Shares of Exact Sciences (EXAS) ripped higher on Friday with news that reimbursement for Cologuard should come in at the high end of analyst and investor expectations: $502 per test.
The Centers for Medicare and Medicaid (CMS) issued a National Coverage Determination for Cologuard and released a preliminary payment fee schedule on Thursday night. $502 is exactly what Exact Sciences had requested, a 17% discount from the product’s $599 list price. This is also at the high end of Wall Street analyst estimates, ranging from $300-500. Analysts on Friday are already raising price targets given that CMS reimbursement, and subsequently revenue from this segment of the market, are increasing 25-40% from early estimates. The jury’s still out on how commercial payors receive Cologuard, but expectations (and precedence) are for a price slightly below CMS.
EXAS was up 35% on the news.
Making the situation more interesting is the high short interest in the stock: roughly 30% of the float is currently short, with bears believing that CMS reimbursement would come in below expectations. With this component of the short thesis unwinding (CMS’ price is NOT finalized, and could still be overturned), its the second leg on which shorts now focus: poor adoption. Cologuard requires users to defecate in a tub and mail the tupperware back to Exact. It’s not a pleasant thought, but EXAS bulls believe older adults will prefer this to the alternative: an invasive and time-consuming colonoscopy.
