VERACYTE INC

Previous wording

Veracyte, Afirma, Percepta, Envisia, Prosigna, Lymphmark, Decipher, GRID, HalioDx, TMExplore, Brightplex, Immunosign, C2i Genomics, C2intelligence, C2inform and the Veracyte logo are registered or pending trademarks of Veracyte, Inc. and its subsidiaries in the United States and selected countries. nCounter is the registered trademark of NanoString Technologies, Inc., or NanoString, in the United States and selected countries and used by Veracyte under license. Immunoscore is the registered trademark of Institut National de la Santé et de la Recherche Médicale, or Inserm, in the United States and selected countries and used by Veracyte under license.

Current wording

Veracyte, Afirma, Percepta, Envisia, Prosigna, Lymphmark, Decipher, GRID, HalioDx, TMExplore, Brightplex, Immunosign, C2i Genomics, C2intelligence, C2inform and the Veracyte logo are registered or pending trademarks of Veracyte, Inc. and its subsidiaries in the United States and selected countries. nCounter is the registered trademark of NanoString Technologies, Inc., or NanoString, now owned by Bruker Corporation as part of Bruker Corporation’s asset acquisition of NanoString, in the United States and selected countries and used by Veracyte under license. Immunoscore is the registered trademark of Institut National de la Santé et de la Recherche Médicale, or Inserm, in the United States and selected countries and used by Veracyte under license.

Previous wording

We currently offer tests in thyroid cancer (Afirma); prostate cancer (Decipher Prostate); breast cancer (Prosigna); and bladder cancer (Decipher Bladder). Our Percepta Nasal Swab test is being run in our CLIA lab in support of clinical studies and our test for lymphoma is in development as a companion diagnostic.

Current wording

We currently offer tests in prostate cancer (Decipher Prostate); thyroid cancer (Afirma); breast cancer (Prosigna); and bladder cancer (Decipher Bladder). Our Percepta Nasal Swab test is being run in our CLIA lab in support of clinical studies and our test for lymphoma is in development as a companion diagnostic.

Previous wording

We serve global markets with two complementary models. In the United States, we offer LDTs through our centralized CLIA certified laboratories in South San Francisco and San Diego, California, supported by our cytopathology expertise in Austin, Texas. Additionally, primarily outside of the United States, we provide tests to patients through distribution to laboratories and hospitals that can perform the tests locally. Today, this includes our Prosigna test, and in the future, we intend to offer the Decipher Prostate and Percepta Nasal Swab tests as IVD tests. We believe our broad menu of advanced diagnostic tests, combined with our ability to deliver them globally, differentiates us in the diagnostics industry.

Current wording

We serve global markets with two complementary models. In the United States, we offer LDTs through our centralized CLIA certified laboratories in South San Francisco and San Diego, California, supported by our cytopathology expertise in Austin, Texas. Additionally, primarily outside of the United States, we provide tests to patients through distribution to laboratories and hospitals that can perform the tests locally. Today, this includes our Prosigna test, and in the future, we intend to offer Decipher Prostate and Percepta Nasal Swab as IVD tests. We believe our broad menu of advanced diagnostic tests, combined with our ability to deliver them globally, differentiates us in the diagnostics industry.

Previous wording

Recent interest rate increases and inflation in the United States and other markets globally, as well as turmoil in the global banking and finance system, have heightened the risk of an economic downturn or recession and volatility and have resulted in recent volatility in the capital or credit markets in the United States and globally. Moreover, the continued fluctuation of the U.S. dollar compared to other currencies, has impacted and may continue to impact our results of operations. We intend to continue to monitor macroeconomic conditions closely and may determine to take certain financial or operational actions in response to such conditions as appropriate. In addition, regional conflicts like those between Russia and Ukraine have increased the risk of disruptions to energy supplies in Europe, which may impact our ability to manufacture tests or perform services from our facility in Marseille, France, and other conflicts may adversely impact our business and operating results. Finally, the ongoing conflict in the Middle East may disrupt our Israel business operations and employees that we acquired through the C2i Acquisition.

Current wording

Recent interest rate changes and inflation in the United States and other markets globally, as well as the macroeconomic environment, have heightened the risk of an economic downturn, recession or heightened volatility in the capital or credit markets in the United States and globally. Moreover, the continued fluctuation of the U.S. dollar compared to other currencies, has impacted and may continue to impact our results of operations. We intend to continue to monitor macroeconomic conditions closely and may determine to take certain financial or operational actions in response to such conditions as appropriate. In addition, regional conflicts like those between Russia and Ukraine may adversely impact our business and operating results. Finally, the ongoing conflict in the Middle East may disrupt our Israel business operations and employees that we acquired through the C2i Acquisition.

