Executive Summary / Key Takeaways

• Exact Sciences delivered a strong start to 2025, exceeding expectations with 11% year-over-year revenue growth in Q1, driven by robust performance in both Screening and Precision Oncology segments.
• The company raised its full-year 2025 guidance, projecting total revenue between $3.07 billion and $3.12 billion and adjusted EBITDA between $425 million and $455 million, implying significant growth and margin expansion fueled by volume leverage and operational efficiencies.
• Recent and upcoming product launches, including Cologuard Plus and Oncodetect, are critical catalysts expected to drive future growth by addressing large, underserved markets and leveraging the company's established commercial infrastructure and ExactNexus platform.
• Exact Sciences is demonstrating improving profitability and cash flow generation, achieving break-even free cash flow in Q1 2025 and expecting a record full-year cash flow, reinforcing confidence in achieving long-term financial targets despite ongoing R&D investments.
• While facing competitive pressures and regulatory uncertainties, particularly regarding LDTs, the company's differentiated technology, strong brand, deep customer relationships, and integrated platform provide significant competitive advantages.

A Platform for Early Detection and Personalized Care

Exact Sciences Corporation, established in 1995, has evolved into a prominent provider of cancer screening and diagnostic tests, driven by a mission to help eradicate cancer through prevention, early detection, and treatment guidance. The company operates within the critical and growing field of oncology diagnostics, addressing significant unmet needs in public health. Colorectal cancer, for instance, remains the second leading cause of cancer deaths in the United States, with approximately 154,000 new cases and 53,000 deaths annually, despite being among the most preventable cancers. A vast population, estimated at up to 55-60 million Americans, remains unscreened or not up-to-date with recommended guidelines, highlighting a substantial market opportunity.

The company's strategy is built upon extending and leveraging its foundational strengths: a portfolio of impactful, industry-leading tests, a powerful commercial engine, deep relationships with healthcare providers and payers, and the proprietary ExactNexus technology platform. This platform connects electronically with nearly a quarter million providers, millions of patients, hundreds of health systems, and over 800 payers, facilitating seamless ordering, patient engagement, and data sharing. This integrated infrastructure is a key differentiator, enabling efficient delivery of tests and supporting growth initiatives like rescreening and care gap programs.

Exact Sciences' competitive positioning is shaped by its differentiated technology and strategic focus. In colorectal cancer screening, its flagship Cologuard test competes with traditional methods like colonoscopy and FIT tests, as well as emerging blood-based tests from companies like Guardant Health (GH). While colonoscopy offers high sensitivity, its invasiveness and capacity limitations present barriers to widespread screening. FIT tests are inexpensive but have lower sensitivity and adherence rates compared to Cologuard. Blood-based tests, while convenient, have historically faced challenges with performance, particularly in detecting pre-cancerous lesions, and achieving broad guideline inclusion and reimbursement.

Exact Sciences' core technological strength lies in its multi-target stool DNA approach, exemplified by Cologuard and the newly launched Cologuard Plus. This technology analyzes multiple DNA and hemoglobin biomarkers to detect CRC and pre-cancer. The recently FDA-approved Cologuard Plus, developed in collaboration with Mayo, represents a significant technological advancement. Based on the pivotal BLUE-C study, it demonstrated 95% overall cancer sensitivity and 43% sensitivity for advanced precancerous lesions at 94% specificity (age-weighted). This performance represents a nearly 40% reduction in false positives compared to the original Cologuard, a quantifiable benefit that reduces unnecessary follow-up colonoscopies. Management highlights that, per USPSTF modeling assumptions, only Cologuard Plus and colonoscopy are expected to be on the "efficient frontier" of screening strategies, underscoring its clinical and economic value. This technological edge in performance, particularly specificity, provides a competitive moat against alternatives, potentially lowering operating costs per unit by reducing follow-up procedures.

In Precision Oncology, Exact Sciences' Oncotype DX test, a genomic assay for breast cancer, holds a leading position, recognized globally as standard of care and included in all major guidelines. This test competes with other genomic profiling and liquid biopsy tests from companies like Natera (NTRA) and Myriad Genetics (MYGN). While competitors like NTRA demonstrate faster revenue growth and higher gross margins, EXAS leverages its deep relationships with oncologists and established presence in breast cancer testing to introduce new products like Oncodetect. The OncoExTra test, offering comprehensive tumor profiling, competes with broader genomic sequencing services, including those from large labs like Quest Diagnostics (DGX). DGX, with its vast scale and network, offers broad lab services, but EXAS focuses on specialized, high-value oncology diagnostics.

The company's R&D pipeline is actively pursuing new technological frontiers. The blood-based CRC screening test, with BLUE-C pivotal study results expected mid-2025, utilizes a multi-omic platform and proprietary PCR technology aiming for a differentiated cost profile and performance comparable to other blood tests (targeting >74% sensitivity, >90% specificity, and better pre-cancer detection than some competitors). The Oncodetect MRD test, leveraging technologies including MAESTRO licensed from Broad Institute and TwinStrand's IP for error correction, is being validated across multiple solid tumors, building on promising data in CRC (Alpha-CORRECT showed 78% sensitivity post-surgical, 91% surveillance). Cancerguard, the multi-cancer screening test, combines multiple biomarker classes and showed 60% overall sensitivity at 98.5% specificity in the ASCEND-2 study, with plans for a large registrational trial (SOAR). These initiatives, powered by licensed technologies and internal development, represent significant investments aimed at expanding the company's portfolio into large, high-impact areas, leveraging its existing platforms for commercialization.

