Q1 2025 Exact Sciences Corp Earnings Call

Kate: Thank you for standing by. My name is Kate, and I will be your conference operator today.

Thank you for standing by my name is Kate and I will be your conference operator today.

Kate: At this time, I would like to welcome everyone to the Exact Sciences' first quarter 2025 earnings call. All 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 followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you.

At this time I would like to welcome everyone to the exact sciences first quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed.

Speaker Change: Would be the number one on your telephone keypad. If you would like to withdraw your question Press Star. One again. Thank you I would now like to turn the call over to Derek Wilco VP of Investor Relations. Please go ahead.

Derek Leckow: I would now like to turn the call over to Derek Leckow, VP of Investor Relations. Please go ahead. Thanks, Operator.

Yeah.

Derek Leckow: Thank you for joining us for Exact Sciences first quarter 2025 conference call. On the call today are Kevin Conroy, the company's Chairman and CEO, and Aaron Bloomer, our Chief Financial Officer. Exact Sciences issued a news release earlier this afternoon detailing our first quarter financial results. This news release and today's presentation are available on our website at exactsciences.com. During today's call, we will make forward-looking statements based on current expectations. Our actual results may be materially different from such statements. 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.

Speaker Change: Thanks, operator, thank you for joining us for exact Sciences' first quarter 2025 conference call on the call today are Kevin Conroy, the company's chairman and CEO and Aaron Bloomer, our Chief Financial Officer.

Speaker Change: Exact sciences issued a news release earlier this afternoon detailing our first quarter financial results. This news release and today's presentation are available on our website at exact sciences Dot 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 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.

Derek Leckow: Both can be accessed through our website.

Kevin Conroy: Both can be accessed through our website I will now turn the call over to Kevin.

Kevin Conroy: I will now turn the call over to Kevin. Thanks, Derek. Highlights in the first quarter include delivering 1.2 million total results to patients. Growing core revenue 11% while non-GAAP operating expenses grew just 4%. Improving our profitability by increasing adjusted EBITDA more than 60%.

Speaker Change: Thanks, Derrick highly.

Kevin Conroy: Highlights in the first quarter include delivering one 2 million total results to patients.

Kevin Conroy: <unk> core revenue, 11%, while non-GAAP operating expenses grew just 4% improving our profitability by increasing adjusted EBITDA more than 60%.

Kevin Conroy: Launching ColoGuard Plus, our next generation ColoGuard test with Medicare coverage and quality measure inclusion and being recognized as a Gallup exceptional workplace for the second year in a Cologuard is driving significant and durable growth because it satisfies an unmet need in an expanding market. We're pleased to share some of the early successes from the commercial initiatives we began last Our purpose-built commercial organization and expanded field team are engaging providers with the highest potential to order at record rate. The shift to territories and calling on providers with the highest potential to order is making our team even more effective.

Kevin Conroy: Launching cologuard plus our next generation Cologuard test with Medicare coverage and quality measure inclusion and being recognized as a gallup exceptional workplace for the second year in a row.

Kevin Conroy: Cologuard is driving significant and durable growth because it satisfies an unmet need in an expanding market.

Kevin Conroy: We're pleased to share some of the early successes from the commercial initiatives, we began last year.

Kevin Conroy: Our purpose built commercial organization and expanded field team are engaging providers with the highest potential to order at record rates.

Kevin Conroy: The shift to territories and calling on providers with the highest potential to order is making our team even more effective our team is expanding the number of providers, we engaging each quarter as a result, they are helping reach new ordering providers much faster.

Kevin Conroy: Our team is expanding the number of providers we engage in each quarter. As a result, they are helping reach new ordering providers much faster.

Kevin Conroy: We're also seeing positive feedback from new advertisers.

Kevin Conroy: Also seeing positive feedback from new advertising campaigns and customer satisfaction was at an all time high in the first quarter.

Kevin Conroy: and Customer Satisfaction was at an all time high in the first Our customer-initiated ordering platform grew triple digits in the first quarter, and we have plans to improve these initiatives further. We're incredibly proud of our entire commercial organization and their positive impact on advancing our Commercial improvements are just one of many drivers that will fuel growth over the coming years.

Kevin Conroy: Our customer initiated ordering platform grew triple digits in the first quarter and we have plans to improve these initiatives further.

Kevin Conroy: We're incredibly proud of our entire commercial organization and their positive impact on advancing our mission.

Kevin Conroy: Commercial improvements are just one of many drivers that will fuel growth over the coming years.

Kevin Conroy: Others include our re-screening. We have a growing base of loyal customers, which now represent more than 25% of our revenue. This provides a predictable recurring source of revenue, and we are getting even better at keeping those patients screened.

Kevin Conroy: Others include a re screen program, we have a growing base of loyal customers, which now represent more than 25% of our revenue.

Kevin Conroy: This provides a predictable recurring source of revenue and we are getting even better at keeping those patients screened.

Kevin Conroy: Our Care Gap Program. This program helps payers and health systems close gaps in screening. This program grew triple digits last year and will continue to grow strong double digits. We are still in the early innings of driving higher adherence in these programs. The launch of Colgar This will deliver increased value, improved performance, higher adoption, and improved margin.

Kevin Conroy: Our care cap program. This program helps payers and health systems close gaps in screening.

Kevin Conroy: This program grew triple digits last year, and we will continue to grow strong double digits. This year.

Kevin Conroy: We are still in the early innings of driving higher adherence in these programs.

Kevin Conroy: The launch of Cologuard plus.

Kevin Conroy: This will deliver increased value improved performance higher adoption and improve margins.

Kevin Conroy: New products. We're starting to see the benefit of investments we've made to launch and scale new tests in large and growing markets. These growth drivers will continue to play out over 2025 and beyond. It's never been a more exciting time.

Kevin Conroy: New products were starting to see the benefits of investments, we've made to launch and scale new tests in large and growing markets.

Kevin Conroy: These growth drivers will continue to play out over 2025 and beyond.

Kevin Conroy: It's never been a more exciting time at exact.

Aaron Bloomer: I'll now pass it on to Aaron to discuss our first quarter financial results and provide an updated outlook for 2020. Thanks Kevin, and good afternoon everyone. Our team delivered strong results in the first quarter, ahead of our expectations, while navigating through one of the worst flu seasons we have seen in years. The team's dedication to our mission also enabled us to deliver two product launches, which will fuel growth and create value for years to come. First quarter revenue grew 11% on both a reported and core basis, $19 million above the midpoint of our guidance. Screening revenue exceeded guidance, increasing 14% to $540 million.

Kevin Conroy: I'll now pass it onto Aaron to discuss our first quarter financial results and provide an updated outlook for 2025.

Aaron Bloomer: Thanks, Kevin and good afternoon, everyone. Our team delivered strong results in the first quarter ahead of our expectations, while navigating through one of the worst flu seasons, we've seen in years the team's dedication to our mission also enabled us to deliver two product launches, which will fuel growth and create value for years to come.

Kevin Conroy: First quarter revenue grew 11% on both a reported and core basis $19 million above the midpoint of our guidance.

Kevin Conroy: Screening revenue exceeded guidance, increasing 14% to $540 million.

Aaron Bloomer: Broad-based Cologuard growth was led by continued success in re-screens, care gap programs, and growth in new ordering providers. Precision Oncology Revenue also exceeded guidance, increasing 4% to $167 million on a core basis. Growth in the quarter was led by continued strength in Archetype DX adoption internationally. Adjusted EBITDA increased 61% to $63 million. Adjusted EBITDA margin expanded 280 basis points. Driven by Volume Leverage, Productivity, Cost-Cutting Initiatives, and Improvements in G&A. As a percentage of revenue, Adjusted G&A improved more than 520 basis points. and was down 7% year over year. This was partially offset by sales and marketing investments to drive near and long-term growth.

Kevin Conroy: Broad based Cologuard growth was led by continued success in re screens carryout programs and growth in new ordering providers.

Kevin Conroy: Precision oncology revenue also exceeded guidance, increasing 4% to $167 million on a core basis growth in the quarter was led by continued strength in Oncotype Dx adoption internationally.

Kevin Conroy: Adjusted EBITDA increased 61% to $63 million.

Kevin Conroy: Adjusted EBITDA margin expanded 280 basis points, driven by volume leverage productivity and cost cutting initiatives and improvements in G&A.

Kevin Conroy: As a percentage of revenue adjusted G&A improved more than 520 basis points and was down 7% year over year.

Kevin Conroy: This was partially offset by sales and marketing investments to drive near and long term growth.

Aaron Bloomer: We expect continued leverage across the P&L. In the first quarter, we took $25 million in actions to optimize costs and increase operational efficiency over time. We expect these actions to deliver annual savings of $18 million, with $9 million coming in 2025.

Kevin Conroy: We expect continued leverage across the P&L in the first quarter, we took $25 million and actions to optimize cost and increase operational efficiency over time we.

Kevin Conroy: We expect these actions to deliver annual savings of $18 million with $9 million coming in 2025.

Aaron Bloomer: We have additional operational excellence initiatives planned and will provide additional updates in the coming quarter. Free cash flow reached break-even during the first quarter, a year-over-year improvement of $120 million. We are making progress to generate meaningful free cash flow growth through productivity and working capital initiatives and expect strong, full-year cash generation. Looking at free cash flow cadence, we expect a meaningful build in our AR balance as we launch Coliguard Plus, temporarily impacting our cash flow in Q2. We expect to collect on these in the back half of the year, driving our full year cash flow to a new record.

Kevin Conroy: We have additional operational excellence initiatives plan and we'll provide additional updates in the coming quarters.

Kevin Conroy: Free cash flow reached breakeven during the first quarter, a year over year improvement of $120 million.

Kevin Conroy: We are making progress to generate meaningful free cash flow growth through productivity and working capital initiatives and expect strong full year cash generation.

Kevin Conroy: Looking at free cash flow cadence, we expect a meaningful build in our AR balance as we launched Cologuard plus temporarily impacting our cash flow in Q2.

Kevin Conroy: We expect to collect on these in the back half of the year driving our full year cash flow to a new record.

Aaron Bloomer: We ended the quarter with cash insecurities of $786 million, which reflects the $249 million convertible note paydown.

Kevin Conroy: We ended the quarter with cash and securities of $786 million, which reflects the $249 million convertible note paydown.

