RECOMMENDATION: SELL 1 Ticker: EXAS Analyst:

Business Description 4 Exact Sciences is transitioning from mainly relying on its flagship products, Cologuard and Oncotype DX, to becoming a diversified platform leader in cancer diagnostics To do this, they need to expand into the high-value, high-growth liquid biopsy markets: molecular residual disease (MRD) with Oncodetect, and multi-cancer early detection (MCED) with Cancerguard Figure 2:  Increasing Global Focus Global TAM to reflect their growing global presence Sources: Company Fillings, FactSet, American Cancer Society, Mordor Intelligence, Precedence Research<br>

Revenue Segments 5 Cancerguard (Blood Screening) Cologuard (Stool Screening) Cancer is the leading cause of death in people under 85. As of 2025, technology and cost limitations mean that patients are usually recommended Testing for only four types of cancer. These cancers only comprise 37% of total fatalities annually, with another 50+ cancers causing the other 63%. Cancerguard fills this meaningful gap by successfully screening for over 50 types of cancer at a lower cost than their competitors and an industry leading level of accuracy from a single blood sample. Colorectal cancer (CRC) is the third most deadly and fourth most commonly diagnosed cancer in the world Cologuard is a prescription-based, noninvasive colorectal cancer screening option for average-risk adults. The patient collects a stool sample at home using a collection kit and then ships the sample back to Exact Sciences' labs for analysis. The launch of the next-generation Cologuard Plus test is a strategic move to reinforce market leadership, defending the product's market share against emerging competitors and substitutes. Sources: Company Fillings, FactSet<br>

Revenue Segments 6 Oncotype DX (Precision Oncology Diagnostic) Oncodetect (Blood MRD Test) The standard of care for guiding chemotherapy decisions in certain patients with early-stage breast cancer The test provides a personalized Recurrence Score that helps predict the likelihood of cancer recurrence and, critically, the benefit of adding chemotherapy. This crucial information helps doctors and patients avoid unnecessary chemotherapy and its side effects, adding significant clinical and economic value It’s been incorporated into major international cancer treatment guidelines (like NCCN, ASCO, etc). This endorsement by the medical community creates a significant barrier to entry for competitors and solidifies its market dominance. Originally developed to detect tiny amounts of recurring CRC Cancer related DNA in the patient’s bloodstream up to two years before any signs of recurring cancer could be caught through traditional methods such as screening. It soon became apparent that this technology could be applied to a variety of cancers, not just CRC. This means that as the research continues to find new applications for Oncodetect, new sources of revenue also become available. Sources: Company Fillings, FactSet<br>

Product Summary 7 Sources: Company Fillings, FactSet<br>

Key Highlights 8<br>

Driver: Cologuard Expansion 9 Figure 3:  Tam Expansion Between 2018 and 2021, most cancer organizations began lowering the recommended screening age to 45 instead of 50 years old, which has been a big tailwind for CRC Screening To capitalize on the tail-end of this inflow, and improve on the accuracy of the legacy test, Cologuard Plus was released earlier this year (March 31st) Figure 4:  Cash Cow Metamorphosis After the initial boost in sales, and most of the abnormal growth has been realized, a slowly declining CAGR is expected for the foreseeable future, while Cologuard gains market share in a slowly growing market The next step in Cologuard’s life cycle is to serve as a revenue generating machine to help fund the growth of new segments Sources: Company Fillings, FactSet, American Cancer Society<br>

Driver: Liquid Biopsy Figure 5:  The Third Pillar The long-term growth and valuation ceiling for Exact Sciences depends upon the success of its Liquid Biopsy solutions, which address significantly large and rapidly emerging clinical markets While Exact Sciences’ established products (Cologuard and Oncotype DX) enjoy dominant market positions, the company must now commit substantial resources to gain traction in the MRD space (Oncodetect) The Cancerguard Multi-Cancer Early Detection (MCED) test represents the highest-risk, highest-reward initiative for the company 10 Although it was launched this year as a laboratory-developed test (LDT) in the United States, the commercial scaling and full reimbursement potential of Cancerguard hinges on the outcomes of the Falcon Registry* The successful and rapid commercial scaling of the Oncodetect molecular residual disease (MRD) test, specifically leveraging the critical advantage of secured Medicare coverage for colorectal cancer (CRC) patients is vital for capturing early market share in the competitive liquid biopsy space The estimated completion date for the Falcon Registry is January 1, 2031 *The Falcon Registry is a large-scale, real-world evidence study conducted under a U.S. FDA-reviewed Investigational Device Exemption (IDE); Specifically, the Falcon registry aims to enroll up to 25,000 participants to inform future regulatory submissions, secure broad payer coverage, and guide inclusion in clinical guidelines Sources: Company Fillings, FactSet<br>

Driver: Operating Leverage Figure 6:  Lab Space Allows for Greater Scale 11 Exact Sciences can leverage its economies of scale and centralized labs already built for Cologuard to fuel the growth of new products like Oncodetect and Cancerguard They will be able to utilize their existing infrastructure, business know-how, and regulator connections to launch new tests faster, cheaper, and with high volume capacity- eliminating operational bottlenecks This focus on sharing existing excess laboratory and commercial infrastructure is a core business driver for accelerating EBIT expansion and closing the gap to sustainable profitability This focus on sharing existing excess laboratory and commercial infrastructure is a core business driver for accelerating EBIT expansion and closing the gap to sustainable profitability. Figure 7: Scale Leads to Higher Margins Figure 8:  Earnings Follow Sources: Company Fillings, FactSet, IMCP, Potter Lawson, The Business Journals<br>

