Exact Sciences Announces Second Quarter 2021 Results

Rhea-AI Summary

Exact Sciences Corp. (EXAS) reported Q2 2021 revenue of $434.8 million, a 62% increase from Q2 2020's $268.9 million. Screening revenue rose 101% to $263.9 million, despite a one-time adjustment of $12.1 million. Precision Oncology revenue increased 34% to $137.8 million, while COVID-19 testing revenue decreased 4% to $33.1 million. The company anticipates annual revenue between $1.705 and $1.745 billion, adjusting prior estimates. However, it reported a net loss of $176.9 million ($1.03 per share).

Positive

• Total revenue increased by 62% year-over-year.
• Screening revenue surged by 101%, indicating strong product demand.
• Precision Oncology revenue rose by 34%, showing growth in this segment.
• Company's cash reserves stood at $1.31 billion.

Negative

• Net loss increased to $176.9 million from $68.1 million year-over-year.
• COVID-19 testing revenue decreased by 4%, indicating potential market challenges.
• Lowered Screening revenue expectations due to a one-time revenue adjustment.

MADISON, Wis., July 28, 2021 /PRNewswire/ -- Exact Sciences Corp. (Nasdaq: EXAS) today announced that the company generated revenue of $434.8 million for the second quarter ended June 30, 2021, compared to $268.9 million for the same period of 2020.

"The Exact Sciences team remained unwavering in their dedication to our mission and delivered record results for Cologuard^® and Oncotype DX^®," said Kevin Conroy, chairman and CEO. "We have a strong foundation in cancer screening and precision oncology and plan to transform cancer care with Cologuard, Oncotype, and our deep pipeline of innovative tests."

Second Quarter 2021 Financial Results

For the three-month period ended June 30, 2021, as compared to the same period of 2020 (where applicable):

• Total revenue was $434.8 million, an increase of 62 percent
• Screening revenue was $263.9 million, an increase of 101 percent
• Screening revenue included a one-time downward adjustment of $12.1 million related to the passing of the contractual deadline to submit claims for previously completed Cologuard tests
• Precision Oncology revenue was $137.8 million, an increase of 34 percent
• COVID-19 testing revenue was $33.1 million, a decrease of 4 percent
• Gross margin including amortization of acquired intangible assets was 69%, and non-GAAP gross margin excluding amortization of acquired intangible assets was 74%
• Net loss was $176.9 million, or $1.03 per share, compared to a net loss of $68.1 million, or $0.45 per share
• EBITDA was $(122.9) million and adjusted EBITDA was $(26.5) million
• Cash, cash equivalents, and marketable securities were $1.31 billion at the end of the quarter

Screening includes laboratory service revenue from Cologuard tests and revenue from Biomatrica products. Precision Oncology includes laboratory service revenue from global Oncotype products and laboratory service revenue from Ashion.

2021 Outlook

• The company anticipates revenue of $1,705-$1,745 million, including Screening revenue of $1,100-$1,125 million, Precision Oncology revenue of $530-$540 million, and COVID-19 testing revenue of $75-$80 million.
• Updated guidance is an increase from previously expected revenue of $1,690-$1,735 million, which included Screening revenue of $1,125-$1,150 million, Precision Oncology revenue of $515-$525 million, and COVID-19 testing revenue of $50-$60 million.
• Lower Screening revenue expectations are primarily due to the one-time downward revenue adjustment of $12.1 million referenced above and COVID-19 dynamics negatively impacting the business, including reduced physician office access for our field sales teams and fewer patient wellness visits.

