Q1 2023 Exact Sciences Corp Earnings Call
Sciences Corporation.
Q1, 2023 conference call.
All lines had been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad, if you'd like to withdraw question at anytime Press Star one.
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Mmm Mmm with me now is vice President Investor Relations Megan Jones, you may begin your confidence.
Thanks Jordan.
Thank you for joining us for exact sciences first quarter of 2023 comment on.
On the call today I can I can write the company's chairman and CEO and Jack Elliot at Chief Financial Officer.
Ever Cunningham, our chief commercial up there will also be available for questions.
Exact sciences issued a news release earlier this afternoon detailing our first quarter financial results.
This means released in today's presentation are available on our website at exact sciences Dot com.
During today's call will make forward looking statements based on current expectations are actual results may be materially different from such statements.
Sessions of non-GAAP figures and reconciliation Scott figures are available in our earnings press release and descriptions of the risks and uncertainties associated with exact sciences are included in our SEC filings both can be accessed through our website I'll now turn the call over to Kevin.
Thanks, Megan I'm incredibly proud of our team their dedication to our mission in the record quarter they delivered.
The first quarter core revenue grew 148 million year over year or 33%.
We're raising our full year guidance for revenue by $110 million and adjusted EBITDA by a $100 million.
We now expect to turn free cash flow positive. During this year ahead of our previous target of next year.
And the fourth quarter of 2014, the first quarter, we launched Cologuard, we tested for people.
And the first full year after lunch, we tested 100000 people.
Three and a half years to screen, our first million people with colder.
This year, we've already screen more than 1.2 million people.
Cologuard has transformed the way that we screen for the number two deadliest cancer in the U S.
And we still have a huge opportunity to make an impact with 60 million people, who are not up to date with screening.
The platform rebuilt will continue to change the way cancer is detected and treated.
We're just starting to realize its full potential our first quarter results demonstrate the power of focusing on what is best for patients and our customers.
That exact sciences. This means we develop tests based on a deep understanding of the biology of the disease and science.
Generate the highest level of clinical evidence supporting the tests use and.
Build the operations necessary to deliver an amazing customer experience.
Combining these with an investment and strong brands enables durable revenue growth industry, leading gross margins and growing profits.
A portion of those profits will support investments and the next wave of life changing diagnostic advancements, creating an unstoppable innovation engine.
Other highlights from the first quarter include delivering more than 1 million total tests, including a record number of Cologuard results.
Generating $46 million and adjusted EBITDA and improvement of 136 million year over year.
Launching uncle extra or enhance therapy selection test.
And making progress toward completing blue sea are pivotal study to support our next generation Cologuard and colon cancer blood tests.
Jeff will now review, our first quarter results.
Thanks, Kevin first quarter revenue of $602 million grew 24% coal revenue of 598 million grew 33%, excluding COVID-19 testing the sale of a prostate business and foreign exchange <unk>.
Screaming revenue of $443 million increased 45%.
Majority of screening revenue upside came from broad based momentum in Colgate adoption with additional benefits from a relatively mild flu season, and enhancements made last year to our patient compliance program and billing systems.
During the quarter 10000, new healthcare professionals ordered cologuard, bringing the total to over 312000.
Precision oncology revenue increased 2% to 155 million growth was 8%, excluding the sale of our prostate business and a $1 billion FX headwind.
Covid testing revenue decreased to 86% to $4 million.
First quarter gap gross margin was 71% non-GAAP gross margin, excluding the amortization of acquired intangibles with 74%.
Gross margin benefited from fixed cost leveraged our lab and improvements made to the cologuard patient compliance programs and billing systems.
GAAP net loss with $74 million.
Justin EBITDA was 46 million an improvement of $136 million driven by better expect better than expected revenue and gross margin.
We ended the quarter with cash and securities of about $700 million.
Turning the guidance, we expect total revenue between 589 and $604 million during the second quarter, and 238 and $242 billion for the year.
This assumes screening revenue between 443 and $453 million for the second quarter, and one 707, and one $795 billion for the year.
Precision oncology revenue between 145 and $150 million for the second quarter, and 605 and $620 million for the year.
