Okay, welcome everybody. Good afternoon. I'm Matt Sykes, Life Sciences Tools and Diagnostics Analyst at Goldman Sachs. I have the pleasure of hosting Exact Sciences for this session. Kevin Conroy, the Chairman and CEO, and Aaron Bloomer, the CFO, are here with me. And Kevin, Aaron, thanks so much for taking your time today. Really appreciate it. Thank you. Thanks for having us, Matt. It's great to be here, even if we all get stuck here with the storms. If I could just start by maybe talking a little bit about Exact Sciences. Our vision is to play a role in helping to eradicate cancer by preventing it, detecting it earlier, and guiding treatment. It's an open-ended growth story. We have guided from 2022 to 2027 to 15% growth and exiting at that point with over 20% adjusted EBITDA margins. It's a wonderful platform that we have built, and it all starts with a team of incredible scientists and people that lead to tests that actually impact clinical decision-making. We've seen that with Cologuard, which is becoming the number two way to screen, just slightly behind colonoscopy procedures every year in the U.S. now, and it's growing at a fast clip. Oncotype DX, which has become standard of care for early-stage breast cancer patients. This is driven by running large clinical studies that actually answer the question. Those key elements are fundamental to what we're building at Exact. Also, having a commercial organization that is at scale and can reach and educate physicians and also patients. That's all built on this platform that is second to none in cancer diagnostics. We call it the Exact Nexus platform, and it gives the ability to electronically order, get a result, do prior authorization, billing of the elements that make it very easy for physicians to order and figure out what is the next step they should do with this test result. Then finally, that leads to growth and profits and growing revenues, which allows us to continue to hire great people. That's the key aspect of Exact. One thing that we'll highlight is we have a lot of things coming up in the next 6- 9 months with Cologuard Plus potentially being approved by the FDA. I'll just take a second here to highlight Cologuard Plus as an advancement in colon cancer screening because it detects 94% of cancers. It's an improvement over Cologuard, 43% of precancerous polyps. We had a 30% reduction in the false positive rate of Cologuard, so 91% specificity, 93% specificity for people who have nothing removed from their colon. Cologuard Plus sets a new standard for colon cancer screening. We also have a blood-based colon cancer screening test, and we have a molecular residual disease test in the Precision Oncology part of Exact Sciences. We have two key business units, the Precision Oncology business and the Screening business. Happy to take any questions from you and also the audience, please. Great. Thank you, Kevin. You answered all my questions, so we're probably good to go. Thanks very much for those comments. I think it's super helpful. I want to start with Cologuard, and I want to start with a high-level question. It's maintained very strong growth, continues into this year. Could you talk about sort of the runway, the penetration rate that Cologuard has? Obviously, you'll have Cologuard Plus coming on, but just if you think about the Cologuard franchise in general, and you think about the penetration, and you think about potential competition coming in, what is that runway for Cologuard that you see? This is an open-ended growth story. To be relevant in colon cancer screening, first of all, it starts with great performance. You need to detect precancerous polyps and stage I cancers. Cologuard does that. It does it better than the FIT test, which was the, you basically have colonoscopy and the FIT test, and then Cologuard came in with data and performance much better than the FIT test. The FIT test just looks for blood in the stool. And so you need that as a starting point. You also need to be in the quality measures. You need broad insurance coverage, and you need to be in the key guidelines. These are things that tests with inferior performance probably never are able to obtain because performance truly matters in screening. And so that has allowed us to build a big commercial organization. In terms of penetration, we see the ability to go from approximately 4 million Cologuard tests per year to north of $2 billion in revenue to $7 billion in revenue and about 14 million Cologuard tests. Let's put that in context of colon cancer screening in the U.S. If you look over the last 10 years, there have been between 5 million-6 million screening colonoscopies performed in the U.S. every year. The wait times are growing, and there are 60 million people between the ages of 45-85 who today are not up to date with their colon cancer screening. So that's the open-ended growth part of this story. Maybe Aaron can talk a little bit about the progress throughout the course of this year. Yeah, for sure. So we're excited. We obviously have a ramp in the back half of the year, very consistent with what we've seen in prior periods as well. So historically, over the course of the last 7 years, roughly 45% of our revenue has been in the first half of the year, about 55% in the back half of the year. And we're really excited about a number of tailwinds that we have heading into the back half of this year as well. First and foremost, a number of patients eligible for a rescreen. So it's largely remained flat over the last couple of years coming out of COVID. So last year was 1.2 million patients eligible for a rescreen. This year we'll have 1.6 million patients eligible for a rescreen, and more of those patients become eligible in the back half of the year. The second thing that we're excited about is our Care Gap program. So partnering with health systems and payers truly helps address quality measure gaps that they have around getting their patients screened. Most of that is also more back-end loaded. So you put that together with the comp and how we typically see seasonality, we're