44%, while Afirma revenue increased by 4%. The company's net income for the quarter was $5.1 million, or 4.3% of revenue, compared to a net loss of $28.3 million in the same period of 2023.

For the full year, Veracyte's total revenue increased by 23% YoY to $445.8 million, with testing revenue up 28% to $419.0 million. The company's total volume grew by 20% to 152,750 tests, and testing volume increased by 23% to 142,925 tests. Veracyte's net income for the year was $24.1 million, or 5.4% of revenue, compared to a net loss of $11.4 million in 2023.

French Unit Exit Consideration

Veracyte recently notified Veracyte SAS, its French subsidiary, that it is considering no longer funding the entity. The French unit generates about $4 million in revenue each quarter but incurs $7 million in fixed costs, leading to a $5 million operating loss. Veracyte is exploring the option of selling the French unit or filing for bankruptcy if a buyer cannot be found. The company is working with Veracyte SAS's works council over the next few months, as required by French law.

Veracyte's decision to potentially exit the French unit aligns with its core strategy of focusing on its lab-developed testing business in the US. The company's strong financial performance in its core testing businesses, particularly Decipher and Afirma, has led to this strategic shift. However, the divestment process may introduce uncertainty about Veracyte's total company revenue and margins in the short term.

Guidance and Market Reaction

Veracyte expects 2025 testing revenue to be between $470 million and $480 million, representing 12% to 15% YoY growth. The company also expects its adjusted EBITDA margin to be approximately 21.6% in 2025, compared to 20.6% in 2024. However, Veracyte is not providing total revenue guidance for 2025 due to the uncertainty surrounding its French unit's divestment process.

Investors reacted negatively to Veracyte's decision to consider exiting the French unit, with the company's stock price falling by 2.90% during the premarket session on Tuesday. The uncertainty surrounding the divestment process and its potential impact on Veracyte's overall revenue and margins may have contributed to this market reaction.




In conclusion, Veracyte's strong financial performance in the fourth quarter and full year of 2024 was overshadowed by the company's decision to consider exiting its French unit. While the divestment process may introduce short-term uncertainty, Veracyte's focus on its core testing businesses and potential long-term cost savings could ultimately benefit the company. Investors will closely monitor the progress of the divestment process and its impact on Veracyte's overall financial performance.