And Covid revenue of $5 million for the year, we plan to discontinue COVID-19 testing after the second quarter.
For the year. This in place, 19% core revenue growth with 25% growth in screening and 5% growth and precision oncology, excluding the sale of our prostate business in foreign exchange.
We are increasing our adjusted EBITDA guidance by $100 million and now expects between 101 hundred $25 million for the year.
We now expect to turn free cash flow positive during the year 12 months ahead of our original target and then generate full year positive free cash flow next year.
Turn the call back to Kevin.
Thanks, Jeff There are 60 million Americans on screen for colon cancer and Cologuard is the only solution to get them screened accurately easily and in the privacy of their own home.
Screening rates have been persistently low for decades. This problem has been intensified by the addition of nearly 20 million people to the screening population. When the recommended start age was moved from age 50 to age 45 <unk>.
Capacity for screening colonoscopy and the U S is relatively fixed and health systems are motivated to increased screening rates.
We estimate it would take 10 years for <unk>.
Gastroenterologist to screen, everyone, who is due today with colonoscopy alone.
Health systems, which represent more than half the market are recognizing the opportunity to partner with us to address their screening rates and related quality measures.
They rely on Cologuard as an essential part of their screen tool kit.
And our embedding it in their workflows.
We have implemented more than 275% electronic ordering interfaces connecting health systems to exact sciences.
Our data show that Cologuard market share is about 50% higher than the largest 400 health systems versus independent practices in smaller systems.
Cologuard will continue to screen more Americans and help eradicate this preventable disease.
Our precision oncology portfolio guides treatment decisions for more than 200000 cancer patients every year.
Our archetype Dx test helps early stage breast cancer patients determine whether they will benefit from chemotherapy and our uncle extra test helps late stage cancer patients determined their best treatment options.
A consistent focus on high quality tests top tier clinical evidence and physician education has cemented archetype Dx is standard of care.
Or international team of 200 people is working to ensure women everywhere have access to this life changing information.
The Oncotype Dx test generates durable high margin revenue and cash flow. This.
This supports adoption of new tests, such as uncle extra and molecular residual disease tests.
We're making progress in our three most impactful pipeline programs colon cancer screening multi cancer early detection and molecular residual disease and.
In colon cancer screening, we are on track to share top line data. This summer from our Blue Sea trial for our next generation Cologuard test.
We recently ran next generation Cologuard on approximately 7700 blinded deep sea samples and the results give us confidence in our goal to improve specificity in pre cancer sensitivity. As a reminder, deep sea was are pivotal study supporting Cologuard theft.
Approval in 2014.
This second prospective study will provide valuable evidence supporting next generation color guards clinical value and competitively unique position.
And multi cancer early detection, we plan to share two additional sets of case control data. This year further validating our comprehensive multi marker class approach.
In molecular residual disease R. M. R. D. We shared data detailing our tumor informed and tumor agnostic approaches at the American Association of Cancer Research Conference last month.
We plan to enhance our algorithm and generate additional evidence before making our tumor informed approach available in colon cancer.
We will continue developing tests based on a deep understanding of the disease and science generating the highest level of clinical evidence supporting their use.
And leveraging the operations, we built to deliver the best customer experience.
This innovation engine built on the broadest most capable platform and cancer diagnostics will support continued revenue growth industry, leading gross margins and growing profits.
This will allow us to solve the biggest problems in cancer care and deliver returns to our shareholders were now happy to take your questions.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad will pause for just a moment to compile the Q&A roster.
As another edition.
Only one question per participant there will be no follow up questions.
Your first question comes from the line of Brandon Cleoid Some jeffries.
Hey, Thanks connection.
Kevin.
What would you say would be the one or two things that you think will most impactful in the first quarter chunky driving the revenue outperformance, Jeff as we look at the Guy for the balance of the year. It seems to apply screening revenues flat over the next three quarters for the balance of the year four five.
March or April orders or just being conservative.
Where we are at this point in the air.
Why don't I take it and handed over it then to Everett, who will hand, it over to <unk>.
So there are just many drivers that had seen the strength and cologuard testing its investments that we've made over the last nine years and it's also just tremendous execution or over the past few quarters.
