Exact Sciences Corporation Q1 FY2025 earnings call

• Delivered 1.2 million total results to patients. • Core revenue grew 11% while non-GAAP operating expenses grew 4%, improving adjusted EBITDA by over 60%. • Launched Cologuard Plus with Medicare coverage and quality measure inclusion. • Recognized as a Gallup Exceptional Workplace for the second year. • Commercial organization expanded, field team engaging providers at record rates; customer initiated ordering platform grew triple digits. • Rescreen program represents over 25% of revenue, providing recurring income. • Care gap program grew triple digits last year and expected to grow double digits this year. • Launched Oncodetect, working on Medicare reimbursement for it; Blue Sea study top line results expected mid-summer. • Cancerguard launch planned for second half of 2025.

Screening revenue in the first quarter was $540 million, increasing 14% and contributing significantly to overall revenue. Precision Oncology revenue was $167 million on a core basis, growing 4%. Core revenue grew 11% overall, with adjusted EBITDA increasing more than 60%.

• Increased total revenue guidance to $3.07–$3.12 billion for the year, with second quarter revenue between $765 million and $780 million. • Raised adjusted EBITDA guidance to $425 million to $455 million. • Screening revenue expected to grow 14%, Precision Oncology 5%. • Increased guidance driven by improved commercial execution, Cologuard Plus launch, and rescreen/care gap growth.

• Uncertainty regarding market acceptance and competitive dynamics of blood tests. • Potential challenges in getting blood tests included in medical guidelines. • No significant impact from tariffs as lab work is done in the US.

Q: Tycho Peterson with Jefferies asked about commercial execution changes driving new to Cologuard orders.

A: Kevin Conroy said changes like territory shift and dynamic calling lists led to 30% year-over-year increase in customer engagement, with rep productivity up 10%, and Cologuard Plus driving excitement among providers.

Q: Catherine Schulte with Baird asked about guidance cadence.

A: Aaron Bloomer said back half of the year implies higher revenue growth, with screening revenue expected to grow 15% in back half driven by Cologuard Plus launch and commercial execution.

Q: Brandon Couillard with Wells Fargo asked about sales and marketing investments.

A: Aaron Bloomer said sales and marketing investments in first quarter were outpaced by revenue growth, with leverage expected throughout the year, and free cash flow expected to improve with working capital initiatives.

Q: Colleen Babington with Wolfe Research asked about rescreens.

A: Aaron Bloomer said rescreens continue to be a growth driver, with potential to increase their contribution to volume this year.

Q: Patrick Donnelly with Citi asked about blood test timeline.

A: Kevin Conroy said team is on track for mid-summer top line results from Blue Sea study, with focus on lab, IT, and sample readiness, and belief in brand, commercial capability, and cost advantage.

Q: Vijay Kumar with Evercore ISI asked about stock market perception.

A: Kevin Conroy said focus is on commercial execution and long-term value creation, with confidence in executing on Cologuard and blood test initiatives.

Q: Puneet Souda with Leerink Partners asked about Cologuard Plus traction.

A: Kevin Conroy said Cologuard Plus is available for Medicare Part B patients, with team working on payer contracts, and expected to grow as payers engage.

Q: Subu Nambi with Guggenheim asked about payer coverage and Cancer Guard pricing.

A: Kevin Conroy said payer coverage discussions are positive but base assumption is Medicare fee for service only this year; Cancer Guard pricing not decided yet.

Q: Andrew Brackmann with William Blair asked about Cologuard 2.5.

A: Kevin Conroy said Cologuard 2.5 is Cologuard Plus with smaller kit, in development with FDA, and has potential for US and international expansion.

Q: Luke Sergott with Barclays asked about gross margin progression.

A: Aaron Bloomer said gross margins improved in Q1, with Cologuard Plus launch expected to be accretive, and Oncodetect launch impact to be appraised.

Q: Dan Brennan with Cowen asked about blood test assay.

A: Kevin Conroy said expect degradation from small to large study, but team feels good about test performance based on three additional studies.

Q: Matt Sykes with Goldman Sachs asked about capital allocation.

A: Kevin Conroy and Aaron Bloomer said focus is on organic growth and optionality, with strong balance sheet and free cash flow generation providing flexibility.

Q: Brad Bowers with Mizuho asked about Cologuard Plus advertising and coverage.

A: Kevin Conroy said ads focus on building Cologuard brand, with sales force educating providers on Cologuard Plus data, and payers excited about its benefits.

Q: Eve Burstein with Bernstein Research asked about margin leverage.

A: Aaron Bloomer said 2025 is a year of investment with expected leverage, and focus on gross margin expansion and operational excellence.

Q: Bill Bonello with Craig Hallum asked about Cologuard first paradigm.

A: Kevin Conroy said Cologuard is nearing being more used than colonoscopy, driven by marketing, commercial interaction, and potential guideline changes.

Q: Jack Meehan with Nephron Research asked about Cologuard Plus coverage.

A: Kevin Conroy said coverage conversations are positive but base assumption is Medicare fee for service only this year.