Q2 2025 Exact Sciences Corp Earnings Call

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

At this time, I would like to welcome everyone to the exact Sciences second 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 1 on your telephone keypad,

We do ask that today, you'd limit yourself to 1 question.

If you would like to address your question, press star 1 again, thank you.

I would now like to turn the call over to Derek Leo, please. Go ahead.

Thank you for joining us for exact science. The second 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 science is issued a press release earlier this afternoon detailing, our second quarter Financial results,

this news release and today's presentation are available on our website at

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 Gap. Figures are available in our earnings press release and descriptions of the risks, uncertainties associated with exact Sciences are included in our SCC filings.

Both can be accessed through our website.

I'll now turn the call over to Kevin thanks. Derek, during the second quarter, the exact Sciences team delivered, a record 1.3 million test results, to patients accelerated core Revenue, growth to 16% year-over-year and generated an all-time high 138 million in adjusted ebita.

As a result, we are raising guidance at midpoint for Revenue by 55 million and adjusted ebit dub by 25 million.

We also Advanced our mission by expanding our agreement with 2 of our top 10, payers to make coal guard Plus in network.

Entering an exclusive license with foam for blood-based col cancer. Screening tests.

Thanks, Kevin and good afternoon everyone.

The Exact Sciences team delivered another strong quarter in both screening and precision oncology.

Second quarter Revenue, grew 16% on both a reported and core basis, 39 million above the midpoint of our guidance.

Screening Revenue, increased 18% to 628 million with Collard growth. Led by rescreens care Gap programs and improved commercial execution.

Precision oncology Revenue increased 9% to 179 million on a core basis.

Growth was led by continued strength in octet-type DX adoption internationally.

We also recognize 7.5 million in revenue from sub-licensing Twin strands technology.

Adjusted ebita increased 26% to a record 138 million.

Adjusted ebits on margin expanded, 130 basis points, driven by colig guard Plus pricing and productivity gains across our lab supply chain GNA and support functions.

gaap, net income was -1

Million which included 15 million. In 1-time costs related to actions. We took to increase operational efficiency and productivity over time.

Free cash flow was 47 million, bringing year-to-date free cash, flow to 46 million or an increase of 95 million to the same period last year.

As expected, the col guard plus launched temporarily increased accounts receivable and impacted second quarter cash flows.

These claims are now being paid and we expect this will increase cash flow in the second half of the year.

This further strengthens our balance sheet and positions us to complete the anticipated freenome transaction with cash on hand.

We ended the quarter with 858 million in cash and marketable securities.

Turning to guidance.

We are raising total revenue guidance to between $3.13 billion and $3.17 billion for the year, an increase of $55 million at midpoint.

With third quarter revenue between 800 and 815 million.

This assumes screening revenue between 630 and 640 million for the third quarter and between 2.44 and 2.47 billion for the year.

Precision oncology revenue between 170 and 175 million for the third quarter and between 690 and 700 million for the year.

Annual guidance at midpoint implies total revenue growth of 14% including 17% in screening and 6% in Precision oncology.

We are raising full-year adjusted Eva guidance by 25 million to between 455 to 475 million for the full year.

Guidance at midpoint implies more than 44% adjusted ebit to growth or about 300 basis, points of adjusted ebita margin expansion.

For modeling purposes, please note our adjusted ebita guidance does not reflect any potential impact from the free gnome licensing. Agreement announced today

We will provide updated guidance upon the close of the transaction.

We are introducing a multi-year productivity plan to strengthen our operational foundation and unlock meaningful cost, synergies.

With our flywheel fully engaged. This is the next step in driving long-term performance and we reaffirm our 2027. Long-term targets of 15% compounded Revenue growth and more than 20% adjusted. Eva margins which we provided at our 2023 investor day.

We expect to deliver more than 150 million in annual Savings in 2026.

Over 50 million of these savings are included in our 2025 guidance, including actions taken during the first quarter.

Savings will primarily come from GNA, efficiencies through reducing external, spend restructuring support functions and accelerating. The use of AI and Automation in core operations.

We anticipate approximately 105 to 120 million in restructuring and transformation costs in total.

For modeling purposes. We expect 90 to 95 million of these costs to incur in 2025, inclusive of 40 million in actions already taken in the first half of the year,

These efforts represent a pivotal step in strengthening our foundation for long-term success.

Highest impact areas towards advancing our mission, including research and development, lab, and operational capacity, and sales and marketing back to you. Kevin

Thank you Sharon. During the second quarter, we continue to gain momentum across our portfolio of advanced cancer tests.

Serving more patience and expanding the number of Health Care Providers Health Systems and payers, who rely on exact sciences and the exact Nexus platform.

We delivered our 20 million Cola guard results doubling from 10 million in just 3 years.

