July 2, 2022

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As 230 Exact Sciences workers face layoffs, company says inflation is factor despite expansion | Business News

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Exact Sciences is laying off about 3% of its global workforce despite the Madison biomedical giant’s recent expansion efforts and acquisitions to advance its cancer testing and research goals, the company confirmed Thursday.

“There were millions of people in a three month period of time who did not get their normal screening, and [a group of modelers] project that that will lead to an additional 10 thousand deaths from colon and breast cancer,” Exact Sciences CEO Kevin Conroy said. “It’s imperative that we get people back in to get a screening colonoscopy, or a Cologuard test, or a screening mammography….Cancer doesn’t wait for COVID.” Conroy discussed how there is overall drop off of 20 to 30 percent in the number interactions with health care even with telemedicine in Wisconsin. Exact Sciences’ in-home Cologuard test has maintained its level of use during the COVID-19 crisis, and physicians are using this time to study the data on Cologuard as well as order it for patients without seeing them to make sure they get screened. “Our goal is to go from 60 to 65 percent of people screened in this country to 90 or 100 percent, and you can do that with a non-invasive test that you can do in the privacy of your home like Cologuard.”

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On Tuesday, 230 Exact Sciences workers were notified that their positions were being eliminated, Exact spokesperson Scott Larrivee said in a statement Thursday. Inflation is a factor in the company’s layoff decision, as well as “a need to prioritize the programs that will have the greatest impact on improving cancer care,” he said.

About 50 of those workers reside in Madison, Larrivee said, adding that Exact’s lab and international staff members were not affected by the layoffs. There are about 3,500 Exact employees in Dane County.

“Employees whose positions were eliminated were offered a comprehensive severance package and outplacement services, access to our employee assistance program and other resources,” Larrivee said. “We are encouraging impacted team members to apply for one of our open positions. Exact Sciences will actively facilitate this process.”

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The last time Exact announced layoffs was in April 2020, when the company used pay cuts, furloughs and staff reductions to address a large decrease in demand in cancer screening services amid the COVID-19 pandemic. In February, however, Exact was able to raise its hourly minimum wage from $17 to $20.

Larrivee did not go into further detail about the specific roles being eliminated, but said “we looked at needs throughout our U.S. business operations.”

Asked to offer further clarity about why the layoffs occurred after recent company efforts to expand its Madison campus and acquire businesses both in the U.S. and in Germany, he said “we remain confident that through prioritization and budget management Exact Sciences will serve more people and achieve profitability by 2024.”

The company took in $487 million in revenue in the first quarter of 2022, the biomedical giant said during a recent conference call with investors. That is a 21% increase compared with 2021.

Recent increases in inflation can also offer some clues into the Exact layoffs — the U.S. Department of Labor said earlier this spring that its consumer price index jumped by 8.5% in March compared with 12 months earlier. That was the index’s largest year-over-year increase since December 1981.

The U.S. is also “heading into an era of elevated inflation that’s likely to persist long after the red-hot prices of the past year or so come off the boil,” a May 13 Bloomberg report states.

“Yes, inflation probably will retreat from near four-decade highs,” the story reads, as supply-chain issues “unwind and economic growth slows in response to interest-rate increases by the Federal Reserve. But it may prove stubbornly higher than the 1.5%-to-2% range that American consumers, businesses and investors grew accustomed to before the pandemic spike.”

Expansions, acquisitions

The layoffs come as Exact recently purchased a German biotechnology startup to build on the capabilities of its advanced cancer screenings — including a blood-based, multi-cancer diagnostic test that’s undergoing clinical trials.

OmicEra Diagnostics creates tech that helps its clients research and more reliably discover “biomarkers” that signal the presence of cancer in the human body. OmicEra works in “proteomics,” or the large-scale analysis of proteins. The deal closed earlier in May for approximately $15 million, according to a U.S. Securities and Exchange Commission filing. OmicEra’s skilled teams are expected to deepen the Madison biomedical giant’s “proteomics profiling” abilities.

In September 2020, Exact CEO Kevin Conroy unveiled preliminary data showing the effectiveness of its blood-based test, also known as a “liquid biopsy” screening. Exact, with the help of the Mayo Clinic, has researched biomarkers for various cancers in blood for nearly a decade.

The early study found that the screening could identify between 83% and 87% of liver, lung, ovarian, pancreatic or stomach cancer cases — with a false positive rate of 5%.

About 300,000 care providers and 200 large U.S. health systems additionally rely on Exact Sciences for its Cologuard and Oncotype DX tests. Cologuard is a stool-based colon cancer screening test, and Oncotype helps physicians determine whether cancer patients require chemotherapy.

The elimination of jobs also comes after Exact Sciences announced in January it was adding a 266,000-square-foot research and development facility to its Madison campus, as well as expanding existing lab and warehouse space to accommodate the company’s rapid growth. The investment totals $350 million and is expected to create 1,300 new jobs within Exact.

The biomedical giant additionally announced at the beginning of this year its acquisition of Marshfield-based genetics lab PreventionGenetics for $190 million. The move represented Exact’s entry into the hereditary cancer research market.

“Our company has grown rapidly over the past several years, both organically and through acquisitions, and has made great strides in achieving this mission,” Larrivee said. “We will do everything we can to support our impacted teammates with utmost empathy and thoughtfulness.”

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