Exact Sciences Corporation (NASDAQ:EXAS): Is Breakeven Near?

With the business potentially at an important milestone, we thought we'd take a closer look at Exact Sciences Corporation's (NASDAQ:EXAS) future prospects. Exact Sciences Corporation provides cancer screening and diagnostic test products in the United States and internationally. The US$10b market-cap company announced a latest loss of US$204m on 31 December 2023 for its most recent financial year result. The most pressing concern for investors is Exact Sciences' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Exact Sciences

Consensus from 23 of the American Biotechs analysts is that Exact Sciences is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$4.8m in 2025. Therefore, the company is expected to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 62%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Exact Sciences' upcoming projects, though, keep in mind that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we would like to bring into light with Exact Sciences is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Exact Sciences' case is 75%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Exact Sciences, so if you are interested in understanding the company at a deeper level, take a look at Exact Sciences' company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:

1. Valuation: What is Exact Sciences worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Exact Sciences is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Exact Sciences’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.