Good afternoon, everyone. I'm Derik De Bruin, the Senior Life Sciences and Diagnostics Tools Analyst here at Bank of America. Welcome to our 2023 healthcare conference, coming to you live from The Encore here in beautiful Las Vegas. Our next discussion group is Exact Sciences. With us today from Exact Sciences is Kevin Conroy, Chairman and CEO, Brian Baranick, General Manager at Precision Oncology, and Megan Jones from IR. Everybody, thank you so much for making the trip, particularly since I know you just had your earnings call last night, and you've had to schlep in from Madison to get here. Thank you for making it on short notice. Shall we start with that? You just reported a blowout quarter. Stocks are acting nicely. I also then wanna follow that up with a question of, you know, it's been a long time, so I think everyone's sort of waiting for that, to sort of see that. Can we talk about, you know, is everything in place now or that is ready to harvest and to go? Thanks, Derik. Thanks to Bank of America for having us back again. I think this is our 12th year of coming to the conference. Yeah, it's been a long time coming to have that transformation really in the way colon cancer, the number two cancer killer in the U.S., is screened for. It's so meaningful to have the impact that to watch the team have the kind of impact it's having. It was in 2009 that I left a meeting at the Mayo Clinic where Dr. David Ahlquist pitched this idea of how to reinvent the way that we screen for colon cancer and show data and articulated why stool DNA testing would be a way to transform screening. He talked about the incredible need that only half of people were being screened when they should be screened, the impact when you get screened on disease, the ability to prevent cancer. You know, that was 14 years ago. What we have seen now is a total transformation in the U.S. in terms of colon cancer screening. We have a long way to go. I think there are three kind of fundamental, I think, big shifts that occurred since we launched Cologuard almost nine years ago. Yeah, the first one was just this commitment to go big with marketing, consumer marketing, and also to go big with the primary care sales force. At the time, a lot of investors, I think, thought we had taken leave of our senses to be a diagnostic company and to go big into primary care. That has paid off. Number two, in terms of going on to the same digital infrastructure and the same platform that our large health systems are on. Making that decision to move on to that architecture called Epic is has been transformative in many, many ways. Thirdly, the acquisition of the Genomic Health business and Oncotype DX has now extended our reach beyond screening into a whole world of cancer diagnostics where we meaningfully help guide treatment. Our mission is to help eradicate cancer through tests that help prevent it, detect it earlier, and to guide treatment. Brian is an amazing general manager of that business, so hopefully we have a robust discussion. Great. That's true. It's funny you should mention about the going big. I think, you know, when I first got to BofA, and that was, what, 12 years ago? The number one incoming call I was getting from all the wealth managers was, "Why don't you cover Exact?" 'cause they were seeing all your advertisements. Particularly on the Golf Channel. With like that, where they were seeing that. It definitely did resonate with that. Where are we in the penetration of Cologuard today, right? I mean, it certainly has kicked up. Can we break that down into the 50+ crowd and the younger crowd and, you know, the sort of the lessons between those two? It's amazing. There are about 110 million Americans aged 45- 85 who are in the screening population. That's a lot of people. To date, Cologuard is only about 10% penetrated. We guided to around $1.7 billion for Cologuard this year. We believe that you can quadruple that we are on a path to get there, to 40% market share. We think we're gonna get there. I think the past three or four quarters show this inflection momentum that has built that makes us even more confident that we'll get there. In the under 45 group, this is really remarkable, it's only 18 months ago did age 45- 49 become standard of care in the U.S. We're at 10% penetration already in 18 months, that's gonna continue to grow. There are about, let's call it conservatively $50 million Americans today who are not up to date with their screening. $15 million-$20 million of them are in that 45 to 49 age group. The capacity for screening colonoscopy in the U.S. is about $6 million tests per year, procedures per year. What about the other $44 million? That's where Cologuard comes in. Our capacity is virtually unlimited. We have shown the ability to, you know, last year, it's almost $3 million people that were tested with Cologuard. This year, it's a much higher number. The year after that, we believe it's gonna be a much higher number. The year after that, a much higher number. We are becoming the go-to option because capacity is fixed. It's a, it's a wonderful time to be part of the team that is now dreaming, how do we make sure that happens? How do we make sure that we deliver strong profits and profit growth to investors and to keep investing into that core mission that we talked about? It's