Aaron Bloomer: Turning to guidance, we are increasing total revenue guidance to between $3.07 and $3.12 billion for the year, an increase of $40 million at midpoint, with second quarter revenue between $765 and $780 million. This assumes screening revenue between $595 and $605 million for the second quarter, and between $2.39 and $2.425 billion for the year. and Precision Oncology revenue between $170 and $175 million for the second quarter and between $680 and $695 million for the full year. We're also raising Adjusted EBITDA guidance to between $425 to $455 million for the full year, or 14.2% Adjusted EBITDA margins at mid- Annual guidance at midpoint implies total revenue growth of 12%, including 14% in screening and 5% in precision on cost.

Kevin Conroy: Turning to guidance, we are increasing total revenue guidance to between 3.07 and $3. One 2 billion for the year, an increase of $40 million at midpoint with second quarter revenue between 765 and $780 million.

Kevin Conroy: This assumes screening revenue between 595 and $605 million for the second quarter and between 2009, and 242 5 billion for the year.

Kevin Conroy: And precision oncology revenue between 170 and $175 million for the second quarter and between 680 and $695 million for the full year.

Kevin Conroy: We're also raising adjusted EBITDA guidance to between $425 million to $455 million for the full year or 14, 2% adjusted EBITDA margins at midpoint.

Kevin Conroy: Annual guidance at midpoint implies total revenue growth of 12%, including 14% in screening and 5% in precision oncology.

Aaron Bloomer: Underpinning our increased screening guidance are early signs of improved commercial execution. As Kevin noted earlier, we're seeing several leading indicators fueling growth ahead of our expectations in new to Cologuard orders. To highlight a couple, customer engagement by our field force is up more than 30% year over year, and over 190,000 providers ordered during the first quarter, an increase of nearly 10% year over year. These factors are coupled with continued momentum in re-screens, care gap orders, and Cologuard Plus pricing, which help inform our increased annual guidance.

Speaker Change: Underpinning our increased screening guidance are early signs of improved commercial execution as Kevin noted earlier, we're seeing several leading indicators fueling growth ahead of our expectations in new to Cologuard orders to highlight a couple customer engagement by our field force is up more than 30% year over year.

Speaker Change: And over 190000 providers ordered during the first quarter, an increase of nearly 10% year over year.

Speaker Change: These factors are coupled with continued momentum in re screens per GAAP orders and Cologuard, plus pricing, which help inform our increased annual guidance.

Aaron Bloomer: Specific to Precision Oncology Guidance, we are excited about the Oncodetect launch and the core business is performing as expected. Shifting to profitability guidance, we are pleased with the leverage in the first quarter and continue to find ways to drive improved margins. Additionally, we have little to no impact from tariffs as we manufacture and perform our lab work in the United Guidance at midpoint implies more than 35% adjusted EBITDA growth, or about 250 basis points of adjusted EBITDA margin.

Speaker Change: Specific to precision oncology guidance, we're excited about the <unk> launch and our core business is performing as expected.

Speaker Change: Shifting to profitability guidance, we are pleased with the leverage in the first quarter and continue to find ways to drive improved margins. Additionally.

Speaker Change: Additionally, we have little to no impact from tariffs as we manufacture and perform our lab work in the United States.

Speaker Change: Guidance at midpoint implies more than 35% adjusted EBITDA growth or about 250 basis points of adjusted EBITDA margin expansion back to you Kevin.

Kevin Conroy: Back to you, Kevin. Thanks Aaron. Cologuard Plus is one of the most accurate screening tests ever developed and will help revolutionize colorectal cancer screening. The test detects 95% of colon cancer at a 94% specificity, resulting in a 40% reduction in false positives. ColoGuard Plus fits into our best-in-class primary care commercial organization and proprietary ExecNexus platform. Our team is seamlessly bringing Cologuard Plus to physicians and We've rapidly achieved Medicare coverage, pricing, and quality measure guidelines. Cologuard Plus built on the strong Cologuard brand and top of mind awareness for Cologuard surpassed colonoscopy for four out of the last.

Speaker Change: Thanks, Darrin Cologuard pluses one of the most accurate screening tests ever developed and will help revolutionize colorectal cancer screenings.

Speaker Change: The test detects 95% of colon cancer at a 94% specificity, resulting in a 40% reduction in false positives.

Speaker Change: Cologuard plus fits into our best in class primary care commercial organization and proprietary exact nexus platform.

Speaker Change: Our team is seamlessly, bringing cologuard plus to physicians and patients.

Speaker Change: We have rapidly achieve Medicare coverage pricing and quality measure guideline inclusion.

Speaker Change: Cologuard plus built under strong Cologuard brand.

Speaker Change: Our combined awareness for Cologuard surpassed colonoscopy.

Speaker Change: Four out of the last six months.

Kevin Conroy: All of these benefits equip our commercial team with a practice-changing message for healthcare. Cologuard First, colonoscopy as. We are working to ingrain Cologuard Plus as the first option in health care provider screening tools. The launch is going well, and we are excited about the test potential. We know which patients are covered for Cologuard Plus through our ExactNexus platform and can triage them accordingly. We've already completed over 30,000 tests and are engaging commercial payers to bring ColoGuard Plus to more patients.

Speaker Change: All of these benefits equip our commercial team with a practice changing message for health care providers Cologuard one <unk>.

Speaker Change: Colonoscopy as needed.

Speaker Change: We are working to ingrain Cologuard pluses, the first option in health care provider screening tool.

Speaker Change: The launch is going well and we are excited about the test potential.

Speaker Change: We know which patients are covered for cologuard plus through our exact nexus platform and can triage them accordingly.

Speaker Change: We've already completed over 30000 tests earnings and are engaging commercial payors to bring cologuard plus to more patients.

Kevin Conroy: In April, we advanced Exact Sciences' unique position to guide a cancer patient's journey every step of the way by launching OncoDetect, our molecular residual disease This vital tool could help benefit 6 million Canvassers. OncoDetect fits right into our precision oncology portfolio, led by OncoType DX. Deep relationships with oncologists, a global footprint, our customer experience, and our evidence generation strategy will drive adoption of OncoDetect for years to come.

Speaker Change: In April we advanced exact sciences unique positioned to guide a cancer patient's journey every step of the way by launching encore detect our molecular residual disease test.

Speaker Change: This vital tool could help benefit 6 million cancer patients.

Speaker Change: <unk> detect fits right into our precision oncology portfolio led by Oncotype Dx deep.

Speaker Change: Deep relationships with oncologists, a global footprint, our customer experience and our evidence generation strategy will drive adoption of agco detect for years to come.

Kevin Conroy: We are actively working with Medicare to secure reimbursement for our tests in colorectal cancer, which we expect to occur this quarter. We look forward to sharing updates on Oncodetect over the course of the year. We remain on track and there is no change to our timeline to share mid-summer top-line results from our pivotal Blue Sea study supporting our blood-based colon cancer screening. Over the last few months, our product development team took important steps to bring the best possible science to patients and physicians. Since our last update, we have completed three studies to optimize and lock our algorithm.

Speaker Change: We are actively working with Medicare to secure reimbursement for our tests and colorectal cancer, which we expect to occur this quarter.

Speaker Change: We look forward to sharing updates on Alco detect over the course of the year.

Speaker Change: We remain on track and there is no change to our timeline to share mid summer topline results from our pivotal Blue C study supporting our blood based colon cancer screening test.

Speaker Change: Over the last few months, our product development team took important steps to bring the best possible science to patients and physicians.

Speaker Change: Since our last update we have completed three studies to optimize and lock our algorithm.

Kevin Conroy: Based on those results, we believe we have a high quality test. Optimized Algorithm. As we head into the test. The Clinical Trial Sample. Our team is focused on final steps ahead of running. including lab, IT, manufacturing, quality, and sample readiness.

Speaker Change: Based on those results. We believe we have a high quality test and optimized algorithm as we head into the testing of the clinical trial samples.

Speaker Change: Our team is focused on final steps ahead of running samples including lab.

Speaker Change: Manufacturing quality and sample readiness.

Kevin Conroy: After we have run the Blue Sea samples, we plan to announce via press release top-line data, including overall cancer and pre-cancer numbers.

Speaker Change: After we have run the Blue Sea samples, we plan to announce via press release top line data, including overall cancer and pre cancer sensitivity and specificity.

Kevin Conroy: Thank you. Specific Our blood test features our unique scientific approach and a differentiated cost program. The test will fit into our existing commercial infrastructure and our exact nexus.

Speaker Change: Our blood test features our unique scientific approach and a differentiated cost profile.

Speaker Change: Test will fit into our existing commercial infrastructure and our exact nexus platform.

Kevin Conroy: Shifting to Multicam We remain on track for the launch of CancerGuard in the second half of 2025 through our large screening and precision oncology commercial organization. CancerGuard also fits into our unique ExactNexus technology.

Speaker Change: Shifting to multi cancer screening we remain on track for the launch of cancer Guard in the second half of 2025 through our large screening and precision oncology commercial organization cancer.

Speaker Change: Cancer Guard also fits into our unique exact nexus technology platform.

Kevin Conroy: Our test enables population level screening for And we look forward to bringing this test to patients later this year.

Speaker Change: Our test enables population level screening for cancer, and we look forward to bringing this test to patients later this year.

Kevin Conroy: In summary, we are off to a very strong start in 2020. We launched two new innovative products that will make positive impacts on The commercial improvements we made are building momentum and we believe will deliver sustained growth. The Exact Sciences Platform, our deeply embedded standard of care tests, and our growing portfolio of innovative diagnoses.

Speaker Change: In summary, we are off to a very strong start in 2025, we launched two new innovative products that will make positive impacts on patients with <unk>.

Speaker Change: Commercial improvements we made are building momentum and we believe will deliver sustained growth.

Speaker Change: The exact sciences platform are deeply embedded standard of care tests, and our growing portfolio of innovative diagnostics puts us in the best position to make early detection and personalized treatment New standard we're now happy to answer your questions.

Kevin Conroy: puts us in the best position to make early detection and personalized treatment the new We're now happy to answer your questions.

Kate: This time, I would like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad. Please limit yourself to one question. We will pause for just a moment to compile the Q&A roster.

Speaker Change: At this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad. Please limit yourself to one question, we will pause for just a moment to compile the Q&A roster.

Tycho Patterson: Our first question comes from the line of Tycho Patterson with Jeffreys. Please go ahead.

Speaker Change: Our first question. This question comes from the line of Tycho Peterson with Jefferies. Please go ahead.