We are encouraged by indicators of sustainable growth coming from our commercial organization.

During the second quarter sales, representative productivity, and calls reached, all-time highs driven by better coverage, segmentation and targeting enhanced by AI.

A record, 200,000 providers ordered Cola guard with growth, all segments, at record depths.

Orders per provider, grew strongly with robust growth. Among new customers.

Accelerated growth and rescreen patients driven by our enhanced patient navigation journeys.

Kard brand awareness hit all-time highs with top of Mind, awareness matching or exceeding colonoscopy

2.5 billion media Impressions driven by increased digital investment.

And customer initiated ordering grew triple digits as our team continues to enhance customer experience and better engage patients through our digital channels.

The colon cancer screening landscape is Shifting towards a cola guard first colonoscopy when needed approach.

The AA work group recently published a paper advocating that the most effective screening approach is to lead with a non-invasive stool test. First

With colonoscopy backlogs, extending for months, screening rates below Target and incidents Rising, especially with young adults. Colgard is the most effective tool to improve screening rates.

A decade in col guard's, momentum speaks for itself and colgard plus possibly. The most sensitive and specific non-invasive cancer, screening tests ever developed

Accelerates our path to screening the next 20 million patients.

A special thanks to the exec team for increasing access to Cola guard plus by securing favorable contracts with 2 of the top 10, payers Humana and centene which together represent about 40 million members.

We also established positive coverage decisions with 8 of the top 10 payers.

Turning to blood-based Cola cancer. Screening we tested samples from the pivotal blue sea study. Using a version of our blood-based colon cancer, screening test, this test included, 3, methylation markers and a protein marker.

It did not include the additional marker class presented at the ESMO 2024 Congress.

Initial testing showed sensitivities of 73% for colon cancer and 14% for advanced precancerous lesions at 90% specificity.

Although we met the primary endpoints of the pivotal study, we are disappointed with these results.

Science is not always a straight path and we are proud of our R&D teams work.

We gained many insights that we believe will lead to Future portfolio. Benefits We are continuing internal testing and evaluation

Because we have not yet made an FDA submission, we will not presently be providing additional color on our program.

As we announced earlier today, we acquired exclusive rights to the current and future versions of free. Gnomes blood-based colon cancer, screening tests.

And underlying technology subject to customary regulatory approvals.

In June, complete results for the first version tests were published in Jama.

The freenome team has submitted the last module of the pre-market application to the FDA.

3 home is also advancing a Next Generation version of the test that is designed to improve Advanced, precancerous solution, sensitivity.

Studies to inform their recommendations.

By evaluating the balance of benefit to burden to determine the most efficient screening strategies.

Results from our recent modeling analyses. Clearly shows that only colgard plus and colonoscopy maximize the benefits to harm ratio over the guideline recommended age range.

This aligns with the nccn recommendation, which positions blood tests as an option, when patients are unwilling to complete Frontline. Guideline recommended tests, such as coal guard or colonoscopy,

Together. These screening tools can expand access drive better outcomes across. Broad populations.

With color guard Plus.

The most accurate guideline included stool test and now a blood-based screening test.

We've created a portfolio designed to continue leading cancer screening.

These tests will be powered by the strong foundation and scale we built first, we have the largest and most effective, cancer, Diagnostics, commercial organization in Primary Care, a segment, where education and engagement are critical.

Second, the scale and infrastructure of our data. We have a large customer base of providers and the tools to identify those who have refused guideline-recommended tests.

Third, our deep relationships.

We can reach these patients through deep relationships with payers, electronic connections, to nearly 400 Health Systems, and over 250,000, ordering Healthcare Providers each year.

This reach is connected empowered by our exact Nexus technology, which uses Advanced analytics and smart tools to make the process seamless from order to result.

This Foundation enables us to scale, Drive awareness and build the most trusted brands in cancer screening.

Next month, we are launching cancer guard. Our blood-based multi-cancer, early detection test,

Cancer guard is designed to address the approximately 70% of cancers that currently lack a recommended screening solution.

This represents a significant unmet clinical need translating to a largely untapped 25 billion dollar addressable Market.

We are uniquely positioned to bring cancer guard to patients by leveraging, our commercial and operational scale.

We have over 1,000 reps calling on primary care physicians, oncologists and Health Systems.

Our patient, navigation, engine delivers millions of multimodal touch points to millions of patients annually.

We have world-class lab operations, Quality Systems and operational capabilities. We also have the ability to reach patients and providers with powerful digital tools through our exact Nexus technology.

We are confident in our ability to lead the maid Market.

Backed by our clinical evidence, we are energized by the opportunity over time to help reduce cancer-related mortality.

During the second quarter, our Precision oncology team unlocked access for cancer, patients by securing Medicare reimbursement, for enco detect.

