All right, great. We're going to go ahead and get started. I'm Catherine Schulte. I cover life sciences and diagnostics here at Baird. Very excited to have Exact Sciences joining us. From the company, we have the CFO, Jeff Elliott. So we're going to dive straight into Q&A, but if you have a question, you can send it to sessionone@rwbaird.com, and I will pass it along to Jeff. So Jeff, thanks for being here. Catherine, thanks for having us, and thanks to the entire Baird team. It's now been almost 14 years since Baird first picked up the stock, so you've been there throughout. Thanks for the continued support. Absolutely. Maybe just starting off on Cologuard, this seems like the most important part of your story right now. In this last quarter, you had yet another beat and raise on the Cologuard side of the business. So what are kind of the key two or three things that have been driving that outperformance for Cologuard? It's certainly been an exciting time at Exact, especially for our Cologuard business. For those of you who don't know, Cologuard is a colon cancer screening test approved in the U.S., and the target market here is approaching 120 million people. So this serves a huge market. What we've seen in over the last several quarters, that we've seen a big shift in the market. There's a lot of drivers here that we could spend time talking about, but the market has changed, and changed in a way that really benefited our business. One of the big things that happened in the past couple of years is the key clinical guidelines lowered the screening age to 45. Previously, it had been 50, and what that did is added 20 million more Americans to the screening pool. That helped grow the market in a major way. It really helped our business. So today, that younger population, ages 45-49, is almost 20% of our business. So that really helped accelerate Cologuard. Other changes happened, too. The pandemic is one of the big ones. So, that's one of the things that happened. Again, the pandemic really changed the market and external factors like the guideline change. Another is that our internal efforts have really improved over the past couple of years. One example of one of these is our sales force. The teams out in the field continue to get more productive. The team in primary care is about 700 people out there calling on physicians, and we see their productivity growing very nicely. And lastly, I would add, is that, our relationships with health systems and payers in this space has really improved, to the point where they are now often coming to us, asking for help, help in getting more people screened. So there's a growing part of our business that we call care gap initiatives, that this year could do $25 million of revenue, where this is an example of where a payer or health system comes to us and says, "We've got a big group of patients that are, historically unscreened. Can you help us get more of these patients screened?" So a lot has happened, to help lift Cologuard growth, and the exciting part here, again, is I point back to the market. With 100, almost 120 million Americans in the screening market, there's a long ways for us to grow in this market. I think you've talked about 75% of all U.S. primary care physicians have ordered Cologuard now, but still pretty consistently, you've been adding 9,000-10,000 physicians per quarter for the last couple of years. It doesn't seem like there's a slowdown there at all. You know, do you think that eventually gets above 90%, and what's been driving some of the adoption in these later adopters? It's, you know, years ago, back with us on the sales side, I thought, okay, someday, way down the road, maybe 100,000 providers would order Cologuard, you know, at peak. I was way off on that. You know, today, we're over 300,000. So the number continues to be, you know, blow through expectations that I had, that many people have had. Yeah, I think it really speaks to the size of this market and the universal appeal that Cologuard has. Yeah, what's driving it? I think things like the high levels of awareness. I mean, you're talking about 90% awareness levels, very high. Cologuard has become synonymous with colon cancer screening. So that really helps that today, increasingly, people are going into the physician and saying, "I want Cologuard." It's not, "I want to get screened," it's, "I want a Cologuard." Maybe I saw the ad or I had a friend or family member who had Cologuard. So they're asking for it by name, which really helps us. After years of out there educating patients and physicians on the name and the importance of screening, I think we're at this tipping point, a tipping point where Cologuard is, again, things have become more automatic. Not that we don't have to go out there and promote Cologuard, I don't mean that, but think growth has become easier over time, now that that brand awareness is high. I would caution you, though, at some point, while we've continued to add close to 10,000 new ordered providers every quarter, at some point, that number will decline. It—I've been saying that for years, and at some point, I'll be right. It, it will go down, because there's only so many physicians out there. The bigger opportunity for us is not to get more physicians to order. We'll still, we still try to get more. The bigger opportunity is in the share of opportunity within the