EXACT Sciences Corporation
11/03/2025 | Press release | Distributed by Public on 11/03/2025 16:11
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Objective
The purpose of this Management's Discussion and Analysis is to better allow our investors to understand and view our Company from management's perspective. We are providing an overview of our business and strategy including a discussion of our financial condition and results of operations. The following discussion of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Form 10-K"), which has been filed with the U.S. Securities and Exchange Commission ("SEC").
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the "safe harbor" created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as "believe," "expect," "may," "will," "should," "would," "could," "seek," "intend," "plan," "goal," "project," "estimate," "anticipate" or other comparable terms. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q regarding our strategies, prospects, expectations, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expected future operating results, including the anticipated impacts of restructuring and cost reduction initiatives; expectations for development or launching of new or improved products and services and their adoption and impact on patients; insurance reimbursement potential; our strategies, clinical trials, commercialization efforts, patient adoption and adherence, positioning, competition, resources, capabilities and expectations for future events or performance; and the anticipated benefits of our acquisitions and collaborative and licensing arrangements, including estimated synergies and other financial impacts. Forward-looking statements are neither historical facts nor assurances of future performance or events. Instead, they are based only on current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Actual results, conditions, and events may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause actual results, conditions, and events to differ materially from those indicated in the forward-looking statements include, among others, the following: our ability to successfully develop and commercialize new products and services and assess potential market opportunities; our ability to successfully and profitably market our products and services; the acceptance of our products and services by patients and healthcare providers; our reliance upon certain suppliers; our ability to retain and hire key personnel; approval and maintenance of adequate reimbursement rates for our products and services within and outside of the U.S.; the amount and nature of competition for our products and services; the effects of any judicial, executive or legislative action affecting us or the healthcare system; government shutdowns and changes in government policies, laws, regulations, and staffing; recommendations, guidelines and quality metrics issued by various organizations regarding cancer screening or our products and services; our ability to obtain and maintain regulatory approvals and comply with applicable regulations; our ability to protect and enforce our intellectual property; our success establishing and maintaining collaborative, licensing and supplier arrangements; the results of our validation studies and clinical trials, including the risks that the results of future studies and trials may differ materially from the results of previously completed studies and trials; our ability to manage an international business and our expectations regarding our international expansion and opportunities; the potential effects of changing macroeconomic conditions and geopolitical conflict; the possibility that the anticipated benefits from our business acquisitions or collaborative or licensing arrangements will not be realized in full or at all or may take longer to realize than expected; the possibility that the anticipated benefits from our restructuring and cost reduction initiatives will not be realized in full or at all or may take longer to realize than expected; the outcome of any potential litigation or legal proceedings; and our ability to raise the capital necessary to support our operations or meet our payment obligations under our indebtedness. The risks included above are not exhaustive. Other important risks and uncertainties are described in the Risk Factors and in Management's Discussion and Analysis of Financial Condition and Results of Operations sections of the 2024 Form 10-K and our subsequently filed Quarterly Reports on Form 10-Q. You are further cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
Overview
A leading provider of cancer screening and diagnostic tests, Exact Sciences Corporation (together with its subsidiaries, "Exact," "we," "us," "our" or the "Company") gives patients and health care professionals the clarity needed to take life-changing action earlier. Building on the success of the Cologuard®and Oncotype DX®tests, we are investing in our pipeline to develop innovative solutions for use before, during, and after a cancer diagnosis.
During the third quarter of 2025, we achieved many critical milestones, including:
•growing total revenue 20% year-over-year while decreasing operating expenses as a percentage of revenue,
•delivering a record number of orders and shipments in our gap closure program that helps payers close gaps in guideline recommended preventive cancer screening,
•generating cash provided by operating activities of $339.7 million for the nine months ended September 30, 2025, an improvement of $176.3 million in comparison to the nine months ended September 30, 2024,
•launching Cancerguard® , the first commercially available multi-cancer early detection ("MCED") blood test analyzing multiple biomarker classes, and
•expanding the impact of our ExactNexusTMtechnology platform by reaching a new milestone of 500 unique healthcare organization interface connections.
Our Screening Tests
Cologuard Test
Colorectal cancer is the second leading cause of cancer deaths in the United States ("U.S.") and the leading cause of cancer deaths in the U.S. among non-smokers. Each year in the U.S., there are approximately 154,000 new cases of colorectal cancer and approximately 53,000 deaths. It is widely accepted that colorectal cancer is among the most preventable, yet least prevented cancers.
Our flagship screening product, the Cologuard test, is a patient-friendly, non-invasive stool-based DNA ("sDNA") screening test that utilizes a multi-target approach to detect DNA and hemoglobin biomarkers associated with colorectal cancer and pre-cancer. Upon approval by the U.S. Food and Drug Administration ("FDA") in August 2014, our Cologuard test became the first and only FDA-approved sDNA non-invasive colorectal cancer ("CRC") screening test. Our Cologuard test is now indicated for average risk adults 45 years of age and older. The FDA approved our Cologuard PlusTMtest for adults ages 45 and older of average risk for colorectal cancer in October 2024, and we launched this test in late March 2025.
Genetic Testing
We have an extensive menu of predefined genetic tests for nearly all clinically relevant genes, additional custom panels, and comprehensive germline, whole exome ("PGxome®"), and whole genome ("PGnome®") sequencing tests.
Our Precision Oncology Tests
Our precision oncology portfolio delivers actionable genomic insights to inform prognosis and cancer treatment after a diagnosis. In breast cancer, the Oncotype DX Breast Recurrence Score®test is the only test shown to predict the likelihood of chemotherapy benefit as well as the chance of cancer recurrence in the most common sub-type of early-stage breast cancer. As the only test proven to predict both the likelihood of chemotherapy benefit and cancer recurrence, the Oncotype DX test is recognized globally as standard of care and is included in all major breast cancer treatment guidelines. The OncoExTra®test applies comprehensive tumor profiling, utilizing whole exome and whole transcriptome sequencing, to aid in therapy selection for patients with advanced, metastatic, refractory, relapsed, or recurrent cancer. With an extensive panel of approximately 20,000 genes and 169 introns, the OncoExTra test is one of the most comprehensive genomic (DNA) and transcriptomic (RNA) panels available today. We enable patients to take a more active role in their cancer care and make it easy for providers to order tests, interpret results, and personalize medicine by applying real-world evidence and guideline recommendations.
Riskguard®, our hereditary cancer test, helps people understand their inherited risk of cancer, arming them with critical information to make more informed treatment decisions.
International Business Background and Products
We commercialize or plan to commercialize our Oncotype®tests internationally through employees in Canada, Japan and a number of European countries, as well as through exclusive distribution agreements. We have provided our Oncotype tests in approximately 120 countries outside of the U.S. We do not offer our Cologuard, Oncodetect®, or Cancerguard tests outside of the U.S. We are exploring opportunities to make these tests and other future products available outside the U.S.
Recent Test Launches
We have launched new screening and diagnostic tests in 2025 to address unmet patient needs and enhance our existing products.
•Cologuard Plus- Our Cologuard Plus test, which was developed in collaboration with Mayo Foundation for Medical Education and Research ("Mayo"), was launched in late March 2025. The Cologuard Plus test, which was approved by the FDA in October 2024 for adults ages 45 and older at average risk for colorectal cancer, is covered by Medicare and included in the U.S. Preventive Services Taskforce ("USPSTF") guidelines as a recommended stool-based screening option. The test features novel biomarkers, improved laboratory processes, and enhanced sample stability, and detects colorectal cancers and precancerous polyps with even greater sensitivity than our Cologuard test while reducing false positives by nearly 40%. Results from the pivotal BLUE-C study published in the New England Journal of Medicine in March 2024 showed 95% overall cancer sensitivity and 43% sensitivity for advanced precancerous lesions at 94% specificity when age-weighted to the U.S. population with no findings on colonoscopy.
