Wall Street expects a year-over-year increase in earnings on higher revenues when Exact Sciences (EXAS) reports results for the quarter ended March 2025. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on May 1, 2025, might help the stock move higher if these key numbers are better than expec ...

Core Insights - Exact Sciences Corporation (EXAS) is focusing on high-return pipeline opportunities that significantly impact patients, which is expected to drive growth in the upcoming quarter [1] - The company is enhancing its digital infrastructure and diagnostics to provide comprehensive insights throughout cancer care [1] Financial Performance - Over the past year, EXAS shares have decreased by 35%, contrasting with a 12.3% decline in the industry and a 10.5% gain in the S&P 500 [2] - The company has a market capitalization of $8.48 billion and a long-term earnings growth rate of 29.4%, outperforming the industry's 21.5% [2] - In the last four quarters, EXAS's earnings surpassed estimates twice, met once, and missed once, with an average surprise of 37.98% [2] Key Drivers for Growth - EXAS is advancing new solutions, including colon cancer screening, molecular residual disease testing, and multi-cancer screening, building on the success of Cologuard and Oncotype DX tests [3] - The company has received FDA approval for Cologuard Plus, a next-generation colon cancer screening test, set to launch in Q2 2025, with Medicare coverage [4] - EXAS is also progressing with blood-based colon cancer screening tests, with pivotal study results expected by mid-2025 [4] Customer Experience Enhancement - The company aims to transform cancer care by providing valuable insights at every stage of diagnosis and treatment, leveraging its proprietary technology platform, Exact Nexus [5] - The goal is to increase the completion rate of Cologuard screenings every three years, thereby closing the screening gap [5] Challenges Faced - EXAS is experiencing escalating costs due to global macroeconomic conditions, including geopolitical conflicts and a high-interest-rate environment, impacting profitability [6][8] - In Q4 2024, the cost of revenues rose by 14.4% year-over-year, with sales and marketing expenses increasing by 12.9% [8] - The competitive landscape for colorectal cancer screening is tough, with numerous competitors possessing greater financial and developmental resources [9] Stock Estimates - The Zacks Consensus Estimate for EXAS's 2025 loss per share has declined by 1.7% to 59 cents, while the revenue estimate suggests a 10.7% year-over-year improvement [10]

Industry Overview - The cancer treatment landscape is shifting towards targeted and less toxic therapies, including immunotherapy, targeted therapies, and personalized vaccines [1][2] - The market for innovative cancer treatments and diagnostics is expected to grow due to a significant increase in cancer cases, with new cancer cases in the U.S. projected to exceed 2 million in 2024 [3] Major Players - Major pharmaceutical companies such as Novartis, AstraZeneca, Pfizer, AbbVie, and Eli Lilly are actively developing new cancer therapies, including antibody-drug conjugates and immune-oncology agents [4] - Smaller biotech firms are also making significant advancements in cancer research, with larger drugmakers showing interest in acquiring these innovative companies [4] Company Highlights - **Novartis**: - Has a diverse oncology portfolio with significant growth from the FDA-approved drug Kisqali, which is a CDK4/6 inhibitor for advanced breast cancer [6] - Oncology sales rose 16% in constant currency terms to $14.74 billion in 2024, driven by new drugs like Pluvicto and Scemblix [7] - The company is investing in precision medicine strategies for both common and rare cancers [8] - **Exact Sciences Corporation**: - Focuses on early detection and prevention of cancer with its non-invasive screening test Cologuard for colorectal cancer [9] - Screening revenues increased by 13% in 2024, while Precision Oncology revenues rose by 4% [10] - Plans to launch several novel cancer tests over the next 18 months [11] - **Monte Rosa Therapeutics**: - A clinical-stage biotech developing molecular glue degraders for cancer treatment, with its lead candidate MRT-2359 targeting MYC-driven solid tumors [12] - Interim data from a phase I/II study showed a favorable safety profile and effective degradation of GSPT1 in patients [13]

Core Insights - The article discusses the performance of Exact Sciences (NASDAQ: EXAS) and highlights a 24% year-over-year growth in core revenue and a 31% increase in another unspecified metric in Q2 2023 [1] Company Performance - Exact Sciences reported a 24% year-over-year growth in core revenue [1] - The company experienced a 31% increase in another key performance indicator during the same period [1] Analyst Background - The author of the article is a full-time healthcare investor with a focus on innovative companies developing breakthrough therapies and pharmaceuticals [1]

