Exact Sciences Expanding Through $2.8B Deal

Cancer diagnostic companies Exact Sciences and Genomic Health are combining in a $2.8 billion cash and stock deal.

The companies announced Monday they expect to generate revenue of $1.6 billion and gross profit of $1.2 billion in 2020.

The deal is expected to close this year.

For each share of Genomic Health shareholders own, they will receive $27.50 in cash and $44.50 in shares of Exact Sciences, subject to a 10 percent “collar” in case of big stock price fluctuations.

Genomic Health, Inc. is based in Redwood City, California, and specializes in genomic-based diagnostic tests for use in cancer care. Exact Sciences Corp., based in Madison focuses on early detection of cancer and is best known for its Cologuard home test for early detection of colorectal cancer.

“Together, with our collective resources and broader platform, we will be able to provide our existing tests to more people, while also accelerating the development and launch of future cancer diagnostic tests,” said Exact Sciences CEO Kevin Conroy in a statement. “We are excited to join together two teams who are united in their dedication to making a positive impact on patients’ lives.”

Dr. Joshua Lang of the University of Wisconsin Carbone Cancer Center said he hopes the merger would mean more practical tools for oncologists.

“As we’ve learned more, we’re starting to understand just how many different types of cancers there are,” he said. “We need better tests. And if (I’m) smarter as a clinician, because I have better information, it means I’m going to be able to deliver better care.”

Officials with both companies said they see room for growth across the testing market.

Exact Sciences now has about 6 percent of the market for colorectal cancer screening, with a long-term goal of 40 percent.

Genomic Health CEO Kimberly Popovits said Monday that while each company enters the merger in strong positions, the testing market has plenty of room to grow.

“We’re looking at a potential combined market opportunity of $20 billion total,” she said. “Less than 10 percent of that is penetrated today.”