interesting, when we were, I mean, there's not enough capacity. When we were marketing in Canada recently, we were having this conversation where it was, like, a 7-year wait for a colonoscopy. There's an opportunity up there if you're there. How many people are, you know, when they've done the colonoscopy the first time around are coming back and doing Cologuard? I mean, are you getting those people that are, or once they do colonoscopy, they stay with colonoscopy? We're seeing about if you poll people who get a Cologuard test- Yeah ... about 40% of people will say, "My last test was a colonoscopy." We're converting people who previously got a colonoscopy and don't wanna do it again. That's not the majority of it. Majority of people, 50%, are people who've never been tested before. Yeah. 10% are moving from the fecal immunochemical test, a test that we think is not an effective test. About 10% of people are getting that 40-year-old test that doesn't work all that well. How do we think about the rescreening opportunity? I mean, how many people are coming back, and how was compliance there versus compliance with first-time scripts? Is due to the fact that people are, should get a Cologuard test every three years per the guidelines. Why don't I hand this over to Megan to answer how we think about the rescreening opportunity? Sure. Derik, that will be the people coming back after three years for their second, maybe even third Cologuard. That'll be about 20% of Cologuard revenue this year. We see that number actually going to more than half of Cologuard revenue in the not-so-distant future. One of the big drivers of that is the new 45- 49-year-olds who are using Cologuard. That market share jumped so fast compared to how long it took us to get there in the. Mm-hmm ... 50 and over age group. And once you capture that 45-year-old, if they have a good experience with Cologuard, why would they ever go do a colonoscopy or a less accurate test? So that's somebody that you can keep for 30 years and do 10 Cologuards as opposed to capturing, you know, a 65-year-old who will only maybe do a couple tests. So the rescreen opportunity is one of the biggest growth drivers over the next few years. If you look at that combined with the 45-49 age group alone, that'll be a billion-dollar opportunity in three years. Why is the 45- 49-year-old group more inclined to do it, right? I mean, what's the... Just the older folks like me have more barriers to doing anything. Two main reasons. People 45- 49 have a hard time taking a day and a half off of work to get a colonoscopy. They're busy. There's another dynamic, and this dynamic of as soon as you drop 15 million more people into the screening population, we overwhelmed the system to use screening colonoscopy as a solution. What has happened over these last 18 months is health systems have come to Exact Sciences saying, "Help us think through the best practices around how to implement a screening program that helps us achieve the quality scores that we need to achieve to be successful as a health system." One of the things that they are deciding to do is for people who are 47 years old, patient comes in, "Hey, why don't you think about getting a Cologuard test?" The absolute risk of colon cancer in that population is lower. It's easy. It's doesn't take any meaningful time away from the day. Health systems are now diverting people in that age group directly to Cologuard, and we're seeing that. We expect that to continue to grow, and then once you capture that patient, you're gonna capture them, hopefully, for, as Megan said, 30 years. Mm-hmm. The recurring revenue opportunity, in other words... Yeah ... here, that's an unappreciated part of the Exact Sciences story. Yeah, it's not just one or done. Can we talk a little bit about some of the physician ordering trends? You mentioned health systems. How many, you know, once you sort of went live in Epic, how many new to Exact doctors did you sort of, like, interface with, given how many were there? This is sort of a question when you look at your order growth now, how much is coming from that versus the fact that, you know, your sales force is now, you know, fully up and running and, you know, the COVID headwinds are dissipated. I mean, I don't know if there still are access facilities in certain areas, but, I mean, just can you sort of break down where the growth pop is coming from? Well, a big part of the growth driving is that our digital ecosystem allows, and how we have connected through Epic with the large customers, has allowed the majority of physicians now to order Cologuard electronically and to get the result back directly into your MyChart account or into your EMR electronically. That's taken 8.5 years to get to about 60% overall and pushing 80% in large health systems. It's driving growth in the... If you look at the top 400 health systems in the country, they employ over half of all primary, probably 60%+ percent of all primary care physicians in the U.S. In those segments, we see 50% more Cologuard utilization than in the small independent practices and smaller health systems. Our strategy of deploying into these health systems is so important as we look at our pipeline of tests in colon cancer, in multi-cancer screening, in therapy selection, in minimal residual disease testing or