Q4 2024 Exact Sciences Corp Earnings Call
Good day everyone and welcome to the ExactSciences fourth quarter 2024 earnings call.
Speaker Change: Today's call is being recorded. All live lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. We do ask that you limit yourself to one question today.
I would now like to turn the conference over to Derek Leckow, Vice President, Investor Relations. Please go ahead, sir.
Speaker Change: Thanks, Operator. Thank you for joining us for ExactScience's fourth quarter 2024 conference call.
Speaker Change: On the call today are Kevin Conroy, the company's Chairman and CEO, and Aaron Bloomer, our Chief Financial Officer. Brian Boranek, our General Manager of Precision Oncology, will also be available for questions.
Speaker Change: Exact Sciences issued a news release earlier this afternoon detailing our fourth quarter financial results. This news release and today's presentation are available on our website at exactsciences.com.
Speaker Change: During today's call we will make forward-looking statements based on current expectations. Our actual results may be materially different from such statements.
Speaker Change: Discussions of non-GAAP figures and reconciliations to GAAP 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.
Kevin Conroy: Thanks, Derek. Good afternoon, everyone. Our purpose is to help eradicate cancer by preventing it.
Detecting it Earlier and Guiding Personalized Treatment.
Kevin Conroy: We are making this a reality by extending and leveraging our platform.
Kevin Conroy: Highlights in 2024 include delivering more than 4.6 million results to patients with our portfolio of cancer tests.
Kevin Conroy: Increasing EBITDA by 48% and more than doubling free cash flow.
Completing two studies for OncoDetect, our molecular residual disease test.
Kevin Conroy: Generating evidence for our liquid biopsy colon cancer screening test, as well as our multi-cancer screening test, CancerGuard.
Kevin Conroy: This year we'll increase adoption of our current tests and launch three new tests.
Kevin Conroy: ExactScience's scale and reach, with the large commercial engine and tens of millions of additional touchpoints with patients,
Kevin Conroy: and healthcare providers will power continued leadership across the largest impact opportunities in cancer diagnostics.
Kevin Conroy: We'll also create an even better customer experience with our secure ExecNexus technology platform.
Kevin Conroy: Aaron will now discuss our fourth quarter financial results and outlook for 2025.
Speaker Change: Thanks, Kevin, and good afternoon, everyone. We're proud of our team's resilience and continued focus on operational excellence, enabling us to deliver another solid quarter. Fourth quarter revenue grew 10% or 11% on a core basis.
Adjusted EBITDA increased 52% to $75 million.
Screening revenue increased 14% to $553 million.
Speaker Change: Growth was led by momentum in Colgard adoption amongst providers, health systems, and payers.
Speaker Change: On average, more than 900 providers became new Colgard customers each week, and 35 of the top U.S. health systems and payers closed gaps in care with Colgard, a new record.
Our expanding customer base supports our long-term growth outlook.
Precision Oncology revenue increased slightly to $161 million.
Speaker Change: Growth in the quarter was led by increased adoption of Oncotype DX internationally.
Adjusted EBITDA margin expanded nearly 300 basis points.
Driven by Volume and Expense Controls
Speaker Change: As a percentage of revenue, adjusted G&A improved more than 400 basis points.
Speaker Change: This allowed us to reinvest back into growth and innovation while still meaningfully expanding margins.
Speaker Change: During the fourth quarter, we recognized an $830 million non-cash impairment charge related to the Thrive acquisition, which closed in January 2021.
Speaker Change: The write-down reflects changes in external factors since the acquisition, primarily the expected reimbursement outlined in the recent MSET Act legislation.
Speaker Change: Additionally, to better reflect our current operations, costs related to customer care were reclassified from G&A to Sales & Marketing.
Speaker Change: Moving to the full year, core revenue grew 11% to 2.75 billion and adjusted the EBITDA margin expanded nearly 300 basis points.
Speaker Change: We also strengthened our balance sheet in 2024 by more than doubling free cash flow.
Ending the year with $1.04 billion in cash insecurities.
Speaker Change: Our strong free cash flow generation in Outlook also allowed us to use cash on hand to repay the full $250 million in maturing convertible notes.
Speaker Change: Turning to our 2025 guidance, including some key assumptions underpinning our outlook.
Speaker Change: We expect total revenue between $680 and $695 million for the first quarter, and between $3.025 and $3.085 billion for the full year.
Speaker Change: This assumes screening revenue between $520 and $530 million for the first quarter and between $2.35 and $2.39 billion for the year.
Speaker Change: We expect 410 to 440 million in adjusted EBITDA for the full year.
Speaker Change: In screening, we're including approximately two points of lift from Cologuard Plus, which will primarily benefit second-half revenue.
Speaker Change: Cologuard Plus will initially be available in the second quarter to Medicare fee-for-service patients, who represented about 15% of Cologuard volumes last year.
Speaker Change: We are also starting to add coverage with some commercial and Medicare Advantage plans and growth from price and volume acceleration will phase in over the next 18 to 24 months as we establish contracts with payers.
Speaker Change: Specific to Q1, please recall first quarter screening revenue tends to be down sequentially because of seasonal trends.
Speaker Change: Primary care utilization is lower in December and early January because of the holidays.
Speaker Change: This impacts screening revenue during the first quarter due to the normal timing between a COLAGARD order and a completed test.