existing doctors. So those doctors that have already ordered, if you look within their practices, we could grow our business 5-10 times over again just by getting them to order more. So that's the bigger area of, of focus for our commercial teams. Yes, I wanna focus on that point for the next couple of questions. So 75% penetrated from an ordering physician perspective, only 10% on the volume side. So to your point, a lot of opportunity by increasing wallet share there. You know, just to give us perspective, what's maybe the wallet share within some of your highest ordering physicians? And, is there a certain profile of docs who seem to have the highest order rates? Yeah, I mean, there are plenty of physicians who have completed hundreds of thousands of tests. It's really what it is, is there's some physicians that have converted 100%. They've gone all in on Cologuard, which we love, and it decides this for you. The average primary care doctor in this country has about 2,000 patients. Of those, maybe about a third, let's call it 700, are on label for Cologuard. So we target this label market, 700, and about half those are screened right now. So you think of about 350 total patients per primary care provider in this country right now need to be screened. So some physicians have ordered hundreds. You know, those physicians often have been ordering for longer. The longer you've been ordering Cologuard, the more they typically order. You know, they typically order electronically. Yeah, we know that, believe it or not, about a third of our orders still come in through a fax. Here we are, you know, nine years into launch, and still, a third of our orders come in through a fax. When you order through a fax, it's more cumbersome. We know that when a physician orders electronically, she orders at a lot higher rate, so we have a big effort to try to encourage more to switch. So the high-ordering providers, typically, you know, they're part of a larger health system where they've made a top-down decision, "We are ordering Cologuard." They can order electronically, and they've ordered for a while, so they're familiar with how the test works and which patients to target. To that point of kind of, so physicians who've been ordering longer typically order more, you've got a lot of data in terms of how different physician cohorts ramp up orders. So are you seeing anything different in how newer adopting physicians are ramping versus some of the earlier cohorts? Yeah, we are. There's some big differences now. Today, when a new physician orders, he or she typically can start ordering electronically from the start, which is a, is a big change from back... think back to 2014 or 2015. The doctors that started ordering back then typically had to order through a fax, and they were ordering into a market where insurance coverage was low, awareness was low. The key clinical guidelines may not have included Cologuard, where today, that's all different. Today, the new doctors that order, there's high levels of awareness. Patients often come to them, so they, what you see is a, a lot steeper ramp. So newer doctors that start ordering, you know, their initial orders are at a higher clip, and then they continue to grow at a faster rate than the ones from, say, 5, 8 years ago. Yeah. Got it. And then you've talked about getting to at least 40% market share longer term, and I think more recently, have even talked about 50%. How do you get to that number, and what drove that upward revision there? Yeah, today we're at 10%, like you said. Again, the market here is nearly 120 million people, so massive market. The way you get from 10% to 40% is there's not a lot of, like, new magic that has to happen. I think we've got a pretty good formula. Recent results would support that what we're doing is working. Last quarter alone, Cologuard grew over 30%, so, the recipe we have is working. You know, the biggest area of growth is getting more people screened. That's really why Cologuard was invented. The overall screening rates are too low in this country for colon cancer. We need to get more people screened. We know that colon cancer is the most preventable, yet least prevented cancer of all, and the reason why, again, screening rates are too low. So when you look at where patients are coming for Cologuard, almost half the patients we test had never been screened before. Today, maybe 40% switch from a colonoscopy, and about 10% switch from a fecal blood test over. But again, about half come from the previously unscreened population. That's great because that is the biggest pool of patients out there. So how do we get to our overall market share goal? It's getting more people screened. It's driving that awareness higher. It's making Cologuard easier to order for patients, easier to access for patients and physicians, and that seems to work. A few years ago, when we had talked, Catherine, at that point, Cologuard was underpenetrated into the big health systems, the big, organized groups of hospitals and doctor's offices, that today, that's the majority of primary care doctors out there. You know, 10, 20 years ago, that wasn't the case, but that is the majority. They continue to consolidate the market, and it took us a while to really penetrate that market. Well, we're there now. It's over 60% of our revenue now comes from the larger health systems, and now when they