It's really wonderful I.
<unk> could the entire team to make this work these are investments in our.
Commercial team, an incredible sales team and marketing.
Capabilities are labs operations the brand building we've done.
B R.
R&D team, who have brought innovations into our our lab into.
Into the product.
Our our digital compliance team analytics, it's just.
So exciting to see some so many strengths across the.
The entire company Cologuard archetype and that prevention genetics business Everett, Yeah, I'll I'll add some color to that of Kevin said, we've made many investments over the years.
Been out in the field over the last few quarters and one thing I'm seeing is I'm seeing that momentum of the investments pickup.
And our our confidence in our sales organization the messaging that they have around the products. It's just so clear with the customers.
Only thing I'll mention is is with the customers. The customers are now realizing especially in a screening space that we can partner with them.
Trying to hit screening and other metrics out there around quality and they know that they can't do it alone. So.
So how they partner with exact sciences, and our organization to hit those metrics, we're seeing that pick up.
Over the last few quarters and the last thing I'll mention is around just are targeting round. Our top customers are health systems as Kevin said in a statement.
Drive a lot of our volume and the focus that we have with calling on the right health systems with the right message and ensuring that were being again a partner an insurance. They can screen. The right people to me I see that picking up over the last few quarters.
Jeff.
Thanks.
On your question on the phasing in guidance I would just take a step back and look at the what we've built here over nine years, we built up cologuard to over 1.7 billion of revenue and again here, we are 90% to launch going over 25% for the year. So we feel really good about the quarterly as delivered we're raising the top line guidance by well north of the the queue.
Beat so that speaks to the optimism for the rest of the year.
On the face and two things to keep in one one is really run first quarter first quarter upbeat our own internal expectations of very strong quarter. The majority of that was underlying momentum that covenant and never just talked about we also got some benefit from a mild flu season and possible to quantify that but it did help as we talked about our last earnings call.
And there was a couple of smaller things that contributed we also previously talked about the carryover benefit from enhancements to our patient compliance engine and our billing systems those have been in place and last year, we got a little bit of benefit in Q1 from that.
When I think of the rest of the year now there is a typical summer seasonality.
The summer fewer people go out for physicals still had therefore, there's there's incrementally less growth between Q1 and.
Two two and throughout the year because that summer seasonality. This year. This one new dynamic to lay on top of that that's related to the impact from Covid three years ago.
Hurt the Cologuard business, primarily in second quarter in the third quarter of 2020 now Flashforward of 2023 hour re screens are about 20% of Cologuard revenue the contribution from re screens.
Is somewhat muted this.
This year because of the Covid impact from three years ago. The brunt of that takes place in the second and third quarters. So from a phasing standpoint, you expect you would expect to flatter year. This year. However.
When you jump ahead to next year now.
Three a re screens reaccelerates because next year now you go from having 1.2 million people are eligible this year newly eligible cologuard re screen patients, which is the same as last year next year, you jump up to 1.6 million more people so that that restraint contributions should accelerate again next year.
Yeah, and Jeff if you're not too nervous about me.
Referring to numbers here and.
Q too.
Of 2020, there were about 275000 Cologuard tests.
In Q2 of 2021, there were about 575000 cologuard tests, so that bounce back.
Going to occur. This is just a one time artifact.
That will have.
Some impact but the team is awfully excited about the year and I, if I could capsulate. The biggest change that has occurred as health systems are coming to us asking for help.
And that has strategic implications for everything we're doing that exact sciences addressing the entire cancer continuum.
That's exciting with every product in our pipeline that we're working on and it fires up the R&D team in the commercial team in the lab teams and so we.
We can't wait.
To our next question comes from the line of Patrick Donnelly from city.
He got up Jason on for Patrick maybe just one on me adjusted EBITDA God moving up $100 million. Just wondering if you can talk about that strengthen the quarter of the embedded assumptions for the rest of the gap Opex declined slightly in the quarter and just drag gross margin.
Yeah. So we're pleased with what the team could deliver it in the first quarter of $46 million, which exceeded the original guidance for the year.
