NEW YORK (GenomeWeb) – Veracyte reported after the close of the market on Monday that its third quarter 2017 revenues declined 6 percent year over year.
For the three months ended Sept. 30, the genomic testing firm reported total revenues of $17.5 million, compared to $18.6 million in Q3 2016, missing the average analyst estimate of $19.6 million.
The firm said that revenue accrued for tests performed during the quarter increased 24 percent, but was offset by the impact of higher cash collections in the prior-year quarter for tests performed prior to July 1, 2016.
Veracyte saw its genomic test volume increase 14 percent to 6,533 tests, compared to Q3 2016.
"We delivered a solid performance this quarter in which we grew our genomic test volume despite the impact of the hurricanes in key markets, further expanded reimbursement, and booked our first Percepta revenue," Veracyte Chairwoman and CEO Bonnie Anderson said in a statement. "We believe our strong foundation to drive revenue growth is in place and we are encouraged by the increased momentum we began to see towards the end of the quarter."
Veracyte's Q3 net loss widened to $7.0 million, or $.21 per share, from $5.6 million, or $.20 per share in Q3 2016, beating Wall Street's estimate for a loss of $.23 per share.
The firm's R&D spending in the quarter fell 25 percent to $3.0 million from $4.0 million in the prior-year quarter. Meanwhile, its Q3 SG&A expenses rose 4 percent to $13.4 million from $12.9 million.
Veracyte finished the quarter with $41.2 million in cash and cash equivalents.
During a conference call with analysts following the release of the Q3 earnings, Anderson said that although the company is advancing the core foundation its business, it "didn't achieve the acceleration of the growth we had anticipated." As a result, the company lowered its guidance for full-year 2017, and is now expecting revenues of $71 million to $72 million. Analysts are expecting revenues of $76.7 million for the year.
Anderson did not provide guidance for 2018, but said the firm anticipates revenue growth of around 20 percent and still has a goal of being cash-flow break even by the end of 2018.
One reason for lower growth was that the company had been converting its Afirma test sales from cash to accrual, so in the year-ago quarter, some revenues were cash collected for tests run in prior quarters. Going forward, Veracyte's revenues will all be reported on an accrual basis.
Following the conference call, investment bank Piper Jaffray downgraded Veracyte's shares to Neutral from Overweight. In a note to investors, analyst William Quirk said that Veracyte's 2018 revenue guidance of around 20 percent growth would amount to about $86 million in revenues, "well short" of the Wall Street $101 million forecast. The miss comes from lower Afirma sales and lower revenue per test, as well as a slower Percepta launch, he added, further noting that Veracyte's goal of being cash flow break even by the end of 2018 was optimistic.
"Veracyte is now, more than ever, a show-me story," Quirk said.
Veracyte's shares fell nearly 26 percent to $6.14 in Tuesday morning trading on the Nasdaq.