Exact Sciences (EXAS) Aided by Innovation, Strategic Buyouts
Exact Sciences EXAS is continually making significant progress with its Cologuard test. Strategic innovations are boosting its growth. The stock carries a Zacks Rank #2 (Buy).
The company is currently focusing on three areas to enhance Cologuard growth. Building the best and most effective commercial organization in healthcare by investing in the leadership team, training, and sales force effectiveness is the first strategy. Secondly, improving the customer experience by making it simpler to order Cologuard electronically and continue rescreening patients every three years; and third, screening more people starting at age 45 to catch cancer earlier.
In terms of the latest development, more than 9,000 new healthcare professionals ordered Cologuard during the second quarter and more than 321,000 have ordered since launch. About 75% of all U.S. primary care physicians have ordered Cologuard.
Following the acquisitions of Paradigm and Ashion, Exact Sciences is now offering therapy selection tests for patients with advanced cancer, providing even more value to oncologists, researchers and pharma partners. In terms of the latest development, Exact Sciences secured reimbursement for the Oncotype DX Breast test in Japan, where 90,000 women are diagnosed with breast cancer every year. About half are eligible for Oncotype DX, making Japan the most significant opportunity outside the United States.
Further, Exact Sciences is planning several key milestones to bring six innovative cancer diagnostics from its pipeline to patients in need.
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In August 2023, the company presented new data, confirming its approach to multi-cancer early detection, real-world outcomes using the Oncotype DX Breast Recurrence Score, and modeling comparisons between Cologuard and potential blood-based screening tests for colorectal cancer.
The company’s Precision Oncology portfolio guides treatment decisions for more than 200,000 cancer patients annually. The Oncotype DX test helps early-stage breast cancer patients determine whether they will benefit from chemotherapy and the OncoExTra test helps late-stage cancer patients determine their best treatment options. A consistent focus on high-quality tests, top-tier clinical evidence and physician education cemented Oncotype DX as the standard of care.
In the August update, Exact Sciences stated that its pipeline teams are focused on two of the most significant opportunities in cancer diagnostics, molecular residual disease and multi-cancer early detection. The company is working with Broad Institute to enhance and extend its molecular residual disease platform, Oncodetect. This will provide best-in-class performance at a very reasonable cost point, allowing us to reach cancer patients at scale.
Shares of EXAS have surged 83.7% over the past year against the industry’s 12% decline.
On the flip side, Exact Sciences has been grappling with escalated expenses for a while. Although the company is gradually coming out of the impact of the two-and-a-half-year-long healthcare crisis, deteriorating international trade, with global inflationary pressure leading to a tough situation related to raw material and labor costs, as well as freight charges and rising interest rates have put the medical device space in a tight spot. All these are creating significant pressure on the company’s profitability.
It has also adopted several strategies to improve its revenue performance. These include portfolio expansion and penetration in the international arena. So far, this has escalated costs and operating expenses for the company.
In the second quarter of 2023, Exact Sciences’ general and administrative expenses rose 30.9% year over year. Adjusted operating expenses in the second quarter were up 2.9% year over year. The escalating costs are putting significant pressure on the company’s bottom line.
Meanwhile, given the large market for colorectal cancer screening, Exact Sciences faces numerous competitors, some of which possess significantly greater financial and other resources and development capabilities than the company.
Other Key Picks
Some other top-ranked stocks in the broader medical space are Haemonetics HAE, Quanterix QTRX and Boston Scientific BSX, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Haemonetics stock has gained 16.2% in the past year. Earnings estimates for Haemonetics have remained constant at $3.82 for 2023 and $4.07 for 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.39%. In the last reported quarter, it posted an earnings surprise of 38.16%.
Estimates for Quanterix’s 2023 loss per share have remained constant at 97 cents in the past 30 days. Shares of the company have surged 154.9% in the past year compared with the industry’s fall of 0.3%.
QTRX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.
Estimates for Boston Scientific’s 2023 earnings have remained constant at $1,99 per share in the past 30 days. Shares of the company have gained 32.4% in the past year compared with the industry’s fall of 0.6%.
In the trailing four quarters, BSX delivered an average earnings surprise of 2.73%, with an 8.16% surprise in the last reported quarter.
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