Exact Sciences Corp Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tycho Peterson - Jefferies - Analyst : Okay, thanks. Yes, I'll keep it to one. Let others ask in the pipeline. But Kevin, I want to focus on commercial execution. You highlighted this a number of times. You 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 lists, but maybe what are some of the other changes you made on the commercial front that are really working? How is that driving new to Cologuard orders, rescreens and care gap, and then the 30% year-over-year increase in customer engagement? Can you clarify? Is that Doc calls? Is that Doc calls per rep? Thank you.

Question: Catherine Schulte - Baird - Analyst : Hey guys, thanks for the question. 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 rescreens versus broader commercial execution or any other color you might have? Thanks.

Question: Brandon Couillard - Wells Fargo Securities LL - Analyst : Thanks. Good afternoon. 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 for the year? Thank you.

Question: Colleen Babington - Wolfe Research, LLC - Analyst : Hi, this is Colleen Babington on for Doug. Thanks for taking our question. So I believe in the prepared remarks that rescreens are now about 25% of total Cologuard orders. Is it reasonable to assume rescreens 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 Cologuard Plus for first time testing? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 9:00PM, EXAS.OQ - Q1 2025 Exact Sciences Corp Earnings Call Also, we know patients become more compliant with rescreening with subsequent rescreens. So as patients become eligible for their third or second and third Cologuard test, how should we be thinking about the pacing? From your path of your current hit rate of about 55% to your

Question: Patrick Donnelly - Citi - Analyst : Hey guys, thanks for taking the questions. 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. But yes, maybe just talk about the milestones needed, what we should be keeping an eye on to get there and just confidence in the timeline. And again, obviously the data I think the expectation is maybe some dilution from the case control, but help us on the expectations as well would be great. I appreciate it.

Question: Michael Ryskin - Bank of America Merrill Lynch - Analyst : Great. Thanks for taking the question guys. Apologies if I missed this earlier, but the update to the guide on revenues makes sense and you kind of talked through some of the screening contributions. On EBITDA, I just want to get a little bit more color there on where and how that's flowing through versus reinvestment in some of the commercial initiatives and especially upcoming pipeline. So just want to talk about the EBITDA margin raise to guide. How we should think about that throughout the course of the year? Thanks.

Question: Vijay Kumar - Evercore ISI Group - Analyst : Hi guys. Thanks for taking my question and congrats on a nice sprint here. Kevin, maybe if I can just 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. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 9:00PM, EXAS.OQ - Q1 2025 Exact Sciences Corp Earnings Call You're doing north of 1 million tests here within screening. And yet the market 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. When you put all of these elements together, it's hard for us to see why the market is not giving you the credit. 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? 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? Thank you.

Question: Puneet Souda - Leerink Partners LLC - Analyst : Yes. 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 what traction you're seeing? What's the mix of Cologuard versus current Cologuard versus Cologuard Plus? And just how should we think about that in the 2Q guide and for the full year? Thank you.

Question: Subu Nambi - Guggenheim Securities, LLC - Analyst : Thank you guys for taking my question. 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'll be in that range? Thank you.

Question: Andrew Brackmann - William Blai - Analyst : 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. 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.

Question: Luke Sergott - Barclays Capital, Inc - Analyst : Great. Thanks for the question. I just kind of want to follow there on Ryskin's question about the margin ramp and you guys have the three big launches, but I wanted 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 have Cologuard Plus 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 a risk there that or is there a dynamic whereas those volumes continue start ramping and some of the other tests like Oncodetect, you could have a little bit of leverage or underutilized leverage?

Question: Dan Brennan - TD Securities (USA) LLC - Analyst : Great. Thanks. Thanks for the questions. 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, 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? B, are there any new additional biomarkers that came into the assay? And C, I know back then you talked about the 31% AA potentially remaining like fit like to somewhere in the low to mid-20s. 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. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 9:00PM, EXAS.OQ - Q1 2025 Exact Sciences Corp Earnings Call

Question: Matthew Sykes - Goldman Sachs - Analyst : Good afternoon. Thanks for taking my questions. Maybe just focusing on a different topic on the capital allocation. Just looking at the change in the financial profile, your free cash flow breakeven 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? 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?

Question: Brad Bowers - Mizuho Securities USA LL - Analyst : Hey, thanks for taking the question here. I wanted to talk on Cologuard Plus. DTC initiative has been pretty strong, sort of spending and some of the ROI has been pretty good there. Just wanted to hear if there are any initiatives planned for Cologuard Plus and also 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 conversations with payers? Thank you.

Question: Brad Bowers - Mizuho Securities USA LL - Analyst : Sorry, advertisements.

Question: Eve Bernstein - Bernstein Research. - Analyst : Great. Thanks so much. I'm going to build off Mike's question also. So it's clear that this year you're cutting costs, you're investing for growth. But this quarter, your revenue guidance went up $40 million and EBITDA guidance went up $50 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 reached scale, there's going to be a high 30's incremental margin on additional revenues? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 9:00PM, EXAS.OQ - Q1 2025 Exact Sciences Corp Earnings Call

Question: Bill Bonello - Craig-Hallum Capital Group - Analyst : Hey, thanks a lot guys. I just wanted to circle back to somebody mentioned several times on this call and a lot recently, Kevin, and just talked about the -- this concept of Cologuard first. Can you maybe which seems like kind of a radical change in how you've ever talked about this. In the past, can you maybe talk through what has to happen for that to be the paradigm? Are there are there guidelines that that would have to be changed? Is it more of a payer driven phenomenon? Is it really something you can drive literally just through your marketing and interaction with physicians? I mean, what how do we think about that change actually taking place?

Question: Jack Meehan - Nephron Research LLC - Analyst : Hello. Thanks for squeezing me in. I wanted to follow-up on some of the discussion around coverage contracting for Cologuard Plus. Just any additional color you can share on progress signing up Medicare Advantage plans and then commercial payers, the discussions there as well? Thank you.