Speaker Change: Additionally, about two-thirds of care gap revenue in 2024 was recognized in the second half, and our 2025 outlook assumes similar phasing.
Speaker Change: In Precision Oncology, we expect steady Oncotype DX growth in the U.S. and strong double-digit growth internationally again this year.
Speaker Change: Key drivers include volume leverage across our fixed cost structure, price from Coligard Plus, and continued OPEX leverage and productivity.
Speaker Change: Especially within GNA, as well as in our lab and supply chain.
Kevin Conroy: These initiatives allow us to reinvest back into near and long-term growth areas, including educating patients and providers about the benefits of Cologuard, the launch of Oncodetect, and research and development to support continued innovation. Back to you, Kevin.
Kevin Conroy: Thanks, Aaron. Our efforts to get more people screened with Cologuard are setting the stage for a strong 2025.
Kevin Conroy: The number of people eligible for their next Cologuard test grows about 30% to 2 million this year. And the rate of re-screening is at an all-time high.
Kevin Conroy: Health systems and payers are turning to Cologuard as the standard of care within large, organized screening programs.
Kevin Conroy: Our expanded field sales team is deployed in new territories and are actively engaging with the highest potential ordering providers.
Kevin Conroy: Our sales team has completed training on Cologuard Plus and will become even more productive as we launch one of the most accurate cancer screening tests ever developed.
Kevin Conroy: These tailwinds will fuel growth for years to come, improve screening rates, and help decrease sales and marketing costs as a percentage of revenue over time.
Kevin Conroy: Exact Sciences is uniquely positioned to guide a cancer patient's journey every step of the way.
Kevin Conroy: Last year, our Precision Oncology team delivered actionable insights for a record 230,000 patients around the world.
Kevin Conroy: We are leveraging our trusted OncotypeDX brand, deep oncology relationships, and global footprint to increase adoption of our broad portfolio.
Kevin Conroy: These advantages will continue powering strong double-digit growth internationally for Oncotype DX.
Kevin Conroy: which has become the global standard of care and holds the preeminent position in cancer guidelines.
Kevin Conroy: We are applying the same approach with OncoDetect by generating clinical evidence and positioning it as a vital tool for patients.
Kevin Conroy: We recently published data in the Journal of Surgical Oncology showcasing the clinical strength of oncodetect.
Kevin Conroy: Results from a well-designed study of monitored colon cancer patients found those with a positive oncodetect test
Kevin Conroy: were 50 times more likely to recur than those with a negative result.
Kevin Conroy: The study also demonstrated that OncoDetect identifies residual disease up to 10 months earlier than imaging, the current standard of care.
Kevin Conroy: Findings from a second clinical validation study extended the test's prognostic benefits for patients with stages 2 through 4 colorectal cancer.
Kevin Conroy: Earlier this month we submitted results to Medicare for Reimbursement. We remain on track to launch OncoDetect in the second quarter.
Kevin Conroy: We're also generating rock-solid clinical evidence for oncodetect across multiple solid tumor types, including breast cancer.
Kevin Conroy: Shifting to multi-cancer screening, we shared new evidence in the fourth quarter supporting our test, CancerGuard.
Kevin Conroy: The data showed at a 98.5% specificity, overall sensitivity excluding breast and prostate cancer was 62.3%, sensitivity was 67.1% for the most aggressive cancer types.
This was from the ASCEND2 study.
Kevin Conroy: We remain on track for the launch of a laboratory developed test version of the test in the second half of 2025 to our large screening and precision oncology commercial organization and unique XactNexus technology plan.
Kevin Conroy: We're also making progress with our blood-based colon cancer screening test and remain on track to share top-line results from our pivotal Blue Seas study by the middle of 2025.
Kevin Conroy: Our blood-based colon cancer screening test features unique science and a differentiated cost profile.
Kevin Conroy: Once available, it will be supported by our existing commercial infrastructure along with the patient navigation program embedded within XactNexus.
Kevin Conroy: We will use these capabilities to deepen our leadership in colon cancer screening while ensuring patients and providers understand ColoGuard is the superior, non-invasive test.
Kevin Conroy: ExactScience's platform, deeply embedded standard of care tests, and pipeline of innovative diagnostics put us in the best position to make early detection and personalized treatment routine.
Kevin Conroy: This year is set to be the most productive in company history, with continued execution from our team and the launch of three significant advancements in diagnostics.
Kevin Conroy: This will power years of growth and profitability, helping us achieve our purpose.
Kevin Conroy: Before we turn to questions, I'd like to congratulate Erik Holznecht and his wife Katie on the birth of their son.
Kevin Conroy: We have big plans for him when he returns from parental leave. We'd also like to welcome Derek Lecko to the Exact Sciences team as our new Head of Investor Relations.
We're now happy to answer your questions.
and Jeff Walsh. Thank you. Thank you.
Speaker Change: Thank you, sir. And once again, we will now take your questions. Please limit yourself to one. Our first question comes from Catherine Schulte Baird.
Speaker Change: Hey guys, thanks for the questions. Maybe first just starting on screening guidance or calling for 13% growth for the full year. Some acceleration throughout the year is implied there. So maybe just talk about the build, what growth drivers get you excited as you get into the back half. And then if we look back to your 2027 outlook that you laid out at your investor day,
Speaker Change: It also takes some acceleration over the next few years to hit that target, so maybe just talk through your confidence there and some of the opportunities that might drive that acceleration. Thanks.
