Veracyte, Inc. (VCYT) Earnings Call Transcript & Summary

Great. Welcome, everybody. Good afternoon. My name is Matt Sykes, the life science tools and diagnostics analyst at Goldman Sachs. I've got the pleasure of hosting the Veracyte management team here with me today: CEO, Marc Stapley; and CFO, Rebecca Chambers. Marc, Rebecca, thank you very much for joining us.

Thank you for having us.

Thank you for having us.

Maybe if you could just kind of help us set the stage first, talk a little bit about sort of the most recent results, some of the trends you're seeing in your business and what you're kind of expecting for the second half of this year.

Yes, happy to. And maybe before I start, I can just remind people about our safe harbor statement, which you can find the full text of that on our website at www.veracyte.com. To the extent we make any forward-looking statements, we would expect them to be covered by that statement. So maybe before kind of getting into the great results that we had in the first quarter and what we expect for the second half, just to remind investors a little bit about what we do at Veracyte and why we do, what we do. And ultimately, our vision is to transform cancer care for patients all over the world. And we base that on our belief that exceptional cancer care begins with exceptional diagnostics. And our role here is to provide physicians with the high-value insights that they need to guide and assure patients at these really critical moments in the race to diagnose and fight cancer and treat cancer. And so with that in mind, we've been very successful launching 2 really important tests, our Afirma test for thyroid cancer and our Decipher test for prostate cancer, and significantly penetrating both of those markets with those tests with a lot more room to continue to grow. And those are the core tests of our business that fuel our growth and our investments in a really broad and interesting long-term growth portfolio. To your question, Matt, around the performance, I mean, those tests really outperformed in the first quarter. It was great to see Afirma, which is a dozen or so years in its life cycle, continue to grow at a very significant rate in the quarter, and we're actually able to increase our guidance for the year to high single digits as that test continues to penetrate the, call it, more than 50% penetrated market in thyroid cancer testing. And then Decipher, similarly, we saw fantastic growth from Decipher in the quarter. When you look at the volume year-over-year, it was in the mid-40s percent growth and driven very much by the significant body of evidence we have for that test. So as we think about the rest of the year, obviously, continuing to see performance -- strong performance from our core business portfolio while continuing to build on the new tests that we're launching and the new markets that we're approaching, both advancing our IVD strategy and advancing our NIGHTINGALE trial for our nasal swab test.

Got it. I think you just addressed it, but I just want to kind of go back to the raised guidance, the $5 million at the midpoint you had mentioned Afirma. Any other puts and takes that we should be aware of or that raised guidance?

Yes. The guide was primarily a flow-through of the beat in the first quarter. We did raise our testing guidance, in addition to our Afirma guidance to high single digits on the Afirma side and then mid- to high teens on the testing side. So those are really the puts and takes. I mean Afirma and Decipher are the vast majority of our business in terms of revenue contribution at this point in time. And so when it comes down to what's really going to drive the guide and the performance, it's those 2 products.

Got it. And maybe sticking with you Rebecca for a minute, just sort of a big picture question. But maybe talk a little bit about your path to profitability and any key drivers to achieve positive cash flow generation. I mean I think it's a differentiating part of the story in the current environment. So...

Yes. I'm happy to, and I 100% agree with you, of course. I do think it's a very differentiated component of the Veracyte story. As many of you know, we did increase our cash guidance as well during the first quarter, such that we said on a year-over-year basis, we -- our ending cash balance would be net neutral. And that was an increase of about $12 million from the prior guide because we are now fully absorbing the contingent consideration tied to the HalioDx and other prior acquisitions. So super excited about the cash generation story here at Veracyte. What is differentiated and what allows us to do that really is a couple of things. First, on the gross margin side, our gross margins are in the mid-60s or the guide for the year is in the mid-60s, and that is tied to an ASP around $2,600, $2,700, right? And so we're getting reimbursed for our tests. These are tests that -- we have at a minimum, on the Decipher side, just under [ 200 million ] covered lives for. So I do think having reimbursement coverage to the extent that we do is differentiated. Additionally, we have specialty oncology channels, and these are highly efficient channels that allow us to continue to grow and penetrate these 2 tests very nicely in a way that does allow incremental leverage and that, again, is a differentiated asset. And then on the R&D side, we're very prudent in our investment approach. We have taken a disciplined portfolio approach. And over the course of 2022, did streamline the portfolio really to be tied to those 2 products primarily, and that has allowed us to also be in this very enviable position from not burning any cash this year. So when you boil it down, it's -- those are the primary drivers that have gotten us to where we are. And obviously, as we continue to pass -- move forward, I think from a cash generation standpoint, net neutral is kind of the floor.

