Dive Brief:

• Exact Sciences has withdrawn its financial guidance in response to the “evolving environment and continued uncertainties from the impact of COVID-19.”

• In a statement posted Thursday, the company backed away from its forecast that sales will top $1.6 billion this year and that around 20% of those revenues will be realized in the first quarter.

• Yet, shares in Exact Sciences rose 32% in the wake of the news as investors drove up the stock prices of genetic testing companies including Invitae and Myriad Genetics.

Dive Insight:

Exact Sciences’ core colorectal cancer screening business has previously shown vulnerability to the negative impact of infectious diseases on demand for testing. In 2018, for example, a particularly bad flu season took a bite out of first quarter sales, although performance rebounded later in the year. Yet, this time the infectious disease and its potential impact could be different.

How those differences will affect Exact Sciences’ business remains unclear, but the company expects the novel coronavirus pandemic to have some sort of impact on its financial results. Exact Sciences will provide an updated outlook when it posts first quarter results “to the extent practicable.” For now, investors are in the dark. What is known is Exact Sciences is no longer committed to the targets it shared last month.

With less than two weeks to go until the end of the first quarter, Exact Sciences may already have enough data to make an informed decision about the chances of it delivering on its now-abandoned outlook for the period.  

Even so, in a volatile market traders identified Exact Sciences and its peers as good bets on Thursday, driving their share prices up by between 24% and 32% in a single session. Even after the big session, Exact Sciences’ stock price is still down 50% compared to one month ago.

Exactly why investors flooded into genetic testing stocks is unclear. One possibility is that investors think the push to stop performing procedures such as colonoscopies to avoid unnecessary contact with patients and divert resources to tackling the virus could drive demand for genetic tests up. 

Exact Sciences said its Cologuard colorectal cancer test “is ideally positioned to meet current needs as the test sample is collected at home.” The company’s laboratories remain open and its sales force continues to interact with healthcare providers remotely, although CEO Kevin Conroy said it is cutting spending “in areas not critical to patient care.” All staff who can work from home are doing so. 

The statement comes days after Intuitive Surgical warned that the coronavirus outbreak may put a material strain on its business. For Intuitive, the deferral of elective procedures is unequivocally a bad thing as it will reduce use of its robotic surgical systems. 

Like Exact Sciences, Intuitive is holding off on trying to quantify the effect of the virus on its financial performance until its first quarter earnings.