Exact Sciences Snaps up PreventionGenetics

Exact Sciences Corp. (NASDAQ: EXAS) has acquired PreventionGenetics in a cash-cum-stock deal worth $190 million. The acquisition will mark Exact Sciences entry into hereditary cancer testing (HCT) and bolster its advanced cancer diagnostics portfolio throughout the U.S. and globally.

With a current market capitalization of $13 billion, Exact Sciences Corp. is a molecular diagnostics company specializing in the detection of early-stage cancers by providing cancer screening and diagnostic tests.

Following the news, shares gained 0.6% on January 10.

Benefits of the Deal

Founded in 2004, PreventionGenetics is a genetic testing laboratory that delivers clinical genetic testing of the highest quality at fair prices, globally. It provides tests for nearly all clinically relevant genes including the comprehensive germline whole genome sequencing test, among others.

In 2021, PreventionGenetics is expected to generate preliminary, unaudited revenue of approximately $36 million and $3 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

The addition of PreventionGenetics’ comprehensive genetic testing portfolio complements Exact Sciences’ existing advanced cancer tests. The collaboration will lead to disease prevention and earlier cancer detection.

Furthermore, PreventionGenetics’ Foundational laboratory’s skilled team, with expertise in sequencing, informatics, and genetic counseling will underpin the entrance into the hereditary cancer testing space.

According to the terms of the agreement, the total consideration of $190 million includes 50% in Exact Sciences common shares, with the remaining 50% paid in cash.

Record Q4 and FY2021 Revenue

Ahead of its upcoming earnings expected on February 24, 2022, the company announced preliminary results for the fourth quarter and full-year concurrent with the acquisition announcement.

For the full year 2021, Exact Sciences expects revenue to grow 18% year-over-year to range between $1,765.3 million and $1,768.3 million. Notably, the growth was 29% after excluding COVID-19 testing.

For Q4, revenues are expected to grow 2% year-over-year and range between $472 million and $475 million. Likewise, excluding COVID-19 testing, the expected growth is 16%.

CEO Comments

Exact Sciences CEO, Kevin Conroy, commented, “PreventionGenetics is a natural fit with Exact Sciences, and we’re thrilled to have their talented team join in our mission to make earlier cancer detection a routine part of medical care.”

He further added, “We share in PreventionGenetics’ belief that genetics can transform medicine, improve lives, and help eradicate cancer. With our deep relationships in primary care and PreventionGenetics’ strong reputation among genetics specialists, Exact Sciences can help more people understand their inherited risk of cancer to catch it earlier and treat it more effectively.”

Analysts Recommendation

Overall, the stock has a Strong Buy consensus rating based on 6 Buys and 1 Hold. The average Exact Sciences stock prediction of $120.17 implies 64.12% upside potential from current levels.

Bloggers Weigh In

TipRanks data shows that financial blogger opinions are 85% Bullish on EXAS stock, compared to a sector average of 69%.

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