Our purpose is to help eradicate cancer by preventing it, detecting it earlier, and guiding personalized treatment. Second-quarter 2024 earnings call July 31, 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 risks ...

Revenue and Financial Performance - Revenue for the three months ended June 30, 2024, was $699.3 million, an increase of $77.2 million compared to the same period in 2023, while the loss from operations decreased by $50.7 million [179]. - The company reported total revenue of $699.3 million for the three months ended June 30, 2024, an increase of 12.4% from $622.1 million in the same period of 2023 [192]. - Screening revenue increased to $531.6 million for the three months ended June 30, 2024, up from $462.8 million in 2023, driven by growth in completed Cologuard tests [192]. - Precision Oncology revenue rose to $167.7 million for the three months ended June 30, 2024, compared to $157.2 million in 2023, attributed to increased demand for Oncotype DX tests, particularly in Japan [192]. - The company incurred an accumulated deficit of approximately $3.60 billion as of June 30, 2024, and expects to continue incurring net losses in the near future [190]. - Cash provided by operating activities was $107.1 million for the three months ended June 30, 2024, an improvement of $6.6 million compared to the same period in 2023 [179]. - Net cash provided by operating activities was $24.8 million for the six months ended June 30, 2024, compared to $62.2 million for the same period in 2023 [212]. - Cash used in investing activities increased by $468.0 million for the six months ended June 30, 2024, compared to cash provided by investing activities for the same period in 2023 [214]. - Proceeds from the issuance of convertible notes were $266.8 million in the second quarter of 2024, compared to $138.0 million in the first quarter of 2023 [215]. - As of June 30, 2024, the company had outstanding aggregate principal of $249.2 million on its convertible notes maturing on January 15, 2025 [219]. Product Development and Innovation - Exact Sciences secured an exclusive license to TwinStrand Bioscience Inc.'s patented technologies, enhancing its product development capabilities [179]. - The company is focused on advancing new tests in colorectal cancer screening, MRD, and multi-cancer screening, with plans to obtain FDA approval for Cologuard Plus [186]. - The Cologuard Plus test demonstrated an overall sensitivity of 94% for colorectal cancer at a specificity of 91%, representing a 30% relative improvement compared to previous tests [182]. - The multi-cancer screening (MCS) test, branded as Cancerguard, showed a mean sensitivity of 61% and mean specificity of 98.2% for detecting cancer signals from 15 organ sites [182]. - Research and development expenditures are expected to remain a significant portion of operating expenses as the company enhances its product portfolio [183]. - Research and development expenses increased to $120.9 million for the three months ended June 30, 2024, up from $104.1 million in 2023, primarily due to a $25.8 million expense from the termination of a license agreement [197]. Market Expansion and Access - Over 1 million people were screened with the Cologuard test in a single quarter for the first time [179]. - The company plans to expand screening access to underserved populations, aiming to test more individuals and generate sustainable profits [187]. - The company has provided Oncotype tests in approximately 120 countries outside of the U.S., expanding its international market presence [180]. - The company secured reimbursement for the Oncotype DX test in Japan, potentially impacting over 100 women per day with early-stage breast cancer [189]. Expenses and Financial Management - Total cost of sales for the three months ended June 30, 2024, was $189.8 million, an increase of 20.9% from $157.0 million in 2023, driven by higher production costs and personnel expenses [196]. - General and administrative expenses decreased to $201.9 million for the three months ended June 30, 2024, compared to $238.0 million in 2023, mainly due to reduced professional and legal fees [201]. - The company anticipates that sales and marketing expenses will generally increase in future periods as it invests in high-impact opportunities while decreasing as a percentage of revenue over time [198]. - Impairment of long-lived assets was $8.2 million and $12.6 million for the three and six months ended June 30, 2024, respectively, compared to $0.6 million for the same periods in 2023 [202]. Other Financial Metrics - Investment income, net increased to $11.8 million for the three months ended June 30, 2024, compared to $4.8 million for the same period in 2023, and to $18.0 million for the six months ended June 30, 2024, compared to $5.3 million for the same period in 2023 [204]. - Net interest income was $0.1 million for the three months ended June 30, 2024, compared to interest expense of $7.8 million for the same period in 2023 [205]. - Income tax expense increased to $1.5 million for the three months ended June 30, 2024, compared to $1.1 million for the same period in 2023 [206]. - Other operating income was $3.8 million and $3.5 million for the three and six months ended June 30, 2024, compared to zero for the same periods in 2023 [203].