Tycho Peterson: Okay. Thanks, I'll keep it to one I'll, let others ask and a pipeline, but Kevin I want to focus on commercial execution. You highlighted this a number of times you've made a lot of changes in the last two quarters. Obviously, we're now seeing the results you talked about the shift to territories dynamic calling list, but maybe what are some of the other changes you've made on the commercial front that are really working how is that driving you to call.

Tycho Peterson: Art orders re screens and care gap and then the 30% year over year increase in customer engagement can you clarify is that Doc calls does that Doc calls per rep.

Tycho Peterson: Okay.

Kevin Conroy: It's Doc Calls. Oh, the volume of calls is up. And thanks, Tycho. Yeah, we're really pleased with the leading indicators based on the changes that we made. You have to go back to December of last year when we made many of the changes. And then throughout the first quarter, these changes, we've seen responsiveness, we're really pleased. We have the right number of reps. We are engaging with the right customers with the right frequency. The rep productivity, the per rep productivity is up about 10%. That's, that's fantastic. That tells you that you have an engaged salesforce that is out there really making sure that people are getting screened.

Tycho Peterson: It's.

Kevin Conroy: Doc calls, although the volume of calls us up and thanks, Tycho Yeah, we're really pleased with the leading indicators based on the changes that we made you have to go back to December of last year. When we made many of the changes and then throughout the first quarter.

Kevin Conroy: These changes we've seen responsiveness. We are really pleased we had the right number of reps, we are engaging with the right customers with the right frequency the rep productivity per rep productivity is up about 10%.

Speaker Change: Thats Fantastic that tells you that you have an engaged sales force that is out there really making sure that people are getting screened cologuard plus is making a difference we have the.

Kevin Conroy: Colgard Plus is making a difference. We have the, you know, the benefit of having a test that is 95% sensitive, 94% specific. Docs, health care providers are really excited to learn more about ColoGuard Plus. We're equipping our sales force with the right data on who to call on in their geographic territory. And the geographic territory alignment that's clearly having an impact. We're targeting the right those right providers with the right frequency. We think that builds out as you go throughout the year and beyond. And one of the things that we're really happy about is three out of four new ordering providers in the quarter have been reached actively by either our inside team or our field team within a week or two of that first order.

Kevin Conroy: <unk>.

Kevin Conroy: The benefit of having a test that is 95% sensitive 94% specific.

Speaker Change: Docks healthcare providers are really excited to learn more about cologuard plus.

Speaker Change: We're equipping our sales force with the right data on who to call on in their geographic territory and the geographic territory alignment that is clearly having an impact.

Speaker Change: We're targeting the right those right providers with the right frequency, we think that builds out as you go.

Speaker Change: Throughout the year and beyond and one of the things that we're really happy about is three out of four <unk>.

Speaker Change: New ordering providers in the quarter have been reached actively by either our inside team our field team within a week or two of that first order we call that an order left behind and it's having an impact always has we believe always will and we will just keep aggressively search.

Kevin Conroy: We call that no order left behind. And it's having an impact, always has, we believe always will. And we'll just keep aggressively surrounding every new customer with education, demo kits, etc. The engagement, the depth of our relationship with our customers continues to strengthen.

Speaker Change: Rounding every new customer with education demo kits et cetera.

Speaker Change: The engagement the depth of our relationship with our customers continues to strengthen so here's a data point our customer satisfaction has reached an all time high we track. This rigorously it's part of typically part of our bonus structure has been in the past it's at an all time high in Q1.

Kevin Conroy: So, here's a data point. Our customer satisfaction has reached an all-time high. We track this rigorously. It's part of, typically part of our bonus structure. It has been in the past. It's at an all-time high in Q1. Our care gap programs continue to be robust. We're on track there. Also, our brand awareness is at a high. So, when you poll customers, which we've done this for years, and ask them on an unaided basis, what is a way to get screened for colon cancer? More people say Cologuard than colonoscopy in four of the last six months.

Speaker Change: Care gap programs continue to be robust. We're on track. There also our brand awareness is at a high so when.

When you pull customers, which we've done this for years and ask them on an unaided basis, what is a way to get screened for colon cancer more people say.

Speaker Change: Cologuard and colonoscopy in four of the last six months.

Kevin Conroy: That's telling you something. You're moving towards ColoGuard becoming the frontline, first way that people think about screening. And as you know, there are a lot of people out there, 50 to 60 million people out there that are not up to date with screening. And then one final thing is ordering Cologuard through our website.

Speaker Change: That's telling you something youre moving towards Cologuard, becoming the frontline first way that people think about screening.

Speaker Change: You know there are a lot of people out there.

50 to 60 million people out there that are not up to date with screening and then one final thing is.

Speaker Change: Ordering cologuard to our website if anybody on this call is listening and Hudson is not up to date with screening.

Kevin Conroy: If anybody on this call is listening and hasn't, is not up to date with screening.

Catherine Schulte: go to the colgard.com website and you can you're going to have to answer some questions and put in your health card health insurance information and excuse me you can get screened and you can get screened quickly that CIO customer initiated ordering business is is growing in triple digits so firing on all cylinders but it's a start so you know we have a lot of work to do throughout the course of the Your next question comes from the line of Catherine Schulte with Baird, please go ahead. Hey guys, thanks for the question.

Speaker Change: So cologuard dot com website, and you can youre going to have to answer some questions and put in your health card health insurance information.

Speaker Change: And.

Speaker Change: Excuse me you can get screened and you can get screened quickly that CIO customer initiated ordering.

Speaker Change: Business is as growing in triple digits, so firing on all cylinders.

Speaker Change: It's a start so we have a lot of work to do throughout the course of the year.

Speaker Change: Okay.

Speaker Change: Your next question comes from the line of Catherine Schulte with Baird. Please go ahead.

Catherine Schulte: Hey, guys. Thanks for the question.

Aaron Bloomer: Maybe one for you, Aaron. Can you just unpack guidance a bit? How should we think about cadence in the back half of the year? And then can you walk us through the puts and takes there of the raised revenue outlook? How much of that is care gap versus re-screens versus broader commercial execution or any other color you might have?

Speaker Change: Maybe one for you Aaron can you just unpack guidance about how should we think about cadence in the back half of the year and then and can you walk us through the puts and takes that's a range for revenue outlook. How much of that is care gap versus re screens versus product commercial execution or any other color you might have thanks.

Aaron Bloomer: Thanks. Hey, Catherine, we, you know, it's early in the year, and we would take any increase in guidance at this early point, we treat it with caution, but coming off of the strong Q1 that we have, and we've got excellent visibility now into kind of how Q2 is shaping up in terms of orders. Kevin just outlined all the reasons why we're really pleased with the changes that we made last December, the leading indicators that we're seeing, and ultimately, starting to see that translate into orders, and so that's giving us visibility to raise, not only from Q1, but also Q2, and ultimately, you know, it is still early, and so as we think about revenue pacing, first half versus second half, you know, the back half of the year already implied slightly higher revenue growth.

Catherine Schulte: Hey, Catherine.

Speaker Change: It's early in the year and we would take any increase in guidance at this early point, we treat it with caution but coming off of the strong Q1 that we have and we've got excellent visibility now into kind of how Q2 is shaping up in terms of orders Kevin just outlined all of the reasons why we're really pleased.

Speaker Change: With the changes that we made last December at the leading indicators that we're seeing and ultimately starting to see that translate into orders.

Speaker Change: And so that's giving us visibility to raise not only from Q1, but also Q2 and ultimately it is still early and so as we think about revenue pacing first half versus second half.

Speaker Change: The back half of the year already implied slightly higher revenue growth. If you just look at screening as an example, this revenue guidance will imply about 13% growth in the first half of the year and that would step up to about 15% growth in the back half of the year, primarily driven by the launch of Cologuard plus.

Brandon Couillard: If you just look at screening as an example, this revenue guidance will imply about 13% growth in the first half of the year, and that would step up to about 15% growth in the back half of the year, primarily driven by the launch of Coligard Plus, the pricing benefit that we'll see from that, and then some of the benefit from the commercial execution. Specific to kind of what led to the increased guidance raised, that was entirely attributable to some of the improvements that we're seeing that Kevin noted earlier related to commercial execution.

Speaker Change: The pricing benefit that we'll see from that and then some of the benefit from the commercial execution Spa.

Speaker Change: Specific to kind of what led to the increased guidance range raised that was entirely attributed attributable to some of the improvements that we're seeing that Kevin noted earlier related to commercial execution.

Aaron Bloomer: Your next question comes from the line of Brandon Couillard with Wells Fargo. Please go ahead. Thanks, good afternoon.

Speaker Change: Your next question comes from the line of Brandon <unk> with Wells Fargo. Please go ahead.

Aaron Bloomer: Aaron, back to you on just margins. So sales and marketing is a lot higher than we had modeled. Can you kind of unpack where you made investments in the first quarter? Was there anything one time in there? How should we think about that line over the balance of the year? And where do you expect free cash flow to land?

Brandon: Thanks, Good afternoon, Eric.

Speaker Change: Back to you on just margins, so sales and marketing a lot higher than we had modeled kind of unpack where you've made investments in the first quarter was there anything one time in there how should we think about that line over the balance of the year and where do you expect free cash flow to land for the year. Thank.

Brandon: Okay.

Aaron Bloomer: Hey, Brandon. First of all, we're really pleased with the progress that we made on overall profitability in the first quarter. So we grew it by more than 60%. And I think it just showed the power of what we have on and we have multiple ways in order for us to expand our margins. I'll start with with gross margin. You know, we knew we had some headwinds last year, just as it pertains to care gaps. And so we challenged our manufacturing, our lab, our supply chain team to figure out how do we get costs down over time and really, really pleased with the hard work that they put in in the back half of last year.

Brandon: Hey, Brandon.

Brandon: First of all we're really pleased with the progress that we made on overall profitability in the first quarter. So we grew it by more than 60%.

Brandon: And I think it just showed the power of what we have on and we have multiple ways in order for us to expand our margins I'll start with gross margin.

Brandon: We do we had some headwinds last year, just as it pertains to care gaps and so we challenged our manufacturing our lab our supply chain team to figure out how do we get costs down over time, and really really pleased with the hard work that they put in in the back half of last year and that really showed in the first quarter.

Aaron Bloomer: And that really showed in the first quarter. So we saw gross margins expand again in the first quarter. Going down the lines of the P&L, the next area to highlight is G&A. So G&A has been an area that we've talked about. We've taken some actions there. We saw more than 500 basis points of margin growth in the first quarter alone. Sales and marketing, we highlighted on our initial call this year. That was going to be an area of an investment. And yes, it was up in the first quarter, but I'd like to unpack that just a little bit.