Combining data from the beta. Correct study shared at ASCO with prior research. Helped secure broad coverage for stages 2 through 4 colorectal cancer. Patients. This supports our belief that enco detect will play a critical role in guiding treatment after a patient's cancer diagnosis.

We're proud of our team for focusing on what matters most and we're more energized than ever on the road ahead together. We're expanding our portfolio increasing access and strengthening our platform for long-term impact.

We're positioned, not just to lead, but to transform how cancer is detected and treated.

That's how we will achieve our purpose of eradicating cancer and the suffering it causes. We're, now happy to answer your question.

At this time, I would like to remind everyone in order to ask a question. Press star, then the number 1 on your telephone keypad, we do ask that you limit yourself to 1 question,

On your first question comes from line of Andrew breckman with William, Blair, your line is open.

And how the how the product can further round out the portfolio that you have, thanks.

Yeah. Uh, thanks Andrew. Uh, first of all in? CRC screening? We're a clear leader in this, uh, the clear leader in the non-invasive. Screening Market with colog guard, plus, we have the most accurate CRC, screening test.

Yet, there is a role for blood to play this agreement. Adds a blood-based option to our portfolio of tests, Cola guard, Cola guard, plus now a blood CRC test and a multi-cancer screening test cancer guard. So we have a portfolio, it's supported by our platform, our commercial infrastructure, which is second to, none healthcare provider relationships. As, as you just heard over 200,000 ordering uh healthcare providers in the quarter and uh just tremendous growth. Here's what we're we are excited about about the freenome technology.

They are B1 test.

Has strong data and it accelerates our time to Market.

Version 2 shows potential promise we've seen uh, data there that shows uh, potentially improved APL detection. Now, this is from a holdout portion of their, um, preamp study and that gives us. Um, you know, uh, we have the option,

Ality to take that technology should in, in the pivotal study and the readout that we will be able to deploy that test if it does indeed have improved performance. So the structure gives us maximum flexibility.

Um, as we continue to lead in this market,

So, um, that's what we like. It's, uh, great technology. We have optionality, we have flexibility, and all of that leads to impact.

In a field that we're currently leading in.

Your next question comes from line of Brandon kard with Wells. Fargo, your line is open.

Hey thanks, good afternoon. Um, Aaron can you walk us through the beat, uh, in the quarter and kind of what's contributing to the strong first app growth of the Core Business. It'd be helpful if you could unpack and all the factors behind the momentum and maybe uh, talk about sustainability, thanks.

Thanks, Brandon. It's Kevin. I'll take the first part and then pass it over to Aaron. Uh, so there have just been multiple Tailwind here and it really starts with the launch of col guard plus and the incredible work that our commercial team has done. The, the commercial organization is doing a great job. Uh, colgard plus is getting them, uh, greater access. Our customer base is energized by a test, that is 95% sensitivity and 94% specificity. We're

We've seen strength in rescreens care Gap, programs. Our brand awareness has never been higher

Aaron, do you want to go dive into the details? A little more. Thanks, Kevin. Thanks. Brandon. Yeah. So we beat by, you know, forty million dollars on on the top line with really strength across all parts of the business, specifically within colag guard and I would highlight comments that we've made in the past. We just continue to see momentum from the commercial improvements that we've made. And that is, what is contributing to the majority of the beat, but we are seeing strength from everything. Whether it's from the traditional, uh, where our reps are are calling. In on point of care, our new care Gap programs which continues to accelerate our new customer initiated ordering platform as well as then from our rescreens and the recent launch of colgard Plus,

I think I'd add 1 other thing to that with, you know, other aspiring entrance into this Market out there. Um, calling on Physicians, what we have seen is an overall lift to Cola guard. So we think more attention in this market is leading to more awareness and reminding Physicians especially in the busy Primary Care segment to think about

Making sure their patient is up to date with colon cancer screening. And what comes to mind first is Color Guard.

On the line of Katherine Schultz with beard. Please go ahead.

Cam.

Well, uh, thanks Katherine science. Uh, is obviously not linear. And, um, we haven't submitted yet to the FDA testing continues and work on on that program continues because we haven't submitted to the FDA. We're not in a position to comment publicly on all of the inner workings. Uh, so I would say why we believe, well, when in blood,

Uh, with this new program, first of all, it Foams, uh, tests delivered 81% sensitivity for for cancer 14% for precancer at a 90% specificity.

And I want to make this clear. This test is now ours. We exclusively licensed it. We're very, uh, excited about bringing it to a niche in the market. That is an important 1. They they have submitted the final module to the FDA. Um, we're not going to guess how long that will take its. I think you can take a look at what is typical out there, but we're not going to guesstimate at this time. Um, and remember we have an A tremendously large sales force, that will be excited to have a, a blood test in their hand and and the niche of patient that will benefit from a blood-based cone cancer. Screening tests are those patients, who refuse a front front line?

