VERACYTE, INC.

Where It Passes

Where It Falls Short

• Debt & Leverage8% pass✓ 3✗ 12▾

  11 of 12 flag VCYT's debt & leverage — Graham, Buffett, Lynch +8 more

  LT Debt vs Net Current Assets

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest Coverage

  ✗BuffettD/E < 0.5 AND Interest Coverage > 5x

  Total Debt / Equity

  ✗Lynch< 0.33

  Cash - Long-term Debt

  ✗LynchPositive preferred

  LT Debt / Total Assets Change0.00% -> 0.00%

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities5.56

  ✓Dreman> 1.5✓SchlossCurrent ratio >= 1.50x (app cutoff)

  Total Debt / Shareholders' Equity

  ✗Dreman< 0.8✗Templeton< 1.0 (fixed cap; proxy for below-sector-median leverage)✗SchlossD/E < 1.00x

  Debt Levels

  ✗MungerDebt/Equity < 0.5✗AkreDebt/Equity < 0.3

  Interest Coverage & Debt/EBITDA

  ✗MarksInterest Coverage > 3x; Debt/EBITDA < 4x

  Total Debt / Shareholders Equity

  ✗Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)

  ✗AsnessTop 30% of eligible cross-section
• Valuation8% pass✓ 7✗ 21▾

  12 of 13 flag VCYT's valuation — Graham, Lynch, Greenblatt +9 more

  Price / Book Value per Share1.5x

  ✗Dreman< 1.2x✓Templeton< 1.5x✗SchlossP/B <= 0.80x (app cutoff)

  Net income / market capitalization+6.46%; #1293/6340 (top 20.4%)

  ✓AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Price / 3-yr avg EPS663.5x

  ✗Graham<= 15x

  Price-to-Book Ratio1.5x

  ✓Graham<= 1.5x

  P/E x P/B979.50

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)P/E 29.7x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value3.6%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=3.6%, ROC=65.6%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS29.7x

  ✗Dreman< 12x✗Templeton< 12x (fixed ceiling; proxy for the market's cheapest 40%)

  Price / (CFO / Shares)14.2x

  ✗Dreman< 8x

  Valuation ReasonablenessP/E=29.7x, OE Yield=4.0%

  ✗MungerP/E < 25 or Owner Earnings Yield > 5%

  P/E or FCF YieldP/E=29.7x, FCF Yield=6.4%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=29.7x, P/B=1.5x

  ✓MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value-4323.6% (IV=$0.55 vs Price=$24.33)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share15.3x

  ✓Ackman<= 25

  Price vs. Trailing Low103% of trailing low ($23.51)

  ✓Templeton<= 120% of trailing low (certified split-adjusted live window)

  Positive book equity / market capitalization+0.7300; #2108/6449 (top 32.7%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS29.7x

  ✗NeffP/E <= 15x (app proxy for a P/E 40%-60% below the market)

  (EPS CAGR % + Dividend Yield %) / P/E

  ✗Neff> 0.7 (Neff's published traditional edge)

  Price / Tangible Book Value per Share4.27x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change+127.7%

  ✓SchlossLatest BVPS >= earliest BVPS over >= 3 years (app rule)

  Revenue / market capitalization+0.2963; #3347/5247 (top 63.8%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization+8.25%; #967/4519 (top 21.4%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date-26.09%; #4251/6202 (top 68.5%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Profitability13% pass✓ 11✗ 24▾

  14 of 16 flag VCYT's profitability — Graham, Buffett, Lynch +11 more

  Net income / market capitalization+6.46%; #1293/6340 (top 20.4%)

  ✓AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Positive EPS (10 years)2/16 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)2/16 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)-2.1%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)11.2% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$78.1M

  ✓BuffettPositive and growing

  Earnings Variance (10-yr CoV)

  ✗BuffettCoV < 0.3

  Retained Earnings Effectiveness

  ✗Buffett$1 retained -> > $1 market value created

  Basic earnings-growth PEG (dividends excluded)P/E 29.7x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  ROE8.9%

  ✗Lynch> 15%

  EBIT / Enterprise Value3.6%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=3.6%, ROC=65.6%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets4.72%

  ✓PiotroskiROA > 0

  ROA Change YoY1.86% -> 4.72% (delta: +2.86%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=9.69%, ROA=4.72%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY66.9% -> 70.1%

  ✓PiotroskiImproved YoY

  Pre-Tax Income / Revenue20.3%

  ✓Dreman>= 8%

  Net Income / Shareholders' Equity8.9%

  ✗Dreman> 12%

  Margin of SafetyP/E=29.7x, P/B=1.5x

  ✓PabraiP/B < 1.5 or P/E < 15

  Return on Equity-0.0% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value-4323.6% (IV=$0.55 vs Price=$24.33)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency2/15 years positive

