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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended
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Sep. 30, 2023
Accounting Policies [Abstract] |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Exact Sciences Corporation (together with its subsidiaries, “Exact,” or the “Company”) was incorporated in February 1995. Exact is a leading global cancer diagnostics company. It has developed some of the most impactful tests in cancer screening and diagnostics, including Cologuard® and Oncotype DX®. Exact is currently working on the development of additional tests, with the goal of bringing new, innovative cancer tests to patients throughout the world. Basis of Presentation and Principles of Consolidation The accompanying condensed consolidated financial statements, which include the accounts of the Company and those of its wholly owned subsidiaries and variable interest entities, are unaudited and have been prepared on a basis substantially consistent with the Company’s audited financial statements and notes as of and for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K (the “2022 Form 10-K”). All intercompany transactions and balances have been eliminated upon consolidation. These condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted (“GAAP”) in the United States of America (“U.S.”) and follow the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of adjustments of a normal and recurring nature) considered necessary for a fair statement of its financial position, operating results and cash flows for the periods presented. The condensed consolidated balance sheet at December 31, 2022 has been derived from audited financial statements, but does not contain all of the footnote disclosures from the 2022 Form 10-K. The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for any other interim period or for a full fiscal year. The statements should be read in conjunction with the audited financial statements and related notes included in the 2022 Form 10-K. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical accounting policies are those that affect the Company’s financial statements materially and involve difficult, subjective or complex judgments by management, and actual results could differ from those estimates. These estimates include revenue recognition, valuation of intangible assets and goodwill, valuation of contingent consideration, and accounting for income taxes among others. The Company’s critical accounting policies and estimates are explained further in the notes to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q and the 2022 Form 10-K. Significant Accounting Policies During the nine months ended September 30, 2023, there were no changes to the Company’s significant accounting policies as described in the Company’s 2022 Form 10-K, except as described in the Contingent Consideration Asset and Recently Adopted Accounting Pronouncements sections below. Contingent Consideration Asset The sale of the Company’s intellectual property and know-how related to the Company’s Oncotype DX Genomic Prostate Score test (“GPS test”) resulted in the recognition of variable consideration in accordance with Accounting Standards Codification (“ASC”) 606. The Company estimates the amount of variable consideration that it is entitled to each quarter using the most likely amount method and considers whether there are any constraints on the consideration. If it is probable that a significant reversal of a gain would not occur, the Company will record a gain. To determine the classification of the consideration, the Company determines if the consideration is conditional on something other than the passage of time. Revenue-based contingent consideration that is conditional on something other than the passage of time, including future revenues from sales related to the GPS test, result in the variable consideration being classified as a contract asset. At the time the amount earned is determined, and passage of time is the only condition remaining, the contract asset is reclassified to a receivable. Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In July 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-03, Presentation of Financial Statement (Topic 205 ), Income Statement - Reporting Comprehensive Income (Topic 220 ), Distinguishing Liabilities from Equity (Topic 480 ), Equity (Topic 505 ), and Compensation - Stock Compensation (Topic 718 ), to amend various SEC paragraphs in the ASC to reflect the issuance of SEC Staff Accounting Bulletin No. 120, among other things. The Company adopted this conforming guidance upon issuance, and the adoption had no material impact to the Company's consolidated financial statements. Net Income (Loss) Per Share Basic net income (loss) per common share (“EPS”) was determined by dividing net income (loss) applicable to common stockholders by the weighted average common shares outstanding during the period. Diluted EPS is based on shares that are outstanding per the calculation of basic EPS and on potentially dilutive shares. The following is a reconciliation of the numerator and denominator used to calculate basic EPS and diluted EPS for the periods indicated:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) |  | 2023 |  | 2022 |  | 2023 |  | 2022
Net income (loss) available to common shareholders |  | $ | 794 |  |  | $ | (148,761) |  |  | $ | (154,383) |  |  | $ | (495,761) |
Weighted average common shares outstanding - basic |  | 180,649 |  |  | 176,997 |  |  | 179,817 |  |  | 175,935 |
Effect of dilutive shares: |  |  |  |  |  |  |  |
Restricted stock awards |  | 2,153 |  |  | — |  |  | — |  |  | — |
Employee stock purchase plan |  | 589 |  |  | — |  |  | — |  |  | — |
Stock options |  | 646 |  |  | — |  |  | — |  |  | — |
Performance share units |  | 38 |  |  | — |  |  | — |  |  | — |
Dilutive potential common shares |  | 3,426 |  |  | — |  |  | — |  |  | — |
Weighted average common shares outstanding - diluted |  | 184,075 |  |  | 176,997 |  |  | 179,817 |  |  | 175,935 |
Earnings per common share from net earnings - basic |  | $ | 0.00 |  |  | $ | (0.84) |  |  | $ | (0.86) |  |  | $ | (2.82) |
Earnings per common share from net earnings - diluted |  | $ | 0.00 |  |  | $ | (0.84) |  |  | $ | (0.86) |  |  | $ | (2.82) |
The following potentially issuable common shares were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) |  | 2023 |  | 2022 |  | 2023 |  | 2022
Shares issuable upon conversion of convertible notes |  | 23,231 |  |  | 20,309 |  |  | 23,231 |  |  | 20,309 |
Shares issuable upon the release of restricted stock awards |  | — |  |  | 5,588 |  |  | 6,423 |  |  | 5,588 |
Shares issuable upon the release of performance share units |  | — |  |  | 1,018 |  |  | 1,584 |  |  | 1,018 |
Shares issuable upon exercise of stock options |  | — |  |  | 1,588 |  |  | 1,305 |  |  | 1,588 |
Shares issuable in connection with acquisitions |  | — |  |  | 45 |  |  | — |  |  | 45 |
|  | 23,231 |  |  | 28,548 |  |  | 32,543 |  |  | 28,548 |

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- Definition The entire disclosure for the basis of presentation and significant accounting policies concepts. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS). Accounting policies describe all significant accounting policies of the reporting entity. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 235 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//235/tableOfContent + Details
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