Core Insights - Exact Sciences Corporation (EXAS) reported a narrower net loss of 6 cents in Q4 2024, compared to a loss of 27 cents in the same quarter last year and significantly better than the Zacks Consensus Estimate of a loss of 32 cents [1][2] - The full-year net loss was $5.59 per share, which was much higher than the Zacks Consensus Estimate of a loss of $1.20 and wider than the 2023 loss of $1.13 per share [2] - Total revenues for 2024 reached $2.76 billion, exceeding the Zacks Consensus Estimate by 0.4% and reflecting a 10.4% increase from 2023 [3] Revenue Breakdown - Q4 screening revenues, including laboratory services from Cologuard and PreventionGenetics, totaled $552.6 million, marking a 14% year-over-year increase driven by Cologuard adoption [4] - Precision Oncology revenues were $160.9 million, showing a marginal increase from the previous year, supported by the international adoption of Oncotype DX [5] Margin and Expense Analysis - Gross profit rose 8.5% year over year to $492.6 million, despite a 14.4% increase in the cost of revenues, leading to a gross margin contraction of 112 basis points to 69.1% [6] - Research and development expenses decreased by 15.2% to $97.7 million, while sales and marketing expenses increased by 12.9% to $244.5 million [6] Financial Position - At the end of Q4, Exact Sciences had cash and cash equivalents and marketable securities totaling $1.04 billion, up from $777.6 million at the end of 2023 [8] Future Outlook - For full-year 2025, the company anticipates total revenues between $3.025 billion and $3.085 billion, with Screening revenues expected in the range of $2.350 billion to $2.390 billion and Precision Oncology revenues between $675 million and $695 million [9] - Adjusted EBITDA is forecasted to be in the range of $410 million to $440 million [9] Strategic Developments - The company secured favorable Medicare pricing for the Cologuard Plus test, enhancing its screening capabilities [12] - New evidence from the ASCEND 2 study supports Cancerguard, a blood-based multi-cancer screening test, indicating potential for improved early cancer detection [12]

Financial Data and Key Metrics Changes - In Q4 2024, Exact Sciences reported a revenue growth of 10%, or 11% on a core basis, with adjusted EBITDA increasing by 52% to $75 million [10][14] - Full-year core revenue grew 11% to $2.75 billion, with adjusted EBITDA margin expanding nearly 300 basis points [14][15] - The company ended the year with $1.04 billion in cash and securities, more than doubling free cash flow [15] Business Line Data and Key Metrics Changes - Screening revenue increased by 14% to $553 million, driven by the adoption of Cologuard among providers and health systems [10][11] - Precision oncology revenue slightly increased to $161 million, led by international adoption of Oncotype DX [11][12] - Adjusted EBITDA margin expanded nearly 300 basis points due to volume growth and expense controls [12] Market Data and Key Metrics Changes - The number of eligible patients for Cologuard tests is expected to grow by 30% to 2 million in 2025, with rescreening rates at an all-time high [22] - Cologuard Plus is set to launch in Q2 2025, initially available to Medicare fee-for-service patients, representing about 15% of Cologuard volumes [17][91] - The company anticipates steady growth in Precision Oncology, particularly with Oncotype DX, and strong double-digit growth internationally [20] Company Strategy and Development Direction - Exact Sciences aims to enhance its leadership in cancer diagnostics by leveraging its commercial engine and expanding its technology platform, ExactNexus [9][31] - The company plans to launch three new tests in 2025, focusing on colon cancer screening, MRD testing, and multi-cancer screening [38][98] - The strategy includes improving patient education and provider engagement to drive adoption of new tests [21][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in 2025 being a productive year, driven by strong growth in Cologuard and the launch of new tests [49][50] - The company is optimistic about the impact of Cologuard Plus and the expansion of care gap programs on revenue growth [40][41] - Management highlighted the importance of maintaining strong payer relationships and the potential for increased reimbursement rates [92][93] Other Important Information - The company recognized an $830 million non-cash impairment charge related to the Thrive acquisition, reflecting changes in external factors since the acquisition [13] - Exact Sciences has been recognized as a great place to work for six consecutive years, indicating strong employee engagement [7] Q&A Session Summary Question: What growth drivers are expected for Screening guidance? - Management highlighted rescreens, care gap programs, and the launch of Cologuard Plus as key growth drivers for the second half of the year [35][40] Question: Can you elaborate on the productivity and balance of product launches? - Management emphasized the capability of the team to manage multiple product launches while driving revenue growth and margin expansion [47][50] Question: What is the status of Cologuard Plus reimbursement? - Management confirmed Medicare pricing of $592 for Cologuard Plus and ongoing negotiations with commercial payers [91][92] Question: How does the company view the impact of the Braidwood case? - Management does not anticipate a significant impact on business, as payers remain motivated to maintain screening rates [146][147] Question: What is the expected contribution of MRD and Cancerguard to revenue? - Management expects MRD to have a near-term impact, followed by Cancerguard, with Cologuard Plus being the most significant contributor initially [97][98]

Our purpose is to help eradicate cancer by preventing it, detecting it earlier, and guiding personalized treatment. Fourth-quarter 2024 earnings call February 19, 2025 Proprietary scientific platform detects cancer earlier and accurately EXACT SCIENCES 1 Safe harbor and non-GAAP disclosures This presentation contains forward-looking statements concerning our expectations, anticipations, intentions, beliefs or strategies regarding the future. These forward-looking statements are based on assumptions that we ...