Previous wording

•the time it takes us or our customers to perform our tests and report the results, including as a result of supply chain challenges (including quality of reagents);

Current wording

•the time it takes us or our customers to perform our tests and report the results, including as a result of supply chain challenges (including quality of single-source reagents);

Previous wording

Our products consist of the Prosigna breast cancer assay, the nCounter Analysis System, related diagnostic kits, and services. We recognize product revenue when control of the promised goods is transferred to our customers, in an amount that reflects the consideration expected to be received in exchange for those products. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer, either on its own or together with other resources that are readily available to the customer, and is separately identified in the contract. Performance obligations are considered satisfied once we have transferred control of a product to the customer, meaning the customer has the ability to use and obtain the benefit of the product. We recognize product revenue for satisfied performance obligations only when there are no uncertainties regarding payment terms or transfer of control. Shipping and handling costs incurred for product shipments are charged to our customers and included in product revenue. Revenue is presented net of the taxes that are collected from customers and remitted to governmental authorities.

Current wording

Our products consist primarily of the Prosigna breast cancer assay, related diagnostic kits, and services. We recognize product revenue when control of the promised goods is transferred to our customers, in an amount that reflects the consideration expected to be received in exchange for those products. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer, either on its own or together with other resources that are readily available to the customer, and is separately identified in the contract. Performance obligations are considered satisfied once we have transferred control of a product to the customer, meaning the customer has the ability to use and obtain the benefit of the product. We recognize product revenue for satisfied performance obligations only when there are no uncertainties regarding payment terms or transfer of control. Shipping and handling costs incurred for product shipments are charged to our customers and included in product revenue. Revenue is presented net of the taxes that are collected from customers and remitted to governmental authorities.

Previous wording

The consideration allocated to each distinct performance obligation is recognized as revenue when control is transferred which may be at a point in time or over time. Consideration associated with at-risk substantive performance milestones is recognized as revenue when it is probable that a significant reversal of the cumulative revenue recognized will not occur. Should there be royalties, we utilize the sales and usage-based royalty exception in arrangements that resulted from the license of intellectual property, recognizing revenue generated from royalties or profit sharing as the underlying sales occur.

Current wording

The consideration allocated to each distinct performance obligation is recognized as revenue when control is transferred which may be at a point in time or over time. Consideration associated with at-risk substantive performance milestones is recognized as revenue when it is probable that a significant reversal of the cumulative revenue recognized will not occur.

Previous wording

We deploy state-of-the-art and costly genomic technologies in our biomarker discovery experiments, and our spending on these technologies may vary substantially from quarter to quarter. We also spend a significant amount on activities to secure clinical trial results in support of our testing and product development portfolio and on-market tests, as well as clinical validation and utilization studies. The timing of these research and development activities is difficult to predict, as is the timing of clinical trial enrollments and sample acquisitions. If a substantial number of clinical samples are acquired in a given quarter or if a high-cost experiment is conducted in one quarter versus the next, the timing of these expenses can affect our financial results. We conduct clinical studies to validate our new products, as well as on-going clinical studies to further the published evidence to support our commercialized tests. As these studies are initiated, start-up costs for each site can be significant and concentrated in a specific quarter. Spending on research and development, for both experiments and studies, may vary significantly by quarter depending on the timing of these various expenses.

Current wording

We spend a significant amount on activities to secure clinical trial results in support of our testing and product development portfolio and on-market tests, as well as clinical validation and utilization studies. We also deploy state-of-the-art and costly genomic technologies in our discovery experiments, and our spending on these technologies may vary substantially from quarter to quarter. The timing of these research and development activities is difficult to predict, as is the timing of clinical trial enrollments and sample acquisitions. If a substantial number of clinical samples are acquired in a given quarter or if a high-cost experiment is conducted in one quarter versus the next, the timing of these expenses can affect our financial results. We conduct clinical studies to validate our new products, as well as on-going clinical studies to further the published evidence to support our commercialized tests. As these studies are initiated, start-up costs for each site can be significant and concentrated in a specific quarter. Spending on research and development, for both experiments and studies, may vary significantly by quarter depending on the timing of these various expenses.