And you just addressed that a little bit, but just kind of want to dig a little bit deeper on how you're thinking about balancing continued need for innovation. You've got pipeline products, whether it's nCounter, Percepta, but at the same time, maintaining that financial profile that is differentiated. So how do you think about that?

We literally have a scale. We don't put them on the scale, but I mean, in our minds, we do, right? And obviously, we make sure that what we generate is being used in a way that can hopefully sustain revenue growth over a long duration, but doesn't go -- take us so far down that we need to tap the capital markets or really even burn any cash in any given year. So I think it is -- overall, it's a portfolio approach and that portfolio of -- I'm sorry, Afirma and Decipher generates that cash, and that cash then gets funneled into the investment opportunities that will allow us to continue to deliver sustained growth over time. But everything has a business case -- I mean, it's pretty basic sometimes. When you think about it, everything has an ROI and everything -- we make portfolio decisions to fund the highest return products that can help the most patients.

And that's a very conscious philosophy that Rebecca just outlined. I mean if you think about the things that we're investing in for the long term, the nasal swab and the IVD strategy, those are conscious investments that we're making to provide long-term growth for the company, and we're investing in those at a rapid pace in order to bring those products to market as soon as we can in the current environment. But -- and then also, in addition to that, we're investing in our discovery engine to continue to fuel the organic growth opportunities for the future as well. So we're able to do those things and make conscious decisions to do those things and dial that up and down as needed appropriately so. But to Rebecca's point, we're going to continue to -- our view is we need to continue to generate positive cash flow and at the same time, they'll continue to create opportunities for growth in the future.

Got it. Maybe just pivoting to Afirma and Decipher just given what they represent to growth. Could you maybe remind everybody sort of about -- sort of the differentiation of those tests relative to the competition? I know there's -- Afirma is sort of 50% penetration -- penetrated and Decipher Prostate is 25%, but just maybe talk about sort of, one, the differentiation; two, the room to grow.

Yes. And to be clear, the penetration of those 2 markets that you mentioned, is in molecular diagnostics for thyroid and prostate cancer testing, respectively, is 50% of 25%, plus or minus and those are based on end of last year numbers. And we believe our tests, Afirma and Decipher, respectively, hold the leading market share in those penetration metrics. I think there's a couple of reasons for that. And one reason for both tests really comes to the performance of the test as evidenced by the evidence we've been able to generate, and not just that we've been able to generate, but that others have been able to generate using our test. So it's one of the things that I think might not be as well appreciated is the amount of R&D that we put into evidence development for those tests is some level, and we fund the studies to result in that. But others do, too. Others do independent studies based on our tests and produce those results. Consequently, both tests perform extremely well in the market. They perform very well as diagnostic tests. The evidence that exists for them is very extensive. Decipher, a good example, we have over 70 peer-reviewed published tests and studies associated with Decipher and over 100 research-based studies that also use Decipher. And so that level of evidence is what leads to, for example, NCCN Level 1 guidelines in the case of Decipher. So that's -- the most important thing is strong performance of the test and that performance to be supported by really robust evidence, and that's what helps us to maintain and grow market share.

