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Exact Sciences Reports 16 Percent Q1 Revenues Rise, Acquires PFS Genomics for $30.6M

NEW YORK – Exact Sciences reported after the close of the market on Tuesday that its first quarter revenues rose 16 percent year over year, thanks largely to a 10 percent increase in revenues from its screening business.

For the three months ended March 31, the Madison, Wisconsin-based molecular diagnostics company reported revenues of $402.1 million, up from $347.8 million a year earlier, beating the average Wall Street estimate of $388.6 million.

Screening revenues, which include laboratory services for the Cologuard colorectal cancer screening test and Biomatrica products, rose to $240.3 million, while precision oncology revenues, which include laboratory services from global Oncotype DX products, rose 1 percent to $129.4 million. Exact also reported COVID-19 testing revenues of $32.3 million for the quarter.

"The first quarter demonstrated Exact Sciences is well-positioned for growth today and into the future," Kevin Conroy, Exact's chairman and CEO, said in a statement. "Our Cologuard and Oncotype tests help people in need of answers, including those who have been vulnerable during the pandemic. We plan to bring additional solutions to patients throughout the course of their diagnosis and treatment."

On a conference call with analysts following the release of the earnings, Conroy also announced that Exact recently acquired PFS Genomics, which has developed a screening test for early-stage invasive breast cancer patients to identify those who could benefit from treatment with radiotherapy.

Under the terms of the deal, which closed after the end of the first quarter on May 3, Exact acquired approximately 90 percent of PFS Genomics' outstanding capital stock for $30.6 million in cash.

In its 10-Q filing with the US Securities and Exchange Commission, the company said it expects this acquisition to "expand our ability to help guide early-stage breast cancer treatment through individualized radiotherapy treatment decisions."

On the call, Exact CFO Jeff Elliott noted that the company's field representatives saw improved physician office access during the quarter, and that there were solid contributions from three-year rescreenings. He also said the electronic ordering rate for Exact's tests rose 13 percent year over year to 43 percent in Q1.

Elliott further noted that 8,000 new healthcare providers ordered Cologuard during the quarter, and more than 235,000 physicians have now ordered the test since its launch.

Conroy also announced that the company is making its liver cancer test, Oncoguard Liver, available to healthcare providers and patients this week. The blood test helps detect hepatocellular carcinoma, the most common form of liver cancer, Conroy said, noting that Oncoguard Liver has demonstrated high sensitivity in the early stages of cancer.

"Oncoguard Liver — developed with Mayo Clinic — was tested across multiple studies, including marker selection, algorithm setting, and clinical validation," Conroy said. "Results of these studies showed enhanced sensitivity and specificity for early-stage disease. We expect to publish the results of the Oncoguard Liver validation study by year-end."

The company's near-term goal in making the test available is to generate real-world evidence to support guideline inclusion, broad reimbursement, and wide adoption over time, he added.

Exact's Q1 net loss narrowed to $31.2 million, or $.18 per share, from $134.6 million, or $.91 per share, in the year-ago period. The reason for the reduced loss was that the firm received an income tax benefit of $242.8 million in the quarter due to a change in the deferred tax asset valuation allowance resulting from its acquisition of Thrive Earlier Detection last October. Analysts had expected a loss of $1.03 per share.

The company's R&D costs for the quarter more than doubled to $115.6 million from $43.5 million in Q1 2020, and its SG&A expenses rose 61 percent to $453.8 million from $281.7 million.

Exact ended the quarter with $1.10 billion in cash and cash equivalents and $274.2 million in marketable securities.

For 2021, the company is anticipating revenues of approximately $1.69 billion to $1.74 billion, including screening revenues of $1.13 billion to $1.15 billion, precision oncology revenues of $515 million to $525 million, and COVID-19 testing revenues of $50 million to $60 million. Analysts are expecting total revenues of $1.72 billion for the year.

Exact's shares fell less than 1 percent to $115.45 in Wednesday morning trading on the Nasdaq.