Brandon: We saw gross margins expand.

Brandon: Again in the first quarter.

Brandon: Going down the lines of the P&L. The next area to highlight as G&A. So G&A has been an area that we've talked about we've taken some actions there we saw more than 500 basis points of margin growth in the first quarter alone.

Brandon: Sales and marketing we highlighted on our initial call. This year that was going to be an area of an investment.

Brandon: Yes, it was up in the first quarter, but I'd like to unpack that just a little bit.

Aaron Bloomer: You know, if we think about the investments we've made within our screening portfolio, supporting everything that we're doing from a Cologuard perspective, the growth that we saw in revenue in the first quarter significantly outpaced the growth and the investments that we made within the first quarter. Within sales and marketing. And so we saw leverage on that in the first quarter, and we will see leverage on that throughout this entire year and in the years to come. The bigger investment from a sales and marketing perspective is really to support the new product launches that we have this year.

Brandon: If we think about the investments we've made within our screening portfolio supporting everything that we're doing from a cologuard perspective, the growth that we saw in revenue in the first quarter significantly outpaced the growth and the investments that we made within sales and marketing and so we saw leverage on that in the <unk>.

Brandon: First quarter, and we will see leverage on that throughout this entire year and in the years to come.

Brandon: The bigger investment from a sales and marketing perspective, it's really to support the new product launches that we have this year, we just launched a co detect.

Aaron Bloomer: You know, we just launched OncoDetect. Recently, we've got the Cancer Guard launch coming later this year. These are brand new markets for us, and we wanted to make sure that we were enhancing the size of those teams to be able to support those launches in a very big way. And then just, you'd asked about free cash flow as well. You know, we saw $120 million improvement year over year in free cash flow. And again, just kudos to the entire Exact team. This has been an area of focus for us. We've taken a number of steps to drive improvements in working capital.

Brandon: Recently, we've got the cancer Guard launch coming later this year. These are brand new markets for us and we wanted to make sure that we were enhancing the size of those teams to be able to support those launches and a very big way.

Brandon: And then just you had asked about free cash flow as well.

Brandon: We saw $120 million improvement year over year in free cash flow and again, just kudos to the entire exact team. This has been an area of focus for US we've taken a number of steps to drive improvements in working capital of note. We've seen a significant improvement within our days to pay so how are we <unk>.

Aaron Bloomer: Of note, we've seen a significant improvement within our days to pay. So, how we manage our suppliers, and that showed up in a very meaningful way here in the first quarter. As we do think about the pacing, as I said in the prepared remarks, we do expect a build in the second quarter. So, we want to make sure that that's incorporated into everybody's models. And that just has to do with the launch of Coliguard Plus. We're able to recognize a higher revenue right away, but the MACs have into Q3 until all that coding gets updated into the system, at which time we would build.

Brandon: Our suppliers and that showed up in a very meaningful way here in the first quarter.

Brandon: As we do think about the pacing as I as I said in the prepared remarks, we do expect to build in the second quarter. So I want to make sure that that's incorporated into everybody's models and that just has to do with the launch of Cologuard plus were able to recognize a higher revenue.

Brandon: Right away, but the Max have into Q3 until all of that coding gets updated into the system at which time, we would build.

Aaron Bloomer: A bill for that and then collect into the back half. And then just on the pacing of sales and marketing, Brandon, pretty consistent as we pace throughout the year. As we've talked about before, I think the team is loaded to bear, fully ready to go to support the year, the full year. And you saw that in Q1, would expect that to pace throughout the balance of the year.

Brandon: Appeal for that and then collect into the back half of the year.

Brandon: And then just on the pacing of sales and marketing Brandon.

Brandon: Pretty consistent as we pace throughout the year as we've talked about before.

Brandon: The team is loaded to bear fully ready to go to support the the year. The full year and you saw that in Q1 would expect that to pace throughout the balance of the year.

Kate: Operator, our next question, please.

Brandon: Operator next question please.

Brandon: <unk>.

Brandon: Okay.

Brandon: Operator next question please.

Unknown Executive: Your next question comes from the line. We can't hear you, you're going to have to repeat that.

Brandon: Your next question comes from the line.

Speaker Change: We can't hear you.

Brandon: Yes.

Brandon: Okay.

Brandon: The next question please.

Kate: Operator, next question, please. The operator has indicated that there is a challenge and to give her a minute, so please bear with us. Apologies for the delay.

Brandon: Operator next question please.

Brandon: The operator has.

Speaker Change: <unk> indicated that there is a challenge to give her a minute. So please bear with us.

Speaker Change: Apologies for the delay. Your next question comes from the line of Shameful from Wolfe Research. Your line is open.

Colleen Babington: Your next question comes from a line of people from Wolf Research. Your line is open. Hi, this is Colleen Babington on for Doug. Thanks for taking our question. So I believe in the prepared remarks that re-screens are now about 25% of total Coligard orders. Is it reasonable to assume re-screens could get to 26 to 28% of total volume this year? Or should we assume that those should stay stable at around 25% as patients get access to Coligard Plus for first-time testing? Also, we know patients become more compliant with re-screening with subsequent re-screens.

Speaker Change: Hi, This is Colleen babington entre Doug Thanks for taking our question. So I believe in the prepared remarks that re screens are now about 25% of total cologuard owners is it reasonable to assume re screens could get to 26% to 28% of total volume this year.

Speaker Change: Or should we assume that those should stay stable at around 25% as patients get access to Cologuard plus for first time testing also we know patients become more compliant with re screening with subsequent re screens. So as patients become eligible for their third second and third Cologuard test how should we be thinking about the pace.

Kevin Conroy: So as patients become eligible for their second and third Coligard tests, how should we be thinking about the pacing from your path of your current hit rate of about 55% to your long-term goal of 70% plus? Thank you. Rescreens continues to be just an unbelievable growth driver for us. It's a great, predictable, recurring form of revenue for us that's going to provide a long-term annuity for our screening business. We've talked about how there's more than 2 million patients eligible rescreens this year. That's up more than 30 percent versus where it was a year ago. And yeah, we do have opportunities to get even better in terms of driving adherence.

Speaker Change: <unk> from your path.

Speaker Change: You have your current head grade of about 55% to your long term goal of 70% plus thank you.

Speaker Change: At re screens continues to be a just an unbelievable growth driver for us. It is a great predictable recurring form of revenue for us thats going to provide a long term annuity.

Speaker Change: For our screening business, we've talked about how there's more then.

Speaker Change: Patients eligible for.

Speaker Change: Three screens this year, that's up more than 30% versus where it was a year ago.

Speaker Change: And yes, we do have opportunities to get even better in terms of driving adherence. We continue to get a couple of points of improvement per year over the last several years and will continue to drive that forward in terms of just the guide we did more than 25% of our revenue in the first quarter came through <unk>.

Kevin Conroy: We continue to get a couple of points of improvement per year over the last several years, and we'll continue to drive that forward. In terms of just the guide, we did more than 25 percent of our revenue in the first quarter came through rescreens. And yes, it is a fair assumption that rescreens would add a couple of points in terms of their overall contribution to our volume this year.

Speaker Change: Screens and yes. It is a fair assumption that re screens would add a couple of points in terms of their overall contribution to our volume this year.

Patrick Donnelly: Your next question comes from the line of Patrick Donnelly from Citi. Your line is open. Yeah, sure. You know, we're to that point in moving forward to testing clinical trial samples that our team excels at. We've done this with ColoGuard. We've done it with ColoGuard+. It's a big undertaking. You have one chance to do it. You want to do it really well. So you have to prepare the lab. You need multiple software systems that need to be validated, reagents, manufacturing, quality, the actual testing of the samples. And there's a ton of work that goes into that.

Speaker Change: Your next question comes from the line of Patrick Donnelly from Citi. Your line is open.

Patrick Donnelly: Hey, guys. Thanks for taking the questions.

Patrick Donnelly: Kevin maybe just to pick up on the pipeline helpful commentary there on the blood piece can you just talk about I guess the hurdles left the timeline it sounds like pretty well locked in here tracking towards the mid summer.

Patrick Donnelly: Maybe just talk about the milestones needed what we should be keeping an eye on to get there and just confidence in the timeline.

Patrick Donnelly: Again, obviously the data I think the expectation is maybe some dilution from the case control, but help us on the expectations as well will be great I appreciate it.

Patrick Donnelly: Yes sure.

Patrick Donnelly: You know where to that point in a move.

Patrick Donnelly: Moving forward to testing clinical trial samples that our team excels at we've done this with Cologuard, we've done it with Cologuard plus it's a big undertaking.

Patrick Donnelly: Have one chance to do it you want to do it really well. So you have to prepare the lab you need multiple software systems that need to be validated reagents manufacturing quality.

Patrick Donnelly: The actual testing of the samples.

Kevin Conroy: As you know, it's a 20,000 patient study overall, so that there's just a lot of work and you want to do it well. We are on track from a timing standpoint. There's no change. We believe we'll be competitive. So we believe in the assay team has done a ton of work to validate and lock that algorithm.

And there's a ton of work that goes into that as you know is the 20000 patient study overall, so that there's just a lot of work and you want to do it well we are on track from a timing standpoint. There is no change we believe will be competitive. So we believe in the assay team has done a ton of work too.

Validate and locked that algorithm.

Kevin Conroy: But I also want to take a step up a little bit. You know, all roads lead to getting into the quality measures, which is gated by USPSTF. That's going to take likely a few years. There are changes there at USPSTF in terms of the budget being cut recently. So we don't have a clear idea of when the guideline group will meet and then the HEDIS and STARS quality measures. In terms of blood modeling, we know from multiple different studies that have been published in the last year that blood just doesn't model at anywhere – basically a substantial reduction in light-year scale.

Patrick Donnelly: But I also want to take a step up a little bit you know all roads lead to getting into the quality measures, which is gated by USPS TF, that's going to take likely a few years there changes there.

Patrick Donnelly: USPS TF in terms of the budget being cut recently, so we don't have a clear idea of window. The guideline group will meet and then that hit us and starts quality measures.

Patrick Donnelly: In terms of blood modeling.

Patrick Donnelly: We know from multiple different studies.

Patrick Donnelly: That had been published in the last year.

Patrick Donnelly: Blood just doesn't model at anywhere at basically a substantial reduction in life years gained at.