Point back toward Kevin talked about we've been at exact Sciences building for nine years now This foundation a foundation that allows for.
Robust top line growth.
Margin expansion cash flow generation. This foundation is scalable its robust and you are seeing it now your standard and the numbers and you should continue to see it in the years to come. So we're pleased with how that unfolded in the first quarter.
That allowed us to raise the EBITDA guidance by $100 million, just one quarter in.
So when you think about the I would highlight the incrementals the incremental adjusted EBITDA margin. This year is about 80% now.
So you're seeing the efficiency of this platform will have assumed as we talked to the top of numbers.
No change to the the assumptions baked in for gross margin around 73%.
And for for Opex, No change there still on a gap basis in the mid single digit range. So again that you are seeing the power of this platform really unfold, we can deliver top line growth gross margin expansion up opex leverage and and now free cash flow for the first time.
Your next question comes from the line of Catherine Sheltie.
Hey, guys. Thanks for the questions I guess could you just talk to Kenneth cadence of Cologuard orders throughout the corner and any commentary on <unk> on April and May so far.
Sure. This is just happy to take that one.
I typically don't get into Intraquarter commentary, but you can hear from our comments that the the majority of the upside was driven by broad based omentum, which speaks to the.
There is no kind of big one time or at the end of the quarter something this is broad based throughout the quarter.
The commercial team did it just a fabulous job of staying disciplined.
Week on week in week driving the growth.
Continued to advance the marketing campaign. So this was just a really strong quarter top to bottom there's Netflix one big thing that came in.
And obviously when you look at the guide here we beat.
Five.
Call. It 50 $60 million, we're raising guidance by $100 million. So that speaks to the optimism that we're seeing in the numbers for the rest of the year.
Mmm.
Your next question comes from the line of Vijay Kumar.
Hey, guys. Thanks for taking my question.
I had a tool partner Kevin.
Once you on your comment on health systems.
Is that is that.
Of course.
Q.
One uptake cannot call of our numbers any sense and what percent a year for Avenue. So perhaps physicians are employed by health systems.
And.
Are we at the early stage here or I can you talk with penetration of health systems, where we are and.
And then my second one.
Jeff for you on the scuba dive guide.
100 $125 million it looks like you guys have.
Half of it in Q1.
Why wouldn't that Q1 into <unk> into the back have given their <unk>.
Let me spell it I'll take the first part of that question. So health systems have seen a dramatic increase in the electronic ordering right.
The dynamic is typically about halfway through the year the health systems geared hyper focused on their quality.
Cancer screening quality measure.
And they.
Are increasingly reaching out to us to ask us to help in a holistic way address the challenge that exists when you add 20 million people to the to the screening population and you have a fixed colonoscopy infrastructure.
Today, if you focus on the 400 largest health systems of almost two thirds of them have implemented electronic ordering and resulting that keeps getting better over time, the ease of use the reporting that data they get and then how we use that together fuels a deeper relationship with those health.
<unk> do you want to add yet.
When I think of health systems in our execution over the past couple of years I think about the investments that we've made we've increased our strategic account management towards our top health systems.
We have a very disciplined way that will review our plans for health systems, all the way from Kevin All the way down to the people that are calling on health systems.
And the other thing I would mention with health systems are it's a local strategy.
We have not only calling on the C suite of the health system, but the way in which were deployed.
Pull through of the Representatives with affiliated physicians of those health systems that team is all one team and we've seen better execution, because everybody is embedded together and making sure that we can execute that health system strategy, that's leading to more growth.
Vijay is jeffe I'll I'll take the rest of it from a percent of revenue standpoint for Cologuard think of in the 60% range for health systems and that number is up nicely from where it was a three to five years ago. So that the team has done a nice job there.
Overall penetration rate for Cologuard, the 10% range.
And based on what Kevin talked about for health systems, it's probably a bit higher but the key takeaway here is there is a long ways to go here with 60 million people unscreened, we've got years and years of strong growth for Cologuard ahead of US Your question on the adjusted EBITDA number.
For noticing $46 million really strong results in the first quarter documented better than we expected.
