Why EXACT Sciences Corporation Is Today's Best Healthcare Stock

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of EXACT Sciences , a molecular diagnostics company best known for early detection, non-invasive colon cancer diagnostic test Cologaurd, vaulted higher by as much as 48% after the Centers for Medicare and Medicaid Services released its national coverage determination, or NCD, on Cologuard.

Amplification Lab per 2014 shareholder meeting presentation slide. Source: EXACT Sciences.

So what: According to the CMS' NCD, EXACT's Cologuard will be covered by Medicare effective immediately, although final pricing on the test is still under review by the CMS. The announcement that Cologuard would be covered was unique, as EXACT's press release notes, because it was done on a parallel basis, with the Food and Drug Administration and CMS reviewing the diagnostic test concurrently. Keep in mind the FDA only approved Cologuard two months ago. As EXACT Sciences' CEO, Kevin Conroy noted, "We are pleased with CMS' final coverage determination for Cologuard and would like to thank both CMS and FDA for giving Exact Sciences the opportunity to participate in the parallel review pilot program."

Now what: You might have thought Cologuard's FDA approval was the big news, but in reality it's the reimbursement potential that had investors waiting on pins and needles. Medicare approval is crucial to EXACT because one of colon cancer's greatest risk factors is age. Therefore, having Medicare reimbursement approval should encourage the elderly to get this diagnostic test -- which exams the cellular breakdown of colon wall cells that are shed on a patient's stool sample to determine if any abnormal cells exist (i.e., cancer or precancerous cells) -- done on an annual basis. With its Medicare approval locked up, I'd suggest EXACT Sciences remains on track to turn profitable on an annual basis within the next two to three years, dependent on the success of the product launch, of course.

Cologuard looks to be a big step forward in cancer detection, but this revolutionary product's growth potential could leave it in the dust! 
The best health care investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not just how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

The article Why EXACT Sciences Corporation Is Today's Best Healthcare Stock originally appeared on Fool.com.

Sean Williams  has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name  TMFUltraLong , track every pick he makes under the screen name  TrackUltraLong , and check him out on Twitter, where he goes by the handle  @TMFUltraLong . The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services  free for 30 days . We Fools don't all hold the same opinions, but we all believe that  considering a diverse range of insights  makes us better investors. The Motley Fool has a  disclosure policy .

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading