Veracyte Inc Aktie

Good day, and thank you for standing by. Welcome to the Veracyte Investor Call on ASCO Finance Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kelly Gura, Director of Investor Relations. Please go ahead, ma'am.

Good morning, and thank you for joining us today to discuss key findings from the 2026 ASCO Annual Meeting.

Before we begin, please note that we will make forward-looking statements, including statements regarding our products, clinical evidence, commercialization plans, reimbursement, market opportunities and expected timing. These statements are subject to risks and uncertainties that could cause actual results to differ materially.

Please refer to Veracyte's SEC filings, including its most recent Forms 10-K and 10-Q for a discussion of these risks. Veracyte undertakes no obligation to update forward-looking statements, except as required by law. We will refer to slides posted on the Investors section of our website, and a replay of the call will be available there after the call concludes. With that, I'll hand the call over to Marc.

Thanks, Kelly. Today, we will discuss the exciting outcomes from the independent OPTIMA trial led by University College London, which provides what we believe are practice-changing results for patients dealing with early-stage breast cancer.

We will also discuss results from the ENZAMET study analysis, which provides yet another level of insight for patients who are suffering with metastatic prostate cancer.

Data from these pivotal studies were presented at ASCO over the weekend, and we believe both provide strong Level 1 evidence demonstrating how our Prosigna and Decipher test can uniquely guide treatment decisions. We're very happy to be here today to share these results with you and to discuss what they mean for patients, physicians and for Veracyte.

Joining me from Veracyte is Dr. John Leite, our Chief Commercial Officer; Dr. Phil Febbo, our Chief Scientific Officer and Chief Medical Officer; Rebecca Chambers, our Chief Financial Officer, will join us for Q&A. I'm also honored to introduce Dr. Iain Macpherson, who is one of the principal investigators of the OPTIMA trial.

Dr. Macpherson is a Professor of Breast Oncology at the University of Glasgow and an honorary consultant medical oncologist at the Beatson West of Scotland Cancer Center. His clinical research work focuses on breast cancer treatment personalization, clinical trials and translational oncology.

Dr. Macpherson has led and contributed to multiple national and international studies, is widely published across peer-reviewed publications and is a recognized investigator in trials advancing precision approaches to breast cancer care. With that, I will turn the call over to Dr. Macpherson to walk through the OPTIMA trial results.

Thank you, Marc, and good morning, everyone. It's my pleasure to present the first results from the OPTIMA Phase III randomized controlled trial of test-directed chemotherapy in patients with high clinical risk estrogen receptor positive HER2-negative early-stage breast cancer.

OPTIMA is an academic trial sponsored by University College London, and the data were first presented by my colleague, Professor Rob Stein, at the ASCO Annual Meeting this past Saturday.

Before diving into the results, I'd like to briefly provide some background for why Prosigna was selected as the molecular diagnostic to be used in the trial. The OPTIMA trial was preceded by a feasibility study called OPTIMA PRELIM, which was initiated in 2012 for early-stage high-risk breast cancer patients.

In addition to its primary objectives, it served as a head-to-head comparison, evaluating the value of information and performance of Prosigna and other genomic tests. Based on these analyses, Prosigna was chosen as the integral biomarker for guiding treatment decisions in the OPTIMA main trial.

The positive clinical outcomes of the 10-year OPTIMA PRELIM study were presented at the ESMO Breast Cancer Annual Congress last year. The findings suggested that Prosigna had enhanced prognostic accuracy in high-risk patients compared to the test that was initially used to assign patients to treatment groups.

Importantly, Prosigna identified 22% of patients or roughly 1 in 5 as high risk of recurrence after they had initially been classified as low risk by the test used to assign treatment. Unfortunately, those patients went on to experience adverse outcomes at a rate consistent with a high-risk status.

These findings demonstrate Prosigna has greater prognostic accuracy, which provided early confidence for the OPTIMA main trial. And these results have turned out to be very exciting for patients and for a continued understanding of breast cancer. Today, tumor gene expression assays are widely used to assist chemotherapy decisions, primarily in postmenopausal women with estrogen receptor positive, HER2-negative early breast cancer with up to 3 involved axillary lymph nodes.

However, supporting evidence for premenopausal patient use is mixed and current guidelines do not support test use in premenopausal women with any degree of nodal involvement. As such, typical treatment for high-risk premenopausal women has been both the course of chemotherapy, which can have severe and lasting side effects and standard hormone tablets taken for 5 to 10 years.

In addition, there's almost no prospective evidence for the use of gene expression tests in patients with higher levels of nodal involvement or more involved nodes. OPTIMA was inspired by retrospective clinical analysis that suggested that gene expression assays in addition to providing prognostic information, could also predict chemotherapy sensitivity.

And this would mean that patients with tumors that have a low test score for risk of recurrence would not benefit from chemotherapy despite having a high stage-related recurrence risk. OPTIMA had a bold and impactful trial design. We recruited more than 4,400 women and men aged 40 years and over following surgical excision of their breast cancer.

These patients were recruited across 6 countries from 2017 through 2025. Cancers had to be ER-positive and HER2 negative, and there could be up to 9 involved auxiliary nodes. For node-negative cancers, there was a minimum tumor size requirement of at least 30 millimeters.

The patient characteristics were well balanced. The median age was 56, 37% of participants were premenopausal, 31% of cancers were grade 3 and 46% were 3 centimeters or larger. 8% of participants had node-negative cancers, 73% had 1 to 3 nodes and 19% had 4 to 9 involved nodes. Eligible patients were then randomized between a control arm, which consisted of chemotherapy followed by endocrine therapy or to the Prosigna test directed arm, where treatment was decided by the Prosigna Risk of Recurrence or ROR score.

Notably, the Prosigna test was performed after the initial randomization occurred. Those with an ROR score greater than 60 received the same treatment as the control arm, plus those with a score of 60 or below avoided chemotherapy and moved straight to endocrine therapy. For patients receiving chemotherapy, the randomization was blinded to both sites and participants, which was an important aspect of the trial design.

All other adjuvant treatments such as CDK4/6 inhibitors, bisphosphonates and radiotherapy were given as standard, and the control arm also received a Prosigna test, which did not impact treatment. Importantly, endocrine therapy included ovarian function suppression in all premenopausal participants, another key aspect of the trial design.

This ensured that the confounding effects of chemotherapy-induced menopause were minimized, allowing for a clearer assessment of chemotherapy benefit. As a result, OPTIMA provides the first definitive predictive data for premenopausal women in this setting. OPTIMA used a non-inferiority design. The primary endpoint was invasive breast cancer-free survival or IVCFS, which includes all invasive recurrences, new primary breast cancer and deaths from any cause.

The primary analysis was the test-directed versus the control arm in the overall per protocol population. We were powered to demonstrate non-inferiority with the margin being a 3% absolute difference in IVCFS at 5 years, meaning to demonstrate that the test-directed arm delivered similar outcomes within a 3% margin.

A key secondary analysis was performed in the per protocol population with ROR scores of 60 or less. This is, in effect, a randomization between chemo endocrine therapy or endocrine therapy alone, and this is the analysis that really defines clinical utility. So OPTIMA met its primary and secondary endpoints for invasive breast cancer-free survival and showed that Prosigna-guided treatment delivered equivalent outcomes while avoiding chemotherapy in a large portion of patients.

The chart on the left represents the complete per protocol population and the right shows the low ROR score population. Of the more than 4,400 people who took part in the trial, more than 2/3 of participants had tumors with ROR scores of 60 or below, representing a low Prosigna score. For this group, the results showed the outcomes were incredibly similar, whether chemotherapy was given or not.

The difference between these outcomes easily met the noninferiority margin objective of the trial. A statistical test showed that at most only 2% of patients with a low Prosigna ROR score treated with chemotherapy will benefit from this treatment, well within the threshold of no more than 3% required by the trial.

This suggests that for patients with low Prosigna ROR scores, chemotherapy offers little or no additional benefit, meaning many people can safely avoid it and its many negative toxic side effects, thereby ensuring a higher quality of life during treatment. These outcomes are consistent across all subgroups for patients with low Prosigna ROR scores as shown on this forest plot. The data clearly demonstrate that the underlying biology of the tumor, as elucidated by the Prosigna test is what truly drives outcomes.

The Prosigna test is built on the PAM50 genomic classifier, a well-validated framework rooted in breast cancer biology, which we believe underpins the consistency and strength of these results across subgroups. By measuring that biology directly, Prosigna is able to differentiate which patients will and will not benefit from chemotherapy independent of traditional clinical risk factors.

While this plot is a great [indiscernible] summary of the subgroup analysis, the next few slides will demonstrate the Prosigna performance across the low ROR score population.

As I mentioned earlier, the premenopausal population and the patients with higher nodal burden are of particular interest with very strong data shown in these Kaplan-Meier plots. So starting with menopausal status, there is no difference in the outcomes for premenopausal patients as shown on the left or post-menopausal patients as shown on the right.

Now looking at the Kaplan-Meier plots according to number of nodes. Again, there is no evidence of a differential effect in patients with 4 to 9 nodes as compared to 1 to 3 nodes. While there does appear visually to be some separation of the curves from 2 years in the higher nodal group, these curves are not statistically different from the overall results.

Another way of looking at patients with the highest stage-related risk is by grouping by stage where Stage IIIa includes all patients with 4 or more nodes as well as patients with 1 to 3 involved nodes and the primary tumor size larger than 5 centimeters, who would be considered to have a similar stage-related prognosis.

As mentioned, whilst patients with 4 to 9 involved nodes make up 19% of the trial population, the proportion with Stage IIIa tumors is higher at 29%. And again, we found no statistical heterogeneity across these subgroups. So in summary, the results of OPTIMA are clear and impactful with the trial successfully meeting its primary and secondary endpoints.

Many clinically high-risk node-positive patients may be able to safely forgo chemotherapy without compromising outcomes. Prosigna identified that more than 2/3 of high-risk node-positive patients who previously would have received chemotherapy could safely be spared this treatment entirely without compromising outcomes or increasing their risk of recurrence. Results were robust across high-risk subgroups that matter most, including premenopausal women treated with ovarian function suppression and patients with more extensive nodal involvement up to 9 positive nodes.

Molecular biology, not clinical factors alone should guide chemotherapy decisions for these patients. OPTIMA now provides Level 1a prospective evidence by [ Simon-Hays ] criteria, showing that the Prosigna test can accurately predict chemotherapy benefit and guide safety escalation across patient populations.

And with that, I'll hand back over to the Veracyte team. John?

Thank you, Dr. Macpherson. And congratulations again on these important results. As the data shows, OPTIMA validates Prosigna in the broadest high-risk breast cancer population to date.

This is critical as NCCN guidelines currently recommend all high-risk patients with extensive nodal involvement, those who have more than 3 nodes to receive chemotherapy based on clinical factors alone. For those with 1 to 3 nodes involved, NCCN guidelines recommend consideration of genomic testing to assess risk and guide chemotherapy use in both pre- and postmenopausal patients.

The OPTIMA data showed that more than 2/3 of high-risk patients, those with low Prosigna risk of recurrence scores can safely avoid chemotherapy. In this study, the test-directed population achieved 5-year cancer-free survival rates of 93.7%, statistically noninferior to the 94.9% achieved with chemotherapy in the control arm, demonstrating that omitting treatment for these patients does not compromise outcomes or increase recurrence risk.

One of the things that we really like about the OPTIMA trial is how the study design required ovarian suppression for all premenopausal women and stratified for other important clinical variables, allowing analysis of endpoints according to chemotherapy use.

For the premenopausal group, over 70% are low risk by the Prosigna test and can safely avoid chemotherapy. The impact to patients of being able to avoid chemotherapy is undeniable. In addition, Prosigna provides clarity to those patients with a high risk of recurrence score, such that the chemotherapy they are undertaking may be even more beneficial to them than previously understood. This combination of strong clinical evidence and meaningful impact to patients supports our view that our Prosigna test should be the new standard of breast cancer care for all patients dealing with early-stage hormone receptor positive disease.

Further, past trials such as TransATAC directly comparing the performance of Prosigna versus other commercial breast cancer prognostic assays show poor to moderate correlation between, suggesting these tests approach the same objective through different methods and have different cutoffs between high and low-risk categories.

Thus, extrapolation of the OPTIMA results to other tests in Prosigna has not been validated and may lead to incorrect assignment of therapy. This means we expect Prosigna to be the only commercial test that benefit from the insights learned from the OPTIMA trial. Now let's talk about U.S. market opportunity.

There are approximately 225,000 patients diagnosed with ER-positive HER2-negative disease every year, and all are eligible and appropriate for Prosigna testing. OPTIMA demonstrates that Prosigna is the only test to predict chemotherapy benefit regardless of menopausal status and for patients with up to 9 positive nodes. This builds on prior studies, which demonstrate Prosigna delivers great prognostic accuracy than other genomic assays, including in node-negative patients.

The robust performance of Prosigna in the OPTIMA trial provides the evidence to support Prosigna's use across the entire early-stage hormone receptor-positive breast cancer market where broader adoption will be supported over time. We also plan to provide access to our grid research use-only database as part of our broader evidence strategy, continuing to lead with KOLs and collaborators to generate a steady cadence of new and innovative data and molecular signatures to advance the understanding of breast cancer in the same way that we have consistently done in prostate cancer.

We look forward to launching Prosigna as an LDT in our CLIA lab on June 8, supported by our newly hired and highly energized commercial team. But as we know, evidence like OPTIMA is the fuel that drives the reimbursement, adoption and guideline inclusion for molecular diagnostics. The Prosigna test is the only commercial test built on the PAM50 genomic classifier, a well-validated framework rooted in breast cancer biology that we believe drives its strong and differentiated performance.

A robust body of evidence shows that Prosigna test delivers greater prognostic accuracy than other genomic assays, particularly in the critical 5- to 10-year breast cancer recurrence window. OPTIMA adds to that evidence base, demonstrating that Prosigna is the only test proven to predict chemotherapy benefit in high-risk premenopausal women and patients with extensive nodal involvement, including up to 9 positive nodes.

These findings have the potential to change clinical practice and are especially meaningful for many patients who may safely avoid chemotherapy and its lasting side effects without compromising outcomes or increasing their risk of recurrence. Beyond OPTIMA, we have a steady pipeline of additional studies underway that we expect will further reinforce why the Prosigna test stands apart.

With that, I'll pass it over to Phil to walk through the data that was presented in ASCO from the ENZAMET study. Phil?

Thanks, John. As you know, at Veracyte, we've been focused on expanding our Decipher Prostate test into the high-risk biochemical recurrence and metastatic settings, contributing to one of our highest growth areas over the past few quarters.

I am pleased to see that our evidence generation engine is continuing to advance the understanding of this devastating late-stage disease, providing new insights into how to better treat these patients. ENZAMET is an international randomized Phase III study conducted by ANZUP.

The prespecified biomarker analysis included 634 patients with a median follow-up of 5.6 years. This study assessed whether Decipher prostate can predict the benefit of adding chemotherapy to standard doublet hormonal therapy in metastatic prostate cancer. In the study, patients with low Decipher scores showed no evidence of benefit from adding chemotherapy, while patients with higher scores benefited from treatment intensification with docetaxel chemotherapy.

Patients with higher Decipher scores who received this triplet therapy had significantly improved 5-year overall survival compared to those with standard hormonal therapy alone. These patients had more aggressive disease features yet achieved comparable survival to patients with a lower Decipher score on doublet therapy. The study provides Level 1b evidence that Decipher can identify which patients can safely avoid chemotherapy and which may be more appropriate for triplet therapy.

This is a highly relevant clinical question in metastatic disease where the toxicity trade-off is meaningful and better risk stratification can improve treatment decisions. Prior studies such as STAMPEDE and CHAARTED helped establish Decipher's role in predicting benefit from adding docetaxel to androgen deprivation therapy, or ADT, for patients with metastatic prostate cancer.

ENZAMET takes us the next step by addressing a more contemporary and important clinical management question, of which of these patients may benefit from triplet therapy by adding docetaxel to ADT plus an androgen receptor pathway inhibitor or ARPI, such as enzalutamide. Approximately 30,000 patients are diagnosed with metastatic prostate cancer each year.

This new evidence broadens Decipher's relevance across the prostate cancer continuum and further supports its role in guiding consequential treatment decisions from active surveillance through metastatic disease.

With that, I'll turn it back to Marc for a few closing thoughts.

Thanks, Phil. The OPTIMA and ENZAMET data demonstrate the strength of the Veracyte clinical evidence engine, including the Prosigna Breast and Decipher Prostate. The OPTIMA trial expands on Prosigna's established prognostic utility in breast cancer and demonstrates that it can safely guide chemotherapy decisions in the broadest high-risk early-stage breast cancer population study to date, enabling more than 2/3 of patients to avoid chemotherapy without compromising outcomes.

The ENZAMET analysis further expands Decipher's utility in high-risk biochemical recurrence and metastatic prostate cancer, delivering predictive evidence that can help guide treatment intensification decisions in advanced disease.

Together, these results highlight how high-quality practice-changing data can expand the clinical utility of our tests, unlock significant market opportunities and most importantly, improve care for patients by enabling more precise personalized treatment decisions while helping avoid unnecessary toxicity. I couldn't be more proud of these results, which further our mission of transforming cancer care for patients all over the world.

Before I close, I'd like to thank the more than 5,000 patients who participated in both OPTIMA and ENZAMET and the independent research teams who carried out these important studies. I'd also like to thank the Veracyte team who have worked tirelessly to make our Prosigna, Decipher and other tests available to physicians and their patients.

Thank you again for joining us today. Operator, please open the line for questions.

[Operator Instructions] Our first question is going to come from the line of Subbu Nambi with Guggenheim.

Absent differentiation in NCCN guideline classification versus Oncotype, one concern would be that it will be a challenge for you to overcome incumbency bias.

What are your thoughts on how to address that? Or do you think NCCN will very clearly stated as Prosigna given Prosigna is the only study that's shown differences in premenopausal women and nodal status.

You're breaking up a little bit. Did you ask effectively about the competitive differentiation? That's what I was entertaining. But...

I can repeat my question if it wasn't clear. Is the audio better now?

Yes, it's a little better now.

Absolutely. Absent differentiation in NCCN guideline classification versus Oncotype, one concern would be that it will be a challenge for you to overcome incumbency bias.

What are your thoughts on how to address that? Or are you certain that NCCN will very clearly mention that it's Prosigna that's shown all this evidence, and that's why warrants being included in NCCN guidelines?

Yes. Thanks, Subbu. We got that question. Yes. So as far as NCCN guidelines are concerned, let me start and then I'll ask John to add in here. But I think if you go back to look at our previous diagnostic tests, NCCN guidelines have been a catalyst for incremental growth, but they don't stop the growth engine working.

So we actually -- while we're waiting for NCCN guidelines, which John can talk about our level of confidence around that. But while we're waiting for those, we believe that there will be some meaningful adoption over time. And then the NCCN guidelines will ultimately come and then like we saw in prostate, put that into new year.

As far as the level of evidence is concerned, it's very compelling. John, do you want to talk about that?

Yes, I'll double down on that, Marc. We've obviously been having some very fascinating conversations here at ASCO. It's been a successful conference for us as a company and the OPTIMA trial results session clearly generated a lot of interest and inspired some great conversations.

I think there will be a cadre of physicians that will adopt in advance of the guidelines. And of course, there are those physicians that are more conservative that will wait for the issuance of the guidelines. We, of course, can never predict when that's going to happen or in what format. We feel confident that the data stands on its own. It is practice changing by everyone that we've had conversations with.

I think, ultimately, it will make its way towards guidelines in one form or another. I think we'll be fine to managing the language and how we position the performance claims of Prosigna in the market.

Another question is, no one has definitively actually shown that in premenopausal women, there is no chemo benefit in low-risk patients. So thank you for that. Thank you for a very well-designed study but could evidence supported efficacy in premenopausal women support an up [indiscernible] in NCCN guidelines from 2A to 1? And in turn, what that looks like from a commercial perspective?

Yes. So I think I understand your question. In the premenopausal patient population specifically, they are managed by the same physicians. I think the evidence is very, very compelling. I think the evidence, as we've said, is practice changing.

I think adoption there, there are a lot of eager patients and eager patients equally that want to see this test applied to them. I think this is going to be one of our main entry points.

Our next question comes from the line of William Bonello with Craig-Hallum Capital Group.

I would agree what we heard was practice changing in terms of premenopausal, and there didn't seem to be much question about that data. The response to the data on 4 or more nodes seem to be a little bit more cautious than the take on the premenopausal data.

And so I'm just curious, in terms -- well, 2 things. One, in terms of what you're doing on further studies that may demonstrate or maybe even segment the effectiveness of the test in patients with 4 or more nodes. And then secondly, how significant of an opportunity and maybe a share shift driver is nodal status compared to menopausal status?

Yes. Will, thanks for the question. I'll start and then others can weigh in. But the way to think about this is the market opportunity here, the patient population that Prosigna addresses is the ER-positive HER2-negative patient population, which in the U.S. is the 225,000 patients per year new incidences.

Whether it be the premenopausal or the high-risk, high nodal status entry points or even just physicians starting to use Prosigna for no negative patients, those are just kind of like the entry points. We actually think that the entire market starts to adopt Prosigna in some level, in some fashion over time for their patients in general.

We don't see it kind of bifurcating like Prosigna gets used for only those patient populations where OPTIMA has demonstrated a clear distinction. This just increases the overall level of utility, both prognostic and predictive for Prosigna across the entire 225,000 population.

As far as [indiscernible] is concerned, if you want to discuss that, Phil, and talk a little bit about that [ 497 ].

Yes. So like with Decipher, now that we're kind of launching Prosigna as an LDT, we already have a broad funnel of studies in line to kind of further expand the evidence.

And we do understand that some areas, there'll be particular concern about the outcomes of these patients and certainly a higher node population. And we've been getting questions about what about even further nodes. I think it's quite interesting that some of the discussion around node positivity, and Iain, love your comment on this, is node positivity and the amount of node positivity does not seem to be reflective of tumor biology as much as the Prosigna test, right? It's a clinical stage.

And wherever we've had these cutoffs of 4 or 9 or more -- what we saw in this study in the OPTIMA is that really breaks down, and it's really the biology trumps the number of nodes. We can get back to you with the specific trials that we have that add to our portfolio and increase the confidence in that 4 to 9. But Iain, maybe you can comment on that.

Thank you. Yes. I mean I would absolutely agree with that comment. I think the fundamental point here is this is about breast cancer biology, and there is no particular preexisting data to argue that the biology differs according to the number of involved nodes.

So we feel these data are robust. It is a subgroup of the overall population. As I showed in my presentation, we can increase the size of that subgroup by looking at patients with very large cancers and 1 to 3 nodes. They are grouped together in TNM staging, we have the same prognosis and that helps us increase the precision of that estimate. And we really have no suggestion of heterogeneity across these subs.

That's helpful. Can I ask just one follow-up to that? Just again, I wasn't thinking that physicians would segment which test they use depending on menopausal or nodal status. I was thinking more that the premenopausal data is a significant reason for physicians to shift from one test to the other. And so I'm just curious, let's say, beyond that, how important you view the nodal status as being a driver for that shift? Or is there anything else you'd highlight in the data that would be a driver for that share shift?

I think the OPTIMA results in general are a driver for that shift, including in the 1 to 3 nodal status as well because of both the combined performance of the OPTIMA results and also OPTIMA PRELIM, I think overall, what it demonstrates is that so many patients, 2/3 can avoid chemotherapy, and that's not just the premenopausal.

So yes, I think there's nothing else to highlight. I take the OPTIMA results in and of themselves, and that just reinforces the predictive capabilities on top of the prognostic. Ping, anything you want to add?

Yes, I would just add that the nodal status or high nodal burden and premenopausals are canonical clinical challenges that have existed now for years. The OPTIMA trial is essentially a robust demonstration of the performance of the test with the best designed trial and with the most compelling and latest results, I think those are compelling enough reasons to convert.

Our next question is going to come from the line of Kyle Mikson with Canaccord Genuity.

Congrats on all the great data. Just first on OPTIMA, I guess following up on the previous questions. I think this is the first study with 100% ovarian function suppression for premenopausal women.

Could you just talk about how meaningful that is? And if a competitor could do like a similar study near term? And if someone did have similar data without that 100% metric, could that depression piece kind of set you pretty far apart? Just kind of give some context there.

I would congratulate the research team on that design here. I mean it was absolutely elegant, and they did absolutely the right thing as far as the premenopausal is concerned.

And this has been years and years in the making. I mean the study design goes back multiple years and it's taken many years to collect the data and produce the results. And so I think -- and it actually -- what it does, in my mind, is it corrects some limitations to the previous studies, too.

And so I think that's super important. And so yes, it would -- it's not going to stop anybody else trying to do that in the future, but it would take a lot of time. I don't know if you want to add anything to that.

I mean really, I would agree with that statement. We, a long time ago, decided to mandate ovarian function suppression, and that turned out to be a very important decision, particularly when we saw the results of some other trials that did not made interpretation very difficult.

So certainly, we've shown in the context of ovarian function suppression that we can safely avoid chemotherapy, specifically based on the Prosigna test. And I think the data...

Okay. And then on Decipher, and that looked great. But I just wanted to talk about this poster presentation that essentially compared Decipher Prostate head-to-head with emerging AI digital path prostate test in the Singapore population.

I think both were significantly associated with MFS with metastatic safest-free survival. Both were prognostic tests. But is there any other takeaways that you guys saw from this head-to-head study that we should focus on that could affect the commercial landscape?

Well, I think what we'll see, and we're certainly supporting a lot of evidence generation looking at the comparative performance. I mean I think there's incredible enthusiasm for Decipher as we grow our portfolio. There's been interest in digital pathology and looking at the prognostic potential there.

What we're seeing in comparative analysis is where there can be isolated studies where when controlling the slides, controlling the scanning and controlling the analysis, you can find a robust and reproducible association with prognosis. What we're finding in our studies when that goes into the wild, when we go to practice, there's been some challenges as far as physicians' experience where we now have multiple studies showing that in real use, patients can be found with very low risk using DPAI methods, whereas Decipher is high and the Decipher has much more evidence supporting it.

So we'll see over time. I think ENZAMET is the type of study that demonstrates the Decipher score is strongly associated with chemotherapy benefit. Those tests are run like any other test sent for testing within a very controlled environment.

And we see reproducible associations through ENZAMET and preceded by charted and preceded by STAMPEDE. So I think it really takes -- the burden is on each test. These tests are different. They have different strengths. They have different performance when they're used by physicians for their patients.

And we're very confident that Decipher consistently shows a strong association with endpoints, both prognostic and now with this docetaxel prediction.

Our next question will come from the line of Mason Carrico with Stephens Inc.

As you kind of think about commercial adoption of Prosigna, how important is workflow integration relative to clinical evidence? Where do you guys stand, I guess, on EMR connectivity and maybe electronic ordering? What investments are really required from here to make Prosigna as easy to order as the incumbent assay?

Yes. Thanks for that question. Let me start with -- actually, I couldn't be more proud of our team for having put together that workflow integration and order cash process.

So we are ready to launch this test on June 8, just a week after the data is presented at ASCO. John, maybe you can talk a little bit about your commercial team's approach there. Rebecca, you might want to talk a little bit about the infrastructure we've built for this.

Yes. So I'll start with digital ordering. As part of the development efforts to make us commercial ready for Prosigna as a laboratory developed test on next-gen sequencing, we took a look at our entire logistics and ordering workflow.

As part of that, it was decided that it was time to build a brand-new portal platform with a brand-new interface looking to see how can we make the ordering processes seamless and as I'm just going to say it, it has to feel familiar to what the office staff is doing today.

And so just from that perspective alone, a lot of work went into making it as familiar and look like home to one of those office workers. Our goal here is to transition the tests into practice workflows as seamlessly as possible. And EHR is a big part of that, and that's a large part of the investment.

Thanks, John. Mason, I would say a lot of the investments have already been made in headcount being added over the course of the last, call it, 12 to 18 months and work that's been done to get ready for both today and for next Monday.

As we progress through penetrating the Prosigna opportunity as well as the MRD opportunity, that expense is now in our run rate, and I don't expect it to go anywhere. But I don't necessarily foresee outside of adding incremental commercial heads, a big incremental step-up for additional spend being associated with the order to cash workflow.

From an EMR integration standpoint, we have been also investing on that side of the equation, and we will continue to do so, and that will be important again, both for Prosigna and for MRD. All of this is contemplated in our guide of adjusted EBITDA for 2026 of that 26%.

On one of the important things to point out is, I think we've said this before, people are aware of this, but just worth punctuating this assay, the test is run on the same platform that we have developed for Afirma that we recently launched at the back end of last year, and that is performing extremely well in the lab, highly scalable. And so it's somewhat of a plug into that existing platform.

Got it. And then one more quick one for me. Does the strength of OPTIMA change your prior view that Prosigna is a 5-year share gain story rather than a near-term revenue contributor?

Yes. Prosigna is a multiyear. Like any new test when you launch it, it's a multiyear story to kind of grow and gain share. There's a big distinction here with Prosigna versus when we launched, for example, Afirma and even Decipher.

In those cases, we were trying to change practice in the context of convincing physicians using evidence as you always do, that they need to insert a molecular diagnostic into their workflow. That work has been done in breast cancer. And so now it's a question of, again, using the evidence to encourage appropriately physicians to use Prosigna in their workflow given the predictive capabilities in addition to prognostic.

So it's a slightly different approach. There's not really a good analog for that, frankly, Mason. So we'll see how that goes. So some components of it are obviously easier. And obviously, when you enter a competitive space, some components could be harder. Overall, when I take a step back, I feel like this should be -- especially with the strength of the evidence that this should be a relatively straightforward prospect for us and our sales team who, by the way, are fantastic. And so we look forward to seeing how it pans out.

Our next question comes from the line of Puneet Souda with Leerink.

You have [ Michael Sontag ] on for Puneet. Congrats on the results. My first question has to do with if you have any estimates on the size of the premenopausal or high node positive population just to get us a sense of maybe the initial commercial traction for the launch.

Yes. We actually do. I mean and again, I would encourage investors to think about those as maybe some landing point, not the only but landing points and entry points, but the node-positive patient population is about 75,000 of the 225,000 and it's split roughly 25 premenopausal, 50 postmenopause and the total premenopausal is also 75 including the negative.

But again, those I would think of as not the market opportunity here, the areas where we have for OPTIMA some distinct evidence.

And maybe, John, do you want to talk about kind of the go-to-market approach from a KOL-driven perspective because I think that does elucidate how the entirety of the market is available.

Yes. So as we mentioned earlier, a publication here will follow. Following the publication, we imagine guideline inclusion. As we've stated, even for our prostate test, guideline inclusion has traditionally been a catalyst of growth.

But in the meantime, we're not sitting still. And as I mentioned, many of the key opinion leaders, thought leaders, researchers, clinicians who happen to do research as well are all attending ASCO, and we're having very enthusiastic conversations.

