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Exact Sciences (EXAS) Q2 Loss Wider Than Expected, Revenues Top

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Exact Sciences Corporation (EXAS - Free Report) reported second-quarter 2021 net loss of $1.03, significantly wider than net loss of 45 cents in the year-ago period and the Zacks Consensus Estimate of a loss of 72 cents per share.

Despite strong top-line improvement, a significant surge in operating expenses led to the bottom-line debacle in the reported quarter.

Revenues in Detail

Second-quarter consolidated revenues were $434.8 million, up 61.7% year over year. The metric exceeded the Zacks Consensus Estimate by 3.8%.

Segments in Detail

Screening revenues, which include laboratory service revenues from Cologuard and revenues from Biomatrica products, were $263.9 million, reflecting a year-over-year increase of 101%. Screening revenues 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. In the quarter, the highest number of people tested for Cologuard (more than 60,000 tests), a significant increase in the number of lives covered for Cologuard in the 45 to 49 age group.

Exact Sciences Corporation Price, Consensus and EPS Surprise

Exact Sciences Corporation Price, Consensus and EPS Surprise

Exact Sciences Corporation price-consensus-eps-surprise-chart | Exact Sciences Corporation Quote

Precision Oncology revenues, which include laboratory service revenues from global Oncotype products, were $137.8 million, up 34% year over year. Revenues from COVID-19 testing totaled $33.1 million, down 4%.

Margin

In the quarter under review, Exact Sciences’ gross profit (excluding the amortization of acquired intangibles) rose 68% to $320.9 million. Gross margin expanded 276 basis points (bps) to 73.8% despite a 46.3% surge in total cost.

Research and development expenses rose a stupendous 225.1% year over year to $106.2 million. Sales and marketing expenses increased 63.9% to $194.8 million. General and administrative expenses surged 57.1% year over year to $167.6 million.

Adjusted operating expenses were $468.7 million in the second quarter, up 81.5% year over year. Adjusted operating loss totaled $147.8 million, wider than the year-ago operating loss of $67.2 million.

Financial Update

Exact Sciences exited second-quarter 2021 with cash and cash equivalents, and marketable securities of $1.31 billion compared with $1.38 billion at the end of first-quarter 2021.

Long-term debt (excluding the current portion) at the end of second-quarter 2021 was $21.7 million compared with $22 million at the end of first-quarter 2021.

2021 Outlook

For 2021, Exact Sciences updated its financial outlook. The company now expects revenues in the range of $1,705-$1,745 million (an improvement from the earlier-projected range of $1,690-$1,735 million). The Zacks Consensus Estimate for the same is pegged at $1.72 billion.

For 2021, the company now expects Screening revenues in the range of $1,100-$1,125 million (from earlier projection of $1,125-$1,150 million), Precision Oncology revenues in the range of $530-$540 million ($515-$525 million), and COVID-19 testing revenues in the band of $75-$80 million ($50-$60 million).

Our Take

Exact Sciences exited the second quarter of 2021 on a mixed note. The widening of quarterly operating and net loss compared to the year-ago period is concerning. Revenues from the COVID-19 tests conducted during the quarter declined year over year.

However, robust total revenue growth during the quarter, despite the pandemic-led headwinds, is impressive. The company’s legacy Screening business saw significant improvement in revenues during the quarter on Cologuard volume growth. Expansion of gross margin bodes well as well.

Zacks Rank and Key Picks

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

Some better-ranked stocks from the same space include AMN Healthcare Services Inc (AMN - Free Report) , Catalent, Inc. (CTLT - Free Report) and Globus Medical, Inc. (GMED - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank(Strong Buy) stocks here.

The Zacks Consensus Estimate for AMN Healthcare’s second-quarter 2021 adjusted EPS is currently pegged at $1.47. The consensus estimate for second-quarter revenues is pegged at $829.4 million.

The Zacks Consensus Estimate for Catalent’s fourth-quarter fiscal 2021 adjusted EPS is currently pegged at $1.04. The consensus estimate for fourth-quarter revenues is pinned at $1.13 billion.

For Globus Medical, the Zacks Consensus Estimate for second-quarter 2021 adjusted EPS is currently pegged at 45 cents. The consensus estimate for revenues stands at $226.96 million.

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