Exact Sciences Shares Higher After Aetna Expands Cologuard Coverage

Xconomy Wisconsin — 

Another large insurer has said it will cover Cologuard, a stool-based DNA screening test for colorectal cancer developed by Madison, WI-based Exact Sciences. The announcement sent the company’s stock price higher during trading Monday.

Hartford, CT-based Aetna (NYSE: AET) updated its policy to include Cologuard in its list of covered colorectal cancer screening tests on Friday, according to a research note by Doug Schenkel, an analyst at Cowen and Company. Aetna said in 2015 that it would cover Cologuard for members of its Medicare Advantage plan, but this is the first time the insurer has said it would cover Cologuard for its estimated 18.6 million commercial, or non-Medicare, patients.

Shares in Exact (NASDAQ: EXAS), which has yet to turn a profit in the 21 years the company has been in business, finished Monday at $22.99 apiece, up more than nine percent from Friday’s close of $21.08 a share. Investors were buoyed because the updated policy represents a green light for wider use of Cologuard. The test is now deemed a “medically necessary” preventive measure every three years, in Aetna’s words, “for average-risk members aged 50 years and older when these tests are recommended by their physician.”

Cologuard is now covered by health plans in the U.S. that have about 190 million members, according to Cowen analyst Schenkel, which represents about 80 percent of all patients with plans that currently cover the test or could do so in the future.

In the past six months, several insurers have announced that they would cover Cologuard. They include Humana (NYSE: HUM), Cigna (NYSE: CI), and TRICARE, which provides health benefits to more than 9 million current and former U.S. military personnel. In a separate research note, analysts at Robert W. Baird wrote that more than 50 payers have said they would cover Cologuard since June, when the U.S. Preventive Services Task Force announced changes to its classification of colorectal cancer screening methods.

Another key metric on Exact’s potential path to profitability is the total number of healthcare providers who have ordered Cologuard for patients. The figure stood at 60,000 when the company reported fourth-quarter earnings last month. CEO Kevin Conroy said that gives his company “a long runway for growth,” given that there are more than 200,000 primary care physicians in the U.S.