It has been about a month since the last earnings report for Exact Sciences (EXAS Quick QuoteEXAS - Free Report) . Shares have lost about 14.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Exact Sciences due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Exact Sciences Q3 Loss Narrows, Revenues Beat Estimates

Exact Sciences 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.

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).

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

At this time, Exact Sciences has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Exact Sciences has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.