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Why Is Exact Sciences (EXAS) Down 9.4% Since Last Earnings Report?
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A month has gone by since the last earnings report for Exact Sciences (EXAS - Free Report) . Shares have lost about 9.4% 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 catalysts.
Exact Sciences Q2 Loss Widens, Margins Down
Exact Sciences 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.
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).
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -14.66% due to these changes.
VGM Scores
At this time, Exact Sciences has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. 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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Exact Sciences has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Exact Sciences (EXAS) Down 9.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Exact Sciences (EXAS - Free Report) . Shares have lost about 9.4% 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 catalysts.
Exact Sciences Q2 Loss Widens, Margins Down
Exact Sciences 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.
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).
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -14.66% due to these changes.
VGM Scores
At this time, Exact Sciences has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. 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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Exact Sciences has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.