In part to the higher level of revenue in gross margin in the first quarter than we expected. It's also in part due to the way that are operating expense assumptions phased through the year.
Plans call for us to hire throughout the year and so that's part of why you're not going to have you can't take the first quarter and multiple that times four and get to the adjusted EBITDA number for the year also we've chosen to reinvest.
Some of the incremental margin that we're generating to accelerate programs that highlight here is mardi that market is unfolding in a R. R. R&D efforts have reached the point, where the teams that hates now is the right time to up the investment here.
To accelerate our path to market so.
That's part of why the facing forward just EBITDA you can't just take Q1 in and assume that level holds.
Thanks, guys.
Okay.
Your next question comes from the line of Andrew Brachman from William Blair.
Good afternoon, and thanks for taking the question Uhm, Kevin I appreciate the commentary around Cologuard to point out running and running.
Running that against samples from deep sea, and maybe just sort of give us a bit more color on around what you saw in those results compared to previous data that we saw and then I guess cause we just get closer to the top line react here. This summer can you just sort of level set us on are you thinking about any degradation from those previous studies to this pivotal thanks.
Thanks, Andrew the wheel.
We will release that data and all I will say is that data gives us confidence going into the blue Sea.
Study as you remembered the the main goal is to improve the specificity specificity is calculated two different ways. One is if you take a look at kind of all comers that in Cologuard. The current version of Cologuard is 87% our goal is to improve that 89%.
If you only look at people with what we would call clean Cohen's no small polyps.
Non adenoma pop polyps, which still send up some some signal if you exclude those then.
Would expect the specificity to be 90% or greater.
So that's we also.
Maine.
We continue to expect cancer sensitivity to be equal to or better than cologuard and the pre cancer sensitivity to be we hope to see an improvement there that that would be a great result.
I'm, Andrew I, just wanted to drive home the point.
We we ran the study against all all of the available samples that we had from deep Sea that study was from.
10 years ago. So we didn't have access to all of the samples.
But we ran them against all of the samples that we had available and didn't.
Select out any for any particular reason and that was blinded.
And that.
Gives us a second prospective study, which is you know when you are looking at guidelines and evidence development is very very important.
So your next question comes from the line of Jack Nihon from math wrong research.
Thank you good afternoon.
I was hoping you could talk a little bit about the regional dynamics for Oncotype. The axe that you're seeing at the moment I was just looking at the 10-Q it looks like the international growth in the quarter was really strong.
Was just wondering if that was offset.
How about you ask performed as well just any commentary as to what's going on will be great.
In and Jack Thanks for the question this is Jeff when.
When you look at the the growth of the us given our strong market share their I think the way to think about growth is somewhere just north of incident. So incidents in this the U S is probably around 3% to 5% growth per year, so somewhere in that kind of low to mid single digit range is.
Four the Oncotype franchise is the right way to think about it internationally to different story internationally.
We're all penetration rate there is probably the 25% range. So we expect strong double digit growth for years to come internationally. The the next big driver of growth.
Would be launching the Japan market, which we expect mid year. So.
So that should open up this is the second largest market outside the U S. So that one can be a little choppy or given the dynamics of new markets coming on line, but there's still a long runway ahead.
Longer term, perhaps the most exciting opportunity for the broader precision oncology growth.
Comes to some of the pipeline test.
Kevin talked about and Mardi.
That market is is you know much larger even than the archetype market. So that's a big driver that we're looking forward to and also don't forget that within the broader appeal umbrella.
We have our our broader advance therapy selection platform.
It is growing nicely.
Your next question comes from the line of Dan Arius from Stifel.
Afternoon, guys, Kevin wanted to look at it a little bit and ask about this braidwood case that looks like it's working its way towards the Supreme Court here and is relevant for the USPS TF recommended tests. It sounds like it has the potential to jam up the works for Cologuard, but it also sounds like some of these industry groups are coming out.
Expressing confidence in just continued coverage I mean, obviously nothing's finalize there, but what are you hearing.
Attacking the risk to the out years.
Even if you don't think it's meaningful to coverage do you think it should be a factor on pricing at all would love to get your thoughts.
I don't think.
Alright.
Supreme Court decision is going to have a negative.