And it's clear that there is adoption potential in the early go prior to those events. And then those that are more conservative and guideline following would start to consider the test post that. So part of our commercial strategy has been and always will be to start with key opinion leaders who are strong influencers who really understand the data, start to use that data to start to tailor and drive new practice workflows that then other physicians can follow in the community, and we'll follow that flow.

Great. That's helpful. And then I was wondering if you could offer any time lines or milestones for getting pricing and reimbursement set for Prosigna?

Yes. So the coverage policy has been set from the historical Prosigna test. We are in the process of reviewing the tech assessment with MolDX. We expect that imminently.

And of course, as we've mentioned in prior calls, we don't control those time lines. We simply respond to the questions from MolDX, but we have conservative confidence that this will read out imminently. From a pricing standpoint, Rebecca, do you want to take that?

Yes, happy to do so. Our belief is that we'll be able to cross walk hopefully to the Afirma code, and that will be something that comes to bear in time.

Historically, we've gotten paid around $2,500 for the IBD. And so when I think about it, our bars are in between that $2,500 and $3,300 list price perspective. From the get-go, while we wait for Medicare coverage, we actually do have a number of commercial payers that are already covering Prosigna with varying coverage depending on different characteristics of the patient.

But we're pretty excited here to actually launch next week, and we'll be doing so without Medicare reimbursement. But the reason why we can do so is because of those commercial contracts that already exist. And so we're pretty comfortable that from the get-go, we'll be able to at least cover the cost of the test in terms of the reimbursement. And once Medicare comes in, it's even better.

So we're optimistic here and excited. And obviously, all of this is contemplated in our spend guide. We don't have contemplation of the revenue contribution, but the impact is included in the adjusted EBITDA.

Our next question comes from the line of Keith Hinton with Freedom Capital Markets.

Just a couple of commercial questions. Number one, just when I think about the fact that you're launching before you have MolDX reimbursement, should we kind of interpret that as evidence that the sort of early effort here is going to be more in the premenopausal patients since those are more commercially insured?

And can you just talk a little bit about the treatment of early breast cancer patients in the community versus academic settings? And then I have a quick follow-up.

Yes. John, do you want to handle that?

Yes, I can take both those. So you're absolutely right. Our historical practice has been to launch after Medicare reimbursement. This is a unique scenario in the sense that we had already enjoyed both coverage and reimbursement for the Prosigna test.

And so the leftover to do our acceptance of our tech assessment, which we've already submitted. That tech assessment essentially covers our validation efforts from transitioning from the array or the nCounter product to the NGS product.

And as such, it reflects our, like I said, our cautious conservative optimism that, that's going to pan out imminently.

And to be clear, just to clarify, we will -- that won't affect our go-to-market strategy one bit, whether it be premenopausal or postmenopausal doesn't matter, we will be addressing patients and customers across the entire category yet.

Yes. And so as Rebecca mentioned, it's less about will we get reimbursed. It's just ensuring that we have the reimbursement price set. On your second question with regards to early-stage patients in premenopausal or postmenopausal setting in academic or community, as I've mentioned, we're going to be pursuing our key opinion leader and collaborator stakeholders first.

Generally, that is a sale that is very top-down being you start with these researchers who truly understand the impact of the data, what it does in terms of impacting practice workflows that has a general effect of creating influence and peer-to-peer demand generation, and that will trickle down into the community.

And we'll be able to follow that as it happens on a region-by-region basis. And that's the reason why we're able to build our sales force in a steady manner to follow this flow.

Okay. Great. And then the second question is just at a very high level, when you think about the OPTIMA data versus your internal expectations going into ASCO, how did this data match up with sort of your base or your bull case? And how is that informing the size and strategy behind the early launch investment?

Maybe I'll give my [indiscernible] and others do. But for me, I mean, pristine outcome, I would call it of those curves and the results and the fact that 2/3 of patients can avoid -- safely avoid chemotherapy is the outcome, we were hoping for that outcome.

It was a non-inferiority study, but the reaction to the outcome has been even more profound than I probably expected myself. I don't know if you would agree with that.

Yes. I would love to say that it all went to plan, but it was better than what we expected. I will -- the only thing I will add is that when we decided to start the development work on the rollout of Prosigna as an LDT, it preceded our understanding or knowledge of what was going to happen with the trial.

So we made a bet and it worked out well. For us, the risk of not having this test available if this data read out positively, knowing what it could do for us was just too big to bear. So we thought this was the prudent thing to do.

Our next question is going to come from the line of Mike Matson with Needham & Company.

This is Joseph on for Mike. Congrats on the data. Maybe just a quick one to confirm on the launch strategy and sales force expansion. It sounds like you guys have already done a little bit of hiring over the past 18 months or so.

And it does sound like maybe the launch strategy, you guys are targeting KOLs at first and expanding from there. So could you maybe just add some more color on that just in terms of the territory expansion for Prosigna? Should we think of this as like a multiyear project? Or is it maybe a little bit more aggressive on that? And then I have 2 follow-ups after that.

Yes. I'll let John talk about the approach there and the work that's already been done in his commercial team. What I would say is we retain full optionality.

We can dial up and dial down as needed, but most likely dial up, frankly, depending on how this goes. Our investment in the commercial activities here, and we're poised ready to do that. As John tells us he needs that investment. John?

Yes. I mean one of the things I'm exceptionally proud of is just the team that we've built to start. Every one of these folks that we've brought in quite purposefully has been exceptionally seasoned, very clinically and technically knowledgeable so that they themselves are player coaches.

And so the rollout of this team always had in mind sales force expansion. And there's a very prescriptive process that's very data-driven, where we know exactly how much revenue in a region requires us to then split that region and bring on more headcount. So we'll do that in a very prudent manner in accordance with the best practices that have been set in the other business units.

Okay. Yes. That's clear. And then if we could maybe go back to, I think it was Slide 16, just outlining the clinical evidence and the future and ongoing studies. I'm just kind of wondering exactly what the bars mean. I guess each bar is a study, but just in terms of the different categories, the test comparisons, it looks like you have there one ongoing, one in analysis. I'm just wondering maybe when would those read out? And then similar question for the clinical predictive.

Can you maybe walk through which of those therapies are included in there? Obviously, you have chemotherapy with OPTIMA and maybe some other studies, there's radiation therapy. I guess these studies are that are outlining predictive benefit, but are there other classes of therapies in that section? And then just last question. How do you guys expect the 10-year data from the OPTIMA trial, I guess, more or less 5 years from now to be taken? Do you think that could be another inflection point just given the 10-year data available from, let's say, Oncotype?

Yes, great question. And I'll start with like a high level on the evidence chart, and then I'll hand over to Phil to get into a little bit more specificity. And then Iain, if you don't mind, handling your outcome data there.

So this is a grid that we share for or a chart we share for all of our tests we have, one for Decipher. And we've recently been doing one of these for Afirma as well, and it seems very appropriate to show the wall of evidence as we call it, for the Prosigna test, where OPTIMA fits in and how much is in progress outside of the already published studies.

And I think one thing to really remember here, again, this is our same platform as Afirma. So we're going to be able to provide, as John mentioned in his prepared remarks, access to the research tool, which, again, it fuels a better understanding of disease. It fuels the generation of new studies and evidence and then that ultimately gets that flywheel turning. Phil, do you want to talk about specific maybe what's on the ground here in the future?

Yes. So as we discussed in the beginning of the call, Prosigna is not a new test. It's been available as an IVD and there's been keen interest including it in clinical studies.

And what you see in the kind of evidence, I would say, reflects the strong history of studies supporting the prognostic strength of Prosigna across different indications, whether it's lymph node negative, lymph node positive, premenopausal, postmenopausal. We've also had studies that look in the neoadjuvant setting as increasingly for higher-risk patients, people want to institute therapy prior to surgery.

And the slide reflects our ongoing portfolio as now we're moving towards running those trials through our laboratory and Prosigna has run on our transcriptome, and that will further add to the information. The portfolio reflects studies that will be coming out over the next few years. As with all this work, we have a cadence and look forward to making meaningful contributions to San Antonio, ESMO Breast, ASCO, and we can review with you the specific outputs.

One thing I did want to mention and a little bit of a follow-up to the prior question, and it was discussed previously is like we are now also launching into another large prospective trial with OPTIMA Young that's being run by unicancer.

And it has to do with continued interest in really understanding the full benefit for premenopausal women. That does include up to 9 nodes. So that will add further evidence to the use of Prosigna to identify women who can safely avoid chemotherapy provided they have a low risk of recurrence. And I also think part of the portfolio of studies that will come out will be the continued follow-up of the OPTIMA study as this was a time-dependent analysis that met all criteria. But Iain, maybe you can talk to what your expectations are as we see over the next 2 years and as we get towards 10 years follow-up for that group.

Yes. Thank you. So this was a time-driven analysis when all patients have had at least 1 year of follow-up. The median follow-up was 4 years.

And so clearly, follow-up is ongoing for all participants. As to what things may look like at the 10-year point, I mean, unfortunately, we will see more events as recurrences do continue to occur. We would expect to have tighter confidence intervals around our point estimates. There's no reason to think the actual estimates themselves should change in any significant way.

The question is important because with ER-positive breast cancer, we always talk about the need for long follow-up because this disease has a long natural history. However, for the specific question we're addressing, which is whether or not to deliver chemotherapy, the key point is we know from prior meta-analysis that chemotherapy very much exerts its effect over the first 5 years. If we're not seeing any difference at the 5-year time point, then we would not expect to see a difference that goes with time.

And I think one final note is in the ER-positive group, there's keen interest in really understanding the use of CDK4/6 inhibitors.

In the OPTIMA study, it was a relatively small proportion that received CDK4/6. Just that has to do with the timing of when the therapy became available, but we are engaged in multiple studies to look at the interaction of PAM50, specifically Prosigna with CDK4/6 treatment. There was some discussion of a retrospective analysis of the NATALEE trial immediately following the results of the OPTIMA study. But Iain, what are your thoughts on CDK4/6 in this group?

Yes. So I think approximately 8% or 9% of patients in OPTIMA did receive CDK4/6 inhibitors, and that just reflects the point at which these agents became available relative to our recruitment from 2017 through to 2025.

I think the question you pose to what extent this data informs patients switching for CDK4/6 inhibitors is very important. I think we don't have any definitive answer on that yet, but it's certainly a really important question area of interest.

Yes. And that's where our flywheel where we'll engage in the RUO-only grid with investigators to further explore that question.

Our last question is going to come from the line of Jacob Dodd with Morgan Stanley.

This is Jacob on for [ Cowen ]. Question on ENZAMET. Growth in Decipher for metastatic has already been impressive since the December launch.

But how should we think about the ENZAMET results as an incremental tailwind to volumes from here? And what milestones in guideline inclusion and broader coverage for Decipher, what do those look like from here in metastatic specifically?

Yes. Thank you. Yes, it's an important study. It helps to resolve this question, as we've mentioned earlier, about the appropriate use.

The biomarker-driven use of triplet versus doublet therapy. I see it as an incremental tailwind to gain further adoption, which will wait on the inclusion into guidelines to drive adoption even beyond that. So it's an evolving story.

And this is a story that we did contemplate when we gave the guide most recently in May because, obviously, we have awareness is coming on the side.

Thank you.

Ladies and gentlemen, this will conclude today's question-and-answer session. This will also conclude today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

Good day and thank you for standing by. Welcome to Veracyte First Quarter 2026 Financial Results Webcast Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Kelly Gura, Director of Investor Relations.

Good afternoon, everyone, and thank you for joining us today to review Veracyte's First quarter 2026 financial results.

Joining me on the call are Marc Stapley, our Chief Executive Officer; and Rebecca Chambers, our Chief Financial Officer. Dr. John Leite, our Chief Commercial Officer, will also be available for Q&A. Earlier this afternoon, we issued a press release detailing our first quarter financial results, and we posted an accompanying presentation in the Investors section of our website.

Before we begin, I'd like to remind you that statements we make during this call will include forward-looking statements as defined under applicable securities laws. Forward-looking statements are subject to risks and uncertainties, and the company can give no assurance they will prove to be correct. Additionally, we are not under any obligation to provide further updates on our business trends or our performance during the quarter.

To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Veracyte files with the Securities and Exchange Commission, including the most recent Forms 10-Q and 10-K.

In addition, this call will include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures are included in today's earnings release accessible from the Investors section of Veracyte's website.

I'm also pleased to highlight Veracyte's newly redesigned website, which makes it easier to access information on our test portfolio, including a publication search tool to help navigate our extensive and growing clinical evidence base.

I will now turn the call over to Marc Stapley, Veracyte's CEO.

Thank you, Kelly, and thank you all for joining us today. We had an excellent start to 2026. In the first quarter, we delivered strong double-digit revenue and volume growth, exceeded our profitability expectations and continued advancing key catalysts that position us well for long-term growth. This quarter highlights years of disciplined execution that have transformed Veracyte into a stronger, more focused, scalable company.

Five years ago, we set out to make Decipher commercial success, grow our core franchises, expand operations, enhance clinical evidence and build a strong pipeline. We revitalized Afirma, made Decipher the top prostate cancer gene expression test, increased lab capacity threefold, improved turnaround time and the no result rate and surpassed a 25% adjusted EBITDA margin. Today, Veracyte is a diversified profitable company with a unique platform, multiple growth drivers, expanding clinical evidence and strong clinician relationships, all achieved through consistent strategic execution.

Now we believe we're approaching an inflection point that will shape the next five years for Veracyte. We're on the cusp of our two most significant product launches since Afirma. First, Prosigna LDT, supported by the OPTIMA trial with a key presentation at ASCO in June; and second, TrueMRD launching initially in muscle invasive bladder cancer.

Together, these launches will expand our addressable market, extend our platform into new clinical settings and position us for what we expect will be an even more transformative next five years for Veracyte and the industry. I will spend time discussing both of these growth catalysts shortly. But first, turning to our core business.

Starting with Decipher. Since our acquisition in early 2021, the business has delivered consistent growth of more than 20% quarter after quarter. That momentum continued in the first quarter as we delivered approximately 28,000 tests, representing 24% year-over-year volume growth.

This strong performance was driven by continued expansion in ordering providers and orders per physician, and it reflects Decipher's differentiated position as the only gene expression test supported by high-quality clinical evidence and inclusion in NCCN guidelines, advantages that continue to drive adoption across the full spectrum of prostate cancer risk.

Over the last few quarters, we've seen particularly strong traction in advanced disease, where we believe there remains significant opportunity for Decipher. In the first quarter, we delivered nearly 30% growth across high-risk categories, including radical prostatectomy, biochemical recurrence and metastatic disease. As we see more evidence supporting the use of Decipher in patients with advanced disease, we expect to see continued growth over time.

For example, we're excited about upcoming results from the ENZAMET Phase III trial, which will assess Decipher's ability to identify metastatic patients who benefit from triplet therapy. Those data will be featured in an oral presentation at ASCO later this month.

ENZAMET is one part of a broader evidence pipeline that continues to advance. Four Phase III trials evaluating Decipher Prostate in treatment intensification and de-intensification have now completed enrollment, including the GUIDANCE trial, which reached that milestone in the first quarter meaningfully ahead of schedule. GUIDANCE includes more than 2,000 patients and is designed to evaluate how the Decipher score can function as an integral biomarker to guide treatment decisions for men with unfavorable intermediate risk prostate cancer.

PREDICT-RT has a similar goal in high-risk disease. These studies move beyond prognostic validation to prospectively demonstrate real-world clinical utility in forming treatment choices. We believe they can support high-level evidence standards for guideline and coverage.

While advanced disease is a compelling growth vector, we also continue to see physicians leveraging Decipher in the low-risk setting. Since launch, we've delivered results for more than 80,000 patients in this population, creating a substantial real-world evidence database that continues to inform clinical utility. We believe there is a long runway to expand Decipher's role in active surveillance, supported by a growing body of evidence.

Recent data published in European Urology Oncology demonstrated Decipher's ability to stratify risk among patients undergoing active surveillance. And we were encouraged to see enrollment completed in G-MAJOR, a large prospective Phase III randomized study evaluating how gene expression classifiers can inform active surveillance decisions.

Taken together, these achievements and our robust pipeline of ongoing studies reflect more than a decade of sustained investment in evidence generation and position us for a steady cadence of high-quality data readouts over the coming years.

As our evidence base expands, we're also enhancing our clinical offerings. Through evidence generated using our Decipher GRID research use-only database, we're incorporating additional predictive biomarkers, including PAM 50, PORTS and PTEN. Over time, we plan to add select biomarkers to the Decipher clinical report to further support informed decision-making in high-risk and advanced prostate disease.

We are also advancing complementary initiatives in digital pathology and AI-powered analysis, which we view as complementary to molecular profiling. As previously shared, we've been scanning our Decipher database and are close to digitizing all historical slides for U.S. patients, more than 350,000 images. We plan to leverage this extensive data set together with whole transcriptome data in collaborations with leading academic centers to better define where these technologies can add value in clinical practice.

Across recent urology conferences, we have seen the field shifting toward biology-driven treatment strategies for bladder cancer with Decipher Bladder emerging as a natural extension of our platform. This momentum will be on display at the upcoming AUA Annual Meeting, where six studies will be presented highlighting our Decipher Bladder portfolio's ability to advance personalized care in bladder cancer, including insights generated from our GRID research use-only database. These presentations build on the strong Decipher Bladder data shared at ASCO GU and support the early but growing adoption we're seeing in the field.

Overall, we're very pleased with Decipher start to the year. We believe the franchise is well positioned with unmatched scale, depth of evidence and commercial reach in urology with only one in three men with prostate cancer in the U.S. currently benefiting from the insights that Decipher offers against the spectrum of disease, we believe it can continue to be a durable long-term growth engine, and we see meaningful extensibility into bladder disease as an incremental growth driver in the coming years.

Turning to Afirma. We delivered approximately 17,200 tests in the first quarter, representing 12% year-over-year volume growth. This reflects both solid demand across our customer base and strong execution on operational initiatives that improve patient access to actionable results. As we've discussed previously, we completed the full transition to our V2 transcriptome workflow in the fourth quarter, establishing a more scalable and cost-effective platform.

Importantly, this transition has also enhanced our ability to deliver definitive results for a broader set of patients, including historically challenging low-input RNA samples. That momentum continued in Q1 with our no result rate improving both sequentially and year-over-year.

As a result, more patients and physicians received actionable Afirma results to guide clinical decision-making, contributing approximately 400 basis points to our volume growth in the quarter. Encouragingly, we saw healthy new account wins, increased utilization and a high number of ordering providers in the quarter, reflecting strong engagement and the effectiveness of our strategy.

We remain focused on expanding the already robust clinical evidence foundation supporting Afirma. Through our Afirma Grid research use-only database, we continue to generate a steady cadence of new data and incorporate additional molecular signatures into the latest version of Grid. We believe this growing data set increasingly reinforces Afirma GRID as a critical research use-only tool to advance the understanding of thyroid nodules and thyroid cancer.

Importantly, our commitment to evidence-backed research translates into real-world clinical and economic impact. A recent independent study analyzing Medicare payment data from 2016 to 2023 found that increased adoption of Afirma was associated with a meaningful reduction in thyroid surgery rates among Medicare beneficiaries.

These findings highlight how Afirma test results help physicians more confidently roll out surgery when it isn't warranted, supporting better informed treatment decisions, reducing overall health care costs and helping patients avoid unnecessary surgery in its long-term consequences. The study also reinforced Afirma's position as the leading molecular test for indeterminate thyroid nodules.

Taken together, Afirma's improving operational performance, expanding clinical evidence and demonstrated real-world impact give us confidence in the franchise's ability to sustain healthy growth in 2026 and beyond. We believe our Afirma test remains well positioned to deliver value for patients, physicians and payers while serving as a stable and durable growth engine within our portfolio.

Building on the momentum across our core franchises, Prosigna LDT represents one of two major upcoming product launches that we believe marks an important next phase of growth. Prosigna is built on the well-established and scientifically validated PAM 50 signature and provides deeper insights into the biological classification of breast cancer.

By reporting the risk of recurrence using intrinsic subtype and proliferation scores to get the 10-year probability of distant recurrence, Prosigna is designed to inform treatment decisions at a critical point in a patient's care journey. We see a significant opportunity in the U.S. market, where approximately 225,000 breast cancer patients are diagnosed annually with early-stage hormone receptor positive disease and are eligible for Prosigna testing.

This is a large clinically meaningful population where improved biological insight has the potential to enhance outcomes and help avoid unnecessary treatment. Clinical evidence will be a key driver of adoption as it always is, and we look forward to the upcoming presentation of results from OPTIMA, a large Phase III randomized prospective trial enrolling approximately 4,500 patients.

I'm pleased to share that this presentation has now been confirmed on the agenda for ASCO later this month. If positive, we believe these results could be practice changing and further strengthen Prosigna's already robust clinical foundation. And beyond OPTIMA, there are additional studies underway that we expect will continue to expand the evidence base and support share gains over time. We remain on track to commercially launch Prosigna LDT by midyear. In preparation, we're scaling our commercial and medical science liaison teams and deepening engagement with key opinion leaders.

Our second major upcoming launch is TrueMRD, our whole genome sequence-based MRD platform and a key step in expanding into minimal residual disease. We remain on track to launch TrueMRD in MIBC by the end of the second quarter and plan to leverage the strength of the Decipher brand and our established commercial channels in urology and radiation oncology, where we believe 70% of patients with MIBC are seen. Our initial focus will be on recurrence monitoring in patients who have completed curative intent therapy, representing the majority of patients treated in this setting.

We believe the initial TrueMRD test launch addresses a significant unmet clinical need and represents an important proof point for our broader platform as we enter the large and growing MRD market. Early data and strong engagement from leading academic institutions reinforce our confidence that our TrueMRD platform's differentiated whole genome approach positions us well to drive adoption and capture meaningful share over time.

The TrueMRD platform is highly scalable with applications well beyond bladder cancer. We're building an expanding body of clinical evidence with several studies completed across bladder, colorectal and lung cancer as well as additional indications. Our pipeline continues to grow with more than 10 studies currently in testing or analysis, 12 in contracting and 29 in active planning, spanning muscle invasive and non-muscle invasive bladder cancer, breast, lung, colorectal, prostate and kidney cancer as well as immunotherapy treatment response.

We're also seeing growing external validation of this approach. At the recent American Association for Cancer Research Annual Meeting in San Diego, we hosted a spotlight theater focused on the clinical utility of the TrueMRD platform for tumor-informed ctDNA analysis. The session was well attended, underscoring the strong and growing interest in our differentiated approach to MRD.

Investigators presented previously shared data from multiple large clinical trials, including TOMBOLA, UMBRELLA, and NEOBLAST. As a reminder, Neoblast is the first prospective interventional study utilizing TrueMRD results and is designed to assess the feasibility of active surveillance in bladder cancer patients with negative ctDNA.

As we expand our portfolio and advance our pipeline, we're also investing in the leadership and organizational capabilities required to support our next phase of growth. I'm pleased to welcome Dr. Kevin Haas, who recently joined Veracyte as our Chief Development and Technology Officer. Kevin brings deep expertise in product innovation, development and software with a strong track record of translating complex science into clinically impactful solutions. His leadership will be instrumental as we continue to advance our product road map and extend our reach to more clinicians and patients globally.

I'd also like to welcome Tracy Ward, our new Chief Human Resources Officer, who will play an important role as we scale the organization in helping us to grow our culture and people, key ingredients to our success.

In closing, we believe Veracyte is well positioned with a long runway to deliver durable double-digit growth through execution of our long-term strategy. None of this would be possible without the execution of our team, and I'm proud of what they've accomplished as we reach more patients than ever before.

With that, I'll now turn the call over to Rebecca to review our first quarter financial results and walk you through our outlook for 2026.

Thanks, Marc. The first quarter was a very strong start to the year and reflects the disciplined execution and scale we've built over the past several years.

We delivered total revenue of $139.1 million, representing 21% year-over-year growth. Total volume increased to approximately 47,600 tests, up 17% compared to the same period in 2025, and we generated $35.2 million of cash from operations, ending the quarter with $439.1 million in cash, cash equivalents and short-term investments.

Testing revenue for the quarter was $135.1 million, an increase of 26% year-over-year, driven by Decipher and Afirma growth of 30% and 21%, respectively. Total testing volume was approximately 45,200 tests, representing 19% growth year-over-year. Testing ASP was $2,986, up 6% compared to the prior year and inclusive of approximately $4 million of prior period collections or PTCs. Excluding PTCs, normalized ASP increased 3% to $2,900, driven by continued strong collections. 

Turning to gross margin and operating expenses. I'll focus on our non-GAAP results. Non-GAAP gross margin was 75.7%, up 350 basis points year-over-year, driven by strength in our testing business and an improved business mix. Testing gross margin increased 230 basis points to 76.4%, reflecting operational efficiencies from our V2 transcriptome workflow and higher prior period collections in the quarter as well. Non-GAAP operating expenses increased 7% year-over-year to $64.6 million.

As Marc highlighted, with the addition of our new Chief Development and Technology Officer, certain IT expenses associated with software development and project management previously reported in G&A have been moved directly into R&D as they are fully dedicated to our product development objectives. As a result, R&D expense increased $8.5 million year-over-year to $24.1 million, driven by our organizational changes and clinical investment, partially offset by a reduction of allocated expenses.

Sales and marketing expense increased $2.2 million to $24.7 million, reflecting hiring and investments to support our existing portfolio and prepare for the upcoming launches of Prosigna LDT and TrueMRD in MIBC. G&A expense decreased $6.6 million to $15.8 million, primarily due to the organizational changes previously mentioned. 

From a profitability standpoint, we delivered GAAP net income of $28.7 million in the quarter. Adjusted EBITDA was $42.8 million or 30.8% of revenue, up 73% year-over-year and well above our long-term target of 25%. This level of profitability underscores the operating leverage we've built over the last five years and provides the flexibility to continue investing in our growth drivers while generating meaningful cash. 

Turning to our 2026 outlook. We are raising full year total revenue guidance to $582 million to $592 million, representing 13% to 14% year-over-year growth compared to our prior range of $570 million to $582 million. This reflects expected testing revenue growth of 16% to 18%, excluding the contribution of new tests, with Decipher revenue growth of approximately 20% and Afirma revenue growth in the high single-digit to low double-digit range, benefiting from improvements in our no result rate.

As a reminder, our guidance excludes any potential prior period collections in future quarters. Given the strong start to the year, we are also increasing our full year adjusted EBITDA guidance to greater than 26%. This outlook reflects our updated revenue expectations and continued investment to support our growth initiatives throughout the year. As always, while we plan expenses on an annual basis, adjusted EBITDA may fluctuate quarter-to-quarter due to the timing of investments and PTC variability. 

In closing, the financial performance we delivered this quarter reflects the significant transformation Marc described, five years of disciplined execution that have created a much more scalable, profitable and resilient business. As we approach the next inflection point with multiple important product launches ahead, we are well positioned to build on this momentum, further strengthen our financial foundation and continue expanding our impact. Most importantly, we remain focused on supporting more patients across their cancer care journey while creating long-term shareholder value. 

We will now move into the Q&A portion of the call. Operator, please open the lines.

[Operator Instructions] Our first question comes from the line of Puneet Souda of Leerink Partners.

Maybe, Marc, Rebecca, I just wanted to understand on the no result rate and the improvement that you're getting from transcriptome. Could you talk about what's the ceiling there? How should we think about the next set of quarters as that benefit continues to both give you upside on the top line as well as the bottom line?

Yes. Thanks, Puneet. Happy to. I'll start and then Rebecca will talk about the financial impact of it. But just to remind everybody what the benefit of the no result rate is actually coming from. As you know, we transitioned our entire Afirma workflow to the new UAE, we call it the version 2 transcriptome. And that was kind of a staged launch in Q4 with a full launch by the end of the quarter. And now, of course, we're seeing our first quarter of full benefit from that.

And frankly, it's surprising us in terms of how much better that particular assay is, of being able to recover those samples that previously would have otherwise been lost. And I think most importantly, there's a great financial impact. But most importantly, there's a real patient and physician customer impact of being able to provide a result and an answer more often than we were previously. And so yes, I couldn't be happier or more proud of our team for having accomplished that project.

By the way, it was not a simple project. It was a long and complex project and, the great benefit of it is that same platform is now available by our other tests and, the first and next test that use post Afirma is actually going to be our Prosigna test. 

Now I'll hand over to Rebecca to talk about the financial impact.

Yes, happy to. Thanks for the question, Puneet. During the quarter, it was a 400-basis point good guide to volume growth. And so, I do think that's about as good as it's going to get. It's obviously way above our expectations that we cited in our original guide coming into the year for Afirma.

If you recall that original guide included a no result rate expectation of 0% to 2% for that mid- to high single-digit Afirma revenue growth guide. Now we've updated it to be mid -- I'm sorry, high single-digit to low double-digit growth, and that includes a 2% to 3% assumption. 

One thing to note on that, the reason why that assumption is below what we saw in the fourth quarter, was because there's two main factors. One, no result rate tends to spike over the summer months with heat and RNA degradation accordingly. And two, we do have a comp from the fourth quarter that as we started to transition and see the benefit, we cited the benefit in the fourth quarter of '25.

And so, for those two reasons, for the full year, we're now expecting a 2% to 3% good guide from no result rate. That flows down at 100% and obviously, huge benefit to patients, as Marc cited, and also a huge thank you to the team who has just done an amazing job on this project, and we're excited to launch Prosigna on the back of the backbone of the new transcriptome as well here shortly.

Our next question comes from the line of Tycho Peterson of Jefferies & Co.

This is [ Lauren ] on for Tycho. A couple from me. So, first, for the momentum in testing revenue. How should we think about the exit philosophy of this business heading into the launch of the new products? I know you're not baking into the revenue guidance raise, but kind of just in terms of growth in the back half of the year?

And then second, around the competitive moat for Decipher, how is the sales team, in particular, kind of positioning Decipher against newer, potentially lower-cost digital pathology or AI-based competitors?

Yes. Happy to deal with both of those. So, on the new product introductions and the momentum in the business, as we've said, we're not including our new products, Prosigna LDT, in our guide for this year on the basis that we're going to obviously manage those launches mostly for good customer and patient impact and then scale as we start to see the level of interest and our ability to functionalize and operationalize that in the lab. 

But in terms of how you think about the ramp going forward, I think it's hard to particularly call off any particular analog here for these two products. I mean, Prosigna, we're launching that into a market that is very well penetrated. And so, what we don't have to do, but we've had to do with all of our other tests, is educate physicians on why molecular diagnostics makes sense in this particular patient population.

What we do have to do is, on the back of strong evidence, demonstrate why Prosigna is a better test for patients. And so that's going to obviously have a different ramp and a different strategy than a brand-new test in the greenfield. Through MRD, of course, while people call it a competitive market, it's fairly well underpenetrated at this point. And so, there's still a lot of education to do, particularly in the muscle-invasive bladder cancer setting.

On the competitive moat around Decipher, it's the same as we've always said, whether you're talking about DPI or other molecular diagnostics or anything else in the future that may come to the ports to provide prognostic or predictive information to patients in a prostate cancer setting, we have so much evidence that's been generated for Decipher over more than a decade.

And remember, most of these studies you have to have started that long ago in order to read out in this particular disease state, which creates quite a competitive moat. It's actually -- people would have had to have started those studies a long time ago. 

Moving specifically to DPAI, I think it sits in the category of it's a recent test. It's launched in the marketplace. I think at this point, customers are quite skeptical, especially when they have discordant results, which have been demonstrated over and over again. 

And so, our answer to that is scan every slide that we've got, and I mentioned 350,000 of those, make that information, along with the GRID transcriptions, available to the community to do the appropriate research and demonstrate the utility of that particular test alongside molecular diagnostics. And remember, physicians don't tend to trade one thing for another. More information is better as long as it's been clinically proven. So that's our strategy.

John, I know you might want to add something there on the competitive landscape for Decipher and our other tests.

Yes. Anything else I would add would be repetitive, Marc. I think you hit everything. The only thing that I would say is that on the pricing side, I've not seen that pricing alone motivates a physician. All the other things would have to be true first and then the pricing would be a very late consideration in terms of driving the adoption or selection of a test.

Our next question comes from the line of Doug Schenkel of Wolfe Research.

So the first topic is really a follow-up on Decipher. This is the 15th consecutive quarter of 20% plus volume growth. The market is about 33% penetrated. I think incidence growth is around 6% per year. As we sit here today, how do you think about the multiyear sustainability of 20% growth? And can you disaggregate how you're going to be able to do that? How much of it is deeper penetration of existing practices, opening up new practices, and/or share capture? So that's the first topic. 

The second is really pivoting to OPTIMA and the upcoming ASCO readout in June. One, I'd love for you to just help us understand what's a good enough result and what would be good enough to justify really leaning in aggressively on this launch in the back half of the year. And if things do go well here, OPTIMA enrolled patients with up to nine nodes, Oncotypes approved for up to three nodes. How do you think about this in the context of expanding the TAM and potentially getting a differentiated label and differentiated reimbursement?

Great. Thanks, Doug. I'm actually going to take the first question real quick and then ask John if he wants to add anything to that, and then he can talk to you about OPTIMA as he's extremely close to our launch plans around that, as well as our strategy there.

So yes, if you think about the Decipher growth, thanks for pulling out the consecutive and long-term growth that we've been seeing there. Yes, Decipher has been on this very steady volume growth, obviously, over time, penetrate more into various risk categories, and the denominator gets larger, but the volume growth has been consistently large year-over-year and growing. And we seem to be very much on that trajectory still.

And I think given the fact that we're only about 1/3 penetrated. To me, what that says is 2/3 of men dealing with prostate cancer are not getting the benefit of the insights that Decipher provides. And with the level of evidence in the NCCN guidelines supporting that test, they should.

The fact that we cover every indication from low intermediate, high, very high metastatic biochemical recurrent RP with evidence now, every single one of those potentially overtime should be getting the test. So that's why I think we continue to see growth. I'm not guiding to whether it will be 20% or not in the future. But in terms of volume, I don't see any reason why it would slow.

Across the categories, intermediate is the largest penetrated and is becoming more. But as I cited on the call today, we saw 30% quarter year-over-year growth in the first quarter in the high-risk categories. And we've got multiple studies coming out in the next few years that cover low-risk and active surveillance as well. So those are the things that we're going to continue to drive growth in Decipher for, I think, many years to come.

And also, we're quite excited about the ENZAMET trial that will be for the metastatic population here at ASCO as well.

Yes, there's a steady drumbeat of evidence around Decipher that keeps it going. On OPTIMA, John, do you want to answer those questions?

Certainly. So, thanks, Doug, for the question. I think, unfortunately, the bar is quite high on OPTIMA. It will require a positive outcome on the primary endpoint, which is a demonstration of non-inferiority against the control for the predictive claim. And we've said all along, we believe we need to have that data to merit Level 1a evidence, that would drive, we hope, inclusion into the guidelines so that we can minimally be on par with a product on the market today and I hope to differentiate with the latest clinical utility data and the performance of the test.

Thanks, John. And Doug, I think the nodal status there is an important component. And I think -- but more than that, it's the breadth of what the OPTIMA study actually addressed and how it dealt with both the pre-menopausal and post-menopausal as well. And so, it's a very well-designed, well-engineered study. And of course, our launch is dependent on it reading out appropriately and favorably, and we hope that will be the case on the 30th of May, which is Saturday coming up at the end of the month.

And importantly, also, the hiring is going quite well. We're building the team. And if we saw positive OPTIMA readout, guideline inclusion, publication, all that stuff, we would turn to be more aggressive there, Doug. I would think that would be kind of an exiting the year sort of decision. But we're excited about the opportunity for Prosigna to be a multi-year-growth driver here for the company going forward.

Our next question comes from the line of Subbu Nambi of Guggenheim.

You're raising guidance by a few million more than the beat, and the guidance still does not include the impact of the new test. It sounds like most of the raise is for Afirma as you reiterated your Decipher revenue growth outlook of approximately 20%. Is there any additional detail you can share as to why -- what are you expecting now for Decipher volume and ASPs?

Yes. Thanks for the question, Subbu. You're absolutely right. So, we raised the guidance by the beat and then a little bit more at the midpoint for the raise in Afirma. Decipher plus or minus a day of volume at any given point in time is kind of what we expect. And this quarter was no different. It was a good quarter. But the outlook for the rest of the year is kind of around that 20% guide that we had coming into the year.

In prior years, we had a really big step-up sequentially in the second quarter for Decipher given the timing of guidelines. And this year, the timing of guidelines was in the back half of the prior year. And so that is one factor we have taken into account in this guide on a sequential basis.

Competitively, we remain incredibly strong. The outlook for Decipher is immensely strong. ASP, as I cited, on the call was up meaningfully ex-PTCs. And so, I think when it comes down to it, the trends of the business are immensely strong and the raise of the guide reflects those trends as well as the fact that we only have one quarter under our belt.

And one additional question. As you think about your next commercial indication for TrueMRD beyond MIBC, you mentioned studies have been completed in MIBC, CRC, lung and ongoing studies in other indications. Can you help us understand where are you in the process of selecting the next indication? And what your strategic priorities will be for the next indication?

Yes. As I mentioned on the call, we've got a lot of studies in progress, and that keeps growing. And we have a regular strategic planning process. Our next kind of readout on that and coming to get a huddling on that is in the summer, in July, and we'll continue to advance our thinking around that there. In the meantime, our priority remains getting our MIBC product launched, getting our reimbursement coverage for that and then starting to penetrate that muscle invasive bladder cancer market. So, no new updates on the next launch and when that will be.

And again, as I said multiple times, I think typically, we won't necessarily give what's coming when because, again, we don't want to do R&D in public as things change so often, and we may flip the order of things. And sometimes that can be viewed as something is negative changing when, in fact, it's not, we have better opportunities. We're constantly trading off here, and it's all going to be driven by the evidence and timing of the evidence coming out.

Our next question comes from the line of Mason Carrico of Stephens Inc.

In terms of the Prosigna LDT, if the OPTIMA study reads out in June, do you think it could be published before the NCCN breast cancer panel meeting that I think is in August so that it could be included in that review?

I mean, I don't know, John, if you have any more information, but I don't think so. I think that might be a little bit too optimistic. And remember, the way that the -- I mean, let me be clear, the publication might come out before then, but whether it influences the guidelines, we just don't know. And frankly, again, if you look at our past history and other indications, we haven't needed guidelines to get good traction. Guidelines have been an additional catalyst further down the road.

John, anything else you got on the publication or guidelines for breast.

You answered it appropriately. We just don't know. I think if the publication comes out early enough, it's entirely possible with a high enough impact that the NCCN would consider late-breaking data and have a discussion that's sufficiently robust to perhaps include it into guidelines, but that's purely speculative. It's not outside the realm of possibilities, but we don't know what they may or may not do.

Got it. And then were Decipher volumes impacted at all in the quarter by weather? And if so, could you quantify that impact?

Yes, Mason. So, the weather was slightly worse than it was versus the prior year, but it got primarily caught up during the quarter as we exceeded our expectations during the quarter. And so, I don't want to quantify it. We've always said plus or minus a day of volume, which tends to be 400, 500 samples or so, can fall in any given side of the quarter. And I think we were pleased with the performance of the Decipher franchise during the first quarter this year despite challenging weather.

Our next question comes from Kyle Mikson of Canaccord Genuity.

Congrats on the great quarter. On Afirma, I guess, like on the pricing stuff, can you just talk about prior period collections for that test specifically and how you sort of think about visibility and ASP upside to that test because it seems like volume growth is relatively could be steady. So, I think that pricing could be the one variable perhaps. But let me know if I'm wrong.

Yes. So, volume growth -- sorry, the guide of high single digits to low double digits includes the Q1 prior period and the Q1 prior periods for Afirma was about half of the total $4 million of prior periods, which is much more than usual. We don't assume prior periods in our guide going forward. Ex prior periods, Afirma ASP was up around 100 basis points and Decipher was up above that to get to that blended average of three.

So, I don't think there's as much room on Afirma, just given the duration of how long it's been on the market and the 280 million covered lives here. There's more upside in Decipher over a multiyear period and that ex-PPCs is what manifested during the quarter.

Awesome. And then on, you guys have been profitable for a while. You have a bunch of cash, just really outstanding EBITDA margins quarter in, quarter out. So how do you guys think about capital allocation going forward? And with respect to M&A, what would be some interesting -- what would be some attractive attributes to a potential target? Like is the large TAM important? Is it nearing reimbursement critical? Just maybe talk about that a bit.

I think no real change in our philosophy there. We're always active in the market with. So, we look at everything, but we're quite discerning. For us, we have a strategy. It's oncology-based strategy. It's whole data-driven strategy as well. And so, things that fit with that would make most sense. And that doesn't mean we wouldn't do other tuck-ins as well and technology plays and things that help us advance that strategy.

But with our financial profile, the strong revenue growth that we're consistently delivering and the strong profitability, we think about if other assets will be dilutive to that, and we take that into account accordingly.

Our next question comes from the line of Keith Hinton of Freedom Capital Markets.

Are you there Keith? All right. I think that -- was that the last question?

Yes. Okay. I am showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Veracyte Fourth Quarter 2025 Financial Results Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Shayla Gorman, Senior Director, Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining us today for a discussion of our fourth quarter and full year 2025 financial results. With me today are Marc Stapley, Veracyte's Chief Executive Officer; and Rebecca Chambers, our Chief Financial Officer. Dr. John Leite, our Chief Commercial Officer; and Dr. Phil Febbo, our Chief Medical and Scientific Officer, will join us for Q&A.

Veracyte issued a press release earlier this afternoon detailing our fourth quarter and full year 2025 financial results. This release and a copy of the presentation we will review during the call today are available in the Investors section of our website at veracyte.com.

Before we begin, I'd like to remind you that statements we make during this call will include forward-looking statements as defined under applicable securities laws. Forward-looking statements are subject to risks and uncertainties, and the company can give no assurance they will prove to be correct. Additionally, we are not under any obligation to provide further updates on our business trends or our performance during the quarter.

To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Veracyte files with the Securities and Exchange Commission, including the most recent Forms 10-Q and 10-K. In addition, this call will include certain non-GAAP financial measures.

Reconciliation of these measures to the most directly comparable GAAP financial measures are included in today's earnings release accessible from the Investors section of Veracyte's website. I will now turn the call over to Marc Stapley, Veracyte's CEO.

Thank you, Shayla, and thank you all for joining us today. Q4 capped off another outstanding year of strong execution for Veracyte with performance across our core businesses that reinforces both the durability of our growth model and the opportunities ahead. I'll review our fourth quarter results, reflect briefly on 2025 and then focus on the growth drivers that give us confidence as we move into 2026.

Fourth quarter total revenue was $141 million, representing 19% growth year-over-year. This performance was driven by continued strength in our core testing business, which grew 21% on strong volume and ASP. Decipher volume grew 21% and Afirma grew 12%, together contributing to 16% total testing volume growth. For the full year, we delivered total revenue of $517 million at the high end of our preliminary range and representing 16% growth.

During the year, we provided clinically actionable information to nearly 170,000 patients with over 800,000 patients served to date. We remain on track to testing our 1 millionth patient later this year, an important milestone for the company and our team that reflects both the scale and impact of our platform. In addition to our strong revenue and volume growth, we executed against all of the key milestones we set for 2025. We drove continued penetration and share gains, launched Decipher for metastatic patients, expanding our presence in advanced disease and generated meaningful new clinical evidence across endocrinology and neurology.

We advanced our pipeline with positive Prosigna outcomes data from the OPTIMA PRELIM study, submitted the technical assessment for TrueMRD and completed enrollment for our NIGHTINGALE lung cancer study. Together, these accomplishments position us well for multiple product launches beginning in 2026.

Importantly, we achieved this while delivering industry-leading profitability and cash generation. Adjusted EBITDA margin exceeded 27% in 2025, not only reaching but surpassing our 25% target more than a year ahead of plan. We also completed key operational priorities, including the restructuring of Veracyte SAS and the full transition of all Afirma volume to the more scalable, lower-cost v2 transcriptome platform, improving our operational efficiency in launching new transcriptome-based tests.

These actions support the sustainability of our financial profile as we continue to invest in growth. I'm extremely proud of our team's focus on execution and innovation, which enabled us to deliver an outstanding year and reach more patients than ever before. The foundation we've built through the Veracyte Diagnostics platform supports a clear phased expansion strategy anchored by a focused set of drivers contributing to near, mid- and long-term growth.

First is the ongoing durable expansion in our core business, Decipher and Afirma, which we believe will support double-digit revenue growth for the foreseeable future. The second phase is our 2026 product expansions with two product launches planned by this summer. We are preparing to launch our inaugural TrueMRD test for patients recovering from muscle invasive bladder cancer, followed by the U.S. launch of Prosigna as an LDT to address early-stage breast cancer patients.

The third phase represents our longer-term commitments, including geographic expansion through our IVD strategy and addressing new cancer challenges across the care continuum. Today, I will focus on the first two phases, our core business momentum and the opportunities ahead with our 2026 launches. Starting with Afirma. We delivered approximately 18,250 tests in the fourth quarter, representing 12% volume growth.

Throughout the year, we saw a steady pipeline of new account wins and increased utilization per account with the fourth quarter continuing this trend. As of year-end, we believe we have grown Afirma to approximately 38% market share with continued opportunity for further penetration. Importantly, as previously mentioned, we completed the full transition to our v2 transcriptome in the lab during the fourth quarter.

Besides being more scalable and cost effective, this new platform enables us to deliver results in challenging cases where we were previously unable due to low RNA. In the fourth quarter, our [ no ] result rate was 2% lower than in the prior quarter, directly contributing to more patients and physicians receiving actionable results to support clinical decision-making. We also saw a steady drumbeat of new publications leveraging data generated from our research [indiscernible] Afirma GRID, which further builds on our extensive body of clinical evidence.

The majority of Afirma-related abstracts and publications in 2025 were GRID-related, reinforcing Afirma's position as not only the standard of care in clinical testing, but also what we believe is becoming the primary research platform advancing understanding of thyroid nodules and cancer. This year, we plan to build on this momentum with an updated version of GRID that includes additional signatures designed to support ongoing thyroid nodule research. Given our recent progress, we're confident in Afirma's ability to sustain healthy growth in 2026 and beyond.

Turning to Decipher. We delivered approximately 27,200 tests in Q4, marking our 15th consecutive quarter of more than 20% year-over-year volume growth. We reached another record for both the number of quarterly ordering providers and orders per physician. In fact, the number of ordering physicians increased 18% year-over-year in Q4, reflecting Decipher's expanding adoption and its role in supporting treatment decision-making. This momentum has been building throughout the year. Of the more than 300,000 prostate cancer patients tested with Decipher since launch, more than 100,000 were tested in 2025 alone.

Decipher is recognized as the only gene expression test with high-quality evidence in NCCN guidelines, which we believe has been an important contributor to this impressive growth. Looking ahead, with the market now penetrated by Decipher at approximately 33%, we remain extremely confident in its ability to sustain strong double-digit growth in 2026 and beyond. This growth outlook is supported by several key drivers. As GRID-enabled research establishes clinical utility for new prostate signatures, we plan to expand our clinical reporting to incorporate these insights.

Our first examples are three new predictive signatures, PORTOS, PTEN and PAM 50 that are now widely recognized by key opinion leaders as having utility based on recently published studies. Patients with higher PORTOS scores have been shown to benefit from higher doses of radiation in both post-biopsy and post-RP salvage settings. PTEN used alongside the Decipher score showed promise in the STAMPEDE study for identifying which metastatic patients would benefit from adding chemotherapy.

And the BALANCE trial, whose results were presented at ASTRO last fall, found that the PAM 50 molecular signature confidently predicts which patients with recurrent prostate cancer may benefit from hormone therapy with apalutamide in addition to salvage radiation therapy. We are working to add these molecular features to the Decipher report as optional insights, providing additional information for men with high-risk biopsy and RP disease, including those with biochemical recurrence.

As a reminder, this patient population has been underserved to date, a trend that we have been focused on improving with augmented clinical evidence supporting Decipher in advanced disease, where its predictive power has been shown to improve patient outcomes. This focus paired with the launch of Decipher metastatic has led to another quarter of more than 30% growth in the combined high-risk RP and metastatic categories, and we believe there remains significant opportunity to expand Decipher's use in advanced disease.

Additionally, we view digital pathology and AI-powered analysis as complementary to molecular analysis with the potential for additional data points to provide a more comprehensive assessment of tumor histology. To support further research, we made our digital pathology services and associated AI models available to collaborators last year and have implemented slide scanning as a standard production workflow.

We have now scanned over 210,000 slides from over 150,000 patients with outcomes data, representing the majority of our historical data set on Decipher. We plan to leverage this extensive database in combination with whole transcriptomes in an expanding number of collaborations with top academic centers to understand the complementary nature of these two data types in order to continue to evolve our clinical offerings. Generating clinical evidence is a core pillar of our Veracyte Diagnostics platform, and we continue to fuel this flywheel.

Decipher Prostate now has more than 100 publications demonstrating its clinical utility and validity across the prostate cancer risk spectrum, plus an additional 100 publications leveraging our research use-only GRID platform. At ASCO GU, data to be presented, including more than 15 abstracts across prostate and bladder cancer, highlight how our platform is contributing to advances in urologic oncology.

Multiple abstracts will showcase the power of Decipher GRID to enable novel research, including studies demonstrating how signatures derived from GRID predict adverse outcomes in men on active surveillance. Additionally, several abstracts will be presented, leveraging real-world data on the usage of the Decipher Prostate score in our patient population, including those with metastatic prostate cancer.

Moving to bladder cancer. Our Decipher Bladder classifier and associated research use-only GRID data is increasingly being integrated into studies that aim to help researchers identify critical signatures to guide the future of bladder cancer treatment. We're seeing strong momentum generating new clinical evidence for this indication with five abstracts highlighting Decipher Bladder at ASCO GU.

We're particularly excited about the findings from the SURE-02 trial, which underscore the importance of molecular subtyping in muscle invasive bladder cancer or MIBC, and support integrating genomic classifiers like Decipher Bladder into clinical trial design and treatment planning.

As the field transitions towards more biologically informed evaluation of novel treatment strategies in bladder cancer, we plan to continue investing in this indication to drive future growth. Collectively, these studies highlight how our Decipher tests are increasingly helping guide clinical decision-making, advance biological understanding and accelerate innovation in urologic cancer care. This momentum in bladder cancer extends to our TrueMRD platform, our whole genome sequencing approach to MRD.

We remain on track to launch our first indication for MIBC in the first half of this year after completing our technology assessment with MolDX to receive reimbursement, which is in progress. We intend to leverage our strong Decipher brand and channel to serve patients that are treated in the urology and radiation oncology setting, which we believe reaches approximately 70% of MIBC cases.

Our initial focus will be on recurrence monitoring in those patients who have completed their initial therapy for MIBC and are not undergoing adjuvant chemotherapy, which we believe is the majority of MIBC patients treated in this setting. We're building a strong and growing body of clinical evidence around our MRD platform. At ASCO GU, TrueMRD will be featured in an oral presentation on a Phase II trial evaluating pembro combined with serial ctDNA monitoring in patients with MIBC that did not undergo radical cystectomy.

In this trial, TrueMRD's whole genome sequencing was used during neoadjuvant therapy at restaging and during surveillance to monitor for residual disease, providing more confidence that the cancer was responding to therapy. The results demonstrate that many patients with MIBC may be successfully treated without bladder removal and maintain very low risk of metastatic recurrence.

These findings highlight how molecular monitoring may support bladder-sparing treatment strategies while maintaining confidence in managing disease. This therapeutic strategy is being prospectively evaluated in the actively accruing NEO-BLAST study conducted at the University of British Columbia.

In addition, there are several other studies that have already been completed across bladder, colorectal and lung cancer as well as other indications. We have a deep pipeline of additional studies underway with 10 in testing or analysis, 13 in contracting and 17 in active planning, spanning MIBC as well as non-muscle invasive bladder cancer, breast, lung, colorectal and immunotherapy treatment response.

TrueMRD is a platform that is extensible into other cancer types, and we plan to launch additional indications each year going forward. Our MIBC launch addresses a clinically important market and will serve, we believe, as a foundational proof point that Veracyte is a credible player in this large and expanding space. With strong engagement from leading institutions and encouraging early results, we believe TrueMRD's differentiated approach positions us well to capture meaningful share in the MRD market.

Turning now to Prosigna, our second major product launch planned for 2026. Prosigna is based on the well-established and scientifically validated PAM 50 signature, which provides physicians and patients with deeper insights into the biological classification of their cancer and the risk of recurrence to help inform treatment decisions. The opportunity in the U.S. breast cancer market is significant with over 300,000 patients diagnosed each year.

Approximately 75% of these patients have early-stage hormone receptor positive disease and would be eligible for Prosigna testing. Clinical data will be an important driver of adoption, and we look forward to the full OPTIMA trial readout, which we expect to be presented at ASCO in June. We believe this data will further strengthen the clinical evidence supporting Prosigna, differentiating it as the next standard in breast cancer prognosis and that numerous ongoing studies will further demonstrate the differentiation of Prosigna in this setting, building on the OPTIMA results.

We believe this body of evidence supports the opportunity for Prosigna to capture meaningful share in this market over the next 5 years. We remain on track to launch our LDT for Prosigna over the summer on our new transcriptome lab workflow, the same analytical platform we have built and fully launched for Afirma.

To prepare for this, we've begun building out our commercial team, starting with appointing a strong leader for the sales force while also growing our medical science liaison team and engaging KOLs. Meanwhile, our talented marketing team is busy working on all of our prelaunch activities, while our fantastic market access team is working on the Medicare and commercial reimbursement coverage. I couldn't be more excited about our two major product launches this year.

The foundation we have built over the last 5 years, including our track record of meeting or exceeding our expectations while expanding our leadership across the cancer care continuum, reinforces the durability of our growth outlook. Our execution across Decipher and Afirma, combined with our ability to navigate through evolving market dynamics reflects the strength and resilience of our operating model.

We are entering 2026 with a clear path to sustained double-digit growth, served by a portfolio of tests in prostate, thyroid, bladder and breast. This momentum positions us to deliver lasting value for the patients we serve, the employees who power our mission and our shareholders. With that, I will now turn the call over to Rebecca to review our financial results for the fourth quarter and full year as well as our outlook for 2026.

Thanks, Marc. Q4 was another exceptional quarter with $140.6 million in revenue, an increase of 19% over the prior year period. We grew total volume to approximately 48,000 tests, a 16% increase over the same period in 2024 and generated $52.6 million of cash from operations to end the quarter with $412.9 million of cash and cash equivalents on hand.

Testing revenue during the quarter was $135.8 million, an increase of 21% year-over-year, driven by Decipher and Afirma revenue growth of 27% and 16%, respectively. Total testing volume was approximately 45,500 tests, an increase of 16% over the prior year period. Testing ASP was approximately $2,984, an increase of 4% compared to the prior year, driven primarily by the impact of higher prior period collections or PPCs. Normalized ASP was also higher at $2,875, a 1% increase compared to the prior year period after adjusting for the approximate impact of $5 million of PPCs in the quarter.

Moving to gross margin and operating expenses. I will discuss our non-GAAP results. Non-GAAP gross margin was 75.1%, up 580 basis points compared to the prior year period. Testing gross margin increased 380 basis points compared to the prior year to 76.1%, driven by operational efficiencies from our v2 transcriptome and higher PPCs.

Non-GAAP operating expenses were up 12% year-over-year to $65.1 million. Compared to the prior year, research and development expenses increased by $1.6 million to $19 million, driven primarily by clinical investments. Sales and marketing expenses increased slightly to $23.9 million, given higher travel expense. G&A expenses were up $4.7 million to $22.3 million, primarily due to hiring and expenses in our customer service function to support revenue growth and software teams to support new product development.

Moving to profitability. We recorded quarterly GAAP net income of $41.1 million and $66.4 million for the full year 2025. Adjusted EBITDA for the quarter was $42.3 million or 30.1% of revenue, well above our expectations given the benefit of prior period collections. For the full year 2025, our adjusted EBITDA margin was 27.6%, ahead of our target of 25%, which was achieved more than a year ahead of our projections. We increased our cash balance by more than $120 million over the course of the year. These results give us the flexibility to invest in our growth drivers and are a testament to our differentiated financial profile.

Turning now to our 2026 outlook. We are reiterating our 2026 total revenue guidance of $570 million to $582 million or 10% to 13% year-over-year growth. This reflects testing revenue growth of 14% to 16% for the year with Afirma growth expected to be in the mid- to high single digits and Decipher growth to be approximately 20%. As always, we have not included PPCs in our guidance, but do have a headwind of approximately $10 million of PPCs we recognized in 2025.

We expect adjusted EBITDA margin to be approximately 25% in 2026 and in future years, barring any bespoke investments we decide to make, which, of course, we would communicate as appropriate. We expect Q1 adjusted EBITDA margin to be lower given typical seasonality of expenses, including increased compensation, benefits and payroll tax. As always, we plan our expenses on an annual rather than quarterly basis.

In closing, I am thrilled with our progress over the course of 2025. As Marc shared, we delivered on or exceeded all of our 2025 goals, including the Decipher metastatic launch and the transition of Afirma to the v2 transcriptome. With a number of exciting catalysts on the horizon for 2026 and beyond, paired with our differentiated financial position, I am more confident than ever in Veracyte's future and proud to be serving more patients at pivotal points in their cancer journey. We'll now go into the Q&A portion of the call. Operator, please open the lines.

[Operator Instructions] Our first question comes from the line of Subbu Nambi of Guggenheim.

I have two topics. Starting with the guidance question. As we sit here 8 weeks into the year, has your conviction in the guidance evolved in any way? What are the assumptions that drive the high end or low end of the range? And maybe some details on the quarterly cadence?

Yes. Thanks, Subbu. I'll start. I mean, obviously, we're 8 weeks into the quarter, but only 8 weeks into the year. We've reiterated our guidance, and so you can -- that we gave earlier in the year. So you can see from that, our conviction in our guidance continued to be strong. I'll ask Rebecca to talk a little bit about the seasonality and the potential drivers of the high and low end range.

Yes, happy to do so. Thanks, Marc, and thanks, Subbu. Great to hear your voice. So I think the first thing to be aware of is for the first quarter, sequentially, this is a quarter where we do see seasonal trends. We had obviously an incredibly large prior period collection quarter in the fourth quarter. And historically, if using last year as a proxy, that does not typically tend to repeat in the first quarter. That's typically -- last year, it was around $500,000. So that is one thing to be aware of from a sequential trend perspective.

From a volume perspective, Afirma is typically the lowest in the first quarter and followed by the third quarter with the second and fourth quarter being stronger. And with Decipher, it's highly dependent in the first quarter on weather. If you use last year as a proxy, we had -- maybe we were up maybe 100 samples or so sequentially and had a pretty big weather impact in the first quarter of last year. This year, tracking to date is around the same from a weather impact. And so obviously, we'll catch that up throughout the course of the year, but that is something to be aware of on a go-forward basis.

What would get us to the high end of the range would be a couple of different things. The first, we do have a no result rate assumption for Afirma in guidance. At the low end, we would assume little to no benefit from the no result rate. At the high end, we would assume about the same level we saw in the fourth quarter. So that would be one thing to take into account. If we do get prior period collections, that's not baked in. That could bias us to the high end.

And then obviously, volume outperformance. Specifically, I think Decipher has more -- the error bars are wider on Decipher than Afirma, given the nature of the kind of portion of the adoption curve of where we are at. And so from Decipher perspective, if we were to see more penetration or more share gains, that would obviously lend itself to the high end of the guide as well. Hopefully, that helps. Anything else to add, Marc?

No, just a reminder that we're not -- in our guide for revenue, we're not guiding for the new product launches for a very simple reason that we expect those to be more of a revenue driver in 2027, but those, of course, aren't included in the guidance either.

Super helpful. One of the goals of the OPTIMA study is to expand the intended use population. What readout is required for this to occur? And if successful, how big would this market be?

Yes. So I'll start and then I'll hand over to John to talk about the market opportunity here. But the way we describe this is there's the patients, 300,000 patients a year with breast cancer. There's about 75% of them or 225,000 of them that are addressed by what we believe will be the Prosigna indication there.

Our first and foremost goal is to penetrate that market as it currently stands and then obviously expand from there. And so you can expand into, for example, premenopausal, you can expand into all the different risk categories within that 225,000. But John, maybe you can just give a little bit more commentary on how OPTIMA is going to address this.

Yes. So thanks, Subbu. OPTIMA has included in their enrollment criteria up to nine nodes. Currently, Oncotype is approved up to three. We'll have to see what the performance of the test ultimately will be with the OPTIMA trial results before we can provide very directed commentary on how we expect to leverage that data.

And remember, OPTIMA is expected to read out. We hope at ASCO. Of course, we're hoping that the -- and expecting that the results are positive and that it reads out when we're looking for it to, and we're ready to launch when that happens. Thanks for that question, Subbu.

Our next question comes from the line of Puneet Souda of Leerink Partners.

This is Carlos on for Puneet. I've got two questions. So the first one is you had a really healthy beat of your 25% margin target. You were at, I think, 27.6% for the year, but you're guiding to go back down to a long-term target of 25% in 2026. If you could just walk through some of the push and pulls there. Is that just conservatism? Is it true-ups? Is there an increase in OpEx that we should be looking out for? Anything there would be helpful.

Yes. Thanks for the question. At a high level, we've got two product launches coming this year. And the way I think about it is as we launch those products, if we see an opportunity to invest faster to go faster, we will absolutely want to be able to take that. And so that's one. Obviously, building clinical evidence and clinical studies and so on in -- especially in MRD as we expand into more indications is important.

So it's -- I think for us, it's really important to have the flexibility to be able to do that while remaining extremely profitable relative to the industry. And I'm proud of the fact that we got there about a year earlier than we anticipated. I always said a well-run business in this diagnostics industry should be able to get to 25% and sustainably remain there. Rebecca, do you want to add?