Kevin Conroy: and a substantial increase in total cost. So it's, where does this shape out? We believe that blood, there will be a niche for blood testing. We don't know whether blood will get into the guidelines. It's certainly not gonna be an easy road there. We believe, and this is tying back to something that Aaron just said, this big base of customers that we have in our data. in our massive data. We have 30 million people today that have had a Colgard test order. We believe that could grow to $50 million over the next several years. and that allows us to parse the people who are willing to get screened with ColoGuard, most are, and then the fraction that aren't, we have a solution for.

Patrick Donnelly: And a substantial increase in total costs.

Patrick Donnelly: So.

Patrick Donnelly: Where does this shape out we believe that blood there will be a niche for blood testing, we don't know whether blood will get into the guidelines.

Speaker Change: Certainly not going to be an easy road. There we believe and this is tying back to something that Aaron just said.

Speaker Change: This big base of customers that we have in our data.

Speaker Change: And our massive database.

Speaker Change: We have 30 million people to date that have had a cologuard test order.

Speaker Change: We believe that could grow to $50 million over the next several years.

Speaker Change: And that allows us to parse that people who are willing to get screened with Cologuard. Most star and then the fraction that aren't we have a solution for and we have a great commercial team an incredible commercial team to deploy our blood tests through.

Kevin Conroy: And we have a great commercial team, an incredible commercial team to deploy our blood tests through to make sure that if there are patients that refuse guideline recommended forms of screening that we can go and get them screened. So, you know, we believe we'll win because of the brand, the commercial capability, our tech platform, our cost. I was just talking with one of our area managers yesterday and said, okay, you know, what are customers saying? And the area manager said, what we're hearing from the field is that people are waiting for exact splits. And I believe that because of the depth of our relationships over the last 11 years of engaging with customers.

Speaker Change: To make sure that if there are patients that refuse guy.

Speaker Change: Guideline recommended forms of screening that we can go and get them screened.

Speaker Change: So you know we believe will win because the brand commercial capability our tech platform. Our costs I was just talking with one of our area managers yesterday and said okay.

Speaker Change: What what are customers, saying.

Speaker Change: The area managers said, what we're hearing from the field is that people are waiting for exact blood tests and I believe that because of the depth of our relationships over the last 11 years of engaging with customers. So that's where we are.

Kevin Conroy: So that's where we are. Really pleased with the progress. We're at that point in time that the operations and lab and I.T. teams just they excel. So looking forward to the midsummer readout.

Speaker Change: Really pleased with the progress we're at that point in time that the operations in lab and it teams just they excel so looking forward to the mid summer readout.

Michael Ryskin: Your next question comes from the line of Michael Ryskin from Bank of America. Your line is open. Great. Thanks for taking the question guys. Apologies if I missed this earlier, but you know, the update to the guide on revenues makes sense and you kind of talk and the Screening Contributions on eBid, I just want to get a little bit more color there. where and how that's flowing through versus. reinvestment in some of the commercial.

Speaker Change: Your next question comes from the line of Michael Riskin from Bank of America. Your line is open.

Speaker Change: Great.

Speaker Change: Thanks for taking the question guys.

If I missed this earlier, but the update to the guide on revenues makes sense and you kind of talk through.

Speaker Change: On the screen contributions on EBIT I, just wanted to get a little bit more color, there on where and how that's flowing through versus.

Speaker Change: Reinvestment in some of the commercial initiatives and especially upcoming pipeline.

Aaron Bloomer: I just want to talk about the event of March.

Speaker Change: Talk about the EBIT margin raise the guide how we should think about that throughout the course of the year.

Aaron Bloomer: Hey, Michael. We're really pleased with the progress, again, that we made in the first quarter that gave us the belief to be able to raise the guide for the full year in line with the revenue guide that we raised. As well, I already called attention to, you know, the world-class gross margins that we have in place, continuing to get better, the productivity that we're seeing within GNA. I also alluded to, in prepared remarks, some of the actions we took in the first quarter to not only impact back half of the year margins, but also set ourselves up for long-term cost-out initiatives as well.

Speaker Change: Hey, Michael we're really pleased with the progress again that we've made in the first quarter that give us gave us the believes to be able to raise the guide for the full year in line with the revenue guide that we raised as.

Speaker Change: Well I already called attention to.

Speaker Change: The World class gross margins that we have in place continuing to get better the productivity that we're seeing within G&A I also alluded to in prepared remarks. Some of the actions. We took in the first quarter to not only impact back half of the year margins, but also set ourselves up for long term cost out initiatives.

Vijay Kumar: And as said earlier, we have more operational excellence initiatives planned on that front. And then just in terms of the rest of the drop-through, we will continue and are just investing in sales and marketing, in particular, in OncoDetect launch costs this year, but again, seeing really great productivity out of the investments that we've made on the CRC side, which we would expect to get meaningful leverage on throughout each of the quarters this Your next question comes from a line of Vijay Kumar from Evercore ISI, your line is open.

Speaker Change: Well and.

Speaker Change: As Ed said earlier, we have more operational excellence initiatives plan on that front.

Speaker Change: And then just in terms of the rest of the drop through we will continue and are just investing in sales and marketing in particular and unco detect launch costs. This year, but again seeing really great productivity out of the investments that we've made on the CRC side, which we would expect to get meaningful leverage on.

Speaker Change: Throughout each of the quarters this year.

Okay.

Speaker Change: Your next question comes from the line of Vijay Kumar from Evercore ISI. Your line is open.

Kevin Conroy: Hi guys, thanks for taking my question and congrats on a nice sprint here. Kevin, maybe if I can just, a big picture sort of question. If I look at the stock, we're at the low end of trading range. I look at your test volumes, you know, you're north of a million tests here within screening. And yet the market, you know, doesn't seem to give their credit. And part of it, I suspect, is this fear on blood, right? You have one of the largest sales force. And when you put all of these elements together, it's hard for us to see why the market's not giving you the credit.

Vijay Kumar: Hey, guys. Thanks for taking my question and congrats on a nice screens here.

Kevin Conroy: Kevin maybe if I can just down.

Speaker Change: Big picture sort of question, if I look at the stock.

Kevin Conroy: We're at the low end of trading days.

Speaker Change: <unk> test volumes.

Speaker Change: Youre doing north of a million tests here within screening.

Speaker Change: And yet the market.

Speaker Change: And it doesn't seem to give their credit and part of it I suspect if you run on.

Speaker Change: Blood.

Speaker Change: You have one of the largest sales force.

Speaker Change: And when you put all of these elements together, it's hard for us to see what why the markets not giving you the credit.

Kevin Conroy: You know, when you think about the blood, A, on the data itself, when you look at versus competition, why is the market fearful of perhaps exact data not being comparable?

Speaker Change: When you think about the blood.

Speaker Change: A on the data itself when you look at that versus our competition.

Speaker Change: Why why is the market fearful of.

Speaker Change: Perhaps exact stat and not being comparable.

Kevin Conroy: I would love your thoughts on the work you've done internally. And second, on pricing, I do think like you guys have a pricing advantage when it comes to blood. Wouldn't that negate the entire competition thesis?

Speaker Change: I would love your thoughts on the work you've done internally and second on pricing I do think like you guys have a pricing advantage when it comes to blood would not going to get the entire.

Speaker Change: Can a competition thesis thank.

Kevin Conroy: Thank you. Thanks, Vijay. You know, I found over the years that you control and focus on what you really can And what we have focused on is getting more people screened and driving that with an incredible commercial focus. And I would say that probably if you look out over the past nine months, there's been we've been more challenged by the commercial execution of Colgard than, you know, any noise around blood testing. That's that's my particular view. But what we can control is. And on the commercial front, we're executing. On the CRC colon cancer blood front, we're executing.

Speaker Change: Thank you.

Speaker Change: Thanks P J.

Speaker Change: Found over the years.

Speaker Change: That you.

Speaker Change: You control and focus on what you really can control.

Speaker Change: And what we have focused on is getting more people screened and driving that with an incredible commercial focus and I would say that.

Speaker Change: If you look out over the past nine months Theres been.

Speaker Change: We've been more challenged by the commercial execution of Cologuard.

Speaker Change: Any noise around blood test.

Speaker Change: My particular view, but.

Speaker Change: What we can control is execution and on the commercial front, we are executing on the CRC colon cancer blood front, we're executing and we're going to have a readout. This summer the key thing for the team the management team all of our team members is to focus on the long term value creation and we.

Kevin Conroy: And we're going to have a readout this summer. The key thing for the team, the management team, all of our team members, is to focus on the long-term value creation. And we had a good quarter. A lot of what happened in this quarter is because of things that we did two years ago and three years. And that's where we keep focusing on building a company that has sustainable impact. And that's what we're going to keep focusing on. And we're also excited for a midsummer readout.

Speaker Change: Had a good quarter a lot of what happened in this quarter is because of things that we did two years ago three years ago.

Speaker Change: And that's where we keep focusing on building a company that has sustainable impact.

Speaker Change: And that's what we're going to keep focusing on and and we're also excited for a mid summer arena.

Puneet Souda: Your next question comes from a line of Puneet Souda from Lyrinc Partners. Your line is open. Yeah. Hi, Kevin and team, and thanks for taking my question here. First one on Cologuard+. It's been a month since the launch. Could you provide a view on what traction you're seeing?

Speaker Change: Your next question comes from a line of Puneet Sudan from Leerink Partners. Your line is open.

Puneet Sudan: Yeah, Hi, Kevin and team and thanks for taking my question here first one on Cologuard plus it's been a month since the launch could you provide a view on.

Puneet Sudan: What traction you're seeing what's the mix of Cologuard versus call. It current Cologuard was cologuard plus and just how should we think about that in the <unk> guide and for the full year. Thank you.

Kevin Conroy: What's the mix of Cologuard versus Cologuard, current Cologuard versus Cologuard+, and just how should we think about that in the 2Q guide and for the full year? Thank you. Well, thanks. You should think about ColoGuard Plus as today being available for Medicare Part B patients, which is right around 14-15% of our customer volume. As you know, Medicare Advantage is becoming a much bigger part of the Medicare patient population, and we think that will grow over time. So think around 15% as we get more payers to change their contracts to include ColoGuard Plus, we will be able to flip those orders.

Speaker Change: Well. Thanks, you should think about Cologuard pluses today being available for Medicare part B patients, which is right around 14%, 15% of our customer volume as you know Medicare advantage is becoming a much bigger part of the.