Negative impact on Cologuard and.
And the main reason for that is that prevented services and heinous measures and the incentive structure <unk>.
Preventive services remains intact, regardless of what the Supreme Court might do there.
In a sense cologuard is embedded into those quality measures. There is still a very very strong bias in the health systems to screen people with tests that are recommended tests.
So that doesn't change anything health payers aren't going to change their view about whether it.
Cover color.
Guard because of the Supreme Court case.
They.
Loved the benefit of Cologuard in terms of the.
It's less expensive than colonoscopy, they save money in any given budget here and and that's a real positive. So I don't think that that's going to impact us I sure hope the Supreme Court.
You know leaves that law in place I think it's very positive for other tests that may come down.
Through the arduous process that cologuard went through and.
But it's certainly not going to have an impact on cologuard.
Sure.
Policymakers in D C too are evaluating avenues to move.
The plaintiffs arguments in that case, and I think are looking at ways to even.
<unk> even reform the oversight an appointment of Usps's members. There is a lot in the works, but the whole healthcare ecosystem relies on.
<unk> is a critical part of guideline recommendations I don't think that's going to go away.
And the next question comes from the line ups Derek Brown from Bank of America.
Hi, This is <unk> Derek thanks for taking questions and congrats on a really solid quarter. I was wondering if you could offer some color on the 45 to 49 group.
Penetration at compared to the 8% that you posted last quarter and can you talk to what kind of contribution you saw this quarter and how you expected that group to play out for the balance of the year.
Yeah, So what I love about the 45 to 49 is it gives us a really good entree into the office to talk about this this cohort.
We are in line with delivering our full 45 to 49 re screen priorities and the reason why we're executing wells because it's been a consistent focus area of ours over the last couple of years, we've done a good job of not proliferating growth strategy spoke making sure that we stick to the 45 to 49.
And just to mention re screen re screen. This year will be 20% of our revenue. So these are big growth opportunities for us.
It's consistent messaging that we have with our physicians, making them aware of the new screening age and we're going to continue to do that for the for the full year.
This is Jeff just to add to whatever it said penetration has really been a highlight for this younger age group and no surprise cold look it really fits into that a younger person's lifestyle very well overall penetration right. There now is 10%. So it's in line with with Cologuard for all ages.
Just shows you the the demand that the younger age group has that we see that continuing in fact, if you look at it just three years the combination of re screens in 45, we expect to contribute around 1 billion of revenue. So this is a huge driver for us today and it will be for years to come.
Yeah.
Your next question comes from the line of Matt sites from Goldman Sachs.
Hi, good afternoon, thank taking my questions congrats on the corner.
Maybe once you're just going back to the health systems could you maybe talk about sort of how that market is shifting in terms of sort of the largest system versus an independent practices and.
And just how how much scale infrastructure it takes to actually gain a new health system I would assume there's many different decision points and.
In an enterprise led sales for a different sort of what you are talking with independent practices can maybe talk about how you've kind of gone after.
The newer health system clients that you've brought on board and how much scale and infrastructure that actually takes to do.
Thanks for the question, what we've seen especially after the pandemic as we see kind of consolidation of health system health systems buying other health systems.
And we feel that we are well.
Staffed if you will and deployed to make an impact at health systems. As I said earlier, we have a strategic account management team and all of our businesses screening precision oncology and prevention genetics. We've invested in this team not just in the number of strategic account managers, but in the way in which we train them the marketing materials that.
They get that allow them not just to call on physicians, but to allow them to call on the C suite.
Of the of the of those organizations, because that's where a lot of decisions are made in terms of scale I loved the way that we're structured because the health systems team with the strategic account managers and the representatives are on the same team now so when something is the decision is made at that health system highest level. It is still much easier for us.
Now pull that through and generate growth and the last thing I'll I'll, just reiterate that Kevin said Hell.
Health systems are now coming to us.
They know that they can't do this alone and so the relationships that we have at that health system because of the many years of investments that we've made the relationships that we have they're coming to us for how can we help them hit their quality metrics, how can we help them get and hit their screening percentages and.
And we're seeing that just gain momentum over the last year.
