Core Insights - Investing is viewed as a learning process where failures serve as tuition and successes contribute to lessons learned [1] Group 1 - The focus of recent research has been primarily on healthcare stocks, reflecting a strategic emphasis in investment analysis [1]

Core Insights - Exact Sciences shares experienced a significant decline after reporting widening losses and lowering its full-year outlook [1] - The company reported a third-quarter net loss of $38.2 million, or 21 cents per share, compared to a net loss of $15.8 million, or 9 cents per share in the previous quarter [1] - Revenue increased by 12.8% year-over-year to $708.7 million, but this was below analysts' expectations [1] Financial Performance - The third-quarter net loss of $38.2 million was wider than the expected loss of $33.9 million [1] - Screening revenue rose by 15.4% to $544.9 million, while Precision Oncology revenue grew by 5.4% to $163.8 million [1] - The company now anticipates full-year adjusted earnings between $310 million and $320 million, down from a previous estimate of $335 million to $355 million [1] Outlook - Exact Sciences projects full-year revenue of $2.73 billion to $2.75 billion, a decrease from the earlier estimate of $2.81 billion to $2.85 billion [1] - CEO Kevin Conroy indicated that the company's recent performance does not reflect its full potential [1] - Following the news, shares of Exact Sciences fell nearly 30% in intraday trading [1]

Core Viewpoint - Exact Sciences Corporation (EXAS) reported a net loss of 21 cents in Q3 2024, wider than the Zacks Consensus Estimate of a loss of 20 cents per share, indicating challenges in financial performance [1][11]. Financial Performance - Consolidated revenues for Q3 totaled $708.7 million, reflecting a 12.8% increase on a reported basis and 13% on a core revenue basis, but missed the Zacks Consensus Estimate by 1.2% [2]. - Screening revenues, including laboratory service revenues from Cologuard and PreventionGenetics, reached $544.9 million, up 15% year over year due to an increase in completed Cologuard tests [3]. - Precision Oncology revenues were $163.8 million, up 5% year over year, driven by a 28% international expansion of Oncotype DX [4]. - Gross profit rose 11.5% year over year to $512.6 million, while gross margin contracted by 85 basis points to 72.3% [5]. - Adjusted operating profit totaled $0.6 million, a significant improvement from the operating loss of $42.2 million in the previous year [6]. Cash Position - At the end of Q3, Exact Sciences had cash and cash equivalents and marketable securities of $588.8 million, an increase from $530.2 million at the end of Q2 2024 [7]. Revised Guidance - The company revised its total revenue forecast for 2024 to a range of $2.73-$2.75 billion, down from the previous estimate of $2.81-$2.85 billion, with Screening revenues expected to be between $2.080-$2.095 billion [8]. - Adjusted EBITDA guidance was also reduced to $310-$320 million, down from $335-$355 million [9]. Market Impact - Following the earnings announcement, EXAS shares fell nearly 30% in after-hours trading, reflecting investor concerns over the missed earnings and revenue estimates [2][11]. - The slower demand in primary-care offices and disruptions from Hurricane Helene and Milton negatively impacted Cologuard orders, which are expected to affect Q4 revenues [11][12]. Positive Developments - Despite the challenges, the company reported year-over-year revenue growth driven by increased Cologuard adoption and international expansion of Oncotype DX, along with improved profitability and milestones in cancer diagnostics [13].

Our purpose is to help eradicate cancer by preventing it, detecting it earlier, and guiding personalized treatment. Third-quarter 2024 earnings call November 5, 2024 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 have made as of the date hereof and are subject to known and unknown ris ...