Yes. I would just say specifically to the 25% guide versus the 27.6% over the course of 25 Recall, we did have $10 million of prior period collections over the course of 2025. And given we don't imply that in the guide, we wouldn't include that in our OpEx guide either. But we do have significant investments per Marc's point, that all have an incredibly high ROI associated with them.

And given we are -- our goal here is to serve as many cancer patients as we can with high-value quality products, we're going to invest in those things. And while they're not necessarily going to be impactful and are included in our guide in 2026, they're absolutely critical for the long-term performance of this organization, and we feel very positively about the benefit they will have both to all of our stakeholders, including patients. And so when it comes down to it, that's what we're focused on, driving revenue growth, driving patient adoption and really serving as many folks as we can. And everything we're investing in here is very high ROI.

So that's what I would add. I would just say what we are investing in specifically are those new product introductions, the software and bioinformatics resources required, the commercial resources required, the revenue growth support through our customer service, billing and lab operations team. And again, remember, last year, we did invest in the back half more so than the first half. And so obviously, you have the full year annualization of that impact as well.

So I think you can see kind of the opportunity breadth of what we have in front of us is so high. It would almost be foolish not to do our best to invest these dollars. And in things like further Decipher penetration, bolstering Afirma for the long-term [ the ] MRD platform as well as Prosigna and then obviously, the long-term growth drivers, which are a much smaller percentage of the pie vis-a-vis IVD nasal swab at this point in time.

Okay. That's really helpful. And then just as one other question. So when we're looking at the Decipher market, you had really great momentum, 27% growth in the fourth quarter, still plenty of penetration to go with the market only 40% penetrated, but the penetration is growing quickly, and we're seeing competitors investing a lot more into their competing assays.

One of them that had struggled a bit managed to return to double-digit volume growth that they announced earlier this week, for example. If you could just give a little update on the competitive space that Decipher operates in, what you're seeing, that would be very helpful. I appreciate it.

Yes, happy to. A couple of kind of macro level things. I mean the way we see the market growing is at about -- from an incidence standpoint, was about 6%. Decipher represents based on our math now coming out of the year of 2025, about 33% market penetration. So as you can see, 1/3 of patients are getting Decipher, more importantly, 2/3 are not. We haven't seen any change in the competitive dynamics or competitive environment at all. In fact, if you look at the way Decipher grew in 2025 and our guide going forward, it's continuing to represent very strong growth.

And that's driven by the masses of evidence that we talk about regularly, the NCCN guidelines that we have and where Decipher sits in that. And so we remain extremely confident in Decipher's ongoing growth trajectory, and we're very encouraged when we see how that's -- even coming into this quarter, how that's progressing in the marketplace.

And just one thing to add. I mean, we grew 22,000 tests in 2025 versus 2024. If you look at the other players in the market and do an extrapolation of what you think their total year volumes were, they aren't that far off of what our peer growth was. And so that's just an explanation point to Marc's point that we really are not seeing a difference in competitive dynamics.

And recall, there are three players in this market and at least vis-a-vis the preannouncement, I do believe we're seeing kind of maybe share move from one to the other in any given quarter. But again, our competitive dynamics are such that -- are so strong that we don't necessarily even see that noise.

And maybe just -- Rebecca, remind me, just punctuate one other point. As you look across the NCCN risk spectrum, Decipher is doing and always has done extremely well in the intermediate and low. Low has been, I would say, our second highest and high has probably been the lowest. And I think we've mentioned a few times over the last couple of quarters, how we're seeing since the launch of Decipher metastatic, a nice increase in growth in the high risk. And of course, you've got the RP in the metastatic population there as well.

And so with that growing in like the 30% range, it's actually really exciting to see further penetration across the care continuum, which has always been our strategy with all of our tests and particularly with the type of evidence that we generate.

Our next question comes from the line of Bill Bonello of Craig-Hallum Capital Group.

Yes. Two things. So to start with, I might come also at the margin question, but probably from the opposite point of view. I mean, just sort of back of the envelope math, it looks like you're giving yourself $10 million to $15 million of incremental investment to launch two products and at some point, you have to put together an entirely new sales force, I would imagine, for breast cancer. So help us understand why that's enough spend to allow you to be competitive with those two products.

I love your question, Bill. Marc is going to answer it, but.

I mean -- and if anything, I would say, when you talk about the room, that might be room for us to add incremental spend if we need it. Remember what I said, if we want to -- we see an opportunity to go faster, we have the room to go faster. the baseline assumption might even be a little bit less than that. And the reason for that is as we launch these new products, if you think about how 2026 shapes out, we need to add maybe a dozen sales reps at the beginning for the Prosigna side.

And then, of course, MRD plays into our existing channel in neurology, where the majority of patients are served in that setting. And so there's not a significant amount of incremental investment there. So beyond the sales team and the market development activities, the bulk of actually launching a new product is in clinical evidence development, and that's been ongoing and is already in the run rate for us and has been for years.

And again, it's playing the similar formula to Decipher. Many of the studies that are actually going to drive these products are studies that others will do over time. So I'd say, Bill, the answer to the question is we're confident we can do it with that. And if we need to spend more, we will spend more, and we will go faster.

Yes, I absolutely agreed with Marc. And Bill, you had let's take the math offline because the amount we will be spending year-over-year versus 2025 is significantly higher than the $10 million you cited. So Marc is absolutely right on the drivers of that investment. But yes, the investment, given the gross margin expansion that we expect from the [ UA ] Transcriptome transition allows the math to be much -- to be decently higher than that $10 million cited.

Excellent. I've never been good at math. Then the follow-up, which is sort of cheating because it's really a different question. But can you just talk about how you're thinking about capital allocation? I mean you're sitting with a lot of cash and generating really strong cash flow, and it looks like you will continue to do that.

Yes. Happy to do that. No change in our philosophy around capital allocation. We've been generating cash for a while now. We've had a strong balance sheet. We've made some important decisions, including acquiring C2i in order to drive our MRD platform. And we're continuing to look at opportunities in the marketplace, but our philosophy and our bar hasn't changed one bit. Other than that, as you can see, and we just talked about, there's investment in our ongoing business.

We're obviously spending money, as you would expect us to, on organic discovery type of activities and building infrastructure, things like software development and so on. And those are kind of the main ways we think about allocating capital. And so we'll continue to be very deliberate about that.

Our next question comes from the line of Doug Schenkel of Wolfe Research.

The first topic I wanted to dig in on is gross margin, which stepped up by about 200 basis points in the fourth quarter. How much of that can be directly attributed to the v2 transcriptome? And then just one clarification also on gross margin. Rebecca, in your prepared remarks on Q1 adjusted EBITDA margin being lower. Is that an expectation of being lower than the target guidance number for the year or down sequentially from Q4?

Yes. Let me take the back part of that first. So yes, it would be -- we would expect Q1 to be below the guide for the year and definitely lower sequentially, right? You have to remove the PPCs and then obviously, the start of the year costs, whether it's benefits, comp, taxes, health care, et cetera, will impact that. So -- and then obviously, PPC. So yes, absolutely, Q1 should be down sequentially for sure.

Vis-a-vis your question on gross margin in Q4, that really is the two things that -- the thing you cited and the thing I cited. So together, we have the perfect answer, Doug. No result rate benefit and the cost benefit from the UA transcriptome as well as the PPCs. And those are -- the PPCs is the larger impact of -- no result rate is the larger impact of the two.

Okay. Second topic is Decipher bladder. Data coming out of ASCO GU looks pretty impressive. Our understanding is most of your Decipher volume is still in prostate today. Can you comment on roughly what percentage of Decipher is bladder and then how you expect that to trend over time? And I guess a big reason, it's probably obvious, but a big reason I'm asking this is on the bladder sparing data being presented at ASCO GU, it does seem like that could support increased use of Decipher into earlier stage or potentially neoadjuvant chemo decision-making workflows.

And that could actually support multiple Decipher informed decision points across the bladder care continuum over time. So if that's the case, I could see where this could turn into a much bigger growth driver over time. if I'm thinking about this the right way. So any help there would be appreciated.

Yes, Doug, I think your question is spot on. And so the way to think about the bladder in the numbers today, it's a very small portion of the total Decipher number that we talk about. And I think we've been relatively consistent in describing how we think about the bladder classifier. We need more evidence, exactly the type of evidence that's coming out at ASCO GU in order to drive the clinical utility of that test in, for example, the neoadjuvant setting that you just described, and then what I really love about it is then you've got this Decipher classifier that can be used at that very early stage.

And I've always said, as you move the patient through the care continuum, you have patients who need MRD as well. We have the Decipher -- we will have the TrueMRD tests as well for those patients. So I love that we're filling out that care continuum. And I think it's kind of important to have these be part of the diagnostic and prognostic and predictive workflow as well. Phil, do you want to talk a little bit about some of the interesting things that we're going to see at ASCO GU?

Yes. And thanks for the question. So I would say the GU ASCO abstracts in aggregate really demonstrate how understanding the different subtypes of earlier-stage bladder cancer is increasingly becoming part of care because bladder cancer is in this transition where we're really looking at how to maximize response to neoadjuvant therapy to move patients to a bladder-sparing approach. And the studies we'll be presenting kind of shows how our Decipher bladder can inform those decisions and where we see higher proportion of responses in kind of -- in luminal versus nonluminal subtypes. And so not only managing that.

Additionally, we see -- you're seeing how we're -- with Decipher Bladder also pairs nicely with the follow-on with our muscle invasive bladder cancer MRD, again, trying to identifying how patients are doing when patients are working towards a bladder sparing approach. So the bottom line is our portfolio of studies showing that understanding the subtypes of bladder cancer help inform that neoadjuvant therapy just increases the interest, and we're getting a lot of interest on that bladder test.

Our next question comes from the line of Kyle Mikson of Canaccord Genuity.

Congrats on a strong year. I wanted to start on the '26 guidance. I think Rebecca, in response to Subbu's question, you parsed out Afirma and Decipher expectations for the year with respect to revenue. I think you said mid-single digit to high single digit for Afirma and then Decipher 20% growth you kind of left. So could you just talk about the volume expectations for both of those products for '26? And then any puts and takes for each of those like for Afirma, maybe some volume shifts because of the v2 or Decipher, you have a lot of digital pathology stuff going on. So we would love to hear that.

Yes. Happy to do so, Kyle. Thanks for the question. Effectively, given the prior period -- you can effectively assume that the volume growth number embedded in the guide is higher than the revenue growth guide because of the $10 million of prior period collection impact. So that's the easiest way to think about it. And remind me what the second part of your question was, sorry?

I mean it was just kind of like puts and takes for volume growth for the year. There's a lot of kind of exciting stuff on tailwind especially.

Yes. So on the new transcriptome at the low end of the Afirma guide, we would assume no benefit. At the high end, we'd assume kind of what we saw in the fourth quarter. And then on Decipher, there's a lot of different things that we're working on. Obviously, the continuous drumbeat of publications and podium presentations. Obviously, the ASCO GU showing was incredibly strong. We would expect just that flywheel to continue throughout the year.

The other thing on the Decipher front is we are working on our new signatures that Marc cited in his prepared remarks. Those may not be necessarily additive to 2026, but will be important as we think about looking to '27 and beyond and continued competitive differentiation.

And then the last one I would cite is really kind of on the high-risk biochemical recurrence metastatic side. We've seen a lot of traction there since the ASTRO presentation back in Q3. And I would suspect that, that trend continues, if not, even becomes even stronger as we go throughout the course of 2026 and beyond.

Perfect. I had a follow-up on MRD. I was curious what you're doing now to seed the market for the launch for MRD and MIBC in the first half of the year, there's a lot going on in bladder cancer, whether it's on the therapeutic approval side or clinical trial side in MRD. So how are you going to make sure that your voice is heard other than these data and things like that in presentations?

Yes, I think that's a great question. There are a couple of layers to it. I mean, first and foremost, as you know, our initial test in TrueMRD, which is a platform, is going to be in muscle invasive bladder cancer. And for that, we really already have a lot of voice of the customer and that we are visiting those customers because of Decipher.

And so at the appropriate time, and remember, we don't want to obviously distract from our very well-run Decipher business on the prostate side, at the appropriate time and the appropriate accounts, we will be spending time with those customers. We will be describing the clinical studies that have already been done in that setting, and we'll be helping those customers to understand what our TrueMRD offering is and how they're able to use it. John, do you want to add anything with respect to that?

No, I think you answered it well. I mean the only thing that I would add is we have a standing policy that we would only pursue tests commercially once they're reimbursed. I think what you're hearing here is prudence, not conservatism. We are confident in the performance of the test as we've seen, as we've published.

It addresses a meaningful clinical question that physicians are asking, which is how many patients are going to recur post surgery that after neoadjuvant treatment after surgery are intended to be curative. Beyond that, we have lots of studies in the hopper that we continue to pull the Decipher play on, which is to continue to expand clinical utility through evidence.

Yes. And it's a good time to remind everybody why our test is differentiated. Our TrueMRD test is a whole genome-based approach. And so to John's point, the whole genome data that we're going to generate for every single patient of every single incidence of care during their treatment journey and the recovery journey, more importantly, is going to be valuable data and valuable information that will drive future clinical studies. So over time, you see the Decipher playbook play out over and over again in MRD as well as it does in our whole transcriptome business.

Our next question comes from the line of Andrew Brackmann of William Blair.

Maybe we could actually just pick up where you left off there, Marc, and sort of using the Decipher playbook for TrueMRD as well. I think in the past, you talked about sort of driving some collaborations through GRID on TrueMRD. Can you just remind us sort of how you can sort of replicate some of the learnings on using that GRID platform from other tests like Decipher into TrueMRD? And any similarities or differences as you move from Decipher to TrueMRD?

Yes. I mean it's a great question. I don't think there's a ton of lessons learned other than the high-level one that making that grid information available is certainly driving and has driven over the years a lot of research. That research is on the existing tests, but also importantly, as you heard when we talked about PORTOS, PTEN and PAM 50 it actually drives research around other biomarkers as well, and we can expand those by adding them to the report, the clinical report over time.

So you've got this great workflow of research finds the most interesting outcomes and clinical factors or clinical information that can be deployed as a test, and then it's very simple for us to just add that without even changing the nature of our test at all. And that's why we have this kind of uniform platform that we use across all of our tests. Do you want to add something?

Yes. So with respect to specifically our MRD, as Marc mentioned, it's whole genome on the tumor, it's also a whole genome on the germline whole genome on the cell-free DNA. That whole genome across -- lets us really track the tumor. So we use the whole genome to provide a clinically validated MRD test that says tumor detected, not detected. If it's detected, it gives a tumor fraction.

Because we're doing whole genome, the GRID approach is that we will leverage that additional data through collaborations, through research to look at things like tumor heterogeneity, clonal evolution, the emergence of genome-wide signatures associated with resistance to platinum or other therapies used.

That's how our MRD really aligns well with what we've done with Decipher and what we're doing with Afirma, where we do -- we get paid for a transcription signature, but we use the whole transcriptome through research to look at the biology and develop new biomarkers.

And what I love about this Andrew, is you start in one indication or one risk category and then you expand from there. You start in prognostic and you expand into predictive and so on. And so you fill out the care continuum and you fill out the clinical uses of the test across that care continuum. And I don't see it being any different in MRD than we've demonstrated already in transcriptome.

Okay. All of that's great color here. I'll stick on TrueMRD. This is more sort of housekeeping. Can you just sort of remind us on the reimbursement strategy here? I think you're going after two codes versus sort of the bundle. So can you just level set us on expectations there? And as you sort of think about dollar amounts, I don't know if you're willing to share sort of what defines success for you there. But anything qualitatively you can share with respect to sort of where your mind is at on sort of levels of reimbursement there?

Yes. Too early on the dollars, but I'll ask John to talk a little bit about the process we're going through.

Yes. On the reimbursement side, Andrew, as I mentioned, we're looking to pursue recurrence detection post patients who have been treated either with or without neoadjuvant therapy and have undergone a radical cystectomy. Those are management decisions that are made with curative intent. And so as such, it is presumed that the patient is cancer-free. And as such, it does not conform to the NC 90.2 limitation of having to bundle testing for MRD. And so those will be coded and billed individually.

So we'll have two main codes. One is the initial landmark setting test that determines the MRD signature, as Phil described earlier as well as then each sequential plasma test is also billed independently. As it relates to pricing, that's something that we're still negotiating through the MolDX process.

And then Andrew, the population that John laid out based on our own research, we believe it's about 70% of the patients that are seen in our channel.

Our next question comes from the line of Lu Li of UBS.

First one on the new product revenue contribution. I understand that it's not included in the guide. I wonder whether you guys have like kind of an internal target that you wanted to hit? And then secondly, on the MRD new indication, you have CRC and lung on the slide. I wonder, is it fair to assume that those will be the next indications?

Let me start with the second one and then Rebecca, you can go with the first one. But the -- I wouldn't assume no. What I don't want to do yet because it's so dependent on a couple of things, including cohorts is put out a road map for exactly what's coming when. And that's why we've been saying the way we have a new indication every year. We will want to flex and adjust that and have agility to be able to do so on an ongoing basis based on the channel, the clinical evidence, the cohorts, the publications of that evidence, the reimbursement and so on.

So we're not going to be more specific about the indications at this point. We have said you should expect us to focus, first and foremost, on indications where we have some channel reach or we're building channel, and that will certainly be a factor over time.

Yes. And on your new product introductions, of course, we have our internal goals. I would highlight them on the MRD front as being more around the customer experience and less around the revenue contribution over the course of 2026. That will obviously become more of a factor in '27 and beyond. But this year, we're really working on ensuring a great customer experience for MRD and various other critical deliverables that we're citing internally.

On Prosigna, that is expected to be launched here over the summer and the benefit of that and the expectations for that are going to be highly tied to the OPTIMA readout and the timing of the OPTIMA readout and how that all goes. We have a range of outcomes internally. But again, we're seeding the market, and we aren't going for volume from the get-go. What we're really focused on is KOL engagement and spreading the word and really kind of taking the approach of a top-down KOL engagement and ensuring that, that is where we're really focusing on volume growth from the get-go.

Over a 5-year time frame, we do believe this will translate into strong share across the entirety of that market. But again, in 2026, we're looking to build the foundation more so than really AMP revenue from Prosigna and MRD.

Yes, that's very helpful. Maybe just a quick question on the Decipher Q4 volume. If you look at it sequential basis, I think that's only up like 500 units. Wondering if there anything to call out or just like why it's like slightly lower than like Q4 '24 number?

Yes, I'm happy to take that one. Effectively, in any given quarter, you can have a day or two of volume that falls on either side of the quarter, right? In Q4 of '24, that was a good guy. In Q4 of '25, it was -- we had a day that didn't get out or day plus actually that didn't get out. So I think that all makes itself up, and that's typical -- that is absolutely typically quarterly impacts and quarterly volatility, and it's not any underlying trend.

Over the course of the fourth quarter, we had across every single metric we track just an outstanding quarter. And so I definitely would not -- 500 samples doesn't make me flinch one way or the other, 600, 700, whatever the course may be. But I think that's -- I wouldn't get overly wrapped around that axle. We've had many quarters like this before that fall on one side and folks tend to get a little excited about it. And a quarter or two or three later, it all normalizes. So I wouldn't read into it.

Our next question comes from the line of Tom DeBourcy of Nephron Research.

I actually wanted to ask on, I guess, the testing revenue where I think you're guiding to $10 million to $12 million. And it seems like, I guess, in Q4, you still had biopharma revenue, and I would expect in 2026, while maybe not from the same source, you may also have biopharma revenue, whether it's from MRD or other clinical trials. And so just how to think about product versus biopharma revenue as we -- I guess, there's IVD launches or just, I guess, biopharma onetime revenue?

Yes, happy to answer that, Tom. Implied in the guide is less than $1 million of biopharma revenue, call it, 0 at the low end and 1 at the high end. That's an incredibly specific range. And the reason why it's that specific is because unless something is signed and booked, we don't include it. That's just our philosophy. So obviously, with shutting down the French entity, that was where the vast majority of the biopharma revenue came from.

And so we will, obviously, with the Decipher franchise, the MRD franchise, continue to go after biopharma. But this, again, is less about a revenue strategy, and it's much more about evidence strategy, and that's really where we're focused. And so that's not necessarily the driving force. On the product front, we have implied something closer to that around $10 million that you cited. And that is down year-over-year. That's down year-over-year for two reasons.

One is we have a new contract manufacturer and obviously, the variable of their ability to produce, we wanted to give ourselves just some wiggle room around. And then the second is we are not selling to U.S. customers ahead of the LDT launch. Let me be very clear. We are not selling the IVD to U.S. customers ahead of the LDT launch. And therefore, that contribution, which was quite small in nature, is not included in the guide.

Our next question comes from the line of Keith Hinton of Freedom Capital Markets.

Just wanted to follow up quickly on Decipher and bladder, just to make sure that I sort of understood the comment. So based on the exciting data at ASCO GU, is investing additional commercial resources there becoming a near-term priority just based on what you've seen? Or do you feel like you need to see more data?

And if so, is there more data that you're aware of in the near term? And then if you do decide to invest commercially there, how much synergy is there with the existing Decipher franchise and the MRD franchise as well?

Yes, I can take that one. Thank you for the question. No, the answer is no. The rate-limiting step in the growth of Decipher Bladder is not tied to commercial investments per se. As Marc mentioned earlier, there's a very high degree of overlap between bladder cancer patients who are currently managed by the physicians that we call on for Decipher Prostate.

We feel we can manage that and have the bandwidth and capacity to manage that through our current channel and sales personnel in our systems. I think the parts that are rate limiting are all this great evidence that you're seeing at ASCO GU still needs to be completed, still needs to be published. And those are, in general, what allows us then to update our own clinical reports and to essentially leverage that great data to see demand and create more demand.

And then just broadly, our investment in commercial this year will be mostly on the Prosigna LDT U.S. side. And then on MRD to your question, because of the overlap in urology, I think about the MRD investment being in future years as we broaden into other indications.

Our next question comes from the line of Mike Matson of Needham & Company.

I really just have two questions, not to pile on, on the TrueMRD, but I was wondering if you could just tell us the annual number of patients that you think are candidates and then the number of tests per year you would expect to be used on those patients on a given patient? And then the second question is really just on tax rate. So do you expect to start paying taxes in '26? And what would be the appropriate rate to model? So.

I'll take the latter because it's fast and easy. So we always have to pay some state taxes where we've blown through our NOLs, but that's in the run rate. So I wouldn't think too hard about that. But effectively, we are expecting our GAAP and non-GAAP tax rate to be around the mid-single digits this year. So we still have a decent chunk of NOLs to get through.

One thing that we'll be talking about over the course of this year as we look at the profitability profile going forward is our valuation allowance, but more to come on that in the back half of the year if we're looking like that might be something that gets released.

Yes. And on the available market, we're estimating just around 20,000 patients for a SAM. You also have to factor that there's going to be some serial repeat testing on a per patient per episode of care basis. The details of that are still under discussion through our tech assessment with...

Our next question comes from the line of Kallum Titchmarsh of Morgan Stanley.

This is Jason on for Kallum. A lot has been asked, so I'll just keep it to one. Maybe on Percepta nasal swab, you recently completed enrollment for the NIGHTINGALE trial. Can you just provide some color on what are the next milestones we should be looking at? Any color you can share on time line for trial completion, data readouts, commercialization and just any milestones we could track?

Yes, that was one of our key accomplishments in 2025 was getting the final patients enrolled through that study. And now it's a question of -- I think a couple of milestones. One is the follow-up. And of course, you got to wait for at least a year, if not 2, for those patients to be followed up to confirm benign.

And then it's getting that publication ready, getting it published, which can take time. And then it's a serial conversation then with MolDX and payers in order to get it reimbursed. And so this is why this one is very clearly in our -- it's not in our 5-year -- 3- to 5-year plan, it's more in our 5- to 10-year plan.

Thank you. This concludes the question-and-answer session. I'd like to thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.

Good morning, everyone. I hope everyone's had a good week. Welcome to the 44th Annual JPMorgan Healthcare Conference. My name is Cliff, a member of the Healthcare Investment Banking team. And our next presenting company is Veracyte. Speaking on behalf of the company, I'm pleased to have CEO, Marc Stapley. Please give it up for Marc.

Thank you, Cliff. Good morning. We're very pleased to be here at the JPMorgan Healthcare Conference. Thank you for joining us. So before I get into the presentation, I'd like you to note our safe harbor statement. This can also be found on our website. At Veracyte, we are focused on fundamentally enhancing our collective understanding of cancer and changing the way it is treated through the power of advanced molecular diagnostics. By enabling deep research and delivering actionable clinical insights at critical moments, we empower physicians to make more confident decisions, improving outcomes for patients. And somewhat uniquely, our mission extends beyond just the U.S. as we strive to reach patients all around the world with our suite of tests.

To deliver on this mission, we have undertaken a platform approach across Veracyte. Our fundamental belief is that more data drives deeper insights, which strengthens evidence, which expands clinical utility, which in turn drives greater adoption and an ability to serve even more patients. And so we intentionally generate more data for each test than is required to answer the clinical question at hand with our whole transcriptome and whole genome-based assays. This novel approach results in a data-driven flywheel effect, which allows us to extend our impact across indications and geographies to deliver durable long-term growth.

Today, we have an expanding portfolio with tests spanning breast, prostate, bladder and thyroid cancers, focused on serving patients who have been diagnosed with cancer and those who are suspected of having cancer. In addition to serving multiple indications, we also aim to serve patients across the care continuum from risk assessment to diagnosis, prognosis, treatment guidance and recurrence monitoring.

Our urology tests are the best examples of our breadth of coverage across the care continuum today. As we deliver upon our strategic growth drivers in coming years, we will add more indications across the continuum of care, thereby extending our reach and deepening our impact. Historically, we have delivered exceptionally strong growth with a significant and sustainable inflection in the business in 2021 as we added our urology portfolio, expanding our impact on patients while building a highly durable financial profile.

Our platform is driving meaningful clinical adoption with more than 800,000 patients served to date. This has been achieved on the back of more than 600 publications supporting the clinical utility of our tests. And as we close out 2025, I couldn't be more proud of our finish to a strong year. We expect to deliver revenue in the range of $515 million to $517 million, driven by approximately 17% testing revenue growth, led by the continued strength of our Afirma and Decipher franchises.

In addition to our expected strong 2025 revenue growth, I'm pleased to share that we executed against all of the key milestones that we laid out for our business coming into the year. On the product front, we drove continued penetration and share gains. We launched Decipher for metastatic patients, and we generated meaningful new clinical evidence across both endocrinology and urology. We also advanced our pipeline as we shared positive Prosigna outcomes data from the OPTIMA PRELIM study, submitted the technical assessment for TrueMRD and finalized enrollment for our pivotal NIGHTINGALE lung cancer study. Importantly, we achieved all of this while delivering industry-leading profitability, and we continue to expect to meet our target of greater than 25% adjusted EBITDA in 2025.

We also made progress on key operational priorities, including the completion of the complex restructuring of Veracyte SAS as well as the transition of all Afirma volume to the v2 transcriptome, our new highly scalable and lower COGS platform for whole transcriptome-based tests. I'm incredibly proud of our team for their relentless focus on execution and innovation, which enabled us to deliver an exceptional year for Veracyte and reach more patients than ever before.

Now taking a closer look at our Decipher test. A prostate cancer diagnosis can be overwhelming for patients, raising difficult questions about what treatment they need and what comes next. Decipher helps bring clarity during this uncertain time by providing genomic insights into the biology of a patient's cancer. By better understanding an individual's risk, clinicians can help patients avoid unnecessary treatment and ensure more intensive therapy is used when it can make a meaningful difference.

Decipher is the leading diagnostic test for prostate cancer prognosis and prediction and is the only such test that can provide insights for all patients with prostate cancer from low risk to high risk and metastatic. With broad reimbursement across approximately 215 million covered lives, it is increasingly being adopted by physicians as demonstrated by a consistently higher order rate per physician. In addition to increased utilization, we are also expanding our reach as the number of ordering physicians grew over 15% in 2025. This scale has resulted in more than 300,000 prostate cancer patients being tested with Decipher to date, over 100,000 of whom were tested in 2025 alone.

Prostate cancer remains a large and growing clinical challenge with approximately 334,000 patients diagnosed annually, and sadly, that number is growing each year. While adoption has accelerated, there are still so many patients in the U.S. and even more outside the U.S. who are not getting access to Decipher and therefore, not benefiting from the insights that our test provides. That needs to change. We estimate that as of the end of 2025, Decipher was only about 33% penetrated. So there is plenty of opportunity ahead to continue to reach even more prostate cancer patients.

As we have expanded our market penetration and benefited from favorable share gains, Decipher has delivered explosive growth over the last few years. The fourth quarter marked our 15th consecutive quarter of greater than 20% volume growth, and we have delivered a 3-year revenue growth CAGR of over 37%. We are proud that Decipher is recognized as the only gene expression test with high-quality evidence in NCCN guidelines, which has helped catalyze this growth. To achieve this, we have consistently enabled an ever-growing body of clinical evidence demonstrating Decipher's role in guiding cancer.

There are now more than 100 publications on the utility and validity of Decipher across the prostate cancer risk spectrum with an additional 100 publications leveraging our research use-only GRID data. And due to the flywheel effect we discussed earlier, this body of evidence will continue to grow. Looking ahead, we're confident in Decipher's ability to sustain strong double-digit growth in 2026 and beyond, supported by a number of drivers.

First, as research empowered by GRID establishes clinical utility for new signatures, our goal is to expand our clinical test to add these new insights. Our first example of this in prostate cancer is 2 new predictive signatures, PORTOS and PTEN, that are now widely recognized by key opinion leaders as having utility based on studies that were published recently. Patients with higher PORTOS scores benefit from higher doses of radiation in both the post-biopsy and post-RP salvage settings. PTEN used alongside the Decipher score showed promise in determining which metastatic patients would benefit from the addition of chemotherapy in the STAMPEDE study. We are working to add these molecular features to the Decipher report as optional insights later this year.

Second, we are driving continued penetration into advanced disease following the launch of Decipher metastatic along with growth in the high-risk post-surgery biochemically recurrent population. This year, we placed particular focus on expanding the clinical evidence supporting Decipher in advanced disease, whereas predictive power has been shown to improve patient outcomes. We believe there remains significant opportunity to expand Decipher use in this patient's population.

And third, we view digital pathology as complementary to molecular analysis, providing additional data points for a more comprehensive assessment of tumor histology. To support further research, we made our digital pathology services and associated AI models available to research collaborators last year and have implemented slide scanning as a standard production workflow. We've made tremendous progress to date and have now scanned over 175,000 slides from over 130,000 de-identified patients with outcomes data. We expect this database to grow meaningfully as we continue building our digital image repository. It is clear that Decipher is increasingly becoming the standard of care in prostate cancer with a long runway of durable growth ahead.

Now turning to our Afirma test. An indeterminate thyroid nodule diagnosis often leaves patients uncertain about whether surgery is needed. Afirma delivers molecular insights that help clarify risk and guide more confident decisions, allowing many safely to avoid surgery. In fact, among the more than 400,000 patients tested to date, we believe that over 60% of those patients were spared in unnecessary surgery through the utility of our test.