Got it. And just given -- just on Decipher, just given the overall market penetration of 25% for molecular, given there seems to be incrementally more runway, how do you see this in terms of like the durable growth rate for Decipher Prostate moving forward?

I mean, it should be very durable. There aren't that many analogs out there. But -- even if you used our own Afirma as an analog in 12 years where the market is over 50% penetrated, I believe there's plenty of room for that to grow. I don't think any of these markets ever get to 100%. But certainly, in my mind, 70% wouldn't be an unreasonable and possibly even a conservative estimate of where these markets could end up. So that gives you a sense of the room for Afirma. But to Decipher to your question, with that market being 25% penetrated, so many men with prostate cancer are still not getting a molecular diagnostic today and they should be. There is a test that is indicated for nearly every indication with the exception of metastatic. And so that's over 90%. And so continuing to penetrate that market is our primary focus. We have a great sales team that's highly leveraged, as Rebecca talked about, who's able to do that. And so the durability of Decipher, in particular, over many years is pretty clear from my standpoint.

Got it. And when you look at some of the other tests that you have in terms of getting toward Decipher Prostate and [ Afirma(R) ], what do you see as sort of the pathway for those? I know the market size will differ. The opportunity set differs. But in terms of sort of like how we should be thinking about the rest of the menu and sort of the growth drivers over the next few years, how should we think about that?

Yes. I think there are some kind of smaller and medium-term opportunities there where we have tests that are single-digit penetrated today or low single-digit penetrated, and that includes, for example, our Prosigna test for breast cancer, which is available as an IVD in the U.S. and outside the U.S. That includes our Envisia test for interstitial lung disease, which is a relatively rare condition, but a very distressing disease. This test has proven utility there. Even up to [indiscernible] bladder test, which leverages our urology channel, and we see opportunities to expand our urology TAM by including more tests based on more evidence and performance for the urology market for bladder. Not as big as prostate as a market, but still meaningful. So those are the medium term, but what's really exciting, I think, is the long-term opportunities that I've mentioned. That includes our nasal swab test for lung cancer, a very simple noninvasive test for patients who have a lung nodule who are a former or current smoker to help classify those patients as low, intermediate or high risk for lung cancer. And our plan is to launch that test in the U.S. and globally as well. And so that's a really exciting future opportunity. And the other one is our IVD strategy, which I think is somewhat underappreciated. But because of the great work we do to develop these amazing exceptional tests in the U.S. and create evidence behind those tests, we're able to launch those tests on our IVD platform on the nCounter for diagnostic use, get regulatory approval under IVDR for those tests, and we already submitted Envisia. We'll be submitting Decipher in 2024 and nasal swab in 2025 and then make those tests available to patients all around the world.

Got it. Maybe just before I sort of moving on to some of the other areas of the business. Could you talk a little bit about sort of the commercial footprint and where you are today? I think you've done a lot of -- laid a lot of groundwork to develop a really robust infrastructure from the commercial side. Do you feel like in terms of the presence that you have on the commercial side, you are where you need to be at this point? Obviously, you've got some longer-term pipeline projects that will require some level of commercial spend. But in terms of the existing business you have today, where are you on the commercial footprint? And what level of investment does that still require?

Yes. I'll talk about the team and Rebecca, you talk about the investment, if you like. But the -- this is one of the really, I think, again, underappreciated, but really interesting benefits of the specialty oncology business that we're in. We've built these sales teams in endocrinology, and they're not huge, roughly, call it, 50 or so plus or minus. Same thing in urology and a smaller sales team in pulmonology, which I'll come to. And these teams are able to address a very significant portion of the market and reach many, many customers. We haven't had to grow those teams substantially as those products have continued to penetrate the market because it's such a specialty population of customers. And so that's a great model. In pulmonology, we have a smaller sales team that is focused today on our Envisia interstitial lung disease product. They're very excited about getting the nasal swab to be able to commercialize and we'll be able to obviously grow that team as we see that nasal swab test start to penetrate the market sometime in the future. So that really, again, gives us an opportunity to grow that pulmonology sales force as we see penetration of the nasal swab test. Outside the U.S., we have a sales team that is more of a country-focused model. And it's more than just sales. We have market access, we have medical teams and we have the commercial team. So that triumvirate works together country by country where we already have that team in place for the major countries in Europe. For example, U.K., France, Germany, Spain, Italy, et cetera, because we're already selling Prosigna in those territories.

