Veracyte (VCYT) Q2 2025: Decipher Volume Surges 28%, Anchoring Multi-Year Growth Trajectory

August 6, 2025 | By EarningsIQ Research

Decipher’s record 28% volume growth and expanding clinical footprint underscore Veracyte’s durable double-digit growth thesis. Management is layering near-, mid-, and long-term drivers across its portfolio, with operational discipline and R&D investment fueling margin expansion and pipeline visibility. Updated guidance reflects rising confidence in core testing while strategic product launches and platform upgrades set the stage for sustained outperformance into 2026.

Summary

  • Decipher’s Market Penetration Accelerates: 28% volume growth and expanded risk coverage drive durable leadership.
  • Margin Expansion and Cost Discipline: Platform upgrades and operational execution support higher EBITDA margin guidance.
  • Pipeline and Platform Investments Deepen: Multi-year growth levers from MRD, Prosigna, and digital pathology reinforce long-term outlook.

Performance Analysis

Veracyte delivered robust Q2 results, highlighted by 14% total revenue growth and 15% volume expansion, anchored by standout performance in Decipher, its prostate cancer genomic test franchise. Decipher volume grew 28% year over year, marking the thirteenth consecutive quarter above 25% growth and propelling the business toward a 100,000-test annual milestone. Affirma, Veracyte’s thyroid nodule test, posted 8% volume growth, demonstrating resilience in a mature segment. Both products together comprise the company’s core testing engine, representing the majority of revenue and providing the foundation for Veracyte’s double-digit growth thesis.

Adjusted EBITDA margin reached 27.5%, well above expectations, driven by improved lab efficiency and disciplined operating expense management. Testing average selling price (ASP) normalized after prior period collections, while product and biopharma revenue showed typical quarterly variability. Cash generation remained strong, with $33.6 million in operating cash flow and a cash balance of $320.7 million, ensuring ample flexibility for reinvestment and future pipeline launches.

  • Decipher Outpaces Industry Growth: Volume growth and share gains reinforce its leadership in prostate cancer diagnostics.
  • Affirma Maintains Share in Mature Market: High single-digit volume growth and grid expansion offset ASP headwinds.
  • Operational Leverage Evident: Margin gains and cash flow support reinvestment in R&D and pipeline acceleration.

Veracyte’s financial performance reflects a disciplined balance between profitability and investment, with management raising full-year revenue and margin guidance in response to execution strength and pipeline visibility.

Executive Commentary

"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 Invisia. Decipher and Affirmer continue 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."

Mark Staffley, Chief Executive Officer

"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 road drivers."

Rebecca Chambers, Chief Financial Officer

Strategic Positioning

1. Decipher: Expanding Clinical Footprint and Penetration

Decipher, Veracyte’s flagship prostate cancer test, is demonstrating accelerating adoption across all risk categories, now covering metastatic indications and driving a “halo effect” that stimulates physician engagement in high-risk and underpenetrated segments. Management reported a record number of ordering providers, up over 20% YoY, and highlighted Decipher’s unique position as the only test spanning the full prostate cancer care continuum. With 65% market share and more than 225 supporting publications, Decipher’s clinical evidence base and operational execution are reinforcing its competitive moat and positioning it for continued share gains toward management’s 80% penetration target.

2. Affirma: Mature Market, Grid-Driven Differentiation

Affirma’s growth is sustained by incremental share and utilization gains, even as the thyroid nodule testing market matures. The launch of research-use-only grid offerings and new classifier publications are driving academic interest and supporting clinical utility claims, which in turn reinforce account retention and modest volume growth. The upcoming transition to the V2 transcriptome platform is expected to reduce costs and improve testing efficiency, supporting margin stability even as ASPs normalize post-lab benefit manager disruptions.

3. Pipeline Expansion: MRD, Prosigna, and Digital Pathology

Veracyte is investing in a multi-year innovation pipeline, with five new products and a major clinical study (Optima) completing in the next 18 months. The MRD (minimal residual disease, recurrence detection) platform, launching first in muscle-invasive bladder cancer, leverages whole genome sequencing for superior insight and differentiation. Prosigna, Veracyte’s breast cancer test, is on track for a mid-2026 launch and aims to capture share in a large, established market. Digital pathology, currently available to research collaborators, is being integrated into core workflows, potentially enabling new product offerings and data-driven insights over time.