Speaker Change: Yeah, thanks, Catherine. We're really excited about 2025. It's set up to be another great year. We enter the year with tailwinds, including re-screens, care-get programs, ColoGuard Plus launch, commercial execution, obviously the strength of our platform, our commercial reach.
Speaker Change: Our payer relationships, the IP platform, ExactNexus, and then we're launching three new tests this year.
Speaker Change: test in the largest areas of opportunity, colon cancer screening, Colgard Plus, Oncodetect in MRD, and CancerGard in multi-cancer screening.
and
Aaron
Yeah
Speaker Change: Building up through then the building blocks of what our growth is in 2025 for screening, you know, it starts with rescreens. The success rate continues to steadily improve. The pool of patients eligible for a rescreen is going to grow again this year from 1.6 million patients in 24 to 2 million in 2025.
Speaker Change: We continue to make improvement and progress in terms of driving adherence in that as well, and it's a huge engine for growth for us, driving more than 30% growth in that space alone.
Speaker Change: Next is Care Gap Programs. If this continues to rapidly expand, we expect to build on the momentum that we generated from 2024.
We talked about the launch of Cologuard Plus.
Speaker Change: We expect about two points of price for the full year. Most of that's going to be back end weighted. And so if you're looking at the sequentials, you'd have about a three to four point impact on screening growth in the back half of the year alone.
Speaker Change: You know, there's a lot of heavy lifting that's going to have to go into preparing for that launch, and we're making progress already in terms of contracting with commercial and MedAdvantage payers.
Speaker Change: And lastly, you know, we've made a number of changes to drive improved commercial execution. You know, we're starting to see green shoots of positivity with that customer base and off to a solid start to the year.
Speaker Change: Up next, we'll take a question from, sorry, sir, go ahead.
Speaker Change: The point on the on the long term guide, you know, really pleased with the progress we've made.
Speaker Change: and confident in our long-term goals, both in terms of growth and on profitability. You know, there's no change to our thinking in terms of long-term
Speaker Change: Goals on either growth or profitability. You know, our 2025 guidance includes modest assumptions from Poligard Plus. That's going to ramp up as we head into 26 and 27 over time.
And up next, we'll hear from Doug Schenkel, Wolf Research.
Speaker Change: Mr. Schenkel, your line is open. Please check your mute button.
Doug Schenkel: Okay, thank you for that. Good afternoon, everybody. Thanks for taking my questions. And congrats to both Derek and Erik. Two questions, then I'll get out of the way. The first is on your press release. And in your prepared remarks, you talked about 2025, possibly being the most productive year in the history of the company.
Doug Schenkel: Can you just unpack that a little bit and just define what you mean by that as you think about balancing the launch of a record number of products in a single year, the goal of driving robust Coligard revenue growth and volume growth.
Doug Schenkel: and also demonstrating that you can do all of those things while growing SG&A at a rate that is meaningfully below sales, essentially giving us more operating leverage. I just want to see how you're balancing those three big things as you talk about the most productive year in the history of the company.
Doug Schenkel: And then the second question is just a guidance question. In terms of MCED and MRD contributions in guidance, how are you thinking about those? You know, essentially what's in guidance for both of those numbers at the revenue line? Thank you.
Speaker Change: Yeah, thanks Doug. I'll take the first part and pass it over to Aaron. I think you hit upon the reason we're looking at what we believe will be the best year in our history. Not only do we expect to see continued strong growth with ColoGuard with a lot of drivers there, but as you mentioned we're launching three really impactful tests.
Speaker Change: I think we've resourced this in an appropriate, aggressive way, and we're seeing lift not only in the top line, but also margin expansion.
Speaker Change: So we are we we have a team that is capable of doing each of these things we have two different
Speaker Change: businesses led by strong general managers and teams that are highly motivated. We just had our big
Speaker Change: Global Salesforce meeting a couple of weeks ago and the team is, you know, energized by these new product launches which have been born of multiple years of intense R&D and clinical trial efforts.
Speaker Change: Yeah, and then just on the sales, the SG&A productivity, you know, G&A, unpacking that specifically, that's going to continue to be the largest driver of margin expansion for us over time.
Speaker Change: Doug, a lot of work has been done. There's more to do, and there's a lot more that we can and will do within GNA. On sales and marketing, we're really pleased with the leverage and productivity that we got out of 2024.
Speaker Change: As an example, revenue per rep in Colgard continues to go up. We saw that go up in 2024. We'd expect that to continue to go up again in 2025.
Speaker Change: As you think about the unpacking, investing in the product launches that we have in 2025, we feel good about the resources that we have to be able to support Cologuard Plus, dropping that into the infrastructure that we've got.
Speaker Change: Similar for Cancer Guard, we're going to leverage the existing sales force that we have. And then MRD, you know, it's a new product and a new space for us. And we're going to look to invest to make sure that that launch is successful. Unknown Speaker
on the comment of just how much do we have.
Speaker Change: contemplated within the guide on both CancerGuard and MRD. We're really looking forward to launching both of those products in 2025. You know, we have a modest impact. You know, we just submitted results recently to MoldeX on MRD and we'll provide updates throughout the year as we launch.
Up next, we'll hear from Tycho Peterson, Jeffreys.