•Oncodetect- Our tumor-informed Oncodetect MRD test is designed to detect small amounts of tumor DNA that may remain in patients' blood after they have undergone initial treatment. This test is expected to help patients and oncologists understand the success of initial treatment, guide further treatment, and monitor for cancer recurrence. Results from the Alpha-CORRECT study, which primarily included patients with stage III colorectal cancer, showed our Oncodetect test achieved 78% sensitivity at the post-surgical timepoint and 91% sensitivity during the surveillance monitoring period, with specificities of 80% and 94%, respectively. In January 2025, complete findings from Alpha-CORRECT were published in the Journal of Surgical Oncology. Results from our Beta-CORRECT study, which we presented at the 2025 American Society of Clinical Oncology Annual Meeting, confirm a significant association between MRD positivity and recurrence in patients with stages II through IV colorectal cancer. Our Oncodetect test was launched as a laboratory developed test ("LDT") in April 2025, and based on results from the aforementioned studies, obtained Medicare reimbursement through the MolDX program effective April 2025 for serial use in patients with stage II, III, and resectable stage IV colorectal cancer in the adjuvant and recurrence monitoring settings over a five-year period.
•Cancerguard- Our Cancerguard test is designed to detect multiple cancers in their earliest stages from a single blood draw. Building on decades of research with Mayo and The Johns Hopkins University, the Cancerguard test combines multiple biomarker classes for earlier cancer detection, provides high specificity to help minimize false positives, and utilizes a streamlined imaging-based diagnostic pathway to reduce follow-up procedures. In September 2025, results from a multi-center, prospective, case-control ASCEND-2 study showed 68% sensitivity across six of the deadliest cancers and 64% overall sensitivity across a broad range of cancers, excluding breast and prostate. Additionally, the test achieved high specificity of 97.4%, helping to minimize false positives and avoid unnecessary procedures. Our Cancerguard test was launched as a self-pay LDT in September 2025, and to support patient access, we entered into an agreement with Quest Diagnostics to enable blood collection at their approximately 7,000 patient access sites across the U.S. We are actively enrolling patients for a real-world evidence study conducted under a U.S. FDA-reviewed Investigational Device Exemption, which is designed to inform future regulatory submissions, support payer discussions on coverage and reimbursement, and guide efforts to include our Cancerguard test in clinical guidelines.
Pipeline Research and Development
We are continuing to advance our pipeline of future screening and diagnostic products, including risk assessment, screening and prevention, early disease diagnosis, adjuvant and/or neoadjuvant disease treatment, metastatic disease treatment selection, and recurrence monitoring.
Through our collaboration with Mayo, we have successfully performed feasibility studies involving multiple types of cancer using tissue, blood, and other sample types. Our research and development programs are also powered by technologies we have exclusively licensed from JHU, Broad Institute, Inc. ("Broad Institute"), Oxford University, the Ludwig Institute for Cancer Research, and TwinStrand Biosciences, Inc. ("TwinStrand").
We are focusing our research and development efforts on three main areas:
•Colorectal Cancer Screening. In August 2025, we announced initial results for an internal version of our CRC blood test, showing sensitivities of 73% for CRC and 14% for advanced precancerous lesions at 90% specificity. This test included three methylation markers and a protein marker. It did not include the additional marker class presented at the European Society for Medical Oncology 2024 Congress. Internal testing and evaluation are ongoing for future versions of our blood-based colorectal cancer screening test. In August 2025, we acquired exclusive rights to the current and future versions of Freenome Holdings, Inc.'s ("Freenome") blood-based colorectal cancer screening tests as well as the underlying technology, subject to regulatory approvals.
•MRD Test Development. In addition to the evidence supporting Oncodetect in colorectal cancer, we plan to validate our Oncodetect test in breast cancer, and subsequently, in multiple other solid tumor types. We also expect to enhance our MRD test by leveraging the Broad Institute's Minor Allele Enriched Sequencing Through Recognition Oligonucleotides ("MAESTRO") diagnostic testing technology, which we secured exclusive rights to in June 2023 through a sponsored research and license agreement. In 2026, we expect to introduce a next-generation version of this test leveraging the MAESTRO technology.
•MCED Test Development.In July 2024, our Cancerguard test was approved as an Investigational Device Exemption by the FDA to be used within a real-world evidence study, providing an opportunity to test 25,000 people over the next three years. The first patient was enrolled within this study at Baylor Scott & White, the primary study site, in August 2024. In the future, we plan to begin recruiting patients for the FDA registrational Study of All comeRs ("SOAR") trial, which we expect to be the largest prospective, interventional multi-cancer screening trial ever conducted in the U.S.
