On Friday, Exact Sciences (NASDAQ:EXAS) Corporation (NASDAQ: EXAS) encountered skepticism during a Medicare Advisory Panel meeting regarding the pricing of their new Cologuard Plus test. The panel, which convened to make recommendations on pricing for laboratory tests in 2025, did not publicly release the results of the vote on the recommended pricing options.
Exact Sciences had proposed a 25% price increase for Cologuard Plus at a prior meeting on June 25, citing the need for additional resources and an enhanced buffer formulation. Despite this, the company expects their cost of goods sold (COGS) for the test to be 5% lower.
During the meeting, a panel representative questioned the justification for the proposed price increase, leaving a "default" recommendation of a 0% price increase before the vote. Historically, the Centers for Medicare & Medicaid Services (CMS) often align with the Clinical Diagnostic Laboratory Tests (CDLT) Panel's majority vote, although there are exceptions.
The results of the panel's vote are expected to be published in the Federal Register in about two weeks. Following the release of the vote, CMS is slated to post preliminary payment determinations around September, which will be open to public comment. Final payment determinations are anticipated in November, with changes taking effect on January 1.
Should Exact Sciences not receive the desired payment determination, they have the option to seek Advanced Diagnostic Laboratory Test (ADLT) status, which could take effect on April 1. ADLT status would allow reimbursement at the full list price in the first year and subsequently at the median commercial payer rate.
Exact Sciences has indicated their expectation of a 10% price increase for Cologuard Plus. The outcome of the panel discussion is seen as a potential challenge for the company, but further developments are awaited before drawing conclusions.
In other recent news, Exact Sciences has been the subject of several significant developments. Piper Sandler maintained its Overweight rating on Exact Sciences shares, anticipating a significant pricing boost for the company's screening business due to the launch of Cologuard Plus, which could result in at least a 10% increase in pricing within the next few years.
Scotiabank (TSX:BNS) also began its coverage on Exact Sciences shares, assigning a Sector Outperform rating and establishing a price target of $70.00, highlighting Exact Sciences' strong portfolio, which includes Cologuard and Oncotype DX.
Exact Sciences Corporation maintained its Buy rating and $80.00 price target according to a report by TD (TSX:TD) Cowen, following the company's announcement of a 25% price increase for its Cologuard Plus product.
Still, BTIG adjusted its outlook on Exact Sciences Corporation, reducing the price target to $70 from the previous $80, while reiterating a Buy rating on the stock. This adjustment follows a series of executive departures, including the company's Chief Commercial Officer, Everett Cunningham.
Finally, Exact Sciences Corp announced the results of its 2024 Annual Meeting of Shareholders. The shareholders elected three nominees to the company’s Board of Directors and ratified the appointment of PricewaterhouseCoopers LLP as the company’s independent registered public accounting firm for the year 2024. An advisory vote on the compensation paid to the company’s named executive officers was also approved.
InvestingPro Insights
As Exact Sciences Corporation (NASDAQ: EXAS) navigates the uncertainties surrounding Medicare pricing recommendations for their Cologuard Plus test, the financial metrics provided by InvestingPro offer a broader perspective on the company's valuation and performance.
With a market capitalization of $8.49 billion and a high gross profit margin of 73.67% over the last twelve months as of Q1 2024, Exact Sciences demonstrates a strong ability to convert revenue into gross profit. However, the company's challenges are reflected in its negative P/E ratio, currently standing at -29.17, which indicates that the market expects future growth or a return to profitability to justify this valuation.
InvestingPro Tips suggest that analysts do not foresee the company turning a profit this year, and the absence of dividend payments may affect investor sentiment. These insights are particularly relevant as the company's future pricing and profitability may be influenced by the upcoming CMS determinations.
For investors seeking a deeper analysis, InvestingPro provides additional tips on Exact Sciences, and users can take advantage of a special offer using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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