Performance and Outlook

Exact Sciences has demonstrated a trajectory of growth and improving financial health, albeit with recent execution challenges. For the full year 2024, the company reported revenue of $2.76 billion, up 10% (11% core) year-over-year, with adjusted EBITDA of $310 million to $320 million, representing a 270 basis point margin expansion. This performance was impacted in the latter half of 2024 by slower-than-expected growth in Cologuard testing frequency among newer providers, disruptions from hurricanes, and temporary challenges during the transition of the Precision Oncology portfolio onto the ExactNexus platform.

Despite these headwinds, the company started 2025 on a strong note. Q1 2025 revenue reached $706.785 million, an 11% increase from $637.524 million in Q1 2024. Screening revenue grew 13.7% to $540.007 million, driven by increased Cologuard test volumes from rescreens, care gap programs, and new ordering providers. Precision Oncology revenue increased 2.5% to $166.778 million, primarily due to international adoption of Oncotype DX. Gross profit improved to $500.547 million (70.8% margin) in Q1 2025 from $446.323 million (70.0% margin) in Q1 2024, reflecting efficiencies in lab operations. Operating expenses totaled $596.557 million, with R&D decreasing slightly to $105.310 million, sales and marketing increasing to $264.310 million due to investments, and G&A remaining consistent at $220.686 million. The net loss for Q1 2025 was $101.215 million, compared to $110.228 million in Q1 2024.

Liquidity is supported by a cash and marketable securities balance of $786.175 million as of March 31, 2025.

The company generated $30.809 million in cash from operating activities in Q1 2025, a significant improvement from a cash use of $82.311 million in Q1 2024, resulting in break-even free cash flow. Cash used in investing activities was $34.437 million, primarily due to purchases of marketable securities and property/plant/equipment. Cash used in financing activities was $256.171 million, largely due to the settlement of $249.172 million in convertible notes that matured in January 2025.

The company also entered into a new $500 million revolving credit facility in January 2025, providing additional financial flexibility, with no amounts drawn as of March 31, 2025. Management expects cash on hand and operating cash flows to fund operations for at least the next twelve months and anticipates record full-year cash generation in 2025, despite a temporary build in accounts receivable in Q2 related to the Cologuard Plus launch.

Looking ahead, Exact Sciences raised its full-year 2025 guidance, projecting total revenue between $3.07 billion and $3.12 billion and adjusted EBITDA between $425 million and $455 million. This implies total revenue growth of 12% at the midpoint, with Screening revenue expected to grow 14% (to $2.39B - $2.425B) and Precision Oncology revenue 5% (to $680M - $695M). The guidance assumes approximately 2 points of revenue lift from Cologuard Plus pricing, primarily benefiting the second half of the year as commercial contracts are established over 18-24 months. Key growth drivers underpinning this outlook include continued momentum in rescreens (pool growing to 2 million in 2025), strong double-digit growth in care gap programs, improving commercial execution (customer engagement up >30% YoY in Q1), and the initial impact of new product launches. Adjusted EBITDA margin is expected to expand by 250 basis points at the midpoint, driven by volume leverage, Cologuard Plus pricing, and continued operational efficiencies, particularly in G&A. The company remains confident in achieving its 2027 targets of 15% compounded revenue growth and greater than 20% adjusted EBITDA margin.

Risks and Challenges

Despite the positive outlook and pipeline catalysts, Exact Sciences faces several risks. Regulatory uncertainty surrounding Laboratory Developed Tests (LDTs), which include Oncotype, OncoExTra, and Oncodetect, poses a significant challenge. While a U.S. District Court recently vacated the FDA's LDT rule, the potential for government appeal or new legislation creates unpredictability regarding future regulatory requirements, which could impact development timelines, costs, and market access for these tests.

Competition is intense across all segments. In CRC screening, while Cologuard Plus offers superior performance metrics, emerging blood tests and established players like DGX and GH continue to vie for market share, potentially impacting pricing power and adoption rates. In Precision Oncology and MRD, companies like NTRA and MYGN offer competing technologies and services. Exact Sciences' ability to execute its commercial strategy effectively and demonstrate the clinical and economic value of its new tests will be crucial in navigating this competitive landscape.

Operational execution, particularly in driving adoption among the broad base of healthcare providers and ensuring seamless transitions with new product launches and platform integrations (as experienced in Q3 2024), remains a key focus area. Macroeconomic conditions, while not materially impacting recent results, could pose future risks to consumer/provider behavior or supplier operations.

Conclusion

Exact Sciences is positioned at a pivotal moment, leveraging its established platform, strong brand, and deep market penetration to launch a new wave of innovative cancer diagnostics. The strong start to 2025, coupled with raised guidance and improving profitability metrics, signals positive momentum driven by core business growth, particularly in rescreens and care gap programs, and the anticipated impact of Cologuard Plus and Oncodetect. The company's technological advancements, especially the performance of Cologuard Plus and the potential of its blood-based CRC and MRD platforms, provide a strong foundation for future growth and competitive differentiation. While regulatory risks and intense competition persist, Exact Sciences' integrated approach, combining advanced diagnostics with a powerful commercial and technology platform, provides a compelling framework for long-term value creation. Investors should monitor the successful rollout and adoption of Cologuard Plus and Oncodetect, the progress of the blood-based CRC and Cancerguard programs, and the company's continued execution on its profitability expansion targets.