Exact Sciences (EXAS) Q3 Earnings Beat, Gross Margin Rises
Exact Sciences Corporation EXAS reported breakeven earnings per share for third-quarter 2023, a significant improvement from the year-ago loss of 84 cents per share as well as the Zacks Consensus Estimate of a loss of 49 cents.
Revenues in Detail
Third-quarter consolidated revenues were $628.3 million, up 20.1% year over year. The metric exceeded the Zacks Consensus Estimate by 2.2%.
Segments in Detail
Screening revenues, including laboratory service revenues from Cologuard, PreventionGenetics and immaterial revenues from Biomatrica products, were $472 million. The figure increased 31% year over year.
The upside can be primarily attributed to broad-based momentum in Cologuard adoption, which was fueled by commercial productivity and strong relationships with payers and providers.
Precision Oncology revenues, including laboratory service revenues from global Oncotype products and therapy selection products, were $156.3 million, up 3% year over year and up 5% on a core basis. Growth was led by Oncotype DX, which expanded 14% globally.
Exact Sciences Corporation Price, Consensus and EPS Surprise
Exact Sciences Corporation price-consensus-eps-surprise-chart | Exact Sciences Corporation Quote
The company did not recognize any revenues from COVID-19 testing in the third quarter against $10.9 million in the year-ago period.
Margins
In the quarter under review, Exact Sciences’ gross profit (excluding the amortization of acquired intangibles) rose 22.6% to $459.8 million. The gross margin expanded 146 basis points (bps) to 73.2%.
Research and development expenses rose 22.7% year over year to $111.4 million. Sales and marketing expenses fell 7.7% to $173.2 million. General and administrative expenses rose 13.2% year over year to $217.4 million.
Adjusted operating expenses were $501.9 million in the third quarter, up 6.7% year over year. Adjusted operating loss totaled $42.2 million, narrower than the year-ago operating loss of $95.3 million.
Financial Update
Exact Sciences exited the third quarter of 2023 with cash and cash equivalents and marketable securities of $733.4 million compared with $604.4 million at the end of the second quarter of 2023.
The company had no long-term debt on its balance sheet at the end of the third quarter.
2023 View
The company raised its 2023 revenue guidance to $2.476-$2.486 billion (from the earlier-provided range of $2.441-$2.466 billion). The Zacks Consensus Estimate for the same is pegged at $2.26 billion.
For 2023, the company now expects its Screening revenues in the range of $1.820-$1.835 billion. The company expects Precision Oncology revenues in the range of $615-$625 million.
COVID-19 testing revenues are expected to be $6 million.
Our Take
Exact Sciences exited the third quarter of 2023 with better-than-expected results. Robust revenues from the Screening and Precision Oncology segments contributed to the third-quarter top line. The company continues to witness broad-based momentum in Cologuard’s adoption and traction within health systems. The growing uptake of the company’s Oncotype DX Breast and therapy selection products are major advantages. The raised 2023 revenue guidance is an upside.
However, the decline in COVID-19 sales hampered top-line growth. The company incurred an operating loss in the quarter under review, raising apprehension.
Zacks Rank and Key Picks
Exact Sciences currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories ABT, Inari Medical NARI and Integer Holdings Corporation ITGR.
Abbott, carrying a Zacks Rank of 2 (Buy), reported third-quarter 2023 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 3.6%. Revenues of $10.14 billion outpaced the consensus mark by 3.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.8%.
Inari Medical, carrying a Zacks Rank #2, reported third-quarter 2023 adjusted EPS of 4 cents, beating the Zacks Consensus Estimate by a staggering 128.6%. Revenues of $119 million outpaced the consensus estimate by 2.3%.
Inari Medical has an estimated earnings growth rate of 725% for the next year. Inari Medical’s earnings surpassed estimates in all the trailing four quarters, the average being 66.8%.
Integer Holdings reported third-quarter 2023 adjusted EPS of $1.27, beating the Zacks Consensus Estimate by 20.9%. Revenues of $404.7 million surpassed the Zacks Consensus Estimate by 8.7%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 15.8%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 11.9%.
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