Afirma now has over 280 million covered lives and over 150 publications to date. And Afirma is currently 38% penetrated into the Bethesda III to VI category, which are patients whose thyroid nodule has been deemed indeterminate, suspicious or malignant. So there remains meaningful opportunity for further share gains and incremental penetration to drive continued growth. We are pleased to see 11% volume growth for Afirma in 2025, which is truly remarkable given it has been on the market for 15 years. Throughout this year -- the year, we experienced a steady pipeline of new account wins and increased utilization per account. Growth was further driven by the expanded LCD that now includes reimbursement for Medicare for the Bethesda V population with such volume growing 16% in 2025.

Lastly, as I previously mentioned, we finalized the move over to our new transcriptome during the fourth quarter. While this benefits our scalability and cost profile, I'm even more excited about the patient impact. Historically, there have been cases where we were not able to provide an Afirma result due to low RNA quality or quantity. With the v2 transcriptome, we are able to confidently call even more results. Our research use only GRID tool launched in 2024 continues to strengthen Afirma's leadership and drive ongoing adoption. By aggregating large-scale, high-quality moleculin clinical data from patients tested with Afirma, GRID enables ongoing research and supports the generation of new clinical evidence. We have seen a meaningful increase in Afirma-related publications in 2025 with the majority driven by GRID. The growing body of evidence helps maintain Afirma's role as the standard of care in thyroid diagnostics.

Moving to our growth drivers. I think of our opportunities in 3 phases. The first phase is the ongoing durable growth in our core business, Decipher and Afirma, which we've just gone through and which we think alone enables us to continue to deliver a double-digit revenue growth profile for the foreseeable future. The second phase of growth is commencing this year with 2 exciting new product launches by the summer. First, the launch of our inaugural MRD product, TrueMRD, which will be in the muscle invasive bladder cancer indication. Second, the launch of Prosigna as an LDT for the U.S. market.

With our entrance into MRD, we will expand our reach further across the care continuum. And with Prosigna, we will be able to serve patients in the U.S. who face a breast cancer diagnosis. The third phase of growth is represented by our commitment to expand geographically with our IVD strategy and to solving new cancer challenges with tests like our nasal swab for lung cancer. I'm excited to share more detail on each of these initiatives today.

Starting with Prosigna, which answers critical questions that breast cancer patients have following diagnosis, such as what kind of breast cancer they have, what treatment is needed and the risk of cancer recurring. Prosigna is based on the well-established and scientifically validated PAM50 signature, providing physicians and patients with deeper insights into the biological classification of their cancer and the risk of recurrence to help inform treatment decisions. The opportunity in the U.S. is significant with over 300,000 patients diagnosed with breast cancer each year. Approximately 225,000 of these patients have early-stage hormone receptor positive disease and would be eligible for Prosigna testing. Given this tremendous opportunity, we plan to launch Prosigna as an LDT in mid-2026 on our new v2 transcriptome.

We believe upcoming clinical data will be an important driver of adoption. One key milestone in May 2025 was the presentation of the clinical outcomes data from the 10-year OPTIMA PRELIM study. This is the first prospective study to specifically address Prosigna's ability to identify clinical high-risk patients who do not benefit from chemotherapy and can safely avoid the toxicities associated with treatment. This study suggested that Prosigna had higher prognostic accuracy in high-risk patients compared to the test initially used to assign patients to treatment groups. We were encouraged by the preliminary results and look forward to seeing the full readout of the full OPTIMA trial and driving further clinical evidence.

But rather than hear about the importance of Prosigna from me, I'd like to share with you a real patient perspective. Dalia is a 37-year-old breast cancer patient. Prosigna changed the course of Dalia's treatment by providing new insights for both her and her medical team, allowing her care to be personalized and tailored to her as an individual. At a time of significant uncertainty, particularly as a younger breast cancer patient, Prosigna gave her greater confidence and peace of mind about her treatment path. With that clarity, Dalia has been able to move forward with her life with confidence in the decision she has made about her care. I would like to thank Dalia for allowing us to share her story.

Moving on to MRD and surveillance testing. After completing initial treatment, a new set of difficult questions often emerges for patients such as whether they can be monitored through surveillance or require additional therapy, if the cancer is returning or spreading and whether treatments such as chemotherapy will provide meaningful benefit. Our MRD approach is differentiated in that it is whole genome every step of the way, from the initial baseline sequencing to the sequencing of serial testing samples. We believe this data-rich approach is not only sufficient but necessary to provide the right level of information to patients who are at risk of recurrence and further our collective understanding of cancer. This follows our fundamental belief that more data drives more insights, more clinical evidence, more payer coverage and therefore, more durable adoption as discussed earlier.

We have made good progress in advancing our TrueMRD platform. We plan to launch our first indication muscle invasive bladder cancer in the first half of this year with reimbursement. We will leverage our strong Decipher brand and channel, which we believe reaches approximately 70% of muscle invasive bladder cancer patients who are seen in the urology and radiation oncology setting. Beyond MIBC, our platform is extensible into many other cancer types, and we plan to launch additional indications annually going forward.

We have made -- we're building a strong and growing body of clinical evidence around TrueMRD. Multiple studies have already been completed across bladder, colorectal and lung cancer as well as other indications, and we have a deep pipeline of additional studies underway. Today, that includes 10 studies in testing or analysis, 13 in contracting, 11 in active planning, spanning MIBC as well as breast, lung, colorectal, kidney and immunotherapy treatment response. With strong engagement from leading institutions and encouraging early results, we believe TrueMRD's differentiated approach positions us well to capture meaningful share in the MRD market.

Turning now to geographic expansion. We are passionate about ensuring our tests are available to patients outside the U.S. In Europe, there are approximately 270,000 patients diagnosed with HR-positive breast cancer each year. Prosigna is already available to these patients on the nCounter platform, but to further expand the reach of the test, we are developing Prosigna as an IVD on NGS. Similarly, more than 450,000 patients are diagnosed with prostate cancer in Europe each year and do not have access to a test like Decipher. To address this need, we are developing Decipher as an IVD on qPCR technology to serve this patient population. Serving patients around the world is central to our mission, and we look forward to bringing these and other IVD tests to market in the coming years.

Moving on to our final growth driver of solving new cancer challenges with innovative products like our Percepta Nasal Swab. Lung cancer is the leading cause of cancer-related death worldwide. Each year, there are 1.6 million incidental lung nodules detected and approximately 15 million people who should be getting screened in the U.S. This represents a massive and underserved market where effective early risk stratification is critical. For patients with an identified lung nodule, determining whether invasive or surgical management is appropriate is a difficult question. We believe a noninvasive test like Percepta can play an important role by helping classify risk earlier and guiding more appropriate patient management. We made important progress on this initiative last year, completing enrollment in our pivotal NIGHTINGALE study. Looking ahead, we will conduct follow-up and data analysis, which we hope will lead to publication and ultimately, reimbursement.

Now taking a closer look at our recent performance, where we believe we have a best-in-class financial profile, we have delivered strong revenue growth with approximately 17% testing revenue in 2025, exceeding our expectations coming into the year. We also expect to achieve our target of greater than 25% adjusted EBITDA for the full year, more than a year ahead of schedule. I couldn't be more proud of our team and our accomplishments, and I'd like to thank all of my colleagues at Veracyte for their hard work and focus on our patients.

Turning to our outlook for 2026. We expect to deliver total revenue in the range of $570 million to $582 million. This is driven by testing revenue from our core business of $559 million to $569 million or 14% to 16% growth and excludes new test introductions. We expect to organically maintain our industry-leading 25% adjusted EBITDA margin in 2026 and beyond. But even more importantly, it is likely that in 2026, we will hit a very key milestone, serving our 1 millionth patient. This demonstrates clearly the impact that Veracyte is having on so many people dealing with cancer and their families, and I couldn't be more proud of that.

So in closing, I am thrilled with our progress over the course of 2025. We delivered on our product goals, improved our financial profile and ended the year with strong momentum across our development programs and commercial tests. We look forward to steadily executing against our rich pipeline of catalysts, including multiple product launches this year alone, which will further fuel our growth for years to come. Above all, we remain deeply committed to our mission of transforming cancer care and improving patient lives all over the world. Thank you.

Now we're going to transition to the Q&A session. We'll be joined by Rebecca Chambers, CFO. Good to have you here. So we've had a number of questions come in from the online audience. And so if time permits, then at the end, we'll turn to the audience. So the first question from the online audience is you've highlighted Afirma and Decipher growth as key to your growth going forward. What gives you confidence in the durability of growth for these 2 tests?

Yes, it's a great question, and thanks for addressing that. I mean, as I mentioned, both Afirma and Decipher are our core business today, and they drive the first phase of growth, and we see multiple years of growth ahead. And what gives us that confidence is a couple of things -- actually a number of things. First and foremost, when you look at that penetration, I shared a couple of graphs on this. Decipher is 33% penetrated into the market and a growing marketplace. We actually think that incidence is now growing around 6%, which is new data that's just recently come out.

And so there are so many opportunities ahead. 2/3 of prostate cancer patients in the U.S. are not getting Decipher. And of course, as I mentioned, outside the U.S., it's significantly less than that. In fact, Decipher is almost nonexistent outside the U.S., and we need to fix that. Afirma similarly, 38%. I mean that test has been on the market for a long time, and we're only 38% penetrated with our test into the market. And as I talked in both cases about research and driving evidence. I mean, the evidence for both of our tests is vast.

If you look at both tests, they're very strongly represented in guidance with Decipher being the only one with the high-quality evidence behind it as recognized by the NCCN. And so that is pushing -- those are catalysts that are pushing adoption forward. Decipher addresses the entire care continuum. We recently launched metastatic, which enables another 30,000 patients per year in that 334,000 to be addressed with our test. And so -- and then finally, I'd say we have an incredibly strong commercial team who are the best in the world at driving these tests in both cases, urology and endocrinology.

Yes. And maybe to comment on our expectations for both of the tests this year that is implied in the guidance. On the Afirma side, after a number of stellar years of double-digit growth, we're projecting another great year of strong growth of mid- to high single digits here in 2026. And also on the Decipher front, the guidance currently implies approximately 20% revenue growth. So both of these tests are expected to have another great year, serving a number of new patients and changing the penetration of those charts Marc showed in a very positive way.

Maybe if you could quickly elaborate on in the same vein. Given that the Afirma market is significantly more penetrated than Decipher, how does Veracyte intend to access the remainder of the opportunity to drive continued volume growth?

Yes. I mean in both cases, Afirma and Decipher, there is an opportunity to expand across the market where no testing is being done today. I mean, that space. And that's where physicians are either not using the test across their entire patient population or they're not using a test at all. And our sales team spends a lot of time with those physicians, obviously, with guidelines and evidence. It's very hard to ignore the benefit of these tests. And it gets to a point almost where it's not good practice to treat a patient without running a molecular diagnostic.

The second component of it is obviously share. And in the case of Afirma, you're quite right, even though we're only 38% penetrated in Afirma and 33% in Decipher, the market share gain opportunity in Afirma is greater given the competing tests. And again, back to the evidence and the clinical utility and the guidelines and the execution by the sales team. So we'll continue to gain share. We believe we've been gaining share in both tests throughout 2025 and prior to that, and we expect that to continue. There are so many tailwinds for us at this point. Our biggest headwinds are only that eventually the denominator grows. And of course, the math of growth is different. But volume growth, which is what you asked about, there's nothing that I can see in the future that slows that down at this point.

Awesome, thank you for elaborating. Maybe pivoting now to TrueMRD. What is your go-to-market strategy for launching TrueMRD in muscle invasive bladder cancer?

Yes. So remember, TrueMRD is a platform and multiple indications can be addressed with that test and it's the same test. We are launching first in muscle invasive bladder cancer. And what's great about that is, as I said in the presentation, about 70% of patients with muscle invasive bladder cancer, we believe, are dealt with and taken care of through our channel, our urology channel.

And so our go-to-market strategy is for those patients who have had radical cystectomy, whether or with neoadjuvant chemo or not. Those patients have gone through curative intent and our test can then be used to detect whether recurrence occurs. And our publication in European Urology last year showed that, that can happen around 131 days median relative to the standard of care, which is imaging. So the test works. It works in that setting, and we already have the channel.

Yes. And just maybe to comment on the reimbursement process. We submitted our application for the tech assessment in March of 2025 and have had numerous back and forth with the pricing bodies here at this point in time. We're planning on launching with reimbursement in the first half of this year. We're super excited about it. Because we are serving the post-radical cystectomy patient, this is a patient that currently is not deemed to have cancer. And therefore, we will be effectively aiming to get 2 codes, 1 code for the upfront landmark test and 1 code for the subsequent surveillance test.

There are also some very kind of the minority of patients that will be served in the adjuvant setting. That is something we'll definitely be interested in, in time. But given the concentration of post-radical cystectomy patients, in the urology channel, that's really where our focus is going to be from the get-go, and we won't be going after the bundle until we do move into more of the medical oncologist space/patients that are currently getting adjuvant therapy.

Maybe a quick follow-up on TrueMRD before we pivot to something else. When you're thinking about expanding into additional indications, what are some of the key considerations that you guys think about?

Yes, it's a great question. I mean, firstly and foremost, we have to do studies in that indication. And as I mentioned in the presentation, we've done many so far and demonstrate the utility of the test. And remember, the utility of the test is, in our minds, the lead time to detection ahead of standard of care, which is imaging or it might even be -- also be, as Rebecca just alluded to, the ability to monitor treatment response. And so that's what's needed.

For that, you need cohorts to do the testing. And so availability of cohorts is one factor or whether we've already been doing studies in that area. Channel is a factor as we build our Prosigna test for the -- as a prognostic, we'll build a Med Onc channel. As we launch MRD more broadly, we'll be able to leverage that Med Onc channel. So channel is a key factor as well. And I think just our own internal prioritization of what needs to get done and when we've committed to launching a new test every year, and we'll continue to focus on doing that.

Maybe pivoting to the financials part first, maybe a question for you, Rebecca. You're one of the few profitable companies in your space, and were able to achieve over 25% adjusted EBITDA this year. Why do you think 25% is the right target for the organization going forward?

Yes, happy to answer that. And I am incredibly proud of our privileged position of delivering such a profitable P&L as well as an incredibly strong balance sheet. So as we look forward, the wealth of opportunities that we have to invest in high-return additive to revenue growth projects is vast. We currently have more projects than -- to fund than we have organizational support for. And effectively, the balance between that revenue growth outlook and the 25% profitability, the balance between the 2 is really what we're focused on.

This business does drop down incremental margins that are decently higher than that 25%. But given the -- again, given the investment portfolio that we have and the long tail of high-return projects, we do feel like that 25% is the right sustainable adjusted EBITDA. We plan for this every year at that level. We manage it on an annual basis. Quarterly fluctuations will exist. We can't turn the investment ship in any given month or any given quarter. So as you saw in the third quarter that we delivered something more than 25%, hitting a 30% number. But on an annual basis, we plan for that 25%, and that's what we aim to achieve such that on a longer-term basis, revenue growth is [indiscernible].

Would you like to ask a question, Siri?

Yes, Siri is going to answer for me. But such that, that 25% is the appropriate figure.

Remember to not only just launch new tests and maintain durability and adoption of tests and get into guidelines, it's a continuous cadence of evidence development and evidence generation. And so any opportunity we have to drive more evidence, whether it's evidence that we're funding or supporting third parties to do so, I think, is a very worthwhile investment. And some of these products -- nasal swab is a great example, take many years, in that case, a decade to potentially come to market. And that's because of the evidence that you have to go after in order just to get reimbursement. And you're not done there. In our industry, remember, evidence development continues after the test is on the market and it should, and that's how the Decipher model has worked so well as well as Afirma.

Maybe one more on the same topic. So with almost $400 million in cash on your balance sheet at the end of Q3 and no debt, how are you thinking about capital allocation?

Yes. So let me talk philosophically about our approach and then Rebecca can click -- give more details. But yes, we're obviously in a very privileged position to have that cash balance in the diagnostics industry. There are plenty of opportunities for us to expand both organically, as we've talked about as well as through M&A and acquisition and partnerships. And we explore everything. And frankly, Rebecca is leading that organization today, and the number of opportunities is quite significant.

Yes, it's actually quite exciting. I mean we're, again, not only in a privileged position with our balance sheet, but also in the spirit of we have such a wealth of organic projects to invest in. We don't have to do anything today, right? I think that's a really key message. But there's a lot that we might want to do or might choose to do. And so we are assessing numerous opportunities on an ongoing basis. We have a very high bar for what those opportunities manifesting them into further action. But there are a number of great technologies, a number of different indications and a number of different geographical assets that could make a lot of sense in '26 or beyond.

So we're going to keep our high bar in terms of the level of rigor that goes into each of our assessments. So far, we've probably analyzed over 100 companies over the last 3 or 4 years and executed on one. But as we look forward, we're going to try and do more of the same, keeping the assessment going and making sure that the assets that we encourage and engage with are high quality and very additive to the Veracyte portfolio.

Excellent. Thank you. The last question from the online audience, maybe going back to the strategy. Where do you see the opportunity to capture share in the breast prognostic market given the incumbent test is so well adopted?

Yes. I mean it's actually really interesting. In our core business, we have an example of a test where, frankly, Veracyte started a market by recognizing a clinical unmet need. And then -- and that's Afirma, we have an example of a test where we weren't the first mover, we weren't the market leader, and we've become the market leader, and that's Decipher through that flywheel effect that we talked about. Now Prosigna, as you mentioned, is an interesting market in that -- if you talk to any medical oncologist who's dealing with a breast cancer patient, they are very familiar with and very used to in their practice using molecular diagnostics, thanks to the incredible job that's been done by those that go before us.

But as I said, diagnostics is an ongoing cadence of evidence generation, and we're very excited about the study that's coming out and other evidence that's going to, over time, be launched using the Prosigna test. And so when that information is published, I think that will help to really drive key opinion leaders to think about what's the right test to use, not in this market, whether I should use a test, but what's the right test to use. And so again, it's a very similar formula, and we're going to help to drive more research, further the understanding of breast cancer more broadly and fill out the care continuum in breast as well. And so it's a long game. It's not going to all happen in 3 years. But we -- with the fact that we've already owned this test for years and getting this ready for as an LDT in the U.S. is not a massive investment for us. We don't need to gain a significant amount of share. But at the same time, for the benefit of patients, we actually think Prosigna will become a market-leading test.

Thank you. Unfortunately, that's all the time we have today. So I'd like to thank you all again for coming to this talk and also to the conference. Please give it up for the Veracyte team one more time.

Thanks, Cliff.

Thank you.

Good day, and thank you for standing by. Welcome to the Veracyte Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Shayla Gorman.

Good afternoon, everyone, and thank you for joining us today for our discussion of our third quarter 2025 financial results. With me today are Marc Stapley, Veracyte's Chief Executive Officer; and Rebecca Chambers, our Chief Financial Officer. Dr. John Leite, our Chief Commercial Officer; and Dr. Phil Febbo, our Chief Medical and Scientific Officer, will join us for Q&A.

Veracyte issued a press release earlier this afternoon detailing our third quarter 2025 financial results. This release and a copy of the presentation we will review during the call today are available in the Investors section of our website at veracyte.com.

Before we begin, I'd like to remind you that statements we make during this call will include forward-looking statements as defined under applicable securities laws. Forward-looking statements are subject to risks and uncertainties, and the company can give no assurance they will prove to be correct. Additionally, we are not under any obligation to provide further updates on our business trends or our performance during the quarter.

To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Veracyte files with the Securities and Exchange Commission, including the most recent Forms 10-Q and 10-K. In addition, this call will include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures are included in today's earnings release accessible from the Investors section of Veracyte's website.

I will now turn the call over to Marc Stapley, Veracyte's CEO.

Thank you, Shayla, and thank you to everyone for joining us today. I'm pleased to share details of our third quarter performance as well as provide updates on our key growth drivers.

We delivered another outstanding quarter. Our core testing business achieved 18% revenue growth year-over-year after adjusting for Envisia, driven by volume growth of 26% in Decipher and 13% in Afirma. This strong performance resulted in total revenue growing 14% year-over-year to approximately $132 million, even after the expected dilutive impact of removing the biopharma and other revenue tied to SAS.

In addition to our robust revenue performance, our adjusted EBITDA margin reached a record 30%, representing a 650 basis point improvement from the prior year and far exceeding our expectations. As you know, we had set a goal of consistently achieving a 25% adjusted EBITDA margin on an annual basis, and it now appears that we will reach that milestone this year, more than a year ahead of our internal plans.

This best-in-class profitability profile is a significant accomplishment, which we attribute to our disciplined portfolio focus. It enables us to continue to invest in our robust pipeline to serve as many patients as possible.

The foundation we have built at Veracyte will enable sustained near- and long-term growth through a focused set of strategic drivers. I'm excited to share progress across several of these initiatives today.

Starting with Decipher. We delivered approximately 26,700 tests in Q3, marking the 14th consecutive quarter of over 25% year-over-year volume growth. With the highest number of quarterly ordering providers and the highest number of orders per physician, Decipher's clinical utility is increasingly recognized by physicians for patients across all risk categories.

This year, we have especially highlighted the clinical evidence for advanced disease, including high-risk localized and metastatic patients, where Decipher's predictive power has been shown to improve outcomes. With Decipher now available for metastatic patients, physicians can better assess the benefit of intensifying treatment with androgen receptor pathway inhibitors or chemotherapy.

For example, recent analysis from the STAMPEDE trial published in Cell showed a high Decipher score predicts docetaxel benefit in metastatic patients and abiraterone efficacy for those with metastatic and high-risk localized disease. During the quarter, our volume of tests in this high-risk localized group grew more than 30%, demonstrating new traction in this category. We believe there remains significant opportunity to expand Decipher's use in this segment.

Consistent with our established formula for evidence generation as the key to broad adoption, we continue to support extensive research in prostate cancer. For example, at ASTRO in September, research collaborators presented the first validation data from the BALANCE trial, demonstrating the PAM50 molecular signature predicts hormone therapy benefit in men with recurrent prostate cancer using data from our research use only Decipher GRID.

This signature, well known in the breast cancer oncologist community and the backbone of our Prosigna test has now been shown to be able to stratify prostate cancer patients based on subtype, providing confidence in hormone therapy benefit for those with the Luminal B subtype.

In addition to demonstrating the power of GRID and driving new important research in prostate cancer, this trial also builds on research presented earlier this year from the SSPORT trial, which showed the biochemical recurrence or BCR post-surgery patients with a high Decipher score received greater benefit from the addition of pelvic node radiotherapy and short-term ADT.

These BCR patients represent a potential incremental opportunity for Decipher as we believe the majority never received a Decipher test when they were initially diagnosed with prostate cancer and would now be appropriate candidates for testing post-surgery.

The complex treatment decisions faced by physicians and their patients dealing with advanced disease requires robust actionable information. As research empowered by GRID establishes clinical utility for new signatures, we are working to add such additional molecular features to the Decipher report to enhance clinical insights.

Signatures like PORTOS and PTEN will be available in the optional Molecular Features Report when it launches next year. PORTOS predicts which patients with prostate cancer are likely to benefit from differing dosages of salvage and definitive radiation therapy. PTEN used alongside the Decipher score showed promise in determining whether metastatic patients would benefit from chemotherapy in the STAMPEDE study.

These additions will further extend Decipher's application across indications, treatment decisions and various health care specialists. These studies represent only a selection of the extensive ongoing research related to Decipher. This quarter, we saw 23 new abstracts and publications on Decipher Prostate and GRID, bringing the total to 240 publications.

Notably, at ASTRO 2025, of the 9 Decipher-focused abstracts, 2 compared the results of the Decipher test to the on-market DPAI solution and found marginal correlation. Investigators concluded that the 2 tests are measuring different biological processes, something we have asserted for a while based on prior studies. Further, there was meaningful discordance between the 2 tests across risk categories with a bias to low and therefore, potential undertreatment from DPAI.

These findings support our view that digital pathology may complement molecular analysis by providing additional data points based on a more comprehensive analysis of tumor histology, but further research is needed to determine optimal use and to protect patients.

To support this, we made our digital pathology services and associated AI models available to research collaborators earlier this year and have now implemented slide scanning as a standard production workflow. We've made tremendous progress in the third quarter and have now scanned over 115,000 slides from over 80,000 de-identified patients with outcomes data and expect this database to grow meaningfully as we continue building our digital image repository.

Looking forward, the expanding clinical evidence supporting Decipher gives us confidence in its long-term growth prospects. With data consistently demonstrating its clinical utility and impact on patient management, Decipher is increasingly becoming the standard of care in prostate cancer. We see a long runway ahead, further bolstered by ongoing prospective studies to drive broader physician adoption, resulting in durable double-digit growth for years to come.

Turning to Afirma. We were incredibly pleased with the 13% volume growth in Q3. This outstanding performance was driven by a steady pipeline of new account wins and yet another quarter of increased utilization per account. We also had a strong showing at the 2025 American Thyroid Association meeting, where we supported the presentation of 12 Afirma-related abstracts, including 4 independent studies utilizing data from Afirma GRID.

Our operational efficiency program for Afirma is progressing nicely as we have transitioned over 1/3 of samples onto our new v2 transcriptome in the lab and having received New York State approval are on track to complete the transition of all incoming Afirma samples to the new workflow by year-end. While the data is early, we are pleased to see a side benefit in that the lower RNA input required by the new workflow has enabled even more patients to get a test result.

Moving to our commitment to serve more of the patient journey through MRD and recurrence testing, we are excited about the opportunity for our whole genome-based MRD platform. Multiple studies are already completed in muscle invasive bladder cancer or MIBC, colorectal cancer or CRC, lung and other cancers with a robust pipeline, including 10 studies in testing and/or analysis, 13 in contracting and 10 in the active planning stage.

This includes additional studies in MIBC as well as in breast, lung, CRC, kidney, immune therapy treatment response and others. The enthusiastic engagement by collaborators at leading institutions, along with the early results we are seeing reinforce our bullish expectations of our ability to capture a meaningful share of the pan-cancer market with our differentiated approach, which we have branded as TrueMRD.

We are now receiving samples for the first phase of the NEO-BLAST trial. With growing enthusiasm over the efficacy of combination therapies like enfortumab vedotin and pembrolizumab or EV Pembro, there is keen interest in moving towards therapy de-intensification. The NEO-BLAST trial has the potential to help inform which patients can be de-intensified following standard of care neoadjuvant therapy.

MIBC patients are being tested with standard staging MRI and TrueMRD. If they achieve a complete clinical response and are undetectable by MRD, they will be randomized to definitive local therapy or bladder-sparing active surveillance. We are excited to advance this trial and further the understanding of when a physician can safely de-intensify treatment for these patients.

Our commercial success in MRD will begin with our proof of concept in MIBC in the first half of 2026, which we plan to launch with reimbursement. We expect to leverage our Decipher channel, which we believe reaches approximately 70% of MIBC patients who are seen in the urology and radiation oncology setting. Beyond MIBC, we plan to deliver indication expansion annually in order to serve more patients across more indications.

Moving now to Prosigna. We are on track to launch Prosigna as an LDT for the U.S. breast cancer market in the middle of 2026, given the tremendous opportunity we see ahead. The clinical outcomes data from the 10-year OPTIMA PRELIM study presented in May suggested Prosigna had higher prognostic accuracy in high-risk patients compared to the test initially used to assign patients to treatment groups.

We're excited to see the readout of the full OPTIMA trial, which is the first prospective study to specifically address Prosigna's ability to identify clinically high-risk patients who do not benefit from chemotherapy and can safely avoid the toxicities associated with treatment.

New studies also continue to highlight the use of Prosigna for guiding preoperative therapy. An IMPACT study led by Dana-Farber Cancer Institute investigators and recently published in ESMO Open demonstrated a change in therapy in 35% of patients based on Prosigna results.

At ESMO last month, investigators reported preliminary results of the RIBOLARIS study in which patients with clinically high-risk ER-positive breast cancer were treated with preoperative endocrine therapy plus Ribociclib, a CDK4/6 inhibitor. Prosigna was used to identify patients who achieved a low-risk molecular profile post therapy, allowing a mission of adjuvant chemotherapy. Additional follow-up is required for definitive results, but this study and other preoperative studies underway demonstrate how Prosigna enables precision medicine.

As you can see, we have continued to advance our robust pipeline, having launched Decipher Metastatic in June, completed our NIGHTINGALE lung cancer trial enrollment of 2,400 patients in August and deployed our v2 transcriptome assay. We are making good progress on our MRD, Prosigna and IVD products. With so many new products and capabilities in these 2 years alone, I couldn't be prouder of the Veracyte team who are working tirelessly on behalf of our patients.

Looking ahead, we will be accelerating our investments into our critical projects while maintaining the best-in-class financial profile we've consistently achieved. The strong momentum we have seen this year, together with the impact we expect to make with our upcoming product launches gives us confidence that we will continue to deliver comfortably durable long-term double-digit growth as we relentlessly pursue our mission of improving cancer care for patients all over the world.

With that, I will now turn to Rebecca to review our financial results for the third quarter as well as our updated outlook for 2025.

Thanks, Marc. Q3 was another exceptional quarter with $131.9 million in revenue, an increase of 14% over the prior year period. We grew total volume to approximately 45,900 tests, an 18% increase over the same period in 2024.

Testing revenue during the quarter was $127.8 million, an increase of 17% year-over-year, driven by Decipher and Afirma revenue growth of 26% and 7%, respectively. Total testing volume was approximately 43,700 tests, an increase of 19% over the prior year period and included 17,000 Afirma tests.

Testing ASP was $2,925, a decrease of 2% compared to the prior year, primarily driven by the impact of higher prior period collections in Q3 2024 as well as the Afirma Laboratory Benefit Manager impact previously discussed. Adjusting for the impact of approximately $2.5 million of prior period collections in the quarter, testing ASP would have been approximately $2,875, flat to the prior year period.

Third quarter product volume was approximately 2,200 tests and product revenue was $3.3 million, up 4% year-over-year. Biopharmaceutical and other revenue was $800,000, a decrease compared to the $3.1 million in the third quarter of 2024, given the Veracyte SAS restructuring and liquidation proceedings.

Moving to gross margin and operating expenses, I will discuss our non-GAAP results. Non-GAAP gross margin was 73%, up approximately 150 basis points compared to the prior year period. Testing gross margin of 74% exceeded our expectations, driven by improved lab efficiencies and was roughly flat to the prior year.

Product margin was approximately 800 basis points higher than the prior year at 52%. We still expect product gross margin to decline in Q4 with our transition to a contract manufacturing model. Biopharmaceutical and other gross margin of negative 36% was down year-over-year due to the restructuring proceedings of Veracyte SAS.

Non-GAAP operating expenses were up 2% year-over-year to $58.6 million. Compared to the prior year, research and development expenses decreased by $2 million to $14 million, driven primarily by the deconsolidation of Veracyte SAS. Sales and marketing expenses increased by $1.5 million to $22.4 million, given higher personnel costs supporting Decipher and Afirma. G&A expenses were up $1.5 million to $22.3 million, primarily due to project-related expenses within our support functions.