Tycho Peterson: Hey, thanks. I want to maybe probe a little bit on the margin outlook because you are guiding a little bit below the street on EBITDA. So can you, is the spending on sales and marketing going to be a little bit higher than you previously telegraphed and are you able to cut deeper on G&A? Is that kind of the takeaway here? And maybe Aaron, can you talk about whether these are programs that are in flight at this point on G&A?
Tycho Peterson: And then a follow-up on blood. I just want to make sure the blood assay is locked down. It seems like there's still some debate on whether the assay is locked down. Thanks.
Thank you.
Tycho Peterson: Again, really pleased with the progress we've made on margin expansion in 2024.
Tycho Peterson: puts us in a really strong position, walking into our longer term outlook of 20 plus percent by 2027. If you look at the guide in 2025, it is another 220 basis points of margin expansion, and that's 30% growth. You know, we've outlined, there's kind of four key drivers that we're going to look to deliver margin expansion over the long haul.
Tycho Peterson: starts with growth and fixed cost leverage across our labs, supply chain, G&A. We're also driving productivity now across each one of those organizations along with a lot of our enabling functions.
Tycho Peterson: We'd expect to get a meaningful lift from Cologuard Plus on the margin line, you know, we called out about two points this year. That's going to have an even more meaningful impact as we head into 2026 and 2027.
And then lastly, it's on on GNA optimization.
Tycho Peterson: which is an area we've made a lot of progress. It was the biggest driver of margin expansion in 24. There is more work that we will do there.
Tycho Peterson: That's going to come through volume leverage, Colagard Plus pricing. If you think about, you know, the current products that we have on market, Oncotype DX, Colagard, we see a path to 80% plus gross margins through both productivity initiatives as well as the Colagard Plus pricing.
Tycho Peterson: G&A, you know, as I mentioned, that's going to be a huge driver of margin expansion for us moving forward. There is more to be done. Pleased with where we're at. More to come.
Tycho Peterson: areas that we're going to invest in R&D. R&D we're going to continue to invest in in growth and innovation in R&D largely in CRC and MRD and think about in 2025 at about a similar percent to sales investment as what we had in 2024.
Rounding out then with sales and marketing.
Tycho Peterson: Again, pleased with the leverage and productivity we had in 2024. 2025 is a year of investment, of note, within supporting the launch of MRD, but we would expect to get leverage on that line of the P&L again over time.
Tycho Peterson: Yeah, and Tycho, we're going to try to limit this to one question apiece. If nobody asks a similar question, we'll come back to that at the end. Thanks.
We'll go next to Matt Sykes, Goldman Sachs.
Matt Sykes: Hi, good afternoon. Thanks for taking my question. Maybe just along the lines of...
Tycho Peterson: The commercial team for this year given the number of new launches you've got and just given some of the challenges you had in Q3 of last year, can maybe just talk a little bit about maybe some changes you made post that, what were some of the new focus for the sales team going into this year based on some of the lack of acceleration we saw from Q3 to Q4 last year?
Yeah. Thanks for that. And yeah, we're really happy that.
Tycho Peterson: As of the end of last year, we have the appropriate sized field rep team in coverage.
Heading into this year, those reps are.
Tycho Peterson: armed with the data that they need to achieve the reach and frequency to make sure that we're calling on the right primary care health care providers, also on the precision oncology side, the right oncologists, pathologists, surgical oncologists.
and they're armed with the right data. So we're
We're pleased with where the team is at the
Tycho Peterson: There isn't really any other colon cancer screening test that is close to that.
Tycho Peterson: So, you know, you have colonoscopy as a procedure, of course.
Tycho Peterson: But that the power of those, all of these kind of recharging of the field force.
Tycho Peterson: left that team incredibly excited heading into the new year. We believe this will have an impact and it's going to take a couple of quarters to start to see the impact, but there are a couple of things that we really are pleased with. Number one, the total calls are up.
Tycho Peterson: and the calls percentage of calls on the right health care providers are up.
Tycho Peterson: This is a leading, these are both leading indicators of enhanced
Tycho Peterson: focused activity in the screening sector. This has proven to have worked historically.
Tycho Peterson: and just a reminder that there are 50 to 60 million people left on screen so you know we have an opportunity to do better this year in the our core customer base and especially those customers who are new to Colgard in the last three years.
Tycho Peterson: That's why we start the year with a high level of excitement and believe we can execute very well.
We'll go to Dan Brennan from TD Cowen.
Great. Thank you. Thanks for the questions. Congrats.
Just on Kodak Plus, Kevin...
Speaker Change: baking in any volume lift it is a materially better test so you know you guys are always surveying doctors i'm just wondering kind of what you're hearing from the field and is there a chance that you could see
Speaker Change: Cold War as it, you know, compares to, you know, the, you know, the shield test as it's early in its launch. Thanks.
Speaker Change: Yeah, thanks, Dan. Why don't I take the first question again on blood? We'll come back to that. I'm sure somebody will ask that question Colgard plus again 95% sensitivity 94% specificity
We are leading with ColoGuard Plus.
We expect that launch in Q2.
and early in Q2.
Speaker Change: And because of the high level of performance, we're seeing a high level of health care provider engagement. It's new. It's powerful data.
Speaker Change: and there's a high level of excitement both in the field force and in the customer base for a test with that level of performance.
