Exact Sciences Announces Second Quarter 2020 Results
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(TM) 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.
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SOURCE EXACT SCIENCES CORP