Got it. Maybe touching on some of the long-term drivers. You've talked a little bit about the Percepta Nasal Swab offering. You talked a little about NIGHTINGALE. Maybe kind of summarize for the audience sort of what some of the key findings are from that and what we should be looking forward to in that?

Yes. So NIGHTINGALE trial is a pivotal clinical study that we're doing to demonstrate the clinical utility for the nasal swab test. So important to understand that we've already generated and shared the clinical validity data for that test that shows that in terms of classifying patients with low, intermediate or high risk, it works well. And that's based on going all the way to clinical truth for those patients. That is the basis of the CV study. And so what that means from a clinical utility standpoint is patients who identified as low risk are able to avoid invasive procedures such as a bronchoscopy. Patients who are identified as high risk are able to be accelerated to surgical follow-up and treatment. And so very important unmet need in lung cancer screening today. Not enough people are getting screened for lung cancer. There's 15 million people in the U.S. alone who should be screened annually and roughly 1 million, call it, or even -- about 1 million of those patients are getting tested today. There's about 1.6 million lung nodules that are found incidentally in the U.S. And then, of course, as I mentioned before, we're going to launch this test outside the U.S. as well. So the market is significant. Our goal is to enroll the final patient for the NIGHTINGALE study by -- around the end of this year, and then we'll obviously have to follow up those patients and get to a publication for clinical utility and get that approved and get reimbursement.

Got it. And then on the biopharma business, which has been a little bit more volatile. I think there's obviously some well-known end market health dynamics that are involved in that. But maybe a little -- talk about that business a little bit. Give us an update into what you're seeing now, particularly around the dynamic of spend from the customer base.

Sure, I'd be happy to. So as we mentioned on the Q1 call, both the biopharma business as well as the IVD manufacturing and development business have had a bit of a headwind here, the latter of which driven primarily by our desire to fund and use those employees to do our own IVD development. But biopharma, back in the fall of last year, we did say we were seeing a slowdown. We play in the earlier stage of the development arena for these customers. And I think that is much more apt to be hit earlier on in these budget macro environments that we currently face as we do today. And so we've expected this for a little bit. We had one major customer that did take a pause on a very large project and impact our outlook for 2023 and since then have also seen a bit of a more challenging environment for this portion of our business. I wouldn't say anything has changed dramatically one way or the other, definitely has not improved. But again, this is only about 6% of our revenue. So in terms of the overall impact from our business, it's not material.

But at the same time, you continue to generate the data and build that biorepository, which I think over time becomes more and more valuable. So as spend comes back, you'd expect Veracyte to participate...

Definitely. Yes, I think we have a host of assets, not just the biorepository with regard to the Afirma, Decipher side that you highlighted, but as well as the business side, it comes out of the Marseille, the Halio acquisition for Marseille. So I think we have a number of great assets to serve our biopharma customers, a good team to go after it. But whether that's 6 months from now or a couple of years, it's anyone's guess at this point in time.

And I mean we believe in that biopharma market opportunity. We have some great assets in immuno-oncology. We've had some really interesting projects and good repeat rate. As Rebecca mentioned, we've had some customers of late that either payback or slow down. And then bringing on new customers is also -- seems to be slowing relative to how long it takes to go from interest to final decision. Interest is there. Decision takes a little bit longer at the moment. I'm sure others are seeing that, too. But my belief is this biopharma business for us could be a significant portion of our revenue in the future. And so we're going to continue to focus on that and invest in that and hopefully drive that to where it needs to be once we get through these macroeconomic headwinds.