Previous wording

Through March 31, 2024, we derived most of our revenue from the sale of Decipher and Afirma tests, delivered primarily to physicians in the United States. We generally invoice third-party payers upon delivery of a patient report to the prescribing physician. As such, we take the assignment of benefits and the risk of cash collection from the third-party payer and individual patients. Third-party payers and other customers in excess of 10% of total revenue and their related revenue as a percentage of total revenue were as follows:

Current wording

Through June 30, 2024, we derived most of our revenue from the sale of Decipher Prostate and Afirma tests, delivered primarily to physicians in the United States. We generally invoice third-party payers upon delivery of a patient report to the prescribing physician. As such, we take the assignment of benefits and the risk of cash collection from the third-party payer and individual patients. Third-party payers and other customers in excess of 10% of total revenue and their related revenue as a percentage of total revenue were as follows:

Previous wording

The components of our cost of testing revenue are sample collection kit costs, reagent expenses, compensation expense, license fees and royalties, depreciation, other expenses such as equipment and laboratory supplies, and allocations of facility and information technology expenses. Costs associated with performing tests are recorded as the test is processed regardless of whether and when revenue is recognized with respect to that test. As a result, our cost of testing revenue as a percentage of testing revenue may vary significantly from period to period because we may not recognize all revenue in the period in which the associated costs are incurred. We expect cost of testing revenue in absolute dollars to increase as the number of tests we perform increases. However, we expect that the cost per test will decrease over time due to leveraging fixed costs, efficiencies we may gain as test volume increases and process enhancements such as automation, and other cost reductions. As we introduce new tests, initially our cost of testing revenue will be high as we expect to run suboptimal batch sizes, run quality control batches, test batches, registry samples, and generally incur costs that may suppress or reduce gross margins. This will disproportionately increase our aggregate cost of testing revenue until we achieve efficiencies in processing these new tests.

Current wording

The components of our cost of testing revenue are sample collection kit costs, reagent expenses, compensation expense, license fees and royalties, depreciation, other expenses such as equipment and laboratory supplies, and allocations of facility and information technology expenses. Costs associated with performing tests are recorded as the test is processed regardless of whether and when revenue is recognized with respect to that test. As a result, our cost of testing revenue as a percentage of testing revenue may vary significantly from period to period because we may not recognize all revenue in the period in which the associated costs are incurred. We expect cost of testing revenue in absolute dollars to increase as the number of tests we perform increases. However, we expect that the cost per test will decrease over time due to leveraging fixed costs, efficiencies we may gain as test volume increases and process enhancements such as automation, and other cost reductions. As we introduce new tests, initially our cost of testing revenue will be high as we expect to run suboptimal batch sizes, run quality control batches, test batches, registry samples, and generally incur costs that may suppress or reduce gross margins. This will disproportionately increase our aggregate cost of testing revenue until we achieve processing efficiencies for these new tests.

Previous wording

Our cost of product revenue consists primarily of costs of purchasing instruments, components for the manufacturing of diagnostic kits, service kits from third-party contract manufacturers, installation, warranty, service and packaging and delivery costs. In addition, cost of product revenue includes royalty costs for licensed technologies included in our products and labor expenses. As our Prosigna test kits are sold in various configurations with different number of tests, our product cost per test will vary based on the specific kit configuration purchased by customers.

Current wording

Our cost of product revenue consists primarily of costs of purchasing diagnostic kit components, labor, installation, service and packaging and delivery costs. In addition, cost of product revenue includes royalty costs for licensed technologies included in our products. As our Prosigna test kits are sold in various configurations with different number of tests, our product cost per test will vary based on the specific kit configuration purchased by customers.

Previous wording

Our finite-lived intangible assets, acquired in business combinations, are being amortized over 4 to 15 years, using the straight-line method. Amortization expense is expected to be approximately $14 million per year through 2025 and decrease thereafter.

Current wording

Our finite-lived intangible assets, acquired in business combinations, are being amortized over 4 to 15 years, using the straight-line method. Intangible asset amortization - cost of revenue includes amortization of finite-lived intangible assets related to developed and product technology utilized in our current product and service offerings and customer backlog.

Previous wording

Research and development expenses include expenses incurred to collect clinical samples and conduct clinical studies to develop and support our products and pipeline, as well as develop future technology. These expenses consist of compensation expenses, direct research and development expenses such as laboratory supplies and costs associated with setting up and conducting clinical studies at domestic and international sites, professional fees, depreciation and amortization, other miscellaneous expenses and allocation of facility and information technology expenses. We expense all research and development costs in the periods in which they are incurred. We incurred a majority of our research and development expenses in 2023 and in the three months ended March 31, 2024 in support of our early-stage products, including Percepta Nasal Swab, as well as the development of new IVD products and discovery. Going forward, we expect to incur significant expense as we invest in the continued development of our innovation engine, early-stage products including our MRD tests, required clinical studies and the development of current tests on multiple IVD platforms.

