Diagnostic company Exact Sciences Corporation (NASDAQ: EXAS) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 16% year on year to $811.1 million. The company’s full-year revenue guidance of $3.15 billion at the midpoint came in 1.7% above analysts’ estimates. Its non-GAAP profit of $0.22 per share was significantly above analysts’ consensus estimates.

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“The Exact Sciences team continues to build momentum, advancing our mission through earlier detection,” said Kevin Conroy, chairman and CEO.

Company Overview

With a mission to detect cancer earlier when it's more treatable, Exact Sciences (NASDAQ: EXAS) develops and markets cancer screening and diagnostic tests, including its flagship Cologuard stool-based colorectal cancer screening test.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Exact Sciences’s 21.1% annualized revenue growth over the last five years was excellent. Its growth beat the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Exact Sciences’s annualized revenue growth of 13% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

We can better understand the company’s sales dynamics by analyzing its constant currency revenue, which excludes currency movements that are outside their control and not indicative of demand. Over the last two years, its constant currency sales averaged 13.3% year-on-year growth. Because this number aligns with its normal revenue growth, we can see that Exact Sciences has properly hedged its foreign currency exposure.

This quarter, Exact Sciences reported year-on-year revenue growth of 16%, and its $811.1 million of revenue exceeded Wall Street’s estimates by 4.9%.

Looking ahead, sell-side analysts expect revenue to grow 11.8% over the next 12 months, similar to its two-year rate. Despite the slowdown, this projection is noteworthy and indicates the market is forecasting success for its products and services.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Although Exact Sciences broke even this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 29.8% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

On the plus side, Exact Sciences’s operating margin rose by 29.2 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming into its more recent performance, however, we can see the company’s margin has decreased by 16.6 percentage points on a two-year basis. If Exact Sciences wants to pass our bar, it must prove it can expand its profitability consistently.

Exact Sciences’s operating margin was negative 0.3% this quarter.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Although Exact Sciences’s full-year earnings are still negative, it reduced its losses and improved its EPS by 33.1% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability.

In Q2, Exact Sciences reported adjusted EPS at $0.22, up from negative $0.06 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street is optimistic. Analysts forecast Exact Sciences’s full-year EPS of negative $0.33 will flip to positive $0.73.

Key Takeaways from Exact Sciences’s Q2 Results

Exact Sciences will pay $75 million in cash and make up to $700 million in additional payments to secure the rights to Freenome's current and future blood-based screening tools for colorectal cancer. Exact will also pay sales royalties up to 10% and $20 million annually for the next three years in joint research and development costs.

Is Exact Sciences an attractive investment opportunity at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.