Financial Data and Key Metrics Changes - Total revenue grew 13% year-over-year to $709 million, driven by broad-based momentum in Cologuard adoption and international expansion of Oncotype DX [13][14] - Adjusted EBITDA increased by 75% year-over-year to $99 million, with an adjusted EBITDA margin expanding 500 basis points to 14% [4][15] - Free cash flow reached a record $113 million, up nearly 60% sequentially, with cash and securities exceeding $1 billion [4][14] Business Line Data and Key Metrics Changes - Screening revenue increased 15% to $545 million, primarily due to Cologuard volume [14] - Precision Oncology revenue grew 5% to $164 million, with Oncotype DX expanding 28% internationally [14] Market Data and Key Metrics Changes - Cologuard customer satisfaction and brand awareness reached all-time highs, with nearly 250,000 healthcare providers relying on Cologuard [6][24] - The number of people due for rescreening is projected to grow from 1.6 million this year to 2 million in 2025 and 2.6 million in 2026 [9] Company Strategy and Development Direction - The company plans to launch Cologuard Plus in Q2 2025, which sets a new performance standard with 95% cancer sensitivity and 94% specificity [8][28] - The ExactNexus platform is expected to drive growth in care gap screening programs, with nearly 50 programs run this year [10][24] - The company aims to achieve 15% compounded revenue growth and greater than 20% adjusted EBITDA margin by 2027 [22] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with the growth in Cologuard testing frequency but remains optimistic about future growth driven by new products and enhanced commercial execution [6][22] - The impact of Hurricane Helene and Milton on Cologuard orders was acknowledged, with approximately 18% of tests coming from affected areas [19][44] - Management expects growth to accelerate in 2025, supported by rescreens, care gap programs, and the launch of Cologuard Plus [22][46] Other Important Information - The company received FDA approval for Cologuard Plus, which is expected to enhance market penetration and pricing power [28][29] - The transition to the ExactNexus platform for Precision Oncology faced challenges but is expected to improve efficiency over time [21] Q&A Session Questions and Answers Question: What changed in the second half outlook relative to where you stood 90 days ago? - Management acknowledged accountability for the less-than-expected performance and outlined plans to address execution issues, emphasizing the long-term growth potential of Cologuard [33][34] Question: Can you quantify the impacts of care gap, hurricane disruptions, and slower ramp from new reps? - Management indicated that the hurricanes had a significant impact on orders, particularly in September and October, and that care gap programs continue to be a strong growth driver [40][44] Question: How do you expect care gap and rep productivity issues to linger? - Management expects care gap programs to continue driving growth, while new sales representatives are anticipated to become more efficient over time [46][56] Question: How did the headwinds develop during the quarter? - Management noted that the challenges became apparent starting in September, with a slower growth rate than historically expected during the typical peak season [93] Question: What is the trajectory for EBITDA going forward? - Management remains confident in achieving long-term EBITDA targets, with ongoing efforts to improve profitability and leverage across the P&L [95][97]

Earnings Performance - Exact Sciences reported a quarterly loss of $0.21 per share, missing the Zacks Consensus Estimate of a loss of $0.20, representing an earnings surprise of -5% [1] - The company's loss per share compares to break-even earnings per share a year ago [1] - In the previous quarter, Exact Sciences posted a loss of $0.09 per share, significantly better than the expected loss of $0.37 per share, delivering a surprise of 75.68% [1] - Over the last four quarters, the company has surpassed consensus EPS estimates two times [2] Revenue Performance - Exact Sciences posted revenues of $708.66 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 1.22% [2] - This represents a year-over-year increase from $628.34 million in revenues [2] - The company has topped consensus revenue estimates three times over the last four quarters [2] Stock Performance and Market Comparison - Exact Sciences shares have lost about 3.9% since the beginning of the year, underperforming the S&P 500's gain of 19.8% [3] - The stock's immediate price movement will depend on management's commentary on the earnings call [3] Earnings Outlook and Estimate Revisions - The current consensus EPS estimate for the coming quarter is -$0.06 on $779.18 million in revenues [7] - For the current fiscal year, the consensus EPS estimate is -$0.95 on $2.83 billion in revenues [7] - The estimate revisions trend for Exact Sciences is favorable, translating into a Zacks Rank 1 (Strong Buy) [6] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions [5] Industry Performance - The Medical - Biomedical and Genetics industry is currently in the top 38% of the 250 plus Zacks industries [8] - The top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [8] Peer Comparison - Oculis Holding AG (OCS) is expected to report a quarterly loss of $0.52 per share for the quarter ended September 2024, representing a year-over-year change of -36.8% [9] - Oculis Holding AG's revenues are expected to be $0.28 million, up 13.2% from the year-ago quarter [10]