Current wording

Research and development expenses include expenses incurred to collect clinical samples and conduct clinical studies to develop and support our products and pipeline, as well as develop future technology. These expenses consist of compensation expenses, direct research and development expenses such as laboratory supplies and costs associated with setting up and conducting clinical studies at domestic and international sites, professional fees, depreciation and amortization, other miscellaneous expenses and allocation of facility and information technology expenses. We expense all research and development costs in the periods in which they are incurred. We incurred a majority of our research and development expenses in 2023 in support of our early-stage products, including Percepta Nasal Swab, as well as the development of new IVD products and discovery. In the six months ended June 30, 2024, our research and development expenses also included support for our MRD tests. Going forward, we expect to incur significant expense as we invest in the continued development of our innovation engine, early-stage products including our MRD tests, required clinical studies and the development of current tests on multiple IVD platforms.

Previous wording

Selling and marketing expenses consist of compensation expenses, direct marketing expenses, professional fees, other expenses such as travel and communications costs, as well as allocation of facility and information technology expenses. Our sales team of approximately 110 representatives is organized by business unit in the U.S., with separate teams calling on thyroid cancer, and urologic cancer physicians. The business units have dedicated marketing support, as well as a marketing operations team that serves the commercial organization broadly. Prosigna sales outside of the U.S. are led by country managers and sales teams that call on laboratories and breast cancer oncologists, and have dedicated marketing support.

Current wording

Selling and marketing expenses consist of compensation expenses, direct marketing expenses, professional fees, other expenses such as travel and communications costs, as well as allocation of facility and information technology expenses. Our sales team of approximately 110 representatives is organized by business unit in the U.S., with separate teams calling on thyroid cancer, and urologic cancer physicians. The business units have dedicated marketing support, as well as a marketing operations team that serves the commercial organization broadly. Prosigna sales outside of the U.S. are led by country managers and sales teams that call on laboratories and breast cancer oncologists, with dedicated marketing support.

Previous wording

Other income (loss), net consists primarily of interest income from our cash held in interest bearing accounts, realized and unrealized gains and losses on foreign currency transactions, and French research tax credits. The French research tax credits

Current wording

Other income (loss), net consists primarily of interest income from our cash held in interest bearing accounts, realized and unrealized gains and losses on foreign currency transactions, and French research tax credits. The French research tax credits (crédit d’impôt recherche, or CIR) are generated by our wholly owned subsidiary, Veracyte SAS, in connection with its research efforts performed in Marseille, France.

Previous wording

Comparison of the three months ended March 31, 2024 and 2023 (in thousands of dollars, except percentages and test volume):

Current wording

Comparison of the three and six months ended June 30, 2024 and 2023 (in thousands of dollars, except percentages and test volume):

Previous wording

Revenue increased $14.4 million for the three months ended March 31, 2024 compared to the same period in 2023. This was primarily due to a $17.9 million increase in testing revenue, partially offset by a $3.1 million decrease in our Biopharmaceutical and other revenue. The 25% growth in testing revenue was primarily driven by a 20% volume increase and a

Current wording

Revenue increased $24.1 million for the three months ended June 30, 2024 compared to the same period in 2023. This was primarily due to a $25.2 million increase in testing revenue, partially offset by a $1.0 million decrease in our Biopharmaceutical and other revenue. The 31% growth in testing revenue was primarily driven by a 24% volume increase and a 5% average selling price increase between our Decipher Prostate and Afirma products for the three months ended June 30, 2024.

Previous wording

Product revenue decreased $0.4 million for the three months ended March 31, 2024 compared to the same period in 2023, primarily driven by lower demand for product test kits primarily as a result of customer adoption reductions and delays.

Current wording

Product revenue decreased $0.1 million for the three months ended June 30, 2024 and decreased $0.5 million for the six months ended June 30, 2024 compared to the same periods in 2023. The six months result was primarily driven by lower demand for product test kits, largely as a result of supply chain issues.

Previous wording

Biopharmaceutical and other revenue decreased by $3.1 million for the three months ended March 31, 2024 driven primarily by the reduction of customer projects given overall spending constraints across the industry.

