Exact Sciences Q2 Loss Narrower Than Expected, Sales Beat

Exact Sciences Corporation EXAS reported a net loss of 9 cents per share in second-quarter 2024, narrower than the year-ago loss of 45 cents per share. The figure beat the Zacks Consensus Estimate of a loss of 37 cents per share.

Q2 Revenues

Consolidated revenues totaled $699.3 million, up 12.4% on a reported basis and 13% on a core revenue basis. The figure beat the Zacks Consensus Estimate by 1.6%.

Segments in Detail

Screening revenues, including laboratory service revenues from Cologuard and PreventionGenetics, totaled $531.6 million. The figure increased 15% year over year. The upside can be primarily attributed to broad-based momentum in Cologuard adoption by healthcare providers.

Precision Oncology revenues, including laboratory service revenues from global Oncotype products and therapy selection products, were $167.7 million, up 7% year over year and 6% on a core basis. The upside was propelled by Oncotype DX, which expanded 31% internationally.

The company did not recognize any revenues from COVID testing in the second quarter.

Margins

Exact Sciences' gross profit (excluding the amortization of acquired intangibles) rose 9.5% year over year to $509.4 million. The gross margin contracted 191 basis points (bps) to 72.9%.

Research and development expenses rose 16.1% year over year to $120.9 million. Sales and marketing expenses moved up 4.9% to $185.3 million.

General and administrative expenses declined 15.2% year over year to $201.9 million.

Adjusted operating expenses were $508 million, down 2% year over year. Adjusted operating profit totaled $1.4 million against the year-ago operating loss of $53.5 million.

Financial Update

Exact Sciences exited the second quarter with cash and cash equivalents and marketable securities of $946.8 million compared with $652.1 million at the end of the first-quarter 2024.

2024 Guidance

The company maintained its 2024 revenue guidance.

Exact Sciences still expects total revenues for the full year to be in the range of $2.81-$2.85 billion. The Zacks Consensus Estimate for the same is pegged at $2.83 billion.

Precision Oncology revenues are expected to be in the range of $655-$675 million.

The company raised the full-year adjusted EBITDA guidance to $335-$355 million (previously $325-$350 million).

Our Take

Exact Sciences exited the second quarter with both the bottom and top lines beating the Zacks Consensus Estimate. Robust revenues from the Screening and Precision Oncology segments contributed to the top line. The company continues to witness broad-based momentum in Cologuard's adoption and traction within health systems. The growing uptake of Oncotype DX Breast and therapy selection products is a major advantage.

However, escalating expenses and the contraction of the gross margin look discouraging. The company incurred a net loss in the quarter, raising apprehension.

Zacks Rank and Key Picks

Exact Sciences currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the broader medical space are Intuitive Surgical ISRG, Abbott Laboratories, Inc. ABT and Haemonetics HAE.

Intuitive Surgical reported second-quarter adjusted earnings per share of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy).

Intuitive Surgical has a long-term earnings growth rate of 16.1% for 2024 compared with the industry's 14.1%. The company's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.97%.

Abbott, carrying a Zacks Rank #2 (Buy) at present, reported second-quarter earnings of $1.14 per share, which surpassed the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion topped the consensus estimate by 0.3%.

ABT has an earnings growth rate of 10.1% for 2025 compared with the S&P 500's 9.3%. The company beat on earnings in each of the trailing four quarters, the average surprise being 2.34%.

Haemonetics, carrying a Zacks Rank #2 (Buy) at present, reported fourth-quarter fiscal 2024 adjusted EPS of 90 cents, which surpassed the Zacks Consensus Estimate by 2.3%. Revenues of $343.3 million outpaced the consensus estimate by 5%.

HAE has an estimated fiscal 2025 earnings growth rate of 15.4% compared with the industry's 12.5%. The company beat on earnings in each of the trailing four quarters, the average surprise being 13.2%.

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