  ✗MarksPositive net income in >= 7 of last 10 years

  Operating Income / Revenue17.1%

  ✓Ackman>= 15%

  Net Income / Shareholders Equity8.9%

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend-23.8% (2023) -> 11.2% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 63.6% -> 70.1%, operating margin -23.8% -> 11.2%

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  Gross profit / total assets+26.62%; #1614/3702 (top 43.6%)

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+8.85%; #1978/5226 (top 37.8%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0452; #2444/5884 (top 41.5%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years2/10 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Growth13% pass✓ 4✗ 9▾

  7 of 8 flag VCYT's growth — Graham, Lynch, Dreman +4 more

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)P/E 29.7x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  Inventory Growth vs Revenue GrowthInv: -5.5% vs Rev: 16.0%

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency2/15 years positive

  ✗MarksPositive net income in >= 7 of last 10 years

  3yr Median Revenue Growth21.8%

  ✓Ackman>= 5%

  Positive EPS Growth Frequency3/5 years with positive EPS growth

  ✓AckmanPositive EPS growth in >= 3 of last 5 years

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendgross margin 63.6% -> 70.1%, operating margin -23.8% -> 11.2%

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  5-year Revenue CAGR34.5%

  ✓SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Verdicts14% pass✓ 2✗ 12▾

  Split decision: 11 FAIL · 3 NEUTRAL · 1 BUY · 1 PASS

  Overall verdict

  ✗GrahamFAIL (3/9)✗BuffettFAIL (2/9)✗LynchFAIL (2/7)✗GreenblattRank #904✓PiotroskiBUY (F-Score 8)✗DremanFAIL (3/11)✗MungerFAIL (0/4)✗PabraiFAIL (1/3)✗AkreFAIL (1/6)✗MarksFAIL (1/5)•AckmanNEUTRAL (6/9)✓TempletonPASS (4/8)✗SleepFAIL (2/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (2/6)✗SchlossFAIL (2/7)•OshaughnessyNEUTRAL (Not ranked)
• Valuation models33% pass✓ 2✗ 4▾

  Models split on VCYT at $24.33 — fair values range $0.55–$57.09

  Graham fair value$17.44

  ✗Graham-39.5% margin vs $24.33

  Buffett fair value$11.61

  ✗Buffett-109.6% margin vs $24.33

  Dreman fair value$0.55

  ✗Dreman-4323.6% margin vs $24.33

  Munger fair value$29.03

  ✓Munger+16.2% margin vs $24.33

  Pabrai fair value$17.10

  ✗Pabrai-42.3% margin vs $24.33

  Ackman fair value$57.09

  ✓Ackman+57.4% margin vs $24.33
• Cash Flow50% pass✓ 7✗ 5▾

  5 of 10 pass — Dreman, Pabrai, Marks +2 more object

  Free Cash Flow Proxy$78.1M

  ✓BuffettPositive and growing

  FCF Positive and Growing$161.9M

  ✓LynchPositive and growing

  Operating Cash Flow$136.3M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=9.69%, ROA=4.72%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)14.2x

  ✗Dreman< 8x

  P/E or FCF YieldP/E=29.7x, FCF Yield=6.4%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive3/15 years FCF positive

  ✗MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap8.4%

  ✓Ackman>= 4%

  Price / FCF per Share15.3x

  ✓Ackman<= 25

  Positive Operating Cash Flow frequency4/15 years positive

  ✗SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$161.9M

  ✓Neff> $0 (app proxy for a strong fundamental case)

  (Operating cash flow - capex) / market capitalization+8.25%; #967/4519 (top 21.4%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Efficiency50% pass✓ 5✗ 6▾

  4 of 8 pass — Buffett, Munger, Akre +1 more object

  Current Ratio5.56

  ✓Graham>= 2.0

  ROIC (3-5 yr avg)-14.4%

  ✗Buffett> 10%

  ROIC - WACC-24.4%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)65.6%

  ✓Greenblatt> 25%

  Current Ratio Change YoY4.73 -> 8.15

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.34x -> 0.37x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities5.56

  ✓Dreman> 1.5

  Return on Invested Capital

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=-6.5%; FY2024: ROIC=unavailable; FY2025: ROIC=unavailable

  ✗AkreLatest 3 consecutive FYs: ROIC > 15% in each

  Reinvestment Rate x ROIC

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/3 years above 12% (latest -6.5%)

  ✗SleepROIC > 12% in a majority of years