Research and development, which includes our clinical study programs, accounts for a material portion of our operating expenses. As we seek to enhance our product portfolio and advance our pipeline, we expect that our research and development expenditures will continue to be a significant portion of our operating expenditures.
2025 Priorities
Our top priorities for 2025 are to (1) champion our customers and team, (2) elevate our product portfolio, and (3) amplify our impact.
Champion our Customers and Team
We will enhance our world-class customer experience, expand screening access to underserved populations, and ensure Exact Sciences remains a great place to work.
Elevate our Product Portfolio
We will increase adoption of current tests, launch our Cologuard Plus, Oncodetect, and Cancerguard tests, and invest in clinical trials to enhance existing products and bring new diagnostics to patients and providers. We will also focus on improving patient adherence to screen more people.
Amplify our Impact
By reaching more patients through an expanded portfolio and growing customer base, we will increase revenue and profitability. Sustained profits will enable continued investment in life-changing cancer diagnostics to help achieve our mission.
Key Trends and Uncertainties
Multi-year Productivity Plan
In August 2025, we announced our multi-year productivity plan. The plan is central to achieving our long-term financial goals. These initiatives are intended to drive sustainable growth, improve operating leverage, and amplify our ability to invest in innovation and serve more patients by delivering more than $150.0 million in expected annual savings by 2026. These savings are expected to primarily come from general and administrative efficiencies through external spend optimization, restructuring certain support functions globally, and building more automation in core operations.
Product Opportunities
We estimate there are up to 55 million Americans that are not up to date with their colon cancer screenings. The capacity for screening colonoscopies in the U.S. is relatively fixed because it is dependent on the number of gastroenterologists available to perform the procedures. Health systems, payers, and health care providers are motivated to increase screening rates because they are measured as part of the Healthcare Effectiveness Data and Information Set ("HEDIS") and Medicare Stars quality measure systems. More health systems and payers are recognizing the opportunity to partner with Exact Sciences to address their screening rates and related quality measures through large, organized screening programs including our care gap programs. We aim to partner with them to implement our Cologuard and Cologuard Plus tests within these programs as a solution for patients who infrequently visit their health care provider. Cologuard test utilization is increasing in this setting, helping us screen more Americans.
In June 2025, the U.S. Supreme Court affirmed Section 2713 of the Patient Protection and Affordable Care Act ("ACA") mandate that certain health insurers cover, without imposing any patient cost-sharing, evidence-based items or services that have in effect a rating of "A" or "B" in the current recommendations of the USPSTF, which includes our Cologuard and Cologuard Plus tests, in its decision in the Kennedy v. Braidwood Management case. This ruling confirms that there will be no disruption in coverage of our Cologuard and Cologuard Plus tests, reinforces the value of evidence-based preventive care, and solidifies our Cologuard and Cologuard Plus tests as valuable assets for payers in improving health outcomes.
We have an opportunity to impact even more lives by increasing adoption of Oncotype DX tests internationally, primarily through continued adoption in Japan. Breast cancer is the most common cancer among Japanese women, with about 45,000 new diagnoses of early-stage HR+, HER2- breast cancer each year. With reimbursement in place, we estimate our Oncotype DX test could help more than 100 women per day understand if their cancer is likely to recur and whether chemotherapy should be used in their treatment plan.
Macroeconomic Conditions
While factors such as increasing financial market volatility and uncertainty, inflation, exchange rate fluctuations, higher interest rates, government shutdowns, and recently imposed tariffs have not materially impacted our results of operations as of September 30, 2025, we are uncertain how these factors may impact our future operating results, including through the impact of consumer or medical provider behavior or by adversely impacting the operations of our suppliers.
Results of Operations
We have incurred losses since our inception and, as of September 30, 2025, we had an accumulated deficit of approximately $4.62 billion. While our operating results have continued to improve, it is possible we may never become profitable or sustain profitability.
Revenue.Our Screening revenue primarily includes laboratory service revenue from our Cologuard and PreventionGenetics, LLC tests while our Precision Oncology revenue primarily includes laboratory service revenue from global Oncotype DX and therapy selection tests.