Speaker Change: Medicare patient population and we think that will grow over time, so think around 15% as we get more payers too.

Speaker Change: Change their contracts to include Cologuard, plus we will be able to flip those orders.

Aaron Bloomer: Bottom line is that we are testing a large volume of ColoGuard Plus tests presently, and that will grow over time as those new patients, those patients have access based upon their payer covering ColoGuard and contracting with our So we're excited, you know, if we can get more of those payers on board sooner, that means more left earlier. And right now we're focused on meeting the demand that we're already seeing. I think it was a couple hundred thousand orders that converted to ColoGuard Plus pretty early there in the launch, and then a lot of new orders coming in.

Speaker Change: Bottom line is that we are testing a large volume of Cologuard plus tests.

Speaker Change: Presently and that will grow over time as those new.

Speaker Change: Patients those patients have access based upon their payer covering cologuard in contracting with our team.

Speaker Change: So we're excited if we can get more of those payers onboard sooner that means more lift earlier and right now we're focused on meeting the demand that we're already seeing I think it was a couple of hundred thousand.

Speaker Change: Orders that converted to Cologuard plus pretty early there in the launch and then a lot of new orders coming in and.

Aaron Bloomer: And just in terms of what's embedded into the guide, then for Q2, it's exactly what Kevin said. It's the Medicare Part B. That obviously then would grow as we go into the back half of the year, but think kind of right around that 15%. To the extent we're successful with securing contracting with any of the larger payers, we will keep you all updated and then obviously reflect back.

Speaker Change: And just in terms of what's embedded into the guide then for Q2, it's exactly what Kevin said its the Medicare part D. That obviously then it would grow as we go into the back half of the year, but think kind of right around that 15% to the extent, we're successful with securing contracting with any of the larger payers. We will keep you all updated it then obviously reflects that.

Subhu Nambi: Your next question comes from the line of Subhu Nambi from Guggenheim. Your line is open. Thank you guys for taking my question.

Speaker Change: Your next question comes from the line of <unk> from Guggenheim. Your line is open.

Speaker Change: Okay. Thank you guys, particularly my question on the commercial payer front could still be a source of upside this year.

Kevin Conroy: On the commercial payer front, could things still be a source of upside this year, or is that too far out, or maybe early next year is the right time frame to think about? And then my second question was, have you settled on the Cancer Guide pricing yet? You previously said folks were willing to pay roughly $500 to $700 out of pocket, so would it be reasonable to think that it will be in that range?

Speaker Change: Is that too far out or maybe early next year is the right timeframe to think about and then my second question list have you settled on the cancer Guy pricing. Yet you previously said folks who are willing to pay roughly 500 to 700 out of pocket. So would it be reasonable to think that it'll be in that range. Thank you.

Kevin Conroy: Thank you. On the first question, in terms of Coverage for ColoGuard Plus. I think the base assumption is that there would be modest to little non-Medicare Part B patients being tested this year. The team is working really hard, and the early indications are pretty positive. The payers like Cologuard Plus. Why do they love Cologuard Plus? It's a 40 percent lower false positive rate. That means fewer unnecessary colonoscopies. So we're engaged in discussions. Those discussions are quite positive. The team is excited, and I think it's going to be a lot easier to go around than it was the first time, in part because, look, nine out of the top ten payers are running Care Gap programs with us.

Speaker Change: And the first question in terms of.

Speaker Change: Coverage for Cologuard plus.

Speaker Change: I think the base assumption is that there would be modest a little non Medicare part b patients being tested this year. The team is working really hard in the early indications are pretty positive.

Speaker Change: Theres like Cologuard, plus why did they love Cologuard, plus it's a 40% lower false positive rate that means fewer unnecessary colonoscopy. So we're engaged in discussions those discussions are quite positive the team.

Speaker Change: As excited and I think it's going to be a lot easier go around than it was the first time in part because look nine out of the top 10 payers are running share gap programs with us we'd become partners with the payers and <unk>.

Kevin Conroy: We've become partners with the payers, and it's so important. Cologuard has become so important to them in terms of how they drive their quality metrics so that they can maximize their Medicare Advantage bonus.

So important cologuard has become so important to them in terms out there.

Speaker Change: In terms of how they drive their quality metrics, so that they can maximize their Medicare advantage bone bonuses.

Kevin Conroy: We have, on the second question, cancer guard pricing, we have not decided.

Speaker Change: We have on the second question cancer Guard pricing, we have not decided yet.

Andrew Brackmann: Your next question comes from the line of Andrew Brackmann from William Blair. Your line is open. Hi guys, good afternoon. Thanks for taking the question. Kevin, maybe one for you on the pipeline. In the proxy, there's mention of Cologuard 2.5.

Speaker Change: Your next question comes from the line of Andrew Brachman from William Blair. Your line is open.

Andrew Brachman: Hi, guys. Good afternoon. Thanks for taking the question Kevin maybe one for you on the pipeline and in the proxy there's mention of Cologuard. Two five can you maybe just talk about that product milestones that you've met and are expected and just how we should think about potentially launching it in the future. Thanks.

Kevin Conroy: Can you maybe just talk about that product, the milestones that you've met and are expected, and just how we should think about potentially launching that in the future? Thanks. ColoGuard 2.5 is our internal name for ColoGuard Plus, which it has a smaller collection kit. And so if you think out in the future, we want to make sure that we meet the needs of all patients. And there are some patient populations that would like to have a very small kit that they could put inside a purse or a backpack or even in their back pocket. And so we have a program going on right now.

Andrew Brachman: Cologuard 2.5 is our internal name for Cologuard, plus which has a smaller collection kit.

Andrew Brachman: So if you think out into the future we want to make sure that we meet the needs of all patients and there are some patient populations that would like to have a very small kit that they could put inside a.

Andrew Brachman: <unk> backpack or.

Even in their back pocket and.

Speaker Change: So we have a program going on right now, we're having conversations with the FDA around that program.

Kevin Conroy: We're having conversations with the FDA around that program that also could be used in certain patient populations like care gap programs, because the kit would be less expensive and much more efficient. It is also an opportunity, this collection device really started as an opportunity to think about ColoGuard outside of the U.S., where cost requirements would be even be more sensitive to cost requirements. And so there are multiple different attributes that we think will be beneficial to expand ColoGuard in the U.S. and beyond.

Speaker Change: That also could be used in certain patient populations like care gap programs, because the kit would be less expensive and much more efficient and it's also an opportunity.

Speaker Change: Collection device really started as an opportunity to think about cologuard outside of the U S where cost.

Speaker Change: Requirements would be even be more sensitive to cost requirements and so there are multiple different.

Speaker Change: Attributes that we think will be beneficial to expand cologuard in the U S and more to come later.

Kevin Conroy: More to come later.

Luke Sergot: Your next question comes from a line of Luke Sergot from Berkley's. Your line is open. Great, thanks for the question.

Speaker Change: Your next question comes from the line of Luke <unk> from Barclays. Your line is open.

Speaker Change: Great. Thanks for the question and just kind of a follow their own risk Ken's question about the margin ramp and you guys have the three big launches, but I wanted to touch on the gross margin here.

Aaron Bloomer: I just kind of want to follow there on Ryskin's question about the margin ramp and, you know, you guys have the three big launches, but I want to touch on the gross margin here. You guys had a good jump off point in the 1Q. You talked about some of the drivers there, but, you know, you have Kologar Prus coming later on, you have some better pricing as well. You know, how should we think about the gross margin progression throughout the rest of the year? You know, is there a risk there that, or is there a dynamic where as those volumes continue to start ramping and, you know, some of the other tests like Oncotect, you know, you could have a little bit of leverage or underutilized leverage.

Speaker Change: You guys had a good jump off point in the <unk> you talked about some of the drivers there but yes.

Speaker Change: You know you have cologuard coming later on you have some better pricing as well how should we think about the gross margin progression throughout the rest of the year is there is there a risk there that or is there a dynamic whereas those volumes continue to start ramping in some of the other tests like architect.

Speaker Change: You can have a little bit of leverage are underutilized leverage.

Aaron Bloomer: It was a great launch point that we had off of Q1. Again, sequential improvement versus Q4 and also year-over-year improvement versus where we were Q1 a year ago. Obviously, launching Cologuard Plus, even if it's just in the Medicare Part B, at an increased value that we'll realize on both the top line and then the flow-through on that from a price perspective, will be accretive to our gross margins. That will more than offset any potential headwinds as it pertains to just sorting and having to run two different lines at the same time. Keep in mind, too, with Cologuard Plus, the actual cost to run the test is lower by about 5 or 6 percent than it is for Cologuard.

Speaker Change: It was a great launch point that we had off of Q1 again sequential improvement versus Q4, and also year over year improvement versus where we were Q1, a year ago, obviously launching cologuard plus even if it's just in the Medicare part B at an increased.

Speaker Change: <unk> that we'll realize on both the top line and then the flow through on that from a price perspective will be accretive to our gross margins.

Speaker Change: That will more than offset any potential headwinds as it pertains to just sorting and having to do run two different lines at the same time keep in mind too with Cologuard plus the actual cost to run the test is lower by about five or 6% than it is for for Cologuard.

Aaron Bloomer: Uncle Detect will be a headwind on our gross margins in the back half of the year to the extent we're very successful with that launch and we'll keep everybody appraised on impacts from that but net net what I would say just looking at the sequential pacing of gross margins throughout the year we would expect to kind of sustain at that potentially even a bit better heading into the back half of the year.

Speaker Change: Arco detect.

Speaker Change: Will be a headwind on our gross margins in the back half of the year to the extent, we're very successful with that launch and we'll keep everybody appraised on impacts from that but net net what I would say just looking at the sequential pacing of gross margins throughout the year.

Speaker Change: We'd expect to kind of sustain at that potentially even a bit better heading into the back half of the year.

Dan Brennan: Your next question comes from a line of Dan Brennan from Cowan. Your line is open. Great, thanks for the questions.

Dan Brennan: Your next question comes from the line of Dan Brennan from Cowen Your line is open.

Great. Thanks. Thanks for the question, maybe I just wanted to go back to blood, Kevin If you don't mind.

Kevin Conroy: Maybe I just wanted to go back to blood, Kevin, if you don't mind. I know back in September, with the strong data you reported, you know, the 31% AA, 88% CRC sensitivity, at the time it seemed propelled by that new biomarker class. So I was hoping maybe you could speak to, A, is that new biomarker class included in the new locked assay? You know, B, are there any new additional biomarkers that came into the assay?