come on, they often come on in mass. They often come on and, "Hey, we've..." You know, we had a health system recently come to us that said, "We've got a backlog of 13,000 people waiting right now for a colonoscopy. Exact, can you help us?" "Of course, yeah, we can help that. We can, you know, we can take all 13,000 orders in a day and take that on. So, we've gotten better at tapping parts of the market that we historically weren't as good at. Can you remind us some of the changes that Everett and team made in terms of messaging to health systems that kind of drove that inflection there? Yeah. So Everett Cunningham, our Chief Commercial Officer, joined about two years ago. Now, he took a different approach to going to the market. He redesigned our sales teams to where they were all organized along a geographical basis. He did historically have kinda separate teams that would call on independent physicians versus health systems. He organized them all closely, which gives them more accountability, more ownership of their territories, and also encourages collaboration. If you're calling in an independent doc, well, you should be working with the hospital rep in that area. So we've seen that. We've seen then the results, better collaboration, better accountability, and much better productivity from the teams out in the field. So Everett's done a really nice job. Same thing on the marketing side. Everett takes a laser-like focus on our marketing spend, making sure that every dollar we, we deploy, we deploy it responsibly into the highest ROI opportunity. So Everett's done a fantastic job leading our entire sales team. And then maybe on rescreens becoming a bigger and bigger portion of your business, we're kind of lapping, you know, three years post-COVID, so a bit of a headwind there this year. At what point does that headwind dissipate? You know, what's the outlook for rescreens going forward? And, you know, I think you've talked about that being 50% of Cologuard revenue at some point. You know, what's the path to get there? Yeah, so what a Cologuard rescreen is, is that the guidelines recommend that you repeat Cologuard every three years. Obviously, with we've now tested over 12 million people, there's a massive opportunity for us to go out there, reach out to patients who had previously completed the test, who are now due again for screening, and bring them back to Cologuard. As Catherine mentioned, three years ago, when the pandemic hit, at that point, healthcare, often many parts of it, kind of slowed down. We were no different temporarily in April, May, primarily of 2020, and that initial onset of COVID, Cologuard orders dipped down. They recovered very quickly, though, in June of that year, we were back to growth. What that means is that three years later now, patients that, you know, temporarily didn't do Cologuard three years ago, aren't now. There's kind of a temporary air pocket where those patients aren't coming back for rescreening. Still, rescreening is a big year for us. It's a big growth driver. This year, about 20% of Cologuard revenue will come from rescreens. However, we're facing a headwind of probably north of $50 million this year in our rescreen business. The good news is now, when you look forward to next year, that headwind goes away. That headwind primarily hits the middle part of this year. So when you flash forward to next year, that rescreen-eligible pool grows. In fact, it grows up to another 1.6 million people become eligible next year for rescreening, and our goal is to capture, to retest as many of those people as possible. And then the Blue C readout displayed about four points of specificity improvement and a two-point bump in cancer sensitivity. Can you just remind us how much this expands your Rescreen revenue potential longer term, just as you lower that false positive rate? So, Blue C was our pivotal study, a registrational study for what we call Cologuard 2. Cologuard 2 is an enhanced version of already a really good test. The primary goal of Cologuard 2 was to improve the false positive rate, really the specificity of Cologuard 1. The reason why is because to the extent there was any clinical resistance to Cologuard, that's where it was. Per the FDA, our false positive rate on the first version of Cologuard was 13%. Blue C showed that in a prospective study, a pivotal study, we can reduce that by 30%. That means 30% fewer people go to colonoscopy unnecessarily. That means 30% more people then stay in our world, stay on the Cologuard train. So in three years, over time, we'll keep more people on Cologuard. That alone drives a significant tailwind for Cologuard growth. Again, rescreens already are 20% of Cologuard revenue, and anything we can do to expand that pool of patients, whether it's testing more patients, or reducing that false positive rate, that's a big driver there. So that, you know, that was the primary goal of Cologuard 2. There's some other operational enhancements to the test that will bring down our cost of goods by at least 5%. So Cologuard 2 not only has a higher share of recurring revenue through this rescreen business, it also brings a better gross margin. So we're excited for that product to come out. The plan for that, we plan to finish submitting to the FDA and that product still this year. The team has done a really nice job working with the FDA over the