4. Geographic and Channel Expansion

Restructuring and contract manufacturing transitions in France have enabled Veracyte to maintain supply continuity for Prosigna IVD, while shifting investment to US-based R&D to accelerate IVD pipeline development. The company is leveraging its commercial infrastructure and clinical relationships to efficiently cross-sell new tests, particularly in urology and oncology channels, and is preparing for country-by-country reimbursement efforts post-approval.

Key Considerations

Veracyte’s Q2 results reflect a business in transition from single-product dependence to a diversified, multi-platform diagnostics leader. The company is layering growth drivers while maintaining operational discipline and a clear focus on clinical evidence generation.

Key Considerations:

  • Decipher’s Penetration Path: Management targets 80% market penetration, with current share at 65% and growing rapidly, supported by new indications and robust evidence.
  • Affirma’s ASP Normalization: Lab benefit manager headwinds are cycling out, and volume growth is expected to remain high single digits into 2026, with grid differentiation adding stickiness.
  • Platform Cost Reduction: Transition to NovaSeqX and unified transcriptome platform expected to drive down sequencing costs and support margin expansion across product lines.
  • MRD and Prosigna Launch Visibility: Both products are on track for 2026 launches, with MRD leveraging existing sales channels and Prosigna targeting an established, high-value breast cancer segment.
  • Capital Allocation Optionality: Strong cash position and cash flow generation provide flexibility for R&D investment, M&A, or potential buybacks, though near-term focus remains on pipeline execution.

Risks

Veracyte faces execution risk around the timing and scale of new product launches, particularly in competitive MRD and breast cancer markets. ASP pressure from payers and the pace of reimbursement for new indications could create near-term volatility. The company’s ability to translate research collaborations in digital pathology and grid into commercial products remains unproven, and international reimbursement timelines may extend beyond initial expectations. Regulatory or guideline changes could also impact test adoption rates.

Forward Outlook

For Q3 2025, Veracyte guided to:

  • Testing revenue roughly flat sequentially, with a slight Decipher uptick offset by Affirma seasonality and lower prior period collections.
  • Non-GAAP operating expenses to increase by up to $5 million, reflecting accelerated clinical and project spend and new hires.

For full-year 2025, management raised guidance:

  • Total revenue of $496 million to $504 million.
  • Testing revenue of $477 million to $483 million, reflecting higher Decipher expectations and stable Affirma ASPs.
  • Adjusted EBITDA margin raised to 25.5% from 24.5% previously.

Management expects continued double-digit revenue growth into 2026, with durable performance from core testing and incremental contributions from pipeline launches.

  • Decipher’s multi-year adoption curve and new indications underpin growth visibility.
  • Affirma’s platform upgrade and grid expansion set up for a stronger 2026.

Takeaways

Veracyte’s Q2 affirmed its position as a category leader in genomic cancer testing, with Decipher’s momentum and a robust innovation pipeline providing clear levers for multi-year growth.

  • Decipher’s Volume and Evidence Lead: Sustained 25%+ growth and expanding clinical validation are reinforcing Veracyte’s share and pricing power.
  • Margin Expansion Supports Investment: Strong EBITDA margin and cash flow are enabling accelerated R&D and commercial buildout for new launches.
  • Pipeline Execution Remains Critical: The next 18 months will test Veracyte’s ability to deliver on MRD, Prosigna, and digital pathology commercialization.

Conclusion

Veracyte’s Q2 results and guidance raise reflect a business executing on both operational and strategic fronts, with Decipher’s leadership and a visible pipeline supporting the case for sustained double-digit growth. The company’s ability to manage cost, scale new platforms, and translate clinical data into commercial adoption will be the key watchpoints heading into 2026.

Industry Read-Through

Veracyte’s performance signals continued demand and clinical adoption for high-evidence genomic diagnostics, particularly in prostate and thyroid cancer. The company’s focus on whole genome MRD and digital pathology integration highlights a broader industry shift toward multi-modal, data-rich platforms that can drive both clinical and economic value. Competitive pressure in MRD and breast cancer genomics will intensify, with reimbursement and evidence generation remaining critical differentiators. Investors should monitor how quickly platform cost reductions and pipeline launches translate into commercial scale across the diagnostics sector.

VCYT Health Care Diagnostics Genomics Margin Expansion MRD Digital Pathology