EXAS 8 qtrs of triple digit growth

I posted about Exact Sciences about a month or two ago when they pre-released their 4Q revenue number, so that number was no surprise in their release from a week ago.

Here is their Q4 release:


And here are some Q4 highlights:

- Revenue was $87.4 million, an increase of 148 percent
- Test volume was 176,000, an increase of 115 percent
- Average recognized revenue per test was $498, an increase of 15 percent
- Average cost per test was $134, an improvement of 21 percent
- Gross margin was 73 percent, an increase of 1,250 basis points
- Operating expenses were $87.0 million, an increase of 47 percent
- Net loss was $21.8 million or $0.18 per share, compared to $37.2 million or $0.34 per share
- Cash utilization was $37.8 million, compared to $26.7 million
- Cash, cash equivalents and marketable securities were $424.7 million at the end of the quarter; subsequent to the end of the quarter, the company raised an estimated $671.3 million, net, through an offering of convertible notes
- Nearly 11,000 healthcare providers ordered their first Cologuard during the fourth quarter, and approximately 102,000 have ordered since the test was launched

For the full year, they completed 571,000 tests, an increase of 134% from 2016. I don’t have the link, or remember where I read it, but I believe their TAM is estimated to be around 80M in the US. Obviously not everyone will go with this test, many will stay with traditional colonoscopies, but there is a huge number that do nothing currently (I assume mostly because of the “ick” factor of colonoscopies), that could be willing to do this test instead.

The revenue growth rates here are nothing short of spectacular and have been for 3 years now. They gained FDA approval for Cologuard in Aug 2014 and here are their revenue numbers since then.

	Revs (Millions)		         Total		
	Q1	Q2	Q3	Q4	 Revs	  Growth

2015	$4	$8	$13	$14	 $39	  2088.9%
2016	$15	$21	$28	$35	 $99	  152.0%
2017	$48	$58	$73	$87	 $266	  167.9%

Here are their sequential QOQ and YOY revenue growth rates for the last 8 quarters.

                Rev     Rev     TTM     Rev
        Revs    Growth  Growth  Rev     Growth

1Q16	$15	2.8%	244.2%	$50	760.3%
2Q16	$21	43.2%	161.7%	$63	353.2%
3Q16	$28	32.5%	123.0%	$79	196.2%
4Q16	$35	25.3%	144.4%	$99	152.0%
1Q17	$48	37.5%	227.0%	$133	166.3%
2Q17	$58	19.0%	171.7%	$169	168.7%
3Q17	$73	26.0%	158.4%	$214	172.4%
4Q17	$87	20.4%	148.3%	$266	167.9%

Their sequential QOQ growth rates are more than most companies grow in a year, and the YOY rates are amazing. Of course they can’t keep that up forever, but they’re certainly doing it for now, and still have a huge runway ahead of them.

They don’t really have recurring revenue, but they also don’t seem to have much trouble finding new people to take the test each quarter.

Here is the 2018 outlook they gave even though they have significantly beaten estimates in the past: The company anticipates revenue of $420-$430 million and completed Cologuard test volume of 900,000-920,000 tests during 2018.

The main risk is them being disrupted by a new colon cancer diagnostic test (which obviously is a possibility).

I’m not trying to say that Cologuard will (or should) replace colonoscopies, EXAS isn’t, either, it’s just another option. Here is what the company has to say about that:

Cologuard is indicated to screen adults of either sex, 50 years or older, who are at average risk for colorectal cancer. Cologuard is not for everyone and is not a replacement for diagnostic colonoscopy or surveillance colonoscopy in high-risk individuals. False positives and false negatives do occur. Any positive test result should be followed by a diagnostic colonoscopy. Following a negative result, patients should continue participating in a screening program at an interval and with a method appropriate for the individual patient.

They’re not making money yet, but are getting closer with every quarter, here are their non-GAAP EPS numbers for the 3 years shown above.

	Non-GAAP EPS				Total	
	Q1	Q2	Q3	Q4		EPS

2015	(0.40)	(0.44)	(0.45)	(0.41)		(1.70)
2016	(0.49)	(0.46)	(0.36)	(0.34)		(1.65)
2017	(0.32)	(0.27)	(0.23)	(0.18)		(1.00)

Their losses are narrowing every quarter as you would hope, but unknown yet when they will turn a profit.

I would imagine they also could be a potential takeover candidate.

The stock price over the past 2 years has gone from $5 to $60 but has pulled back to $40-$45 recently. I only started buying this about 6 months ago when it was about $40 on it’s way up, so I’m actually down some currently as I added some at higher prices. I don’t have a large position by any means, but plan on holding and potentially adding if their rev growth stays on track.

I know some here own this as I’ve seen it in a couple portfolios, but not many I believe because of the possible risk of disruption.



I owned it. Sold for a little profit to buy Nektar and Pure Storage (I think) It physically hurt to sell EXAS. They have a product, good one, and it is selling well. They have other related products in the pipeline, and are in fact a Big Data play, among other things.

They had a pull back because their sales were off due to flue season. They couldn’t get in to see the doctors, the doctors had no time for routine patients and the doctors were ill.

If I had anything I was will to let go of, Exact Sciences is one I would be interested in. They have some competition on the horizon, but none in the field. It seems to me that Exact Sciences is probably the lowest risk medical play I have been pitched.

Certainly a lower risk than Nektar. (This doesn’t mean I didn’t feel exhilaration with the 20 percent in a day thing)

On the other hand, the chart is pretty awful. I wonder if there is a fundamental reason for support here.

Pure speculation follows: The last quarter was bad due to the flue season. Is it probable that the lost sale were not lost? Could those sales have simply been pushed into the next quarter? If so, the next quarter results could be blow out and have the computers and momo traders piling on.

Qazulight (Will avoid colonoscopy if possible.)


Oh by the way.

Thanks Foodles.

I looked into Exact Sciences and bought becuase of those discussions here. I walked away with a bit of money.

However, I am still convinced Saul has a time machine.


1 Like