Exact Sciences Corporation
EXAS
reported third-quarter 2021 net loss of 97 cents, significantly narrower than net loss of $1.35 in the year-ago period. However, the metric lagged the Zacks Consensus Estimate of a loss of 89 cents.
Despite top-line improvement, a significant surge in operating expenses led to the bottom-line debacle in the reported quarter.
Revenues in Detail
Third-quarter consolidated revenues were $456.4 million, up 11.8% year over year. The metric exceeded the Zacks Consensus Estimate by 6.4%.
Segments in Detail
Screening revenues, including laboratory service revenues from Cologuard and revenues from Biomatrica products, were $280.4 million, reflecting a year-over-year increase of 31% on strong contributions from Cologuard rescreen in the 45-49 age group. In the quarter, the highest number of people tested for Cologuard (more than 950,000 tests), a significant increase in the number of lives covered for Cologuard in the 45-49 age group.
Exact Sciences Corporation Price, Consensus and EPS Surprise
Precision Oncology revenues, including laboratory service revenues from global Oncotype products, were $145.4 million, up 59% year over year. Revenues from COVID-19 testing totaled $30.6 million, down 70%.
Margin
In the quarter under review, Exact Sciences’ gross profit (excluding the amortization of acquired intangibles) rose 8.7% to $340.6 million. Gross margin contracted 208 basis points (bps) to 74.6%.
Research and development expenses rose a stupendous 139.4% year over year to $75.4 million. Sales and marketing expenses increased 44.1% to $196.6 million. General and administrative expenses surged 61.4% year over year to $186.5 million.
Adjusted operating expenses were $458.5 million in the third quarter, up 61.7% year over year. Adjusted operating loss totaled $117.9 million, wider than the year-ago operating loss of $29.8 million.
Financial Update
Exact Sciences exited third-quarter 2021 with cash and cash equivalents, and marketable securities of $1.22 billion compared with $1.31 billion at the end of second-quarter 2021.
Long-term debt (excluding the current portion) at the end of third-quarter 2021 was $21.4 million compared with $21.7 million at the end of second-quarter 2021.
2021 Outlook
For 2021, Exact Sciences updated its financial outlook. The company now expects revenues in the range of $1,722-$1,737 million (an improvement from the earlier projected range of $1,705-$1,745 million). The Zacks Consensus Estimate for the same is pegged at $1.73 billion.
For 2021, the company now expects Screening revenues in the range of $1,050-$1,055 million (earlier projection $1,100-$1,125 million), Precision Oncology revenues in the range of $547-$552 million ($530-$540 million) and COVID-19 testing revenues in the band of $125-$130 million ($75-$80 million).
Our Take
Exact Sciences exited the third quarter of 2021 on a mixed note. The widening of quarterly operating and net loss compared to the year-ago period is concerning. Revenues from the COVID-19 tests conducted during the quarter declined year over year. Moreover, the company has lowered its Screening revenue expectations for 2021 due to the rapid rise in Delta variant cases.
However, robust total revenue growth during the reported quarter despite the pandemic-led headwinds is impressive. The company’s legacy Screening business saw significant improvement in revenues during the quarter on Cologuard volume growth. The company registered strong growth in Precision Oncology driven by Oncotype DX Breast in the United States and international market.
Zacks Rank and Key Picks
Exact Sciences currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader medical space that have announced quarterly results are
Medpace Holdings, Inc.
MEDP
,
Thermo Fisher Scientific Inc.
TMO
and
West Pharmaceutical Services, Inc.
WST
.
Medpace, currently carrying a Zacks Rank #1 (Strong Buy), reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%. You can see
the complete list of today’s Zacks #1 Rank stocks here.
Thermo Fisher Scientific reported third-quarter 2021 adjusted EPS of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%. It currently carries a Zacks Rank #1.
West Pharmaceutical Services, carrying a Zacks Rank #2 (Buy), reported third-quarter 2021 adjusted EPS of $2.06, which beat the Zacks Consensus Estimate by 13.2%. Revenues of $706.5 million outpaced the consensus mark by 3.2%.
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