Non-GAAP Disclosure

In addition to the company's financial results determined in accordance with U.S. GAAP, the company provides non-GAAP measures that it determines to be useful in evaluating its operating performance. The company presents EBITDA, adjusted EBITDA, as well as non-GAAP gross margin and non-GAAP gross profit. EBITDA and adjusted EBITDA consist of net loss after adjustment for those items shown in the table below. The company defines non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, excluding amortization of acquired intangible assets. The amortization of acquisition-related intangible assets used in the calculation of non-GAAP gross profit and non-GAAP gross margin pertain only to the amortization associated with developed technology acquired and recorded through purchase accounting transactions. The amortization of these intangible assets will recur in future periods until such intangible assets have been fully amortized. The company believes that these non-GAAP measures are useful in evaluating the company's operating performance. The company uses this non-GAAP financial information to evaluate ongoing operations and for internal planning and forecasting purposes. Non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental information purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. For example, non-GAAP gross margin and non-GAAP gross profit exclude the amortization of acquired intangible assets although such measures include the revenue associated with the acquisitions. For a reconciliation of these non-GAAP measures to GAAP, see below "EBITDA and Adjusted EBITDA Reconciliations" and "Non-GAAP Gross Profit and Non-GAAP Gross Margin Reconciliations."

Second Quarter Conference Call & Webcast

Company management will host a conference call and webcast on Wednesday, July 28, 2021, at 5 p.m. ET to discuss second quarter 2021 results. The webcast will be available at www.exactsciences.com. Domestic callers should dial 833-235-7650 and international callers should dial +1-647-788-4901. The access code for both domestic and international callers is 3969691.

An archive of the webcast will be available at www.exactsciences.com. A replay of the conference call will be available by calling 800-585-8367 domestically or +1-416-621-4642 internationally. The access code for the replay of the call is 3969691. The webcast, conference call and replay are open to all interested parties.

About Cologuard

The Cologuard test was approved by the FDA in August 2014, and results from Exact Sciences' prospective 90-site, point-in-time, 10,000-patient pivotal trial were published in the New England Journal of Medicine in March 2014. The Cologuard test  is included in the American Cancer Society's (2018) colorectal cancer screening guidelines and the recommendations of the U.S. Preventive Services Task Force (2021) and National Comprehensive Cancer Network (2016). The Cologuard test is indicated to screen adults 45 years of age and older who are at average risk for colorectal cancer by detecting certain DNA markers and blood in the stool. Do not use the Cologuard test if you have had precancer, have inflammatory bowel disease and certain hereditary syndromes, or have a personal or family history of colorectal cancer. The Cologuard test is not a replacement for colonoscopy in high risk patients. The Cologuard test performance in adults ages 45-49 is estimated based on a large clinical study of patients 50 and older. Cologuard performance in repeat testing has not been evaluated. The Cologuard test result should be interpreted with caution. A positive test result does not confirm the presence of cancer. Patients with a positive test result should be referred for diagnostic colonoscopy. A negative test result does not confirm the absence of cancer. Patients with a negative test result should discuss with their doctor when they need to be tested again. Medicare and most major insurers cover the Cologuard test. For more information about the Cologuard test, visit www.cologuardtest.com.

About Oncotype DX

The Oncotype DX^® portfolio of breast, colon and prostate cancer tests applies advanced genomic science to reveal the unique biology of a tumor in order to optimize cancer treatment decisions. In breast cancer, the Oncotype DX Breast Recurrence Score® test is the only test that has been shown to predict the likelihood of chemotherapy benefit as well as recurrence in invasive breast cancer. Additionally, the Oncotype DX Breast DCIS Score^® test predicts the likelihood of recurrence in a pre-invasive form of breast cancer called DCIS. In prostate cancer, the Oncotype DX Genomic Prostate Score^® test predicts disease aggressiveness and further clarifies the current and future risk of the cancer prior to treatment intervention, and the Oncotype DX AR-V7 Nucleus Detect^® test helps determine which patients with metastatic castration-resistant prostate cancer (mCRPC) are resistant to androgen receptor (AR)-targeted therapies. The Oncotype DX AR-V7 Nucleus Detect test is performed by Epic Sciences at its centralized, CLIA-certified laboratory in San Diego and offered exclusively by Exact Sciences. The Oncotype MAP^® Pan-Cancer Tissue test is a rapid, comprehensive tumor profiling panel that aids therapy selection for patients with advanced, metastatic, refractory, or recurrent cancer. With more than 1 million patients tested in more than 90 countries, the Oncotype tests have redefined personalized medicine by making genomics a critical part of cancer diagnosis and treatment. To learn more about Oncotype tests, visit www.OncotypeIQ.com, www.MyBreastCancerTreatment.org or www.MyProstateCancerTreatment.org.  

