[Updated 7/26/16, 5:15 pm. See below.] Shares in Exact Sciences were up more than 28 percent on Tuesday after the company released second quarter financial results that handily beat analyst expectations.
Madison, WI-based Exact (NASDAQ: EXAS), whose flagship product is a stool-based DNA test for colorectal cancer known as Cologuard, said it completed about 54,000 of the tests during the three-month period ending June 30. That’s ahead of chairman and CEO Kevin Conroy’s projection that his company would complete 48,000 tests during the period.
As of this writing, the company’s stock price was $15.99 a share, up from Monday’s close at $12.46.
Exact’s revenues for the quarter were $21.2 million, which eclipsed analysts’ average estimate by more than $2.6 million. The company reported a net loss of $0.46 per share, beating projections by $0.09 a share.
Cologuard earned FDA approval and Medicare coverage in 2014, and the company began selling the test later that year. To date, about 41,000 physicians have ordered the test, up from 32,000 at the end of March, Exact said in a press release.
“Continued execution of our sales and direct-to-consumer marketing strategies during the second quarter drove an increase in new physicians ordering Cologuard,” Conroy said in a prepared statement.
Exact on Tuesday reiterated its projection that it would complete more than 240,000 tests of Cologuard this year. During the company’s quarterly earnings call, Conroy sounded like he wanted to temper expectations somewhat: “We don’t think that if [we] exceed 240,000 tests, it would be by much,” he said. Exact also echoed its previous estimate that revenues for 2016 would total between $90 and $100 million. To get to $90 million by year-end, combined revenues for the third and fourth quarter would have to be about $54 million. [This paragraph has been updated with information from Exact’s earnings call on Tuesday.]
While numerous private health insurers have already agreed to cover Cologuard, a key question going forward is how many others will follow suit. Last month, the U.S. Preventive Services Task Force announced changes to how it classifies colorectal cancer screening methods. The immediate reactions of Exact—and investors—seemed to suggest an improved outlook for the company.
“We anticipate that Cologuard’s position in the [task force’s] final recommendations will have a meaningful, positive long-term effect on our efforts to expand commercial insurance coverage,” Conroy said. “Commercial insurers typically cover cancer screening tests recommended by the task force and we are engaged in active discussions with insurers to cover Cologuard.”
In addition to insurers, Exact will of course need to continue its effort to persuade providers that Cologuard is worth ordering for their patients.
Last month, David Feldstein, a physician at the University of Wisconsin Hospital and Clinics who leads a committee at the health system that determines which screening methods to recommend, told the Wisconsin State Journal that he doesn’t recommend Cologuard, citing a lack of evidence. But in the same article, Patricia Golden, a physician at Franklin, WI-based Wheaton Franciscan Medical Group, called Cologuard “an appropriate standard of care,” given the decisions made by the U.S. Preventive Services Task Force.