Financial Performance - Exact Sciences Corporation achieved a revenue growth of 10% while controllable operating expenses grew just 3% in 2024[16] - The company generated cash provided by operating activities of $210.5 million for the year ended December 31, 2024, an improvement of $54.4 million compared to 2023[16] - Revenue for the year ended December 31, 2024, was $2,758,867, an increase of 10.4% compared to $2,499,766 in 2023[387] - Gross profit for 2024 was $1,918,717, representing a gross margin of approximately 69.5%, up from $1,762,202 in 2023[387] - Total operating expenses increased to $2,976,620 in 2024, a rise of 44.7% from $2,055,641 in 2023[387] - The net loss for 2024 was $1,028,857, compared to a net loss of $204,149 in 2023, reflecting a significant increase in losses[387] - The accumulated deficit as of December 31, 2024, was $4,498,032, up from $3,469,175 in 2023[387] - Total stockholders' equity decreased to $2,402,249 in 2024 from $3,145,305 in 2023, indicating a decline of 23.6%[385] - Other comprehensive loss for 2024 was $2,372, contributing to the overall comprehensive loss of $1,031,229[390] Product Development and Innovation - The Cologuard test has a cancer sensitivity of 92% and a sensitivity of 94% for stage I and II cancers[17] - The Cologuard Plus test, expected to launch in Q2 2025, shows 95% overall cancer sensitivity and 43% sensitivity for advanced precancerous lesions with 94% specificity[32] - The Oncotype DX Breast Recurrence Score test is recognized globally as standard of care and is included in all major breast cancer treatment guidelines[26] - Exact Sciences completed two studies for Oncodetect, its molecular residual disease test, further enhancing its product portfolio[16] - Oncodetect test achieved 78% sensitivity at post-surgical timepoint and 91% during surveillance monitoring, with specificities of 80% and 94% respectively[36] - Cancerguard test showed 60% overall sensitivity at 98.5% specificity for average-risk screening, and 67% sensitivity for the six most aggressive cancer types[36] - Blood-based colorectal cancer screening test demonstrated 88% sensitivity for colorectal cancer and 31% for advanced precancerous lesions at 90% specificity[37] - The company is advancing its pipeline of future screening and diagnostic products, including collaborations with Mayo and exclusive technologies licensed from various institutions[34] Market Opportunity - There are nearly 110 million Americans aged 45 to 85 at average risk for colorectal cancer, representing a potential $18 billion market for the Cologuard test[18] - More than 40% of Americans aged 45 to 85 at average risk for colorectal cancer are not up-to-date with screening, indicating a significant opportunity for the Cologuard test[19] - The U.S. colorectal cancer screening opportunity includes nearly 110 million eligible individuals aged 45 to 85[67] - The company is exploring international commercialization of its tests, with Oncotype tests already provided in approximately 120 countries[45] Competition and Regulatory Environment - Geneoscopy, Inc. received FDA approval for its ColoSense stool-based test, which will compete directly with the company's Cologuard tests in the U.S.[68] - Guardant Health recently received FDA approval and Medicare coverage for its blood-based colorectal cancer screening test, Shield, indicating significant competition for the company's current and in-development tests[69] - The company is entering the multi-cancer early detection (MCED) market with its Cancerguard test, facing competition from GRAIL, Guardant Health, and Freenome[70] - The genetic testing market is highly competitive, with numerous companies including Ambry Genetics, Myriad Genetics, and Illumina posing threats to the company's market position[71] - The FDA regulates the company's Cologuard and Cologuard Plus tests as Class III medical devices, with substantial restrictions on marketing and sales[76] - The FDA's final rule on Laboratory Developed Tests (LDTs) may materially impact the company's development and commercialization of its Oncotype tests[79] Compliance and Legal Matters - The company is subject to various federal and state anti-fraud and abuse laws, including the Federal False Claims Act, which imposes severe penalties for overpayments[88] - Compliance with HIPAA and other privacy laws is essential, as violations can lead to significant penalties[83] - The company must navigate complex federal and state regulations regarding laboratory operations, including CLIA requirements and state-specific laws[81] - The company has incurred significant expenditures to comply with new regulatory requirements, which may continue to impact its business operations[94] Human Resources and Corporate Culture - The company employs approximately 7,000 individuals, with a voluntary turnover rate of about 8%, which is below the healthcare industry benchmark[113] - The company aims to fill 35% of open positions with internal candidates, reflecting its investment in employee training and development[118] - The company has established a comprehensive employee training program applicable to all staff, enhancing professional growth opportunities[117] - The company has a commitment to diversity and inclusion, with women comprising approximately 53% of total employees and 47% of management positions[115] Financial Position and Assets - As of December 31, 2024, the company's net accounts receivable was $249 million, reflecting a significant increase from $203.6 million in 2023[376] - The company's IPR&D intangible asset balance was $420 million as of December 31, 2024, with a recorded non-cash, pre-tax impairment charge of $830 million[379] - Total current assets increased to $1.57 billion in 2024 from $1.19 billion in 2023, driven by higher cash equivalents and marketable securities[384] - The company's total assets decreased to $5.93 billion in 2024 from $6.47 billion in 2023, primarily due to the impairment of intangible assets[384] - The company reported total liabilities of $3.53 billion as of December 31, 2024, an increase from $3.33 billion in 2023[384] - The company maintained significant amounts of cash and cash equivalents totaling $600.9 million as of December 31, 2024, slightly down from $605.4 million in 2023[384] Research and Development - Research and development expenses were $431,210 in 2024, slightly up from $426,927 in 2023, showing a focus on innovation[387] - Research and development costs are expensed as incurred, including costs of proprietary research and IPR&D projects with no alternative future use[442] - The Company tests capitalized IPR&D projects for impairment annually and considers various factors including regulatory environment and competitive landscape[427]

