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Exact Sciences (EXAS) Q4 2021 Earnings Preview

2022-02-22T15:17:00.002-06:00

Exact Sciences (EXAS) Q4 2021 Earnings Preview

February 22, 2022

From: Financial Inversion

Background

Exact Sciences has been on my radar and in my portfolio since 2013. Back then they were completing development of their non-invasive colon cancer test (Cologuard). They have since gotten FDA approval, they received a good CMS reimbursement, they got included on the US Preventative Screening Task Force (USPSTF) recommendations see here under sDNA-FIT. This USPSTF rating was critical an A or B rating from the USPSTF because it meant that under the Affordable Care Act (ACA) insurance companies would have to cover the test. Since those early days Exact Sciences has broadened their scope significantly through further research and through many acquisitions.

This broadening in scope has actually caused me to lose some of the more intimate touch I felt with the company and its business. Simply put the company is now too complex for me to follow as well as I would like. Big picture highlights is that Exact is progressing toward becoming a broad cancer diagnostic testing company (e.g. their addition of Oncotype Dx, see their current slide deck here). Exact also has a long term goal to be a player in the holy grail of caner detection a multi-cancer blood screening test. Many companies are working on this and they all are years away from a successful product. In the mean-time Exact is currently generating revenue from Cologaurd, Oncotype Dx, and a nice short term pivot to Covid-19 testing. Exact revealed that they are one of the frontrunners for this technology with their release back in fall 2020 at the Cowen Liquid Biopsy Summit (Exact slides here and see image from slide 17 below).

Exact Sciences past Quarter results Q3 and Q4 Guide

Key headlines from their Q3 release:

Total revenue was $456.4 million, an increase of 12 percent
Screening revenue was $280.4 million, an increase of 31 percent
Precision Oncology revenue was $145.4 million, an increase of 59 percent
COVID-19 testing revenue was $30.6 million, a decrease of 70 percent
Net loss was $166.9 million, or $0.97 per share, compared to a net loss of $202.5 million, or $1.35 per share
EBITDA was $(119.9) million, and adjusted EBITDA was $(16.3) million
Cash, cash equivalents, and marketable securities were $1.22 billion at the end of the quarter

Full Year 2021 Original guide as of Q3

The company anticipates revenue of $1,722-$1,737 million during 2021, including Screening revenue of $1,050-$1,055 million, Precision Oncology revenue of $547-$552 million, and COVID-19 testing revenue of $125-$130 million.
Updated revenue guidance has been narrowed toward the high end of our previously expected range of $1,705-$1,745 million, which included Screening revenue of $1,100-$1,125 million, Precision Oncology revenue of $530-$540 million, and COVID-19 testing revenue of $75-$80 million.

Preliminary Q4 results as of 1/9/2022

Total revenue between $472 million and $475 million, an increase of 2 percent
Total revenue, excluding COVID-19 testing, increased 16 percent
Screening revenue between $277 million and $278 million, an increase of 11 percent
Precision Oncology revenue between $148.5 million and $149.5 million, an increase of 27 percent
COVID-19 testing revenue between $46.5 million and $47.5 million, a decrease of 53 percent

Preliminary 2021 Financial Results as of 1/9/2022

Total revenue between $1,765.3 million and $1,768.3 million, an increase of 18 percent
Total revenue, excluding COVID-19 testing, increased 29 percent
Screening revenue between $1,061.6 million and $1,062.6 million, an increase of 30 percent
Precision Oncology revenue between $561.1 million and $562.1 million, an increase of 27 percent
COVID-19 testing revenue between $142.5 million and $143.5 million, a decrease of 39 percent

Analysis and Expectations for Earnings on 2/22/2022

I expect Exact to report approximately what they preliminarily released on 1/09/2022. The topline revenue of $1768 mil beats their guide of $1737 mil at their Q3 release (+1.7% beat). Overall that is acceptable for me, their screening revenue has been hampered by limited doctors visits due to Covid. Conversely, during rough Covid stretches their Covid-19 testing revenue appears to go up. Perhaps this is the reason behind the early Q4 release.

I am optimistic that we will finally start to see that reacceleration of screening revenue in 2022 picking up where we left off in Q1 2020. The tide of Covid related limitations appears to have turned and I expect 2022 to see that shift impact doctors visits and thus Cologuard sales. See this graph of quarterly revenue where we were seeing some nice acceleration prior to Q2 2020.

I expect screening revenue to be the biggest driver of revenue for 2022 and I am keenly interested in the screening revenue guide for 2022. Here is the revenue splits for the past few years.

Projections

I think a decent year in 2022 would see Screening revenues and Onco revenues grow ~8% each quarter and ~36% for the year. That would give a full revenue estimate of $2080 mil with $1353 mil from Screening and $728 from Onco. I think these numbers could upltimately be exceeded with good conditions: evaporation of Covid limitations, doctors visits close to the norm, unraveling of colon screening backlog, expansion of covered age groups for Cologaurd. However, I do not expect Exact management to guide to the rosiest picture. I expect a reasonable reacceleration with the potential to raise guidance throughout the year if conditions develop.

Still alive

2022-01-28T18:51:00.003-06:00

Unlock the secrets to high finance http://financialinversion.com/ A place to learn how the deck is really stacked.

