Exact Sciences Announces Second Quarter 2020 Results

07/30/2020

MADISON, Wis., July 30, 2020 /PRNewswire/ -- Exact Sciences Corp. (Nasdaq: EXAS) today announced that the company generated revenue of $268.9 million for the second quarter ended June 30, 2020, compared to $199.9 million for the same period of 2019.

"Cologuard helps solve the problem of COVID-related missed cancer screenings because it's a convenient, accurate, at-home test, and we believe this will accelerate adoption," said Kevin Conroy, Chairman and CEO. "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. As diagnostic testing continues to play a larger, more important role in cancer care, Exact Sciences is in a unique position to create value at every step along the way."

Second Quarter 2020 Financial Results

For the three-month period ended June 30, 2020, as compared to the same period of 2019 (where applicable):

  • Total revenue was $268.9 million, compared to $199.9 million
  • Screening revenue was $131.3 million, a decrease of 34 percent
  • Precision Oncology revenue was $103.0 million
  • COVID-19 testing revenue was $34.6 million
  • Gross margin including amortization of acquired intangible assets was 63 percent, and non-GAAP gross margin excluding amortization of acquired intangible assets was 71 percent
  • Other operating income consisted of a one-time payment of $23.7 million from the Coronavirus Aid, Relief, and Economic Security (CARES) Act Provider Relief Fund
  • Net loss was $86.1 million, or $0.58 per share, compared to a net loss of $38.5 million, or $0.30 per share
  • EBITDA was $(26.0) million and adjusted EBITDA was $(4.9) million
  • Non-cash interest expense related to convertible debt was $20.1 million, compared to $10.7 million
  • Cash, cash equivalents, and marketable securities were $1.2 billion at the end of the quarter

Screening includes laboratory service revenue from Cologuard and revenue from Biomatrica products. Precision Oncology includes laboratory service revenue from global Oncotype DX products and the recent Paradigm acquisition.

Non-GAAP Disclosure
In addition to the company's financial results determined in accordance with U.S. GAAP, the company provides non-GAAP measures that it determines to be useful in evaluating its operating performance. The company presents EBITDA, adjusted EBITDA, as well as non-GAAP gross margin and non-GAAP gross profit. EBITDA and adjusted EBITDA consist of net loss after adjustment for those items shown in the table below. The company defines non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, excluding amortization of acquired intangible assets. The amortization of acquisition-related intangible assets used in the calculation of non-GAAP gross profit and non-GAAP gross margin pertain only to the amortization associated with developed technology acquired and recorded through purchase accounting transactions. The amortization of these intangible assets will recur in future periods until such intangible assets have been fully amortized. The company believes that these non-GAAP measures are useful in evaluating the company's operating performance. The company uses this non-GAAP financial information to evaluate ongoing operations and for internal planning and forecasting purposes. Non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental information purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. For example, non-GAAP gross margin and non-GAAP gross profit exclude the amortization of acquired intangible assets although such measures include the revenue associated with the acquisitions. For a reconciliation of these non-GAAP measures to GAAP, see below "EBITDA and Adjusted EBITDA Reconciliations" and "Non-GAAP Gross Profit and Non-GAAP Gross Margin Reconciliations."

Second Quarter Conference Call & Webcast
Company management will host a conference call and webcast on Thursday, July 30, 2020, at 5 p.m. ET to discuss second quarter 2020 results. The webcast will be available at www.exactsciences.com. Domestic callers should dial 833-235-7650 and international callers should dial +1-647-689-4171. The access code for both domestic and international callers is 8183605.

An archive of the webcast will be available at www.exactsciences.com. A replay of the conference call will be available by calling 800-585-8367 domestically or 416-621-4642 internationally. The access code for the replay of the call is 8183605. The webcast, conference call and replay are open to all interested parties.

