Exact Sciences (EXAS -3.67%) is a cancer diagnostics company with promising long-term potential. Its Cologuard non-invasive test can detect colorectal cancer and help save lives. The company also has tests for other types of cancer as well. Last year, it generated record revenue of just under $2.1 billion -- more than four times what it reported back in 2018. 

Would investing in the stock back then have paid off for investors today? Below, I'll look at what a $10,000 investment in Exact Sciences made in 2018 would be worth now, and whether the healthcare stock is a good buy today. 

The stock's performance has match the S&P 500

Five years ago, at the start of March 2018, shares of Exact Sciences were trading at around $44. At that price, a $10,000 investment would have bought 227 shares. Fast-forward to today and the value of that investment would be around $14,500. That amounts to a 45% return, which is almost identical to the S&P 500's performance during that time frame.

That might be a bit disappointing for growth investors seeking a better performance from Exact Sciences. After all, a big incentive to invest in companies in their early growth stages is their potential to deliver better-than-average returns. Exact hasn't done that, and the reason for its underwhelming performance is its poor financials.

Exact Sciences is nowhere near profitable

The diagnostics company has achieved significant revenue growth over the years, but the problem is that its net losses have also been growing.

EXAS Net Income (Quarterly) Chart

EXAS Net Income (Quarterly) data by YCharts.

As the business has been expanding and preparing for all that growth, its increased expenses negated its strong top-line performance. Over time, this should improve as the company benefits from economies of scale. But it creates a problem in that the business isn't generating positive cash flow. Last year, Exact Sciences burned through $223.6 million in cash just from its day-to-day operations. And that was a significant increase from the $102.2 million it used up in the previous year.

Given its cash-burning operations, it may come as little surprise that Exact Sciences has significantly increased its outstanding share count over the past five years.

EXAS Shares Outstanding Chart

EXAS Shares Outstanding data by YCharts.

Issuing new stock is a common way for businesses to raise the cash they need to keep growing, but it dilutes the previous shareholders in the process, and pushes down the share price. Had Exact Sciences been in better financial shape and not needed to issue shares, the stock's gains would have been far more impressive.

Is Exact Sciences a buy today?

Despite its average performance over the past five years, Exact Sciences could be a good buy now -- provided that you're able to stomach the risk. Its losses are concerning, but the potential is there. Companies are willing to pay big money to build out their oncology businesses -- Pfizer's plan to buy Seagen for a whopping $43 billion offer a prime example.

Even if Exact Sciences can't turn a profit on its own, if it keeps developing quality products. Another healthcare company might end up acquiring it, potentially at a lucrative premium for its shareholders.

But that's not a guarantee. And in the meantime, there's more risk of dilution in the future for Exact Sciences shareholders. That's why this is a stock that's better suited for investors with high risk tolerances.