Financial Performance - Total revenue for Q2 2024 was $699 million, a 12% increase from $622 million in Q2 2023, with core revenue growth of 13%[3][6] - Screening revenue reached $532 million, reflecting a 15% increase year-over-year, while Precision Oncology revenue was $168 million, up 7%[6][7] - Revenue for Q2 2024 reached $699.3 million, a 12% increase from $622.1 million in Q2 2023[21] - Screening revenue increased by 15% to $531.6 million in Q2 2024, compared to $462.8 million in Q2 2023[25] - Precision Oncology revenue grew by 7% to $167.7 million in Q2 2024, compared to $157.2 million in Q2 2023[25] Profitability Metrics - Adjusted EBITDA for Q2 2024 was $110 million, an increase of $43 million, with an adjusted EBITDA margin of 16%, up 500 basis points[7] - Adjusted EBITDA for Q2 2024 was $110.1 million, representing an adjusted EBITDA margin of 16%, up from 11% in Q2 2023[30] - The company reported a gross profit of $488.3 million for Q2 2024, with a gross margin of 70%[28] - Gross margin for Q2 2024 was 70%, with a non-GAAP gross margin of 73% excluding amortization of acquired intangible assets[7] - The net loss for Q2 2024 was $16 million, an improvement of $65 million compared to the previous year[7] - Net loss for Q2 2024 was $15.8 million, significantly improved from a net loss of $81.0 million in Q2 2023[21] Cash Flow and Liquidity - Operating cash flow was $107 million, and free cash flow was $71 million, both showing increases from the prior year[7] - Net cash provided by operating activities for Q2 2024 was $107,065, an increase of 6.6% compared to $100,424 in Q2 2023[44] - Free cash flow for Q2 2024 was $71,199, up from $65,703 in Q2 2023, reflecting a year-over-year increase of 7.7%[44] - Cash, cash equivalents, and marketable securities totaled $947 million at the end of Q2 2024[7] - Cash and cash equivalents decreased to $530.2 million as of June 30, 2024, down from $605.4 million at the end of 2023[23] - Cash, cash equivalents, and restricted cash at the end of Q2 2024 totaled $536,017, down from $604,660 at the end of Q2 2023[44] - The company experienced a net increase in cash and cash equivalents of $184,233 in Q2 2024, compared to an increase of $182,998 in Q2 2023[44] Expenses and Investments - Total operating expenses for Q2 2024 were $729.3 million, compared to $699.0 million in Q2 2023, reflecting a 4% increase[21] - Research and development expenses rose to $120.9 million in Q2 2024, up from $104.1 million in Q2 2023, marking a 16% increase[21] - Sales and marketing expenses for the three months ended June 30, 2024, were $185,270 thousand, consistent with $176,490 thousand in the same period of 2023[34] - General and administrative expenses for the three months ended June 30, 2024, were $201,856 thousand, compared to $237,965 thousand in the same period of 2023, showing a decrease of 15%[34] - The company recorded impairment of long-lived assets of $8,152 thousand for the three months ended June 30, 2024, compared to $552 thousand in the same period of 2023[34] - The company recognized acquisition and integration costs of $13,239 thousand for the three months ended June 30, 2024, with no such costs reported in the same period of 2023[34] - The termination of a license agreement resulted in charges of $25,933 thousand for the three months ended June 30, 2024[34] - The company incurred restructuring costs of $2,936 thousand for the six months ended June 30, 2024, primarily related to workforce reductions[40] Guidance and Future Outlook - The company maintained its full-year 2024 revenue guidance of $2.810 - $2.850 billion and raised the adjusted EBITDA guidance midpoint by $8 million to $335 - $355 million[8] - The company advanced its pipeline by generating evidence for molecular residual disease and multi-cancer screening tests[6]

Core Insights - The SPDR S&P Biotech ETF (XBI) has shown strong performance, gaining 4% in June and 7.3% in July [1] Company Performance - EXACT Sciences Corporation (NASDAQ:EXAS) shares are down 1.1% to $49.14, despite a 21% recovery from its June 25 low of $40.62, but are still 33.5% lower year-to-date in 2024 [1] - Sarepta Therapeutics Inc (NASDAQ:SRPT) stock is down 1.8% to $146.16, having decreased 15.5% from its June 21 high of $173.25, yet remains up 51.6% year-to-date [1] - United Therapeutics Corp. (NASDAQ:UTHR) stock reached a record high of $339.56, following a price-target increase from Leerink to $344, and is up 51.6% in 2024, trading at $333.44 [1]

