Document
false0001124140 0001124140 2020-05-06 2020-05-06


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):  May 6, 2020
 
EXACT SCIENCES CORPORATION
(Exact Name of Registrant as Specified in Charter)
 
Delaware
 
001-35092
 
02-0478229
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
441 Charmany Drive
Madison, WI  53719
(Address of Principal Executive Offices)(Zip Code)
 
Registrant’s telephone number, including area code:  (608) 284-5700
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
           Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
           Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Common Stock, $0.01 par value per share
 
EXAS
 
The Nasdaq Stock Market LLC
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 




2.02.                     Results of Operations and Financial Conditions.
 
On May 6, 2020, Exact Sciences Corporation announced its financial results for the quarter ended March 31, 2020.  A copy of the press release is being furnished as Exhibit 99 to this Current Report on Form 8-K.

The information in this Current Report on Form 8-K and Exhibit 99 attached hereto is intended to be furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.
 
9.01.                     Financial Statements and Exhibits.
 
Exhibits
 
The exhibits required to be filed as a part of this Current Report on Form 8-K are listed below and incorporated herein by reference.
  
Exhibit No.
 
Exhibit Description
 
 
 
 
Press release, dated May 6, 2020, issued by Exact Sciences Corporation, furnished herewith.
 
 
 
104
 
The cover page from this Current Report on Form 8-K, formatted in Inline XBRL.

2




SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
EXACT SCIENCES CORPORATION
 
 
 
Date: May 6, 2020
By:
/s/ Jeffrey T. Elliott
 
 
Jeffrey T. Elliott
 
 
Chief Financial Officer


3
Exhibit


Exhibit 99
 
Investor Contact:
Megan Jones
Exact Sciences Corp.
meganjones@exactsciences.com
608-535-8815
 
Media Contact:
Cara Connelly
Exact Sciences Corp.
cconnelly@exactsciences.com
608-284-5735
 
For Immediate Release
 
Exact Sciences Announces First Quarter 2020 Results 

 
MADISON, Wis., May 6, 2020 — Exact Sciences Corp. (Nasdaq: EXAS) today announced that the company generated revenue of $347.8 million for the first quarter ended Mar. 31, 2020, compared to $162.0 million for the same period of 2019.
 
“Even in unprecedented times, cancer doesn't stop. The coronavirus pandemic highlights and increases the need for novel ways to screen for cancer, detect it early, and guide treatment. Our Cologuard, Oncotype DX, and Paradigm tests meet that need," said Kevin Conroy, chairman and CEO. "In a world that is trying to avoid unnecessary physician office visits, invasive procedures, and treatments, our tests and deep pipeline are more valuable now than ever. We plan to play an even greater role in cancer screening and guiding therapy decisions after the coronavirus pandemic abates."

First Quarter 2020 Financial Results

For the three-month period ended March 31, 2020, as compared to the same period of 2019 (where applicable):

Total revenue was $347.8 million, compared to $162.0 million
Screening revenue was $219.5 million, an increase of 35 percent
Precision Oncology revenue was $128.4 million
Gross margin including amortization of acquired intangible assets was 71 percent, and non-GAAP gross margin excluding amortization of acquired intangible assets was 77 percent
Net loss was $105.7 million, or $0.71 per share, compared to a net loss of $82.9 million, or $0.66 per share
EBITDA was $(51.0) million and adjusted EBITDA was $(8.2) million
Non-cash interest expense related to convertible debt was $22.5 million, which included a non-cash loss on extinguishment of debt of $8.0 million, compared to $19.6 million, which included a non-cash loss on extinguishment of debt of $10.6 million
Cash, cash equivalents, and marketable securities were $1.2 billion at the end of the quarter, including $975.5 million, net, raised in relation to the issuance of new convertible notes and the repayment of a portion of previously issued convertible notes

Screening includes laboratory service revenue from Cologuard and revenue from Biomatrica products. Precision Oncology includes laboratory service revenue from global Oncotype DX products and the recent Paradigm acquisition. 