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| Amounts in thousands | 2025 | 2024 | Change | % Change | ||||||||||||||||||||||
| Screening | $ | 666,240 | $ | 544,901 | $ | 121,339 | 22.3 | % | ||||||||||||||||||
| Precision Oncology | 184,499 | 163,754 | 20,745 | 12.7 | % | |||||||||||||||||||||
| Total | $ | 850,739 | $ | 708,655 | $ | 142,084 | 20.0 | % | ||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| Amounts in thousands | 2025 | 2024 | Change | % Change | ||||||||||||||||||||||
| Screening | $ | 1,834,728 | $ | 1,551,305 | $ | 283,423 | 18.3 | % | ||||||||||||||||||
| Precision Oncology | 533,881 | 494,138 | 39,743 | 8.0 | % | |||||||||||||||||||||
| Total | $ | 2,368,609 | $ | 2,045,443 | $ | 323,166 | 15.8 | % | ||||||||||||||||||
The increase in Screening revenue for the three and nine months ended September 30, 2025 was primarily driven by a higher volume of completed Cologuard tests, which resulted from increases in rescreen rates, care gap programs, and growth in new ordering providers.
The increase in Precision Oncology revenue was primarily due to an increase in the number of completed Oncotype DX breast cancer tests, both domestically and internationally. The increase in completed Oncotype DX breast cancer tests was led by an increased number of ordering providers outside the U.S., particularly in Japan. In addition, we recognized sublicense revenue of $7.5 million for the nine months ended September 30, 2025 under a sublicense agreement executed in the second quarter of 2025 related to technology originally licensed from TwinStrand in the third quarter of 2024.
Adjustments to revenue recognized during the period relating to prior period estimates were less than 1% of revenue recorded in our condensed consolidated statement of operations for the three and nine months ended September 30, 2025 and 2024. The impacts to revenue related to change in transaction price are a function of differences in realized collections compared to original estimates, which includes upward adjustments stemming from optimizations in our reimbursement operations and downward adjustments from things such as payer denials.
We expect continuing revenue growth for our Cologuard and Oncotype tests subject to seasonal variability, timing of care gap programs, and additional growth from our recent and upcoming product launches. Our revenues are affected by the test volume of our products, patient adherence rates, payer mix, the levels of reimbursement, our order to cash operations, and payment patterns of payers and patients.
Costs and expenses
Cost of sales. Cost of sales includes the costs incurred to deliver our products and services including material and service costs, personnel costs including stock-based compensation, infrastructure expenses associated with laboratory testing services, shipping charges, depreciation, amortization of acquired intangible assets or license intangible assets related to products we have commercialized, and allocated facility and overhead costs. Cost of sales and gross margin consisted of the following:
| Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| Amounts in thousands | 2025 | % of Revenue | 2024 | % of Revenue | $ Change | % Change | ||||||||||||||||||||||||||||||||
| Cost of sales | $ | 266,810 | 31.4 | % | $ | 217,170 | 30.6 | % | $ | 49,640 | 22.9 | % | ||||||||||||||||||||||||||
| Gross profit and gross margin | 583,929 | 68.6 | % | 491,485 | 69.4 | % | 92,444 | 18.8 | % | |||||||||||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| Amounts in thousands | 2025 | % of Revenue | 2024 | % of Revenue | $ Change | % Change | ||||||||||||||||||||||||||||||||
| Cost of sales | $ | 721,680 | 30.5 | % | $ | 619,319 | 30.3 | % | $ | 102,361 | 16.5 | % | ||||||||||||||||||||||||||
| Gross profit and gross margin | 1,646,929 | 69.5 | % | 1,426,124 | 69.7 | % | 220,805 | 15.5 | % | |||||||||||||||||||||||||||||
The increase in cost of sales for the three and nine months ended September 30, 2025 was primarily due to an increase in production costs, which was a result of an increase in completed Cologuard and Oncotype tests. Gross margin decreased for the three and nine months ended September 30, 2025 primarily due to an increase in volume from certain of our care gap programs, which was partially offset by efficiencies gained in our personnel and lab automation from increased Cologuard test volume. We expect that cost of sales will generally continue to increase in future periods as a result of an increase in our existing laboratory testing services and as we launch our pipeline products. We also expect to see a corresponding increase in personnel and support services associated with this growth.
