EXAS update 2Q19

Some big news from EXAS, they released their 2Q results a day early today. About 3 weeks ago I finally got an update out on this board from their first quarter. Here’s that update:


Here were my thoughts on their performance going forward, …I believe as the large, established Pfizer sales force becomes more adept at selling the Cologuard test, that the growth will continue to increase.

It seemed pretty obvious to me, and it played out exactly as expected with rev growth INCREASING from 80% to 94%. And seeing as how this was still just the 2nd full quarter of the partnership, I expect the rate to continue over 100% for at least the next couple quarters. Here were the numbers over the past few years I posted last time now with 2Q19 included:

	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%
**2Q19        $200           23.5%           94.2%            $623                   76.5%**

It was a significant beat and raise quarter, as average estimate was for $182M and they came in at $200M. They also raised full year guidance from $725-$740M to $800-$810M, and I think they’ll beat that by another 10%, closer to $880M, if they get their growth to 100% or more as I expect in the next 2 quarters.

Here is their press release for the quarter:


  • Revenue increased 94%
  • Test volume increased 93%
  • Market share increased from 4.6% to 5.7%
  • Gross margin was 74%.

The stock price dropped initially today about 14% from $117 down to $101, but has since recovered to break even for the day and is now slightly up after hours last I checked. I haven’t gotten to check out the conference call yet and not sure when I will, but from the standpoint of EXAS, I’m pretty excited about their continued growth prospects.

Why do I say “from the standpoint of EXAS”? Well their other big news they announced today was that they’re combining with Genomic Health. I’m not sure about the “combining” term as it looks like EXAS is buying them for cash and shares to me.

Here’s the release for that:


I know nothing about Genomic Health other than what I’ve read in that press release so I really don’t know what to make of this news. It seems to me the market didn’t like it initially, but maybe came around to thinking it was a good thing after looking into it. They do say the combined company will be a leading cancer diagnostic company with expected revenue of $1.6B and gross profit of $1.2B in 2020 so the companies seem about equal sized from a revenue standpoint.

Transaction terms: Under the terms of the agreement, for each share of Genomic Health common stock they own, Genomic Health stockholders will receive $27.50 in cash and $44.50 in shares of Exact Sciences stock, subject to a 10% collar centered on Exact Sciences’ volume-weighted average price for the 45 trading days ended July 26, 2019.

A comment on their combined presence: Cologuard and Oncotype DX, the companies’ leading brands, will respectively continue to help detect colorectal cancer and inform treatment decisions in colorectal, breast and prostate cancer, which collectively represent approximately 40% of all solid tumor incidence.

One concern I have is I’m invested in EXAS for the stellar revenue growth they’ve demonstrated for years, but Genomic Health just had 19% growth in 2Q19 so I’m not sure how that will affect the perception of EXAS going forward.

I’d appreciate anyone’s help on any info on Genomic Health or considerations to take into account from the merger. I don’t plan to sell or add currently (I added last week thinking the growth rate was going to accelerate as it did) until I’ve had a chance to study and assess Genomic Health and the new combined companies prospects.


Thanks for posting this. EXAS is on my watchlist, but I’ve been hesitant to pull the trigger on what seems a single-product company. Today’s Genomic Health deal further confuses things, given their growth history.

If all my days were hills to climb and circles without reason
If all I was, was passing time, my life was just a season

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Cross post from another thread…

If TTD gets low enough I might add
Personally if I hadn’t already reached a full position in TTD I would be scooping it up. At 8% (or what was an 8% holding), I have other top up priorities.

What to buy today?
Well I swapped out my Arista Networks (down 1% at the time), to load up on:
MDB ~ $145 and take this towards a 5% holding
EXAS ~ $104 and get a starter position of 1% established
NVTA ~ $25 and again get a starter position of ~1% established

Whilst at the time I was very happy about getting some MDB at 145 so far from the 52 week high and at a reasonable valuation proportion. However the Exact Science (EXAS) purchase proved to be the buy of the day.

A beat and beat on their results with 100% growth rate with an $800m run rate company is outstanding but to top that they announced the acquisition of Genomics Health - one of the global leaders in cancer genetic testing for $2.8bn to create a $1bn run rate company at ~$20bn market cap and cement a true global leadership position in genetic testing. Genomics Health’s results were also a beat and beat with accelerated growth. The acquisition rationale was less about the cost synergy more about the revenue synergy, shared infrastructure platform, customer relationship synergy and earnings synergy.


The share price dropped back from 117 to 101 and returned to 117 by end of day and then moved higher to 120 after hours. Clearly the analysts warmed to the results and the merger as the day went on.

As for what to make of Genomics Health:-

  1. Their product Oncotype Dx is globally established as a leading product. It has clinical adoption and also support for private health insurance reimbursement coverage that some of the NGS players are finding hard to compete with, (I know this first hand from the Singapore Oncology & private health insurance scene).

  2. Their growth rate re-accelerated to 19% this last Q and I expect it could improve further in combination with EXAS, however they are looking to release the next line of products that they have been working on which should re-invigorate growth.

  3. The synergies of Genomic Health’s US sales force, Genomic health’s international infrastructure, Exact Sciences’ Pfizer agreement and the combined products covering 3 of the major tumour types is huge.

I’m very happy with this acquisition.



It was a single product company, but a pretty strong product at the growth rates shown with no competition except a colonoscopy, and many want to avoid that.

From their presentation at the annual shareholders meeting a few days ago, they have a slide that shows 48% of their Cologuard tests completed are people that have NEVER been screened before (so they’re definitely resonating with people and getting them to do something they haven’t been willing to do before). Where the other 52% have been screened either with Cologuard or a colonoscopy. Tells me that they’re getting half their new clients from a pool that NEVER were screened before, thus growing their market share without having to TAKE IT from their competition.

It’s at the 12:50 mark of the below webcast of the annual stockholders meeting:


The most recent presentation below shows the combined company stats:


The more I look at Genomic Health, the more I like this deal, will definitely hold for now and see how things progress.


Thanks for your thoughts, Ant!

Glad to see some others have taken a position in EXAS, it’s been a lonely ride for myself from sub $40 to $120. Glad to have some other eyes on the company going forward.

The thing with EXAS is fears of competition, namely blood drawn tests that are being developed, have done nothing to stop the share price from marching upwards. Time and time again, I have been proven that “fears” of “potential” competition is not a reason to sell a stock. When competition actually starts taking a bite, that’s when you have to reassess. That and them blaming a slowdown during the last flu season because of doctors being too busy with the flu, seemed a little odd to me. So congrats for hanging on. The more observations and case studies you have, the better your framework for evaluating companies going forward. I know EXAS is working on a lot of things too so I don’t expect them to be a “one hit wonder” for long.