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Exact Sciences Reaps Q2 Rewards From Growth in Colon Cancer Screening


NEW YORK – Exact Sciences is continuing to boost adoption of its colorectal cancer screening test Cologuard, taking advantage of recent updates to national guidelines. However, the company still sees a long runway ahead in terms of filling gaps that leave many eligible individuals untested.

On Tuesday, the firm reported that its screening revenue during the second quarter of 2022 was $353.9 million, up 34 percent compared to the same period last year. Exact CEO Kevin Conroy said on a call with analysts and investors that the company tested more than 700,000 people with Cologuard during the three months ended June 30.

Among factors driving this growth, Exact cited a recently launched advertising campaign with television host Katie Couric, as well as expansion in the colon cancer screening market itself with guidelines now recommending screening in Americans as young as 45.

Over the last few years, the company's growth in access to physicians has stalled due to the COVID-19 pandemic, but Conroy said the firm expects it to soon pick up again.

"The need for colon cancer screening is persistent, and we're seeing a fundamental shift, that is, that Cologuard is becoming more commonly accepted within large health systems, among primary care physicians, and importantly, among patients as just a great way to get screened," Conroy said.

In addition, Conroy highlighted the Centers for Medicare and Medicaid Services' recent proposition to remove a significant barrier to screening by eliminating Medicare cost sharing for a follow-up colonoscopy after a positive stool-based screening test.

The move would address a top concern patients and providers have about using Cologuard, Conroy said.

Jeff Elliott, Exact's CFO and chief operating officer, added that increased electronic ordering should also drive greater adoption in coming years, citing a backlog of health systems wanting to convert.

During the pandemic, the company saw a drop in orders from its long-term customer base, which the company attributed to healthcare staff shortages, which translate to a lack of access for its sales reps. But that drop seems to be resolving, Elliott said. 

"These are doctors that are the true believers … and as the patient flow is ticking back up and as access improves, they will come back even more and expand from their current levels," he said.

Meanwhile, the pandemic environment also drove a significant boost in test orders from new customers. "These are doctors who historically only ordered infrequently. Oftentimes, we didn't even call them, so this part of the business is tremendously exciting. Those doctors have essentially doubled their order rate relative to the start of the pandemic," Elliott added.

Nevertheless, Conroy said that Exact believes Cologuard has a "tremendously long runway ahead of it."

"There are between 45 million and 60 million unscreened people who need to be screened, the people [aged] 45 to 49 are starting to be screened at an increasing clip," he said, adding that almost half of first-time Cologuard users are new to screening.

While it continues its efforts with Cologuard, Exact is also building additional screening tools with a second-generation stool assay, a blood-based version of the test in the works, and a multi-cancer detection assay also in the pipeline.

Conroy said that Exact has now enrolled the number of cancer patients necessary to power an FDA submission for its next-generation Cologuard test but will continue enrollment to ensure it has enough cases to do the same for its blood-based version.

The test could possibly launch in 2023, but Conroy said Exact hasn't made any official decision on timing. For the blood-based assay, things will take longer considering the need for updated guidelines to support payor coverage.

Guardant Health, a competitor in this arena, launched its own blood-based CRC screening test, Guardant Shield, in May. According to Conroy, Exact saw "zero impact" from this during the quarter.

The same should continue to be true for some time, he added. "With tests that aren't reimbursed, that aren't in guidelines … it's challenging to conceive of a way that there would be significant uptake there that could impact us."

"Blood tests have a role in colon cancer screening … just not in the near term," Conroy said.

Although the company's current business is dominated by screening, Exact is hoping to build a holistic presence in cancer care, addressing needs post-diagnosis.

The company reported total revenue of $521.6 million in Q2, up 20 percent from $434.8 million for the same period of 2021. Excluding its waning COVID-19 testing, revenues were up 26 percent.

Precision Oncology revenue was $154.0 million, up about 12 percent year over year.

During the firm's conference call, Conroy said the company has been transformed by acquisitions in recent years, "building what we believe is the best reach all the way from primary care, GI, Ob/Gyn, other specialties, all the way to oncology."

But that doesn't mean the firm won't trim its portfolio, as the company announced simultaneously that it is jettisoning it's Oncotype DX Prostate test in a sale to MDx Health for up to $100 million.

Conroy said that Exact will become "one of the important shareholders" of the urology-focused firm and certain members of its urology team will transition to MDx Health. "We want to support and help them be successful, and we believe that this is the right home for Oncotype DX Prostate."

"The divesture of Oncotype Prostate is not a major surprise and glad to see the company being more selective about funding future projects," Craig-Hallum analyst Alex Nowak said in a research note following the call.

Exact posted a Q2 net loss of $166.1 million, or $0.94 per share, compared to a net loss of $176.9 million, or $1.03 per share, in the same quarter last year.

The firm ended Q2 with cash and cash equivalents of $213.4 million and marketable securities of $514.6 million.