On August 1, 2023 Exact Sciences Corp. (Nasdaq: EXAS), a leading provider of cancer screening and diagnostic tests, reported that the company generated revenue of $622.1 million for the second quarter ended June 30, 2023, compared to $521.6 million for the same period of 2022 (Press release, Exact Sciences, AUG 1, 2023, View Source [SID1234633582]).

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"The team at Exact Sciences is powering the most innovative growth engine in cancer diagnostics," said Kevin Conroy, chairman and CEO. "Led by our best-in-class scientific team, we’ll continue to enhance our current tests and develop new tests that help meaningfully improve patient outcomes. The second-quarter results demonstrate how our scale and commercial teams will help those tests impact millions of patients while improving profitability."

Second-quarter 2023 financial results

For the three-month period ended June 30, 2023, as compared to the same period of 2022 (where applicable):

Total revenue was $622.1 million, an increase of 19 percent
Core revenue was $617.5 million, an increase of 24 percent
Screening revenue was $462.8 million, an increase of 31 percent
Precision Oncology revenue was $157.2 million, an increase of 2 percent, or 7 percent on a core revenue basis
COVID-19 testing revenue was $2.1 million, a decrease of 84 percent
Gross margin including amortization of acquired intangible assets was 71 percent, and non-GAAP gross margin excluding amortization of acquired intangible assets was 75 percent
Net loss was $81.0 million, or $0.45 per share, compared to a net loss of $166.1 million, or $0.94 per share
EBITDA was $(21.7) million and adjusted EBITDA was $66.9 million
Cash provided by operating activities was $100.4 million and free cash flow was $65.7 million
Cash, cash equivalents, and marketable securities were $775.7 million at the end of the quarter
Screening primarily includes laboratory service revenue from Cologuard tests and PreventionGenetics. Precision Oncology includes laboratory service revenue from global Oncotype DX products and therapy selection products.

2023 outlook

The company anticipates revenue of $2.441-$2.466 billion during 2023, assuming:

Screening revenue of $1.820-$1.835 billion,
Precision Oncology revenue of $615-$625 million, and
COVID-19 testing revenue of $6 million.
Revenue guidance has been raised from the previously expected range of $2.380-$2.420 billion, which assumed:

Screening revenue of $1.770-$1.795 billion,
Precision Oncology revenue of $605-$620 million, and
COVID-19 testing revenue of $5 million.
Second -quarter 2023 conference call & webcast
Company management will host a conference call and webcast on Tuesday, August 1, 2023, at 5 p.m. ET to discuss second-quarter 2023 results. The webcast will be available at exactsciences.com. Domestic callers should dial 888-330-2384 and international callers should dial +1-240-789-2701. The access code for both domestic and international callers is 4437608.

An archive of the webcast will be available at exactsciences.com. A replay of the conference call will be available by calling 800-770-2030 domestically or +1-647-362-9199 internationally. The access code for the replay of the call is 4437608. The webcast, conference call, and replay are open to all interested parties.

Non-GAAP disclosure

In addition to the company’s financial results determined in accordance with U.S. GAAP, the company provides non-GAAP measures that it determines to be useful in evaluating its operating performance and liquidity. The company presents EBITDA, adjusted EBITDA, non-GAAP gross margin, non-GAAP gross profit, core revenue, and free cash flow. EBITDA and adjusted EBITDA consist of net loss after adjustment for those items shown in the table below. The company defines non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, excluding amortization of acquired intangible assets. The amortization of acquisition-related intangible assets used in the calculation of non-GAAP gross profit and non-GAAP gross margin pertain only to the amortization associated with developed technology acquired and recorded through purchase accounting transactions. The amortization of these intangible assets will recur in future periods until such intangible assets have been fully amortized. Core revenue is calculated to adjust for recent divestitures, COVID-19 testing revenue and foreign currency exchange rate fluctuations. To exclude the impact of change in foreign currency exchange rates from the prior period under comparison, the Company converts the current period non-U.S. dollar denominated revenue using the prior year comparative period exchange rates. The company considers free cash flow to be a liquidity measure and is calculated as net cash used in or provided by operating activities, reduced by purchases of property, plant and equipment. Management believes that presentation of non-GAAP financial measures provides useful supplemental information to investors and facilitates the analysis of the company’s core operating results and comparison of operating results across reporting periods. The company uses this non-GAAP financial information to establish budgets, manage the company’s business, and set incentive and compensation arrangements. The company believes free cash flow provides useful information to management and investors since it measures our ability to generate cash from business operations. Non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental information purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. For example, non-GAAP gross margin and non-GAAP gross profit exclude the amortization of acquired intangible assets although such measures include the revenue associated with the acquisitions. Additionally, adjusted EBITDA excludes a number of expense items that are included in net loss. As a result, positive adjusted EBITDA may be achieved while a significant net loss persists. For a reconciliation of these non-GAAP measures to GAAP, see below "EBITDA and Adjusted EBITDA Reconciliations", "Non-GAAP Gross Profit and Non-GAAP Gross Margin Reconciliations", "Reconciliation of Core Revenue" and "Condensed Consolidated Statements of Cash Flows and Reconciliation of Free Cash Flow". The company presents certain forward-looking statements about the company’s future financial performance that include non-GAAP measures. These non-GAAP measures include adjustments like stock-based compensation, acquisition and integration costs including gains and losses on contingent consideration liabilities that are difficult to predict for future periods because the nature of the adjustments pertain to events that have not yet occurred. Additionally management does not forecast many of the excluded items for internal use. Information reconciling forward-looking non-GAAP measures to U.S. GAAP measures is therefore not available without unreasonable effort, and is not provided. The occurrence, timing, and amount of any of the items excluded from GAAP to calculate non-GAAP could significantly impact the company’s GAAP results.

About Cologuard

The Cologuard test was approved by the FDA in August 2014, and results from Exact Sciences’ prospective 90-site, point-in-time, 10,000-patient pivotal trial were published in the New England Journal of Medicine in March 2014. The Cologuard test is included in the American Cancer Society’s (2018) colorectal cancer screening guidelines and the recommendations of the U.S. Preventive Services Task Force (2021) and National Comprehensive Cancer Network (2016). The Cologuard test is indicated to screen adults 45 years of age and older who are at average risk for colorectal cancer by detecting certain DNA markers and blood in the stool. Do not use the Cologuard test if you have had precancer, have inflammatory bowel disease and certain hereditary syndromes, or have a personal or family history of colorectal cancer. The Cologuard test is not a replacement for colonoscopy in high risk patients. The Cologuard test performance in adults ages 45-49 is estimated based on a large clinical study of patients 50 and older. The Cologuard test performance in repeat testing has not been evaluated.

The Cologuard test result should be interpreted with caution. A positive test result does not confirm the presence of cancer. Patients with a positive test result should be referred for colonoscopy. A negative test result does not confirm the absence of cancer. Patients with a negative test result should discuss with their doctor when they need to be tested again. Medicare and most major insurers cover the Cologuard test. For more information about the Cologuard test, visit cologuardtest.com. Rx only.