Non-GAAP Disclosure
In addition to the company's financial results determined in accordance with U.S. GAAP, the company provides non-GAAP measures that it determines to be useful in evaluating its operating performance. The company presents EBITDA, adjusted EBITDA, as well as non-GAAP gross margin and non-GAAP gross profit. EBITDA and adjusted EBITDA consist of net loss after adjustment for those items shown in the table below. The company defines non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, excluding amortization of acquired intangible assets. The amortization of acquisition-related intangible assets used in the calculation of non-GAAP gross profit and non-GAAP gross margin pertain only to the amortization associated with developed technology acquired and recorded through purchase accounting transactions. The amortization of these intangible assets will recur in future periods until such intangible assets have





been fully amortized. The company believes that these non-GAAP measures are useful in evaluating the company’s operating performance. The company uses this non-GAAP financial information to evaluate ongoing operations and for internal planning and forecasting purposes. Non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental information purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. For example, non-GAAP gross margin and non-GAAP gross profit exclude the amortization of acquired intangible assets although such measures include the revenue associated with the acquisitions. For a reconciliation of these non-GAAP measures to GAAP, see below "EBITDA and Adjusted EBITDA Reconciliations."

First Quarter Conference Call & Webcast
Company management will host a conference call and webcast on Wednesday, May 6, 2020, at 5 p.m. ET to discuss first quarter 2020 results. The webcast will be available at www.exactsciences.com. Domestic callers should dial 833-235-7650 and international callers should dial +1-647-689-4171.

An archive of the webcast will be available at www.exactsciences.com. A replay of the conference call will be available by calling 800-585-8367 domestically or 416-621-4642 internationally. The access code for the replay of the call is 7874149. The webcast, conference call and replay are open to all interested parties.
 
About Cologuard
Cologuard was approved by the FDA in August 2014, and results from Exact Sciences’ prospective 90-site, point-in-time, 10,000-patient pivotal trial were published in the New England Journal of Medicine in March 2014. Cologuard is included in the American Cancer Society’s (2018) colorectal cancer screening guidelines and the recommendations of the U.S. Preventive Services Task Force (2016) and National Comprehensive Cancer Network (2016). 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. Do not use Cologuard if you have had precancer, have inflammatory bowel disease and certain hereditary syndromes, or have a personal or family history of colorectal cancer. Cologuard is not a replacement for colonoscopy in high risk patients. Cologuard performance in adults ages 45-49 is estimated based on a large clinical study of patients 50 and older. Cologuard performance in repeat testing has not been evaluated.
 
The Cologuard test result should be interpreted with caution. A positive test result does not confirm the presence of cancer. Patients with a positive test result should be referred for diagnostic colonoscopy. A negative test result does not confirm the absence of cancer. Patients with a negative test result should discuss with their doctor when they need to be tested again.

Medicare and most major insurers cover Cologuard. For more information about Cologuard, visit www.cologuardtest.com. Rx only.

About Oncotype DX
The 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. In breast cancer, the Oncotype DX Breast Recurrence Score® test is the only test that has been shown to predict the likelihood of chemotherapy benefit as well as recurrence in invasive breast cancer. Additionally, the Oncotype DX Breast DCIS Score test predicts the likelihood of recurrence in a pre-invasive form of breast cancer called DCIS. In prostate cancer, the Oncotype DX Genomic Prostate Score® test predicts disease aggressiveness and further clarifies the current and future risk of the cancer prior to treatment intervention, and the Oncotype DX AR-V7 Nucleus Detect™ test helps determine which patients with metastatic castration-resistant prostate cancer (mCRPC) are resistant to androgen receptor (AR)-targeted therapies. The Oncotype DX AR-V7 Nucleus Detect test is performed by Epic Sciences at its centralized, CLIA-certified laboratory in San Diego and offered exclusively by Exact Sciences. With more than 1 million patients tested in more than 90 countries, the Oncotype DX tests have redefined personalized medicine by making genomics a critical part of cancer diagnosis and treatment. To learn more about Oncotype DX tests, visit www.OncotypeIQ.com, www.MyBreastCancerTreatment.org or www.MyProstateCancerTreatment.org.

About Exact Sciences Corp.
A leading provider of cancer screening and diagnostic tests, Exact Sciences relentlessly pursues smarter solutions providing the clarity to take life-changing action, earlier. Building on the success of Cologuard and Oncotype DX, Exact Sciences is investing in its product pipeline to take on some of the deadliest cancers and improve patient care. Exact Sciences unites visionary collaborators to help advance the fight against cancer. For more information, please visit the company's website at www.exactsciences.com, follow Exact Sciences on Twitter @ExactSciences, or find Exact Sciences on Facebook.
 






Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the "safe harbor" created by those sections.  Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as "believe," "expect," "may," "will," "should," "would," "could," "seek," "intend," "plan," "goal," "project," "estimate," "anticipate" or other comparable terms.  All statements other than statements of historical facts included in this news release regarding our strategies, prospects, expectations, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expected future operating results, anticipated results of our sales, marketing and patient adherence efforts, expectations concerning payer reimbursement, and the anticipated results of our product development efforts. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Actual results, conditions and events may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause actual results, conditions and events to differ materially from those indicated in the forward-looking statements include, among others, the following: uncertainties associated with the coronavirus (COVID-19) pandemic, including its possible effects on our operations and the demand for our products and services; our ability to efficiently and flexibly manage our business amid uncertainties related to COVID-19; our ability to successfully and profitably market our products and services; the acceptance of our products and services by patients and healthcare providers; our ability to meet demand for our products and services; the success of our efforts to facilitate patient access to Cologuard via telehealth; the willingness of health insurance companies and other payers to cover our products and services and adequately reimburse us for such products and services; the amount and nature of competition for our products and services; the effects of the adoption, modification or repeal of any law, rule, order, interpretation or policy relating to the healthcare system, including without limitation as a result of any judicial, executive or legislative action; the effects of changes in pricing, coverage and reimbursement for our products and services, including without limitation as a result of the Protecting Access to Medicare Act of 2014; recommendations, guidelines and quality metrics issued by various organizations such as the U.S. Preventive Services Task Force, the American Society of Clinical Oncology, the American Cancer Society, and the National Committee for Quality Assurance regarding cancer screening or our products and services; our ability to successfully develop new products and services and assess potential market opportunities; our ability to effectively enter into and utilize strategic partnerships, such as through our Promotion Agreement with Pfizer, Inc., and acquisitions; our success establishing and maintaining collaborative, licensing and supplier arrangements; our ability to maintain regulatory approvals and comply with applicable regulations; our ability to manage an international business and our expectations regarding our international expansion and opportunities; the potential effects of foreign currency exchange rate fluctuations and our efforts to hedge such effects; the possibility that the anticipated benefits from our combination with Genomic Health cannot be realized in full or at all or may take longer to realize than expected; the possibility that costs or difficulties related to the integration of Genomic Health's operations will be greater than expected and the possibility of disruptions to our business during integration efforts and strain on management time and resources; the outcome of any litigation, government investigations, enforcement actions or other legal proceedings; and the other risks and uncertainties described in the Risk Factors and in Management's Discussion and Analysis of Financial Condition and Results of Operations sections of our most recently filed Annual Report on Form 10-K and our subsequently filed Quarterly Reports on Form 10-Q. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.








EXACT SCIENCES CORPORATION
Selected Unaudited Financial Information
Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share data)

 
Three Months Ended March 31,
 
2020
 
2019
Revenue
$
347,821

 
$
162,043

 
 
 
 
Operating expenses
 
 
 
Cost of sales (exclusive of amortization of acquired intangible assets)
81,606

 
42,827

Research and development
43,509

 
31,785

Sales and marketing
167,749

 
90,939

General and administrative
113,991

 
63,806

Amortization of acquired intangible assets
23,339

 
760

Total operating expenses
430,194

 
230,117

Loss from operations
(82,373
)
 
(68,074
)
 
 
 
 
Other income (expense)
 
 
 
Investment income, net
97

 
6,655

Interest expense
(25,153
)
 
(21,990
)
Total other income (expense)
(25,056
)
 
(15,335
)
 
 
 
 
Net loss before tax
(107,429
)
 
(83,409
)
 
 
 
 
Income tax benefit
1,732

 
470

 
 
 
 
Net loss
$
(105,697
)
 
$
(82,939
)
 
 
 
 
Net loss per share—basic and diluted
$
(0.71
)
 
$
(0.66
)
 
 
 