Moving to profitability and cash metrics. We recorded GAAP net income of $19.1 million, including a $6.7 million loss upon deconsolidation of Veracyte SAS. This is onetime in nature and puts the France accounting impact behind us.

Adjusted EBITDA was $39.7 million or 30.1% of revenue, well above our expectations given the benefit of prior period collections, lab efficiencies and the timing of some project investments, which are now forecasted to occur in the fourth quarter and into 2026. We generated $44.8 million of cash from operations and ended the quarter with $366 million of cash and cash equivalents.

Turning now to our 2025 outlook. We are raising our 2025 total revenue guidance to $506 million to $510 million from our prior guidance of $496 million to $504 million. Due to our strong year-to-date performance, we are raising testing revenue guidance to $484 million to $487 million from our prior guidance of $477 million to $483 million. This reflects a raised Decipher outlook and continued Afirma volume strength.

As a result, testing revenue growth is now estimated to be 16% as compared to the prior guidance of 14% to 15%. We are also raising adjusted EBITDA margin guidance for the year to exceed 25% from our previous guidance of 23.5%, which was already meaningfully higher than our original 21.6% 2025 guide. This reflects our year-to-date profitability outperformance and expectations for accelerated investment in the fourth quarter in support of our strategic growth drivers.

We expect adjusted EBITDA margin to be approximately 25% in the fourth quarter and in future years, barring any specific incremental investments we decide to make, which we would, of course, communicate as appropriate.

In closing, I am thrilled with our progress over the course of 2025. As Marc shared, we delivered on our product goals this year, including the launch of Decipher for metastatic patients and the transition of Afirma to the v2 transcriptome. With strong momentum heading into year-end, I'm excited to close out a successful 2025 and have confidence in our trajectory for '26 and beyond.

We'll now go into the Q&A portion of the call. Operator, please open the line.

[Operator Instructions] Our first question comes from Doug Schenkel at Wolfe Research.

So I want to ask, I think -- I guess, 2 for Marc, and then I guess if I can take the liberty to ask a financial question of Rebecca. So on Marc, digital pathology, there were several presentations as you talked about in your prepared remarks at the ASTRO Annual Meeting showing weak correlation between multimodal AI scores and Decipher. As you talked about, it suggests these assays are complementary.

Just on that topic, I'm curious, how do clinicians manage discordant results? Do you see this as being a concern for Decipher? Or is this something that you think actually leads folks to maybe kind of prioritize Decipher over some of the emerging competitors? And then maybe while we're on the topic, could you just talk a little bit about your own internal digital pathology efforts and kind of what the time lines are there?

Yes. Happy to, Doug, and then we can get to your financial questions. And actually, I'll answer these questions, and then I'll turn a little bit to John on the commercial aspects and Phil on the DPAI internal digital program.

But I think the way to think about this is if you think about new technologies, including genomics of 10 or a dozen years ago, there's a lot of excitement and new tests come out. And I think what's really important is to go at an appropriate pace, develop the clinical evidence and make sure that evidence supports the utility and most importantly, the patients aren't getting harmed by the wrong decisions and the physicians aren't getting confused.

This is kind of the formula we took with Decipher and letting the research community help drive the research behind Decipher, which is what we believe has resulted in it being so popular. I think we're at that stage now with DPAI-based models, right? It's exciting technology. It's new, but enough evidence hasn't been generated yet. And then -- and so you do get discordant results. And there isn't anything to tell the physician what to do in that case. And so what they do is pretty logical.

They focus on the gold standard, which, frankly, is Decipher. So if you've got a Decipher high and you have a DPAI-based low result, you certainly wouldn't want to undertreat that patient. And so you would focus on the Decipher result, treat accordingly, but the DPAI, the new technology loses credibility. And I think that's a bad thing for the industry as a whole.

So our approach of making sure that we are really focused on developing the evidence and letting the research community do that is what we think will ultimately drive success for a technology that should have its place if done the right way.

Let me turn over to John on the commercial side, what we're hearing from physicians.

Yes. Thanks, Marc, and thanks, Doug. It's a good question. It's difficult for us to firmly lean into this concept of complementarity while we are seeing significant rates of discordance. And while it leads to physicians ultimately then being confused as to how to interpret the results and how to proceed with the patient. And so on the commercial side, we're spending a lot of time or revisiting the wealth of evidence substantiating the clinical validation and utility of Decipher versus that of emerging technologies.

And ultimately, physicians and based on the results of a survey that we've run, they heavily lean on the evidence that's currently substantiating Decipher and they see it as the current standard of care. Moving forward, we would hope that complementarity becomes more defined around how are insights to be developed in the best platform that ultimately associates a result with a clinical outcome and that will inform the right patient management decision.

To do that, as Marc mentioned, we're working very closely with our current network of collaborators, key opinion leaders. Ultimately, we will curate and develop new signatures that will land on GRID. Ultimately, those will make their way into an equivalent of Molecular Features Report, such as we're doing now with the current GRID. And that's what true complementary in my mind, looks like. It's the rounding of clinical decisions aggregated and curated by an actionable report.

And then maybe, Phil, anything to add standpoint of the internal development program?

Yes. Happy to, Doug, and thanks for the question. So being a custodian of over 200,000 transcriptomes and incorporating pathology scanning of whole slide images into our research program, we are in a very -- we have probably the best and most comprehensive data set where we can dig into that interface that John was talking about and figure out how to take the best of both the transcriptome, which is represented the Decipher commercially and the emerging excitement around DPAI.

That is in full steam. We're digging in with collaborators as we've done with transcriptomes through the GRID. We're working with external -- some of the top investigators to drive that research forward and as well as both developing a model under -- as a DPAI model as well as understanding the interface and the biology that's measured there.

We also have looked at that and see that it can help some of the prognostic, but we're also really understanding that through the GRID work we've done, we see a lot of opportunity, as Marc mentioned, on the molecular features that are coming out of the GRID and the different signatures. And we're excited about the LUM-B, non-LUM-B distinction that we saw presented at ASTRO.

We're excited about the P10 activity, that's STAMPEDE activities. And we're seeing a number of the signatures that are predictive for therapeutic benefit. And so we are in an excellent place to look at the interface between the 2. Right now, we're driving forward with the molecular features because they're predictive, and we're in the best position of anybody to bring digital pathology into the clinic in a complementary and in a rigorous way.

Thanks, Phil. Okay. And Doug, you had a -- sorry, hopefully, we answered that question and you had a question on financial.

Yes. No, that was fantastic, and I appreciate all the detail. And in an effort to be respectful to my sell-side peers, I'm going to try to make the follow-up a much quicker one. I think for Rebecca, you're a year ahead of plan on margin targets, which is fantastic. There are areas you've talked about planning to invest in next year, like I think building up the breast channel is one example. How are you contemplating balancing the margin trajectory and the upside that you're generating with maybe the opportunity to opportunistically maybe pull forward some investment in a period of strength to drive future growth? Would be curious to just get your thinking and obviously, that helps us as we're contemplating the model updates.

Yes, absolutely. Thanks, Doug, for the question. And you're right, we're in a very privileged position that we've gotten to based on really solid portfolio management and planning and quite regimented project prioritization. And I don't expect that to change. We have also a number of different initiatives that we're undertaking.

As we did our strategic plan this year, we actually thought that the number of opportunities we had to invest in was almost embarrassing. It was a wealth of riches. And we remain in an incredibly fortunate position in terms of being able to help patients across the cancer care continuum with those investments. And so we are accelerating them to your point.

This Q4 guide implies we hire a number of heads that we're working on hiring. We spend some money on clinical trials that we're hoping to spend and also, we start to scour the landscape for the best breast sales leader. And so all of those things will happen in 2025 are implied in the approximately 25% Q4.

As we have talked about previously, looking ahead, we really do plan on managing to that approximate 25% adjusted EBITDA target going forward. We have a number of tailwinds on the gross margin side next year that we will benefit from, including the full year of the v2 transcriptome. And we have obviously the benefit of no longer having the burn of the French entity.

Those will be -- those kind of good guys will be offset by incremental spend on the breast channel, incremental spend on MRD and incremental spend on the Prosigna launch in general and the development to get there. So I think -- think about that 25% is our goal in any given year. And we're going to do our best to manage the P&L to that, and we will be bringing forward spend into 2025 to accomplish this.

Our next question comes from Puneet Souda at Leerink Partners.

I'll try to wrap both of my questions in one, hopefully not too long. On the prostate side, you're well above 25% volume growth for Decipher. My question is, given the penetration that you have today, how should we think about the 2026 growth? Can you still grow more than 20% in volumes here for Decipher in '26?

And then on the MRD side, I would love a perspective from Phil and the folks in the room as well. I appreciate you're getting closer to the launch here on MRD. But we have seen data so far from competitors where we have moved from observational trial to not prospective data sets that are getting published in NEJM. We saw the [ Tece ] data with the IMvigor011 MIBC trial.

And there are other data sets that are coming from CRC, lung, other competitors entering the market. So how should we think about Veracyte's MRD position? And more importantly, what's the market strategy here? How do you differentiate? And how do you go to an oncologist and say, here is a test that you ought to employ in your practice, just given the competitive landscape?

Yes. Thanks, Puneet. On the first question, let me take that real quick. And I'll actually cover this as a company as a whole, including Afirma and Decipher. You kind of -- this question of durable long-term growth has been a question that we've dealt with for quite a while, understandably. And if you actually take a look back and look at Afirma has grown year-over-year for the last 13 quarters. Decipher has grown over 25% in volume for 14 quarters in a row.

And if you think about where they both were coming into the year when we looked at the market numbers, Afirma was about -- we had about 1/3 of the TAM and Decipher, we had about 25% of the TAM. So in both cases, there's significant growth opportunity ahead, which is why we've said we feel that the market penetration and market share opportunity and the tailwinds we have and frankly, the lack of headwinds given everything we've done around evidence and NCCN guidelines and so on is what's going to help us get -- comfortably get double-digit growth durably for the foreseeable future, and that includes 2026. So that isn't a concern of mine.

When you actually take those 2 core ones alone and you get double-digit -- comfortable double-digit growth and you add to that MRD and Prosigna in the nearer term and international and nasal swab in the longer term, you can see we've got a pretty well mapped out.

Since you brought up MRD on that one, I mean, we've had data published for our MRD test, including in bladder for quite a while. And as I mentioned today, we've got a lot of publications that are in the works. We've talked about UMBRELLA before. We've talked about NEO-BLAST today. I'll let Phil talk about his excitement around some of the clinical studies very, very briefly. But essentially, we are very much doing our bit to make sure that we're part of the evidence generation journey.

Yes, Puneet, thanks for the question. And I really feel quite confident that between the performance of our test, the strength of our clinical evidence portfolio and our commercial channel, we're going to be a leading competitor in muscle invasive bladder cancer with our MRD test.

It's incredibly exciting to see the prospective trials come out like IMvigor011. It was incredible to see the NIAGARA trial to talk about in the neoadjuvant setting. These are foundational trials that are really demonstrating that MRD status is a new disease state and a state that we can take full advantage of the medical oncologist. I'm extremely excited to be able to manage patients more precisely and earlier with a compendium of therapies that are more effective.

We will have to demonstrate with confidence the performance of our tests and I have confidence in our portfolio. What I've seen already, as Marc said, we've already published. We're already in prospective trials. And to cross back to a question that Rebecca had, our clinical trial portfolio will -- we do have opportunities to use some of that margin on our clinical trial portfolio, and we are doing so. Veracyte, I came to Veracyte because of the consistent history of investing in evidence, and this is no exception.

And just one last thing to add to Marc's response on 2026, Puneet, just to sum it all up, we are -- as we're sitting here in our budget planning season, our early look at 2026 revenue is above the Street just to be blunt about it. So we're obviously not guiding today. We'll guide either early in the first quarter at a competitor's conference or shortly thereafter on our Q4 call. But given the trends we're seeing year-to-date, quarter-to-date in Q4, we're extremely excited about 2026 and beyond. And that even is taking into account the around $10 million headwind from biopharma and other revenue that we won't have next year.

So I think as we're sitting here, we're -- the playbook is working, right? What we've invested in is demonstrating the evidence, which is demonstrating the utility, which is demonstrating the guidelines and coverage and growth and penetration.

Thanks, Rebecca, thanks Puneet, for the question.

Our next question comes from Kyle Mikson at Canaccord.

Congrats on the awesome quarter. Maybe, Rebecca, on your point there, when you look at the Street estimates for '26, I mean, when you look at like what Decipher is expected to do, what we think Afirma can do, where are people underappreciating Afirma, for example? Just curious what you think about that.

And then maybe for John or for Phil, the molecular features for Decipher, just could you talk about how much of the unmet need those signatures are and if there's a pipeline beyond PORTOS and PTEN?

Yes, I'll take the first one. Effectively, the range is pretty wide on each, Kyle. So I don't want to make a statement that's general in nature and have it be expounded or extrapolated into something that is wide in nature. So I would say, in general, we're above the average, but I don't want to go beyond that given I don't have the ranges in my mind for each. So I think the statement can just be applied to the average for both.

And then we'll let John talk about the commercial opportunity for molecular features and why it's important.

Yes. So molecular features are a response to the evidence that's emerging as these collaborative groups use Decipher more and more as a selection enrichment randomization tool. And the evidence from STAMPEDE, from PORTOS, from BALANCE were designed to meet a need in the market, which necessarily is treatment of and management of high-risk and metastatic patients is becoming more and more heterogeneous. There are clearly differences in response to a variety of these therapeutics. And so the need for a biomarker is exceptionally high.

You can look at the results of those studies to see the benefit of using Decipher in those studies, and we're meeting that need by providing these signatures now in a consolidated report with these predictive biomarkers.

And Kyle, think of this as a repeatable formula. It's enabled by GRID and whole transcriptome approach. And you'll see us at these signatures when the clinical utility evidence is there and there's an unmet need in our customer base.

Our next question comes from Lu Li at UBS.

Congrats on the quarter. First question, I wanted to dig into a little bit on the 2025 guide. It does seem like the Q4 would seem to be roughly flat as of Q3. Any days impact or maybe just like holiday season? Please correct me if I'm wrong on this one.

No, it's a great question. So recall, we had $2.5 million of prior period collections in the quarter in Q3, and that isn't necessarily implied in the guide. So that would be one thing. The other thing is the way the holidays do fall is a little bit more challenging than prior years, but those are the 2 things I would take into consideration. The third thing I would say is we did have a little bit of French revenue in Q3 that won't repeat in Q4.

Got it. Appreciate that. And then I wanted to dig into the breast investment in 2026. Possible that you can size like how big of the channel that you're planning to build? And then also the kind of like the spend related to the Prosigna launch? And then second, also related to kind of the margin question. On Afirma v2, I think it's not fully transitioned yet. I wonder how much of the cost benefit that we've already seen in the quarter? And then how much left that we can potentially see the margin benefit in 2026?

Thank you for the question. I'll ask John to talk about the commercial scale-up strategy.

Yes. Thanks for the question. I mean we're excited about Prosigna. We're excited about in anticipation of the release of the OPTIMA trial results at ASCO 2026 and we're excited about the potential launch. To do that, we will have to build a sales channel specifically focused on breast cancer oncologists. We will do that in a very measured way. It's always been our approach to not get over our skis from a spend standpoint and to build the sales team as we see the demand emerging.

The plan here is fairly prescriptive. All you got to do is look at how we launched and have led the field in Decipher with prostate cancer to understand how we will approach the market in breast cancer. We will lean into the GRID. We will lean into collaborations with key opinion leaders. We will lean in with buy-in from market leaders on the HCP side and drive the demand from the top down and build the sales team accordingly.

Yes. And in terms of the gross margin in the quarter and the v2 transcriptome, so think about the gross margin dynamic on testing as a quarter -- I'm sorry, a month of goodness from the V2 transcriptome for 1/3 of the Afirma volume. Obviously, as we transition throughout Q4, that will -- by the end of Q4, that will go to 100%, but I would really think about that only being at 100% for '26.

We also had the benefit of $2.5 million of prior period collections in the quarter. And then we did have a decently sized write-off associated with v1 transcriptome reagents. And so those all kind of netted out with regard to the testing gross margin trends on a sequential basis, if that helps.

We're not going to quantify the v2 transcriptome benefit because effectively, it's one of our levers for fueling the investments across the rest of the portfolio and don't want folks to get ahead of themselves on profitability. We will be managing our P&L to that 25% in '26 and beyond, and that gives us ample room given the programs we have in hand to invest for continued revenue growth while also delivering a best-in-class financial profile.

Our next question comes from Subha Nambi at Guggenheim.

There have been a lot of updates throughout the year when it comes to competitive landscape for Decipher. In your view, in what ways have things played out as you expected? And what has surprised you the most?

Yes, great question, Subha. Thanks for that. There have been a lot -- and there will continue to be competitive updates, I think. And I think similar to what we talked about for MRD, there's a rising tide here, and we were able to benefit from drafting on others to pave the way for molecular diagnostics in prostate cancer. And through evidence development and having a strong test and ultimately NCCN guidelines, we've been able to benefit from that.

It's played out maybe better than we thought, frankly. I think Decipher has taken more share than I would have guessed it would coming into the year. And the NCCN guidelines are kind of an unknown quantity. It's hard to quantify the benefit you're going to get from those. And then obviously, there's been a fair bit of noise around DPAI, and we addressed that question extensively at the beginning, and that's turned out to be a lot of noise and not a lot of substance in terms of the market share and the growth rate that we're seeing in Decipher.

And then do you still expect to have a commercial Prosigna LDT midway through 2026? And if yes, could you provide some color on the time leading up to then? Like what should we expect to see LDT performance data and so on and so forth, I think the [ OPTIMAS ] data?

Yes, we do expect to have a commercial Prosigna LDT halfway through 2026. You're not going to see a ton of data from us there because we're -- obviously, you've seen the OPTIMA PRELIM data. We're waiting for the final OPTIMA data. That's the key evidence behind that test. And then actually generating that test in our lab is a pretty straightforward process for us with a tech assessment, validation, bridging, New York State approval, all those things, which are fairly normal processes for us to follow.

Our next question comes from Mason Carrico at Stephens.

This is Ben on for Mason here. On MRD, would you be able to provide some color on the overlap of urologists that are treating prostate cancer and our Decipher targets and are also those treating muscle invasive bladder cancer that are going to be targets for your MRD assay. What's the overlap here? And really just what does that Venn diagram look like of those 2 urologists?

I mean it's an exceptionally high overlap. Thanks for the question. We expect to be able to serve upwards of 70% of the TAM based on the channels that we currently control. These are primarily going to be a combination of urologists and oncologists. We feel confident we can serve the market.

Okay. Great. And then I appreciate the color that you gave on Decipher's growth in high-risk patients this quarter. Are you able to go a little deeper there and maybe comment on how ordering patterns have trended in localized patients after urologists have adopted the metastatic offering? Is this a fairly immediate impact to orders that you're seeing?

Maybe I'll take that just in terms of stratifying the Decipher market that we're going after. Obviously, we added 30,000 patients when we launched metastatic and now we have the full TAM addressable by Decipher. We also mentioned BCR-based patients, which could be part of the prevalent population, hard to size it, but that's a potential upside. Of course, you've got incidence growth as well.

When you kind of subdivide the localized disease population, we've said over 20% in low. So that's actually quite a high penetration for us. We said that the high risk is actually one of our highest growers this quarter, and that's driven a lot by the metastatic data that's come out as well.

And so while intermediate has always been the highest penetrated and maybe even the highest growing area in the past, it's clear that we are making great traction in every single risk category of prostate cancer patients and metastatic really helped that. And GRID and everything else, NCCN guidelines help that as well.

Our next question comes from Andrew Brackmann at William Blair.

Maybe just on TrueMRD here. I appreciate all the color on the studies in the pipeline there. But can you maybe just sort of talk about some of the considerations that you have when you sort of think about choosing which indications to expand sort of each year as we sort of look at it, some of those indications are a bit crowded and there's others where Veracyte has a great channel. And so how do you sort of think about building out that annual road map of additional indications?

Yes, it's a great question. And Andrew, thanks for referencing our brand, TrueMRD. We're excited about that product. Obviously, we fix muscle invasive bladder cancer for the reasons John just highlighted in terms of the Venn diagram and the overlap there with our existing customer base.

You can imagine us really potentially going after any market with TrueMRD because it is a pan-cancer platform. But we will go after markets where we have an inherent advantage, for example, where we have an existing channel or building a channel. It's really great for us to build out the entire care continuum. I think it will really help in MRD to be a company that is able to support that patient and that physician right at the upfront in their diagnostic journey with a prognostic test or a diagnostic test or a predictive test as they're being treated and then an MRD test post treatment.

And so obviously, covering that whole spectrum there will be an important advantage for us. And then beyond that, it will be subject to things like cohort availability, existing published data that we've already got. We won't shy away from competitive markets. We believe our whole genome-based approach is a differentiator.

And so that will certainly -- some markets will be harder to go after than others, especially where they're already well penetrated. And let's face it, most MRD markets are not well penetrated today. So plenty of opportunity. But we won't shy away from it. We'll just be thoughtful about how we do that and the timing.

Okay. That's perfect. And then somewhat related to that, another great quarter of cash generation here. So how should we sort of be thinking about your appetite for maybe expanding the portfolio through some acquisitions to maybe round out that care offering?

Yes. I mean, absolutely. We've -- I'm very pleased with the performance of the business, especially the cash generation as well this quarter. And as Rebecca said, we're going to -- first and foremost, we look at investing in our business, clinical trials, product development, some of the stuff in infrastructure. We're really building an incredibly efficient engine here at Veracyte, and we have the opportunity to be able to do that.

M&A, of course, is on the list. And if there's something that makes sense, then we would go after it. But our narrative on this hasn't changed one bit. The funnel isn't huge. We look at everything. We kick the tires, and we're very diligent, and we're not -- this cash doesn't burn a hole in our pockets, far from it. It doesn't change the VC approach that we take. And then beyond that, other capital allocation opportunities, none of which are top of mind for us right now.

Anything you want to add, Rebecca.

No, you covered it quite well.

Our next question comes from Andrew Cooper at Raymond James.

Maybe first, just one on some of the numbers. I think in the script, you called out a little bit of timing of spend on the 30% EBITDA margin this quarter, but you do have EBITDA up, I think, around $10 million or so at the midpoint. So when you think about those prior plans versus where we are now, what was timing? What was operational performance?

And then maybe in the guide, is there any incremental spend that you're pulling in that wasn't expected in '25 in the first place? And how do we think about sort of the jumping off point as we head into next year from an OpEx perspective?

Yes, fair question, Andrew. So effectively, what was good news was the revenue outperformance versus our commentary plus prior period collections, which obviously flowed on 100%. I would say there was a little bit of v2 Afirma goodness in there, a little bit further ahead of kind of the transition than we would maybe have expected, though that's a rounding error.

With regard to the 2025 spend, I would say there -- I wouldn't call it anything specifically material that would fold in. I would say maybe a couple of heads here and there, but we just try to derisk it as much as possible. And the jumping off point for next year, I think you've effectively quantified it decently well. You can effectively back into whatever you think the revenue number is with getting to that 25% adjusted EBITDA for 2026.

Okay. Helpful. And then already asked, maybe just a little bit more on the Molecular Features Reports. Help us frame how that fits in from a competitive perspective and what you think that can do? Is there any opportunity to kind of go out and monetize that a little bit more directly? How does it compare to something like Promoter Score that you've added on Afirma and what that's helped kind of enable with that platform?

Yes. Great question. No, there isn't a way to monetize it directly. But I believe it's yet another way that we continue to improve self-disrupt, add evidence, prove to each one of our HCP customers that they are using the best tool to make the most informed clinical management decision on behalf of their prostate cancer patients. This is just one more thing that we will continue to do.

Just to add from a medical perspective, adding these features to our report underscores the value of the biology. And so the treatment of men in that high-risk group and that biochemical occurrence in the metastatic group where we're seeing some very good growth because of our coverage -- recent coverage in metastatic and increased interest in the high risk is getting more complex.

We have hormonal therapy. We have chemotherapy. We have radiation therapy. We have a whole slew of therapeutics, adding predictive signatures to complement the best-in-class prognostic signature will really help clinicians, urologists as well as some of the radiation therapists and medical oncologists in that space. And so it's part of the Decipher report, but it really helps drive a lot of and inform some of the increasingly complex decisions managing those higher-risk patients.

This concludes the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Okay. I think we can get started. Kallum Titchmarsh here from the life sciences team at Morgan Stanley. Really pleased today to be joined by the team from Veracyte. We have Marc Stapley, CEO; and Rebecca Chambers, CFO. Before we get started, the good stuff, the disclosures. So please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures.

So thank you, everyone, for joining. Marc, maybe just to set the stage for us, can you walk us through how 2025 has played out so far versus your initial expectations? Beyond the numbers, what are you most proud of? And what challenges would you maybe call out?

Yes, I'm happy to, and thanks very much for having us here today. It's our pleasure to be here. Maybe I can just cover some of the formalities as well and just remind everybody that to the extent we'd be making forward-looking statements, they're expected to be covered under the safe harbor that can be found on our website at www.veracyte.com.

With that said, I appreciate the question around 2025. It's been an interesting year for Veracyte so far with a lot of accomplishments under our belt. We actually feel very good about where we are, especially relative to where we were coming into the year. A couple of things, if I think about starting on the top line, the growth across the businesses has been -- the core business has been really encouraging and impressive with Decipher growing 32% year-to-date and Afirma growing 9% year-to-date in volume terms. Decipher very much exceeding our expectations and Afirma meeting our expectations as we came into the year. And so that's an encouraging set of trends.

If you think about it in terms of what we've accomplished on the product side, we launched our metastatic product for Decipher. We just launched our internal V2 transcriptome product that helps us in the lab and from a cost and scaling standpoint. We are making great progress on our long-term growth drivers in MRD, where we just completed the enrollment of NIGHTINGALE. The final patient there, 2,400 patients. And we're making progress on our international strategy.

On that note, we completed our activities with our French entity, and that's now to a point where we go forward now with a third-party contract manufacturer, which is a great outcome and one that we really strived hard to achieve without interrupting our international business. And then from a profitability standpoint, I couldn't be more pleased with how we performed relative to our expectations coming into the year with some very strong performance on the adjusted EBITDA line. So kind of when I net all that out, I think it's fair to say that 2025 has got off to an extremely good start.

And just one quick thing to add. I think as we look into '26 and beyond with the metastatic launch, the STAMPEDE publication that came to bear last week or so is actually quite impactful for that metastatic indication as well. And so that, obviously, as we go through any given year, we're trying to satisfy the catalyst for that year as well as ensure there's future catalysts, and then we put the STAMPEDE piece into that future catalyst category.

Great. A lot to dig into there. Maybe let's start with Decipher. You're market leader here, I think 65% share. Market itself is around 40% penetrated. What are some of the strategies you're implementing to further increase penetration from here?

Yes. Thanks for that question. First and foremost, I think it's fair to say that Decipher is the only test on the market that addresses the entire incidence population for prostate cancer now with the addition of metastatic. And so we've been making great progress in low risk, intermediate risk, high risk, and now we expect to do the same in metastatic. And so that is, I'd say, the #1 kind of push for us. The second is Decipher has NCCN #1 guidelines, and those guidelines have been, I think, a really strong catalyst to help us grow in the localized setting. And at some point, especially with reference to the STAMPEDE data and other studies that Rebecca mentioned, we should be able to get guidelines as well for metastatic.

And I think that would be a helpful catalyst, not necessarily needed to start penetration because we proved that in localized setting. The guidelines are helpful, but they're not necessary to get going. And then continuing to drive our core strategy of more data drives more insights, which drives more evidence and drives more penetration. We are consistently coming out with and seeing others launch new data and new studies and new publications that include Decipher and just continue to grow on the body of evidence that we already have.

And coverage, obviously, pretty strong now, 200 million covered lives. Afirma, obviously, closer to 275 million, I believe. So it's like now, I guess, a smaller tail of lives you need covered. Just talk us through whether you can bridge that gap further from here.

Yes, it is. I mean there's a distinction there in terms of for prostate cancer, it's more like 2/3 Medicare population. And obviously, we have the Medicare rate, whereas for thyroid cancer, it's more like 1/3. So those 2 have a very different Medicare dynamic. And then to your point around covered lives, that's a commercial payer concept. We have a little way to go on the Decipher side, but we've gotten a lot of the big payers along the way, including last year when we had an announcement around one significant one that we added. So a little bit more room to grow there, which, of course, will help bridge that gap between where we are from a Medicare standpoint and our ASP as we get to higher coverage. But I'd say there's a lot of blocking and tackling, and it takes multiple years to get to where Afirma is. And it took multiple years for Afirma to get there. So we'll get there with Decipher. It just takes time.

And one of the things that isn't really captured in the covered lives number is the coverage gap. So I'm wondering if there are any that you feel stand out today that are worth targeting?

Not really. I mean, again, it's that difference between 200 and 270 and making sure that we contract with commercial payers and that we do it the right way. Medicaid continues to be for both our core tests a gap, but that's a small single digit to a maximum of 10% of the volume there.

Yes. And I would just add, I mean, we're in the -- as Marc mentioned earlier, we're in the portion where we're -- each payer is maybe a couple of hundred thousand, maybe 1 million lives. And so I think it is an equal amount of work to get those as it is those that are 20 million, 30 million covered lives. And so the progress over the last 3 or 4 years has been amazing. The team has done a really fabulous job. I expect that their success will continue. It's just the impact of their success on that Pareto of payers is going to be less meaningful in any given year. But over a 5-year time frame, we should absolutely be able to achieve ASP gains on the Decipher side.

Fantastic. And you noted an uptick in interest from physicians for NCCN high-risk patients. Just help us to understand how meaningful that interest is. I think you suggested the pool represents about 25% of the incidence population.

It does. And we've been -- in the localized setting, we've been gaining penetration into that high-risk market, albeit intermediate risk is obviously where the greatest penetration typically is and would be, you would expect that. On the high-risk side, I think it's early days yet because we haven't had the product fully launched for long. but it's starting to initiate conversations with patients because we have the metastatic test now who are dealing with high-risk patients.

And before, they might have thought, okay, I have a clear pathway and a way to treat these patients. And now that Decipher metastatic, including some of the studies that have come out in support of it, cover both high-risk and metastatic patients, I actually might be using Decipher going forward to give me a better prognostic outcome for that patient or even potentially a predictive outcome. And so I think it's -- what's encouraging is it's starting to initiate those conversations. Too early to say whether that actually translates to orders in the high-risk setting, but it certainly gives us positive encouragement.

And you touched on it here, but the metastatic side, how has early feedback been from the broader launch? Again, it's been 2 months, so I appreciate it.

I'd say very positive. I mean we've yet to find customers of ours who say they're not interested in some way in the metastatic. I mean there's nobody that we're aware of that has said, no, I wouldn't use it. I think the level of interest is there. I think you're going to find physicians from those who say, absolutely, I'm now going to include that on every metastatic patient to the ones who say, I need to see more evidence. A couple of studies are good. STAMPEDE is good, but I want to see more to those who say, I'm going to wait until it's in guidelines and everything in between those categories.

