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After the company reported better-than-expected top- and bottom-line second-quarter results in late July and updated investors on its strategy at Cannacord's 37th annual growth conference on Aug. 9, shares of Exact Sciences (NASDAQ: EXAS) jumped 10.2% last month, according to S&P Global Market Intelligence.
Guidelines call for everyone between ages 50 to 74 to be on a colon cancer screening "schedule," yet millions of Americans are failing to follow through on being tested, and as a result, more cases of late-stage colon cancer are being diagnosed than there should be.
The gold standard for colon cancer screening is a colonoscopy. However, colonoscopies can be expensive and they require fasting and the use of strong laxatives beforehand.
Unlike a colonoscopy, Exact Sciences' colon cancer screening kit -- Cologuard -- is easy to use. Patients ship a stool sample from the comfort of their own home to Exact Sciences' lab for evaluation. Insurers are increasingly paying for Cologuard, so it can be less expensive than a colonoscopy, too.
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These advantages are resonating with patients, and that's driving significant top-line growth for Exact Sciences. In the second quarter, the company completed 149% more tests than it did in the same quarter of 2016, and as a result, sales swelled to $57.6 million from $21.2 million last year.
Although Exact Sciences is still losing money because of its substantial spending on marketing, losses are decreasing, and that may mean it's on a path to profitability. In the first six months of 2017, it spent $75 million on sales and marketing expenses and its net loss was $66 million. Last year, its net loss through the first half was $93 million.
Colon cancer remains the second most deadly cancer in America, and changing that is going to require more baby boomers get screened. Cologuard isn't a substitute for a colonoscopy, but it is establishing itself as an important testing option for patients who would otherwise skip a colonoscopy.
Following its strong second-quarter results, Exact Sciences estimates it will complete 550,000 tests and deliver sales of between $230 million to $240 million. That forecast is significantly higher than its prior outlook for 470,000 tests and sales of between $195 to $205 million.
The million-dollar question is: "When will there be earnings?" The company hasn't said when it could turn a profit, but it estimates that the market for screening is worth $14 billion. Based on the size of its addressable market, it would seem that earnings are only a matter of time.
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