Driver: Abbott Acquisition On November 20th, it was announced that Abbott has entered a definitive agreement to acquire Exact Sciences for $21 Billion in cash, at $105/share The acquisition is expected to close in the second quarter of 2026, and is awaiting regulatory and shareholder approval Given That:
-The boards of both companies unanimously approved the acquisition

-The purchase price is significantly above the most recent prices pre-announcement

-The acquisition is priced in

It seems highly likely that the Acquisition will go through Figure 9:  Pricing in the Acquisition 12 The stock rocketed up to over $100 per share, immediately pricing in the acquisition Sources: Company Fillings, FactSet, EAI<br>

Key Highlights 13<br>

EPS Rising and Margins Growing Figure 11:  Sales Increase Figure 10:  Margins Increasing 14 Figure 13:  EPS Impact Figure 12:  Estimates vs Consensus Sources: Company Fillings, FactSet, IMCP<br>

Free Cash Flow Stabilizing Figure 14: Free Cash Flow Per Share 15 In the years leading up to the approval of Cancerguard, The company will continue to invest heavily in the growth of their liquid biopsy technology, but with the backing of the robust revenues from Oncotype DX and Cologuard this time around

-This will cushion the impact of the spending Sources: Company Fillings, FactSet, IMCP<br>

ROE, Leverage, and Profitability Analysis Figure 15: ROE, Leverage, and Profitability Figures Improve -EXAS’ ROA is expected to rise

-EBIT margin is projected to rise

-Asset turns should be increase

-Interest burden should fall

-ROE will rise to 28.7.2% from -37.1% in 2024 16 Figure 16: Leverage and Profitability Metrics Sources: Company Fillings, FactSet, IMCP<br>

17 Key Highlights<br>

Above-Average Value P/B Relative to Comps EXAS doesn’t seem to be much of an outlier in this group, but with a relatively attractive long-term growth rate, and high P/B, the market is pricing in a lot of growth – but more likely the acquisition. Some Quick Comparisons
High LTG
High D/E
High P/B
Middle Net Margin
Low EV/EBIT 18 A mixed bag
Consistently unprofitable
Poor operational efficiency Figure 17: Comps Table Sources: Company Fillings, FactSet, IMCP<br>

Fairly Valued (All Things Considered) Figure 18: Composite relative valuation 19 Fundamental Factors
LTG (25%)
1/(LTD/Equity) (25%)
NTM sales growth (25%)
STM ales growth(25%)
Valuation
P/B (10%)
P/S (70%)
P/CF (20%) All things considered EXAS is fairly valued relative to its comps Figure 19: Comparable fundamental & valuation weights ​ Several fundamental metrics are important to valuation. To compare a composite of fundamental factors to a composite of valuation factors, the raw data was first converted to percentiles based on the maximum value for each factor in the comp group. Then, the percentile for each factor was weighted according to perceived importance to create the final composites. Sources: Company Fillings, FactSet, IMCP<br>

Two Stage DCF (First Stage -$2.76 in Value) 20 Figure 20: First stage of DCF Figure 21: Beta Justification Figure 22: Cost of Equity Cost of equity is 16.48%. The beta increase is justified due to renewable energy and AI growth opportunities -The cost of equity dwarfs the profitability of the company within this time horizon, although fundamentals are dramatically improved compared to their normal historical levels

-Much of this can be chalked up to the fact that while EXAS is now able to realize a return on their sizeable investment in Cologuard and Oncotype DX, they are still investing in their next racehorse, being Liquid Biopsy Sources: Company Fillings, FactSet, IMCP<br>

Stage Two and Justification of Terminal P/B Figure 23: P/B Second Stage of DCF 21 Figure 24: Potentially Overpriced Current P/B: 7.67​
5-Year average P/B: 4.99
Terminal P/B: 4.44 Elevated P/B Multiple:

Reflects high expectations for future growth from liquid biopsy segments, and market leadership in legacy solutions Sources: Company Fillings, FactSet, IMCP<br>

Quantifying the Acquisition 22 Figure 25: Probability Valuation Made Easy How do we value this company? P(Acquisition)* $105
+ P(NO Acquisition)* DCF
= Estimate To account for opportunity cost within the time horizon, I will discount the ending expected cash flow by the current 6 month risk free rate of 3.73%(annualized) to get the real expected price of… $100.82 Figure 26: Net Present Value of Future Cashflows 102.68/1.0373^.5 Sources: Company Fillings, FactSet, IMCP<br>

23 Key Highlights Risks, SWOT Analysis, and Porter’s Five Forces 23<br>

Risks, Porter’s Five Forces, SWOT Analysis Figure 27: Risk Assessment Matrix 1. Cancerguard Regulatory Approval

2. Existing Labs Lead to Faster Liquid Biopsy Growth Rates

3. Horizontal TAM Growth for Oncodetect

4. Acquisition gets Cancelled

5. Cancerguard Studies Flop Figure 28: Porter’s Five Forces 24 Figure 29: SWOT Analysis<br>

Summary 25 RECOMMENDATION: SELL Exact Sciences presents a potential downside of 0.42% from its current price of $101.25 to a target price of $100.82.The main factor here is that the biggest piece of news -being the acquisition- is very much baked into the current value of the stock. The core business has strong growth and improving margins, but the disparity between the price those metrics warrant, and the offered price just paints to compelling of a picture for investors to turn down.

What we’re left with at the present time is a zero-coupon bond like device that yields less than the risk free rate. My honest opinion would be to sell, take your profits off the table if you were lucky enough to get in before the news, and allocate your money to a potentially more useful purpose.<br>