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Why Is Exact Sciences (EXAS) Down 8.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for Exact Sciences (EXAS - Free Report) . Shares have lost about 8.9% 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 Q4 Earnings, Revenues Top Estimates
Exact Sciences announced fourth-quarter 2020 results, incurring adjusted loss per share (adjusted for acquisition and integration costs and charges related to asset acquisition) of 9 cents compared with adjusted loss of 37 cents in the year-ago period. However, the adjusted loss was narrower than the Zacks Consensus Estimate of a loss of 19 cents per share.
GAAP loss per share for the fourth quarter was $2.79 compared to the year-ago earnings of 54 cents per share.
Full-year GAAP loss per share was $5.61, wider than the year-earlier loss per share of 64 cents.
Revenues in Detail
The fourth-quarter consolidated revenues (post the Genomic Health business integration) were $466.3 million, up 57.8% year over year. The metric exceeded the Zacks Consensus Estimate marginally by 0.1%.
Full-year revenues were $1.49 billion, reflecting a 70.2% increase from the year-ago period. Revenues surpassed the Zacks Consensus Estimate by 1.4%.
Segments in Detail
Screening revenues, which include laboratory service revenues from Cologuard and revenues from Biomatrica products, were $249.7 million, reflecting a year-over-year increase of 9% on the back of Cologuard volume growth.
Precision Oncology revenues, which include laboratory service revenues from global Oncotype products, were $117.6 million. Revenues from COVID-19 testing were $99.1 million.
Margin
In the quarter under review, Exact Sciences’ gross profit (excluding the amortization of acquired intangibles) rose 62.8% to $366.6 million. Gross margin expanded 243 basis points (bps) to 78.6% despite a 41.7% surge in total cost.
Research and development expenses surged stupendously by 932.8% year over year to $446.4 million. Sales and marketing expenses rose 39.2% to $166.8 million. General and administrative expenses inched up 0.7% to $145.5 million year over year.
Adjusted operating expenses were $758.7 million in the fourth quarter, up 146.8% year over year. Adjusted operating loss totaled $392.1 million, wider than the year-ago operating loss of $82.3 million.
Financial Update
Exact Sciences exited 2020 with cash and cash equivalents, and marketable securities of $1.84 billion compared with $323.7 million at the end of 2019.
Long-term debt (excluding the current portion) at the end of 2020 was $22.3 million compared with $24 million at the end of 2019.
2021 Outlook
Exact Sciences, due to the persisting pandemic-led uncertainties, has not provided any financial outlook for 2021.
However, the company expects Screening revenues to decline sequentially in the first quarter of 2021 due to typical seasonal trends. Per the company, this fall in revenues will be more pronounced in the first quarter of 2021 due to the spike in COVID-19 cases toward the year-end which lasted through January and is now narrowing down slowly.
Further, Precision Oncology revenues in the first quarter of 2021 are expected to register modest sequential growth on the back of continued recovery in breast cancer diagnosis. However, based on recent trends in COVID-19 cases, the company expects the COVID-19 testing revenues to be down sequentially in the first quarter.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -318.18% due to these changes.
VGM Scores
Currently, Exact Sciences has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Exact Sciences has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Why Is Exact Sciences (EXAS) Down 8.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Exact Sciences (EXAS - Free Report) . Shares have lost about 8.9% 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 Q4 Earnings, Revenues Top Estimates
Exact Sciences announced fourth-quarter 2020 results, incurring adjusted loss per share (adjusted for acquisition and integration costs and charges related to asset acquisition) of 9 cents compared with adjusted loss of 37 cents in the year-ago period. However, the adjusted loss was narrower than the Zacks Consensus Estimate of a loss of 19 cents per share.
GAAP loss per share for the fourth quarter was $2.79 compared to the year-ago earnings of 54 cents per share.
Full-year GAAP loss per share was $5.61, wider than the year-earlier loss per share of 64 cents.
Revenues in Detail
The fourth-quarter consolidated revenues (post the Genomic Health business integration) were $466.3 million, up 57.8% year over year. The metric exceeded the Zacks Consensus Estimate marginally by 0.1%.
Full-year revenues were $1.49 billion, reflecting a 70.2% increase from the year-ago period. Revenues surpassed the Zacks Consensus Estimate by 1.4%.
Segments in Detail
Screening revenues, which include laboratory service revenues from Cologuard and revenues from Biomatrica products, were $249.7 million, reflecting a year-over-year increase of 9% on the back of Cologuard volume growth.
Precision Oncology revenues, which include laboratory service revenues from global Oncotype products, were $117.6 million. Revenues from COVID-19 testing were $99.1 million.
Margin
In the quarter under review, Exact Sciences’ gross profit (excluding the amortization of acquired intangibles) rose 62.8% to $366.6 million. Gross margin expanded 243 basis points (bps) to 78.6% despite a 41.7% surge in total cost.
Research and development expenses surged stupendously by 932.8% year over year to $446.4 million. Sales and marketing expenses rose 39.2% to $166.8 million. General and administrative expenses inched up 0.7% to $145.5 million year over year.
Adjusted operating expenses were $758.7 million in the fourth quarter, up 146.8% year over year. Adjusted operating loss totaled $392.1 million, wider than the year-ago operating loss of $82.3 million.
Financial Update
Exact Sciences exited 2020 with cash and cash equivalents, and marketable securities of $1.84 billion compared with $323.7 million at the end of 2019.
Long-term debt (excluding the current portion) at the end of 2020 was $22.3 million compared with $24 million at the end of 2019.
2021 Outlook
Exact Sciences, due to the persisting pandemic-led uncertainties, has not provided any financial outlook for 2021.
However, the company expects Screening revenues to decline sequentially in the first quarter of 2021 due to typical seasonal trends. Per the company, this fall in revenues will be more pronounced in the first quarter of 2021 due to the spike in COVID-19 cases toward the year-end which lasted through January and is now narrowing down slowly.
Further, Precision Oncology revenues in the first quarter of 2021 are expected to register modest sequential growth on the back of continued recovery in breast cancer diagnosis. However, based on recent trends in COVID-19 cases, the company expects the COVID-19 testing revenues to be down sequentially in the first quarter.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -318.18% due to these changes.
VGM Scores
Currently, Exact Sciences has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Exact Sciences has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.