Research and development, sales and marketing, and general and administrative expenses, including each item as a percentage of revenue, consisted of the following:
| Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| Amounts in thousands | 2025 | % of Revenue | 2024 | % of Revenue | $ Change | % Change | ||||||||||||||||||||||||||||||||
| Research and development | $ | 117,290 | 13.8 | % | $ | 101,487 | 14.3 | % | $ | 15,803 | 15.6 | % | ||||||||||||||||||||||||||
| Sales and marketing | 250,228 | 29.4 | % | 220,264 | 31.1 | % | 29,964 | 13.6 | % | |||||||||||||||||||||||||||||
| General and administrative | 241,413 | 28.4 | % | 193,539 | 27.3 | % | 47,874 | 24.7 | % | |||||||||||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| Amounts in thousands | 2025 | % of Revenue | 2024 | % of Revenue | $ Change | % Change | ||||||||||||||||||||||||||||||||
| Research and development | $ | 331,501 | 14.0 | % | $ | 333,501 | 16.3 | % | $ | (2,000) | (0.6) | % | ||||||||||||||||||||||||||
| Sales and marketing | 761,656 | 32.2 | % | 649,596 | 31.8 | % | 112,060 | 17.3 | % | |||||||||||||||||||||||||||||
| General and administrative | 670,681 | 28.3 | % | 590,715 | 28.9 | % | 79,966 | 13.5 | % | |||||||||||||||||||||||||||||
Research and development expenses.Research and development expenses consist of costs incurred to develop new or enhance existing products and services, which primarily includes personnel costs including stock-based compensation, clinical study programs, materials and infrastructure costs, depreciation and amortization, and allocated facility and overhead costs. For the three and nine months ended September 30, 2025 and 2024, research and development costs incurred primarily related to the development of our colorectal cancer, MRD, and MCED tests. Research and development expenses incurred to support our ongoing clinical studies increased for the three and nine months ended September 30, 2025 primarily due to increased resources needed to support our pipeline tests as they approached and reached commercialization as discussed in the Recent Test
Launchessection above. The increase in costs incurred to support our ongoing clinical studies for the nine months ended September 30, 2025 was offset by the termination of a license agreement with The Translational Genomics Research Institute, which resulted in the recognition of an expense of $25.8 million in the second quarter of 2024. We expect that research and development expenses will generally increase in future periods as we continue to enhance our current products and invest in our pipeline.
Sales and marketing expenses.Sales and marketing expenses primarily include personnel costs including stock-based compensation and commissions for our sales force, marketing costs, customer-oriented support activities, depreciation and amortization expense, and allocated facility and overhead costs. Sales and marketing expenses increased for the three and nine months ended September 30, 2025 due to continued investment in high impact sales and marketing opportunities. We anticipate sales and marketing expenses will generally increase in future periods as we reinvest in efforts to increase adoption of current products and support the launches of new products. We expect these expenses will decrease as a percentage of revenue over time, driven by the growth of Cologuard and Oncotype testing services. Refer to Note 1 of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q ("Notes to Condensed Consolidated Financial Statements") for discussion of the reclassification of customer care and customer experience related costs from general and administrative expenses to sales and marketing expenses.
General and administrative expenses.General and administrative expenses include costs associated with our corporate support functions, which primarily includes personnel costs including stock-based compensation, legal and professional service fees, depreciation and amortization, and allocated facility and overhead costs. General and administrative expenses increased for the three and nine months ended September 30, 2025 primarily due to restructuring and business transformation related costs incurred as discussed in Note 14 of our Notes to Condensed Consolidated Financial Statements and an increase in certain incentive-based compensation arrangements, which were reduced in the third quarter of 2024. The increase in expenses was also attributed to the change in fair value of our outstanding contingent consideration liabilities. Refer to Note 7 of our Notes to Condensed Consolidated Financial Statements for further discussion of our outstanding contingent consideration liabilities. The increase in general and administrative expenses as a percentage of revenue for the three months ended September 30, 2025 is primarily due to restructuring and business transformation related costs, which we expect to continue to impact our general and administrative expenses into 2026 as discussed in further detail above. We expect general and administrative expenses will stabilize and decrease over time as we continue to leverage efficiencies in our personnel, information technology systems, and the expected benefits from our multi-year productivity plan. Refer to Note 1 of our Notes to Condensed Consolidated Financial Statements for discussion of the reclassification of customer care and customer experience related costs from general and administrative expenses to sales and marketing expenses.