About Cologuard
Cologuard was approved by the FDA in August 2014, and results from Exact Sciences' prospective 90-site, point-in-time, 10,000-patient pivotal trial were published in the New England Journal of Medicine in March 2014. Cologuard is included in the American Cancer Society's (2018) colorectal cancer screening guidelines and the recommendations of the U.S. Preventive Services Task Force (2016) and National Comprehensive Cancer Network (2016). Cologuard is indicated to screen adults 45 years of age and older who are at average risk for colorectal cancer by detecting certain DNA markers and blood in the stool. Do not use Cologuard if you have had precancer, have inflammatory bowel disease and certain hereditary syndromes, or have a personal or family history of colorectal cancer. Cologuard is not a replacement for colonoscopy in high risk patients. Cologuard performance in adults ages 45-49 is estimated based on a large clinical study of patients 50 and older. Cologuard performance in repeat testing has not been evaluated.

The Cologuard test result should be interpreted with caution. A positive test result does not confirm the presence of cancer. Patients with a positive test result should be referred for diagnostic colonoscopy. A negative test result does not confirm the absence of cancer. Patients with a negative test result should discuss with their doctor when they need to be tested again.

Medicare and most major insurers cover Cologuard. For more information about Cologuard, visit www.cologuardtest.com. Rx only.

About Oncotype DX
The Oncotype DX® portfolio of breast, colon and prostate cancer tests applies advanced genomic science to reveal the unique biology of a tumor in order to optimize cancer treatment decisions. In breast cancer, the Oncotype DX Breast Recurrence Score® test is the only test that has been shown to predict the likelihood of chemotherapy benefit as well as recurrence in invasive breast cancer. Additionally, the Oncotype DX Breast DCIS Score test predicts the likelihood of recurrence in a pre-invasive form of breast cancer called DCIS. In prostate cancer, the Oncotype DX Genomic Prostate Score® test predicts disease aggressiveness and further clarifies the current and future risk of the cancer prior to treatment intervention, and the Oncotype DX AR-V7 Nucleus Detect™ test helps determine which patients with metastatic castration-resistant prostate cancer (mCRPC) are resistant to androgen receptor (AR)-targeted therapies. The Oncotype DX AR-V7 Nucleus Detect test is performed by Epic Sciences at its centralized, CLIA-certified laboratory in San Diego and offered exclusively by Exact Sciences. With more than 1 million patients tested in more than 90 countries, the Oncotype DX tests have redefined personalized medicine by making genomics a critical part of cancer diagnosis and treatment. To learn more about Oncotype DX tests, visit www.OncotypeIQ.com, www.MyBreastCancerTreatment.org or www.MyProstateCancerTreatment.org.

About Exact Sciences Corp.
A leading provider of cancer screening and diagnostic tests, Exact Sciences relentlessly pursues smarter solutions providing the clarity to take life-changing action, earlier. Building on the success of Cologuard and Oncotype DX, Exact Sciences is investing in its product pipeline to take on some of the deadliest cancers and improve patient care. Exact Sciences unites visionary collaborators to help advance the fight against cancer. For more information, please visit the company's website at www.exactsciences.com, follow Exact Sciences on Twitter @ExactSciences, or find Exact Sciences on Facebook.

Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the "safe harbor" created by those sections.  Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as "believe," "expect," "may," "will," "should," "would," "could," "seek," "intend," "plan," "goal," "project," "estimate," "anticipate" or other comparable terms.  All statements other than statements of historical facts included in this news release regarding our strategies, prospects, expectations, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expected future operating results, anticipated results of our sales, marketing and patient adherence efforts, expectations concerning payer reimbursement, and the anticipated results of our product development efforts.  Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Actual results, conditions and events may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: uncertainties associated with the coronavirus (COVID-19) pandemic, including its possible effects on our operations and the demand for our products and services; our ability to efficiently and flexibly manage our business amid uncertainties related to COVID-19; our ability to successfully and profitably market our products and services; the acceptance of our products and services by patients and healthcare providers; our ability to meet demand for our products and services; the success of our efforts to facilitate patient access to Cologuard via telehealth; the willingness of health insurance companies and other payers to cover our products and services and adequately reimburse us for such products and services; the amount and nature of competition for our products and services; the effects of the adoption, modification or repeal of any law, rule, order, interpretation or policy relating to the healthcare system, including without limitation as a result of any judicial, executive or legislative action; the effects of changes in pricing, coverage and reimbursement for our products and services, including without limitation as a result of the Protecting Access to Medicare Act of 2014; recommendations, guidelines and quality metrics issued by various organizations such as the U.S. Preventive Services Task Force, the American Society of Clinical Oncology, the American Cancer Society, and the National Committee for Quality Assurance regarding cancer screening or our products and services; our ability to successfully develop new products and services and assess potential market opportunities; our ability to effectively enter into and utilize strategic partnerships, such as through our Promotion Agreement with Pfizer, Inc., and acquisitions; our success establishing and maintaining collaborative, licensing and supplier arrangements; our ability to maintain regulatory approvals and comply with applicable regulations; our ability to manage an international business and our expectations regarding our international expansion and opportunities; the potential effects of foreign currency exchange rate fluctuations and our efforts to hedge such effects; the possibility that the anticipated benefits from our business acquisitions cannot be realized in full or at all or may take longer to realize than expected; the possibility that costs or difficulties related to the integration of acquired businesses will be greater than expected and the possibility of disruptions to our business during integration efforts and strain on management time and resources; the outcome of any litigation, government investigations, enforcement actions or other legal proceedings; and the other risks and uncertainties described in the Risk Factors and in Management's Discussion and Analysis of Financial Condition and Results of Operations sections of our most recently filed Annual Report on Form 10-K and our subsequently filed Quarterly Reports on Form 10-Q. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Investor Contact:
Megan Jones
Exact Sciences Corp.
meganjones@exactsciences.com
608-535-8815

Media Contact:
Cara Connelly
Exact Sciences Corp.
cconnelly@exactsciences.com
608-284-5735

 

EXACT SCIENCES CORPORATION
Selected Unaudited Financial Information
Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share data)






Three Months Ended June 30,


Six Months Ended June 30,


2020


2019


2020


2019

Revenue

$

268,868



$

199,870



$

616,689



$

361,913










Operating expenses








Cost of sales (exclusive of amortization of acquired intangible assets)

77,892



51,139



159,498



93,966


Research and development

32,673



29,972



76,182



61,757


Sales and marketing

118,862



88,190



286,611



179,129


General and administrative

106,685



63,723



220,676



127,529


Amortization of acquired intangible assets

23,430



748



46,769



1,508


Total operating expenses

359,542



233,772



789,736



463,889










Other operating income

23,665





23,665




Loss from operations

(67,009)



(33,902)



(149,382)



(101,976)










Other income (expense)








Investment income, net

2,912



7,669



3,009



14,324


Interest expense

(22,912)



(12,712)



(48,065)



(34,702)


Total other income (expense)

(20,000)



(5,043)



(45,056)



(20,378)










Net loss before tax

(87,009)



(38,945)



(194,438)



(122,354)










Income tax benefit

867



443



2,599



913










Net loss

$

(86,142)



$

(38,502)



$

(191,839)



$

(121,441)










Net loss per share—basic and diluted

$

(0.58)



$

(0.30)



$

(1.29)



$

(0.95)










Weighted average common shares outstanding—basic and diluted

149,727


129,182


148,938


127,723

 

EXACT SCIENCES CORPORATION
Selected Unaudited Financial Information
Condensed Consolidated Balance Sheets
(Amounts in thousands)