years, so we're confident in the ultimate approval there. Upon approval, we expect that, you know, the NPV. This is well over $1 billion. We expect this to accelerate the growth of Cologuard and help improve the margins over time. Submission by the end of this year, I think you've talked about commercial launch, maybe early 2025. Is that still the target? And then any commentary on what's needed from a lab workflow perspective to get that launched? Yeah, that is still the target. Obviously, this depends on FDA approval, but that is the target. You know, our lab team has done a fantastic job over the years, scaling up our lab, driving efficiencies. I know you and many others were at the lab this summer for Investor Day. So we're really proud of what that team has accomplished. So what the teams now are busy adding additional capacity for Cologuard 2 in that lab. The reason being is because when we ship a Cologuard kit out to the patient for sample collection, that kit could come back up to a year later. So simultaneously, our lab, for up to a year, will have to be able to process both Cologuard 1 and Cologuard 2. That's okay, the lab is big enough to do that. Eventually, we'll wind down Cologuard 1 and use the, you know, focus on Cologuard 2. Over time, then, the plan is to fill up the entire lab with Cologuard. So the team has thought through this one for a long time and done a nice job planning for the two tests. Great. And we'll talk more about profitability later, but can you just talk to the profitability profile for Cologuard specifically and the trajectory there? Yeah, we're proud of what we accomplished. Not only is this a huge market, the goal is to get to $7-$8 billion of top line. And what we guided to over the next several years was, at our Analyst Day, we said between 2022 and 2027, we expect total growth of about 15% compounded. Obviously, Cologuard should grow faster than that. We feel good about those numbers. We actually raised our long-term guidance for Cologuard at the Analyst Day this summer. The margin profile of Cologuard is also very good. Today, it carries about a 75% gross margin. We expect that to get... my goal is to get that to about 80% long term. And you can see it. When you look at how efficient our labs are, this business can scale very effectively. From an EBITDA margin standpoint, I feel good that Cologuard, my goal there is a 40%. So we expect very good margin improvement over time. Today, Cologuard, Oncotype, which we haven't talked about yet, but Oncotype is our other major product right now. Oncotype carries very strong margins, so that business today is about $550 million of revenue internationally, with U.S. EBITDA margins in the 40% range. So we know the power of our platform can generate very strong margins, today and into the future. And maybe on Oncotype, you know, I think the international business is probably the biggest growth opportunity there. Mm-hmm. Talked about Japan, some other geographies, but maybe just lay out the path forward for that part of the business. Yeah, so I mentioned the US business there, very high margins, strong recurring revenue, but $550 million of sales. We're in a strong market share position. So the primary driver of growth in the US will be new products. New products, whether internally developed, or deals like we announced this morning, a tuck-in acquisition of a new therapy selection test. Internationally, the market, our market share is about 25%, so there's still a long ways to continue to gain share in that market. Longer term, I think that can get to at least 50%, so long ways to go outside the US, by driving share in existing markets and new market entry. Japan is one you just mentioned. Japan could be the biggest market opportunity outside the U.S. Each year, there's about 45,000 women, unfortunately diagnosed with breast cancer, and fortunately for them, there's a test like Oncotype that can help them inform that key decision around risk of recurrence and chemotherapy benefit. Oncotype is the only test validated to do both. So we're excited to now, starting this month, bring that test to the Japanese market, where we've got reimbursement in place and a really talented team out there, looking to drive that market. For us, that could be $25 million-$30 million of revenue in the first full year, so think of next year. So we're excited to get that product on the market and, see the early results. You referenced Resolution Bioscience, which you announced you acquired this morning. Can you just give us a quick overview of rationale for that deal and your plans for the asset? Yeah. So Resolution Bioscience, terms of that material, but we're thrilled to have this new product to plug into our existing foundation. So what this is, it's a liquid, really blood-based therapy selection test. So imagine somebody diagnosed with late-stage cancer. The goal at that point is to optimize therapy, you know, get somebody onto the right therapy, try to avoid the therapies that won't work. We have a test for the tissue market today, but about 20%-30% of the time, a patient presents, and there's not enough tissue to accurately inform that therapy selection question. So now with Resolution Bioscience, which we acquired from Agilent this morning, we can answer the question whether tissue is available or not. Assets like this plug right into our foundation. So