Current wording

Biopharmaceutical and other revenue decreased by $1.0 million for the three months ended June 30, 2024 and decreased by $4.1 million for the six months ended June 30, 2024 compared to the same periods in 2023, driven primarily by the reduction of customer projects given overall spending constraints across the industry.

Previous wording

Cost of testing revenue increased $6.3 million, or 32%, for the three months ended March 31, 2024 compared to the same period in 2023. The increase in cost of testing revenue was due to increased volume in testing, higher staffing to support testing performance and the build out of infrastructure related to current and future growth expectations, primarily related to Afirma and Decipher Prostate tests.

Current wording

Cost of testing revenue increased $4.6 million, or 20%, for the three months ended June 30, 2024 compared to the same period in 2023. The increase in cost of testing revenue was due to increased volume in testing, higher staffing to support testing performance and the build out of infrastructure related to current and future growth expectations, primarily related to Decipher Prostate and Afirma tests.

Previous wording

Cost of biopharmaceutical and other revenue includes labor costs, laboratory supplies and pass-through expenses incurred on these projects. Cost of biopharmaceutical and other revenue decreased by $1.6 million driven by reductions of variable expenses related to projects.

Current wording

Cost of biopharmaceutical and other revenue includes labor costs, laboratory supplies and pass-through expenses incurred on these projects. Cost of biopharmaceutical and other revenue for the three and six months ended June 30, 2024 decreased by $0.2 million and $1.8 million, respectively, compared to the same periods in 2023, driven by reductions of variable expenses related to projects.

Previous wording

Research and development expense increased $3.2 million, or 25%, for the three months ended March 31, 2024 compared to the same period in 2023. The increase is primarily driven by direct research and development expense related to our on-going clinical studies including, but not limited to, furthering the support and clinical utility evidence of our Percepta Nasal Swab test and urology products. In addition to clinical studies, the increase is partially driven by development costs related to our IVD and MRD strategies, as well as projects to enhance laboratory efficiencies.

Current wording

Research and development expense increased $3.9 million, or 31%, for the three months ended June 30, 2024 compared to the same period in 2023. The increase was primarily driven by direct research and development expense related to our on-going clinical studies including, but not limited to, furthering the support and clinical utility evidence of our urology products and our Percepta Nasal Swab test. In addition to clinical studies, the increase is partially driven by development costs related to our IVD and MRD strategies, as well as projects to enhance laboratory efficiencies.

Previous wording

Selling and marketing expense decreased $2.3 million, or 9%, for the three months ended March 31, 2024 compared to the same period in 2023. The decrease in compensation expense was primarily due to a reversal of the stock-based compensation related to employee exits and reduced variable compensation, partially offset by severance costs associated with the decision to reduce the sales support for our Envisia product. Direct marketing expense decreased primarily due to timing of trade show events, which was partially offset by an increase in allocated expenses to support the growth of the Afirma and Decipher test volume.

Current wording

Selling and marketing expense decreased $3.9 million, or 7%, for the six months ended June 30, 2024 compared to the same period in 2023. The decrease in compensation and other expense was primarily due to a reversal of the stock-based compensation related to employee exits and reduced variable compensation, partially offset by severance costs associated with the decision to reduce the sales support for our Envisia product. Direct marketing expense increased primarily due to increased trade show events.

Previous wording

General and administrative expense increased by $5.2 million for the three months ended March 31, 2024, compared to the same period in 2023. Compensation expense for the three months ended March 31, 2024 compared to the same period in 2023 increased primarily due to annual compensation increases and expenses related to the C2i Acquisition. Occupancy expenses increased primarily due to our expansion of our San Diego facilities footprint to support Decipher growth, and other expenses increased $4.2 million primarily related to expenses related to the C2i Acquisition. General and administrative expenses related to occupancy costs and information technology costs are allocated to general and administrative expense, selling and marketing expense, research and development expense, and cost of revenue based on the headcount and employee location.

Current wording

General and administrative expense increased by $11.9 million for the six months ended June 30, 2024, compared to the same period in 2023. Compensation expense for the six months ended June 30, 2024 compared to the same period in 2023 increased primarily due to expenses related to restructuring costs associated with the mutually consented termination plan at our Marseille location, annual compensation increases and expenses related to the C2i Acquisition. Occupancy expenses increased primarily due to our expansion of our San Diego facilities footprint to support Decipher Prostate growth, and other expenses increased $7.1 million primarily in relation to expenses related to the C2i Acquisition, infrastructure build out and $0.9 million of contingent consideration expenses. General and administrative expenses related to occupancy costs and information technology costs are allocated to general and administrative expense, selling and marketing expense, research and development expense, and cost of revenue based on the headcount and employee location.