Speaker Change: Will we see a volume flip? We believe we will. We're also leading with the message of KoloGuard first. That means that, you know, we're driving people to think about KoloGuard as the way to, the first way to think about screening.
Speaker Change: And, you know, there have been experts who have looked at the question of
Speaker Change: And if you only screened those 6.3 million and didn't use Cologuard or Fittest, you would miss 90% of the cancers in the population.
Speaker Change: in that unscreened population. You would find them symptomatically. And they also estimate that then if you implement ColoGuard, ColoGuard has a significant impact on that detection rate and reducing costs and improving outcomes.
The next question comes from Jack Meehan, Nephron Research.
Jack Meehan: Good afternoon. It will be my honor to follow up on Tycho's question. Just ask the status of getting the colon blood test locked down and that leg of the blue sea study. Thanks.
Speaker Change: Aaron Bloomer, Kevin Conroy, Kevin Conroy, Kevin Conroy, Kevin Conroy, Kevin Conroy,
Yes, well, the
Speaker Change: Our CRC blood test, which we haven't named yet, is on track for middle of the summer in terms of when we expect to unlock the data. That test, the team is working really hard to ensure that we are prepared to bring our very best effort with a
Speaker Change: You know, no new real new news to report there. The team continues to work on it. I'd like to say, you know, this
We are not seeing an impact on.
In terms of our volumes, because of any competitive dynamic.
Speaker Change: requirements to really be able to bring these tests up and we will comment on our tests, not the competition. With respect to our tests,
Speaker Change: We believe that to have an impact there you need a minimum of Medicare coverage, FDA approval,
Speaker Change: 7 late 2027 2028 could be delayed beyond that and then it usually takes about a year to get into quality mesh.
Until you have that and a reasonably priced test.
Speaker Change: Very hard to address that 50-60 million patients with a blood-based mortality But there's a lot of opportunity to get more people screened. We believe blood testing will will have some impact not like
Speaker Change: The impact that we've had with the, with Coal Guard and now Coal Guard Plus.
and next up from William Blair is Andrew Brackman.
Andrew Brackman: Hi guys, good afternoon. Thanks for taking the questions and Derek, looking forward to working with you and Erik. I'm sure you're listening. Congrats again. Maybe on Cologuard Plus, can you maybe just talk about some of the progress you've made on the reimbursement front with commercial payers? What's been their receptivity to sort of this higher price and also any change in tone from then just in light of the upcoming Braidwood case heading to the Supreme Court? Thanks.
Andrew Brackman: We'll take the first question. I'm sure somebody will come back to the second. Colgar plus reimbursement, as you know, we had a victory there with
Medicare, which
Issued pricing of $592 that will apply initially to
Andrew Brackman: Medicare fee-for-service patients, which is about 15% of our volume today.
Andrew Brackman: We've also seen a handful of payers cover the test and contract with us at that same price. Medicare is the largest payer and
Andrew Brackman: You know, that should be the floor on pricing. We expect that over the course of the next
Andrew Brackman: Our deep relationships with payers, altogether we have about 800 payers, and over that period of time we expect to
to be able to contract.
Andrew Brackman: There have been one major payer, that national payer that has already covered ColoGuard.
Andrew Brackman: from a policy standpoint, and also acknowledge the code for COLA Guard.
Andrew Brackman: And then there have been some smaller plans, including a fairly large state blues plan that has covered and contracted. So we'll provide more color in quarters to come, but we like where we're starting. And we think it's a pretty
Andrew Brackman: Clear path going forward, mainly driven by the performance of 95% sensitivity and a much improved false positive.
That drives real value for payers.
And the next question is Patrick Donnelly, Citi.
Patrick Donnelly: Hey guys, thanks for taking the questions. Kevin, maybe another one on the pipeline side, I know you said, you know, maybe some of the tests aren't material this year.
Can you just talk about, I guess, the...
pathway here on OncoDetect, the MRD side, CancerGuard, NSAID.
Patrick Donnelly: and then the unnamed Blood CRC. Which of those do you feel like become material first? What does that trajectory look like? Just curious how you think about the path for the three of them and just the contribution on the revenue side as we look out over the next few years.
Patrick Donnelly: Well, Colgar Plus, of course, has the first and biggest impact. And then I would say probably...
Patrick Donnelly: MRD followed by multi-cancer screening if you look at you know nearest term
Patrick Donnelly: Long-term, as you know, the multi-cancer screening opportunity is one of the biggest opportunities in all of cancer diagnostics. So we're in the fortunate position to have three tests in the largest areas of impact.
Colgard Plus
Patrick Donnelly: in colon cancer screening, a well-defined yet vastly under-penetrated field, OncoDetect in a fast-growing, hugely impactful area of MRD testing, and CancerGuard in multi-cancer screening. So, I don't know which one is going to have the biggest impact long-term. It's why we firmly believe that
Patrick Donnelly: For a decade and beyond, we can deliver double-digit growth, huge patient impact.
Patrick Donnelly: and commercial investments to allow us now to do this in a levered way. That's the beauty of it is we're going to be able to, with very attractive test economics,
Patrick Donnelly: One of the best in the field, drop it into our existing commercial infrastructure and our exact nexus platform and get huge leverage on that as these tests scale over time.
The next question today comes from Vijay Kumar, Evercore ISI.
