Exact Sciences posted its fourth consecutive strong quarter—beating analysts’ and the company’s own projections of financial and business performance—and investors reacted favorably.
Madison, WI-based Exact (NASDAQ: EXAS) develops diagnostic tests for several types of cancer. Its flagship product is Cologuard, a stool-based DNA test for colorectal cancer. Exact said it completed about 161,000 of the tests during the three-month period ending Sept. 30. That surpassed Exact’s previous projection of at least 150,000 Cologuard tests for the third quarter.
Exact’s third-quarter revenues were $72.6 million, which eclipsed analysts’ average estimate by more than $7 million. The company reported a net loss of $26.9 million, or 23 cents a share, beating projections by 7 cents a share. Exact’s net losses for the second quarter of 2017 and third quarter of 2016 were $30.8 million and $37.8 million, respectively. (Exact still has yet to turn a profit in the 22 years the company has been in business.)
Exact announced third-quarter results shortly after the close of the trading day Monday. The company’s stock price was $50.10 a share when the closing bell rang, down nearly 2.1 percent from Friday’s closing price of $51.16 per share. However, after Exact revealed its earnings and other information from last quarter, investors sent its stock price up more than 6.5 percent, to $53.40.
Cologuard earned FDA approval and Medicare coverage in 2014, and the company began selling the test later that year. To date, about 91,000 clinicians have ordered the test, up from about 81,000 at the end of June, Exact says.
Exact raised its forecast for total sales in 2017 to between $254 million and $257 million. The company had previously projected revenues for the current year would come in between $230 million and $240 million.
Exact now projects it will complete between 568,000 and 572,000 Cologuard tests in 2017, including at least 173,000 in the fourth quarter. Previously, the company forecast completing 550,000 Cologuard tests this year. Exact completed about 244,000 Cologuard tests in 2016.
Kevin Conroy, chairman and CEO of Exact Sciences, said in a conference call with analysts Monday that his company can process about 1 million tests per year at its current laboratory facility. Exact is in the process of adding lab space, which it estimates will increase its capacity to about 2.5 million tests of Cologuard annually.
Exact increased its sales force by about 100 employees between April and September, according to Jeff Elliott, Exact’s chief financial officer.
“During the fourth quarter, we plan to purchase additional real estate near our headquarters in Madison to make room for our growing team,” Conroy said, according to a transcript of the call on the stock market website Seeking Alpha. “To process a steadily growing number of Cologuard tests, we are expanding our existing lab capacity and plan to break ground on a new lab soon.”
When construction of the new lab is complete, Exact would be able to complete about 4.5 million Cologuard tests a year, Conroy said.
The company also revealed a previously undisclosed acquisition Monday; Conroy said Exact acquired Sampleminded, a Salt Lake City-based IT business that has been a partner of Exact for years and has helped develop and support Exact’s lab information system. According to a document filed with federal securities regulators, Exact acquired Sampleminded on Aug. 1 for $3.2 million in cash, plus shares of stock in Exact.
Conroy said the next opportunity his company sees “to use the power” of Exact’s development platform is a test designed to assess potentially cancerous nodules, or clumps of cells, found in the lungs. The current diagnostic tests for distinguishing between benign lung nodules and lung cancer tend to be expensive and invasive, he said.
“The potential for a new blood-based biomarker test [for lung cancer] is significant,” Conroy said.
Exact plans to provide a public update on its lung nodule test in the first half of 2018, he said.