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Exact Sciences (EXAS) Q4 Earnings Top Estimates, Margin Falls

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Exact Sciences Corporation (EXAS - Free Report) reported a net loss of 72 cents per share in fourth-quarter 2022, narrower than the net loss of $1.28 per share in the year-ago quarter. The metric was also narrower than the Zacks Consensus Estimate of a loss of 90 cents.

For the full year, the net loss was $3.54 per share, up 1.7% from the year-ago period’s levels. The figure lagged the Zacks Consensus Estimate by 3.5%.

Revenues in Detail

Fourth-quarter consolidated revenues were $522.9 million, up 16.7% year over year. The metric exceeded the Zacks Consensus Estimate by 6.5%.

Total revenues for 2022 were $2.08 billion, up 17.9% from the year-ago period’s levels. The figure lagged the Zacks Consensus Estimate by 8%.

Segments in Detail

Screening revenues, including laboratory service revenues from Cologuard, PreventionGenetics and immaterial revenues from Biomatrica products, were $403.5 million. The figure increased 45% year over year(up 42% excluding the PreventionGenetics acquisition).

The upside was driven by impressive contributions from PreventionGenetics and Cologuard volume growth. In the quarter, 10,000 new healthcare providers ordered Cologuard.

Exact Sciences Corporation Price, Consensus and EPS Surprise

 

 

Precision Oncology revenues, including laboratory service revenues from global Oncotype products and therapy selection products, were $143.4 million, down 4% year over year (up 1% excluding the Oncotype DX Genomic Prostate Score test that was divested on Aug 2, 2022, and the impact of foreign exchange rates).

Revenues from COVID-19 testing totaled $6 million, down 87% year over year.

Margin

In the quarter under review, Exact Sciences’ gross profit (excluding the amortization of acquired intangibles) rose 14.4% to $405.8 million. However, the gross margin contracted 148 basis points (bps) to 73%.

Research and development expenses rose 6.5% year over year to $94.3 million. Sales and marketing expenses fell 26.1% to $210.2 million. General and administrative expenses rose 8.1% year over year to $193.9 million.

Adjusted operating expenses were $498.4 million in the fourth quarter, down 9.7% year over year. Adjusted operating loss totaled $92.5 million, narrower than the year-ago operating loss of $197.4 million.

Financial Update

Exact Sciences exited 2022 with cash and cash equivalents and marketable securities of $242.5 million compared with $315.5 million at the end of 2021.

The company reported long-term debt of $50 million on its balance sheet at the end of 2022.

2023 Outlook

The company expects revenues in the range of $2,265-$2,315 million. The Zacks Consensus Estimate for the same is pegged at $2.26 billion.

For 2023, the company expects its Screening revenues in the range of $1,660-$1,690 million. The company expects Precision Oncology revenues in the range of $600-$620 million. COVID-19 testing revenues are expected to be $5 million.

Our Take

Exact Sciences exited the fourth quarter of 2022 with better-than-expected results. The decline in quarterly loss compared to the year-ago period was encouraging. Robust revenues from the Screening and Precision Oncology segments contributed to the third-quarter top line. The company noted that more than 302,000 healthcare providers ordered Cologuard from its launch till the end of September. The growing uptake of the company’s Oncotype DX Breast and therapy selection products are major advantages.

However, the decline in COVID-19 sales hampered top-line growth. The company incurred an operating loss in the quarter under review, raising apprehension. Contraction in gross margin on escalating costs does not bode well.

Zacks Rank and Other Key Picks

Exact Sciences currently carries Zacks Rank #2 (Buy).

A few other top-ranked stocks in the broader medical space that have announced quarterly results are Cardinal Health, Inc. (CAH - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .

Cardinal Health, carrying a Zacks Rank #2, reported second-quarter fiscal 2023 adjusted EPS of $1.32, beating the Zacks Consensus Estimate by 16.8%. Revenues of $51.47 billion outpaced the consensus mark by 2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 6.4%.

McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.

McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.

Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.

Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.

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