Guideline recommended tests.

The nccn guidelines were clear that there is a role for blood-based testing and it's for those patients who are active refusers of screening. So could this ultimately um represent um uh meaningful niche in the market. Yes, we believe it can. And we believe we have the relationships with the health care providers with patients and their trust and the

Of the quality that we've delivered over the last 11 years, with colgard.

Your next question comes from the line of Doug Shankle with wolf research. Your line is open.

Hey, Kevin. Um, let me well first off thank you for taking my questions. Um

So let me, let me start with the Positive via the license. You seem, well, positioned to have access to an FDA approved product.

You probably can launch it within the next 18 months.

And you have the commercial infrastructure.

To really get after this Market with existing relationships. So those are clear positives now now let's to be balanced to talk about the negatives.

So as as I mentioned and I use the word access to a product because you didn't develop it.

You have definitely been great in stool.

But CRC blood was acquired via a license.

Archetype was acquired Beyond stool, the ROI on R&D, hasn't been great. And frankly m&a hasn't been great Drive. Looks like a mistake.

And there's other examples.

I think it's fair to say there's questions about billions of dollars of m&a spends and 400 million dollars in annual R&D from an Roi standpoint.

so, my first question is this

What changes? Now in terms of resource allocation operational spend and how do you change an improved, strategic prioritization? What are the lessons here? And how do you want to investors to think of exact through this lens second?

Specific to CRC, presumably due to the cogs profile of freenome your stance on testing interval. Flexibility has changed. I want to confirm. That's right. Essentially is the position now that you will be the number 2 entrance for the CRC blood, screening market and you view this as a multiplayer Market test area going after the screening resistance, population of about 45 million people and that this will have a 3 year interval.

Third, my last question.

Why should an investor now think that blood is a threat to Cologuard, given the quick pivot on this data to quickly make a deal with FAX? Thank you.

I think there were multiple questions and multiple, uh, uh, uh, there was a long dialogue in there, and I would start, uh, Doug by saying I disagree with,

Uh your conclusion that the genomic Health acquisition was not as successful 1. Um, I also disagree that the Thrive acquisition uh is not successful. We will be launching uh, cancer guard next month.

To the, uh, was a part of the Thrive acquisition. So

Um we just have a fundamental disagreement there. I don't think that you um probably fully understand the potential of that multi-cancer screening market. And um I would also say you probably dug don't understand the power of our commercial organization based upon the question you asked which is okay.

But the commercial organization. Um, just delivered, an unbelievable, uh, quarter 2 quarters in a row and what we have seen year-over-year in the 11 years. Since we've launched Colo guard, and let's take a step back and think about this impact.

we've seen over a 100,000 people probably about 120,000 people diagnosed earlier with Colo guard than they would have been otherwise

With um, with cancer.

The impact is huge over, 600,000 people with precancerous polyps leading to potential prevention.

And finally, the mortality rate since colgard was launched,

Has declined. 11%

So, if you want to talk about, uh, productivity and R&D, we're happy to have that debate.

Our R&D investment, uh, has been over 50%. Uh, if if you look cumulatively in the CRC screening place, where we have clear leadership,

And so that leadership will continue in in terms of blood-based screening, I think that you probably have that market. Uh, not fully understood. If you take a look at the size of that market, it is small blood-based. Screening is not recommended by guidelines at this point in time. The pivotal guideline group uspstf may not weigh in for a number of years.

And the data of, uh, any of these blood tests just does not hold a candle to colonoscopy. It doesn't hold a candle to Colo guard. And today, it doesn't hold a candle to a a fit test in terms of precancer detection.

So, we will see how that market develops.

We um, are the company that has the ability to reach hundreds of thousands of Physicians who who have a need to deploy cancer, screening Technologies, to their patients, who need it.

And, um, that is where our new blood tests based on the, uh, phenome, uh, PMA submission.

Will be deployed. We welcome competition in that space. We in our team is ready to deploy test to those patients who truly refused both a colonoscopy and Colo guide. There, there is a very real Market to be able to reach those patients but until blood testing is fully uh deployed. Um and is in guidelines which is a big question. Uh we think that um your uh your view on this is is probably uh different than our view.

Your next question.

Tito Peterson with Jeffrey's. Please go ahead.

Hey, thanks. Um, a few follow-ups on, on the deal here, you know, Kevin given going external, was not necessarily, you know, part of the plan at least publicly discussed anything. You can provide on timelines, you know, Doug alluded to the fact that this came together quickly. Um, how should we think about the timing of the next gen test? And how much better do you think it'll be at De? What can you say on the cost structure? You know, cost per test? Given that it's ngs-based and then I guess, lastly, you know, I I appreciate this deal structure. Gives you a lot of flexibility. Um, but you are committing to a potential 10% royalty. Uh, why was this the right structure as opposed to m

A with real earnouts, you know, in an aggressive integration program, where you get all the IP cash and the balance sheet, and not have to pay a royalty. Thanks.

alright, so, um, you know,

The deal structure that we have here with the royalty we think is 1 that makes sense over the long call. And um we'll see how all of this develops uh as the years go on.

