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Exact Sciences Q2 Revenues Up 35 Percent, Buoyed by COVID-19 Testing Sales

NEW YORK – Exact Sciences reported after the close of the market on Thursday that its second quarter revenues rose 35 percent year over year, despite a 34 percent decrease in screening product revenues.

For the three months ended June 30, the Madison, Wisconsin-based molecular diagnostics company reported revenues of $268.9 million, up from $199.9 million a year earlier, beating the average Wall Street estimate of $228.4 million.

Screening revenues fell to $131.3 million, and the company reported precision oncology revenues of $103 million for Q2. 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 revenues from the Q4 2019 acquisition of Paradigm Diagnostics.

Exact also reported COVID-19 testing revenues $34.6 million for the quarter.

"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," Exact Chairman and CEO Kevin Conroy said in a statement. "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."

On a conference call with analysts following the release of the earnings, Exact CFO Jeff Elliott said the pandemic drove a decline in test orders and caused a temporary negative impact on patient compliance for Cologuard.

"In April, Cologuard hit a low point and then improved through June, outpacing colonoscopy growth during that time," he said. "About 5,000 new healthcare providers ordered Cologuard during the quarter and nearly 211,000 have ordered since launch."

Conroy also noted during the call that Exact has seen increased Cologuard use among customers who were previously infrequent users, and that Cologuard ordering is now near pre-COVID levels.

"This recovery occurred with significantly limited physician office access for our field sales force, a key driver of growth historically," he said. "We plan to solidify this strength and awareness by continuing to highlight Cologuard's value to providers."

For the precision oncology business, Elliott noted that there's normally a lag between screening mammograms and Oncotype DX testing. Doctors usually order a mammogram first for cancer diagnosis, and then order Oncotype DX for patients with early-stage breast cancer to help predict chemotherapy response and recurrent risk, he said.

In April, there was a significant decline in mammograms, so Oncotype DX test volumes started to soften in May. For the third quarter, the company is expecting total precision oncology revenues to decline sequentially based on mammography volume trends in recent months.

"Despite this, the long-term outlook for Oncotype DX is very strong," Elliott added. "That's due to the robust evidence and highly capable team supporting the test, a solid US market position, and a significant international runway."

Exact's Q2 net loss widened to $86.1 million, or $.58 per share, from $38.5 million, or $.30 per share, in the year-ago period. Analysts had expected a loss of $.63 per share.

The company's R&D costs for the quarter rose 9 percent to $32.7 million from $30 million in Q2 2019, and its SG&A expenses rose 49 percent to $225.6 million from $151.9 million.

Exact ended the quarter with $703.9 million in cash and cash equivalents and $518.7 million in marketable securities.

In addition, the company reported that it received a one-time payment of $23.7 million from the Coronavirus Aid, Relief, and Economic Security (CARES) Act Provider Relief Fund.

On the conference call, Elliott noted that the recent rise in COVID infections has slowed the pace of recovery in Exact's business, so the company is not providing guidance because of the uncertainty.

Exact's shares fell more than 4 percent to $93.78 in Friday morning trading on the Nasdaq.

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