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In this case, the company's warnings may increase.
Companies with too little and too much commitment achieve above-average returns in the long term. Exact Sciences Corp. could have such a surprise in store when it reports its third-quarter 2022 operating results in early November.
The leader in genetic testing previously told investors it was expecting revenue of $497.5 million in the third quarter. This includes sales of approximately $342.5 million for a colorectal cancer screening product, the only genetic testing device on the market to generate at least $1 billion in annual sales. The Company By 2022, the company forecasts sales of $2 billion, of which $1.32 billion will come from home filter devices.
The company deliberately advised cautiously. At the very least, the company is well-positioned to meet its full-year guidance and deliver healthy year-over-year growth. It could be so easy to see Cologard dominate.
During an August conference call to discuss second-quarter 2022 operating results, at least one Wall Street analyst asked management directly if it was overly conservative with its guidance. You were right.
Exact Sciences told investors it doesn't expect sales to exceed $335 million in the second quarter of 2022, but the home control device did post quarterly sales of $344 million. It was easy in the middle of the trip.
Despite the favorable pace, management hasn't raised 2022 revenue guidance for ColoGuard. Merchandise revenue is expected to remain approximately $1.32 billion for the year. Let's open the box:
- The latest forecast puts colon cancer diagnostic equipment sales at $679 million in the second half of 2022. This is a relatively small increase from the $641 million paid out in the first half.
- Finally, Cologard's third quarter revenue is forecast to be lower than the second quarter. This means that Cologard's sales in the fourth quarter will be below the result of the third quarter. It doesn't make much sense and doesn't follow historical sales trends.
This suggests that Cologuard could deliver another solid set of sales and strength management in Q3 to boost its 2022 sales guidance — at least as far as its core product is concerned.
Precision Science's ability to increase its 2022 revenue guidance for its integrated product portfolio may depend on the strength or weakness of precision oncology devices. Recent guidelines indicate that these tissue biopsy tests are only increasing at 4% per year. While that includes the recently sold prostate cancer device, there are more general headaches.
One thing investors should keep in mind is that Clarity's oncology portfolio is heavily exposed to international currency headwinds. A strong US dollar hurts many global companies in 2022. Exact Science derives almost all of its revenue from the US, which has an advantage over central bank monetary policy. The caveat is that international sales are becoming an increasingly large driver for the company's precision oncology devices.
In other words, the most likely scenario is probably more complicated. Solid science could benefit from the strength of Cologuard, which looks set to easily pass 2022 guidelines.
Even in these mixed conditions, business remains strong. Achieving 2022 revenue guidance of more than $2 billion represents a 13 percent increase over the prior year. That's a respectable growth rate for a company of its size — and especially when compared to a difficult operating environment that hampers many smaller rivals. Anyway, it all depends on Colorguard.