Vijay Kumar: Hi guys, thanks for taking my question. Kevin, maybe on the last question around on MRD, your comments here on this being perhaps a more
Speaker Change: And based on those results, right, like how should we think about the revenue ramp? I think you've submitted to more DX. How critical is that reimbursement? What percentage of population is that covered and how do you compete against your largest competitor in that space?
Speaker Change: I think there's one overarching question in there, B.J., and that's all about MRD, so why don't I pass it over to Brian Boranek, our GM of Precision Oncology.
Brian Boranek: Thanks, Kevin. There was a lot in there. I'll start with the first question, which was really around the adjustment we made to the cut point in our AlphaCorrect study. What I'll say here is that the teams were kept blind.
These were independently validated.
Brian Boranek: And we outlined all the methodology that we followed in the JSO publication.
that was referenced earlier in the call.
We then took that
that algorithm into the beta-correct study.
Brian Boranek: And if you reference the press release in the language we used.
within that study, which is under embargo.
Brian Boranek: We'll do a couple things. One, it will confirm the performance of the assay in stage 3 colon.
Brian Boranek: He will extend us into stage 2, 4 colon cancer, as well as all of rectal cancer. And then again, because the data is in barcode, what we're going to say here is that we believe the data looks very promising.
Brian Boranek: In the sub study of the galaxy study, and we look forward to sharing those results, which we will do at ASCO in the June timeframe. With respect to the overall MRD program, I mean, there's a lot of excitement within our team. If we just step back and think about where we are.
that are within five years of their original cancer diagnosis.
Brian Boranek: You layer on top of that a very, very large clinical unmet need.
Brian Boranek: We're excited about the program, the alpha and beta correct data. We also believe that we have some really strong, unique, competitive advantages. You've heard reference to the ExactNexus platform several times on this call already. We think that's going to create a unique and differentiated customer experience.
Brian Boranek: We arguably have one of the strongest, if not the strongest brands. Prior to genomic health, there really wasn't a market for high-value centralized cancer diagnostics. We helped build that playbook. We intend to utilize that playbook and those skills to propel OncoDetect forward.
Brian Boranek: And then we have a deep tenured sales team that quite frankly is hungry to leverage those relationships to bring new products to the patients and customers that they serve. So we're looking forward to the launch. We're excited about what we're going to do in Q2, and we look forward to driving forward.
The next question today is Subbu Nambi Guggenheim, Securities.
Subbu Nambi: Hey, guys, thank you for taking my question. Can I ask a follow up to Vijay's question? Is the test performance expected to be consistent with what you were presented at ASCOGI or can it be better a few percent points, either on the sensitivity or specificity?
Subbu Nambi: Yeah, thanks for the follow-up question. Unfortunately, the data is under embargo.
Speaker Change: Well, I'll go back to my previous statement and just say, you know, we're encouraged. The data looks promising and we look forward.
Speaker Change: to sharing the details. If you just look at the study that we published in the Journal of Surgical Oncology back in January, you know, Kevin mentioned this earlier in the call, if you look at the performance of the assay, patients who were positive on OncoDetect were 56 times more likely than a patient who is negative to go on and have a cancer recurrence.
Speaker Change: We showed 10-month lead time to standard of care imaging and being able to spot that recurrence. And if you look at the longitudinal setting, the serial sensitivity and specificity was very competitive with other assays that are out there.
Speaker Change: The well-known galaxy study, we were excited to get access to a subset of that parent study and we look forward to sharing the data.
Speaker Change: at ASCO. And we've also got a number of investments in prospective clinical studies across colorectal breast, and then the work that we announced with our partner Flatiron, which will bring us into the multi-solid tumor scenario as well.
Puneet Suda from Lee Rank Partners has the next question.
Speaker Change: Aaron Bloomer, Jeffrey Elliott, Kevin Conroy, Aaron Bloomer, Jeffrey Elliott, Kevin Conroy,
Speaker Change: Great, thanks. So, a simple one for me on pricing. Why shouldn't we see more than two points of lift from ColoGuard Plus?
Speaker Change: pricing and you know what are the levers and pieces that that you think that can potentially drive that higher versus what you provided and wondering if you can give a pricing assumption from Cancer Guard. Thank you.
Speaker Change: So, the two points assumes a launch in Q2 within the Medicare fee-for-service population, which, as Kevin alluded to earlier, represents roughly 15 percent
Speaker Change: of Colegard Volume, and that obviously has now an increased value to Medicare of about 16%.
Speaker Change: Implied in the guide is essentially just that Medicare fee-for-service volume. Keep in mind, too, there's a typical lag between when we get an order in and when we recognize revenue when we get that test back in our lab. And so most of the contribution from Cologuard Plus pricing lift is going to be in the back half of the year.
Kevin Conroy: As Kevin alluded to earlier, we are beginning those conversations with payers to be able to renegotiate that price, and we'll give updates on that as we go along. Kevin?
Right now the assumption is that
Kevin Conroy: That's going to occur more beginning of next year than than this year. So yeah, there is upside The team is hard at work having those conversations in terms of the cancer guard price We'll come back to that if somebody else asks that question. We're keeping the list
And next up is Dan Leonard, UBS.
Thank you.
Speaker Change: I have a question on your screening guidance for 2025, that 13% growth at the midpoint.
Speaker Change: Oh, no, I, well, if you heard some, that is not something that we have ever messaged that.
But is there upside to our screening guide?