Financial Metrics and Adjustments - Pro forma adjustments for financial metrics must be consistent with the definition of Consolidated Net Income or Consolidated EBITDA[3] - Financial metrics and ratios are calculated on a Pro Forma Basis for Test Periods involving Subject Transactions, with specific exclusions for certain ratios[28] - Financial ratios are calculated by dividing components and rounding to the nearest number, with specific rounding rules[34] Indebtedness and Refinancing - Refinancing Indebtedness principal amount shall not exceed the original Indebtedness except for unpaid accrued interest, premiums, and reasonable fees[7] - Indebtedness includes obligations under conditional sale agreements, deferred purchase price of property, and Capital Lease Obligations[13] - The weighted average life to maturity of Extended/Modified Term Loans shall be no shorter than the remaining weighted average life of the original Term Loans[10] Interest Rates and Benchmarks - The NYFRB Rate shall be deemed zero if the determined rate is less than zero[14] - Interest rates on Loans may be derived from benchmarks subject to regulatory reform, with mechanisms for determining alternative rates[35] - SONIA rate is defined as the Sterling Overnight Index Average published by the Bank of England for any Business Day[41] - The Administrative Agent determines the applicable interest rates (e.g., Alternate Base Rate, Adjusted Term SOFR Rate) and their determination is conclusive absent manifest error[146] - Benchmark Transition Events may trigger the conversion of Term Benchmark Loans to ABR Loans or alternative interest rate calculations[140] Subsidiaries and Equity Interests - A subsidiary is defined as any entity where more than 50% of equity value or voting power is owned or controlled by the parent[16] - Subsidiary refers to any subsidiary of the Borrower or another specified Person[42] - Wholly-owned subsidiary means all Equity Interests in such subsidiary are owned by the Person, another wholly-owned subsidiary, or any combination thereof[49] Letters of Credit and Reimbursement - Letters of Credit are issued, amended, or extended only if specific conditions are met, including limits on LC Exposure and Revolving Exposure[39] - The Borrower's obligation to reimburse LC Disbursements is absolute, unconditional, and irrevocable, and must be performed strictly in accordance with the terms of the Agreement under any and all circumstances[66] - The amount of a Letter of Credit that provides for automatic increases in the stated amount shall be deemed to be the maximum stated amount after giving effect to all such increases, whether or not such maximum stated amount is in effect at the time of determination[74] - The Borrower shall reimburse, indemnify, and compensate the applicable Issuing Bank for any Letter of Credit issued for its Restricted Subsidiaries as if such Letter of Credit had been issued solely for the account of the Borrower[77] Revolving Loans and Commitments - Each Revolving Lender agrees to make Revolving Loans to the Borrower denominated in dollars or in one or more Alternative Currencies, provided that the aggregate principal amount does not exceed the Revolving Commitment or the Alternative Currency Sublimit[78] - The aggregate amount of the Lenders' Revolving Commitments as of the Effective Date is $500,000,000[91] - The Revolving Availability Period extends from the Effective Date to the earlier of the Revolving Maturity Date or the termination of Revolving Commitments[90] - Each Lender must fund its share of a Borrowing by wire transfer of immediately available funds by 12:00 p.m., New York City time, on the proposed date[93] Prepayments and Repayments - The Borrower has the right to prepay any Borrowing in whole or in part without premium or penalty, subject to Section 2.15[122] - The Borrower must prepay Revolving Borrowings if the Aggregate Revolving Exposure exceeds the Aggregate Revolving Commitment[123] - If the aggregate amount of Loans and LC Exposure in Alternative Currencies exceeds the Alternative Currency Sublimit, the Borrower must prepay Loans or cash collateralize Letters of Credit within two Business Days[124] - Prior to any optional or mandatory prepayment, the Borrower must specify the Borrowing or Borrowings to