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ES

EXACT SCIENCES CORP (EXAS)·Q1 2020 Earnings Summary

Executive Summary

  • Q1 2020 revenue of approximately $348M was consistent with the April preannouncement but slightly below the prior February guidance range ($349M–$359M), as COVID-19 drove sharp late‑quarter Cologuard order declines; Precision Oncology posted a record quarter, partly offsetting Screening pressure .
  • Management implemented >$400M of 2020 cost savings and exited Q1 with $1.2B of cash and securities, positioning liquidity to weather COVID volatility; GAAP gross margin was 71% and non‑GAAP 77% as mix favored higher‑margin Precision Oncology .
  • Cologuard order trends deteriorated in late March and early April (-36% Mar 15–31; -63% first 20 days of April), but stabilized into late April (-~47% last 10 days) with positive trends into early May; telehealth rollout and electronic ordering expected to be structural tailwinds .
  • Guidance withdrawn on March 19; no financial outlook provided given uncertainty; key near‑term catalysts are recovery in Screening volumes, telehealth adoption, and execution on cost actions and COVID‑19 testing capacity (~60k tests/week) .

What Went Well and What Went Wrong

  • What Went Well

    • Precision Oncology delivered a record $128M, with growth across major products and geographies; U.S. breast benefitted from earlier Oncotype testing to inform neoadjuvant chemotherapy decisions amid surgical delays .
    • Margin mix benefit: non‑GAAP gross margin reached 77% on higher Precision Oncology mix; adjusted EBITDA improved sequentially versus expectations to -$8M with disciplined OpEx management underway (> $400M 2020 savings identified) .
    • Strategic execution: rapid telehealth rollout for Cologuard and acceleration of electronic ordering; CEO: “In a world that is trying to avoid unnecessary…procedures…our tests…are more valuable now than ever.” .

  • What Went Wrong

    • Screening headwinds: COVID‑19 sharply reduced orders and completions; Cologuard orders -36% YoY (Mar 15–31) and -63% YoY (first 20 days of April), improving to ~-47% in late April .
    • Q1 revenue slightly below prior guidance range and Screening revenue tracked below February outlook ($230M–$235M) as March slowed; actual Screening ~$219M .
    • R&D/program delays: certain clinical trials (e.g., BLUE‑C) paused temporarily; liver test initial launch likely pushed into next year due to COVID .

Financial Results

  • Note: Wall Street consensus via S&P Global was unavailable in this session; comparisons shown vs prior periods and company guidance.
MetricQ3 2019Q4 2019Q1 2020
Total Revenue ($M)$219 $296 reported; $348 pro forma ~$348
GAAP Gross Margin %76% 72% 71%
Non‑GAAP Gross Margin %n/a76% 77%
Sales & Marketing ($M)$86 (incl. $16M Pfizer fee) $120 (incl. $14M Pfizer fee) $168 (incl. $20M Pfizer fee)
G&A ($M)$81 $145 (incl. ~$53M transaction/integration) $114
R&D ($M)$35 $43 $44
Net Income (Loss) ($M)n/an/a$(106)
Adjusted EBITDA ($M)n/a$10 $(8)
Capital Expenditures ($M)$41 $34 $26
Cash & Securities (end of period)$1.2B $324M $1.2B

Segment revenue

Segment Revenue ($M)Q4 2019Q1 2020
Screening (primarily Cologuard)$229 ~$219
Precision Oncology$66 (partial quarter, Genomic Health from Nov 8) ~$128

KPIs and operating metrics

KPIQ3 2019Q4 2019Q1 2020
New ordering HCPs (quarter)n/an/a~9,000
Total ordering HCPs since launch>180,000 (as of Q3 commentary) n/a~206,000
Cologuard order trend YoYn/an/a-36% (Mar 15–31) ; -63% (Apr 1–20) ; ~-47% (last 10 days Apr)
Pfizer service fee ($M)$16 $14 $20
Cologuard cost per completed test$114 $123 n/a
Medicare volume mix (Screening)n/an/a~44%

Vs Company Guidance (issued Feb 11)

MetricPrior GuidanceActual/Update
Q1 2020 Total Revenue$349–$359M ~$348M (slightly below)
Q1 Screening Revenue$230–$235M ~$219M (below)
Q1 Precision Oncology Revenue$119–$124M ~$128M (above)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2020$1.61B–$1.645B (Screening $1.125B–$1.15B; Precision Oncology $485M–$495M) Withdrawn (Mar 19); no guidance provided on Q1 call Lowered/Withdrawn
Total RevenueQ1 2020$349M–$359M Prelim actual ~$348M (April 21) Superseded by actual
Screening RevenueQ1 2020$230M–$235M Prelim actual ~$219M Below prior
Precision Oncology RevenueQ1 2020$119M–$124M Prelim actual ~$128M Above prior