Speaker Change: Yes, there is. If we see the commercial execution impact in the second half, if we have more contracts updated in the first half of this year on the commercial side, Medicare Advantage plans, commercial plans, etc. But it's February right now.
And as Aaron mentioned, we're seeing some green shoots.
Speaker Change: in terms of the metrics around the reenergized and enhanced sales force on the screening side and you know we have some new product launches this year so the
Our guide is, our guide there on screening, that's
Speaker Change: You know, I will just point to there are opportunities for us to continue to execute well on automating re-screens.
Speaker Change: and getting more of those people who are due for their second, third, or fourth ColoGuard test screened as close to that three-year anniversary as possible. And there is an opportunity for us to expand our care gap.
Speaker Change: So, we enter the year with a strong re-screen look, Care Gap program, Coal Guard Plus, and then commercial execution. Those are the four big levers.
Speaker Change: We believe we're going to be able to execute this year.
Speaker Change: And what we said at J.P. Morgan was that we were comfortable with where consensus was. And if you look at the midpoint of our guide for screening, it's right on where consensus was, which was 13% growth.
The next question is Bill Bonello, Craig Hallam.
Hey guys, thanks for taking the call and welcome Derek.
people eligible, my sort of back of the envelope math.
Speaker Change: digits. Is that is that kind of consistent with how you're thinking about the numbers?
Speaker Change: Hey, Bill. Directionally, your math isn't that far off with what we've included in our guidance.
Important to keep in mind is.
Speaker Change: With Cologuard, you know, Kevin alluded to a number of changes we've made to the commercial organization, really targeting the newest ordering providers that have the highest propensity to order and drive growth for us moving forward. And that's a channel that we're going to look to continue to grow.
Speaker Change: over time. And the last thing I'd call out is, you know, we continue to target the younger population. Care Gap is a great way for us to get to that younger patient population, but you've also probably noticed some new ads and marketing experiences that we're trying to deliver that to the younger patient population as well.
Up next is Sung Ji Nam, Scotiabank.
Speaker Change: Hi, thanks for taking the question. One on Cancer Guard as well. Without having third-party reimbursement when you launch,
Speaker Change: Just could you elaborate a little bit more in terms of your go-to-market strategy there? You mentioned leveraging your existing sales force But was curious kind of where do you expect to see the biggest traction in terms of the different channels that you have there? Thank you
Speaker Change: Yeah, you have huge leverage with the current existing field force.
Speaker Change: more it's amazing it's they're more interested in Cancer Guard at this point in the product life cycle than they were cold.
Speaker Change: and the question is why? And the why is they see a pressing need to identify cancers earlier.
Speaker Change: to keep their patient population within their community cancer centers and to help those patients if they take care of other needs.
Speaker Change: And so, as we talk with large health systems through our large health system sales team, we believe this is going to be a strong opportunity.
Speaker Change: Our field force and screening can't wait to get a cancer guard and our precision oncology team too has the ability and there's a lot of excitement around the team.
Speaker Change: delivering Cancer Guard to those patients who've previously been diagnosed with cancer.
more amenable to out-of-pocket pay.
Next up is Eve Bernstein, Bernstein Research.
Eve Bernstein: You're there. Thanks so much for the question. I'd actually like to follow up on Andrew's question about Braidwood.
So my interpretation here is that
Eve Bernstein: If the court case is upheld when it's heard by the Supreme Court.
Eve Bernstein: Recommendations from the USPSTF after March of 2010 no longer need to be covered without any cost-sharing. So that means both Cologuard and any future blood tests would no longer need to be covered by private payers without that patient cost-sharing.
Is that correct?
Eve Bernstein: If so, how quickly could the no cost sharing be revoked by payers? Like, I imagine there are regulatory filings that don't allow for this sort of change without some kind of warning. And then that's a pretty big hit to exact business. How are you preparing or planning if the Supreme Court does uphold that appeal?
Eve Bernstein: We don't believe there's going to be a hit to the business because
payers are highly motivated.
Eve Bernstein: to get their patients screened in order to drive their quality.
Eve Bernstein: So, as a result, the focus on prevention, both from the health plan standpoint and also from the health system standpoint, and obviously the patient standpoint, remains high.
Eve Bernstein: and we don't expect there to be any significant changes because let's let's take for example if a large payer decided to impose a copay.
Eve Bernstein: Whereas their competitors didn't, they're almost certainly to see a decline across the board in their quality measures associated with prevention.
Eve Bernstein: And, you know, they just can't afford to do that because of the bonuses that are tied to the quality measure scores across the board.
Eve Bernstein: In terms of Braidwood, what is Braidwood? Braidwood is a lawsuit that challenges...
Eve Bernstein: The Affordable Care Act requirement that insurers cover services with grade A or B recommendations from USPSTF with zero out-of-pocket costs.
Eve Bernstein: As you may have seen, the incoming administration, the Trump administration, is taking the same position as the Biden administration in opposing this lawsuit.
Eve Bernstein: That is obviously a positive sign for the whole field of prevention. And we know, again, that payers are highly motivated to keep their screening scores
Eve Bernstein: So we, and also the plans for 2025 are already set, so even if anybody did want to change they would have to wait until 2026.
and others.
The next question comes from Andrew Cooper, Raymond James.
Andrew Cooper: Hey everybody, thanks for the question here. A lot already asked, so maybe a little bit on precision oncology.