we've got an experienced oncology sales team with about 100 oncology reps out there calling on oncologists, many times have 10-15 years of experience with that oncologist. Over 98% of all oncologists have ordered from us, so an asset like this plugs right into our foundation. We're thrilled to have it. Resolution Bioscience has taken their platform through the FDA. Agilent had used a bit different approach. They were going more with a kitting approach, selling the kits to other labs to process themselves. We are taking more of the lab-based approach. That's a business model we are very familiar with. Again, that's the model that we deploy for Oncotype and Cologuard and really our entire pipeline. So we think this really plugs right into our foundation. It's a business that we know well, have been studying it for years, and we're thrilled to have it. Then maybe pivoting to the pipeline and MRD specifically, you know, you won't be the first mover there. You have Natera, you've talked about their early success in MRD and a lot of others trying to enter the space as well. I guess from a technology standpoint, how do you think that you could be differentiated and make up for some of that first-mover advantage that others might have? Yeah, so the MRD, or molecular residual disease, market, we see as one of the biggest opportunities in all of cancer, really all of diagnostics. We peg it at about a $15 billion opportunity in the U.S. alone, and while the market has started to unfold, actually unfold very quickly, it's still less than 5% penetrated. So we feel good about our ability to succeed in this market. Obviously, there are other players out there now, but we think we'll both have a technological advantage. We are developing tests both for, again, a tumor-informed or tissue-informed approach and the tissue-naive approach. So we can provide answers for more patients on that key question. You know, did... You know, first of all, did surgery or whatever that initial therapy, did it get it all? Or do we have to go back in and remove more of that tissue? Or, and then also, has the cancer recurred? Unfortunately, if a cancer recurs, it often recurs in Stage III or IV, at which point timing is of the essence. We want to get an answer to as many patients as possible, as quickly as possible. So we think we'll have a technological advantage. We've got to prove that out, but with the approach we're taking, we think has better specificity and better sensitivity than what's on the market today, and we definitely have a commercial advantage. I mentioned before the strong oncology sales team that we have. But with the Oncotype product that we have, today, given our market presence, about 50% of all breast cancer tissue in the US comes into our lab, and today, we're really only running Oncotype on that. In the future, we can first run Oncotype, again, informing the decision around risk of recurrence for that patient, and also, will chemotherapy benefit that woman? Well, in the future, that same block of tissue can be used also for MRD and potentially for therapy selection. So there's a massive synergy that we can have, running multiple tests off that same block of tissue. And also, this provides better care. This will help us get that answer to that woman or that patient more quickly and overall, better results clinically. You've talked about an early access launch in the fourth quarter of this year. I guess, what's your goal for that program, and are you already seeing interest from the oncologists you're calling on through your Oncotype franchise? Yeah, I mean, oncologists are asking for other solutions out there. Again, we've got deep relationships within the oncology community. The goal for that is to get it on the market, to help build additional evidence, to help gain traction for the ultimate commercial launch. So again, the goal is to continue to get that product on the market, first in colon cancer this year, next year in breast cancer. As we build additional evidence, next year, the plan is to submit to Medicare for reimbursement with the MolDX program. So that's set in 2025, we expect to have the true commercial launch, where we'll have Medicare coverage and evidence to support the adoption. And then maybe pivoting to colon cancer screening blood tests, I guess maybe update us on your own internal program. You enrolled an arm of blood in Blue C. You know, what's the timeline to when we could see potential data from your own program? ... So the teams have prioritized Cologuard 2 first. It's a lot of the same resources within R&D, and our clinical team are working on both or had been working on kind of both the colon cancer blood test and Cologuard 2. We've pivoted that team for right now, focus on Cologuard 2, get that one through the FDA, get that onto the market. The payback there is far higher, so that's been the priority, and the evidence we have now generated now for Cologuard 2, very strong. So we're—we think that's the right move. Once they're done, once they're done with the submissions and everything necessary to get that product onto the market, we'll pivot that team back to colon blood. So as you mentioned, we've got the samples, the pivotal samples in-house. We plan to run that and generate evidence and publish that next year, probably middle of the year, but ultimately, the priority here is Cologuard 2 first, and