Other operating and non-operating expense (income) items consisted of the following:
| Three Months Ended September 30, | ||||||||||||||||||||
| Amounts in thousands | 2025 | 2024 | Change | |||||||||||||||||
| Impairment of long-lived and indefinite-lived assets | $ | 543 | $ | 18,698 | $ | (18,155) | ||||||||||||||
| Other operating income | - | (3,100) | 3,100 | |||||||||||||||||
| Investment income, net | (17,577) | (11,582) | (5,995) | |||||||||||||||||
|
Interest expense, net
|
9,789 | 9,607 | 182 | |||||||||||||||||
|
Income tax expense
|
1,837 | 808 | 1,029 | |||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||
| Amounts in thousands | 2025 | 2024 | Change | |||||||||||||||||
| Impairment of long-lived and indefinite-lived assets | $ | 6,794 | $ | 31,296 | $ | (24,502) | ||||||||||||||
| Other operating income | - | (6,632) | 6,632 | |||||||||||||||||
| Investment income, net | (34,500) | (29,596) | (4,904) | |||||||||||||||||
|
Interest expense, net
|
29,602 | 17,439 | 12,163 | |||||||||||||||||
|
Income tax expense
|
3,189 | 4,077 | (888) | |||||||||||||||||
Impairment of long-lived and indefinite-lived assets.The impairment charges recorded during the three and nine months ended September 30, 2025 and September 30, 2024 related to certain of our domestic facilities and corresponding leasehold improvements.
Other operating income. The income recorded for the three and nine months ended September 30, 2024 represents the remeasurement of the contingent consideration asset from the sale of the Oncotype DX Genomic Prostate Score test ("GPS test") to MDxHealth SA ("MDxHealth").
Investment income, net. The investment income recorded for the three and nine months ended September 30, 2025 and 2024 was primarily due to gains recorded on our marketable securities.
Interest expense, net.Interest expense recorded from our outstanding convertible notes totaled $8.2 million and $8.9 million for the three months ended September 30, 2025 and 2024, respectively and $24.7 million and $23.6 million for the nine months ended September 30, 2025 and 2024, respectively. Interest expense for the nine months ended September 30, 2024 included a net gain on settlement of convertible notes of $10.3 million. The convertible notes are further described in Note 9 of our Notes to Condensed Consolidated Financial Statements.
Income tax expense.Income tax expense for the three and nine months ended September 30, 2025 and 2024 was primarily related to current foreign and state tax expense.
Liquidity and Capital Resources
Overview
We have incurred losses since our inception, and have historically financed our operations primarily through public and private offerings of our common stock and convertible debt and through revenue generated by the sale of our laboratory testing services. We expect our operating expenditures to continue to increase to support future growth of our laboratory testing services, as well as an increase in research and development and clinical trial costs to support the advancement of our pipeline products and bringing new tests to market. We expect that cash, cash equivalents and marketable securities on hand at September 30, 2025, along with cash flows generated through our operations, will be sufficient to fund our current operations for at least the next twelve months based on current operating plans.
In January 2025, we entered into a senior secured revolving credit agreement (the "Revolving Credit Agreement"), which provides us with access to $500.0 million on a revolving basis, including a letter of credit sublimit. The Revolving Credit Agreement also provides for uncommitted incremental facilities in an amount up to $200.0 million plus an unlimited additional amount so long as we are in pro forma compliance with certain financial covenants. The Revolving Credit Agreement expires in January 2028. As of September 30, 2025, we have not drawn any funds under the Revolving Credit Agreement. The Revolving Credit Agreement is further described in Note 8 of our Notes to Condensed Consolidated Financial Statements.
We may raise additional capital to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons. If we are unable to obtain sufficient additional funds to enable us to fund our business plans and strategic investments, our results of operations and financial condition could be materially adversely affected, and we may be required to delay the implementation of our plans or otherwise scale back our operations. There can be no certainty that we will ever be successful in generating sufficient cash flow from operations to achieve and maintain profitability and meet all of our obligations as they come due.