And you're continuing to invest in digital pathology studies for Decipher. Maybe just dive into that and give us some color on what excites you?

Yes, invest in and enable investment in digital pathology studies. So as we did when we launched Decipher, we want to enable research. We want researchers to be able to look at the data, both with and without necessarily the molecular diagnostics. They're able to look at the digital pathology. They're able to look at outcomes. We scanned 90,000 slides so far across 50,000 patients, and we're scanning on an ongoing basis. And so it just gives our researchers the opportunity to do whatever studies they want to do, gives us the opportunity to fund or support whatever studies we want to support.

We continue to believe that it has potential complementary -- it could be potentially complementary to molecular diagnostics, but doesn't replace molecular diagnostics. You don't get the level of resolution that you get with molecular with a pathology -- digital pathology-based test with or without AI. You just don't get to that level of detail, and we've consistently seen that and some of the early studies have indicated that as well. And so as the research creates evidence that evidence could or could not turn into a commercial opportunity, we'll see how that plays out in the future.

And on the Helix partnership, maybe just walk us through the rationale there and what change you're hoping to drive with that.

Yes. Now that we've launched the metastatic test, there are guidelines that suggest that those patients should be getting a hereditary cancer test, and Helix is one of the market leaders in terms of capability, in our opinion, around a whole exome-based approach to hereditary cancer. And so we've entered into a partnership with them. And Helix takes, as I mentioned, a whole exome approach, which is so consistent with our approach of more data driving more insights. And so it's a very natural partnership for us. I should disclose I have a relationship with Helix. I'm on the Board. And I'm great to see these 2 companies coming together and being able to create this opportunity so that we can serve our physician customers with a hereditary solution should they need it without necessarily creating a product ourselves that, frankly, we decided we don't need to do. We'll let Helix do that.

How impactful could STAMPEDE be?

Very impactful. I mean it's certainly impactful for the patient. If you think about what STAMPEDE tells the physician, which is for -- and just to reiterate, for many of the patients who are metastatic, not every patient is going to benefit from docetaxel, and in fact, of those patients that aren't going to benefit, they're going through the toxicity of the chemotherapy that they don't necessarily need to go through. In the past, the physicians have had a blunt instrument, if you like, tumor volume to help guide that decision. And STAMPEDE demonstrated that tumor volume isn't necessarily the right indicator. It's not the biomarker. And Decipher is a very strong biomarker for which patients will and will not benefit. And so the opportunity to deescalate confidently is what STAMPEDE demonstrates, and I think that will really help us drive Decipher in the metastatic population. Metastatic population is about 10%, so call it 30,000 patients per year.

Exciting. And I want to shift now to the thyroid side. Similar question to what I had with Decipher. But I think penetration, thyroid now around 65%. How are you looking to bridge to that 80% that I think you've spoken about?

Yes. I mean, to continue to get Afirma to the market share and the market penetration that we ultimately think it can get to, I think it's a lot of continuing to do what we're already doing. That's the good news, right? We are -- we have a great test. It's extremely well validated. There's great evidence for it. And with our recent launch of the GRID research tool, we're enabling more evidence, which again fits in with the whole Veracyte philosophy and strategy around data drives insights, drives evidence, drives adoption. And again, just a reminder that we run a whole transcriptome in the case of Afirma, just like we do with Decipher, and that's what's enabling this research to be done.

And you've seen some publications around that recently. So I think that helps to gain share as we think about Afirma as a high-performing test that has a lot of evidence behind it and growing evidence behind it. The other thing is we -- as I mentioned before, we launched our V2 transcriptome assay, which is the backbone next-gen sequencing test, the new version of that, that we have in our lab. That got launched a couple of weeks ago. The initial patient reports have gone out and everything, thanks to the incredible efforts of our team, has gone very, very well. And so it's exciting to see that. That platform will form the backbone of the new tests that we launched like Prosigna as well. So it's a scalable, durable platform for the future of Veracyte.

And will you need to expand the sales force meaningfully to get some of those targets, do you think?

Yes, it's a great question. The answer is no. We have -- in both Afirma and Decipher, we have, call it, 50-plus sales reps who are doing an amazing job, and we grow that sales force between low single digit and 5 or 6 people, a handful every year, and that is proving to be not only sufficient but optimal. The territory management is a key component of designing and optimizing the sales team, and they do a really good job of that. And they've built great relationships, and they're continuing to do so. So I couldn't be happier with both our sales teams on the urology and the endocrinology side, and we don't see the need for significant outsized growth in those teams going forward.

And the reason for that does come back to the data piece, right? Because we are generating so much data and driving publications that demonstrate the clinical utility. We effectively have a strong podium presence. And so the leverage, while it is higher cost, obviously, to do a whole transcriptome versus a qPCR panel or something similar, the leverage that it affords us on the R&D and the sales and marketing side is actually quite attractive. So we really love this model of having more data to drive more insights and more utility, and that translates into the rest of the P&L.

Fantastic. And I want to hit on the LCD from last year. I think you talked about up to 30,000 patients annually with that specific module classification. So...

B-V.

Yes. So how has that been thus far?

Yes. I mean it's going well. I wouldn't say it's huge numbers, and we didn't expect it to be huge numbers, I mean, in that indication of Bethesda V, but we're starting to see some traction there. And I think it just helps to again reinforce the breadth and depth of our test. We added TERT promoter gene a couple of years ago as well for a very similar reason. I mean the more the utility can expand across the care continuum and across indications like we have with Decipher as well, the more we're able to service our customers and be an ally to them in giving them more insights. And so we're starting to see some physicians who are interested in Afirma for B-V, but the bulk of the growth is continuing to come from the indeterminate B-III and B-IV.

And just one thing to add, about 1/3 of those 30,000 are actually Medicare patients. And so that's what the LCD covers. For commercial coverage, some do, some don't. And so we would have to grind all the way up to that 30,000. And so when you think about kind of the prioritization of our managed care team, they're obviously going to go after Decipher before they focus on B-V, right? So -- and also contracting more on the Afirma side. So that's just one thing. That's one of the reasons why it's not -- it's large of a driver in, say, metastatic. Metastatic conversely has the same patient population, but 2/3 is Medicare. And so it's going to be a much more meaningful driver.

Got it. And just framing up volume growth, I think you're expecting high single digits this year, 6% to 7% revenue growth. Is this the right framework to be thinking about Afirma over the mid- to long term?

Yes. So when it comes down to it, you're having incidence growth of around 3%. We have share gains, and we have penetration, right? And so those are the 3 vectors by which we will continue to grow Afirma. We haven't officially guided what we would expect Afirma revenue growth to be outside of 2025, but there's no reason to think that a mid- to high single-digit type delivery of volume growth isn't achievable. At some point in time, that does start to peter out. We thought it was going to be 2022, '27, '28, '29, we're just going to have to -- I think we have good line of sight on a rolling 12-month basis. But given where we are at in the penetration curve and the life cycle, obviously, share and incidence growth is going to be increasingly important for us to be able to continue to deliver mid- to high single digits.

Understood. And you touched on GRID. I think new version coming later in the year. So just talk us through some of the features we should expect with the new version and how it improves upon what we have today.

Yes. I mean we listen to our customers as they complete this research and look at the data, the extraneous data that is provided by that. And our goal is always to take some of those features and move them into the clinical report over time if they have value and utility. And so that's something that we look at on both the Decipher and Afirma side. No clarity yet on what those indications are, but it's based on what the customers and physicians are telling us that they're interested in.

Understood. Shifting on to Percepta. Talk us through the market opportunity for nasal swab and how you go about addressing that unmet need.

Yes. So a reminder for everybody, the nasal swab is a -- it's what it says. It's a nasal swab, quite simply, that is used to classify patients as low, intermediate and high risk for lung cancer. So think of it as a truly noninvasive test for patients who've got a lung nodule. These patients are either current or former smokers who meet that criteria. And then this test is able to be used, as I said, to help classify their risk of lung cancer. The population is significant. The largest population today is the incidental population, patients who are found to have a lung nodule when they're undergoing some other procedure. They're not there for screening. That is about 1.6 million patients a year in the U.S. alone.

The screening population is much larger. There's about 15 million patients who should be getting lung cancer screening in the U.S. every year according to USPSTF guidelines, but only a very small percentage of those patients are actually getting screened today, and that results in around another 300,000 lung nodules discovered. So call it combined, roughly 2 million today that could grow as screening penetration grows, which it should, and it needs to. And so when we launch this test, we'll be able to address that roughly 2 million or whatever number it is at that time.

I'd say when we launch this test, we've just completed the 2,400 NIGHTINGALE study, as I mentioned, with the last patient through the door and a huge congratulations to all of our investigators and our team for that massive lung study. And it will take us a while, a year or 2 to follow up those patients and see how the clinical utility of the test is demonstrated in that population. And then, of course, we're going to need to get a peer-reviewed publication, and we're going to need to get Medicare reimbursement. We're not looking to launch the test without reimbursement. And so that's what this NIGHTINGALE study is all about, and it's what it will drive. And so we've got a little bit of work to do ahead of us and excited to launch that test when it's ready.

So when should we be expecting something in the market?

I think if you look at the time frame I've said that 1 to 2 years plus publication plus Medicare reimbursement, it's not in the next 3 years. It's in -- this is a meaningful driver in our 10-year plan, but not in our 3-year plan. So something we're thinking in the time frame of 2029 or thereabouts.

Okay. And keeping on the theme of innovation, but Prosigna, you're targeting that launch LDT in mid-'26. How are you thinking about the U.S. market opportunity here given it's a pretty well-established breast cancer market?

Yes. So to take a step back and describe that a little bit, we already have the Prosigna test. It's based on a well-respected scientifically robust PAM50 signature. We've owned that test since 2019. It's in -- sold in Europe today as an IVD, and that's -- we're getting some traction there. But the whole object of this LDT launch is for the U.S. market, which, as you mentioned, is a very significant market. It's around 225,000 patients per year who are identified with breast cancer that could benefit from the Prosigna test. It's a very well-covered market today. It's a competitive market.

The key to the launch of that will be just like it is with any test that we launch or anybody else's launch, it's all about evidence and what that evidence tells you and how that evidence is viewed by the key opinion leaders in the academics and the physicians who utilize the test and whether it gives them incremental utility and helps them, as I said before, in the prostate case with deciding the right pathway for their patient. And so we believe, which is why we're investing in this now, we believe that Prosigna, when we launch it mid next year, in conjunction with new data that will come out that it will provide physicians with incremental insights that will be valuable. And therefore, we'll be able to start to sell our test in the U.S. market as an LDT.

Fantastic. MRD, targeting the launch in MIBC in the first half of '26. So what are the next steps for securing reimbursement? I think you had some feedback from the tech assessment submitted in March. So just give us the update there.

Yes. So again, we're taking a little bit of a step back on MRD and reminding everybody that we acquired a whole genome-based MRD platform. And when I say whole genome based, I mean every step of the way. So not just that initial tissue and blood sample, but every surveillance sample thereafter would be a whole genome. We believe in that. Again, it fits in with our philosophy of more data drives more insights, more evidence and so on. You'll keep hearing us talk about that. And so this is a great way to -- for us to enter the MRD market.

Now it will address multiple indications of cancer, but we're starting in muscle invasive bladder cancer for 2 very simple reasons. One is we have a channel to the urologist where a lot of the decisions are made, not all of them, but a lot of them made around patients with muscle invasive bladder cancer. And secondly, clear path to reimbursement. To your point around the tech assessment, we submitted that earlier this year. We're going through the normal back and forth, as you would expect. And ultimately, our goal is to get a reimbursement decision with a rate that is to be determined that hopefully reflects the true value of this approach and this test. And then we're ready to launch that test. Our expectation is that test launches in the first half of next year.

How do you go about competing in a market with these up and comers that also have established themselves quite well? I think you have 2 angles here. You have these competitors, but also you have a really underpenetrated population. So maybe just talk us through that.

I think you've hit the nail on the head. I mean you do have an underrepresented population. There's plenty of room for multiple players to grow. The rising tide lifts all boats. So it's great to see others investing in really driving -- as well as us in driving the utility of MRD. I mean it's becoming very clear that it has utility in multiple indications. It makes sense for us to be a part of that, but we need to deal with a differentiated test, and that's where the whole genome comes in. And we believe in that. And it comes with its downside, its downside is it costs a lot more initially.

But if you think about it, in 10 years' time, it's hard to imagine as that cost curve evolves, which I think we all expect it will, that everybody isn't thinking about whole genome in MRD because of the richness of the data that you're going to be able to get there. And so we feel good about that. And then, of course, in muscle invasive bladder cancer as an indication, we feel fairly bullish because of our presence in the channel and how well regarded and our strong brand. Beyond that, we're going to launch new indications every year from 2027. And in some of those cases, we're going to have to build the channel, and then we'll be competing on a different playing field.

You hit on the data side, and it's an interesting angle that we're seeing more so in the industry now. How are you going about leveraging that data? Or how do you plan on going about leveraging that?

It's an excellent question. I mean we leverage the data, first and foremost, to drive evidence around our core tests. So the way we've talked about it before, like, for example, GRID. And that is the first and you don't put a line on the spreadsheet for revenue associated with that because that isn't driving revenue. We're not monetizing data. We also aren't leaning in today heavily on the biopharma side. But as we enter into whole genome-based MRD, it's pretty clear that the level of interest from biopharma, especially around the whole genome is going to be meaningful. And so over time, that could potentially be a focus area for us. Not yet. We're still very focused on launching our clinical test, which is really our core business. And then we'll see how that plays out over time.

And outside of MIBC, you again, loosely touched on it, but which other indications interest you?

We haven't guided to which indications we're going to launch in yet and when. And of course, there's a lot of factors that influence that. Of course, we're -- as a company, if you think about who Veracyte is today, where we have tests in prostate, thyroid, we're going to be launching in lung, breast, bladder. So 5 key indications today, and many or some of those would be key targets potentially for MRD. And then we could go beyond that, too. I mean this test has -- we believe it has utility across multiple indications, and we'll launch in the right ones at the right time.

Great. And a lot of the focus of the discussion so far has been U.S. So I wanted to touch on international. Maybe just give us the state of the union outside of the U.S. and what you're seeing.

Yes. So to talk a little bit about our strategy there, we've got these great tests that we've developed for the U.S. market. I just mentioned the 5 kind of key indications there. We've got tremendous evidence behind our tests as well, especially the ones that are on the market already, and we're generating evidence for those that are not. And so -- and there are patients, in fact, in many cases, more patients in -- let's just start with Europe, who could benefit from these tests. Take prostate cancer, right? We're dealing with 300,000 patients annually in the U.S. and growing. There's about 0.5 million patients outside the U.S. and Europe who could benefit from the test. It's almost a travesty that those patients are being treated without the benefit of a molecular diagnostic. Now there's a reason for that. Getting into those markets is difficult. Reimbursement is a challenge. You have to go country by country. We believe that we've got the right approach. We're launching our tests as IVDs.

We're going to have our Decipher PCR-based test and our Prosigna NGS-based test ready by the end of next year. Now that we've gone through the process, we went through with France, we will get IVDR approval for those tests at some point. And then we will get reimbursement for those tests country by country. And then the sales force that we -- actually, we already have will be able to add that menu to their -- to what they're selling to those labs, and we'll be able to launch those tests outside the U.S. as well. And while it's a different margin profile to the U.S. from a bottom line perspective, we think we can make it viable.

Is the sales team, the structure outside the U.S., is it similar to what you have in the U.S.?

No, it's very different. And you're selling to other labs. So it's very different. Now on the good news side of that is it's the same team that would sell multiple indications.

Yes. Rebecca, for you, just on the profitability front, you raised the 25% EBITDA margin guide to, I think, 23.5% then last quarter. That's closing in on that 25% long-term target. So from this point onwards, how do you think about weighing up wanting to keep that profitability scaling and also wanting to keep that top line moving up as well?

Yes. Our focus is absolutely on ensuring we maintain a very attractive profitability profile, but while augmenting revenue growth, right? So we have a set of opportunities in front of us to invest that can serve in the end, more patients. And given patients are our purpose, that is effectively what's driving our investment. So as we look here for the next 5 years, we have a great opportunity set in front of us. We are going to invest accordingly. And at some point in time, we'll deliver that 25%. Above and beyond that, I don't actually think that's the best thing for the company because we are at a stage where we have so many great opportunities to invest. So I think as you think about the next 3 to 5 years, I would think about us funneling those incremental profits back into the organization to drive organic revenue growth.

Great. And I have to ask a shorter-term question.

Of course.

We obviously, heard from you only 1.5 months back. Anything changed from the messaging from the second quarter to where we are today?

Nothing that has changed at this point in time. No, of course.

Good to know. And then on capital allocation, I think $320 million of cash, no debt, positive free cash flow. How are you thinking about capital allocation from this standpoint? What are your priorities midterm, longer term as well?

Yes. So for the last 3 or 4 years, we've really focused on setting the foundation for the company, right? We have focused on our systems, our G&A organizations in an effort to be able to fully scale and bring in more assets. And so as we look for the last -- for the next 3 to 5 years, I think we've become more offensive. Now that doesn't mean anything materially potentially would change. We could become more offensive while also saying no to a lot of things. I would say our bar isn't necessarily changing. But I think when it comes down to it, we now have that foundation in place. And there are a number of assets out there we are not willing to take on because they're science experiments, but there are also a number of assets out there that are starting to become more interesting. And so we are absolutely keeping a very high bar, but at the same time, actively thinking about what would make sense.

Okay. A couple of minutes left. Last one, and I'd like an answer from both of you.

Oh, no.

What's something you wish investors asked you more often or paid more attention to? And what should we be asking you that perhaps we haven't?

Yes. That's -- I think that's an excellent question. I think investors understand our core business and the growth opportunity that we have there. But I think as you think about the long-term growth drivers, I think there -- we should be getting a lot of credit for what we're planning to do there before we hit some of the milestones. And what I mean by that is we've delivered and executed on this business quarter after quarter consistently. We've launched new products. We've driven to a path to profitability very, very well ahead of actually our own expectations. And our intentions we got -- what is it now in these 2 years, some behind us, some ahead of us, roughly 6 product launches, including the internal facing stuff as well as the completion of NIGHTINGALE.

And so yes, I think we've continued to deliver. And of course, the work that we went through with France, which was very complex and somewhat time-consuming as well. We are now in a really strong position. So I think it would be helpful for investors to focus a little bit on the positives around the pipeline and talk a little bit more about that and not assume that these -- while these are competitive markets, remember, Decipher was launched into a competitive market. Decipher was third test. It wasn't the first test. And through that data forward approach and our commitment to evidence and good strong science and our strong commercial team, we've become the market leader, and we've got a track record of doing that.

We have 1 minute. We've got...

I have 1 minute. I don't know if I have anything to add, which is a first. So we'll leave it there.

Okay. Great. Marc, Rebecca, thank you so much.

Thank you.

Thank you. Appreciate it.

Good day, and thank you for standing by. Welcome to the Veracyte Second Quarter 2025 Financial Results Webcast. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker for today, Shayla Gorman. Please go ahead.

Good afternoon, everyone, and thank you for joining us today for a discussion of our second quarter 2025 financial results. With me today are Marc Stapley, Veracyte's Chief Executive Officer; and Rebecca Chambers, our Chief Financial Officer. Dr. John Leite, our Chief Commercial Officer; and Dr. Phil Febbo, our Chief Medical and Scientific Officer, will join us for Q&A.

Veracyte issued a press release earlier this afternoon detailing our second quarter 2025 financial results. This release and a copy of the presentation we will review during the call today are available in the Investors section of our website at veracyte.com.

Before we begin, I'd like to remind you that the statements we make during this call will include forward-looking statements as defined under applicable securities laws. Forward-looking statements are subject to risks and uncertainties and the company can give no assurance they will prove to be correct. Additionally, we are not under any obligation to provide further updates on our business trends or our performance during the quarter. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Veracyte files with the Securities and Exchange Commission, including the most recent Forms 10-Q and 10-K.

In addition, this call will include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures are included in today's earnings release accessible from the Investors section of Veracyte's website.

I will now turn the call over to Marc Stapley, Veracyte's CEO.

Thank you, Shayla, and thanks, everyone, for joining us today. I'm pleased to share details of our second quarter performance and updates on our key growth drivers. At Veracyte, patients are our purpose. Our work is grounded in bringing meaningful actionable insights to clinicians, so that we can drive better health outcomes for patients, which in turn results in greater economic value to global health systems.

I couldn't be more pleased with our Q2 performance. We delivered 14% revenue growth year-over-year with total revenue of $130 million. This outstanding result was driven by testing revenue, which also grew 14% year-over-year or 16% after adjusting for Envisia. Decipher and Afirma continued to advance market share and delivered another strong quarter of impressive volume growth, further bolstering our confidence in the ongoing durability of our core testing business while also delivering our groundbreaking adjusted EBITDA margin of 27.5%, vastly exceeding our expectations.

Our vision is to transform cancer care for patients all over the world. And I couldn't be more proud of our team and their commitment to serving our advanced genomic tests to over 700,000 patients to date. We are focused on a number of strategic initiatives to fuel sustained growth at a differentiated level by creating layers of short-term, midterm, and long-term drivers. Today, I'm excited to share our progress across these initiatives.

Starting with Decipher, we delivered approximately 25,500 tests, putting us on a trajectory to exceed 100,000 tests annually for the first time, representing a truly remarkable milestone. This resulted in year-over-year volume growth of 28%, our 13th consecutive quarter of over 25% year-over-year volume growth. It was also our second highest ever sequential increase in volume, superseded only by Q2 last year, which benefited from the timing of pivotal NCCN guideline updates. This performance reflects pristine execution by our commercial and operational teams and a continuation of the strong trends that we saw in March and April.

We further established our strong foothold with clinicians in Q2 with both a record number of ordering providers, up over 20% from the prior year, and increased orders per physician. Clearly, our robust science, vast array of publications, operational quality, turnaround time, and comprehensive offering are resonating with physicians.

The accelerated penetration of our Decipher test continues to surpass our internal expectations with broad-based expansion across each biopsy and CCN risk category. We are progressing across the care continuum with the broad launch in June of our Decipher Prostate test for use in the metastatic population. The clinical validity and utility of Decipher Prostate metastatic has been demonstrated with 4 prospective Phase III clinical studies: STAMPEDE, [indiscernible].

These studies have shown the benefit from therapy intensification is greatest in patients with a Decipher higher risk score, meaning physicians can confidently use Decipher Prostate metastatic to help determine if treatment should be intensified by adding additional therapy to ADT such as androgen receptor pathway inhibitors or docetaxel.

We expect clinical studies to be published this year that will make a strong case for guideline inclusion in the coming year or 2. Recently, we have observed a noticeable uptick in interest from physicians for NCCN high-risk patients, estimated to be approximately 25% of the incidence population, which we believe reflects a halo effect from the test expansion into the metastatic setting.

In these conversations, physicians are looking to adapt their treatment plans for these patients based on Decipher score to prevent metastatic progression as effectively as possible. Additionally, to better serve patients with metastatic and high-risk localized disease, we have entered into a partnership with Helix to offer the option for physicians to conveniently order the Helix whole exome-based hereditary cancer test when ordering Decipher.

NCCN guidelines include the evaluation of specific hereditary germline variants that may influence therapeutic choices for these patients, including the addition of PARP inhibitors. Further, germline data can be added to our growing GRID database and becomes yet one more valuable biomarker to be considered in future research.

We continue to build on our strong and growing body of clinical evidence for Decipher across all risk categories with 29 abstracts and 9 publications in the second quarter, bringing the total to more than 225 publications. Each of these clinical studies further demonstrates the differentiated performance of Decipher as well as the power of GRID. This expanding foundation of high-quality data is a key competitive advantage and plays a critical role in supporting increased clinical adoption in this underpenetrated market.

I'll quickly highlight the notable paper from the quarter. Focal therapy is a modality for management of intermediate risk disease that is gaining traction as an alternative to radical therapy. New data from the first clinical trial to evaluate the association between Decipher scores and focal therapy outcomes was recently published in the Journal of the National Cancer Center. This analysis, which pulled data from a Phase II trial in a prospective registry, highlights Decipher's role in guiding focal therapy decisions as patients with lower Decipher risk and the luminal differentiated subtype may be ideal candidates for focal therapy. While those with intermediate or high Decipher risk or basal subtype may be better suited for radical treatment or require closer post-treatment surveillance if they opt for focal therapy.

We remain committed to enabling research in digital pathology and believe that this technology, combined with AI, may complement molecular analysis by offering additional data points and biological feature interpretation. As we shared last quarter, we recently made our digital pathology services and associated AI models available to research collaborators to advance the science in this field. We have now scanned over 90,000 slides from over 50,000 deidentified patients with outcomes data. And we are planning to implement slide scanning as a standard production workflow to support ongoing research into this interesting and emerging technology.

Looking ahead, we are more confident in Decipher's long-term growth trajectory than ever before. We believe we are the #1 prostate testing brand amongst clinicians with 65% market share. And Decipher is the only test that can be used across the entire risk spectrum of prostate cancer care.

With the most robust and growing body of clinical evidence, including over a dozen ongoing prospective trials, NCCN guideline recommendation and a meaningfully expanded patient population, we believe we have everything we need to remain the clear market leader and execute on the multiple drivers that position Decipher for sustained double-digit growth.

Moving to Afirma. Volume growth continues to be strong and increased 8% year-over-year, resulting in approximately 16,950 tests. We continue to add new accounts and drive depth into our existing accounts with Q2 marking another quarter of higher year-over-year utilization per account. This gives us confidence that Afirma will continue to gain both share and penetration moving forward.

We are pleased to see increased traction with our research use-only GRID offering, which provides physicians with additional data to advance thyroid nodule in cancer research. At AAES in May, Cleveland Clinic presented the first independent analysis leveraging the GRID database, which received very positive feedback from KOLs and has driven higher awareness and interest in GRID data from other academic institutions.

And just a few weeks ago, we were pleased to see the first publication in the journal Frontiers of Endocrinology on the development and validation of novel classifiers to preoperatively predict low-risk thyroid tumors that are available on Afirma GRID. With continued evidence generation, these classifiers could eventually help physicians personalize the extent of surgery and reduce overtreatment for low-risk thyroid tumors, thus decreasing the threat of surgical complications and postoperative hypothyroidism.

Additionally, 3 abstracts with data derived from Afirma GRID were presented at ENDO 2025, the Annual Meeting of the Endocrine Society in mid-July. The growing body of research and clinical evidence around Afirma continues to build momentum and gives us confidence in the continued ability for Afirma to gain share in this more mature market.

As we shared last quarter, we are planning to transition Afirma onto V2 of our Veracyte transcriptome running on the latest and most cost-effective next-generation sequencing technology later this summer. This launch is part of our effort to reduce our COGS and improve the efficiency of our testing business. In the near term, we expect this to offset normal reagent list price increases, help mitigate tariff impacts, and enable us to reinvest in opportunities to serve more patients.

Moving now to Prosigna. Last quarter, we shared our decision to launch Prosigna as an LDT for the U.S. breast cancer market given the tremendous prospects we see ahead. We believe this test has the opportunity to gain share in a large and well-penetrated market with approximately 225,000 breast cancer patients diagnosed annually in the U.S. with early-stage hormone receptor positive disease.

Prosigna, which is based on the well-known, well-researched and scientifically respected PAM50 signature can provide physicians and their patients with additional data around the biological classification of the cancer and the 10-year risk of distant recurrence to help inform treatment decisions. We remain committed to making our Prosigna LDT commercially available in mid-2026 in our CLIA lab on our new V2 Veracyte transcriptome.

The clinical outcomes of the 10-year OPTIMA Prelim study were presented at the ESMO Breast Cancer Annual Congress in May and was well received by KOLs. The findings suggests that Prosigna had higher prognostic accuracy in high-risk patients compared to the test initially used to assign patients to treatment groups. These results are consistent with the clinical and health economic performance of Prosigna that contributed to its selection for the ongoing 4,500-patient prospective OPTIMA trial that is now nearing completion of the endpoints needed for a successful readout.

OPTIMA represents 1 of only 4 prospective randomized trials globally evaluating genomic testing in early-stage breast cancer and is the first to specifically assess Prosigna's ability to predict chemotherapy benefit with Level 1A evidence and is expected to be completed in mid-2026. We are focused on generating additional evidence for Prosigna through our Veracyte diagnostics platform with data readouts expected over the near term that will help us drive adoption and revenue growth.

Moving to our commitment to serve more of the patient journey through MRD and recurrence testing. Our MRD approach is differentiated in that it is whole genome every step of the way, including the initial baseline sequencing followed by the sequencing of serial testing samples. This approach is backed by our fundamental belief that more data drives more insights, more clinical evidence, more payer coverage, and therefore, more durable adoption.

We're excited about the opportunity to advance our MRD platform for our first indication, muscle invasive bladder cancer or MIBC. We recently received feedback on the tech assessment we submitted to MolDx in March and continue to make good progress towards launching in the first half of '26. As a reminder, this indication will leverage our strong Decipher channel that serves urologists and radiation oncologists as we estimate 70% of MIBC patients are treated in this setting.

Additionally, we are excited to share that our test will be used in the NEO-BLAST prospective trial to determine whether MRD-negative status can support the de-intensification of treatment for MIBC patients. For this trial, the investigators at the University of British Columbia chose our MRD platform together with MRI and standard screening to identify patients with MIBC who could be safely managed with bladder-sparing approaches.

While our published data shows significantly poor prognosis for patients who are MRD positive, this trial helps address the clinical utility and confidence in those patients who are MRD negative. We are continuing to invest in generating the clinical evidence needed to expand our MRD platform beyond MIBC. Beginning in 2027, we plan to deliver indication expansion annually in order to serve more patients across more indications.

Next, turning to our geographic expansion strategic growth driver, where we are committed to launching our tests with IVDs to address patient needs outside the U.S. I would like to update you on the ongoing process with our French subsidiary, Veracyte SAS or SAS. Maintaining access to the Prosigna test for patients and the physicians who serve them was an important goal of this process. I'm pleased to announce that the French Commercial Court recently published a decision approving the sale of the contract manufacturing portion of the business. The sale closed on August 1 and enables us to maintain continuity of supply for the Prosigna IVD on nCounter through a contract manufacturer.

The remaining assets of SAS will be managed by the existing court appointed administrator until such time that the court progresses with formal liquidation. With the sale behind us, we are in the final stages of concluding this restructuring process.

We now expect to meaningfully increase our investment in our U.S. research and development IVD team in the second half of this year to finalize the development of our next 2 IVDs, Decipher on qPCR and Prosigna on NGS. We are still on track to complete the IVDR submission for both tests by the end of 2026 and anticipate subsequent commercial launches thereafter as we go country by country to secure reimbursement post approval.

Our next growth driver is solving new cancer challenges with innovative products like our Percepta Nasal Swab. Lung cancer is the leading cause of cancer-related deaths worldwide and early detection and management is key to reducing mortality and improving outcomes. Percepta Nasal Swab is a simple noninvasive test that assesses lung cancer risk in patients with a detected lung nodule and smoking history so that the right patients get the right intervention at the right time.