 
Weighted average common shares outstanding—basic and diluted
148,151

 
126,248







EXACT SCIENCES CORPORATION
Selected Unaudited Financial Information
Condensed Consolidated Balance Sheets
(Amounts in thousands)

 
March 31, 2020
 
December 31, 2019
Assets
 
 
 
Cash and cash equivalents
$
701,054

 
$
177,254

Marketable securities
530,062

 
146,401

Accounts receivable, net
140,046

 
130,667

Inventory, net
69,424

 
61,724

Prepaid expenses and other current assets
43,732

 
40,913

Property, plant and equipment, net
465,476

 
455,325

Operating lease right-of-use assets
124,369

 
126,444

Goodwill
1,237,161

 
1,203,197

Intangible assets, net
1,128,261

 
1,143,550

Other long-term assets, net
21,540

 
20,293

Total assets
$
4,461,125

 
$
3,505,768

 
 
 
 
Liabilities and stockholders' equity
 
 
 
Total current liabilities
$
243,581

 
$
236,494

Convertible notes, net
1,514,306

 
803,605

Long-term debt, less current portion

 
24,032

Other long-term liabilities
47,252

 
34,911

Operating lease liabilities, less current portion
118,333

 
118,665

Total stockholders’ equity
2,537,653

 
2,288,061

Total liabilities and stockholders’ equity
$
4,461,125

 
$
3,505,768







EXACT SCIENCES CORPORATION
Selected Unaudited Financial Information
EBITDA and Adjusted EBITDA Reconciliations
(Amounts in thousands)

 
Three Months Ended March 31,
 
2020
 
2019
Net loss
$
(105,697
)
 
$
(82,939
)
Interest expense
17,199

 
11,432

Investment income
(97
)
 
(6,655
)
Depreciation and amortization
39,345

 
7,135

Income tax benefit
(1,732
)
 
(470
)
EBITDA
$
(50,982
)
 
$
(71,497
)
Stock-based compensation
26,742

 
16,166

Loss on settlement of convertible notes
7,954

 
10,558

Acquisition and integration costs (1)
8,048

 

Adjusted EBITDA
$
(8,238
)
 
$
(44,773
)
 
(1) Represents acquisition and related integration costs incurred as a result of the company's combination with Genomic Health. Acquisition and integration costs were $8.0 million for the three months ended March 31, 2020. The costs primarily consist of legal and other professional service fees and incremental stock-based compensation including the fair value of stock awards assumed by the company in connection with the Genomic Health combination. Legal, severance, and other professional service fees were $5.2 million for the three months ended March 31, 2020. Incremental stock-based compensation including the fair value of assumed stock awards was $2.8 million for the three months ended March 31, 2020.






EXACT SCIENCES CORPORATION
Selected Unaudited Financial Information
Non-GAAP Gross Profit and Non-GAAP Gross Margin
(Amounts in thousands)

 
Three Months Ended March 31,
 
2020
 
2019
Revenue
$
347,821

 
$
162,043

Cost of sales (exclusive of amortization of acquired intangible assets)
81,606

 
42,827

Amortization of acquired intangible assets (1)
20,464

 
425

Gross profit
$
245,751

 
$
118,791

Gross margin
71
%
 
73
%
 
 
 
 
Amortization of acquired intangible assets (1)
20,464

 
425

Non-GAAP gross profit
$
266,215

 
$
119,216

Non-GAAP gross margin
77
%
 
74
%
 
(1) Includes only amortization of intangible assets identified as developed technology assets through purchase accounting transactions, which otherwise would have been allocated to cost of sales.


v3.20.1
Cover Page
May 06, 2020
Cover [Abstract]  
Document Type 8-K
Document Period End Date May 06, 2020
Entity Registrant Name EXACT SCIENCES CORPORATION
Entity Central Index Key 0001124140
Amendment Flag false
Entity Incorporation, State or Country Code DE
Entity File Number 001-35092
Entity Tax Identification Number 02-0478229
Entity Address, Address Line One 441 Charmany Drive
Entity Address, City or Town Madison
Entity Address, State or Province WI
Entity Address, Postal Zip Code 53719
City Area Code 608
Local Phone Number 284-5700
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $0.01 par value per share
Trading Symbol EXAS
Security Exchange Name NASDAQ
Entity Emerging Growth Company false