really excited about how the phasing works in the back half of this year. Got it. Maybe I want to touch on something, Kevin. You said a little bit earlier about the infrastructure that you guys have developed, particularly on the commercial side. And I think there's a lot of focus on new technology that gets introduced and maybe too less focus on the fact that it costs a lot of money to develop the infrastructure to sell it. And so as you think about what you've developed for Cologuard, particularly facing what I would consider one of the most difficult channels to face, which is the PCP market, and what you've developed there, how are you thinking about adding additional tests in? And I'm thinking about the blood screening test potentially and others that gives you an advantage longer term versus some of the competition. If I go back to 2012, two years before we launched Cologuard, we went to a preeminent healthcare consulting firm and said, "Should we go to the large labs and sell Cologuard through the labs, or should we build our own primary care salesforce?" I still have a copy of this report. It said, "Under no circumstances build a primary care salesforce in the diagnostics. You can't make the numbers work." Well, we've shown that you can make the numbers work. The reason being is this is a test that there's a big population and the gross margin profile with a PCR-based test that's a lower-cost way of delivering a very accurate result through the magic of our R&D team that allowed us to build that. Now that we have built it, it is a huge asset. I'll give you an example. Last quarter, 176,000 unique healthcare providers ordered Cologuard, 10,000 of them for the first time. The way to educate them is to reach them with multiple means of communication, from digital communications to our call center to our sales force. That sales force can't call in 176,000 all at once. You've got to do that over time with very sophisticated targeting. Our sales force is a huge opportunity for us as we have this pipeline of tests. Cologuard Plus, that's going to require educating physicians about the benefits of the improved performance. Our blood-based colon cancer screening test, a test for liver cancer, blood-based test for liver cancer, a test for esophageal cancer, and a test for endometrial cancer if you look out over the next five years. So our pipeline is robust. There's only one company in diagnostics that has successfully built a primary care salesforce, and that gives us a huge opportunity. When you think about other companies trying to come in with their blood test that's really expensive, with lower performance, can't detect precancerous polyps, not good performance for Stage I cancer, boy, it's just a real challenge to launch a test like that into primary care. Got it. I think that the commercial infrastructure you've built for PCP is highly relevant to the potential blood screening tests that you guys are developing. On the MRD side, could you maybe talk a little bit about how your commercial infrastructure could benefit the MRD and maybe give the audience an update on where you are on MRD in terms of timeline? Yeah. So minimal residual disease testing is one of the biggest advancements to come to the field of oncology. It starts with the idea that if you probe the tissue from the tumor and you find mutations, and then you develop a bespoke blood test for that patient after treatment, you can determine did the surgeon and the oncologist with chemotherapy get all of the tumor. That's a really important question to ask because survival depends on taking that tumor burden down to zero or near zero. Then being able to test on the test will have data we'll submit for the goal is the colon cancer space, which is the fastest growing tumor type for MRD testing. I told the story of a friend of mine who has kidney cancer, was detected Stage IV. She had an MRD test, and after initial treatment, you could no longer see the two mets. There was zero now for three years detectable circulating tumor DNA that is matched back to her tumor. That's fantastic news. Now that can potentially change how she is treated. That is something that can eventually apply across all solid tumor types, we believe, and is a really important opportunity to have an. How are we going to deploy that? Our Oncotype DX, our precision oncology team, Oncotype DX has about 90% market share. That means about 90% of oncologists in the U.S. and community settings and academic medical centers are utilizing Oncotype as a matter of course. They know our commercial organization. They know our customer service organization. They trust our lab with a tissue block. They don't just send the tissue block to anybody. That tissue block is the starting point for an MRD test. So it's that Genomic Health acquisition that we did in 2019 and the incredible reputation of Oncotype is a starting point for great things to happen in the future in MRD. Got it. And Aaron, I want to go back to you for a second on Cologuard. You mentioned two of the opportunities in rescreening Care Gap. First on rescreens, you expect them to reach 50% of your business in the long term. I think it's somewhere around 20% today. Could you talk about the opportunity you're seeing there in the path towards that 50% in rescreens? Yeah, absolutely. As I mentioned earlier, first of all, the patient continues to grow. So it was 1.2 million last year. It'll be 1.6 million this year, more than 2 million the year after. And one of the benefits that we get from rescreen, obviously, is even higher patient compliance and adherence as well. And so as they become eligible for the second time, the third time, they're obviously very brand loyal. And so the adherence compliance rate is even better. Experience and customer care organization that calls on them, they notify not only the health system, but also the patient as to when they're going to become eligible for a rescreen. So we can send them a text or through MyChart and say, "Hey, you're eligible for a rescreen now. You're going to be getting a Cologuard. So please complete