About Exact Sciences Corp.

A leading provider of cancer screening and diagnostic tests, Exact Sciences relentlessly pursues smarter solutions providing the clarity to take life-changing action, earlier. Building on the success of Cologuard and Oncotype tests, Exact Sciences is investing in its product pipeline to support patients throughout their cancer diagnosis and treatment. Exact Sciences unites visionary collaborators to help advance the fight against cancer. For more information, please visit the company's website at www.exactsciences.com, follow Exact Sciences on Twitter @ExactSciences, or find Exact Sciences on Facebook.

Forward-Looking Statements

This news release 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 and uncertainties that could cause actual results, conditions and events to differ materially from those anticipated. Therefore, you should not place undue reliance on forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expected future operating results; our strategies, positioning, resources, capabilities and expectations for future events or performance; and the anticipated benefits of our acquisitions, including estimated synergies and other financial impacts.

Important factors that could cause actual results, conditions and events to differ materially from those indicated in the forward-looking statements include, among others, the following: uncertainties associated with the coronavirus (COVID-19) pandemic, including its possible effects on our operations, including our supply chain and clinical studies, and the demand for our cancer and COVID-19 testing products and services; our ability to efficiently and flexibly manage our business amid uncertainties related to COVID-19; our ability to successfully and profitably market our products and services; the acceptance of our products and services by patients and healthcare providers; our ability to meet demand for our products and services; the willingness of health insurance companies and other payers to cover our products and services and adequately reimburse us for such products and services; the amount and nature of competition for our products and services; the effects of any judicial, executive or legislative action affecting us or the healthcare system; recommendations, guidelines and quality metrics issued by various organizations regarding cancer screening or our products and services; our ability to successfully develop new products and services and assess potential market opportunities; our ability to effectively enter into and utilize strategic partnerships and acquisitions; our success establishing and maintaining collaborative, licensing and supplier arrangements; our ability to obtain and maintain regulatory approvals and comply with applicable regulations; our ability to manage an international business and our expectations regarding our international expansion and opportunities; the potential effects of foreign currency exchange rate fluctuations and our efforts to hedge such effects; the possibility that the anticipated benefits from our business acquisitions will not be realized in full or at all or may take longer to realize than expected; the possibility that costs or difficulties related to the integration of acquired businesses' operations will be greater than expected and the possibility that integration efforts will disrupt our business and strain management time and resources; the outcome of any litigation, government investigations, enforcement actions or other legal proceedings, including in connection with acquisitions; our ability to retain and hire key personnel including employees at businesses we acquire. The risks included above are not exhaustive. Other important risks and uncertainties are described in the Risk Factors sections of our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q, and in our other reports filed with the Securities and Exchange Commission. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Investor Contact:
Megan Jones
Exact Sciences Corp.
meganjones@exactsciences.com
608-535-8815

Media Contact:
Katie Boyce
Exact Sciences Corp.
kboyce@exactsciences.com
608-710-3903

 