Revenue and Financial Performance - Total revenue grew 13% year-over-year in Q3 2024, with operating cash flow improving by $114.4 million to $138.7 million compared to Q3 2023[151] - Screening revenue for the three months ended September 30, 2024, was $544.9 million, a $72.9 million increase from the same period in 2023, driven by growth in Cologuard test completions[173] - Total revenue for the nine months ended September 30, 2024, was $2,045.4 million, a $192.5 million increase from the same period in 2023, primarily due to increased Cologuard and Oncotype DX test volumes[174] - Net cash provided by operating activities increased to $163.5 million for the nine months ended September 30, 2024, compared to $86.6 million for the same period in 2023[198] - Net cash used in investing activities was $400.3 million for the nine months ended September 30, 2024, compared to $116.4 million provided by investing activities for the same period in 2023[198] - Net cash provided by financing activities increased to $221.4 million for the nine months ended September 30, 2024, compared to $149.7 million for the same period in 2023[198] - Investment income, net increased to $11.6 million for the three months ended September 30, 2024, compared to $2.1 million for the same period in 2023[189] - The company issued $620.7 million aggregate principal amount of new Convertible Notes due in 2031, with net proceeds of approximately $259.8 million[203] Product Development and Pipeline - Cologuard Plus, the next-generation colorectal cancer screening test, received FDA approval in October 2024 with expected Medicare coverage and guideline inclusion in 2025[153][157] - Cologuard Plus reduces false positives by over 30% and shows 95% overall cancer sensitivity and 43% sensitivity for advanced precancerous lesions at 94% specificity[157] - The company's blood-based colorectal cancer screening test demonstrated 88% sensitivity for colorectal cancer and 31% sensitivity for advanced precancerous lesions at 90% specificity[161] - The multi-cancer screening test (Cancerguard) detected cancer signals from 21 cancer types with 50.9% mean sensitivity and 98.5% specificity[164] - Oncodetect MRD test for colorectal cancer completed clinical validation, with results to be submitted for Medicare reimbursement approval[158] - The company plans to launch new screening and diagnostic tests in 2025, including Cologuard Plus and Oncodetect MRD[156][157][158] - The company's ASCEND-2 study enrolled over 11,000 participants for multi-cancer screening test validation[164] Expenses and Costs - Cost of sales for the three months ended September 30, 2024, increased by $27.6 million to $196.1 million, driven by higher production costs and personnel expenses due to increased test volumes[179] - Research and development expenses for the nine months ended September 30, 2024, increased by $20.6 million to $331.6 million, partly due to a $25.8 million expense from the termination of a license agreement[182] - Sales and marketing expenses for the nine months ended September 30, 2024, increased by $35.7 million to $572.3 million, driven by continued investment in high-impact sales and marketing opportunities[185] - Personnel expenses decreased by $3.2 million (3.2%) to $98.1 million for the three months ended September 30, 2024, compared to $101.3 million for the same period in 2023[186] - Total general and administrative expenses decreased by $0.2 million to $217.2 million for the three months ended September 30, 2024, compared to $217.4 million for the same period in 2023[186] - Amortization of acquired intangible assets increased to $24.4 million for the three months ended September 30, 2024, compared to $23.0 million for the same period in 2023, primarily due to acquisitions[186] - Impairment of long-lived assets was $18.7 million and $31.3 million for the three and nine months ended September 30, 2024, respectively, compared to zero and $0.6 million for the same periods in 2023[187] Market and Screening Initiatives - The company delivered test results to 1.2 million people in Q3 2024, including record numbers for Cologuard and Oncotype DX tests[151] - Up to 60 million Americans are not up to date with their colon cancer screenings, and the company aims to increase screening rates through partnerships with health systems and payers using the Cologuard test[169] - The company secured reimbursement for the Oncotype DX test in Japan, where breast cancer is the most common cancer among women, with about 45,000 new diagnoses annually. The test could help more than 100 women per day understand their cancer recurrence risk[170] Financial Position and Risks - The company had an accumulated deficit of approximately $3.63 billion as of September 30, 2024, and expects to incur net losses in the near future[171] - Cash, cash equivalents, and marketable securities totaled $588.8 million and $432.3 million, respectively, as of September 30, 2024[196] - The company maintains significant amounts of cash, cash equivalents, restricted cash, and marketable securities exceeding federally insured limits, posing potential risks of losses[210] - As of September 30, 2024, the company had no outstanding variable rate debt, but future drawdowns under the Revolving Loan could be impacted by rising market interest rates[211] - The company's functional currency for most international subsidiaries is the U.S. dollar, minimizing foreign currency translation gains or losses[212] - A small portion of revenues is denominated in foreign currencies due to international expansion, with certain expenses payable in foreign currencies[212] - The company had open foreign currency forward contracts with notional amounts of $47.7 million as of September 30, 2024, to mitigate foreign exchange rate risks[213] - Currency fluctuations have had an immaterial impact on financial results historically, but future impacts could become significant[213]