Previous wording

Impairment of long-lived assets during the three months ended March 31, 2024 and 2023 was $0.4 million and $1.4 million, respectively, of impairment of right-of-use and fixed assets in relation to exiting our Watertown and Richmond facilities.

Current wording

There were no impairments of long-lived assets during the three months ended June 30, 2024 and 2023. Impairment of long-lived assets during the six months ended June 30, 2024 and 2023 was $0.4 million and $1.4 million, respectively, of impairment of right-of-use and fixed assets in relation to exiting our Watertown and Richmond facilities.

Previous wording

Other income, net, increased $0.3 million for the three months ended March 31, 2024 compared to the same period in 2023, primarily due to an increase of $1.5 million from interest income partially offset by a decrease of $0.4 million related to the French research tax credit and a decrease of $0.8 million due to foreign currency revaluation.

Current wording

Other income (loss), net, increased $3.3 million for the six months ended June 30, 2024 compared to the same period in 2023, primarily due to an increase of $2.9 million from interest and dividend income, an increase of $1.4 million related to the French research tax credit, and a decrease of $0.9 million due to unrealized foreign currency loss.

Previous wording

From inception through March 31, 2024, we have been financed primarily through net proceeds from the sale of our equity securities. We have incurred net losses since our inception. For the three months ended March 31, 2024, we had a net loss of $1.9 million, and we expect to incur additional losses for the remainder of 2024 and potentially in future years. As of March 31, 2024, we had an accumulated deficit of $470.0 million.

Current wording

As of June 30, 2024, we had cash and cash equivalents of $235.9 million. During the six months ended June 30, 2024, our cash and cash equivalents increased by $19.5 million. Historically, we have been financed primarily through net proceeds from the sale of our equity securities. Beginning in 2023, our operations have been financed primarily by cash flows generated by our revenue. For the six months ended June 30, 2024, we had net income of $3.9 million, but we may not sustain profitability for the remainder of 2024 and in future years. As of June 30, 2024, we had an accumulated deficit of $464.3 million.

Previous wording

We believe our existing cash and cash equivalents of $209.2 million as of March 31, 2024, and cash flows generated by our revenue during the next 12 months will be sufficient to meet our anticipated cash requirements for at least the next 12 months from the filing date of this report. We expect that our near- and longer-term liquidity requirements will continue to consist of costs to run our laboratories, research and development expenses, selling and marketing expenses, general and administrative expenses, working capital, capital expenditures, lease obligations, potential milestones associated with the C2i Acquisition, and general corporate expenses associated with the growth of our business. However, we may also use cash to acquire or invest in complementary businesses, technologies, services or products that would change our cash requirements. If we are not able to generate cash flows from our revenue to finance our cash requirements, we will need to finance future cash needs primarily through public or private equity offerings, debt financings, borrowings or strategic collaborations or licensing arrangements. If we raise funds by issuing equity securities, dilution to stockholders could result. Any equity securities issued also may provide for rights, preferences or privileges senior to those of holders of our common stock. The terms of debt securities issued or borrowings could impose significant restrictions on our operations. The incurrence of indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations and could also result in restrictive covenants, such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to acquire or license intellectual property rights, restrictions on our cash and other operating restrictions that could adversely affect our ability to conduct our business. In addition, the issuance of additional equity securities by us, or the possibility of such issuance, may cause the market price of our common stock to decline. In the event that we enter into collaborations or licensing arrangements to raise capital, we may be required to accept unfavorable terms. These agreements may require that we relinquish or license to a third-party on unfavorable terms our rights to technologies or product candidates that we otherwise would seek to develop or commercialize ourselves, or reserve certain opportunities for future potential arrangements when we might be able to achieve more favorable terms. If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate one or more research and development programs or selling and marketing initiatives, or forgo potential acquisitions or investments. In addition, we may have to work with a partner on one or more of our products or development programs, which could lower the economic value of those programs to us. Moreover, any instability …