Got it. Maybe shifting to the IVD strategy in Europe. I think it would help the audience to maybe understand a little bit more about the genesis of that approach. It's obviously a very different market than the U.S. in terms of the decentralization. But maybe talk about why you decided to approach that market that way. And as part of that, the HalioDx acquisition and then kind of sort of what your vision is of that business over time.

Yes. And it goes back to the vision of the company, transforming cancer care for patients all over the world. We've developed these exceptional tests for the U.S. market, and they're penetrating extremely well. But there's clearly demand for these tests outside the U.S. as well. And our primary focus has been Europe. Decipher Prostate is a great example of that. It's pretty clear to us that there is a need for a test like Decipher to be made way more -- much more accessible to patients, much closer to the patients in every country that we can access. So knowing, that our strategy was to develop -- or have a platform that we can develop the test as a kitted strategy to distribute those tests. The alternative of actually creating a clear lab in every country is cost prohibitive. You wouldn't do that. You wouldn't be able to make the economics of that necessarily work. The second strategy of having tests shipped to your [ clear lab ] in the U.S. doesn't work. You have privacy issues. You have samples across borders. You have turnaround time challenges. So making the test available to customers and to labs who are closer to those customers makes a lot more sense. So we're in the process of getting regulatory approval, as I mentioned earlier, for 3 of our tests, 1 is already submitted, 2 to come soon, and that includes Envisia, Decipher and nasal swab. And then at that point, we'll have a very meaningful menu. So we're only at that point looking at talking about 4 tests which is, Prosigna for breast and then the 3 I just mentioned. That is significant menu. When you think about the number of incidences of breast cancer, lung cancer, prostate cancer outside the U.S. And that's not even including Envisia, which is a rare condition, as I mentioned earlier. When you think about that, that is a meaningful menu that should be, in our opinion, is sufficient to get many labs to adopt the instrument if they haven't already done so, because these instruments already exist in the installed base out there, and the kits. Now the idea of the HalioDx acquisition for us was to enable us to manufacture those kits ourselves, control the supply chain, control the economics of our manufacturing capabilities in Marseille, France and be able to distribute from there to all of our customers outside the U.S.

And the decision to bring that to sort of vertically integrate that manufacturing, talk to me about sort of the cost-benefit trade-off of either outsourcing that or doing it yourself and vertically integrating that or even the possibility of doing that. I mean, obviously, it was clearly an economically driven decision. So I would love to hear kind of the rationale behind that.

I mean it is. I mean, effectively, we outsource that today. And the idea of bringing that in-house is controlling our supply chain and also having the economic benefit of maintaining the margin within Veracyte for that. So of course, outside the U.S., we're selling to other labs who themselves are running the test, and therefore, they need to cover their costs or make a margin. And so you're already sharing margin in -- outside the U.S. that you're not doing in the U.S. model today. And so it's really important for us to control as much as we can the rest of that cost structure. And we believe, as we scale and grow, it enables us to take opportunities of that scaling and to leverage those opportunities of scale, to manage those procurement relationships as well. And so it's all a volume-based economic decision. And it's based on the volume growing in each of those countries that we service and having sufficient volume outside the U.S. in order to make those economics work. So again, it's always about menu, volume and driving enough production for our customers and having the quality and turnaround time that we need.

And then talk about sort of the cadence of timing in terms of rolling out this menu expansion. You talked about the different tests, but just to really talk about in terms of how we're modeling this and how we're expecting that to start contributing, it would be really helpful to kind of understand how that's going to be -- that cadence is driven.