Revenue Performance - Total revenue for Q3 2024 was $709 million, a 13% increase compared to $628 million in Q3 2023[1] - Screening revenue reached $545 million, up 15%, while Precision Oncology revenue was $164 million, an increase of 5%[3] - Revenue for the three months ended September 30, 2023, was $708,655,000, representing a 13% increase from $628,338,000 in the same period of 2022[22] - Screening revenue for the three months ended September 30, 2023, was $544,901,000, a 15% increase from $472,013,000 year-over-year[24] - The company reported a 10% increase in total revenue for the nine months ended September 30, 2023, totaling $2,045,443,000 compared to $1,852,881,000 in the same period of 2022[25] - Total revenue for the nine months ended September 30, 2024, reached $2,045,443,000, compared to $1,852,881,000 for the same period in 2023[29] Financial Metrics - Adjusted EBITDA was $99 million, reflecting a $42 million increase, with an adjusted EBITDA margin of 14%, up 500 basis points[3] - Adjusted EBITDA for Q3 2024 was $98,731,000, with an adjusted EBITDA margin of 14%, up from 9% in Q3 2023[30] - Gross profit for Q3 2024 was $491,485,000, resulting in a gross margin of 69% compared to 70% in Q3 2023[29] - Non-GAAP gross profit for Q3 2024 was $512,585,000, with a non-GAAP gross margin of 72%[29] - The company reported a loss from operations of $147.2 million for the three months ended September 30, 2024[36] Cash Flow and Liquidity - Operating cash flow was $139 million, and free cash flow was $113 million, both showing significant increases[3] - Net cash provided by operating activities for the three months ended September 30, 2024, was $138.7 million, significantly up from $24.4 million in the same period of 2023[44] - Free cash flow for the three months ended September 30, 2024, was $112.6 million, compared to a negative free cash flow of $0.8 million for the same period in 2023[44] - Cash, cash equivalents, and marketable securities totaled $1.02 billion at the end of Q3 2024[3] - Cash and cash equivalents as of September 30, 2024, were $588,830,000, down from $605,378,000 as of December 31, 2023[23] - Cash, cash equivalents, and restricted cash at the end of the period were $594.7 million, compared to $594.9 million at the end of the same period in 2023[44] - The company achieved a net increase in cash and cash equivalents of $58.7 million for the three months ended September 30, 2024[44] Expenses and Losses - Total operating expenses for the three months ended September 30, 2023, were $751,158,000, compared to $693,516,000 in the same period of 2022, reflecting an increase of 8%[22] - Net loss for the three months ended September 30, 2023, was $(38,236,000), compared to a net loss of $(154,383,000) in the same period of 2022[22] - Net loss for Q3 2024 was $(38,236,000), compared to a net income of $794,000 in Q3 2023[30] - The company reported an impairment of long-lived assets of $31,296,000 for the nine months ended September 30, 2024[33] - The company recorded impairment charges of $621,000 related to long-lived assets for the three months ended September 30, 2024[39] - The company recognized a legal settlement expense of $36.2 million during the reporting period[42] - Legal settlements for Q3 2024 amounted to $(3,500,000)[30] Guidance and Future Outlook - The company updated its full-year 2024 revenue guidance to $2.810 - $2.850 billion, and adjusted EBITDA guidance to $655 - $675 million[12] Product Developments - The FDA approved the Cologuard Plus test, which enhances sensitivity and reduces false positives by over 30%[6] - Data presented for a blood-based colorectal cancer screening test showed 88% sensitivity for colorectal cancer and 31% for advanced precancerous lesions at 90% specificity[7] - Exact Sciences secured acceptance for its first publication on the Oncodetect test, aimed at monitoring residual disease and cancer recurrence[8] Research and Development - Research and development expenses for the nine months ended September 30, 2024, were $331,593,000[33] - Research and development expenses for the three months ended September 30, 2024, were $310.9 million, slightly down from $309.7 million in the same period of 2023[36] - The ExactNexus technology platform contributed to strong growth in Cologuard test utilization among rescreen patients[5] Stockholder Equity - Total stockholders' equity as of September 30, 2024, was $3,210,511,000, up from $3,145,305,000 as of December 31, 2023[23] - Total assets as of September 30, 2024, were $6,748,571,000, an increase from $6,471,334,000 as of December 31, 2023[23]