Um, but what it does is give us access for a modest investment. Thankfully, we have the balance sheet and the strong financial profile to be able to deliver in terms of timelines.

You know, don't know all of the Dynamics that will, uh, occur here. Could it be shorter? Yes. Could it be longer? Yes, we don't know at this juncture in terms of AA detection, the only thing that we well, I guess I'll say 2 things number 1 is freenome intends to disclose their AA data at the appropriate scientific Congress and I think that will be in the nearer term uh ultimately that will be up to them.

Secondly, um,

We have built into this uh agreement that if AA detection does not achieve greater uh than 19%. We have the ability to exit the agreement and then finally I would say our internal program uh will continue and um,

So it maybe Aaron. You would want to comment on the cost structure.

Hey Taiko. So from a cost of goods, sold perspective. Yes it's sequencing. Um, we haven't yet determined where we're going to price this product but again, Kevin talked about all of the optionality and flexibility that we get with this deal. I would just reiterate, you know, we will drive costs down over time on this specific test particularly as it scales and gets in the hand of our commercial organization, we're able to drive volume. And then from a, a broader macro perspective. I think this quarter is good evidence. Our guide is good evidence that we have so many different levers to continue to not only experience.

Expand gross margins but importantly total profitability which is just going to further strengthen that already strong financial profile. Kevin alluded to

Your next question comes from the line of Jack. Mihan nephron research. Please go ahead.

Thank you, good afternoon.

Wanted to ask about uh CRC competition in a slightly different way. Now with Garn on the market, can you just talk about what you're seeing in terms of The Real World Adoption of blood in terms of the interplay versus, you know, just you know existing methods like colig guard.

And as you look at the free gnome data and the way that the test is developed um do you think it can be differentiated, or do you see this kind of standing kind of like in line with the way garnished positioning Shield? Thank you.

Sure. Um, you know, it's been interesting, we're not seeing that the current promotional activity is diminishing colgard orders.

In fact, the opposite seems to be occurring. The more, um, the aspiring entrance, talks to Health Care Providers, especially those that are our customers, the more we see, uh, growth in Color Guard utilization. So, we think what's happening is sales, reps are going into offices and reminding HC.

Piece about the importance of colon cancer, screening and their reflexing to Color Guard. We saw this same Dynamic when we launched Colo guard that Co colonoscopy utilization increased

Um, we so we have tremendous Goodwill with hcp customers.

And these Primary Care customers. See, a role for CRC blood testing. And many of them have told us that they intend to wait. Until we bring a test to Market where you can imagine. They've worked with us for over a decade. They know that we stand for Quality. They have easy electronic, uh, ordering electronic resulting. Uh, a customer care hotline that they can call with any questions and they they know their patients will be treated well,

so, we think that all of this leads to a strong,

Option for us to really take care of this Niche, patient.

Jack, maybe 1 other thing to add on that, too? That I think is an important point, you know, aspiring entrance. Have now been out in the market for a bit and while they continue to drive,

Some limited adoption.

We just put up an, you know, an 18% growth quarter in screening or guiding to a, you know, a 17% growth in the back half of the year and for the full year. And so, you know, to the to Kevin's point, we have multiple drivers of Tailwind for this year and years to come in our Core kard Business as well.

Your next question comes from the line of Vijay Kumar with evercore isi, please go ahead.

Wardrobe, the sequential step down and, uh, on the guidance, uh, uh, to your earlier Point Aaron. Um, you know, each 18% growth here in uh, yeah, second quarter, uh, monitoring the 17 in the back half, what drives the moderation, uh, did your assumptions and pricing change at all, uh, versus prior, thank you.

DJ first. So just on the on the second quarter, gross margin. It was down, slightly sequentially and year-over-year that just had to do with the timing of, some of our care Gap orders. We had our largest ever care Gap. Order shipped out at the end of the second quarter which we would expect to see now results flowing in uh here in Q3. If you back that out gross, margins would have been up to sequentially and year-over-year. And so I think you know, this Dynamic that's taking place with our care Gap business. It's going to create some quarter to quarter fluctuations, in our gross margin. But as we commented on in the past, we still expect gross margin expansion. Um, for the full year and obviously meaningful adjusted. Even to expansion is these programs are highly highly accretive to total profitability.