With only a few handful of patients remaining, we are on track to reach the enrollment target of 2,400 for our pivotal NIGHTINGALE study in the next few weeks. Once completed, we will then conduct a follow-up and data analysis, which we hope will lead to publication and ultimately, reimbursement.

I'm proud of our progress in Q2 as we work to improve patient lives all over the world. We saw another quarter of very strong testing volume growth and demonstrated solid progress across our long-term growth drivers. These results exhibit that we're just beginning to deliver on the promise of our powerful diagnostic platform to fundamentally transform health care.

As we enter into the second half of the year, we are accelerating our investments in these critical projects and have even more confidence in our ability to deliver long-term sustained growth with the best-in-class financial profile we've consistently achieved.

With that, I will now turn to Rebecca to review our financial results for the second quarter as well as our updated outlook for 2025.

Thanks, Marc. Q2 was a fantastic quarter with $130.2 million in revenue, an increase of 14% over the prior year period. We grew total volume to approximately 44,950 tests, a 15% increase over the same period in 2024.

Testing revenue during the quarter was $122.3 million, an increase of 14% year-over-year, driven by Decipher and Afirma revenue growth of 24% and 5%, respectively. Total testing volume was approximately 42,400 tests, an increase of 18% over the prior year period. Testing ASP was $2,881, down 3% compared to the prior year, primarily driven by the impact of higher prior period collections in Q2 2024 as well as the Afirma laboratory benefit manager impact discussed last quarter. Adjusting for the impact of $1.9 million of prior period collections in the quarter, testing ASP would have been approximately $2,825, roughly flat to the prior year period.

Second quarter product volume was approximately 2,500 tests. And product revenue was $3.6 million, down 8% year-over-year. Biopharmaceutical and other revenue was $4.3 million, up 21% year-over-year, higher than our forecast given the benefit of a U.S. Decipher biopharma revenue project that completed during the quarter.

Moving to gross margin and operating expenses. I will highlight our non-GAAP results. Non-GAAP gross margin was 71.5%, up approximately 30 basis points compared to the prior year period. Testing gross margin of 73.9% exceeded our expectations, driven by improved lab efficiencies. Compared to the prior year, gross margin was slightly lower given the benefit of prior period cash collections in Q2 2024.

Product margin was 20 basis points higher from the prior year at 52.3%. With the sale of the Veracyte SAS manufacturing business and our transition to a contract manufacturing model, we expect product gross margins to decline in the second half. Biopharmaceutical and other gross margin was 18.5%, up 23% year-over-year due to revenue mix and higher cost absorption.

Non-GAAP operating expenses were up 2% year-over-year at $60.3 million. Compared to the prior year, research and development expenses decreased by $300,000 to $14.3 million, driven by the timing of clinical trial expenses and project spend. Sales and marketing expenses increased by $1.2 million to $23.1 million, given higher personnel costs. G&A expenses were up $400,000 to $22.9 million.

Moving to profitability metrics. We recorded a GAAP net loss of $1 million, inclusive of $20.5 million of noncash impairments related to Veracyte SAS. Due to the impact of this impairment in the quarter, our GAAP tax rate was 178%. Looking to the full year, we are expecting our GAAP tax rate to be in the high single digits.

We delivered adjusted EBITDA of $35.8 million or 27.5% of revenue, well above our expectations given the timing of our investments, which are now forecasted to occur in the second half. While we plan our profitability on an annual basis, hitting this quarterly level is a great data point that validates our sustained 25% adjusted EBITDA goal and provides us the flexibility to further invest in our growth drivers.

With 5 products launching and a major clinical study completing in the next 18 months, we will invest as needed to drive these projects forward, which, as always, will be balanced with our goal of delivering enhanced profitability each year until we achieve our 25% adjusted EBITDA goal. We generated $33.6 million of cash from operations. And we ended the quarter with $320.7 million of cash and cash equivalents.

Before moving to guidance, I would like to share the positive financial impact we expect moving forward now that the sale of the Veracyte SAS manufacturing business is behind us. While we no longer will be recognizing biopharma and other revenue related to Veracyte SAS activities, we expect $2 million to $2.5 million of quarterly product revenue supported by our new contract manufacturer. We remain on track to generate approximately $13 million of savings compared to 2024 results after accounting for the additional $7 million of investments to rebuild our IVD development capabilities here in the United States in the interest of serving patients globally.

Further, as of August 1, we have deconsolidated the impact of the limited SAS operations from our financials as we have deemed that we no longer control the entity. Given this, we have reflected $5 million of these savings in our updated 2025 adjusted EBITDA guidance. The remaining funds will be used to invest in our key growth drivers and also further enhance our profitability.

The total cash outlay for the SAS program remains at approximately $15 million, which was or will be expensed over the course of Q4 2024 through year-end 2025. Importantly, most of the remaining expense will occur in the third quarter, while only a small amount is expected in Q4. Lastly, with the deconsolidation, we do expect a relatively immaterial noncash gain loss on deconsolidation of a few million dollars in the third quarter.

Turning now to our 2025 outlook. Now that we have line of sight to Prosigna supply continuity and the path forward for Veracyte SAS, we are excited to initiate our 2025 total revenue guidance of $496 million to $504 million. Due to our strong performance in the first half of the year, we are raising testing revenue guidance for the full year to $477 million to $483 million from our prior guidance of $470 million to $480 million. This reflects a raised Decipher outlook as well as Afirma ASP expectations for the remainder of the year, which are now projected to result in Afirma revenue growth of 6% to 7%.

Importantly, given the catalysts Marc outlined, our Afirma volume growth expectations of high single digits has not changed. As a result, testing revenue growth is now estimated to be 14% to 15% as compared to the prior guidance of approximately 12% to 15%.

We are also raising adjusted EBITDA margin guidance for the full year to 23.5% from 22.5% previously, which was already meaningfully higher than our original 21.6% 2025 guide. This reflects our year-to-date profitability outperformance, expectations for accelerated investment in the second half in support of our strategic growth drivers and as previously mentioned, the deconsolidation of Veracyte SAS from our financials as of August 1, 2025.

Moving to the third quarter, we are forecasting the decline in total revenue given we will no longer be recognizing SAS biopharma revenue. We expect testing revenue to be roughly flat sequentially, driven by a slight uptick in Decipher revenue and offset by typical Afirma seasonality and lower prior period collections. Additionally, we expect our non-GAAP operating expense to grow up to $5 million sequentially given the timing of clinical and project spend, new hires, and incremental investments in our robust pipeline.

In closing, I am thrilled with our strong start to 2025 and our commitment to driving revenue growth with a focus on profitability and continued cash generation. We've made significant progress on our catalysts for the year, achieving the launch of Decipher for metastatic patients last quarter and the sale of the SAS contracting manufacturing business this month. All of this progress is a testament to the outstanding team here at Veracyte. And I am grateful for their contributions towards our vision of helping cancer patients globally.

We'll now go into the Q&A portion of the call. Operator, please open the line.

[Operator Instructions] Our first question comes from the line of Doug Schenkel of Wolfe Research.

So Rebecca, you may have kind of just run through this as you went through your guidance comments. So sorry if I'm kind of saying something that you already ran through. But based on Marc's earlier comments and you're tracking above 100,000 Decipher tests this year. I think that takes you over 25% growth for Decipher revenue this year or close to it. What -- as we think about the durability of that, what are the key drivers to maintaining something like 20% plus growth for the next few years for Decipher? Is it further market penetration? Is it share gains? Is it digital pathology integration? How should we be thinking about that?

And if indeed -- and this is my second question. If we can have some confidence that Decipher keeps growing at these levels for the next few years. If we assume a continued moderation in Afirma revenue growth down to mid-single-digit levels over time, that still should be enough to maintain double-digit growth for the business over time at the top line. And that's in advance of getting any additional pipeline contributions. Is that a fair way of thinking about it?

Yes. Happy to do so, Doug. Thank you. And I'm going to take part and I think Marc is going to help on some of this as well. But you're absolutely right. Decipher is just doing -- the team is just doing a phenomenal job with an absolutely critical test for that patient population. Our guide actually implies slightly lower revenue numbers. I think you're thinking more on a volume basis. And that volume number does make more sense to me than a revenue number. So the guide implies 22.5% to just over 24% revenue growth for Decipher. So that's one thing to take into account. So that -- I think the drivers of that growth here are multiple different opportunities.

The first, obviously, the metastatic population that Marc referred to and kind of the halo effect that that has brought into conversations with docs on the high-risk side, which is about a large portion of the population and the most underpenetrated of the populations, underpenetrated of the risk categories.

Additionally, we are always going with our Veracyte diagnostics platform with more data and more use cases, more predictive and prognostic capabilities. And then the sales team is just executing really well. So I would say those are the drivers for Decipher growth over a multiyear period.

I think I don't want to guide to future years, but I would say, we are very confident and I'll turn this part over to Marc. But effectively, between Afirma and Decipher, we are absolutely confident in our ability to demonstrate double-digit revenue growth until those longer term growth drivers come in. We've been pretty much a broken record on that for the last couple of years. And actually, I think we've delivered even beyond that as you look at the updated revenue guide here of 14% to 15% for testing.

Yes. Thanks, Rebecca. And Doug, thanks for the question. I totally agree. I mean, we've guided that we think these tests can get to 80% market penetration. And we started this year with the Decipher market, the prostate market at around 40%. And we think we have what we need in terms of the product set to drive to that 80% and its market share gains and penetration. And obviously, there are some incidence growth as well there that helps drive the growth.

If you think about the second part of your question, I talked about it in the script around layers of short-term, medium-term, and long-term growth drivers, right? So you pointed out very clearly, Decipher continuing to grow. We've got multiple years ahead there. Afirma is later in its life cycle. But we've talked about Prosigna and launching that in the middle of next year, muscle invasive bladder cancer for MRD and launching that in the first half of next year and then MRD indications every year after that in 2027 and beyond.

We will get to completion on NIGHTINGALE and with good results. And we should be able to launch Nasal Swab. And we're not done there. We've got a rich and exciting portfolio and a financial profile that gives us an opportunity to continue to invest in new indications, new products, new expansions across the care continuum, new studies, more clinical evidence, driving more guidelines, and so on.

So to your point around the double-digit growth, yes. It's certainly something that we think a lot about and we've set up our company to deliver that. And as long as we continue to make the right investments, you would expect it to do so.

Our next question comes from the line of Andrew Brackmann of William Blair.

This is Maggy Boeye on for Andrew today. Maybe first, just to start, I can appreciate it's still early days for the metastatic launch. But just based on the early interest you are seeing, can you talk about what you expect the growth contribution to be in the back half of the year for Decipher in the metastatic population and just how you're thinking about that contribution as we head into 2026?

Yes. I mean I'm going to ask John to talk a little bit about the successful launch so far. And of course, we're only a couple of months in, as you point out, of the metastatic and also an interesting trend that we're starting to see in high risk and then Rebecca can kind of triangulate that back to you, for you to guide.

Yes. Thanks for the question. So far, what we've seen is we've seen really good response and interest from physicians who are in these large practices. And it's taking -- one of the lessons learned is that it's taking a multidisciplinary approach towards managing these patients. So we have to call on urologists. We have to call on the med-oncs, we have to call on the rad-oncs, and align all of them around the operational impact of implementing the Decipher metastatic test, how they think about the operationalization of that test. But the discussions around the CMP data have been extremely impactful and the response so far is good. So we see good upside for the test in the future.

Yes. So with regards to the high-risk discussion, one of the arms of the CMP trial, Arm G, dealt with the investigation as to whether the addition of abiraterone, which is a next-generation ARPI to androgen depletion therapy would have a sustained effect towards patients who tested Decipher high risk. And the answer was yes. Patients who test Decipher high risk, both in localized high-risk disease as well as the metastatic setting, both saw benefit from the addition of the ARPI.

And in a sense, that's reinvigorated the interest in the conversation again on high risk. And then overall, there's just a growing awareness of the robustness of Decipher as a prognostic signature across all these very different indications. And it speaks to just how well designed the assay has been and how well validated it's demonstrating to be.

And then on guidance. So thank you for the question. I wouldn't say that metastatic is a meaningful contributor to the guide this year in and of itself. I would say we're expecting a launch here that is successful, but not overly impactful given the large denominator and lending itself to a multiyear adoption curve that we would expect similar to that we saw with Decipher out of the gate once it also got a biopsy Medicare reimbursement. So in '25, not a huge impact.

I would say more of the halo effect John mentioned on high risk is more impactful on the guide. But going into '26 and beyond, this is 10% of the incidence population for high risk that does require this critical information. And so as we have STAMPEDE published. And we hopefully get guidelines over the coming years. It will continue to be a contributing factor to Decipher revenue growth and absolutely is part of the reason why we have the confidence we do in delivering double-digit revenue growth on a total company basis here for the foreseeable future.

And then just maybe for my follow-up, one on Prosigna. So I appreciate some of the efforts that you outlined in the prepared remarks. But can you share what some of the key milestones you will be focused on, particularly as it relates to drive greater adoption and revenue growth for Prosigna after launch, be that guidelines, additional utility studies, or reimbursement?

Yes. I mean our first milestone, which we talk about is the launch in mid-'26 and of course, also the outcome of some pivotal study results, some early data from which we saw at ESMO recently. Beyond that, we haven't said specifically what additional clinical studies will support the tests. But you can imagine, I mean, we're going to just going to follow the very same formula that we've applied with Decipher. And remember, this is a whole transcriptome-based test as well.

So we'll be able to drive research around the whole transcriptome here and there'll be plenty more clinical studies. I don't know if any of the team wants to add anything specific.

More to come.

The only other thing I would add is that, obviously, for a new product to launch, we'll be having to put in a tech assessment and get pricing and all that fun stuff. So that would be one data point along the goalpost of getting the product launched.

And of course, the building of the sales team for that as well, which we'll do gradually as we've always said we will do. So thank you for the question. I appreciate it.

Our next question comes from the line of Puneet Souda of Leerink Partners.

I'll ask my questions in one. On Afirma, obviously, solid growth there still. Are you seeing any changes in the share dynamics or ordering patterns in endocrinologists at the current penetration level? Just trying to sort of understand how should we think about that growth trajectory as we head into '26? And how should we think about the ASP stability there with the LCD and the V2 transition? And then secondly, on MRD, can you just remind me in terms of your commercial approach there on cross-training the reps or hiring more? And how are you targeting that in academic versus community oncology when you launch this in the first half '26? And if you could just remind us on the MolDx timing as well.

Go ahead on both of those.

Sure. I can take both of those. So we've not noticed specifically any meaningful changes in the ordering patterns of customers on Afirma. It's obviously a more mature product. It's a more penetrated market. We have the lion's share of share. I think overall, growth is going to come from share dynamics. And so the bulk of what we need to do better is to service those customers, improving our service levels overall continuously, continue to improve on clinical evidence to demonstrate the clinical utility of the test and differentiate via our GRID offering, which invites more collaborators to do that research. That drives that clinical utility that ultimately drives more demand and market adoption.

Regarding your second question on MRD, we've mentioned this before. Our commercial approach for muscle invasive bladder cancer, which is the first indication that we plan to launch, is absolutely to leverage our current Decipher channel. These bladder patients are managed by the same urologists that we call on for Decipher Prostate. And the goal there is to cross-train our sales reps to have that conversation about bladder and to continue to service the same channel that we do today.

And then regarding academic versus community, we have contacts across all institutions. Remember, we have a very healthy network of key opinion leaders who work with us on Decipher Prostate and GRID. We plan on leveraging the same for MRD.

And then a couple of cleanup items. MolDx timing, we said we will have reimbursement prior to launch. As Marc mentioned, that TA was submitted back in March. And we're in the midst of doing the advance with MolDx on that. And then with regard to the Afirma growth trajectory and your ASP stability question. So the implied guide, this updated guide for Afirma is 6% to 7% revenue growth and volume of high single digits.

Given the LBM impact that we had back in '24 that has been cleaned up since November of '24, we will start to lapse that, Puneet, here in November of '25. And so as we enter into '26, with the exception of very small prior period collections here in '25. We won't have the same headwind that we had going through this year. So that's good news. Hopefully, we will get to more ASP growth over a multiyear period for both Decipher and Afirma. There's no reason why we shouldn't. But we are excited.

I mean we are continuing at high single-digit volume growth for Afirma in 2025. We're excited that that is -- we're still seeing the strength there. We do have the next version of GRID coming here later this year. And that we are expecting will set us up very nicely for 2026 volume and revenue growth for Afirma.

So I would say with the nuance or nuisance is a better way to say it, of the ASP LBM issue for Afirma that we're now just working through our financials because it's been cleaned up behind us. I think this is going to be a really -- '26 is going to be a really great Afirma year.

Our next question comes from the line of Subha Nambi of Guggenheim.

Could you provide any additional color on the positive feedback you received on the tech assessment from MolDX on the MRD asset? And then are you hearing anything from urologists ahead of the launch for a need of whole genome-based MRD test? And then I have a follow-up on Decipher. You had a press release about Decipher Prostate GSC data being integrated with a new NCIC database. Could you provide some added color on this as well? Is this more for the general physician support or any incremental adoption driver? Is it something that we could potentially see any benefit tangibly in the Decipher results?

Thank you. On the first one, the MolDx submission tech assessment, I'd say it's in the normal process. Rebecca mentioned, we're going back and forth with MolDx. There's nothing specific to call out there. Importantly, the whole pricing discussion is a key component of that. The tech assessment is the first milestone and then you get into the pricing decisions. I don't know if you have anything you want to add to that, John?

I didn't understand the second question.

I didn't understand either.

Well, so the second part of that was, are you getting feedback from urologists on whole genome-based -- the desire for a whole genome-based MRD test?

Do you want to take that one, Phil?

Yes. This is Phil. So what I can say, Subha, is that in general, as we've engaged different physician populations, there's incredible enthusiasm, growing enthusiasm for MRD and incredible enthusiasm for the additional data that comes with the whole genome approach.

As we know, as you engage with sequential therapy in bladder cancer, as it goes through neoadjuvant, definitive local therapy and then postoperative care, there's a lot of changes that the disease can go through. And whereas MRDs that are focused on a panel and detecting disease, can detect the disease, they can't monitor the clonal evolution and that can happen. And the selection that go on and help some agility with the managing of the care.

And so people are really looking at that. And with the whole genome approach, you can look at broad genomic signatures and how those are changing of the tumor while under care. I see that as super important, especially as we think about the benefit of our whole genome platform is that it serves multiple cancers. And you can dial in different capabilities based on the needs of that cancer.

And when we engage with folks and they talk about whole genome, they see the RUO reports that will become part of our Veracyte diagnostic platform. They get very excited about that additional information.

And this is just obviously a continuation of our standard philosophy here of more data leads to more insights. We think it makes complete sense to sequence whole genomes to be able to have that data for future research.

And then your last question was regarding the SEER data combination. I don't know, Phillip, you want to take that as well?

No, the SEER data was -- that was an important collaboration we had with the NCI and their SEER database. And we felt it was responsible after doing the analysis and the publication to make that data available. And so that opens up the opportunity for investigators to dive into that integration of the Decipher data together with some of the outcomes available through the SEER database in a way that protects patient confidentiality and privacy.

And I think as we've seen, the more investigators get comfortable with Decipher data, with the Veracyte Diagnostics platform, that's all research. But I certainly think it raises the visibility of our company, raises the visibility and the confidence in our diagnostic clinical tests that they're ordering to manage patient care.

Just has a derivative impact.

Yes.

Our next question comes from the line of Yuko Oku of Morgan Stanley.

I wanted to touch on digital pathology, acknowledging it's only available on a limited basis to research collaborators. Could you share early feedback on that offering so far? And would you also provide updated thoughts on whether you may offer it more broadly, either in the clinic or perhaps to biopharma customers?

Yes. Great question, Yuko. I wouldn't say any specific feedback so far on that. I think in general, feedback on digital pathology in our space is consistent with our understanding and expectations that it's a fairly nascent technology or a nascent application of the technology in our space. It is likely, if anything, complementary to molecular diagnostics. The challenge is going to be if it's contradictory, there's contradiction and confusion for the market and for the physicians in any way.

And so we continue to believe that the right way to think about that technology is in the same way that we thought about molecular diagnostics. You work with KOLs. You do very robust science and research, a number of studies that then can be relied upon for treating patients clinically, which is at the end of the day. We want to be thinking about at the end of every one of these tests is a patient who is dealing with a very difficult situation, probably the most difficult situation in their lives and we've got to have robust tests.

And so our decision to launch this as part of GRID is to enable that research. And so our feedback so far from KOLs is that's the right approach. We're on the right track with that. They'll support research. I expect to see some interesting things coming out in the future. And as I've always said, if we wanted to launch our own product with DPI either alongside or with Decipher, we could do that, but we wouldn't do that without the robust science behind it.

Do you want to add anything?

No, I think that's well said, Marc. We have a proven process and strategy of working very closely with key opinion leaders who contribute a large part in the advancement of the science and the clinical insights that ultimately translate into demand for our products through continuous improvement to our products. We see no reason for why that should be different as we apply this new very exciting and potentially transformational OMIC, but the process is the same. It's working through our collaborators, developing the evidence that arms us with the confidence then to improve our test.

And back to the data, we have incredible amounts of data. As I mentioned in the call, 90,000 samples scanned. We're going to implement scanning as part of our production capability. So you combine that with whole transcriptomes. It's just exciting what we could potentially do with that data.

I was going to double down on it.

Go ahead.

We're going to take the rigorous approach that it requires to bring a test to market. But because of our GRID offering and because of our aggressive approach to operationalize the scanning and then cover our historical volume. We're very -- we can move very quickly to get to a data set that no other company is positioned to do. So we're very bullish as far as our ability to move quickly through a rigorous clinical program and bring that to market better than anyone.

And then while you're focused initially in launching MRD platform in muscle invasive bladder cancer, you're also broadening scope in other cancer types starting in '27. So given the unique approach you're taking in MRD, as you touched on earlier in the call, which indications or cancer types do you see your MRD platform delivering the best value?

Great question. We've said consistently that you can imagine us launching MRD in indications where we have a presence. And so you think about where we are today, we're covering urology broadly, including prostate, bladder and that could be even more expanded. We're going to be launching our breast test. We're going to be launching our lung-based test. So those will be obvious indications. But it doesn't mean they're the ones and the only ones we're going to launch.

And then there are different modalities within each of those indications like we're starting with muscle invasive bladder cancer, but there's other modalities. So more to come on that. I wouldn't like to speculate yet.

Our next question comes from the line of Lu Li of UBS.

And I wanted to go back to Decipher as well. So you talked about the partnership with Helix to offer the option to order hereditary cancer test. I wonder, can you give us a little bit more kind of detail in terms of like why? And then what kind of like cross-selling benefit that you can have from this partnership?

Yes. Thank you for the question. The why is fairly straightforward. So NCCN guidelines have very clear recommendations for prostate cancer on the types of patients, namely high-risk and metastatic who should be assessed for germline variants and in particular, to determine therapeutic options vis-a-vis the addition of PARP inhibitors or even to assess overall family risk.

Clearly, this is an area that's not an area of proficiency for us. And it would take us some time and possibly even distract us from doing other things. So we thought the partnership route was perfect. And Helix revealed itself as a very exceptional and very collaborative partner. And that will kick off in the fall. We'll start accepting samples and supporting customers. And we look forward to reporting on further results on that.

And then my next question for Rebecca. So great margin in the quarter and then you're also raising the guide. But I'm wondering what will be kind of a good starting point for 2026, given that you have the new product launches coming out. What will be kind of like the balancing act that you have for it? And then it will be great if you can refresh us about like the cost profile for both the MRD and the Prosigna.

Absolutely. So that -- I'll take the second part first. On the cost profile of Prosigna, think about that exactly as the cost profile of what Afirma will be, maybe a little bit higher, but less than 10% higher given the histopathology component. But effectively, Afirma would be a great proxy for once we have the V2 transcriptome out there.

On MRD, we are doing 3 whole genomes upfront and then subsequent whole genomes. We haven't discussed specifically exactly what that's going to look like. We have multiple R&D projects ongoing. And Phil gets asked that exact question often from me. So all jokes aside, we are making good progress on the cost of whole genome sequencing. But the margin profile of that is going to be as much tied to the Medicare reimbursement percentage of the population as our cost for indication by indication. So good progress there.

We're not ready to necessarily share what it is. But we do think that the benefit of what whole genome sequencing provides us in the MRD in terms of differentiation is more than enough to offset the incremental costs. Similarly, on the Decipher front, if we were doing a qPCR assay, our margin profile would be immensely better. But we wouldn't be the #1 leading test provider here, right, because we effectively have the incremental data. So this is a fundamental part of our strategy. And the costs end up being a good return for us in terms of incremental sales and less R&D and sales and marketing expense.

Going to 2026, you are ahead of us in terms of our budget planning process. So I'm not ready to sign up for a number here today. Obviously, we've made great strides in our ability to deliver incremental profitability. But we also don't want to box ourselves in. You are seeing a decent pickup in spend in the back half of this year implied in the guide. Some of that is timing from the first half. But some of that is projects that we are really keen to do that with the outperformance, both of the core business as well as the outperformance on the timing of the SAS deconsolidation. We have more dry powder to go after.

So I think if we deliver a solid year of profitability in '25, we're going to look to do that again in '26, albeit in any given year. We do hold ourselves. We do request the option to invest in incremental projects that obviously, if that changed the profile of our profitability. We would explain to you why and when you would see a return from that investment.

So dancing around answering your question a bit just. But it's not because -- it is because effectively, we are still in the planning process and more will come at the appropriate time. But huge opportunity ahead of us across these 5 new products, a lot of good opportunity between having a full year of SAS to fund some of those projects as well as having a full year of the new transcriptome to fund those projects. So we'll see where everything shakes out. But we have every -- we're going -- all signs are headed in the right direction.

Our next question comes from the line of Mason Carrico of Stephens Inc.

Sorry, I joined in a bit late here. So hopefully, this has not been asked. But has the metastatic indication improved the marketability of Decipher to new urologists who maybe hadn't used Decipher previously? Has it accelerated new account wins in any way?

Yes. Let me handle that one. I think it's clear that the marketability of the test being able to say that it's the only test that covers the entire care continuum up to metastatic now, I think is valuable. We're starting to see some interesting trends. You might have missed it, but John mentioned earlier, the trend of high-risk interest growing as a result, we think, of having the metastatic product available. So it's difficult to quantify it exactly. But -- and it's also early stages since the full launch. But we're so far very happy with what we're seeing.

I mean could you talk a bit about the commercial payer landscape for metastatic patients? I mean, do you have coverage in place? Could you speak to maybe the number of covered lives that you have today and potentially the opportunity before NCCN?

So yes, on the coverage policy, there is an LCD in place for Decipher metastatic.

Two-thirds of which -- yes, so the Medicare population is closer to about 2/3 of the total population. So we'll be in good stead out of the gate. We will have to go through and update contracts over time. And so that will be kind of a long tail, if you will, to get to the same 200 million covered lives. But the good news is with such a high Medicare population, we'll have a slightly different ASP for Decipher metastatic. But here shortly, I would think those 2 things start to converge.

Yes. And we think there's a strong evidence trail as well, Mason, supporting the use of Decipher in the metastatic indication. So we expect data to emerge here very, very soon in publications. Phil can go into those a little bit further. But we expect those to make their way into guidelines. And again, guidelines will drive demand and adoption as well as the -- improve the payer landscape and updating their own coverage policy.

Yes. And don't forget, Mason, if you think about Decipher in the localized setting, we made tremendous traction with before guidelines, right, before being in guidelines. The guidelines certainly provide a step-up, but they're very helpful, but not necessary to start that ramp. And so I wouldn't see that as a gating factor.

Our next question comes from the line of Mike Matson of Needham & Company.

So just one on Prosigna. Can you just talk about the market opportunity there? It sounds like it's an established market here in the U.S. So how big do you think that is in terms of dollars? And is this -- I assume it's fairly mature at this point. But is there room for more penetration of the testing within the targeted group of patients?

Yes. Thanks for the question. It is absolutely a very mature market, primarily, I would say, dominated by one participant. Nevertheless, I think there are opportunities in a sense that the data coming from the OPTIMA trial will highlight where Prosigna has a distinct value proposition in predicting patients that absolutely will benefit from chemotherapy.

In terms of overall size, just over 200,000 patients or so are indicated for testing. A good number of those are going to be Medicare patients. We're going to leverage our network to update our contracting with payers where we can. And as Rebecca mentioned earlier, it's going to require us to build a brand-new channel, but we're confident in the upside.

And Mike, in terms of ASP, that's part of what we'll be resolving between now and the launch in the middle of next year. But you can kind of -- you can bookend it between where it's currently reimbursed for MolDx and where Afirma and other tests like that are.

And then just a financial one. So you've got $320 million of cash. I think that's about 70% of your market cap. You have no debt, you're positive free cash flow now. Your adjusted EPS is positive. So your shares look pretty undervalued here. So would you consider share repurchases with some of that cash? Why or why not?

You can imagine we go through those kinds of conversations. The potential uses of cash in terms of strategic uses, share buybacks and so on. And there's a multitude of variables to take into account there. We're certainly in a very fortunate position to have built the financial profile that enables us to have those options and the optionality.

But at this time, we're very focused on building the business and making sure we're investing in the right things to grow and allow us to target even more and more patients. So no specific commentary around uses of that cash at this point.

Yes. I wholeheartedly agree. I would just say. I think your math is appropriate on the valuation. The other thing I would add is the landscape of opportunities is pretty ripe right now. We continue to have a very high bar for M&A. But I think we're now in year 3, perhaps, of some of the valuation disconnect across the industry. And so I think there are a number of different assets that could be interesting. And so we always are looking. That hasn't stopped. We don't always do deals because the bar is so high. But we're absolutely keen to continuously assess and bring to bear what make sense for our shareholders and for patients and employees.

Our next question comes from the line of Sung Ji Nam of Scotiabank.

This is Corey Rosenbaum on for Sung Ji. So specifically for the Afirma transition to V2 Transcriptome, I appreciate the commentary you've provided thus far. But would you be able to break out the gross margin benefit that could be expected by the time that is fully rolled out?

Yes. I would like to -- I'm happy to talk about it qualitatively. We will be using that to reinvest in the business. And so I don't want folks to get too far ahead of their skis on the profitability side. But qualitatively, around 1/3 of our costs are sequencing and library prep in nature. We're currently on the NextSeq 500 and we'll be moving to the NovaSeq X.

And so for the portion of that 30% that is sequencing related, we will, in time, see a meaningful reduction in our cost structure.

And one of the things I really like about this transition other than the obvious COGS financial impact of it is, it gives us a unified platform that we can use for other tests. And as we've already said, we're going to be launching Prosigna on that platform next. And you can imagine it's extensible and scalable even more broadly than that.

This concludes the question-and-answer session. Thank you for your participation in today's conference. This concludes the program. You may now disconnect.