Andrew Cooper: to close the year. It's a little bit slower, you should have a little bit of at least a little bit of onco detect dropping in. So maybe talk us through what the assumptions on are there and why why that can't grow a little bit faster. And then related
Andrew Cooper: You know, I think Aaron, in a previous answer, you called out sales and marketing some investments behind OncoDetect.
Andrew Cooper: You know, in the past, we've talked about that more as another arrow in the quiver for the OncoType DX sales force. So maybe what's changed or where does that incremental spend need to go to support OncoDetect in terms of the commercial team?
Speaker Change: Hey, Andrew. So just in terms of the full year guide, yeah, kind of mid-single-digit growth for PO, we would expect a tailwind from the exact nexus change. One, the non-repeat of it, but two, just that we know from putting things on the exact nexus platform that the cash collection rate will improve.
Speaker Change: Over time, you think about like the core business, you know, growth is again going to be led by international, anticipating, you know, strong double-digit growth.
from our Oncology Business Internationally again.
Speaker Change: And then in the U.S., just continued growth and momentum with the U.S. oncotype.
Business as well.
You know, it's specific to maybe the Q1.
Thank you for joining us. Have a great day.
With respect to the sales...
Speaker Change: But what I will say is we're being intelligent with the.
Speaker Change: The investments that we're making on the sales and marketing side to make investments to make sure that we come out of the gate full steam and have a really successful product launch. In addition, we're making the needed investments we need to make on the clinical evidence side of the equation. We haven't talked a lot about the studies that we're investing in.
Speaker Change: But, you know, in colorectal, we have correct one and correct two, which collectively have
Over 1,400 patients.
that we're going to be deploying OncoDetect on.
Speaker Change: We have what is probably the largest prospective clinical study in breast cancer that collectively will enroll 1,800 patients.
and then on the multi-cancer side of the equation.
Speaker Change: In the press release related to Flatiron and multi-cancer, we have over 1,300 patients that we plan on enrolling. So, making smart, intelligent investments on sales and marketing.
Speaker Change: to support the existing Oncotype team, but also investing aggressively on the development side of the equation to make sure that we can quickly move from colorectal into breast and ultimately into multi-solid tumor.
Kyle Mixon from Canaccord has the next question.
Kyle Mixon: Hey guys, thanks for the questions. Kevin and Aaron, could you talk about the CareGap revenue contribution, 25 versus 24, in terms of dollars and the year-over-year growth rate implied, and relatedly, any update on any business shifting from standard primary care cold guard ordering to CareGap? Thanks.
Kyle Mixon: Hey, Kyle So if you think about the full year guide, we did more than 250000 patients through the care gap program in 2024, it was triple digit growth last year and without exactly sizing what it will be this year I would just say we expect to build.
Kyle Mixon: That momentum heading into 2025.
Kyle Mixon: We're seeing meaningful growth in that part of the business in Q1 as well from a phasing perspective about two thirds of care GAAP revenue came in the back half of 2024, we're assuming similar phasing in 2025, and we've talked a lot about adherence in the past as well we're doing a lot of things.
Kyle Mixon: To continue to improve the adherence or the kit return rate in care gap programs, but from a guidance perspective, we're assuming similar adherence rates to what we saw in 2024.
Speaker Change: Yeah, and just the drivers of care gaps so just wanted to.
Kyle Mixon: Mind people, it's this exact nexus LG.
Kyle Mixon: Algae platform that allows us to do it our deep relationships with payers.
Brand awareness of Cologuard and that Cologuard is in the guidelines.
Kyle Mixon: The quality measures and comes along with the three year credit because thats.
Kyle Mixon: The intervals for testing.
Kyle Mixon: That's awfully powerful and what we're seeing is a shift in the way that a lot of health systems and payers or are starting to think about screening and so a lot of first time screeners are going to come in through these programs in the future and over time, We've said hey look this could be a $500 million plus opportunity.
Kyle Mixon: We are screening 1 million plus people per year and it can grow from there.
Kyle Mixon: The next question is Sir got Barclays.
Speaker Change: Save them on for Luke Thanks for squeezing me in here.
Kyle Mixon: Maybe maybe picking up.
Speaker Change: Dan letters question here.
Speaker Change: I appreciate the color on upside to screening growth.
Speaker Change: You're guiding to similar screening growth this year to 24.
Speaker Change: Talked about the 2% pricing contribution already and I'm wondering if.
Speaker Change: Regarding re screening and care gap, you guys kind of talked about maybe a 10% growth contribution.
Speaker Change: Maybe a quarter or so ago. So I'm wondering if that is still intact.
Speaker Change: And I'll just leave it there thanks.
Speaker Change: Hey, welcome, yes that is still very much intact and so what we've talked about is that collectively between re screens and care gap that that gets you to something maybe.
Speaker Change: Slightly north of 10% growth.
Re screens continues to be the.
Speaker Change: Our largest growth opportunity for us over time, it's growing more than 30%.
Speaker Change: A year and so we'll contribute kind of mid to high single digits and then you can kind of do the math on what that means for caregivers.
Speaker Change: And everyone that was our last question that does conclude our conference for today, we would like to thank you all for your participation you may now disconnect.
Speaker Change: Please wait the conference will begin shortly.
Speaker Change: [music].
Speaker Change: Okay.
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Yes.
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