EXACT SCIENCES CORPORATION Selected Unaudited Financial Information Condensed Consolidated Statements of Operations (Amounts in thousands, except per share data)
	Three Months Ended June 30,								Six Months Ended June 30,
	2021				2020				2021				2020
Revenue	$	434,819			$	268,868			$	836,896			$	616,689
Operating expenses
Cost of sales (exclusive of amortization of acquired intangible assets)	113,968				77,892				223,961				159,498
Research and development	106,235				32,673				221,802				76,182
Sales and marketing	194,827				118,862				380,968				286,611
General and administrative	167,629				106,685				435,356				220,676
Amortization of acquired intangible assets	23,824				23,430				47,014				46,769
Total operating expenses	606,483				359,542				1,309,101				789,736
Other operating income	—				23,665				—				23,665
Loss from operations	(171,664)				(67,009)				(472,205)				(149,382)
Other income (expense)
Investment income, net	3,429				2,912				34,617				3,009
Interest expense	(4,652)				(4,300)				(9,268)				(58,904)
Total other income (expense)	(1,223)				(1,388)				25,349				(55,895)
Net loss before tax	(172,887)				(68,397)				(446,856)				(205,277)
Income tax benefit (expense)	(4,025)				305				238,780				2,542
Net loss	$	(176,912)			$	(68,092)			$	(208,076)			$	(202,735)
Net loss per share—basic and diluted	$	(1.03)			$	(0.45)			$	(1.22)			$	(1.36)
Weighted average common shares outstanding—basic and diluted		171,494				149,727				170,469				148,938

 

EXACT SCIENCES CORPORATION Selected Unaudited Financial Information Condensed Consolidated Balance Sheets (Amounts in thousands)
	June 30, 2021				December 31, 2020
Assets
Cash and cash equivalents	$	363,715			$	1,491,288
Marketable securities	943,864				348,699
Accounts receivable, net	226,539				233,185
Inventory	89,809				92,265
Prepaid expenses and other current assets	45,284				33,157
Property, plant and equipment, net	501,908				451,986
Operating lease right-of-use assets	166,914				125,947
Goodwill	2,242,535				1,237,672
Intangible assets, net	2,089,108				847,123
Other long-term assets, net	54,658				63,770
Total assets	$	6,724,334			$	4,925,092
Liabilities and stockholders' equity
Convertible notes, net, current portion	$	312,961			$	312,716
Current liabilities	362,737				320,380
Convertible notes, net, less current portion	1,864,312				1,861,685
Long-term debt, less current portion	21,740				22,342
Other long-term liabilities	439,175				51,342
Operating lease liabilities, less current portion	164,308				121,075
Total stockholders' equity	3,559,101				2,235,552
Total liabilities and stockholders' equity	$	6,724,334			$	4,925,092

 