Um, and then, as we're looking at the, the back, half of the Year guide, what I would say is we continue to see the positive signals, uh, on the new tool guard orders. The commercial strength that we talked about our care Gap orders, and ultimately, we, we feel really good about the business and the progress that we've made, but if you look at, you know, kind of sequentially Q2 to Q3, as well as from a year-over-year perspective, it's kind of in line, uh, with with what we've done in the past and so no change to pricing assumptions. Um, midpoint of our guide we would say, is the most likely outcome for the back half of the year.

Your next question comes from the line of Dan Brennan with Kellen. Please go ahead.

Great. Thank you. I'm taking the questions here. Um, maybe just a multi-party. Um I think in the past my impression was the exact team may have harbored some skepticism towards the freenome data or maybe the quality in the past. And that's certainly obviously it's changed now but I guess the question would be

Kind of, what can you say about your team's confidence in? Like, the clinical study rigor and performance data such that you believe it'll, you know, allow for FDA approval. Um, and then the second part was related to the headline data itself that was in the press release. You know, the 81 and the 14 and the 90, I know in the publication it was a bit lower than that. And I think it's age adjusted. So is that the appropriate way to look at it on age adjusted? And then final point would would be giving your so

Dominant in stool. Although the blood Market's nent. We do Envision any FTC issues with the steel. Thank you.

On the last Point. Um, we believe that this is a deal that should make it through HSR review. Um, obviously there's a process there that will play out in terms of the performance of the tests. Yes, on an age adjusted basis, which is the, uh, the approach that the FDA and freenome have worked on. And again, I'm not making any comments. Uh, it is their submission and we will benefit from it. But 8114, uh, 90, uh, in terms of the diligence that we did, we're very impressed with the actual study design, the data, um, the rigor that, um, the, uh, the study that that they designed and, uh, the performance of the test, which has been now validated

Uh, I just 1 other comment, you know, their new leadership. Uh Aaron Elliott is a um is a real strong addition to the team? I would say uh adding uh errand to that team really made it uh a quite a a positive for us to uh enter into this agreement. And um, so you know, all of our interactions with them. Have been uh, quite positive and we've been impressed.

Your next question comes from the line of Dan Arias with stifel please go ahead.

Good afternoon, guys, thanks for the questions. Kevin. I I understand that science is not linear but the team was definitely bullish multiple times in a way that people just really couldn't understand last year. So,

Can you offer something on what your R&D? Folks, have concluded, or what the thesis was that didn't play out. I mean, it sounds like we have a

Sort of a long road ahead of us when it comes to just asking what performance needs to be an mrd or an maid in order to be relevant. So,

It just seems like asking what happened versus what you thought would happen is, is the fair question.

Plus which is a 3 marker methylation marker test plus protein. It we delivered and the R&D team. Same R&D team delivered.

Unbelievable performance with Colour Guard Plus, which was a significant investment that we think will have a massive ROI.

Think starting with patient Roi, just with the 40% Improvement in colgard, plus, uh, specificity that could lead over the next 30 Years to about a billion dollars of saving in terms of reduced colonoscopies. So,

The R&D team has done a tremendous job. Our blood test is a that we ran as part of this study was uh, 3 methyl markers on a, a kind of a advanced. What we call talk is, uh, pcr-based, uh, platform that uh, we missed, uh, missed the mark. Now, remember, you are dealing with the law, uh, of small numbers in terms of the actual performance difference. When you look statistically, there's not a significant difference here between, um, the the various tests, uh, that are in Market. Uh, but we didn't hit the end point. So I do understand uh, the frustration and we own that and all I can say is our, I would never bet against our R&D team.

And with that program, we will continue; it's just not the right time for us to dig into those details. Uh, because number one, we just licensed a great test, and, uh, we are still submitting to the FDA. So, uh, there's more work to be done there.

Next question comes from the line of Punnett Essay with Lee ring Partners. Please go ahead.

Yeah. Hi Kevin. Um, yeah, I would just want to, um, go back a bit. Um, you you've always appreciated and invested into technology development. Obviously blood is a, you know, hard problem to crack. Uh, but given where you stand today, do you think, uh, this assay that you're acquiring, or your own efforts, can match? What the competition can continue to improve on. And then my second question is, um, uh, what do you think is the was going to be the market? Share for blood-based testing in this multimodal market.

Let me start with the last question first. You know, I think over time you may see about 5% to 10% of the market being blood.

uh,

uspstf. The guideline group.

Will play a very critical role with the current modeling.

The and the current performance of blood test.

You're just not at the point that

What are the current versions of blood tests that probably pass muster and get rated A or B by USPSTF, and why?

well, these blood tests are

Um just slightly better than blind to precancerous polyps and precancerous. Polyps Drive about 2/3 of the positive impact from screening in this field. So that's that's critically uh important.

