Baron Funds, an investment management company, released its “Baron Health Care Fund” first quarter 2023 investor letter. A copy of the same can be downloaded here. The first quarter was difficult for the fund, as it failed to participate in the broader market rally and declined 3.69% compared to the 3.27% decline for the benchmark Russell 3000 Health Care Index and a 7.50% increase for the S&P 500 Index. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Health Care Fund highlighted stocks like Exact Sciences Corporation (NASDAQ:EXAS) in the first quarter 2023 investor letter. Headquartered in Madison, Wisconsin, Exact Sciences Corporation (NASDAQ:EXAS) is a cancer screening and diagnostic test products provider. On May 17, 2023, Exact Sciences Corporation (NASDAQ:EXAS) stock closed at $78.63 per share. One-month return of Exact Sciences Corporation (NASDAQ:EXAS) was 18.54%, and its shares gained 45.61% of their value over the last 52 weeks. Exact Sciences Corporation (NASDAQ:EXAS) has a market capitalization of $14.184 billion.
Baron Health Care Fund made the following comment about Exact Sciences Corporation (NASDAQ:EXAS) in its Q1 2023 investor letter:
“We initiated a position in Exact Sciences Corporation (NASDAQ:EXAS), a cancer diagnostics company whose flagship product is Cologuard, a stool-based DNA colon cancer screening test. Colon cancer is the second leading cause of cancer deaths in the U.S. Patients who are diagnosed early are more likely to have a complete recovery. Exact has a large opportunity to screen patients with Cologuard. There are roughly 110 million Americans between the ages of 45 and 85 who are at average risk for colon cancer. At a three-year screening interval and an average revenue per test of roughly $500, this represents a potential $18 billion annual revenue opportunity for Cologuard. Recently, the Cologuard business has exhibited strong momentum with several tailwinds driving growth, including demand from health systems, which are incentivized to comply with screening guidelines for enhanced payments, the American Cancer Society guideline change lowering the age of recommended screening from 50 to 45, increased adoption of electronic ordering, and a growing rescreening opportunity. Later this year, Exact expects to report clinical trial data on Cologuard 2.0, a second-generation screening test that management believes will have enhanced specificity and boost gross margins. Exact also plans to participate in the market for minimal residual disease testing and multi-cancer early detection, two large new market opportunities for the company. After many years of heavy investments in its laboratories, IT, and distribution, the company recently turned adjusted EBITDA positive and expects to turn free cash flow positive next year. Long term, management targets 80% gross margins and 40% adjusted EBITDA margins for the business.”
Photo by National Cancer Institute on Unsplash
Exact Sciences Corporation (NASDAQ:EXAS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held Exact Sciences Corporation (NASDAQ:EXAS) at the end of the fourth quarter which was 34 in the previous quarter.
We discussed Exact Sciences Corporation (NASDAQ:EXAS) in another article and shared the list of gene editing stocks with the best long-term potential. In addition, please check out our hedge fund investor letters Q1 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