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Current wording

We believe our existing cash and cash equivalents as of June 30, 2024, and cash flows generated by our revenue during the next 12 months will be sufficient to meet our anticipated cash requirements for at least the next 12 months from the filing date of this report. We expect that our near- and longer-term liquidity requirements will continue to consist of costs to run our laboratories, research and development expenses, selling and marketing expenses, general and administrative expenses, working capital, capital expenditures, lease obligations, potential milestones associated with the C2i Acquisition, and general corporate expenses associated with the growth of our business. However, we may also use cash to acquire or invest in complementary businesses, technologies, services or products that would change our cash requirements. If we are not able to generate cash flows from our revenue to finance our cash requirements, we will need to finance future cash needs primarily through public or private equity offerings, debt financings, borrowings or strategic collaborations or licensing arrangements. If we raise funds by issuing equity securities, dilution to stockholders could result. Any equity securities issued also may provide for rights, preferences or privileges senior to those of holders of our common stock. The terms of debt securities issued or borrowings could impose significant restrictions on our operations. The incurrence of indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations and could also result in restrictive covenants, such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to acquire or license intellectual property rights, restrictions on our cash and other operating restrictions that could adversely affect our ability to conduct our business. In addition, the issuance of additional equity securities by us, or the possibility of such issuance, may cause the market price of our common stock to decline. In the event that we enter into collaborations or licensing arrangements to raise capital, we may be required to accept unfavorable terms. These agreements may require that we relinquish or license to a third-party on unfavorable terms our rights to technologies or product candidates that we otherwise would seek to develop or commercialize ourselves, or reserve certain opportunities for future potential arrangements when we might be able to achieve more favorable terms. If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate one or more research and development programs or selling and marketing initiatives, or forgo potential acquisitions or investments. In addition, we may have to work with a partner on one or more of our products or development programs, which could lower the economic value of those programs to us. Moreover, any instability in the global banki…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We lease office and laboratory facilities in South San Francisco and San Diego, California; Austin, Texas; Marseille, France; Richmond, Virginia; and Watertown, Massachusetts, and lease certain equipment under various non-cancelable lease agreements. The lease terms extend to January 2033 and contain extension of lease term and expansion options. As of March 31, 2024, the leases have a weighted average remaining lease term of 2.9 years and total future minimum lease payments of $15.5 million.

Current wording

We lease office and laboratory facilities in South San Francisco and San Diego, California; Austin, Texas; Marseille, France; Richmond, Virginia; and Watertown, Massachusetts, and lease certain equipment under various non-cancelable lease agreements. The lease terms extend to May 2036 and contain extension of lease term and expansion options. As of June 30, 2024, the leases have a weighted average remaining lease term of 6.3 years and total future minimum lease payments of $28.6 million.

Previous wording

Veracyte SAS has signed a lease agreement for facilities which are under construction in Marseille, France. The lease will commence upon completion of the construction of the office building at which time we will record a lease liability and a corresponding ROU asset. The initial term of the lease will be twelve years with annual rent of approximately $1.3 million, which is subject to change based on final construction.

Current wording

Veracyte SAS entered into a lease agreement for a newly constructed facility in Marseille, France. The lease commenced during the three months ended June 30, 2024 and we recorded a lease liability and a corresponding ROU asset of $8.0 million. The initial term of the lease is twelve years with annual rent of approximately $1.3 million, excluding common area maintenance costs.

Previous wording

The following table summarizes our cash flows for the three months ended March 31, 2024 and 2023 (in thousands of dollars):

Current wording

The following table summarizes our cash flows for the six months ended June 30, 2024 and 2023 (in thousands of dollars):

Previous wording

Cash used in operating activities for the three months ended March 31, 2024 was $9.0 million. Our net loss of $1.9 million includes non-cash charges of $8.0 million of stock-based compensation expense, $5.6 million of depreciation and amortization, of which $3.7 million was related to intangible asset amortization, and the remainder was due to a non-cash lease expense of $1.1 million. Cash used as a result of changes in operating assets and liabilities was $22.8 million, primarily composed of a decrease in accrued liabilities and deferred revenue of $9.0 million, an increase in accounts receivable of $6.5 million, an increase in prepaids and other current assets of $2.7 million, an increase in supplies and inventory of $2.3 million, a decrease in accounts payable of $1.5 million, and a decrease in operating lease liability of $1.1 million, partially offset by a decrease in other assets of $0.3 million.