Your next question comes from the line of Dan Brennan from T D. Colin.
Great. Thanks for thanks for taking the questions, maybe just saw on profitability and.
Free cash flow.
Pull forward the free cash flow of 2023, and obviously profitability a lot stronger in Q1 can you just give us a sense of some of the trade off here.
Top line growth is really strong, but as we look ahead say beyond twenty-three.
How much of this kind of progression.
<unk> is sustainable obviously, you'll you'll remain positive just wondering kinda where margins.
Could get two and kind of remind us as we get towards the Investor day kind of what kind of outlook, we could expect to get in terms of timing. Thanks.
Thanks, Dan what you're seeing here is a fundamental turning point what you saw on Q1 was the power of the platform that we've been building for many years, we've been investing and investing.
By the way very much appreciate the support of investors along the way there because we're building something special and.
Platform that allows us to both grow and generate profitability.
So we don't have to make significant tradeoffs going forward, we continue to invest right now in a bright future.
And if we see opportunities to drive revenue growth by making investments will continue to do that we are in a position to do that and we want to do that to achieve our mission Jeff.
It's so damned when you look at the first quarter I think this is indicative of what what's to come use those strong coplin growth strong gross margin improvement and disciplined outbox. In fact, when you look at total revenue of 24% Opex down 1% that speaks to the power the platform that we've developed over a nine year period. So.
Going forward. This platform was designed to to scale efficiently, we've been frontloading investments for years and things like our lab, our sales and marketing teams are in digital infrastructure.
That will allow us to scale.
Comment on two tiers right now.
But our goal was just to get the free cash flow positivity or goes to get their punch through and keeps generating incremental growth year on year. So that is the plan.
Your next question comes from the line of Puny soda from SBB Securities.
Hey, guys and congrats on a strong quarter here.
So first one and I'll keep it to one actually.
I don't know if you had an opportunity to look at this but any data that you're seeing in terms of the seed or the feedback from the field in terms of the 45 to 49 year old are they gravitating.
More towards the color guard versus colonoscopy sort of help us understand that dynamic.
This is a new population that's entering the market, maybe just give us a sort of sense of the performance of the test their two 445 to 49 year old with respect to methylation.
So it would be helpful. If you can provide color on those points. Thank you.
They're pretty this is Jeff I can start on those may want to jump in but when you look at the relative demand here look it's strong across the board Cologuard has been that the fastest diagnostics launched in history. The first diagnosed.
Diagnostic ticket over $1 billion and still children very strong top line growth. So that the demand is significant and you'll look there is a long ways to go with.
With 60 million people that are screened from a relative standpoint, if you compare a 45% to 49 versus 50 and over.
We've talked about 45 to 49, achieving the same penetration rate.
In about a year and a half two years that it took the 50 to over age group to get to and closer to nine years. So.
The demand there is robust and you just think about it I'm in this age group now I know that I've got a lot of commitments with with family with kids in outside of work I don't Wanna take off two days for a colonoscopy. That's why that's one of the reasons I choose cologuard it fits into my lifestyle better.
Actual survey work in real real demand supports that from a performance standpoint, you that the label is a label and that was established with with Cologuard in deep sea that we've referenced today on the call. We have run an additional prospective study in this younger age group.
He wasn't designed to demonstrate.
Cancer sensitivity, so it's not something that we talked about so that the labels the label and you'll look forward to continued success in this younger age group and I'll just add what what Jeff said in terms of the 45% to 49 year old or messaging in the field is fantastic.
They are the Cologuard patient.
You talk about the only solution.
From a screening standpoint is accuracy effectiveness and you can do it in the privacy of your home a lot of 45 to 49 year olds. They're on the go this is the perfect product now.
Just from a selling standpoint, but we're also messaging from a marketing standpoint, our latest campaign. The my way campaign in our messaging is geared towards this younger patient. This younger population and then our customer experience a lever that we have in terms of surround sound outreach not just through T V, but through digital and social meat.
Is is very well geared towards that 45 to 49 year old.
Your next question comes from the line of <unk> can cord Genuity.