A little known fact

2010-11-16T22:56:00.002-06:00

A B-25 bomber crashed into the 79th floor of the Empire State Building on July 28, 1945

What to do...

2010-11-15T22:19:00.000-06:00

So Im out of school for another half a year or so, should I get a full time job or just keep working part of the time and really enjoying life?

Any thoughts?

Anyone else in a similar situation?

Bookin'

2010-11-11T16:12:00.001-06:00

*Updated List and I'm off to the library, wish me luck
I'm in the hunt for some more books to read. So far on my to read list:

Plato's dialogues
Zen and the Art of Motorcycle Maintenance
*Breakfast of Champions
*Sirens of Titans
*Patrick O'Brian
*Crooked Little Veins
*American gods
*Hunter S Thompson
*Who Moved My Cheese
*Jonathan Livingston Seagul

Anyone else have a must read I should add?
It can be ANY genre, I'm not picky :)

Thanks in advance

Waitin' on Google

2010-11-08T22:24:00.000-06:00

In a week or two I should be getting my first check from Google! If all goes according to plan it should be to the tune of almost $200. Though they sure do have a sneaky way of waiting as long as possible before they actually pay you.

One more day!

2010-11-01T21:12:00.000-05:00

Then no more freaking political attack ads, no more phone calls (6+ a day and we're on the no call list wtf), and no more spam mail/email. What a horrible election process, national organizations (mostly conservative) pumping millions of dollars into our state election campaigns.

I can hardly wait!

Anyone else been bombarded for the mid terms?

I applaud this man!

2010-10-28T13:03:00.000-05:00

It doesn't matter what your views are but those women are the types of people who you would even hate to have on your side. They just don't get it.

Road rage...

2010-10-26T14:07:00.000-05:00

People who suffer from road rage often see it as a way venting or releasing their anger. They see it as cathartic but thats only in the short term. In reality anger is like anything you repeatedly do, it can become a habit. Therefore becoming excessively angry on the road is only making it easier to become more angry in the future, you are just encouraging more stress not releasing it.

Important credit tip

2010-10-20T21:17:00.000-05:00

Most people realize having a good credit score is fairly important, right?

Did you know that checking your credit score too many times will actually lower your score?

Yeah, banks and lenders are a bunch of jerks, not surprising.

A quote!

2010-10-19T19:11:00.001-05:00

Try to look unimportant; they may be low on ammo.
- Infantry Journal

I guess I should make a new post

2010-10-17T18:14:00.000-05:00

Here is something most people don't know, although its not that really useful. The US had 13 states originally right, but which one was the 14th. Any guesses?

Well, it turns out is Vermont.

Thank you that is all

The Onion News gets me every time!

2010-10-12T12:26:00.000-05:00

Back and better than ever

2010-10-12T08:44:00.000-05:00

Computer issues + being gone this weekend left me unable to post for awhile. I missed this place and I'm glad to be back.

Here's something a bit embarrassing

2010-10-06T15:35:00.000-05:00

When I first started using the internet I thought that the expression " lol " was a person throwing their hands up in the air over their head. I had seen people making smileys and faces so I thought this was mimicking an action as well.

I even argued about it with a friend who said it was laugh out loud, I thought mine made more sense, lol. Ah those were the days!

Did anyone else think this way or was it just me?

Did you know....

2010-10-05T10:21:00.000-05:00

That cat urine glows under a black light? This actually goes for most any bodily fluids even human blood, urine and semen. This is mostly due to phosphates and various other fluorescent compounds. Use this information however you like :)

2010-10-02T11:34:00.001-05:00

Anyone who has never made a mistake has never tried anything new.

Albert Einstein

100 Followers!

2010-10-01T10:46:00.002-05:00

Should cross this today, at 99 right now. I love all the encouraging comments, I have personally used all of these quotes to help motivate myself and I'm glad I can help pass them along to more people!

-Crammarc

This probably sums up the theme of Walden

2010-09-30T22:12:00.000-05:00

I would rather sit on a pumpkin and have it all to myself, than be crowded on a velvet cushion.
Thoreau

Sadly this continues to ring true...

2010-09-29T21:43:00.000-05:00

Only the dead will know the end of the war.
- Plato

Here's one from a football coach

2010-09-28T08:00:00.001-05:00

Winning is a habit. Unfortunately, so is losing.
-Vince Lombardi

Good Ol' Teddy

2010-09-26T21:13:00.002-05:00

Far better is it to dare mighty things, to win glorious triumphs, even though checkered by failure...than to rank with those poor spirits who neither enjoy much nor suffer much, because they live in a gray twilight that knows not victory nor defeat.
Theodore Roosevelt

Another good motivational quote

2010-09-25T07:52:00.000-05:00

Failures do what is tension relieving, while winners do what is goal achieving.
Dennis Waitley

This one fits all too well in my life. Helped me stop spending my whole day playing video games.

Hope these help a few people, I know they have helped motivate me

2010-09-23T16:29:00.000-05:00

We are what we repeatedly do. Excellence, therefore,
is not an act but a habit.
Aristotle

Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can help the man with the wrong mental attitude.
Thomas Jefferson

A few of my athletic goals

2010-09-21T21:32:00.000-05:00

Run a mile in 5 minutes

Dunk a basketball on a regulation hoop (Im only 5'11" and white, it may not be possible)

Finish a triathlon

Any other good ones?