Exact Sciences reported its sixth consecutive quarter of double-digit sales growth, but screening revenue missed whispered expectations and EXAS stock plummeted Wednesday.
The company makes Cologuard, a noninvasive method of testing stool for signs of colorectal cancer. Total revenue — which includes other diagnostic tests — climbed 19% to $622.1 million. That beat expectations for $601 million, according to FactSet.
But Evercore ISI analyst Vijay Kumar says screening revenue came in below whispered expectations. In the second quarter, screening sales rose about 4% sequentially. That's below the 9%-14% historical trend.
"Some of the sequential math will be hard to decipher on two accounts," he said in a note to clients. "You might have had a bolus of patients getting back to the system post pandemic, making the first-quarter jump-off point above trend. Second, Exact pointed to a 50 million-person re-screening headwind due to volume declines in 2020 (pandemic impact), some of which could have impacted the second quarter."
Exact Sciences also reported lighter-than-expected losses of 45 cents per share, narrowing from a loss of 94 cents a share during the same three months last year.
On today's stock market, EXAS stock plunged 11.7% to close at 85.13. Exact Sciences stock is in Cathie Wood's ARK Innovation exchange-traded fund. The ETF owns almost 4% of EXAS stock.
EXAS Stock: Screening Sales Surge
The lion's share of growth came from Exact Sciences' screening products, like Cologuard. Sales surged to $462.8 million. The precision oncology business, which includes a breast cancer recurrence test called Oncotype DX, brought in $157.2 million, rising 2%.
Both segments topped predictions for $451 million and $149 million, respectively, though some investors wanted that screening number to be a "tad" higher, Evercore's Kumar said.
Canaccord Genuity analyst Kyle Mikson says some of Cologuard's massive growth could be moderating.
"It appears revenue growth for this product may be finally normalizing, recognizing re-screen revenue headwinds will be strongest in the second half of 2023," he said in his note to clients. "That said, we continue to view the Cologuard performance as impressive (especially for a product generating nearly $2 billion in annual revenue."
He raised his price target on EXAS stock to 120 from 115, and kept his buy rating.
Like Pfizer and Merck, Exact Sciences also reported a decline for its Covid products. Revenue from Covid tests tumbled 84% to $2.1 million. But that topped EXAS stock analysts' calls for $1 million, FactSet shows.
Exact Sciences raised its outlook for the year. It now expects roughly $2.44 billion to $2.47 billion in sales. That includes $1.82 billion to $1.84 billion from screening products, $615 million to $625 million from precision oncology and $6 million on Covid testing sales.
EXAS stock analysts had predicted full-year sales of $2.42 billion.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
