On Tuesday, Wolfe Research maintained a positive outlook on Exact Sciences (NASDAQ:EXAS), reiterating an Outperform rating and a $70.00 price target. The firm's analysis indicates that the launch of Cologuard Plus in late Q1 2025 or early Q2 2025 could significantly impact revenue, with a projected reimbursement rate of $592 for Medicare Fee-For-Service (FFS) patients from the start.
Exact Sciences is expected to see approximately 15-20% of its Screening business revenue from Medicare FFS, with Medicare Advantage contributing another estimated 20%, while the remaining majority is sourced from commercial payers. Wolfe Research anticipates that Medicare Advantage and commercial payers will align with the $592 reimbursement rate over an 18 to 24-month timeframe.
The analysis suggests that if 15-20% of Cologuard tests are reimbursed at the new rate starting in the second half of 2025, there could be an upside of over $50 million to the current 2025 revenue estimates for Exact Sciences. This projection comes as a surprise following developments earlier in the year.
In June, at the Clinical Lab Fee Schedule (CLFS) Annual Meeting, Exact Sciences proposed a 1.25 times price increase for Cologuard Plus. The independent panel's vote in July leaned in favor of crosswalking the test with a narrow 5-4 vote, which was more contentious than anticipated. Finally, in September, the preliminary rate determination for 2025 was released, keeping the proposed rate for Cologuard Plus on par with the current Cologuard 1.0. The Centers for Medicare & Medicaid Services (CMS) concurred with the CDLT Panel's majority recommendation to crosswalk the code (81528), justifying that the crosswalked codes share similar methods and resource utilization.
In other recent news, Exact Sciences Corporation has reported significant advancements in early cancer detection and a positive financial growth despite facing operational challenges. The company's third quarter 2024 earnings showed a 13% year-over-year revenue increase, reaching $709 million. Notably, the company delivered test results to 1.2 million patients and saw a 75% increase in adjusted EBITDA to $99 million.
Exact Sciences is making strides in multi-cancer early detection (MCED) testing, with research indicating that a new multi-biomarker approach can significantly improve early cancer detection. The company is also developing the Cancerguard test, aiming to detect multiple cancers from a single blood draw. In the meantime, the FDA has approved the company's next-generation colorectal cancer screening test, Cologuard Plus, with a launch anticipated in the second quarter of 2025.
Looking ahead, Exact Sciences has revised its full-year revenue guidance to between $2.73 billion and $2.75 billion, with adjusted EBITDA expected to be between $310 million and $320 million. The company projects accelerated growth for 2025 and a strong product pipeline including Oncodetect and the ExactNexus platform. Despite facing challenges, including sales staff turnover and reduced in-office visits, Exact Sciences remains confident in its strategy and execution.
InvestingPro Insights
To complement the analysis on Exact Sciences (NASDAQ:EXAS), recent data from InvestingPro offers additional context. The company's market capitalization stands at $10.21 billion, reflecting its significant presence in the medical diagnostics sector. Despite the positive outlook from Wolfe Research, InvestingPro Tips indicate that 9 analysts have revised their earnings downwards for the upcoming period, suggesting some caution in near-term expectations.
Exact Sciences has shown revenue growth of 11.91% over the last twelve months, with Q3 2024 revenue reaching $2.69 billion. This growth aligns with the company's potential for increased revenue from the anticipated Cologuard Plus launch. However, the company is not currently profitable, with an adjusted operating income of -$227.22 million over the last twelve months.
An InvestingPro Tip notes that the stock has fared poorly over the last month, with a -20.21% price return. This recent performance might present an opportunity for investors who align with Wolfe Research's optimistic outlook and the potential upside from Cologuard Plus.
For readers interested in a deeper dive, InvestingPro offers 6 additional tips for Exact Sciences, providing a more comprehensive analysis of the company's financial health and market position.
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