Please ensure Javascript is enabled for purposes of website accessibility

Exact Sciences Beats Q2 Estimates Despite a COVID-19 Drag

By Keith Speights - Jul 31, 2020 at 6:38AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company's revenue increased in Q2 -- but only because of acquisitions.

Exact Sciences (EXAS -0.51%) hasn't fired up investors so far in 2020 like it did last year. But the COVID-19 pandemic has weighed heavily on the cancer screening and diagnostics provider's business. The good news is that Exact Sciences' management team said that there were signs of improvement in the quarterly conference call in May.

The company announced its second-quarter results after the market closed on Thursday. Did those early signs of improvement pan out? Here are the highlights from Exact Sciences' Q2 update.

Exact Sciences' Cologuard kit.

Image Source: Exact Sciences.

By the numbers

Exact Sciences reported revenue in the second quarter of $268.9 million. This reflected a 35% jump from the prior-year period revenue total of $199.9 million. It also handily beat the Wall Street consensus revenue estimate of $228.4 million.

The company announced a net loss of $86.1 million, or $0.58 per share, in Q2, based on generally accepted accounting principles (GAAP). This was much worse than the $38.5 million, or $0.30 per share, net loss reported in the same quarter of 2019. However, it was still better than the average analyst estimate of a net loss of $0.63 per share.

Exact Sciences ended the second quarter with cash, cash equivalents, and marketable securities totaling $1.2 billion. The company's cash stockpile was much greater than the $323.7 million on hand at the end of 2019.

Behind the numbers

Don't get too enthused about Exact Sciences' revenue increase. The company's Q2 revenue total included $103 million of precision oncology revenue, all of which stemmed from acquisitions. Exact Sciences closed on its acquisition of Genomic Health in November 2019. It also completed the acquisition of Paradigm Diagnostics earlier this year. 

If you back out the precision oncology revenue, Exact Sciences' total revenue fell 17% year over year. The company's screening revenue from DNA colon cancer screening test Cologuard and its Biomatrica sample preservation products sank 34% year over year to $131.3 million. This decline stemmed from the disruption caused by the COVID-19 pandemic.

However, COVID-19 also helped Exact Sciences somewhat in Q2. The company reported COVID-19 testing revenue of $34.6 million. In addition, Exact Sciences received a one-time payment of $23.7 million from the Coronavirus Aid, Relief, and Economic Security (CARES) Act Provider Relief Fund.

Looking ahead

Exact Sciences chose not to provide any guidance for the full year. It took the same stance in Q1 due to the uncertainties created by the COVID-19 pandemic.  

The healthcare stock isn't likely to repeat its sizzling performance from 2019 this year because of the pandemic. The coronavirus outbreak could continue to cause problems for Exact Sciences' Cologuard sales.

Over the long run, however, CEO Kevin Conroy expects adoption of the DNA test will accelerate because of its convenience and accuracy. Conroy also noted that "COVID-19 is elevating the importance of our Precision Oncology tests, as patients and physicians look for smarter, faster answers to guide their cancer treatment decisions."

Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Exact Sciences. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Exact Sciences Corporation Stock Quote
Exact Sciences Corporation
EXAS
$46.81 (-0.51%) $0.24

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.