Yes. So the development for those 3 tests, and again, reminding everybody that the development of the actual assay and the deep science behind that, including the machine learning that results in the classifiers or the tests that we've come up with, has already been done for the U.S. market. So now the development is bridging that for the European market to the other platform, the nCounter platform and then developing the evidence that we need for that specific -- for that market and submitting the dossier for regulatory approval under IVDR.. . IVDR being the new standard that we're all having to follow. We're all learning as are the notified bodies as we go through that process. Our Envisia submission in December last year is progressing very well. And again, we're learning from that iterative process back and forth with the notified body in terms of what's required here. The time line for actually getting a test approved is unknown to us and others at this point. We just don't know how long it's going to take, but we'll learn that as time goes on. And as I mentioned, we're developing these 3 products in parallel, and we'll be submitting Decipher in 2024 and nasal swab in 2025. Those are the -- we want to get the Decipher Prostate test launched as quickly as possible and then have nasal swab follow soon after that. And so we are on very compressed time lines here going from bridging those products, developing those products, creating the evidence and dossier to submitting and getting it approved as quickly as possible.

We've heard other companies dealing with the challenges of IVDR registration, and you're obviously dealing with it now. If you can kind of look forward in time and see that taking place, do you think that develops some type of moat for you in terms of actually doing the work and getting there when everyone else is just starting?

I think it does already has and one of the reasons we acquired the team in Marseilles is because they have over 15 years of experience in developing IVD products, right? Now IVDR is new for everybody, but even there, that team has some experience in that -- in the early stages as well. But clearly, many years of experience of developing assays and getting them through regulatory approval. So yes, I do think, a, it is a moat and, b, it becomes an even stronger one as we get through a test a year, every year is quite an incredible accomplishment and experience.

And then I'm not as up to speed on the sort of the competitive landscape for these types of tests in Europe. Could you maybe talk about as you kind of roll these out, what kind of competitive landscape are you facing for each test? And what are you really going up against?

Yes. Again, I think the best way to deal with the competitive landscape, I mean, first and foremost, as I talked about, the challenges to getting a test launched in Europe, the clear model in the U.S. not working, the cost prohibitive outlay that you would have to put in place to build your own lab or do have to put in place. So having our own platform, the access to the nCounter for the clinical markets is, I think, a key differentiator there. And then in terms of competition, the most important thing that we will have on top of that is menu. Being able to address many needs of our customers in oncology in a number of indications, I think, is going to be really important. And being able to work with those customers very effectively. The raft of evidence that we have and will have generated, I mean, again, this is the beauty of the flywheel here that the U.S. -- the number of tests, if you think about how many tests we run for Decipher Prostate in the U.S., the plus 70 and 100-plus studies that I mentioned earlier, the NCCN Level 1 guidelines in the U.S., all add weight when you think about that's going to be the same test effectively that we bridge -- that's being used outside the U.S. That is a huge competitive advantage. And so our focus on evidence development, the clinical utility study, NIGHTINGALE, for nasal swab, for example, that is what gives us, I think, the competitive edge when it comes to launching these tests outside the U.S. as well.

Got it. And then Rebecca, just looking at margins. We talked a little bit about financials before, but just sort of your thoughts and expectations for rest of '23 and beyond. Last quarter, you mentioned sort of a sequential step down in gross margin. Maybe talk about some of the drivers and opportunities to expand margins. And any color on specific test margin profiles as you kind of lay that out would be helpful if you're willing to talk about that.

Happy to talk about the topic in general.

Okay. Sure. I can try.

It's all good. So yes, we did highlight on the last earnings call that we do expect a sequential step down in gross margin. We have seen, as we've highlighted a few times this afternoon, really strong growth in Decipher, in particular. And we are getting to the point in the laboratory where we need to add incremental staff, incremental equipment and incremental space. And over the course of the rest of this year, that will start biasing itself into the financials, and that's one of the large drivers of that guidance. Additionally, we had a $2 million good guy in the quarter that we aren't expecting to repeat, and that obviously flows down as well as a business mix contribution in the first quarter. And so as you look in Q2 and beyond, we absolutely do feel the need to continue to invest to catch the lab operations up, if you will, to the level of volume that we are expecting, and that's all work that's going on beginning in the second quarter, and that will continue on throughout the rest of the year. As we look forward beyond 2023, we do think there are many opportunities for us to continue to focus on efficiencies in the laboratory. Not really willing to go into what those are today. They're works in progress, if you will. But given the advances across the tools industry, you can imagine that we have different opportunities at hand. Those -- we expect to balance inflationary pressures both on the reagent side as well as the labor side. And our goal at a minimum is be net neutral between those 2 things. So yes, we're seeing some goodness with regard to efficiencies on the ability to scale. That being said, we're also seeing some pressures, and our goal is to be net neutral at a minimum, to be clear.

