On July 31, 2024 Exact Sciences Corp. (Nasdaq: EXAS), a leading provider of cancer screening and diagnostic tests, reported that the Company generated revenue of $699 million for the second quarter ended June 30, 2024, compared to $622 million for the same period of 2023 (Press release, Exact Sciences, JUL 31, 2024, View Source [SID1234645201]).
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"Our second quarter results show the dedication of Exact Sciences’ world-class team and the power of our unique platform," said Kevin Conroy, chairman and CEO. "We delivered answers to more patients and healthcare professionals than ever before, achieved record revenue and profitability, and advanced each of our key pipeline programs. Momentum continues to build, fueling our purpose to help eradicate cancer."
Second-quarter 2024 financial results
For the three-month period ended June 30, 2024, as compared to the same period of 2023 (where applicable):
Total revenue was $699 million, an increase of 12 percent or 13 percent on a core revenue basis
Screening revenue was $532 million, an increase of 15 percent
Precision Oncology revenue was $168 million, an increase of 7 percent, or 6 percent on a core revenue basis
Gross margin including amortization of acquired intangible assets was 70 percent, and non-GAAP gross margin excluding amortization of acquired intangible assets was 73 percent
Net loss was $16 million, or $0.09 per share, an improvement of $65 million and $0.36 per share, respectively
Adjusted EBITDA was $110 million an increase of $43 million, and adjusted EBITDA margin was 16 percent, an increase of 500 basis points
Operating cash flow was $107 million and free cash flow was $71 million, increases of $7 million and $5 million, respectively
Cash, cash equivalents, and marketable securities were $947 million at the end of the quarter
Screening primarily includes laboratory service revenue from Cologuard tests and PreventionGenetics. Precision Oncology includes laboratory service revenue from global Oncotype DX and therapy selection tests.
2024 outlook
The Company has maintained its full-year 2024 revenue guidance and raised its full-year 2024 adjusted EBITDA guidance:
Prior guidance
July 31 update
Total revenue
$2.810 – $2.850 billion
$2.810 – $2.850 billion
Screening
$2.155 – $2.175 billion
$2.155 – $2.175 billion
Precision Oncology
$655 – $675 million
$655 – $675 million
Adjusted EBITDA
$325 – $350 million
$335 – $355 million
Second-quarter 2024 conference call & webcast
Company management will host a conference call and webcast on Wednesday, July 31, 2024, at 5 p.m. ET to discuss second-quarter 2024 results. The webcast will be available at exactsciences.com. Domestic callers should dial 888-330-2384 and international callers should dial +1-240-789-2701. The access code for both domestic and international callers is 4437608. A replay of the webcast will be available at exactsciences.com. The webcast, conference call, and replay are open to all interested parties.
