Any year that a stock goes up 40% would count as a memorable year. But what about a year where a stock soars nearly 340%? That's what has happened for Exact Sciences Corporation (NASDAQ:EXAS) in 2017 -- and there are still a few weeks left to go in the year.

To say that 2017 will be a year to remember for Exact Sciences is an understatement. Here's how the molecular diagnostics company achieved its tremendous success and whether that success is likely to continue into 2018.

Silhouette of 2017 with woman holding hands up in place of the one

Image source: Getty Images.

Starting off with a bang

Exact Sciences definitely got off to a great start in 2017. Within five days into the new year, the company announced that its Cologuard DNA screening test for colorectal cancer received a positive review from the Blue Cross Blue Shield Association (BCBSA). This assessment was a boost for Exact Sciences in helping win over the remaining one-third of Blue Cross and Blue Shield plans that didn't yet cover Cologuard. The member companies of the BCBSA combined insure roughly one in three Americans. 

On Jan. 8, the company provided a sneak peek at just how much momentum it had in 2016. Exact Sciences' announcement of preliminary fourth-quarter and full-year 2016 financial results caused the stock to jump more than 20%. I wrote at the time that the stock should go much higher than that. I had no idea just how true that prediction would be.

In early February, Exact Sciences received more good news. The Centers for Medicare and Medicaid Services (CMS) announced that it was proposing that Cologuard be included in the Star Ratings program for Medicare Advantage plans. This was a huge development, because inclusion in the Star Ratings program meant that Medicare Advantage plans would improve their ratings when their members used Cologuard. Two months later, CMS made the proposed change effective. 

Left wasn't right

By early May, Exact Sciences stock was up over 150% for the year. Then Citron Research's Andrew Left started campaigning against the company and its Cologuard test. The short-seller called Exact Sciences "a poster child for what goes wrong when Wall Street gets a hold of a healthcare concept with no discrimination for whether it's good or bad medicine." He predicted that the stock price would "soon be cut in half" with the potential to be practically worthless within three to five years.  

Why was Left so negative about Exact Sciences? He stated that Cologuard would never be a standard of care because it was "a seriously inferior product." Left said that Exact Sciences was spending an unsustainable amount of money to acquire new business. He also alleged that Cologuard wasn't gaining ground with doctors and that Exact Sciences' marketing campaign to consumers was ineffective. And he predicted that the price for Cologuard would fall dramatically, devastating Exact Sciences' prospects.

With this gloom and doom message making news, Exact Sciences' stock dropped around 10%. The pullback lasted for only a few days, though. By the end of May, the stock had bounced back and then some. Instead of being cut in half, Exact Sciences' share price went on to rack up gains of nearly 50% between the Citron Research publication on May 15 and early October.  

Solid execution

There was a good reason why Exact Sciences succeeded despite dire predictions for its future: The company executed solidly on its plan. And what was that plan? Increase the number of payers covering Cologuard, the number of physicians ordering the test, and the awareness of consumers about the noninvasive alternative to colonoscopies.

Exact Sciences' third-quarter results, reported on Oct. 30, showed just how well the company had delivered on its plan. CEO Kevin Conroy said that Cologuard was covered by payers for 87% of all Americans. Test volume soared 136% higher than the prior-year period to 161,000 completed tests. More than 10,000 providers ordered Cologuard for the first time during the third quarter. The company was pleased with its television advertising campaign to raise consumer awareness and planned to invest at the same level on TV advertising in 2018. 

Cologuard appeared to increasingly become a standard of care for colorectal cancer screening for individuals who preferred not to undergo a colonoscopy. The BCBSA and CMS decisions earlier in 2017, along with previous inclusion in the U.S. Preventive Services Task Force (USPTF) recommendations for colorectal cancer screening, underscored this. Exact Sciences' improving bottom line cast doubt on the assertion that its spending levels were unsustainable. All of the numbers pointed toward increased acceptance of Cologuard by providers and patients.

What about the price for Cologuard falling as Left predicted? Exact Sciences reported that the average recognized revenue per test increased by 9% year over year in the third quarter to $451. Although it's possible that the price paid by Medicare could decrease next year, rising volumes could easily offset any decline. 

What's in store for 2018?

Cologuard sales should continue to enjoy momentum next year. There are 80 million patients who should be tested for colorectal cancer but aren't right now. Exact Sciences thinks it can capture around 30% of that market. That gives the company a lot of room for growth. 

The stock is trading at a premium at more than 41 times trailing-12-month sales. Any bump in the road for Exact Sciences could feel like a crater for investors. Perhaps the greatest risk for the company is that blood-based DNA testing could threaten Cologuard down the road. However, that probably won't be an issue for Exact Sciences in 2018 -- and the company is also working on developing its own liquid biopsies for early detection of cancer.

Overall, I think the chances are pretty good that 2018 will be another memorable year for Exact Sciences. I wouldn't count on the stock more than quadrupling again, though.

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.