Veracyte Inc (VCYT)

Return on total capital

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Earnings before interest and tax (EBIT) US$ in thousands 25,746 -76,597 -36,229 -81,408 -34,680
Long-term debt US$ in thousands — — — — —
Total stockholders’ equity US$ in thousands 1,175,970 1,044,100 1,075,200 1,096,510 421,232
Return on total capital 2.19% -7.34% -3.37% -7.42% -8.23%

December 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $25,746K ÷ ($—K + $1,175,970K)
= 2.19%

The analysis of Veracyte Inc's return on total capital (ROTC) over the specified period reveals a pattern of significant fluctuations within the context of negative and positive performances. As of December 31, 2020, the company exhibited a notably negative ROTC at -8.23%, indicating that the company's operational efficiency and profitability relative to its total capital were substantially below break-even.

The following year, December 31, 2021, showed a marginal improvement to -7.42%, reflecting some progress toward more efficient capital utilization, although the company remained in a negative territory. This upward trend continued into December 31, 2022, with the negative ROTC narrowing further to -3.37%, suggesting ongoing efforts to enhance operational performance or possibly a reduction in capital costs or increased revenues.

In contrast, the data for December 31, 2023, indicates a regression, with the ROTC decreasing again to -7.34%, which could be attributed to increased costs, lower margins, or other operational challenges impacting profitability relative to total capital.

However, a notable shift occurs by December 31, 2024, where the return on total capital turns positive at 2.19%. This positive figure implies that Veracyte Inc has managed to generate a return exceeding its total capital, reflecting an improvement in operational efficiency, profitability, or a combination of both. The presence of a positive ROTC is generally seen as a favorable development, potentially signaling a turning point towards sustainable profitability.

In summary, Veracyte Inc’s ROTC has experienced significant volatility over the four-year span, from substantial negative figures to a modest positive return by late 2024. This trajectory suggests ongoing operational challenges in prior years, followed by a period of recovery culminating in positive capital efficiency in 2024.