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:
http://investor.exactsciences.com/investor-relations/press-r…
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.
Seq QOQ YOY TTM YOY
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.
Thoughts?