What happened

Shares of EXACT Sciences (NASDAQ:EXAS), a company focused on colon-cancer detection, rose as much as 13% in early morning trading on Wednesday in response to reporting better-than-expected second-quarter results.

So what

Here's a review of the key highlights from the period that have traders feeling giddy today:

  • Revenue skyrocketed 172%, to $57.6 million for the quarter. That figure sailed past the $47.7 million that Wall Street had expected.
  • Net loss fell 30% year over year, to $30.8 million, or $0.27 per share. This number also compared favorably to the $0.37 loss that analysts had estimated.
  • 135,000 Cologuard tests were completed during the quarter. This figure jumped 149% when compared to the year-ago period. 
  • Average revenue per test jumped 9%, to $428.
  • Gross margins improved significantly and came in at 69% for the period.
  • The company's cash balance at quarter end was $484 million.
  • 11,000 new providers ordered Cologuard for the first time during the quarter.
  • Insurance coverage for its target patient population now stands at 86%, thanks, in large part, to its recent contract wins with UnitedHealth Group and Aetna.

The solid quarterly performance allowed management to significantly raise its guidance for the year. Management now expects to complete at least 550,000 Cologuard tests during 2017. That's quite a big jump from the 470,000 tests that management had forecasted just three months ago.

The updated testing guidance is expected to have a major positive impact on the company's full-year revenue, too. The company now sees its 2017 revenue landing between $230 million to $240 million for the full year. That's far ahead of its old guidance range of $195 million to $205 million.

Given the terrific results and bullish guidance, it's easy to understand why shares are soaring today.

business people giving the thumbs up

Image source: Getty Images.

Now what

Exact Sciences' second-quarter results clearly show that Cologuard is catching on with patients and providers alike. That hints that the company's bold decision to spend big on a nationwide advertising campaign is paying off in spades.

CEO Kevin Conroy reminded investors that Cologuard still has penetrated only about 2% of its 80 million person target market. As a result, he emphasized that the company will continue to make investments that are aimed at driving continued growth from here.

While Exact Sciences' quarterly losses continue to make it a high-risk investment, I must admit that the company's impressive growth rates and huge market opportunity are highly attractive. For that reason, I think that Exact Sciences stands a good chance at continuing to deliver for its long-term shareholders, even from today's lofty valuation.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.