Exact Sciences Corporation
’s
EXAS
legacy Screening business is witnessing significant improvement, buoyed by Cologuard volume growth. However, escalating costs and stiff competition are concerning. The stock currently carries a Zacks Rank #3 (Hold).
Exact Sciences exited the first quarter of 2022 on a bullish note, with better-than-expected results. Robust revenue growth in the Screening and Precision Oncology segments contributed to the first-quarter top line. The company’s legacy Screening business was driven by impressive Cologuard volume growth and revenue contributions from the PreventionGenetics acquisition. Meanwhile, the Precision Oncology business saw an improvement in revenues due to significant Oncotype DX breast volume growth. The Precision Oncology team tested a record number of patients with the Oncotype DX breast test during the first quarter, delivering life-changing information to more than 40,000 people.
The company’s latest agreement to acquire OmicEra Diagnostics, a Germany-based emerging leader in proteomics, biomarker discovery, buoys optimism.
The company is currently focusing on three areas to enhance Cologuard growth. Building the best and most effective commercial organization in healthcare by investing in the leadership team, training, and sales force effectiveness is the first strategy. The second strategy revolves around improving the customer experience by making it simpler to order Cologuard electronically and continue rescreening patients every three years while the final strategy is screening more people starting at age 45 to catch cancer earlier.
Exact Sciences Corporation Price
Exact Sciences Corporation price
|
Exact Sciences Corporation Quote
In first-quarter 2022, the company saw an increase in the number of completed Cologuard tests, led by enhanced productivity within the sales team, an increase in patients being rescreened with the Cologuard test. The growing number of first-time Cologuard users in the 45-49 age group and higher electronic ordering rates also contributed to the rise.
To spread awareness about the importance of early detection, the company collaborated with Katie Couric on a national campaign titled “Mission to Screen” in March 2022. The campaign will advocate the urgent need for individuals to get screened for colon cancer.
On the flip side, Exact Sciences recorded an increase in quarterly loss compared to the year-ago period. Revenues from the COVID-19 tests conducted during the quarter declined year over year. Contraction in gross margin is discouraging. Moreover, the company incurred an operating loss in the quarter under review. A tough competitive landscape is an added concern.
According to Exact Sciences, the Screening and Precision Oncology businesses have been negatively impacted by the ongoing COVID-19 pandemic, although a large part of it has recovered. The company expects any future outbreaks of COVID-19 and the emergence of new variants to diminish access to healthcare provider offices. Further, pandemic-led cost inflation and supply-chain disruptions continue to impact the company’s operations, with the ongoing inflationary pressure leading to an increase in personnel-related costs.
Further, Exact Science has adopted several strategies to improve its revenue performance. These include portfolio expansion and penetration in the international arena. So far, this has significantly escalated costs and operating expenses for the company.
In the first quarter, Exact Sciences’ gross margin contracted on a 22.5% uptick in the cost of sales. Meanwhile, sales and marketing expenses increased 24.7% year over year in the quarter under review. These escalating costs are building pressure on the company’s bottom line.
Over the past year, Exact Sciences has underperformed its
industry
. The stock has declined 67% compared with the industry’s 39.3% fall.
Key Picks
A few better-ranked stocks in the broader medical space that investors can consider are
AMN Healthcare Services, Inc.
AMN
,
Novo Nordisk
NVO
and
Omnicell, Inc.
OMCL
.
AMN Healthcare has a long-term earnings growth rate of 1.1%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 15.6%, on average. It currently sports a Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry in the past year. AMN has gained 18.2% against the industry’s 50.8% fall.
Novo Nordisk has a long-term earnings growth rate of 14.5%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 7.6%, on average. It currently has a Zacks Rank #2 (Buy).
Novo Nordisk has outperformed its industry in the past year. NVO has gained 31.2% against the industry’s 19.3% growth.
Omnicell has an estimated long-term growth rate of 20%. Omnicell’s earnings surpassed estimates in three of the trailing four quarters and missed the same in the other, the average beat being 13.4%. It carries a Zacks Rank #2 at present.
Omnicell has outperformed its industry in the past year. OMCL has lost 17.9% compared with the industry’s 56.3% fall over the past year.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