Dan Brennan: I know back in September with a strong data you reported the 31% AA, 88% CRC sensitivity at.

Speaker Change: At the time it seem propelled by that new biomarker class I was hoping maybe you could speak to.

Dan Brennan: Is that new biomarker class included in the new locked assay.

Speaker Change: B are there any new additional biomarkers that came into the assay.

Kevin Conroy: And C, I know back then, you know, you talked about, you know, that 31% AA, you know, potentially, you know, remaining like fit-like, so somewhere in the low to mid-20s, just wondering kind of your confidence in the assay today that you have in LOCT moving forward versus where you were back in September. Thank you. You know, we have been asked this question multiple times, Dan, over since September. And what we have said, including in the press release in September, is we expect degradation in any time you go from a smaller study to a large prospective study, you're going to see degradation.

Speaker Change: And I know back then you talked about that 31% AA potentially.

Speaker Change: Remaining like fit like somewhere in the low to mid Twenty's, just wondering kind of your confidence in the assay today that you have in locked moving forward versus where you were back in September. Thank you.

Speaker Change: We have been asked this question multiple times stand over since September and what we have said, including the press release in September as we expect degradation.

Speaker Change: Anytime you go from a smaller study to a large prospective study youre going to see degradation.

Kevin Conroy: We'll get into the exact composition of the test as it'll be detailed in the publication that follows. The top line data release or as we present this, we believe our multi-OMIC platform is a, it's a differentiated platform because both performance and cost. And so, you know, in terms of going into all the details, we're not going to go into more details than that now.

Speaker Change: We will get into the exact composition of the test.

Speaker Change: It'll be detailed in a publication that follows the topline data release or as we present this.

Speaker Change: We believe our multi platform is a.

Speaker Change: It's a differentiated platform because both performance and cost.

Speaker Change: And so you know in terms of going into all the details we're not going to go into more details than that now.

Kevin Conroy: Thing is, you never know how a clinical trial is going to work. Is it going to perform better than expected or worse than expected? That's what the exciting part of what we do is. And I want to reiterate, we feel good about the performance of the test based on the three additional studies that we have run, which include a prospectively collected samples to lock the algorithm. And so that's where we are. We're going to keep working really hard to deliver the best possible tests and the highest quality clinical trial results.

Speaker Change: Thing is you never know how our clinical trial is going to work is it going to perform better than expected or worse than.

Speaker Change: Expected, that's what the exciting part of what we do is in.

Speaker Change: I want to reiterate we feel good about the performance of the test based on.

Speaker Change: The three additional studies that we have run which included prospectively collected samples.

Speaker Change: To lock the algorithm and so that's where we are we're going to keep working really hard to deliver the best possible tests.

Speaker Change: Highest quality clinical trial results.

Kevin Conroy: in mid-summer.

Speaker Change: In mid summer.

Speaker Change: Okay.

Matt Sykes: Your next question comes from a line of Matt Sykes from Goldman Sachs. Your line is open. Good afternoon, thanks for taking my questions. Maybe just focusing on a different topic on capital allocation, just looking at the change in the financial profile, you know, your pre cash flow break even moving to positive free cash flow going forward. You've got a lot of things to spend money on organically in your own business, which I totally understand. But as your financial profile improves, and that free cash flow generation increases, How do you think about priorities of capital allocation?

Speaker Change: Your next question comes from the line of Matt <unk> from Goldman Sachs. Your line is open.

Speaker Change: Hi, good afternoon, thanks for taking my questions.

Speaker Change: And maybe just focusing on a different topic on capital allocation just looking at the.

The change in the financial profile.

Speaker Change: Free cash flow breakeven moving to positive free cash flow going forward.

Speaker Change: Got a lot of things to spend money on organically in your own business, which I totally understand but as your financial profile improves and that free cash flow generation increases.

Speaker Change: How do you think about priorities of capital allocation are you still going to be gearing towards investing organically in the opportunities you have are there certain areas that tuck in or bolt on acquisition would make sense, maybe on the technology side. Just how are you thinking about that is as the profile evolve.

Kevin Conroy: Are you still going to be gearing towards investing organically in the opportunities you have? Are there certain areas that a tuck-in or bolt-on acquisition would make sense, maybe on the technology side? Just how are you thinking about that as the profile evolves?

Aaron Bloomer: I'll take this first and then kick it over to Aaron. You know, this is an area of intense focus with our team with our board, as we move to being a both a fast growing company on the top line and the bottom line, and generating cash. It's an intense focus of the company, it gives us a ton of optionality moving forward. And we you know, we'll start to lay out our philosophy as we get closer to that point. We're not quite there yet. But that's right around the corner.

Speaker Change: Yes, I'll take this first and then kick it over to Aaron.

Speaker Change: This is an area of intense focus with our team with our board as we move to being a both a fast growing company.

Speaker Change: On the topline and the Bottomline and generating cash it's an intense focus of the company. It gives us a ton of Optionality moving forward and well you know.

Aaron Bloomer: We'll start to lay out our philosophy as we get closer to that point, we're not quite there yet, but that's right around the corner Aaron do you want to add color to that.

Aaron Bloomer: Aaron, do you want to add color to that? I would just say we're proud of the strong balance sheet that we have and all of the hard work that the team's put in over the last several quarters to really be able to even further strengthen that, increase our free cash generation. As Kevin alluded to, it just gives us the optionality moving forward. And we already started to evolve some of our capital structure last quarter with the convertible note debt pay down, as well as taking out the revolving credit facility. And so all of these are meant to help us continue to evolve into the future and give us optionality moving forward.

Aaron Bloomer: I would just say we're proud of the strong balance sheet that we have in all of the hard work that the team has put in.

Aaron Bloomer: Over the last several quarters to really be able to even further strengthen that.

Aaron Bloomer: Increase our free cash generation as Kevin alluded to it it just gives us the optionality moving forward and we already started to evolve some of our capital structure last quarter with the.

Aaron Bloomer: The convertible note debt paydown as well as taking out the revolving credit facility and so all of these are meant to help us continue to evolve into the future and give us optionality moving forward.

Brad Bowers: Your next question comes from the line of Brad Bowers from Mizuho. Your line is open. Hey, thanks for taking the question. Wanted to talk on Coligard Plus, you know, DTC initiative has been pretty strong. of the ROI is pretty good there.

Speaker Change: Your next question comes from the line of Brad Bowers from Mizuho. Your line is open.

Brad Bowers: Hey, Thanks for taking my question here I wanted to talk on Cologuard, plus DTC initiative has been pretty strong.

Brad Bowers: Spending in some of the ROI has been pretty good there I just wanted to hear if there are any initiatives plan for cologuard.

Kevin Conroy: Just wanted to hear if there are any initiatives planned for coligard plus and also, you know, the extent that you're starting to have the conversation about moving up the continuum versus colonoscopy, how that's also playing into some of the coverage. Repairs. I thank... I want to make sure I understand the question correctly. In terms of Coal Guard Posta, I hear you say DTC initiatives. Oh, sorry. Advertisements. Yes. Okay.

Brad Bowers: Also the extent that youre starting to have the conversation about moving up the continuum versus.

Brad Bowers: Versus colonoscopy, how thats also playing into some of the coverage conversations with payers.

Brad Bowers: Okay.

Brad Bowers: I want to make sure I understand the question correctly in terms of Cologuard plus did I hear you say DTC initiatives sorry.

Brad Bowers: Sorry advertisements.

Kevin Conroy: So right now, the advertisements are just focused on continuing to build the Cologuard brand that will start to move more towards Cologuard Plus, as we secure more contracts with payers. And so that will be in the coming quarters that that focus changes from an advertising perspective. However, from a Salesforce perspective, there's an intense focus on educating healthcare providers in the primary care setting of the data around Cologuard Plus. As I mentioned earlier, that The data is generating a lot of excitement among our large and growing base of health care providers. They want to spend time with our sales force and our MSLs on that data.

Brad Bowers: Okay.

Brad Bowers: So right now the advertisements are just focused on continuing to build the cologuard brand that will start to move more towards Cologuard plus.

Brad Bowers: As we secure more contracts with payers and so that will be in the coming quarters that that focus changes from an advertising perspective. However from a salesforce perspective, there is an intense focus on educating health care providers in the primary care setting.

Brad Bowers: The data around Cologuard plus.

Brad Bowers: As I mentioned earlier that.

The data is generating a lot of excitement among our large and growing base of healthcare providers. They want to spend time with our sales force and our msl's on that data, it's remarkable at 95% sensitivity, 94% specificity. There is no other screen.

Kevin Conroy: It's remarkable. 95% sensitivity, 94% specificity. There is no other screening test, and we're really proud of this, no other screening test with that level of sensitivity and that level of specificity. So it's kind of eye-popping. That allows us. to challenge all of our customers. Polo Guard First. if necessary, colonoscopy. That's a game changer. If that's happening right at the time, as we mentioned earlier, that the brand awareness of ColoGuard is actually exceeding colonoscopy.

Brad Bowers: <unk> test and we're really proud of this no other screening tests with that level of sensitivity and that level of specificity. So it's kind of eye popping that allows us to challenge all of our customers.

Brad Bowers: Cologuard first.

Brad Bowers: If necessary colonoscopy.

Brad Bowers: As a game changer, if thats happened happening right at the time as we mentioned earlier that the brand awareness of Cologuard is actually exceeding colonoscopy.

Kevin Conroy: So it's an exciting time at EXACT. And I think if you look out over the next three or four years, here's what the impact is going to be. We're going to get more people screened. We're going to push towards 80% screening. And when you get to 80% screening, you're near. mammograms, you're near pap smears. And that's where you start to bend the curve in terms of incidence and mortality.

Brad Bowers: It's an exciting time at exact and I think if you look out over the next three or four years, here's what the impact is going to be we're going to get more people screened were going to push towards 80% screening and when you get to 80% screening year Nir.

Speaker Change: Mamograms Pap smears, and Thats, where you start to bend the curve in terms of incidence and mortality that's our ultimate goal.

Kevin Conroy: That's our ultimate goal.

Brad Bowers: Okay.

Eve Burstein: Your next question comes from a line of Eve Burstein from Bernstein Research.

Speaker Change: Your next question comes from the line of Eve Burstein from Bernstein Research. Your line is open.

Eve Burstein: Your line is open. Great, thanks so much.

Eve Burstein: Great. Thanks, so much.