molecular residual disease testing. The other products that we're bringing across the cancer continuum, those are going to be ordered and deployed in internal guidelines set within each health system, and they look to us as a partner. Got it. I mean, that was going to be one of my questions, like the opportunity to sort of like cross-sell from Precision Oncology into. I think this is a great opportunity for Brian to talk a little bit about how he's and our business is thinking about that in Precision Oncology. Thanks, Kevin. I look at two of our early sort of molecular residual disease areas that being colorectal and breast, are two prime examples of where I think the power of the portfolio starts to come into focus. Clearly, we're screening a ton of patients on the colorectal side with Cologuard, and we know who those patients are that test positive. We know where they lived. Oftentimes, we have their phone number. That's how we stay in touch with them. I would argue that's our business to lose when we have our colorectal cancer test. If we do screening correctly, we should find patients in stage one, two disease and even stage two, three, unfortunately, where molecular residual disease would be very useful. On the breast side of the equation, we touch well over 80% of newly diagnosed breast cancer women, here in the U.S. I would argue there's a lot of synergies between what we're doing with the Recurrence Score and where you'd want to deploy and potentially even not deploy, molecular residual disease testing. For those of you who are less familiar with our breast assay, we stratify patients into three cohorts: low risk, intermediate, and high risk. It's those intermediate and high-risk patients that are most in need of molecular residual disease testing. Again, we're touching 80% of those patients today. Switching. Hello? Yeah, you're feeding feedback. Oh, no problem. We're touching 80% of those patients today with our breast assay. Again, we have a relationship with these patients and their physicians well over 15 years on the physician side. Again, I look at the breast opportunity as an area where, you know, we would be losing that business if we surrendered that when we were on market to some of our other molecular residual disease competitors. Brian, staying with you for a second before I bounce around some other stuff since you're there, talking about this. You know, what are some of the differentiating characteristics of some of the stuff that you're bringing online, right? I mean, there's a lot of companies that are doing MRD. There's a lot of companies that are doing hereditary cancer testing. There's a lot of companies that are doing this. It's like, what are some of your differentiation points in some of these other products? Or is it just offering a full suite that's there and the infrastructure sort of take it out? It was like, you know, I think when we saw you a couple of weeks ago, down at your Genomic Health facility, it was, you know, you were talking about the R&D innovation that was there. Can you sort of elaborate a little bit more on those topics? One of the things I don't think Exact gets enough credit for is the high science that we do. We opened a state-of-the-art facility down in San Diego, where our Chief Science Officer, Jorge Garces, and his team are developing our molecular residual disease test. We've also loaded up on bioinformatics talent down there. I think one of the ways that we're going to innovate is I believe based on some data that I've seen and looking forward to share later this year, that we will have a better mousetrap, if you will, for molecular residual disease when we come to market. Part of it's having a better test that has better sensitivity and specificity than some of the companies that are out there. Another leg of this stool is some of the stuff that Kevin's been talking about, which I'll define as infrastructure more broadly. On the sales side, we have people in the field. When you go out and visit these reps and you spend time on the front line, they've been in their territories 10, 15, sometimes even 17 years, calling on the same physicians. They know the staff. I think that deep relationship is an advantage. The digital infrastructure that Kevin mentioned, being on Epic, a lot of the machinery that the Cologuard team has built around adherence, compliance, rescreen, these are things that are going to be needed to keep patients on surveillance regimens, where in the case of HR-positive cancer, you often see recurrences happen in the 5-10 year time frame. These are going to be women who have been tested 20, 25, 30 times with a blood-based MRD test, and if it tested negative consistently for four or five years, they still need to show up for that 37th, 38th, 39th test. That machinery that we've built on the Cologuard side can easily be deployed to help patients and physicians with MRD. Lastly, I lean back on the clinical evidence strategy. I mentioned this to you, Derik, when you were in Redwood City, joining the team. I believe that Genomic Health wrote the playbook on how to build evidence around a high-value diagnostic, and that happened 15, 16 years ago. We still have a best-in-class team that will stand up world-class clinical evidence working with these collaborative groups, who we have deep relationships