Got it. And then Marc, I'm going to ask the obligatory artificial intelligence, AI, question, which I'm asking everybody, regardless of relevance sometimes. But I think with you guys, it is actually highly relevant. Maybe talk a little bit about how you're leveraging AI and what do you think this could mean for the diagnostics industry? I mean we're dealing with very large complex datasets, which tends to lend itself to AI. But maybe talk about Veracyte, how you're leveraging it and what do you think the role of AI will be in your company.

Yes. And if you think about the development of our tests and our classifiers, there's an incredible amount of data involved in analyzing the algorithms and coming up, locking the classifier and determining what is the best algorithm for the test. And so you can imagine, we have incredible machine learning and AI capabilities on that side of our business as well as if you think about our immuno-oncology offerings in immunohistochemistry, we have tremendous experience in using AI on imaging data as well. So that already exists in our company as one of the offerings that we have for our biopharma customers. And -- so those existing capabilities within our business, too. And then if you think about the amazing datasets that we have based on the number of patients that we've serviced so far, you put all that together, of course, we're very well positioned from an AI standpoint as a company. And we think it's important to continue to opportunistically develop and grow those capabilities over time.

Got it. And then just in terms of capital deployment, I mean, you guys were very active a few years ago on M&A. In terms of the balance sheet, it's in good shape. You're obviously approaching profitability. But as you think about sort of capital deployment opportunities, we've talked a lot about sort of the organic investments that you're making. Have you sort of gotten to the point where you might be pivoting back towards inorganic? Or are you still really focused on organic? And if there is some inorganic, I'd love to kind of get your view on sort of valuations and where you see sort of the landscape.

Yes. No change in our philosophy here relative to what we've communicated before. It remains the same. And that is, first and foremost, as I mentioned earlier, we are investing in inorganic discovery and research efforts in our company to help identify the products of the future and the technologies of the future that are going to serve us and our customers well. So that's important. We bring fence of the investment in that, and we're continuing to develop that part of our business. We've made some great acquisitions. And as you can see, Decipher, in particular, is really doing very well because we acquired that business at a really important inflection point. It had a clear path to reimbursement, a great product with significant evidence behind it, and it was ready to really start to inflect. That's the bar for me for an acquisition.

High bar.

It's a very high bar. And there aren't a lot of Deciphers out there. And so we're opportunistic, of course, but we certainly -- ultimately, we have an incredible portfolio of products that we're developing already in-house. So we've got growth drivers near term, medium term and long term that we're excited about. And so that will help to fuel our business growth. And we can do that as we said we can and are with a clear path to profitability and cash generation that we're effectively there this year based on the comments we've made with respect to cash, then even better.

Got it. Maybe in the minute we have left, what do you think is most misunderstood or underappreciated at Veracyte?

It's a great question. I think always, the question is around the durability. It's the first question you asked of our existing products. And I think we've demonstrated that many, many -- multiple years after a product is launched, the growth is durable. The second is the IVD strategy. I think proving that out is -- we're breaking new ground with that. And so there's not an analog to look at and say, okay, Veracyte is doing what other companies have done here. We're doing it first, and we're doing it really well. And I think kind of trying to understand that market relative to the U.S. market is an area where I'm not sure investors have fully appreciated yet. But as we launch a product a year, you'll start to see that penetration curve.

Got it. I think that's a great place to end it. Thank you, Marc. Thank you, Rebecca. Appreciate it.

Thank you.

Thanks, Matt.