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Exact Sciences Q1 Revenues Up 115 Percent

NEW YORK – Exact Sciences reported after the close of the market on Wednesday that its first quarter revenues rose 115 percent year over year, thanks largely to a 35 percent increase in screening product revenues.

For the three months ended March 31, the Madison, Wisconsin-based molecular diagnostics company reported revenues of $347.8 million, up from $162.0 million a year earlier, missing the average Wall Street estimate of $350.4 million, and in line with its own preliminary revenue estimate of $348.0 million.

Screening revenues rose to $219.5 million, and precision oncology revenues rose 18 percent to $128.4 million versus pro forma Q1 2019. Screening includes laboratory service revenues from Exact's Cologuard colorectal cancer screening test and revenues from Biomatrica products, the company said. Precision oncology includes laboratory service revenues from global Oncotype DX products and the recent acquisition of Paradigm Diagnostics.

"Even in unprecedented times, cancer doesn't stop. The coronavirus pandemic highlights and increases the need for novel ways to screen for cancer, detect it early, and guide treatment. Our Cologuard, Oncotype DX, and Paradigm tests meet that need," Exact Chairman and CEO Kevin Conroy said in a statement. "In a world that is trying to avoid unnecessary physician office visits, invasive procedures, and treatments, our tests and deep pipeline are more valuable now than ever. We plan to play an even greater role in cancer screening and guiding therapy decisions after the coronavirus pandemic abates."

On a conference call with analysts following the release of the earnings, Exact CFO Jeffrey Elliott said that approximately 9,000 new healthcare providers ordered Cologuard during Q1 and that nearly 206,000 doctors have ordered the test since its launch.

In its preliminary Q1 earnings announcement, the company said that it had seen a significant and widespread decline in standard wellness visits and preventive services that had negatively affected Cologuard test orders. Through the end of February, Cologuard revenues were tracking consistently with the company's original first quarter guidance range of $230 million to $235 million. But from March 15 through March 31 and during the first 20 days of April, Cologuard test orders decreased 36 percent and 63 percent year-over-year, respectively. During April, Exact said the year-over-year decline in Cologuard test orders appeared to have stabilized.

On the conference call, Elliott confirmed that fewer Cologuard tests were being ordered and that patients were completing tests at a lower rate, due to the impact of the pandemic.

"After a 63 percent year-over-year decline in Cologuard test orders during the first 20 days of April, we have recently seen a slight recovery," he added. "Orders declined 47 percent year-over-year in the last 10 days of April with continued positive trends in May."

Further, after delivering strong results in the first quarter, the precision oncology business was also starting to see weakening underlying conditions because of the pandemic, most notably in the US prostate business and in certain international geographies. The company said it expected the widespread decrease in preventive services, such as mammograms and prostate cancer screenings, to negatively affect precision oncology test volumes in the coming months.

Elliott noted that the pandemic created weaker underlying conditions for Exact in certain geographies, resulting in a test volume decline from March to April. While first quarter growth in the prostate testing business in the US was strong during April, the pandemic contributed to a 26 percent year-over-year volume decrease as physician office visits declined, he said.

Exact's labs were providing COVID-19 testing on a limited basis under a public-private partnership initiated by the State of Wisconsin to increase its laboratory testing capacity for COVID-19. The company also recently received Emergency Use Authorization from the US Food and Drug Administration for its own in vitro diagnostic assay for the detection of SARS-CoV-2.

On the conference call, Elliott was asked about how many COVID tests the company has been running per week for the last month. He declined to provide that number, but said that Exact's lab capacity today is at least 60,000, and there's room to ramp that up further if the demand is there.

"I'm not going to provide guidance on the path forward here, how much will it contribute," Elliott added. "It's safe to say we expect it to be a nice contributor going forward. That said, we hope we can get out of this business as soon as possible, and COVID is something we never have to talk about again."

Exact's Q1 net loss widened to $105.7 million, or $.71 per share, from $82.9 million, or $.66 per share, in the year-ago period. Analysts had expected a loss of $.61 per share.

The company's R&D costs for the quarter rose 37 percent to $43.5 million from $31.8 million in Q1 2019, and its SG&A expenses rose 82 percent to $281.7 million from $154.7 million.

Exact ended the quarter with $701.1 million in cash and cash equivalents, and $530.1 million in marketable securities. These amounts include $975.5 million raised from the issuance of new convertible notes and the repayment of a portion of previously issued convertible notes, the company said.

In addition, Exact had previously reported that it had initiated several cost-saving measures intended to save more than $400 million in 2020, and that it had received $24 million of funding under the CARES Act in April. A company spokeswoman told GenomeWeb that those funds were received as part of the Department of Health and Human Services' provider relief fund, which is meant to reimburse healthcare-related expenses or lost revenue attributable to coronavirus.

Finally, the company declined to provide revenue guidance for the rest of the year. "Since the COVID-19 environment is rapidly evolving, and there are continued uncertainties surrounding its impact, we are not providing financial guidance at this time," Elliott said.

Exact's shares rose more than 2 percent to $79.53 in early Thursday morning trading on the Nasdaq.