EXACT SCIENCES CORPORATION Selected Unaudited Financial Information EBITDA and Adjusted EBITDA Reconciliations (Amounts in thousands)
				Three Months Ended June 30,								Six Months Ended June 30,
(In thousands)				2021				2020				2021				2020
Net income (loss)				$	(176,912)			$	(68,092)			$	(208,076)			$	(202,735)
Interest expense				4,652				4,300				9,268				8,085
Depreciation and amortization				45,323				41,056				89,021				80,401
Income tax expense (benefit)				4,025				(305)				(238,780)				(2,542)
EBITDA				$	(122,912)			$	(23,041)			$	(348,567)			$	(116,791)
Stock-based compensation				53,895				38,780				116,963				65,522
Investment income				(3,429)				(2,912)				(34,617)				(3,009)
Acquisition and integration costs (1)				12,857				3,719				131,251				11,768
Asset acquisition (2)				33,074				—				85,337				—
Loss on settlement of convertible notes (3)				—				—				—				50,819
CARES Act Funding (4)				—				(23,665)				—				(23,665)
Reduction-in-force severance (5)				—				2,198				—				2,198
Adjusted EBITDA				$	(26,515)			$	(4,921)			$	(49,633)			$	(13,158)
(1) Represents acquisition and related integration costs incurred as a result of the Company's business combinations and asset acquisitions, a majority of which relates to the acquisition of Thrive Earlier Detection Corp. ("Thrive") for the three and six months ended June 30, 2021. Incremental stock-based compensation including the fair value of assumed stock awards was $2.4 million and $102.8 million for the three and six months ended June 30, 2021, respectively. Incremental stock-based compensation including the fair value of assumed stock awards was $1.3 million and $4.1 million for the three and six months ended June 30, 2020. Legal and other professional service fees were $4.1 million and $19.3 million for the three and six months ended June 30, 2021, respectively. Legal and other professional service fees were $2.4 million and $7.7 million for the three and six months ended June 30, 2020, respectively. Expense of $6.3 million and $9.2 million was incurred for the three and six months ended June 30, 2021 resulting from the remeasurement of the contingent consideration liabilities in connection with business combinations.
(2) During the first quarter of 2021, the Company acquired a worldwide exclusive license to the proprietary Targeted Digital Sequencing ("TARDIS") technology from The Translational Genomics Research Institute ("TGen"). The acquisition was treated as an asset acquisition under U.S. GAAP and resulted in a $52.3 million charge to research and development expense. During the second quarter of 2021, the Company acquired PFS Genomics, Inc. The acquisition was treated as an asset acquisition under U.S. GAAP and resulted in a $33.1 million charge to research and development expense.
(3) The loss on settlement of convertible notes represents the difference between (i) the fair value of the consideration transferred and (ii) the sum of the carrying value of the debt at the time of repurchase for $100 million of convertible notes with an original maturity of January 15, 2025.
(4) As part of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), the Company received $23.7 million from the United States Department of Health and Human Services Provider Relief Fund provided to eligible healthcare providers. The CARES Act funds are meant to offset the implications of the COVID-19 pandemic which include increases in the Company's costs and lost revenues.
(5) Represents severance costs as a result of proactive measures the Company put in place to address the impact of the COVID-19 pandemic. The severance cost resulting from this workforce reduction was $2.2 million for the three months and six months ended June 30, 2020.

 

EXACT SCIENCES CORPORATION Selected Unaudited Financial Information Non-GAAP Gross Profit and Non-GAAP Gross Margin Reconciliations (Amounts in thousands)
						Three Months Ended June 30,								Six Months Ended June 30,
						2021				2020				2021				2020
Revenue						$	434,819			$	268,868			$	836,896			$	616,689
Cost of sales (exclusive of amortization of acquired intangible assets)						113,968				77,892				223,961				159,498
Amortization of acquired intangible assets (1)						21,188				20,555				41,742				41,018
Gross profit						$	299,663			$	170,421			$	571,193			$	416,173
Gross margin						69%				63%				68%				67%
Amortization of acquired intangible assets (1)						21,188				20,555				41,742				41,018
Non-GAAP gross profit						$	320,851			$	190,976			$	612,935			$	457,191
Non-GAAP gross margin						74%				71%				73%				74%
(1) Includes only amortization of intangible assets identified as developed technology assets through purchase accounting transactions, which otherwise would have been allocated to cost of sales.

 

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SOURCE EXACT SCIENCES CORP

FAQ

What were Exact Sciences' Q2 2021 revenue results?

Exact Sciences reported $434.8 million in revenue for Q2 2021, a 62% increase from $268.9 million in Q2 2020.

What is the revenue breakdown for Exact Sciences in Q2 2021?

Q2 2021 revenue consisted of $263.9 million from Screening, $137.8 million from Precision Oncology, and $33.1 million from COVID-19 testing.

What is the net loss reported by Exact Sciences in Q2 2021?

The company reported a net loss of $176.9 million, or $1.03 per share, for Q2 2021.

What is Exact Sciences' revenue outlook for 2021?

Exact Sciences anticipates revenue between $1.705 billion and $1.745 billion for the full year 2021.

How did COVID-19 impact Exact Sciences' business in Q2 2021?

COVID-19 dynamics negatively affected the business, leading to a 4% decline in COVID-19 testing revenue and lower Screening revenue expectations.