June 30, 2020


December 31, 2019

Assets




Cash and cash equivalents

$

703,926



$

177,254


Marketable securities

518,731



146,401


Accounts receivable, net

163,608



130,667


Inventory, net

82,215



61,724


Prepaid expenses and other current assets

36,378



40,913


Property, plant and equipment, net

463,437



455,325


Operating lease right-of-use assets

132,751



126,444


Goodwill

1,237,672



1,203,197


Intangible assets, net

1,105,115



1,143,550


Other long-term assets, net

23,902



20,293


Total assets

$

4,467,735



$

3,505,768






Liabilities and stockholders' equity




Total current liabilities

$

222,274



$

236,494


Convertible notes, net

1,534,383



803,605


Long-term debt, less current portion

22,944



24,032


Other long-term liabilities

50,311



34,911


Operating lease liabilities, less current portion

126,630



118,665


Total stockholders' equity

2,511,193



2,288,061


Total liabilities and stockholders' equity

$

4,467,735



$

3,505,768


 

EXACT SCIENCES CORPORATION
Selected Unaudited Financial Information
EBITDA and Adjusted EBITDA Reconciliations
(Amounts in thousands)






Three Months Ended June 30,


Six Months Ended June 30,


2020


2019


2020


2019

Net loss

$

(86,142)



$

(38,502)



$

(191,839)



$

(121,441)


Interest expense

22,912



12,712



40,111



24,144


Investment income

(2,912)



(7,669)



(3,009)



(14,324)


Depreciation and amortization

41,056



7,880



80,401



15,015


Income tax benefit

(867)



(443)



(2,599)



(913)


EBITDA

$

(25,953)



$

(26,022)



$

(76,935)



$

(97,519)


Stock-based compensation

38,780



20,143



65,522



36,309


Loss on settlement of convertible notes





7,954



10,558


Acquisition and integration costs (1)

3,719





11,768




Reduction-in-force severance (2)

2,198





2,198




CARES Act Funding (3)

(23,665)





(23,665)




Adjusted EBITDA

$

(4,921)



$

(5,879)



$

(13,158)



$

(50,652)









(1) Represents acquisition and related integration costs incurred as a result of the company's combination with Genomic Health. Acquisition and integration costs were $3.7 million and $11.8 million for the three months and six months ended June 30, 2020. The costs primarily consist of legal and other professional service fees and incremental stock-based compensation including the fair value of stock awards assumed by the company in connection with the Genomic Health combination. Legal, severance, and other professional service fees were $2.4 million and $7.7 million for the three months and six months ended June 30, 2020. Incremental stock-based compensation including the fair value of assumed stock awards was $1.3 million and $4.1 million for the three months and six months ended June 30, 2020, respectively.






(2) Represents severance costs as a result of proactive measures the Company put in place to address the impact of the COVID-19 pandemic. The severance cost resulting from this workforce reduction was $2.2 million for the three months and six months ended June 30, 2020.






(3) As part of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), the Company received $23.7 million from the United States Department of Health and Human Services Provider Relief Fund provided to eligible healthcare providers. The CARES Act funds are meant to offset the implications of the COVID-19 pandemic which include increases in the Company's costs and lost revenues.


 

EXACT SCIENCES CORPORATION
Selected Unaudited Financial Information
Non-GAAP Gross Profit and Non-GAAP Gross Margin Reconciliations
(Amounts in thousands)






Three Months Ended June 30,


Six Months Ended June 30,


2020


2019


2020


2019

Revenue

$

268,868



$

199,870



$

616,689



$

361,913


Cost of sales (exclusive of amortization of acquired intangible assets)

77,892



51,139



159,498



93,966


Amortization of acquired intangible assets (1)

20,555



424



41,018



849


Gross profit

$

170,421



$

148,307



$

416,173



$

267,098


Gross margin

63

%


74

%


67

%


74

%









Amortization of acquired intangible assets (1)

20,555



424



41,018



849


Non-GAAP gross profit

$

190,976



$

148,731



$

457,191



$

267,947


Non-GAAP gross margin

71

%


74

%


74

%


74

%





(1) Includes only amortization of intangible assets identified as developed technology assets through purchase accounting transactions, which otherwise would have been allocated to cost of sales.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/exact-sciences-announces-second-quarter-2020-results-301103473.html

SOURCE EXACT SCIENCES CORP