back to the birth of Oncotype. I'm talking about groups like the NSABP and ECOG and SWOG, these collaborative groups who really understand how to develop real utility evidence that is practice-changing. I think it's a combination of all those factors and the fact that the MRD market. Kudos to the early market leaders. We're still very early in the development of that market. There's a lot of baseball to be played there. I think we have ample opportunity to catch up. Great. Great overview. I wanna hit one thing before we talk about blood before that because we have to. Can you please remind us on the timing of BLUE-C and the read on that and the advantages of Cologuard 2.0 versus classic and how important is this to. Or how could Cologuard 2.0 help accelerate uptake and compliance? I mean, is it even a further. Is it something that even doctors would wanna prescribe even more given some of the performance characteristics? Yeah. Cologuard 2.0 is our next-generation version of Cologuard. It is with more precise markers, better technology, lower cost of goods, and we believe that we will improve across the board in terms of the accuracy of the test. The main goal is to reduce the false positive rate by 20%. We think that's very achievable. We have confidence in that based on the number of studies we have done of the Cologuard 2.0 assay has been in development for a decade. An improvement in the pre-cancer detection we believe it by far will have the best pre-cancer detection capability of any non-invasive approach to screening. We hope to at least remain constant and potentially improve around our cancer detection. We're so strong with cancer detection. We detect 94% of early-stage cancers, that it's hard to improve on that. We want to at least remain as good as with the original version of Cologuard. The BLUE-C study is the pivotal study. We've closed down enrollment. We have tested the vast majority of those samples that all the data will go to the bioinformatics team, and eventually we'll see the data this summer and release the top line data. The goal is to have that this summer and the goal is to have that new incredible product in market a year from now. We think that's going to increase the rate of adoption because the false positive rate, physicians will say that they want that to be as low as possible. That will be a big win to reduce it. Also I think payers are really going to love not having to pay for as many false positive procedures, namely colonoscopies. We think there's an opportunity for us to capture some of that value that we're creating and share it with the payers. More to come on that front. We're really excited about the impact that can have on patients. You're also, this sort of segues into the blood conversations. You are collecting blood from your Cologuard 2.0 studies. What's your latest thinking on the whole blood versus stool debate and the, you know, some of the data that's out there right now? You know, and also, let's start with colon cancer screening but I also wanna go on to multi-cancer detection as well. Well, this goes back to the very first meeting that I referenced back in 2009 with Dr. Ahlquist who said, "Look, you know, the problem with detecting precancerous polyps in stage one cancers from a blood draw is that those early cancers don't invade into the muscle layer of the colon, so that's where the DNA is being shed into, versus a stool test where even with a precancerous polyp, if you take a 1 cm precancerous polyp, it's shedding a lot of DNA into the because it's on the inner lining of the colon into the stool so you can find it. Stool is a much better target with more enriched DNA. That's a starting point. We believe that a blood test is still relevant because there are people out there that refuse a colonoscopy, refuse a Cologuard test. We happen to know who those people are. We have several million of them in our database today and we want to help get those people screened. Even with a blood test that is inferior at detecting cancer and these blood tests have a very difficult time detecting precancerous polyps. It's just they don't interact with the blood supply, like a tumor does. We still believe that that is an advantage that we have that nobody else has. We also have another advantage. Others in this field are trying to do it with sequencing which is really expensive. You can't run a blood test every year on a sequencing for the masses. It's very difficult to make the math work. We have a very proprietary version of PCR which is incredibly advanced and allows us to detect at the same rate or higher as sequencing. I won't get into all the details, but we can do it at a much lower price point. Medicare has already priced a blood based screening test. A lot of people don't appreciate this. It's $192. We can make a reasonable profit and we can target it for the patients who've refused colonoscopy and Cologuard. What does the FDA think about this space? The FDA has already issued their view on blood-based testing which is inferior to Cologuard or colonoscopy and their view is it's not gonna get a first line screening claim. What does that mean? That means it gets a secondary claim. A secondary claim reads, "This is a test for colon cancer screening only to be used on patients who have refused all other guideline