Cash, Cash Equivalents and Marketable Securities
As of September 30, 2025, we had approximately $789.0 million in unrestricted cash and cash equivalents and approximately $214.1 million in marketable securities.
The majority of our investments in marketable securities consist of fixed income investments, and all are deemed available-for-sale. The objectives of this portfolio are to provide liquidity and safety of principal while striving to achieve the highest rate of return. Our investment policy limits investments to certain types of instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer.
Cash Flows
| Nine Months Ended September 30, | ||||||||||||||
| Amounts In millions | 2025 | 2024 | ||||||||||||
|
Net cash provided by operating activities
|
$ | 339.7 | $ | 163.5 | ||||||||||
|
Net cash provided by (used in) investing activities
|
104.0 | (400.3) | ||||||||||||
|
Net cash provided by (used in) financing activities
|
(262.2) | 221.4 | ||||||||||||
Operating activities
The increase in cash provided by operating activities for the nine months ended September 30, 2025 was primarily due to an increase in revenue, a decrease in our operating expenses as a percentage of revenue, and timing and magnitude of our cash outflows on our accounts payable and accrued liabilities including lower disbursements related to incentive-based compensation arrangements that were accrued as of December 31, 2024. This was partially offset by an increase in cost of sales to support the increase in revenue as discussed in the Results of Operationssection above.
Investing activities
The increase in cash provided by investing activities was due to allocating more funds to money market accounts and reducing our investments in fixed income securities, allowing us to meet our liquidity needs for financing activities for the nine months ended September 30, 2025 as further discussed below. In addition, we received a payment of $28.0 million in the second quarter of 2025 in settlement of a portion of our contingent consideration receivable related to the sale of the intellectual property and know-how related to our GPS test to MDxHealth. These inflows were partially offset by a payment of $50.0 million as part of the note purchase agreement that we executed with Freenome in the third quarter of 2025. We also made a payment of $45.0 million during the third quarter of 2024 for our license of intellectual property from TwinStrand.
Financing activities
The increase in cash used in financing activities was primarily due to payments of $249.2 million on settlement of our previously outstanding convertible notes due in 2025 ("2025 Notes") upon maturity in January 2025 and a cash payment of $19.0 million in settlement of the contingent consideration liability related to our acquisition of Ashion Analytics, LLC. In comparison, we received proceeds of $266.8 million from the issuance of convertible notes in the second quarter of 2024. The increase in cash used in financing activities was partially offset by a payment of $50.0 million in settlement of our previously outstanding accounts receivable securitization facility upon maturity in June 2024.
Material Cash Requirements
A discussion of our material cash requirements as of December 31, 2024 was provided in the Management's Discussion and Analysis of Financial Condition and Results of Operation of our 2024 Form 10-K. Other than the matters described below, there were no material changes outside the ordinary course of our business in our specified material cash requirements during the nine months ended September 30, 2025.
Upon maturity of our previously outstanding 2025 Notes, we made a cash payment of $250.4 million in settlement of the total principal of the 2025 Notes and accrued interest that was previously outstanding as of December 31, 2024. Refer to Note 9 of the Notes to Condensed Consolidated Financial Statements for further discussion of the 2025 Notes.
In January 2025, we entered into the Revolving Credit Agreement, which is discussed in further detail above. The Revolving Credit Agreement replaced our previous revolving line-of-credit (the "Revolver") dated as of November 5, 2021. Refer to Note 8 of the Notes to Condensed Consolidated Financial Statements for further discussion of the Revolving Credit Agreement and Revolver.
In August 2025, we entered into a Collaboration and License Agreement with Freenome. Under the terms of the agreement, we made a payment to Freenome of $75.0 million in cash in November 2025. Additional amounts would be payable to Freenome upon the achievement of certain development and regulatory milestones. Refer to Note 10 of the Notes to Condensed Consolidated Financial Statements for further discussion of this agreement.
As of September 30, 2025, we had no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
Management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires us to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience and on various other factors that are believed to be appropriate under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
For a discussion of our critical accounting policies and estimates, refer to our Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Form 10-K. There have been no material changes to our critical accounting policies and estimates since our 2024 Form 10-K.
Recent Accounting Pronouncements
See Note 1 of our Notes to Condensed Consolidated Financial Statements for the discussion of Recent Accounting Pronouncements.
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