Yeah, Hey, guys. Thanks for taking my questions. Congrats on the great quarter here and the cash holdings as Paul EBITDA. So just question on next generation Cologuard with this blue seed without coming up pretty soon here I'm just curious are pre cancer sensitivity.
Just given the importance of that metric as you included in a bunch of these CDW publishers. This this past week.
I think you know to the threat threshold like 40%.
That is like a baseline there you think that's the pre cancer sensitivity in blue see there's going to be like a game over for some of the emerging options I mean, obviously, it probably means blood, but I mean, that's kind of open ended and then just one other question on next generation Cologuard, what's the path. Therefore, pahitas. They took all of our a few years, but that's been a huge tailwind I think stuff will be curious to hear that I'm sorry, what's the path forward.
Tahiti for what.
Cologuard next generation.
Yes, let me take that one first I think that.
Boulevard 2.0 fits within the current.
Definition.
Of USPS stay up so it doesn't really have to go through another cycle. It's just as an improvement on the current.
Technology, that's already included in that goes guidelines.
They are presumably it will be will wait until this summer to share the data.
In terms of the importance of.
The evidence that Cologuard set.
I'll go back to what we have said from a regulatory standpoint, cologuard PMA level of product that means is the highest level of rigor for any medical device or diagnostic because it's cancer.
And so the way the regulatory age.
Agency FDA looks at this is typically you need to have at least as good as performance you can't have degradation and our product.
Or.
At Best you would get.
A secondary screening client.
Which hampers your ability to commercialize that in a meaningful way.
Pre cancer sensitivity is important you think well how important could it be.
Can see from our D D W.
Poster.
They are abstract.
80 per cent of the benefit of screening comes from finding and removing precancerous polyps.
40, 80% of the benefits so.
So if you're looking at on a population level.
The difference between.
Let's call it like 15% pre cancer detection and 40% pre cancer detection.
As you are.
On a population level that inferior test only.
Achieved.
Somewhere around 40 per cent of the light beers gained of 60% 60% of the light years gained as a test with 40 plus percent pre cancer detection, it's critically important.
And this is what the guideline group looks that they looked at that very sophisticated models, which answer the question what what's the impact of a news green modality.
I believe that the blue speed data has the potential to set a new bar.
Now what do we think about our blood program because I think there's an embedded second question there and our blood program is if we end up with a secondary screening claim with the test that's built on.
Proprietary PCR platform, we can deliver X at cost.
Testing to patients, who just refused other forms of screaming.
I think that we all know family members friends, who have avoided screening and they've been diagnosed we add exact sciences happened to know who those patients are in combination with our health system.
Partners, we can deliver a solution.
Two people who refuse other <unk>.
More.
Better better forms of screening so we're in a great position with Cologuard is bleeding product, adding a blood test we think is going to help.
Save lives, because we know who who the refusers are.
Final question comes from Alex No lag of Craig Hallum Capital Group.
Okay, great. Good afternoon, everyone Navy to end.
Note here about the upcoming analyst day, you have a lot going on whether it be the Blue Sea study of our day focus of profitability you shared a lot with us so far with concerning his calls here, but what nobody want a unhealthy analysts say any prevail.
Oh, Alex you have to come here for the good stuff. So you know, we really can't wait to show off our team our lab our pipeline products.
Commercial activities, we haven't had.
An investor day, and I think it's seven years. So we're really excited to bring everybody together and look forward to hosting you another investors here.
Here in Madison.
Thanks for the update.
There are no further questions at this time.
I will now turn the call back over to Mister Conroy for its final moments.
Since joining exact sciences in 2009, there are many accomplished accomplishments that bring me pride and make me thankful for being part of this team today's announcement of our Q1 results marks a high point, we made incredible progress in our mission of eradicating cancer and delivering great risk.
<unk> for the shareholders, who have supported and believed in US the exact sciences team takes pride in innovation quality integrity accountability.
And most of all we believe that teamwork fuels the culture that leads to superior results.
Best part is yet to come in the exact Sciences story.
You too all of the team members who made.
Q1, such a powerful quarter and we look forward to delivering again in the future. Thank you.
Okay.
This concludes today's conference.
Call you may now disconnect.