Core Viewpoint - Exact Sciences has seen a significant decline in stock performance, down 41% this year, despite some analysts projecting a potential upside of 93% based on an average price target of $83.46 [1][2] Company Overview - Exact Sciences specializes in developing innovative cancer diagnostic tests, with its flagship product being Cologuard, a non-invasive colorectal cancer screening test [2] - The company reported revenue of $638 million in the first quarter, reflecting a year-over-year growth of just under 6% [2] Financial Performance - Exact Sciences remains unprofitable, with a net loss per share of $0.60, which is worse than the $0.42 loss reported in the same period last year [3] - The company's marketing and advertising expenses have decreased as a percentage of revenue, from 114% in 2016 to 29.1% last year, which is expected to positively impact margins and the bottom line [6] Competitive Landscape - Exact Sciences faces increasing competition, particularly from Guardant Health, which is nearing FDA approval for its colorectal blood cancer test, potentially impacting Cologuard's market share [3] Future Prospects - The company is working on a next-generation Cologuard that has shown a 30% decrease in false positives in late-stage studies, with expectations for approval next year [4] - There are approximately 60 million eligible patients who are not adhering to recommended screening schedules, indicating a significant market opportunity for Cologuard [4] - Exact Sciences is also developing other products, including multi-cancer screening options, which could be lucrative if approved [6] Marketing Strategy - The company is increasing awareness through aggressive marketing campaigns, which is crucial for addressing the screening gap in colorectal cancer [5]

Core Viewpoint - The stock market is performing strongly in 2024, with the S&P 500 up 12% year-to-date following a 23% increase last year, making it challenging to identify stocks that can sustain this momentum. Analysts at Jefferies Financial Group have identified three stocks expected to deliver double-digit returns over the next 12 months, with price targets ranging from 52% to 120%, averaging an 83% return. Group 1: Flutter Entertainment (FLUT) - Flutter Entertainment's stock dropped due to sports betting scandals and proposed tax hikes, but Jefferies analyst James Wheatcroft believes the reaction is exaggerated and maintains a buy rating with a one-year price target 52% above its current price of $183 per share [2][3]. - The U.S. market is crucial for Flutter, contributing 42% of total revenue, and its FanDuel platform holds a leading 52% market share [2]. - Despite the scandals, FanDuel's growth is expected to continue, and proposed tax increases in Illinois and New Jersey are not anticipated to significantly impact the company [3]. Group 2: Exact Sciences (EXAS) - Exact Sciences has faced a challenging 2024, with shares down 42%, yet Jefferies initiated coverage with a buy rating and a price target of $75 per share, indicating a 78% upside potential [4]. - The company's performance has been affected by weaker-than-expected first-quarter results, but the second half of the year is expected to improve significantly [4]. - Exact Sciences offers a stool-based test for colon cancer, which is more accessible than traditional colonoscopy, alleviating concerns about competition from potential blood tests [5]. Group 3: Pacific Biosciences (PACB) - Jefferies initiated coverage of Pacific Biosciences with a buy rating and a one-year price target of $4 per share, suggesting a 120% upside from its current price of $1.82, although this is lower than the consensus target of $6.38, indicating a potential 250% growth [6][7]. - The company specializes in gene sequencing equipment, which is essential for biotechs in genomics, but has yet to achieve profitability, recording narrower losses in recent years [6][7]. - Pacific Biosciences has shown improvement in its financial performance, with losses narrowing from $1.38 per share to $1.11 per share last year, and further reducing to 29 cents per share in the first quarter of this year [7].

Core Insights - Exact Sciences reported a net loss of $0.50 per share in Q1 2024, which was in line with the Zacks Consensus Estimate but wider than the previous year's loss of $0.42 [2] - The company's consolidated revenues for Q1 2024 were $637.5 million, reflecting a year-over-year increase of 5.8% and exceeding the Zacks Consensus Estimate by 2% [3] Revenue Breakdown - Screening revenues, including laboratory services from Cologuard, were $474.8 million, up 7% year-over-year, driven by increased adoption of Cologuard by healthcare providers [4] - Precision Oncology revenues reached $163 million, marking a 5% year-over-year increase, with Oncotype DX contributing to a 7% global expansion [4] Margin and Expenses - Gross profit rose 4.9% to $467.4 million, but gross margin contracted by 64 basis points to 73.3% [5] - Research and development expenses increased by 15.9% to $110.6 million, while sales and marketing expenses rose by 2.9% to $192.4 million [5] Financial Position - At the end of Q1 2024, Exact Sciences had cash and cash equivalents of $652.1 million, down from $777.6 million at the end of Q4 2023, with no long-term debt reported [6] 2024 Guidance - The company maintained its revenue guidance for 2024, expecting total revenues between $2.81 billion and $2.85 billion, with Screening revenues projected between $2.16 billion and $2.18 billion [7][8] Estimate Trends - Recent estimates for the company have trended downward, with a significant shift of -44.09% noted [8] VGM Scores - Exact Sciences currently holds a poor Growth Score of F and a similar score for momentum, with an overall VGM Score of F, placing it in the bottom 40% for investment strategies [9] Industry Comparison - In comparison, Geron (GERN), another player in the Zacks Medical - Biomedical and Genetics industry, reported a revenue increase of 1400% year-over-year, although it also faced losses [11]

