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TICKERS: EXAS

Exact Sciences Shares Rise 29% as Firm Announces Q3 Earnings, a Capital Raise and Two Acquisitions

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Exact Sciences Corp. shares reached a new 52-week high after the maker of cancer screening test Cologuard reported Q3/20 financial results that included a greater than 86% increase in year-over-year revenue.

Molecular diagnostics company Exact Sciences Corp. (EXAS:NASDAQ), which is focused on the early detection and prevention of certain some forms of cancer, today announced third quarter 2020 financial results for the period ended September 30, 2020.

Exact Sciences reported that Q3/20 revenue increased by 86.65% to $408.4 million, compared to $218.8 million in Q3/19. The firm indicated in the report that revenue generated in the first nine months of 2020 was $1.025 billion, which represents a 76.51% increase over the $580.7 million it recorded during the first nine months of 2019.

The company's Chairman and CEO Kevin Conroy remarked, "The Exact Sciences team delivered a strong quarter and made significant progress towards our vision...We're confident in the long-term growth outlook for both Cologuard and Oncotype DX and are excited about our extensive pipeline of liquid biopsy tests. Our team and the depth and breadth of our capabilities position us at the forefront of advanced cancer diagnostics."

The firm stated that Screening revenue in Q3/20 decreased by 2.0% to $214.6 million versus Q3/19. The company explained that Screening includes laboratory service revenue from its Cologuard and Biomatrica products.

The firm further advised that Precision Oncology revenue and COVID-19 testing revenue totaled $91.6 million and $102.2 million respectively during this latest quarter. The company noted that Precision Oncology revenues includes laboratory service revenue from global Oncotype DX products.

The company listed that its GAAP gross margin was 72% in Q3/20. The firm advised that it posted a one-time intangible asset impairment of $209.7 million primarily related to "certain in-process research and development assets related to an in vitro diagnostic version of Oncotype DX."

Exact Sciences posted a net loss in Q3/20 of $219.9 million, or $1.46 per share, compared to a net loss of $40.5 million, or $0.31 per share in Q3/19. The company also reported EBITDA of $(160.2) million and adjusted EBITDA of $94.5 million in Q3/20.

The company explained that its non-invasive colorectal cancer screening test, Cologuard, was approved by the FDA in 2014 and that "Cologuard 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." The firm advised that its "Oncotype DX® portfolio of breast, colon and prostate cancer tests applies advanced genomic science to reveal the unique biology of a tumor in order to optimize cancer treatment decisions."

Exact Sciences also announced today that that it has entered into agreements to sell $869 million of common stock in a registered direct offering. The company advised that it has executed agreements to sell "an aggregate of 8,605,483 shares of its common stock, par value $0.01 per share, in a registered direct offering to ten institutional investors, including some of its largest shareholders as well as healthcare specialist firms Casdin Capital and Rock Springs Capital."

The company indicated that the offering is expected to close on or about October 29, 2020, and is subject to ordinary closing conditions. The firm stated the shares will be sold at a price of $101.00 per share, which will generate gross proceeds of $869.2 million and about $866.0 million in net proceeds after transaction related fees and expenses.

Exact Sciences stated the net proceeds from the sale will be utilized for general corporate purposes and may be used to fund debt repayment, working capital and business acquisitions, including the company's pending acquisition of Thrive Earlier Detection Corp.

On a very busy news day for the company, Exact Sciences additionally announced that that it has entered into a definitive agreement to acquire early cancer detection company Thrive Earlier Detection Corp. for an estimated amount of $2.15 billion in a combination cash and stock deal. The firm provided details of the transaction and reported that the deal has already been unanimously approved by each company's Board of Directors. The acquisition is expected to close in Q1/21 and is subject to regulatory approval and certain other conditions.

In the same news release, Exact Sciences also reported that "it has also acquired Base Genomics, an epigenetics company working to set a new standard in DNA methylation analysis, one of the most promising approaches to detecting cancer in its earliest stages." The firm did not elaborate on the details of the transaction, but indicated that the specific terms of this particular transaction were disclosed in Form 10-Q, filed today with the U.S. Securities and Exchange Commission.

Exact Sciences is a provider of cancer screening and diagnostic tests based in Madison, Wis. The company stated that its product pipeline is being developed in order to combat some of the deadliest forms of cancers and improve patient care.

Exact Sciences started the day with a market capitalization of around $16.0 billion with approximately 150 million shares outstanding and a short interest of about 8.5%. EXAS shares opened 6.5% higher today at $113.51 (+$6.94, +6.51%) over yesterday's $106.57 closing price and reached a new 52-week high price this morning of $137.41. The stock has traded today between $113.27 and $137.41 per share and at present is trading at $137.35 (+$30.78, +28.88%).

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