Current wording

Cash provided by operating activities for the six months ended June 30, 2024 was $20.6 million. Our net income of $3.9 million includes non-cash charges of $17.9 million of stock-based compensation expense, $11.3 million of depreciation and amortization, of which $7.4 million was related to intangible asset amortization, and the remainder was due to a non-cash lease expense of $2.3 million. Cash used as a result of changes in operating assets and liabilities was $17.0 million, primarily composed of an increase in accounts receivable of $10.1 million, an increase in supplies and inventory of $3.3 million, a decrease in operating lease liability of $2.4 million, an increase in prepaids and other current assets of $2.2 million, a decrease in accounts payable of $1.7 million, and an increase in other assets of $1.2 million partially offset by a decrease in accrued liabilities and deferred revenue of $3.9 million.

Previous wording

Cash used in operating activities for the three months ended March 31, 2023 was $2.2 million. The net loss of $8.1 million includes non-cash charges of $8.0 million of stock-based compensation expense, $6.7 million of depreciation and amortization, of which $5.3 million was related to intangible asset amortization, $1.4 million of impairment of right-of-use and fixed assets and non-cash lease expense of $0.9 million. Cash used as a result of changes in operating assets and liabilities was $10.5 million, primarily comprising a decrease in accrued liabilities and deferred revenue of $7.7 million, an increase in prepaids and other current assets of $3.1 million, an increase in accounts payable of $2.0 million, an increase in accounts receivable of $1.3 million, a decrease in supplies and inventory of $1.1 million, a decrease in operating lease liability of $1.0 million and a $0.5 million impact from other working capital accounts.

Current wording

Cash provided by operating activities for the six months ended June 30, 2023 was $14.5 million. Our net loss of $16.5 million includes non-cash charges of $18.4 million of stock-based compensation expense, $13.5 million of depreciation and amortization, of which $10.7 million was related to intangible asset amortization, $1.4 million tied to the impairment of right-of-use and fixed assets, and the remainder was due to a non-cash lease expense of $2.0 million. Cash used as a result of changes in operating assets and liabilities was $4.0 million, primarily composed of a decrease in accrued liabilities and deferred revenue of $3.7 million, an increase in prepaids and other current assets of $2.5 million, a decrease in operating lease liability of $2.1 million, and an increase in other assets of $1.0 million. These amounts were partially offset by a decrease in supplies and inventory of $2.8 million, a decrease in accounts receivable of $1.8 million, and an increase in accounts payable of $0.8 million.

Previous wording

Cash provided by investing activities for the three months ended March 31, 2024 was $2.9 million, consisting of $5.0 million net cash acquired from C2i excluding post-close transactions costs, partially offset by $2.1 million used in the purchase of property, plant and equipment.

Current wording

Cash provided by investing activities for the six months ended June 30, 2024 was $0.1 million, consisting of $5.0 million net cash acquired from C2i excluding post-close transactions costs, partially offset by $4.9 million used in the purchase of property, plant and equipment.

Previous wording

Cash provided by investing activities, for the three months ended March 31, 2023, was $24.1 million, consisting of $44.8 million generated from the sale and maturity of short-term investments, partially offset by $19.7 million used in the purchase of short-term investments and $1.0 million used in the purchase of property, plant and equipment.

Current wording

Cash provided by investing activities for the six months ended June 30, 2023 was $20.4 million, consisting of $44.8 million generated from the sale and maturity of short-term investments, partially offset by $19.7 million used in the purchase of short-term investments and $4.7 million used in the purchase of property, plant and equipment.

Previous wording

Cash used in financing activities for the three months ended March 31, 2024 was $0.9 million, consisting of $3.8 million in tax payments during the period related to the vesting of restricted stock units granted to employees, partially offset by $3.0 million in proceeds from the exercise of options to purchase our common stock and the purchase of stock under our Employee Stock Purchase Plan, or ESPP.

Current wording

Cash used in financing activities for the six months ended June 30, 2024 was $0.9 million, consisting of $5.1 million in tax payments during the period related to the vesting of restricted stock units granted to employees, partially offset by $4.3 million in proceeds from the exercise of options to purchase our common stock and the purchase of stock under our Employee Stock Purchase Plan, or ESPP.

Previous wording

Cash provided by financing activities for the three months ended March 31, 2023, was $1.7 million, consisting of $4.0 million in proceeds from the exercise of options to purchase our common stock and the purchase of stock under our ESPP, partially offset by $2.3 million in tax payments during the period related to the vesting of restricted stock units granted to employees.

Current wording

Cash provided by financing activities for the six months ended June 30, 2023 was $2.1 million, consisting of $5.3 million in proceeds from the exercise of options to purchase our common stock and the purchase of stock under our ESPP, partially offset by $3.2 million in tax payments during the period related to the vesting of restricted stock units granted to employees.