Exact Sciences, a large holding of Cathie Wood's ARK Innovation fund, came in hot with double-digit sales growth that easily beat third-quarter projections. But EXAS stock reversed earlier gains and closed in the red.
The company makes Cologuard, a noninvasive means of screening for colorectal cancer by examining a patients' stool. Colon cancer is increasingly affecting younger patients. But the U.S. health system is facing a massive backlog of patients who aren't up to date with screening recommendations. Exact's screening tool is an alternative to traditional colonoscopies.
And sales are booming.
In the September quarter, sales in Exact Sciences' screening division surged 31% to $472 million. That beat EXAS stock analysts' view by $10 million, according to FactSet. The screening segment includes primarily laboratory service revenue from Cologuard and blood-based genetic tests that screen for hereditary forms of cancer called PreventionGenetics.
"The solid results were driven by continued Cologuard volume growth, with revenue from this product increasing roughly 30% year over year," Canaccord Genuity analyst Kyle Mikson said in a report to clients.
On today's stock market, EXAS stock sank 1.7% to 62.46.
Is EXAS Stock Nearing Profitability?
Overall, Exact Sciences posted no earnings on $628.3 million in sales. Wall Street called for a 47-cent loss per share on $617 million in sales. This is the first quarter since March 2021 that Exact Sciences hasn't reported an adjusted loss. Sales climbed 20% year over year.
Meanwhile, Precision oncology sales — which includes Exact's Oncotype DX and therapy selection tools that help match patients with precise medicines — inched 3% ahead to $156.3 million. Analysts expected a lower $154 million. Oncotype DX helps screen patients for recurring breast cancer.
Exact Sciences also raised its full-year outlook for the third time this year. The company now expects sales to come in at roughly $2.48 billion to $2.49 billion. That beat EXAS stock analysts' prediction for 2.47 billion.
The guidance includes increases for Exact's screening and precision oncology revenue. Exact expects screening sales of $1.85 billion, at the midpoint, and its precision oncology business to generate $622 million to $627 million in sales. Exact reiterated its guidance for $6 million in Covid testing sales.
Will Margins Be Pressured?
"Looking forward, it remains to be seen if the robust Cologuard business momentum will continue or if the company's rising expenditures will pressure (or limit) margins in the near term," Canaccord's Mikson said. He kept his buy rating and 120 price target on EXAS stock.
Despite falling roughly 41% from a record high at 100.77 in July, EXAS stock remains a large holding in Cathie Wood's ARK Innovation exchange traded fund. The fund holds almost $193 million in shares.
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