Veracyte Inc (VCYT)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 64.95% | 68.73% | 65.74% | 66.11% | 64.71% |
| Operating profit margin | 3.62% | -23.76% | -13.85% | -37.31% | -30.12% |
| Pretax margin | 5.78% | -21.22% | -12.28% | -37.20% | -29.71% |
| Net profit margin | 5.41% | -20.61% | -12.33% | -34.42% | -30.51% |
The analysis of Veracyte Inc.'s profitability ratios over the period from December 31, 2020, to December 31, 2024, reveals notable trends and significant developments in the company's financial performance.
Gross profit margin, a key indicator of the company's ability to manage direct costs relative to revenue, demonstrates a generally positive trend. It increased from 64.71% in 2020 to a peak of 66.11% in 2021, followed by slight fluctuations, and reaching 68.73% in 2023 before a modest decline to 64.95% in 2024. These movements suggest that the company has maintained relatively healthy gross profitability, with improvements indicating effective cost control or pricing strategy adjustments during this period, despite some volatility.
Operating profit margin, which measures the efficiency of core operations after operating expenses, shows a substantial turnaround. It was deeply negative at -30.12% in 2020 and worsened to -37.31% in 2021, indicating operational challenges. However, a significant improvement is observed in 2022, when the margin improved to -13.85%. While still negative, this marks progress towards operational efficiency. The margin then deteriorated again in 2023 to -23.76%, before turning positive in 2024 at 3.62%. The transition to positive operating margin in 2024 indicates a meaningful enhancement in operational performance and cost management, suggesting the company is moving toward profitability at the core operating level.
Pre-tax margin follows a similar pattern, starting from -29.71% in 2020, worsening to -37.20% in 2021, then recovering to -12.28% in 2022. The negative pre-tax margins persisted through 2023 at -21.22%, but improved to 5.78% in 2024, crossing into positive territory. This movement signifies a substantial reduction in pre-tax losses and implies improved efficiency or revenue generation before tax considerations.
Net profit margin, capturing the overall profitability after all expenses including taxes, mirrors the trends seen in pre-tax margin. It was -30.51% in 2020, declining further to -34.42% in 2021, indicating increased net losses at that time. The margin improved markedly to -12.33% in 2022, then decreased again in 2023 to -20.61%. In 2024, the net profit margin reached 5.41%, marking the company's first positive net profitability in this period. This indicates a significant turnaround in the company's bottom-line performance, reflecting an overall improvement in managing costs, revenues, and tax obligations effectively.
In summary, Veracyte Inc.'s profitability ratios demonstrate a trajectory from substantial losses toward evolving profitability, with key ratios such as operating profit margin and net profit margin turning positive in 2024. The gross profit margin has remained relatively stable with slight fluctuations, supporting the notion of maintained sales efficiency. The substantial improvement in net margins and operating margins in 2024 suggests the company has made significant strides in operational efficiency, cost control, and overall financial health, leading to a positive bottom-line result after several years of losses.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 1.24% | -7.70% | -3.55% | -6.90% | -7.74% |
| Return on assets (ROA) | 1.86% | -6.67% | -3.16% | -6.36% | -7.84% |
| Return on total capital | 2.19% | -7.34% | -3.37% | -7.42% | -8.23% |
| Return on equity (ROE) | 2.05% | -7.13% | -3.40% | -6.89% | -8.51% |
The profitability ratios of Veracyte Inc. over the period from December 31, 2020, to December 31, 2024, reveal a pattern of initial losses followed by signs of improvement.
The Operating Return on Assets (Operating ROA) demonstrates a gradual upward trend from –7.74% in 2020 to –3.55% in 2022, indicating that the company's core operations were becoming less unprofitable during this period. However, in 2023, Operating ROA deteriorated again to –7.70%, before significantly improving to 1.24% in 2024. This shift above zero indicates that Veracyte's core operations generated positive returns on assets in 2024.
Similarly, the Return on Assets (ROA) followed a comparable pattern. It was –7.84% in 2020, improving gradually to –3.16% in 2022. The decline to –6.67% in 2023 suggests a temporary setback, but the positive rate of 1.86% in 2024 further underscores a turnaround in profitability, with the company generating gains on its overall assets.
The Return on Total Capital reflects a similar trajectory, starting at –8.23% in 2020, showing slight improvement to –3.37% in 2022, before experiencing a downturn again in 2023. By 2024, it reached 2.19%, indicating a shift towards profitable utilization of capital resources.
Return on Equity (ROE), which measures net income attributable to shareholders, follows a consistent trend of recovery and then improvement. Starting at –8.51% in 2020, it moved closer to breakeven by 2022 at –3.40%. The decline to –7.13% in 2023 highlights a temporary setback, but the positive value of 2.05% in 2024 signifies that shareholders’ equity generated positive returns during that year.
Overall, the data reflects a period of persistent losses from 2020 through 2023, with initial signs of stabilization and recovery emerging in 2022. The significant improvement in profitability indicators in 2024 suggests successful strategic or operational adjustments, leading to net positive returns across key profitability ratios.