Last update on 2024-06-07

Exact Sciences (EXAS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Exact Sciences (EXAS) scores 6/9 in 2023 Piotroski F-Score, showcasing financial vitality. Learn about EXAS profitability, liquidity, and operational efficiency.

Short Analysis - Piotroski Score: 6

We're running Exact Sciences (EXAS) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Exact Sciences (EXAS) scored a 6 out of 9 on the Piotroski F-Score, indicating moderate financial health. The company's profitability is a mixed bag; it's had negative net income for years but saw a positive cash flow from operations in 2023. Their Return on Assets (ROA) improved but remains negative, and operating cash flow higher than net income adds a positive note. In terms of liquidity, leverage decreased slightly, hinting at better financial stability, though their current ratio marginally declined. On operational efficiency, their gross margin and asset turnover showed positive growth. However, the company diluted its shares, negatively impacting the score.

Insights for Value Investors Seeking Stable Income

Investors might find Exact Sciences (EXAS) interesting due to the recent improvements in cash flow and operational efficiency. The 6/9 Piotroski score suggests the company is moderately strong with potential for growth. However, the persistent negative net income and share dilution are concerns. If you're considering long-term investment, it's essential to weigh these risks against potential benefits and perhaps wait for further positive trends in profitability and financial stability.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Exact Sciences (EXAS)

Company has a positive net income?

The Net Income criterion evaluates a company's bottom-line profitability by analyzing the net profits or losses over a fiscal year.

For Exact Sciences (EXAS), the net income in 2023 stood at -204,149,000 USD, highlighting a negative figure. Over the past 20 years, the company has consistently reported negative net income, with values ranging from -9,745,000 USD in 2008 to a peak deficit of -823,605,000 USD in 2020. This perennial loss-making history infers a sustained struggle in achieving profitability, underlying potential challenges in operational efficiency, market standing, or financial strategizing. Consequently, no point is awarded for this criterion, reflecting ongoing financial vulnerability and raising concerns over long-term sustainability.

Company has a positive cash flow?

Evaluating Cash Flow from Operations (CFO) involves determining whether the company generates positive cash flow through its core business operations. This is essential for assessing a firm's financial health.

Exact Sciences (EXAS) reported a positive Cash Flow from Operations (CFO) of $156.1 million in 2023. This is a significant improvement compared to previous years. The last 20 years of data display volatility in operational cash flow, with frequent negative values. Nonetheless, the positive CFO in 2023 not only results in adding 1 point in the Piotroski Analysis, but also suggests enhanced operational efficiency and stability for EXAS. This trend is a good indicator for the company's fundamental strength and future sustainable growth.

Return on Assets (ROA) are growing?

Return on Assets (ROA) evaluates how efficiently a company can manage its assets to generate earnings. An increasing ROA indicates better profitability.

Exact Sciences (EXAS) saw its ROA improve from -0.0966 in 2022 to -0.0322 in 2023, thus gaining 1 point according to the Piotroski Analysis. This shift signifies a positive trend, where the company is utilizing its assets more effectively despite remaining negative compared to the significant positive median industry ROA of 0.504 in 2023. With constant long-term negative operating cash flows barring an uptick in 2020 and 2023, this positive change is worth noting but does underline ongoing profitability challenges.

Operating Cashflow are higher than Netincome?

Operating cash flow higher than net income; assesses the quality of earnings and the firm's liquidity.

In 2023, Exact Sciences' operating cash flow was $156.119 million, while its net income was -$204.149 million. This indicates that the operating cash flow is indeed higher than the net income, resulting in a positive impact on the Piotroski score with an addition of 1 point. Historically, the company has experienced fluctuating operating cash flows and net incomes. The positive operating cash flow in 2023 compared to a negative net income suggests a strong cash generation capability, critical for liquidity and ongoing operations. The upward trend starting from negative figures in previous years to a significant positive figure in 2023 highlights improvement in Exact Sciences' financial stability and operating efficiency.

Liquidity of Exact Sciences (EXAS)

Leverage is declining?

Change in leverage is a critical measure indicating how the company's use of debt has changed year over year. Lower leverage typically suggests reduced risk and greater financial stability.

In the case of Exact Sciences (EXAS), the leverage has slightly decreased from 0.3884 in 2022 to 0.3825 in 2023. This decrement is minimal but signifies a positive trend in reducing debt levels, adding to the company's financial solidity. Historically, the company's leverage has fluctuated, with notable peaks such as in 2016 when leverage was significantly higher at 0.452. The fact that Exact Sciences' leverage has decreased amid a backdrop of higher historical leverage underscores a favorable development, given the complex nature of its business in the biotechnology space. Thus, the criterion scores 1 point.

Current Ratio is growing?

The Current Ratio compares a company's current assets to its current liabilities. It indicates liquidity and whether a company can cover its short-term obligations.

In 2023, the Current Ratio for Exact Sciences (EXAS) was 2.3205, slightly lower than the 2.3798 recorded in 2022. This decrease signifies a dip in the company's liquidity, though it remains relatively stable. Over the past 20 years, Exact Sciences' Current Ratio peaked in 2013 at 17.4739, far surpassing the industry's median of 1.9324 in the same year, indicating periods of superior liquidity. By 2023, Exact Sciences' ratio of 2.3205 remains close to the industry's median of 2.3682, demonstrating sound liquidity management broadly aligned with industry standards. However, the year-over-year decrease sets the Piotroski score for this criterion at 0, reflecting a slight decline in liquidity.

Number of shares not diluted?

The criterion examines if a company's outstanding shares decreased. Decreasing shares may signify share buybacks, which can indicate confidence and financial health.

Between 2022 and 2023, Exact Sciences' outstanding shares increased from 176,351,000 to 180,144,000. This continuation of the trend of increasing shares over the past twenty years, where shares grew from 18,911,000 in 2003 to 180,144,000 in 2023, suggests no share buybacks and potentially frequent equity financing. This is not favorable under Piotroski Analysis as a decrease would signify increased shareholder value. Score: 0

Operating of Exact Sciences (EXAS)

Cross Margin is growing?

Gross Margin is an indicator of a company's financial health and efficiency in controlling production costs. A higher gross margin indicates better profitability.

For Exact Sciences (EXAS), the gross margin increased from 0.7244 in 2022 to 0.7383 in 2023. This positive trend is favorable as it indicates a 1.93% improvement in efficiency and profitability. Compared to the last 20 years, Exact Sciences has seen fluctuations, including a significant dip in 2014. However, in recent years, the trend has been stabilizing, with margins staying above 0.7 since 2017. Additionally, the company’s gross margin consistently outperforms the industry median, which was 0.504 in 2023, highlighting its competitive advantage in cost management. Consequently, this improvement warrants a 1-point increment on the Piotroski scale.

Asset Turnover Ratio is growing?

Change in Asset Turnover is a measure of the efficiency with which a company utilizes its assets to generate sales. A rising turnover represents a more efficient use of assets.

Exact Sciences saw its Asset Turnover increase from 0.3228 in 2022 to 0.3937 in 2023, accumulating 1 point in this criterion. Historically, their Asset Turnover showed a significant upward trend since a low of 0.0078 in 2014, peaking at 0.5453 in 2017. This consistent rise reflects positively on their operational efficiency.