Core Viewpoint - Exact Sciences (EXAS) has received an upgrade to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which have a strong correlation with near-term stock price movements [4][6]. - Rising earnings estimates for Exact Sciences suggest an improvement in the company's underlying business, likely leading to an increase in stock price [5][10]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7][9]. - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, indicating superior earnings estimate revisions [9][10]. Recent Earnings Estimate Revisions - For the fiscal year ending December 2024, Exact Sciences is expected to earn -$0.95 per share, reflecting a 15.9% change from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Exact Sciences has increased by 25.2%, indicating a positive trend in earnings expectations [8].

Core Viewpoint - Exact Sciences (EXAS) is set to report its Q3 2024 earnings on November 5, with expectations of revenue growth driven by its cancer diagnostics products, particularly Cologuard and Oncotype DX [1][2]. Group 1: Earnings Estimates - The Zacks Consensus Estimate for Exact Sciences' Q3 2024 revenues is $717.26 million, reflecting a 14.2% increase from the previous year [2]. - The expected loss per share for Q3 2024 is 20 cents, a decline from the breakeven level reported in the same quarter last year [2]. Group 2: Revenue Segments - Exact Sciences reports revenues in two main segments: Screening and Precision Oncology [4]. - Screening revenues are anticipated to have increased year-over-year, driven by growing Cologuard orders and efforts to enhance adoption through rescreens and care gap programs [4][5]. - The Zacks Consensus Estimate for Screening revenues is $551.6 million, with earlier expectations set between $545 million and $555 million, indicating a growth of 17% at the midpoint [5]. - Precision Oncology revenues are expected to benefit from laboratory service revenues from Oncotype DX, which has seen a 10% increase in international adoption over the past year [6]. - The Zacks Consensus Estimate for Precision Oncology revenues is $166 million [6]. Group 3: Earnings Prediction Model - The current model does not predict an earnings beat for Exact Sciences, as it has an Earnings ESP of 0.00% and a Zacks Rank of 3 (Hold) [7].