then colon blood. And then you just achieved your first free cash flow positive quarter, and in the second quarter, you've kind of talked about punching through profitability. You talked at some about the margin targets that you laid out at your Investor Day. But how should we think about free cash flow growth from here? Yeah, we're proud of what the team has developed over the years to build this foundation to scale. You know, Cologuard is the first billion-dollar diagnostic. Our plan is to have that be the first two or three billion dollar diagnostic. But this foundation wasn't just built for one. It was built for multiple billion-dollar diagnostics. So we really front-loaded the investment and everything from our labs to our IT systems, our sales teams in the field, were all built to scale. You know, many of our sales reps only carry one product. Well, they can carry multiple products and with very minimal incremental cost, generate a lot more revenue. So the goal again is to bring more products to market, and after front-loading the investment in our lab. So now that we've hit that inflection point with a free cash positivity, I feel good about ability to grow from here. We put out long-term targets. In 2027, we expect at least a 20% adjusted EBITDA margin. It's essentially a cash earnings number. With the investments we've made in things like CapEx, I think our CapEx profile should be fairly modest, such that we'll see a pretty good free cash flow pull-through on that EBITDA. And then does the new improved profitability profile change your thought at all on M&A? Should we expect smaller technology tuck-ins? Would you be open to a bigger deal? What's your mindset on M&A? Well, as I laid out this summer, the priorities are, first and foremost, grow the core business. We've got long-term targets out there, ambitious goals for both revenue and profitability. That's the first focus. Second priority is really the R and D. We've got a robust R and D pipeline across the three biggest markets in all of cancer diagnostics, so that's the second priority. And third, is capital allocation. We are open to acquisitions, but we've got to hit the first two priorities first. This foundation was built to scale effectively. The example of Resolution Bioscience this morning fits perfectly into the sales team, IT, it's consistent with our strategy. So that sort of thing, I think, makes a lot of sense. So nothing's changed, but again, the core business is the priority. Great. We've just got a couple of minutes left, maybe three rapid-fire questions to, to cap things off. So you think about the next 12-18 months, what do you view as the two biggest opportunities for your business? We're in a really exciting time at Exact, and we've had a really strong start to the year. We've got to close out the year in with strength. You know, I think the biggest opportunities, first, I would say, is keep growing that top line. With only 10% share in colon cancer screening, there's a long ways for that to run. We've got an exciting time, whether it's looking across our portfolio with Japan finally coming online with Oncotype. We're also entering a period where with a lot of new pipeline launches, MRD later this year, Cologuard 2 before too long, colon blood data next year. So we're at this period where there's a lot coming out of both the core business on market products and the pipeline. So to me, that's the most exciting thing coming right now. And then, on the flip side, as you think about the next 12-18 months, what do you view as the two biggest potential challenges for your business? So I'm an optimist, so I'd, you know, I'd call it a challenge, I'd also say it's an opportunity. We have an internal program called OncoMove. It's an IT initiative where we're taking some of the acquired assets over the years, so the Oncotype products primarily, and moving that onto our IT foundation that was established for Cologuard, established and proven for Cologuard. That the plan is to do that next year. So all the good synergies we've gotten, all the improvements to DSOs and efficiency we've gleaned for Cologuard, will get moved over to the Oncotype franchise. So that's a big opportunity to enhance the margin profile, to improve the cash flow profile, and actually help reach more patients. So that's one of the biggest ones, and with all the... I would leave you with all the external forces out there, whether it's the turmoil over in Russia and the economy and inflation, we've got to take care of our people. So making sure we take care of our frontline, especially, is something we watch closely, and that's something we're fully committed to doing. All right, and then last one: What is something that investors and/or analysts don't ask you about very often—that you wish that they would? You all ask tons of good questions, but I would say the size of this market. I think people really underappreciate how large this market is and how difficult it is to build this foundation. We've invested significantly, IT, lab, sales team, and most importantly, our team. We've got a team of 6,500 people that I believe are the best in the business. That wasn't built overnight, and that's very hard to replicate. All right. Very good. Well, with that, we're out of time. Jeff, thanks so much, and thanks, everyone, for joining. Thanks, Catherine. Thanks to the entire Baird team.