Core Viewpoint - Exact Sciences is facing significant challenges due to rising expenses and intense competition in the colorectal cancer screening market, impacting its profitability and market position [1][2]. Financial Performance - In Q1 2024, Exact Sciences reported a 15.9% year-over-year increase in research and development expenses to $110.6 million, a 2.9% rise in sales and marketing expenses to $192.4 million, and an 11.9% increase in general and administrative expenses to $243.1 million, indicating substantial pressure on the company's bottom line [2]. Competitive Landscape - The company is contending with at least 13 competitors in the liquid biopsy test market for colorectal cancer, many of which have greater financial and developmental resources [2]. Market Strategy - Exact Sciences aims to capture at least 40% of the U.S. colorectal cancer screening market, leveraging strong sales teams, a partnership with Pfizer, and innovative marketing strategies to support the growth of Cologuard [3]. Innovation and Expansion - The company is focused on enhancing its digital infrastructure and diagnostics, with plans to introduce several novel tests in the next 18 months to improve cancer identification and management [4]. Global Reach - Exact Sciences is expanding its global presence, which is expected to provide opportunities for future growth across its range of examinations [4].

Core Insights - Exact Sciences Corporation (EXAS) will present 10 abstracts at the ASCO Annual Meeting, showcasing its screening and diagnostic portfolio, particularly the Oncotype DX test's utility across diverse patient populations [1] - The company aims to set new standards in cancer screening and diagnostics through innovative research and real-world data collection [4] Group 1: Oncotype DX Test Findings - New data indicates that the Oncotype DX Breast Recurrence Score test predicts breast cancer survival across various racial and ethnic groups, demonstrating its prognostic value for breast cancer-specific mortality and predictive benefits of chemotherapy [2] - A study involving over 171,000 breast cancer patients revealed that non-Hispanic Black patients exhibited higher Recurrence Score results and chemotherapy usage, suggesting potential differences in tumor biology affecting outcomes [2] Group 2: Multi-Cancer Early Detection (MCED) - A recent study shows that MCED can lead to earlier tumor detection, resulting in shorter diagnosis times and fewer late-stage diagnoses [3] - Exact Sciences will present real-world results indicating strong adherence and a three-year repeat rate for the Cologuard test, highlighting the effectiveness of digital outreach tactics in promoting screening adherence [3] Group 3: Industry Prospects - The global cancer diagnostics market was valued at $107.45 billion in 2023 and is projected to grow at a CAGR of 6.16% from 2024 to 2030, driven by increasing cancer prevalence and advancements in diagnostic technologies [6][7] Group 4: Recent Developments - In April 2024, Exact Sciences reported positive outcomes for the non-endoscopic Oncoguard Esophagus test, which shows high sensitivity and specificity for detecting esophageal adenocarcinoma and its precursors [8] - The BLUE-C study results published in NEJM demonstrated that the Cologuard Plus test met all performance endpoints, achieving 94% sensitivity for colorectal cancer [8] Group 5: Price Performance - Over the past six months, EXAS stock has declined by 23.4%, contrasting with a 6.2% rise in the industry [9]

Market Overview - The S&P 500 is close to setting a new all-time high, with a year-to-date increase of 11% and a 48% rise since the bull market began in 2022 [1] - Bull markets typically last around 36 months, while bear markets average about 15 months [1] Investment Strategy - Long-term investment is recommended as market downturns are unpredictable, and previous crashes have been followed by significant recoveries [2] Exact Sciences (EXAS) - Exact Sciences has seen a 33% decline in 2024 and is down 50% from its 52-week high, but analysts predict a stronger second half of the year [3][4] - The company leads in colon cancer testing with its Colorguard test, facing competition from Guardant Health's blood test, but the stool sample method remains less invasive [4] - Analysts have a consensus price target of $95 per share for Exact Sciences, indicating a potential growth of 91% [4] RIOT Platforms (RIOT) - RIOT Platforms has a current stock price around $10, with a consensus target price of $18, suggesting a 77% upside [6] - The company is expected to be among the lowest cost producers post-Bitcoin halving, benefiting from favorable power contracts [6] Joby Aviation (JOBY) - Joby Aviation is approaching FAA certification for its eVTOL aircraft, despite current stock prices being under $5 due to market skepticism [7][8] - The company has strong financial health with $924 million in cash and no long-term debt, leading to a consensus price target of $7.67 per share, implying a 56% upside [9]