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2019, Q4 2019)Current Period (Q1 2020)Trend
Telehealth / Electronic orderingImplemented Epic; electronic ordering lifts orders >60%; HL7 interfaces expanding Telehealth site launched; positive early traction; still on track for Epic EHR integrated ordering rollout later in year Improving structural tailwind
COVID‑19 impactn/aWithdrew guidance (Mar 19) ; labs remained operational; CARES $24M; COVID testing added on limited basis Acute headwind; stabilizing late April
Screening volumes/backlogCologuard growth; 45–49 label expansion; rescreening ramp Cologuard orders -63% early April; GI backlog large; Cologuard positioned to help prioritize positive patients to colonoscopy Near‑term down; medium‑term catch‑up
Precision OncologyIntegration and momentum; TAILORx tailwinds Record $128M; U.S. breast benefitted from neoadjuvant testing amid surgery delays Positive
Cost actions/liquidityCapex plan; strong cash entering 2020 >$400M 2020 savings; cash/securities $1.2B; CEO salary to effectively zero; broad OpEx cuts Strengthened
R&D pipeline (BLUE‑C, liver, blood)BLUE‑C kicked off; liver test data strong; plan 2H20 availability Some trials paused; liver timing likely next year; MRD/recurrence remains a focus Timing pushed right
Partnerships/AcquisitionsParadigm/Biomics acquisitions contemplated Paradigm closed; plan tissue test expansion and future blood‑based version Expanding portfolio
Supply chainn/aConfident; COVID testing preference supports access to key supplies Stable

Management Commentary

  • “Even in unprecedented times, cancer doesn't stop…our tests and deep pipeline are more valuable now than ever.” – Kevin Conroy, CEO .
  • “Total first quarter revenue was $348 million…Screening revenue of $219 million…Precision Oncology…$128 million…non‑GAAP gross margin…77%…net loss was $106 million…adjusted EBITDA was negative $8 million.” – Jeff Elliott, CFO .
  • “We…identified more than $400 million of savings relative to our original 2020 budget…If we see a faster‑than‑expected recovery…savings will be lower as we would invest to support that growth.” – Jeff Elliott .
  • “We accelerated the launch of our telehealth site…People can now request a telehealth consult specific to Cologuard from home.” – Kevin Conroy .
  • “We now have the capacity to test more than 60,000 people per week [for SARS‑CoV‑2]…we hope we can get out of this business as soon as possible.” – Kevin Conroy / Jeff Elliott .

Q&A Highlights

  • Volumes: Cologuard orders improved from -63% YoY (first 20 days April) to ~-47% YoY (last 10 days April), with positive trends into early May; recovery broad‑based geographically .
  • Telehealth: Early traction; opens previously inaccessible channels (website, employer, payer); no specific mix guidance yet; avoids channel conflict by integrating PCP/GI follow‑up .
  • Cost savings: Majority from OpEx; capex largely unchanged from prior plan; personnel actions (furloughs/reductions) will unwind as volumes recover .
  • Clinical programs: BLUE‑C temporarily paused; major initiatives (Cologuard 2.0, colon blood, liver) continue; liver initial launch likely in 2021 .
  • Payer/mix: Medicare volume ~44% in Q1; coverage for 45–49 improving (website update indicated ~80% no out‑of‑pocket in that cohort) .

Estimates Context

  • Wall Street consensus (S&P Global) for Q1 2020 EPS and revenue was unavailable in this session due to data access limits; as a proxy, we compare results to company’s February guidance, noting a slight miss on total revenue (actual $348M vs $349–$359M) and Screening ($219M vs $230–$235M), offset by a Precision Oncology beat (~$128M vs $119–$124M) .
  • Given the withdrawal of 2020 outlook and evolving COVID impacts, we expect Street models to reduce near‑term Screening revenue, partially offset by stronger Precision Oncology mix and cost savings leverage; non‑GAAP gross margin may remain supported by mix .

Key Takeaways for Investors

  • Near‑term Screening headwinds were severe but appear to be stabilizing; telehealth and electronic ordering are likely structural tailwinds that could accelerate recovery and long‑term penetration .
  • Precision Oncology resilience (record $128M) plus cost controls (> $400M savings) and $1.2B liquidity provide downside protection in a volatile environment .
  • Expect FY modeling shifts: lower Screening in 1H with catch‑up potential in 2H/2021; favorable mix may support non‑GAAP margins; OpEx flex preserves optionality .
  • Strategic pipeline remains intact despite some COVID‑related pauses; liver and MRD/recurrence opportunities extend TAM; Paradigm broadens therapy selection offering .
  • Watch catalysts: continued order trend improvement into Q2/Q3, telehealth adoption metrics, Epic ordering rollout, COVID testing contribution, and timeline updates for BLUE‑C and liver .

Search notes: We read the full Q1 2020 8‑K 2.02, full Q1 2020 earnings call transcript, and prior two quarters’ transcripts; no additional press releases for Q1 2020 were found in the corpus – – – –.