Exact Sciences (EXAS) Q1 Revenues Rise Y/Y, Gross Margin Down
Exact Sciences Corporation EXAS reported a net loss of 50 cents per share in first-quarter 2024, in line with the Zacks Consensus Estimate. This quarter's loss was wider than the year-ago loss of 42 cents.
Revenues in Detail
First-quarter consolidated revenues were $637.5 million, up 5.8% on reported and core revenue basis year over year. The metric exceeded the Zacks Consensus Estimate by 2%.
Segments in Detail
Screening revenues, including laboratory service revenues from Cologuard, PreventionGenetics and immaterial revenues from Biomatrica products, were $4748 million. The figure increased 7% year over year. The upside can be primarily attributed to broad-based momentum in Cologuard adoption by healthcare providers.
Precision Oncology revenues, including laboratory service revenues from global Oncotype products and therapy selection products, were $163 million, up 5% year over year and 4% on a core basis. The upside was propelled by Oncotype DX, which expanded 7% globally.
The company did not recognize any revenues from COVID-19 testing in the first quarter.
Margins
In the quarter under review, Exact Sciences’ gross profit (excluding the amortization of acquired intangibles) rose 4.9% to $467.4 million. The gross margin contracted 64 basis points (bps) to 73.3%.
Research and development expenses rose 15.9% year over year to $110.6 million. Sales and marketing expenses moved up 2.9% to $192.4 million.
General and administrative expenses rose 11.9% year over year to $243.1 million.
Adjusted operating expenses were $546.1 million in the first quarter, up 9.2% year over year. Adjusted operating loss totaled $78.7 million, wider than the year-ago operating loss of $54.1 million.
Financial Update
Exact Sciences exited the first quarter of 2024 with cash and cash equivalents and marketable securities of $652.1 million compared with $777.6 million at the end of fourth-quarter 2023.
Exact Sciences Corporation Price, Consensus and EPS Surprise
Exact Sciences Corporation price-consensus-eps-surprise-chart | Exact Sciences Corporation Quote
The company had no long-term debt on its balance sheet at the end of first-quarter 2024.
2024 View
The company maintained its 2024 revenue guidance.
Exact Sciences expects total revenues for the full year to be in the range of $2.81-$2.85 billion. The Zacks Consensus Estimate for the same is pegged at $2.83 billion.
The company expects Screening revenues in the range of $2.16-$2.18 billion.
The company expects Precision Oncology revenues in the range of $655-$675 million.
Our Take
Exact Sciences exited the first quarter of 2024 with earnings meeting the consensus mark and revenues beating the same. Robust revenues from the Screening and Precision Oncology segments contributed to the first-quarter top line. The company continues to witness broad-based momentum in Cologuard’s adoption and traction within health systems. The growing uptake of Oncotype DX Breast and therapy selection products is a major advantage.
However, escalating expenses and contraction of gross margin look discouraging. The company incurred an operating loss in the quarter under review, raising apprehension.
Zacks Rank and Other Key Picks
Exact Sciences currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Medpace MEDP, ResMed RMD and Encompass Health Corporation EHC.
Medpace, sporting a Zacks Rank #1 (Strong Buy), reported first-quarter 2024 EPS of $3.20. The figure beat the Zacks Consensus Estimate by 30.6%. Revenues of $511 million increased 17.7% from last year’s comparable figure. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace has an estimated 2024 earnings growth rate of 26.5% compared with the industry’s 12.3%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 12.8%.
ResMed, sporting a Zacks Rank #1, reported first-quarter 2024 EPS of $2.13, which topped the Zacks Consensus Estimate by 10.9%. Revenues of $1.20 billion surpassed the Zacks Consensus Estimate by 1.9%.
RMD has an estimated fiscal 2024 earnings growth rate of 17.9% compared with the industry’s 15.7%. In each of the trailing four quarters, the company delivered an average earnings surprise of 2.8%.
Encompass Health, carrying a Zacks Rank #2 (Buy), reported first-quarter 2024 adjusted EPS of $1.12, which surpassed the Zacks Consensus Estimate by 20.4%. Net operating revenues of $1.3 billion topped the Zacks Consensus Estimate by 3.6%.
EHC has an estimated long-term earnings growth rate of 15.6% compared with the industry’s 11.7% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.7%.
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