Um and then you couple that with a 10% false positive rate and and it leads to low impact at 3 year intervals and a relatively, you know, kind of a medium impact in terms of unnecessary colonoscopies. If you run it as a 1 year interval, you get better impact but at a steep cost. So it's somewhere between the efficient Frontier where color guard and colonoscopy are and no screening at all. It's somewhere in the middle. Does that get an A, or B rated test? It's hard to see that with the current performance.

Upon the guidelines.

Um,

So you know where we do, we think free gnomes tests can match others into the future. That depends the version 2 data that we've seen. Again, we built into the agreement that if their version 2 doesn't deliver more than 19%, we can get out of the agreement and pivot to our own program.

So, um, you know, it's

Nobody has delivered version 2. We have a program. Free gnome has a program others have programs. We'll see where that plays out.

Your next question comes from the line of Michael Riskin with Bank of America. Please go ahead.

Thanks, um, taking a question Kevin. I want to follow up on something that was just kind of asked, you know, realize there's a version of 1 and a version 2. So it's going to be different considerations for both. But, you know, your earlier, comment on you seen having blood, taking 5 to 10% of the market and how this compares to Shield just as we layer this into our model, over the next couple years. How should we think about, you know, what this could do to the exact model? Should we use Shield as a benchmark in terms of volume and and revenue ramp? Um, and just sort of, you know, there's the pros and cons of the lower sensitivity versus having your commercial engine and your Market presence. Just

What's the right way to think about how? How you think volumes. Um, and and revenue? Cirque could grow over time. Thanks.

Yeah, I think the right way. Thanks for the question. I think the right way to look at this is um, actually different than probably uh, analysts some analysts are thinking about this. Right now, start with the cola guard brand.

The brand awareness now is greater than colonoscopy and 5 of the last 6 months.

The power of that brand means that not only are patients asking for Cola guard.

But Physicians are recommending, Cola guard. First, even ahead of colonoscopy

and then when you add more, um, reps into the field, talking about colon cancer, screening that feeds more Cola guard and now Cola guard plus growth

and that's what we're actually seeing in the market, is that

there is a, um,

and we believe, we'll see this, if you look out over the next 5 years, even more of those 55 million unscreened, people are going to get screened.

now, when you think about that, if this year, approximately somewhere in the range plus or minus a 5 million, people gets get screened up with colag guard and and roughly 6 4 0,

As you look over time, there's a Tipping Point. Where Cola guard? Not too far from the future. Is

Used more often than screening colonoscopy. And so we think that continues and more reps in this field. Probably ends up arising tide lifts all boats

Then Michael specifically from a modeling perspective on the the blood as well. Keep in mind. Like, so, as Kevin said, we're not going to opine as to exactly when FDA approval would come. But once we have that, it's, it's going to be additive to our overall revenue, and to our overall growth rates. We view this again, as additive to our portfolio, additive to our long-term Revenue growth and additive to the strong financial profile that we've established.

Your next question.

On the line of Patrick Donnelly with City, please go ahead.

Hey guys, thanks for the question. Um, Kevin maybe just on the internal program. I know you talked about the additional marker not being included. Can you just talk about the go forward there? What the Investments are going to look like on that piece? Now that you've you have this free, no option as well and then just quickly on foam. Yeah, I know to the earlier question, you know, in terms of, it's been around that in the past, I know the timelines drag out, you know, submission to the FDA dragged out, but you just talked about you know what call that and just the confidence and do the data. There would be helpful. Thank you guys.

Patrick you cut out on the second part of your question, was it? Uh, confidence around timelines.

Yeah, just the timeline again. I know the FDA submission timeline dragged out a little bit, with 3 gnomes. I just wanted to talk through what caused that and what got you comfortable there. Thank you.

Work they did is um, very high. And so we believe that there are um no major issues in terms of their submission. Uh and our confidence level aside, which is why we entered into this agreement. Um, in terms of our current program strategy going forward, again, you know, we're not going to get into those details. The um, we have exclusively licensed uh a a well-performing test with an option to potentially and even better performing tests,

And we look forward to deploying that we're, we will really put our back into that program and uh, we're excited about it. We think that we're in the natural position to have it. Uh, the biggest impact in this field.

next question comes from the

Bursting with Bernstein, please go ahead.

Great, thank you so much for taking the question. Um, 1 thing that you seem to be giving up in this licensing, deal with Renault is potentially some of the moat around your multi-cancer test. So for example, in in Freedom's, press release, they noted that they will have access to all multimodal data from colorectal cancer. Screening patients to power future Ai and ml models across multiple cancer indications. And they were even quoted as saying uh, the partnership gives them real world.

Data. They need to improve their existing tests and accelerate development of the multi-cancer tests in their pipeline. Um, so from these points, I take away the fact that freedom wants to lean really hard into their multi-cancer, screening test, and you're giving them a platform to improve their product, uh, which will ultimately compete with your test. So what made you agree to this term and the agreement? Um, and how do you see this Choice impacting sales of your own test?

