Diagnostic company Exact Sciences Corporation (NASDAQ: EXAS) announced better-than-expected revenue in Q1 CY2025, with sales up 10.9% year on year to $706.8 million. The company’s full-year revenue guidance of $3.1 billion at the midpoint came in 1.3% above analysts’ estimates. Its non-GAAP loss of $0.21 per share was significantly below analysts’ consensus estimates.
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Exact Sciences (EXAS) Q1 CY2025 Highlights:
- Revenue: $706.8 million vs analyst estimates of $688.5 million (10.9% year-on-year growth, 2.7% beat)
- Adjusted EPS: -$0.21 vs analyst estimates of -$0.10 (significant miss)
- Adjusted EBITDA: $63.26 million vs analyst estimates of $59.87 million (8.9% margin, 5.7% beat)
- The company lifted its revenue guidance for the full year to $3.1 billion at the midpoint from $3.06 billion, a 1.3% increase
- EBITDA guidance for the full year is $440 million at the midpoint, above analyst estimates of $422.9 million
- Operating Margin: -13.6%, up from -16.7% in the same quarter last year
- Free Cash Flow was -$365,000 compared to -$120 million in the same quarter last year
- Constant Currency Revenue rose 11% year on year (5.8% in the same quarter last year)
- Market Capitalization: $10.6 billion
StockStory’s Take
Exact Sciences began 2025 with notable momentum, attributing Q1 results to improved commercial execution and the launch of new products. Management emphasized that changes made to the sales organization, including territory realignment and expanded field engagement, led to a 30% increase in customer interactions. CEO Kevin Conroy cited early success with the launch of Cologuard Plus and continued growth in the company's rescreen and care gap programs as key drivers of revenue for the quarter.
Looking ahead, management lifted full-year revenue guidance and highlighted the expected impact of new products and operational efficiency initiatives. CFO Aaron Bloomer said the company expects “continued leverage across the P&L,” with gross margin improvements and cost optimization actions underway. Management believes the recent launches and increased provider engagement will support both top-line growth and improving profitability throughout the year.
Key Insights from Management’s Remarks
Management identified several drivers of Q1 performance, including new product launches, enhanced commercial strategy, and operational improvements. Early signs of adoption for Cologuard Plus and increased engagement with healthcare providers contributed meaningfully to results.
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Commercial execution enhancements: The expansion and realignment of the sales force, along with targeted provider outreach, led to a 30% increase in provider engagement and higher sales productivity. Management stated that rep productivity was up about 10% and that three out of four new ordering providers were engaged within two weeks.
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Cologuard Plus launch: The company launched Cologuard Plus, its next-generation colorectal cancer screening test, which achieved early Medicare coverage and quality measure inclusion. Over 30,000 tests have already been completed, with ongoing discussions to secure broader payer coverage. Management emphasized the improved accuracy and lower false positive rate compared to the original Cologuard.
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Growth in recurring revenue streams: The rescreen program now accounts for more than 25% of total revenue, providing a stable and growing source of recurring income. Management noted increasing adherence rates and a growing eligible patient pool.
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Operational efficiency gains: Cost optimization and productivity initiatives reduced general and administrative expenses as a percentage of revenue by more than 520 basis points. The company also achieved break-even free cash flow, a $120 million year-over-year improvement.
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Pipeline and product development progress: Beyond Cologuard Plus, the company launched Oncodetect (a molecular residual disease test), continued work on a blood-based colon cancer screening test (with results expected mid-year), and prepared for the late-2025 launch of Cancerguard for multi-cancer screening.
Drivers of Future Performance
Management’s outlook for the remainder of 2025 centers on sustained commercial momentum, expanded adoption of new products, and further cost discipline. The company expects these factors to drive high-single-digit to low-double-digit revenue growth and continued margin improvement.
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Broader adoption of Cologuard Plus: Management anticipates that securing coverage from additional payers and increasing provider awareness will lead to higher test volumes and improved gross margins due to better pricing and lower test costs.
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Expansion of recurring programs: Growth in the rescreen and care gap programs is expected to provide predictable revenue and higher customer retention, supporting stability even as new products scale.
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Operational efficiency initiatives: Further cost optimization, particularly in G&A and manufacturing, is expected to enhance profitability. Management also highlighted the risk of near-term cash flow fluctuations as accounts receivable build with new product launches, but expects collection to normalize by year-end.
Top Analyst Questions
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Tycho Peterson (Jefferies): Asked for details on commercial changes driving new customer growth. Management explained that doctor engagement and rep productivity increased, with new providers being contacted within two weeks of first orders.
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Catherine Schulte (Baird): Inquired about the breakdown of revenue guidance upgrades. CFO Aaron Bloomer attributed improvements to commercial execution, particularly in rescreens and care gap programs, and increased provider engagement.
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Brandon Couillard (Wells Fargo): Sought clarity on increased sales and marketing spend. Management responded that investments supported new product launches and were leveraged by strong revenue growth, with a goal of maintaining consistent pacing throughout the year.
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Patrick Donnelly (Citi): Requested updates on the pipeline and timing for the blood-based colon cancer screening test. CEO Kevin Conroy confirmed the company remains on track for a mid-summer top-line data readout.
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Luke Sergott (Barclays): Asked about gross margin trends with new product launches. Management stated that Cologuard Plus should be accretive to gross margin, as lower test costs and improved pricing offset potential headwinds from simultaneous product lines.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace of payer adoption and provider uptake for Cologuard Plus, (2) the volume growth and adherence rates in recurring rescreen and care gap programs, and (3) the upcoming mid-year release of top-line data from the company’s blood-based colon cancer screening trial. Progress in operational efficiency and continued improvement in free cash flow generation will also be important signposts for tracking execution.
Exact Sciences currently trades at a forward P/E ratio of 85.4×. At this valuation, is it a buy or sell post earnings? Find out in our free research report.
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