Eve Burstein: I'm going to build off Mike's question also. So it's clear that this year, you're you're cutting costs, you're investing for growth. But this quarter, your revenue guidance went up 40 million and EBITDA guidance went up 15 million. So is it fair to say this is roughly what incremental margin looks like going forward? And can we expect that now that the company is More or less reach scale, there's going to be a high 30s incremental margin on additional revenues.

Speaker Change: Im kind of build off my question also so it's clear that this year, you're cutting costs, you're investing for growth.

Eve Burstein: But.

Eve Burstein: This quarter your revenue guidance went up 40 million and EBITDA guidance went up $15 million. So is it fair to say this is roughly what incremental margin looks like going forward and can we expect that now that the company is.

Eve Burstein: More or less rate scale, there's going to be a high thirties incremental margins on additional revenues.

Aaron Bloomer: Thanks for the question, Eve. I would say that this reiterate, this is a year of investment that we would expect to get meaningful leverage on for the years to come. And so when you think about incremental margins being in the high 30s, I would say we should be able to do better than that, just given our world-class gross margin profile over time.

Eve Burstein: Thanks for the question <unk> I would say that this I reiterate this is a year of investment that we would expect to get meaningful leverage on for the years to come and so when you think about incremental margins being in the high Thirty's.

Eve Burstein: I would say, we should be able to do better than that just given our world class gross margin profile over time 2025 is a little bit unique just given the product launches that we are supporting and I'd also just call attention on the 40 versus 15 to that it's still very early in the year. We've got a lot of really exciting initiatives plan.

Aaron Bloomer: 2025 is a little bit unique, just given the product launches that we are supporting. And I'd also just call attention on the 40 versus 15, to that it's still very early in the year. We've got a lot of really exciting initiatives planned to further lean out and gain efficiencies throughout the P&L, and we'll keep you posted on the progress to those later in the year.

Eve Burstein: And to further lean out and gain efficiencies throughout the P&L and we'll keep you posted on the progress to those later in the year.

Bill Bonello: Your next question comes from a line of Bill Bonello from Craig Hallam. Your line is open. Hey, thanks. I just wanted to circle back to something you've mentioned several times on this call and a lot recently, Kevin and just talked about the, you know, this concept of Collegard First. Can you maybe, which seems like kind of a radical change in how you've ever talked about this, you know, in the past, can you maybe talk through what has to for that to be the paradigm. guidelines that would have to be changed? Is it more of a payer driven phenomenon?

Speaker Change: Your next question comes from the line of Bill Bonello from Craig Hallum. Your line is open.

Bill Bonello: Thanks, a lot Ed I just wanted to circle back to some of these mentioned several times on this call. It a lot recently.

Speaker Change: Kevin and just talk to that.

Speaker Change: As Ken said.

Bill Bonello: Cologuard can.

Bill Bonello: Thank you.

Bill Bonello: Yes.

Bill Bonello: Which seems like kind of a radical change in how we use that we're talking about this.

Bill Bonello: In the past.

Bill Bonello: Can you maybe talk through.

Bill Bonello: Okay.

Bill Bonello: For that to be.

Bill Bonello: The paradigm or guidelines that would have to be changed is more of a payer driven phenomena is it really something you can drive literally just through your marketing and interaction with physicians.

Kevin Conroy: Is it really something you can drive literally just through your marketing and interaction with physicians? How do we think about that change actually?

Bill Bonello: How do we think about that change actually taking place.

Kevin Conroy: Bill, I would say we are driving this and you are starting to near the point that there will be more people screened with Cologuard in a given year than with colonoscopy. I'll repeat that we're nearing the point that more people will opt for Cologuard in a year than colonoscopy. As you know, there is a limit in the U.S. to how many screening colonoscopies can be performed. Let's say it's a range somewhere between, call it 5 million and 6 million. It's hard actually to get that accurate data, but between five and six million screening colonoscopies are performed every year.

Bill Bonello: Bill I would say we are driving this.

Bill Bonello: You are starting to near the point that there will be more people screened with cologuard in a given year than with colonoscopy.

Bill Bonello: I'll repeat that we're nearing the point that more people will opt for cologuard in a year than colonoscopy as you know there is a limit in the U S to how many screening colonoscopy is can be performed let's say, it's a range somewhere between.

Bill Bonello: Call, it $5 million and $6 million.

Bill Bonello: It's hard actually to get that accurate data, but between $5 6 million screening colonoscopy are performed every year. There are 50 560 million people not up to date with screening.

Kevin Conroy: There are 55 to 60 million people not up to date with screening. So if you just try to go and get those people screened, it would take you nine or 10 years, take you a long, long time. And so what ColoGuard has been able to do, and again, this is based on a ton of work that we've done in the past. is now moving towards, when I talk to people and say, hey, are you up to date with your colon cancer screening, which I always do. More and more and more and more people, people say, I use Cologuard.

Bill Bonello: So if you just tried to go and get those people screen. It would take you nine or 10 years take a long long time and so our cologuard has been able to do and again. This is based on a ton of work that we've done in the past.

Bill Bonello: Is now moving towards.

Bill Bonello: When I talk to people and say Hey are you up to date with colon cancer screening, which I always do.

Bill Bonello: More and more and more and more people people, saying.

Bill Bonello: I use cologuard and these are people who have no idea.

Kevin Conroy: And these are people who have no idea what it is that I do. So that's, it's a sea change, it's going to happen. The question is, how much can we expedite? with Innovative Marketing, with our commercial organization, our field force, our MSLs, our ExactNexus platform, which is becoming more sophisticated, with our rescreens, which are going to keep growing over time. And then with our Consumer Initiated Ordering Capability and our CARE GAP programs and what's going to come along next. Our employer is going to want to drive this. are other avenues of growth going to occur?

Bill Bonello: What it is that I do so that's a sea change it's going to happen. The question is how much can we expedite it with innovative marketing with our commercial organization. Our field force. Our Msl's are exact nexus platform, which is becoming more sophisticated with our risk.

Bill Bonello: Screens, which are going to keep growing over time.

Bill Bonello: And then.

Speaker Change: With that Doug.

Bill Bonello: Consumer initiated.

Bill Bonello: Ordering capability and our care jet programs and what's going to come along next our employers going to want to drive this.

Bill Bonello: Our other.

Kevin Conroy: And then is international growth going to occur? So we're it's a really exciting time to be at exact. And there are a lot of possibilities for the future. But this one we're confident. ColoGuard will be first.

Bill Bonello: Avenues of growth going to occur and then is international growth going to occur. So it's a really exciting time to be at exact and there are a lot of possibilities for the future, but this one more competent colo.

Bill Bonello: Cologuard will be first colonoscopy will be utilized as appropriate.

Kevin Conroy: Colonoscopy will be utilized as a.

Bill Bonello: Okay.

Jack Meehan: And your final question comes from the line of Jack Meehan from Nefron Research. Your line is open. Hello, thanks for squeezing me in. I wanted to follow up on some of the discussion around coverage contracting for Colgard Plus. Just any additional call you can share on progress, signing up Medicare Advantage plans, and then commercial payers, the discussions there as well. Thank you.

Speaker Change: And your final question comes from the line of Jack Meehan from Nephron Research. Your line is open.

Jack Meehan: Hello, Thanks for squeezing me in.

Jack Meehan: Just wanted to follow up on some of the discussion around coverage contracting for Cologuard plus.

Jack Meehan: Any additional color you can share on progress signing up Medicare advantage plans and then commercial payers the discussions there as well thank you.

Kevin Conroy: Sure, those conversations tend to be one and the same because most plans we talk to have commercial lines, they have Medicare Advantage lines, they have Medicaid lines, and so those conversations all go hand in hand. We were pleased with the conversations that we've had, as I mentioned earlier. Payers are excited about the higher sensitivity for both cancer and pre-cancer with a lower false positive. They're excited about what they're seeing in terms of the progress with our care gap programs with them. And so there's a potential for these conversations to be faster than occurred the first time around.

Jack Meehan: Sure those conversations tend to be one of the same because most plants, we talked to a commercial lines. They have Medicare advantage lines. They have Medicaid lines and so those conversations I'll go hand in hand.

Jack Meehan: We.

Jack Meehan: Word.

Jack Meehan: We used with the conversations that we've had as I mentioned earlier.

Jack Meehan: Payers are excited about the higher sensitivity for both cancer and pre cancer with a lower false positive rate, they're excited about what they're seeing in terms of the progress with our care gap programs with them and so there is a potential for these conversations to be faster than occur.

Kevin Conroy: But why is that happening? Well, it's because three things happened in succession quickly, FDA approval. Medicare, including us with a price and the clinical lab fee schedule, and then importantly, the immediate inclusion into the quality Thank you. So those three things happening in succession, that wasn't accidental. That was an incredible team of people who made those things happen very quickly. And so we'll lever that, those conversations. We'll give you color as the year progresses.

Jack Meehan: For the first time.

Jack Meehan: Why is that happening well, it's because three things happened in succession quickly FDA approval.

Medicare, including us with a price in the clinical lab fee schedule and then importantly.

Jack Meehan: The immediate inclusion into the quality measures. So those three things happening succession that wasn't accidental that was an incredible team of people who made those things happen very quickly and so we'll lever that those conversations will give you color as the year progresses.

Kevin Conroy: But again, the base assumption should be Medicare fee-for-service only this year.

Jack Meehan: Again, the base assumption should be Medicare fee for service only this year.

Kevin Conroy: And we have reached the end of our question and answer session. I will now turn the call back over to Kevin for some final closing remarks. Thank you for joining us on today's call. We look forward to updating you on all of our progress throughout this transformational year at Exact Sciences. Most importantly, thanks to the dedicated team at Exact Sciences for your commitment to our purpose of eradicating cancer. Thank you.

Kevin Conroy: And we have reached the end of our question and answer session I will now turn the call back over to Kevin for some final closing remarks.

Kevin Conroy: Thank you for joining us on today's call. We look forward to updating you on all of our progress throughout this transformational year at exact sciences. Most importantly, thanks to the dedicated team at exact sciences for your commitment to our purpose of eradicating cancer. Thank you.

Kate: That concludes today's conference call. Thank you for your participation. You may now disconnect.

Kevin Conroy: That concludes today's conference call. Thank you for your participation you may now disconnect.

Kate: Please wait, the conference will begin shortly.

Kevin Conroy: Please wait the conference will begin shortly.

Kevin Conroy: [music].