Sure, we'll be launching our multi-cancer, screening tests through a field force of about a thousand people. Next month, we couldn't be more excited about it. It's uh, a tremendous opportunity to have a, a huge impact on human health over time. There's no company that has the, the reach, the customer, reach the sales reach, um, the global reach. Uh, so we get to lever off of our incredible reach through the genomic Health. Uh, uh, in archetype DX reach we intend to launch, uh, also, uh, globally in select, uh, uh, markets.

So, um, in terms of the deal with feno, look they have their own uh program and we'll compete uh quite uh vigorously. There, we have the commercial organization in terms of data and access to data, to the extent that they do uh get data. Whether that really helps them develop the test room.

Remember you need to have?

The, um, patient characterization, not just the raw data, the raw data itself without understanding whether the, the patient has cancer or doesn't have cancer. Um, does not in our experience, provide you with tremendous ability to do product development. You, you really need to have characterized samples to be able to do that.

So um that's all I'll comment on there we are we will be licensing their technology and competing with them. We think that's a positive thing for patients over time because more investments in this field uh usually ends up being good for patients.

Your next question comes from the line of subu nambi with Guggenheim please. Go ahead.

Hi. Kevin. Um, thank you for taking my question, regarding the additional biomarker. I'm unclear why they won't included in the readout. Can you, clarify and does the fact that you went after phenome does that, take that you don't have the confidence that the biomarker will take you to an acceptable sensitive, sensitivity level, and does that say something to your performance for the inset that given its a PCR based approach. Many of us, including me have wondered if PCR could ever perform at the level of NGS. Does this answer that question for the class of essays?

You know, for the second part of your question, I would go back and point to colgard plus again. Um, because we approach

The scientific part of our platform begins by first identifying the most discriminatory markers and working backwards. That's why we were able to develop a test with 95% sensitivity and 94% specificity.

platform that allows us to, uh, reach millions of people, uh, in uh, a way that allows us to make significant Investments

Um, and our maid data, which is, uh, a combination of our talk is platform and the Thrive technology, also delivers a high level of sensitivity. So, um, again, I'm not going to get into the areas where we believe that we learned and this is an important thing. We learned a lot with this 3 marker, approach that um, we this 3 methyl marker, plus 1, protein approach. And we think that those learnings will fuel improvements to our platform now and in the future, um it stinks, no doubt. However, we think that it will make us better in the future and I um have enormous confidence in our R&D team again, I will point right to col guard plus which uh, has delivered.

Over a couple hundred thousand results I'm looking around at the team right now, uh, and that will grow quickly now with Humana and centene, uh, adopting. So, um, I understand why? Uh, some may be um, disappointed. Uh, so are we you've got to look at the same technology platform that has delivered incredible results in the past.

Your next question comes from the line of Luke Sergot with Berkeley's. Please go ahead.

Great, thanks. Um, I just wanted to follow up on that. Um, is that the couple hundred thousand CG plus that you guys have offered? Is that, I mean, what you guys end up doing in the quarters, as you're thinking about the ramp here from what was embedded in the guide for the back half? And, you know, how did the progress there from a conversion standpoint?

Thanks Luke. Uh, progress is going really well.

From a launch perspective. You know, we started out in Q2 at launch with uh just the Medicare fee for service and as we've said that's about 10 to 15% of our patient. Volume at any given month and quarter and that is what we saw in Q2. The other thing from a launch perspective that we're seeing is it's driving increased access for our reps with Physicians, uh, which is very important for broader col guard growth,

On the payer side conversations have been really productive, you know, we announced uh, obviously now we have 2 of the top 10 payers, which will start to come online with colag guard plus here into the back half of the year.

Um, and we're obviously really excited about that. We, we are not coming off, you know, our our commitment to that this will take, you know, 12 to 18 months. Uh, we will be sunsetting at some point in time because we feel, we have a responsibility to bring the best test to patients. We haven't set a specific date just yet, but we will be sunsetting. And obviously, the teams making just tremendous progress. I'd close by just thanking our lab, um, and our entire operational team. That's just done a phenomenal job of and ensuring that we can bring our Cola guard and cola guard plus test results to patients in a seamless way.

Well, this concludes our question-and-answer session. I will now turn the call back over to Kevin Conroy for closing remarks.

Thank you all for joining us today. We look forward to sharing our progress throughout this transformational time at exact Sciences as we became a 1-stop solution or comprehensive genomic. Testing most importantly, thanks to the dedicated team at exact Sciences for their commitment to our purpose of eradicating cancer. Thank you.

Ladies and gentlemen, that concludes today's call.

Thank you all for joining. You may now disconnect.

please wait the conference will begin shortly.