• Total Revenue: $709 million, up 13% year over year.
• Adjusted EBITDA: $99 million, a 75% increase year over year.
• Free Cash Flow: $113 million, a record and up nearly 60% sequentially.
• Screening Revenue: $545 million, a 15% increase driven by Cologuard volume.
• Precision Oncology Revenue: $162 million, a 5% increase with 28% international growth in Oncotype DX.
• Adjusted EBITDA Margin: Expanded 500 basis points to 14%.
• Cash and Securities: Over $1 billion at the end of the quarter.
• Full Year Revenue Guidance: Between $2.73 billion and $2.75 billion.
• Full Year Screening Revenue Guidance: Between $2.08 billion and $2.095 billion.
• Full Year Precision Oncology Revenue Guidance: Between $650 million and $655 million.
• Adjusted EBITDA Guidance: Between $310 million and $320 million for the full year.

• Warning! GuruFocus has detected 5 Warning Sign with EXAS.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Exact Sciences Corp (NASDAQ:EXAS) achieved a 13% year-over-year revenue growth, reaching $709 million for the third quarter.
• The company expanded its adjusted EBITDA by 75% year over year to $99 million, highlighting strong operational execution.
• Exact Sciences Corp (NASDAQ:EXAS) received FDA approval for Cologuard Plus, which sets a new performance standard with 95% cancer sensitivity and 94% specificity.
• The company generated a record $113 million in free cash flow, marking a significant improvement from the previous year.
• Exact Sciences Corp (NASDAQ:EXAS) is seeing positive contributions from new sales representatives, with expectations for increased returns in the near and long term.

Negative Points

• The growth in Cologuard testing frequency among the expanding provider base was disappointing, impacting third-quarter performance.
• Hurricanes Helene and Milton negatively affected Cologuard orders and results, particularly impacting the fourth quarter due to the 30-day timing between order and test completion.
• The transition of the Precision Oncology portfolio onto the ExactNexus platform faced challenges, resulting in a one-time negative impact on revenue.
• The company experienced slower-than-expected ramp-up from new sales representatives, affecting the anticipated growth rate.
• Exact Sciences Corp (NASDAQ:EXAS) revised its full-year revenue guidance downward due to lower-than-expected demand growth in primary care offices.

Q & A Highlights

Q: Can you explain what changed in the second half outlook compared to 90 days ago, and how factors like care gap, hurricane disruptions, and new rep ramp-up contributed? A: Kevin Conroy, CEO, acknowledged the long-term trend for Cologuard remains intact but took accountability for the lessened performance. He noted that Cologuard is promotionally responsive, especially among newer healthcare providers. Aaron Bloomer, CFO, added that while there was progress in re-screens and care gap programs, the growth in Cologuard orders was below historical rates due to hurricanes and slower-than-expected ramp-up of new sales reps.

Q: Why is fourth-quarter guidance down sequentially, and what are the expectations for 2025? A: Aaron Bloomer, CFO, stated that the primary reason for the sequential decline is the impact of hurricanes, which affected about 18% of Cologuard volumes. He also mentioned that some care gap programs were pulled forward into Q3, affecting Q4 revenue. For 2025, they expect growth to accelerate due to re-screens, care gap programs, the launch of Cologuard Plus, and improved commercial execution.

Q: How confident are you in forecasting the business given the recent challenges, and what variables are within your control? A: Aaron Bloomer, CFO, highlighted that while they saw growth in orders, it was not at expected levels. They are addressing commercial execution issues and are confident in their ability to improve. The hurricanes were a significant factor, but they are closely monitoring and predicting order trends.

Q: Can you provide more details on the pricing strategy for Cologuard Plus and its impact on Medicare and commercial payers? A: Kevin Conroy, CEO, explained that they are pursuing a price increase through the ADLT pathway, which allows for a higher initial price. The transition to Cologuard Plus will start with Medicare patients and gradually include commercial payers over 12 to 24 months, leveraging the improved performance of the test.

Q: How are you addressing the commercial execution issues, and what changes are being made to improve sales performance? A: Kevin Conroy, CEO, emphasized the importance of focusing sales efforts on healthcare providers who are most responsive. They are providing better tools and analytics to their sales team to enhance execution. He expressed confidence in the sales team's ability to drive growth with these improvements.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.