be prepaid in the notice of such prepayment[125] Fees and Interest - Commitment fees accrue at the Applicable Rate on the unused Revolving Commitment, payable quarterly in arrears on the 15th calendar day following the end of each quarter[128] - Participation fees for Letters of Credit accrue at the Applicable Rate on the average daily LC Exposure, with fronting fees capped at 0.125% per annum[129] - Overdue principal or interest on Loans or LC Disbursements incurs an additional 2% per annum interest rate[134] - Interest on Loans is calculated based on a 360-day year, except for Sterling loans using the Daily Simple RFR, which uses a 365-day year[145] Taxes and Withholding - Taxes include all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees, or other charges imposed by any Governmental Authority[43] - Loan payments must be made without tax deductions unless required by law, with applicable withholding agents responsible for timely tax payments[165] - Loan Parties must timely pay Other Taxes to relevant Governmental Authorities or reimburse the Administrative Agent[167] - Loan Parties must provide evidence of tax payments to the Administrative Agent, including receipts or certified copies[168] Defaulting Lenders - If a Lender becomes a Defaulting Lender, commitment fees cease to accrue on the unused amount of its Revolving Commitment[185] - Payments received from a Defaulting Lender are applied first to amounts owed to the Administrative Agent, then to Issuing Banks, and finally to cash collateralize LC Exposure[185] - The Borrower may cash collateralize a Defaulting Lender's LC Exposure if reallocation among Non-Defaulting Lenders is not possible[186] - No Issuing Bank is required to issue, amend, or extend any Letter of Credit if a Defaulting Lender's LC Exposure is not fully covered by Non-Defaulting Lenders or cash collateral[187] Miscellaneous Provisions - The Administrative Agent and the Borrower may amend the agreement to replace the current Benchmark with a Benchmark Replacement, effective at 5:00 p.m., New York City time, on the fifth Business Day after posting the proposed amendment, provided no objection is received from Required Lenders[148] - The Administrative Agent can modify the definition of "Interest Period" to remove or reinstate any tenor of a Benchmark if it becomes unavailable or non-representative, based on regulatory announcements or screen display status[149] - If financial statements or Compliance Certificates are materially inaccurate, the Borrower must pay accrued interest or fees that should have been paid based on the actual Consolidated Secured Gross Leverage Ratio[153] - The Administrative Agent can make Benchmark Replacement Conforming Changes without further action or consent from other parties, in consultation with the Borrower[156]

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Exact Sciences despite higher revenues, with a focus on how actual results will compare to estimates [1][2]. Financial Expectations - Exact Sciences is expected to report a quarterly loss of $0.32 per share, reflecting an 18.5% decrease year-over-year [3]. - Revenue projections stand at $703.56 million, indicating an 8.8% increase from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 7.41% over the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Exact Sciences is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +1.59% [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive Earnings ESP reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [8]. - Exact Sciences currently holds a Zacks Rank of 3, suggesting a likelihood of beating the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, Exact Sciences was expected to post a loss of $0.20 per share but actually reported a loss of $0.21, resulting in a -5% surprise [12]. - Over the past four quarters, the company has beaten consensus EPS estimates twice [13]. Industry Context - In the broader Zacks Medical - Biomedical and Genetics industry, Axsome Therapeutics is expected to report a loss of $0.99 per share, a 35.6% decline year-over-year, with revenues projected at $117.84 million, up 64.7% from the previous year [17]. - Axsome's consensus EPS estimate has been revised down by 7% over the last 30 days, leading to a negative Earnings ESP of -4.51% [18].