EXAS update 1Q19

So I’ve been posting updates on EXAS on a semi-consistent basis (for those that don’t know, they provide a stool test for colorectal cancer screening, as opposed to, or in concert with, a colonoscopy). They released their last results about 2 months ago on 4/20/19, and it was another impressive quarter with growth re-accelerating to 80%. For those that remember what I’ve posted before (you can search for my old posts on EXAS if you’re interested), they were growing in the triple digits for 8 quarters, from 4Q15, to 4Q17, posting revenue growth from 125% to 250% during that time (see table below). Revenue growth started coming down in 1Q18 into the 80s, then 70s, then a couple quarters in the 60s, before re-accelerating this last quarter back up to 80%.

	Revs (Millions)	Seq Rev Growth	YOY Rev Growth	TTM Rev (Millions)   TTM YOY 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%
1Q18	     $90	    3.0%	   86.0%	    $308	          131.5%
2Q18	    $103	   14.4%	   78.8%	    $353	          108.5%
3Q18	    $118	   14.6%	   62.5%	    $398	           86.3%
4Q18	    $143	   21.2%	   63.6%	    $454	           70.7%
**1Q19	    $162	   13.3%	   80.0%	    $526	           71.0%**

The growth increase is because of the partnership with Pfizer to sell their Cologuard tests. Last quarter was the first full quarter of the partnership, and I believe as the large, established Pfizer sales force becomes more adept at selling the Cologuard test, that the growth will continue to increase.

Even with the growth they’ve seen, they’ve currently captured just 4.6% of their market, with a long term goal of 40% share.

Some other highlights from their last quarter:

  • Revenue of $162 million, an increase of 79 percent, and test volume of 334,000, an increase of 79 percent
  • Average Cologuard recognized revenue per test was $483, a decrease of $2
  • Average Cologuard cost per test was $128, an increase of $4
  • Gross margin was 73 percent, a decrease of 130 basis points
  • Nearly 14,000 healthcare providers ordered their first Cologuard test during the first quarter, and more than 160,000 have ordered since the test was launched

2019 Outlook

The company anticipates revenue of $725-$740 million during 2019, an increase from prior guidance of $710-730 million

Their expenses have also been going up quite a bit because of their increased focus on sales and they expanded the capacity of their original lab in Wisconsin to be able to process 3M samples/year and built a new second facility that will be able to process another 4M samples/year. It took them almost 4 years to perform their first million screenings (FDA approval for Cologuard was in 2014), but only another year to notch their second 1M screenings, and they’re now set up with the facilities to perform 7M/year as they scale up sales to fill that capacity.

And the Pfizer partnership is just one of the potential catalysts I’ve identified in previous posts, and the only one that has come into play so far. The other two are:

  1. They’ve submitted an application to the FDA for the Cologuard label to include the 45-49 year old age group, instead of the previous recommendation of 50 years and older, increasing the TAM by about 20M people (25%).

  2. The development with the Mayo Clinic of a liquid biopsy (blood test) screening that demonstrates a potential to achieve 92% sensitivity and 92% specificity for detecting the most common type of pancreatic cancer. Recent article here:


And how has the stock done? YTD it’s up 84%, right up their with our high performing enterprise/cloud/SaaS stocks. I’ve bought in the $30’s, $40’s, $50’s, $60’s, $80’s and $90’s, and it’s currently at $118, just under it’s ATH…I started buying in Sept '17 and my total EXAS position is up 95%. I am considering buying more, as I think the accelerating growth will give the stock another boost, and it’s still only a 4% position in my portfolio as I never want to have too much in bio/medical stocks as there are plenty of risks.

I would say the largest risk would be another company coming up with a liquid biopsy test that screens for colorectal cancer with the same or better sensitivity as the Cologuard test. But there’s been talk about this potential for quite awhile now and still no competition outside of a colonoscopy.

Not a stock for everyone, great potential, but plenty of risk, too. Do your own DD and make your own decisions, I’ve made mine.


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