Non-GAAP disclosure
In addition to the Company’s financial results determined in accordance with U.S. GAAP, the Company provides non-GAAP measures that it determines to be useful in evaluating its operating performance and liquidity. The Company presents core revenue, non-GAAP gross margin, non-GAAP gross profit, adjusted EBITDA, adjusted EBITDA margin, adjusted cost of sales (exclusive of amortization of acquired intangible assets), adjusted research and development expenses, adjusted sales and marketing expenses, adjusted general and administrative expenses, adjusted amortization of acquired intangible assets, adjusted impairment of long-lived assets, adjusted other operating income (loss), adjusted operating income (loss), and free cash flow. Core revenue is calculated to adjust for recent acquisitions and divestitures, COVID-19 testing revenue and foreign currency exchange rate fluctuations. To exclude the impact of change in foreign currency exchange rates from the prior period under comparison, the Company converts the current period non-U.S. dollar denominated revenue using the prior year comparative period exchange rates. The Company defines non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, excluding amortization of acquired intangible assets. The amortization of acquisition-related intangible assets used in the calculation of non-GAAP gross profit and non-GAAP gross margin pertain only to the amortization associated with developed technology acquired and recorded through purchase accounting transactions. The amortization of these intangible assets will recur in future periods until such intangible assets have been fully amortized. Adjusted EBITDA, adjusted cost of sales (exclusive of amortization of acquired intangible assets), adjusted research and development expenses, adjusted sales and marketing expenses, adjusted general and administrative expenses, adjusted amortization of acquired intangible assets, adjusted impairment of long-lived assets, adjusted other operating income (loss), and adjusted operating income (loss) consist of the applicable GAAP measure after adjustment for those items shown in the reconciliations below. Adjusted EBITDA margin is calculated as adjusted EBITDA divided by total revenue. The Company considers free cash flow to be a liquidity measure and is calculated as net cash used in or provided by operating activities, reduced by purchases of property, plant and equipment. Management believes that presentation of non-GAAP financial measures provides useful supplemental information to investors and facilitates the analysis of the Company’s core operating results and comparison of operating results across reporting periods. The Company uses this non-GAAP financial information to establish budgets, manage the Company’s business, and set incentive and compensation arrangements. The Company believes free cash flow provides useful information to management and investors since it measures our ability to generate cash from business operations. Non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental information purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. For example, non-GAAP gross margin and non-GAAP gross profit exclude the amortization of acquired intangible assets although such measures include the revenue associated with the acquisitions. Additionally, adjusted EBITDA and other adjusted operating result metrics exclude a number of expense items that are included in net loss. As a result, positive adjusted EBITDA or adjusted operating income may be achieved while a significant net loss persists. For a reconciliation of these non-GAAP measures to GAAP, see below "Reconciliation of Core Revenue", "Non-GAAP Gross Profit and Non-GAAP Gross Margin Reconciliations", "Adjusted EBITDA Reconciliations", "Reconciliation of U.S. GAAP to Non-GAAP Measures", and "Condensed Consolidated Statements of Cash Flows and Reconciliation of Free Cash Flow". The Company presents certain forward-looking statements about the Company’s future financial performance that include non-GAAP measures. These non-GAAP measures include adjustments like stock-based compensation, acquisition and integration costs including gains and losses on contingent consideration, and other significant charges or gains that are difficult to predict for future periods because the nature of the adjustments pertain to events that have not yet occurred. Additionally management does not forecast many of the excluded items for internal use. Information reconciling forward-looking non-GAAP measures to U.S. GAAP measures is therefore not available without unreasonable effort, and is not provided. The occurrence, timing, and amount of any of the items excluded from GAAP to calculate non-GAAP could significantly impact the Company’s GAAP results.
About Cologuard
The Cologuard test was approved by the FDA in August 2014, and results from Exact Sciences’ prospective 90-site, point-in-time, 10,000-patient pivotal trial were published in the New England Journal of Medicine in March 2014. The Cologuard test is included in the American Cancer Society’s (2018) colorectal cancer screening guidelines and the recommendations of the U.S. Preventive Services Task Force (2021) and National Comprehensive Cancer Network (2016). The Cologuard test is indicated to screen adults 45 years of age and older who are at average risk for colorectal cancer by detecting certain DNA markers and blood in the stool. Do not use the Cologuard test if you have had precancer, have inflammatory bowel disease and certain hereditary syndromes, or have a personal or family history of colorectal cancer. The Cologuard test is not a replacement for colonoscopy in high risk patients. The Cologuard test performance in adults ages 45-49 is estimated based on a large clinical study of patients 50 and older. The Cologuard test performance in repeat testing has not been evaluated.
The Cologuard test result should be interpreted with caution. A positive test result does not confirm the presence of cancer. Patients with a positive test result should be referred for colonoscopy. A negative test result does not confirm the absence of cancer. Patients with a negative test result should discuss with their doctor when they need to be tested again. Medicare and most major insurers cover the Cologuard test. For more information about the Cologuard test, visit cologuardtest.com. Rx only.