recommended screening tests." They're serious about that. There's a reason why they're rightfully worried about having a test with worse performance being used by the masses. Our view on this hasn't changed. There is a need. I think people in this room have probably had friends, family members touched by colon cancer who weren't up to date in their screening, even with Cologuard and colonoscopy available. There is a need, and back to there are 60 million people we know, 50 million-60 million people that are not up to date with their screening to date. We're in the best position to deploy it. Nobody else has built a ecosystem of the 1,300 people that we have in a commercial organization. The deep investment. We've invested $1 billion in our digital ecosystem. $1 billion. We have deep electronic connections with most, the majority of the large health systems, so we can drop a blood-based test in and guide it to the appropriate patients. In fact, we can go to the physicians and I tell them, "These are the patients you ordered Cologuard for and who refused it." We wanna get to those patients, so we think it's another growth driver and our chief commercial officer, Everett Cunningham, says again and again, "You give me that blood test, we're gonna be back in talking about a broad colon cancer prevention and screening program with this broad set of tools." We think we're going to win in this field. With all of that said, blood test is unlikely to get into the guidelines. It's unlikely to count as a quality measure, and if you don't have that, it's an uphill battle. Is it going to take away share or cannibalize Cologuard? No. Is it going to provide upside? Yes. you know, it has a particular role. People have been asking our view on this. When you study a field intensely and you're kind of, you know, your career depends upon it, you tend to know it pretty well, and we've studied this pretty carefully. Any questions from the audience before I move on to a little thing like profitability? Just a question. Out of the Cologuard tests that get completed [audio distortion] The question is, out of the Cologuard tests that are completed a year, what percent are stage one cancers? In the DeeP-C study, the original pivotal study that was initiated 10 years ago, stage one cancers were 45% of all of the cancers found. There were 65 cancers. That's probably gonna vary study to study, but it is. As you can imagine, when you go into an asymptomatic population and you screen for a cancer, you find earlier cancers. That's the point of screening. We saw 75% of the cancers were stage one and stage two in the pivotal study. We don't know yet what that is for the BLUE-C study, but it's probably, you know, between 50% and 75%, if I had to guess. Yeah, if you add in pre-cancers to that. Kevin talked about the importance of detecting pre-cancers as well. Pre-cancer stage one and two was over 98% of the findings in DeeP-C, and that's the real target of screening 'cause that's when you can impact the disease and actually change the outcome. Assuming that the people in this room are of, kind of, well-distributed in the age population, one in 20 people are walking around with a pre-cancerous polyp and don't know it. One in 200 have cancer and don't know it. Those are the targets. That 5.5% of the population is who you're really screening for. You also find people with smaller polyps, but I know you have a profitability question, and we're about ready to wrap up. Yeah. Yeah, yeah. Now that you hit the inflection point on profitability and as, you know, your free cash flow target's coming in sooner than expected, how are you thinking about reinvestment? How do you think about spending on people? How do you know, the trade-off between profitability and growth and, you know, how quickly does the profitability ramp from here? You know, I look pretty calm right now, but I am so excited about the fact that we have made a turn, and that turn is not going back. 18 months ago, in January of 2022, we said, "We're going to be profitable, and we're gonna be profitable in 2024," and a grand total of nobody believed us except our team. Our team knew the path. We knew what we had to do from an investment cost standpoint. We also knew what we had to deliver in terms of growth. The team delivered on this. I would just say we are going to keep delivering on it. When Jeff Elliott, our CFO, said, "We are going to not eke through profitability. We're gonna punch through profitability," I can tell you that is the message, and this isn't gonna slow down in its years to come. I have a number sitting on a piece of paper that I gave to the board at the beginning of this year for 2027 in terms of top-line revenue and profitability, and you know, it's a big number. We don't think we can deliver on this. We know our business very well and we are going to deliver on this. My final question, as you know it, is what's underappreciated about Exact? I think what Brian said is the incredible science that has delivered this kind of growth, both in screening and Precision Oncology, and we can't wait to show data this year and next on some of these new products that we're bringing to patients and physicians who need them. Great. Thanks, everybody, and thank you for listening. Remember, IR season's coming up, so vote early, vote often. Thanks.