it." And so there's many different activation techniques that we have to be able to continue to grow that. And we see that to about 50% of our revenue over time. Got it. And then just on Care Gap, maybe explain to the audience kind of what the Care Gap is, what the opportunity is, and how you're sort of working with payers and systems in order to facilitate that. Kevin, if you want to take it other way. A Care Gap program is a program that is initiated by a large payer or a large health system. Medicare and also large commercial insurance plans, employer insurance plans emphasize the need for prevention. The way that you focus and drive and measure prevention is looking at quality measures. What percentage of the patients in your population are up to date with breast cancer screening, cervical cancer screening, colon cancer screening, blood pressure testing, etc.? Over the last decade or so, these plans have focused on FIT testing, shipping out these little FIT tests, which are not very sensitive for colon cancer, but it's cheap and it gives you a one year quality credit. Now these payers are using Cologuard in a similar way, but with Cologuard, you get three years of quality credit because that's the recommended interval for testing. And they love that because they engage one time with the recalcitrant patient. We help get them tested with our compliance services engine, telephone, customer service, digital outreach, all of that. And that's on our dime. And we get paid on success. So we have seen an incredible uptake last year. In the back half of the year, this became a nice business. This year, it's growing at a really fast clip. So these payers are driving it, but also the health systems. Put this in perspective, right now we're in discussions or active programs with about 60 payers and 30 large health systems where they want us to ship collection kits and letters and communications to patients who are not up to date with screening. By getting 20%-40% of them to return those kits, what you do is you're attacking that 60 million patient problem, those people who are not up to date with screening. Aaron, maybe you can kind of contextualize the upside in the Care Gap and the rescreens, either in the context of 2024 or longer term. Yes. We haven't officially sized how big the Care Gap program is. As Kevin said, it was a nice business for us. That really started in the back half of 2023 in a meaningful way. We've seen significant growth and progress even in just the first six months of this year. As Kevin mentioned, we have line of sight with the 60 payers and the 30 health systems to a very robust pipeline. These are large orders that get dropped in. Just huge kudos to our billing, our customer care, and our lab organizations that are able to respond to this in a very quick and meaningful way and get kits shipped out timely and partnering with the payers such that the patient has a good experience. We size what that means, but meaningful, meaningful growth in the back half of the year coming from this. Got it. And then recently, you've reached profitability and you actually pulled forward that target pretty meaningfully. And could you talk about sort of some of the operating levers that are in the business, I think particularly on the G&A side, and what that can mean to profitability in that path and margins going forward? Yeah, of course. So first of all, the Exact Team has done just a phenomenal job setting the infrastructure for this in place. So as you mentioned, we did break through and reached profitability last year. We posted 9% Adjusted EBITDA. And in 2024, we continue to track ahead of our long-term objectives as well. If you look at the guidance that we put out, it would mean roughly another 300 basis points of margin expansion in 2024. Most of that is going to come through operating leverage through G&A. And so we have a number of things that sits in our G&A that is really a differentiator for us, and it's helped fuel Exact's growth to get us to where we are. So two key ones to call out would be our Exact Nexus IT platform, which is a competitive differentiator, as well as our customer care and experience organization. That being said, we've scaled those. We're going to be a $2.8 billion revenue company this year as we look to continue to grow. One way to kind of think about this would be if we were to hold our G&A dollars flat over the course of the next couple of years, and you take our 15% revenue growth guide that Kevin talked about earlier, you'd get about 10 points of operating leverage just on the G&A line alone. We expect to see operating leverage across all lines of the P&L, but G&A certainly is the one that's the most scalable. Got it. Maybe just shifting to the Precision Oncology business a little bit, so much focus on Cologuard. You had mentioned the Oncotype DX and the dominant position you have there. I did want to ask you about the international opportunity within Precision Oncology because I know it's not a large part of the business, but the growth is there. Maybe just talk about how you think about the international opportunity for Exact Sciences. Oncotype DX has been transformative to how women are treated for breast cancer, especially early-stage HER2-negative, HR-positive tumors. So this is a large percentage of women diagnosed with breast cancer. And Oncotype DX answers two questions definitively with two major randomized outcome trials and altogether probably 100 publications. It answers the question of, will this particular patient benefit from chemotherapy or not? 80% of patients don't benefit from chemotherapy. So this test accurately predicts which group will benefit and which group should probably get chemotherapy. The other question is it answers the question in the future, who is likely to recur and what that level of recurrence risk is. And so this test has been, it probably has almost 80% adoption in the U.S., and we have a 90% share in that class. Outside the U.S., adoption penetration is probably 25%, and we have about 75% share. So we are actively growing markets around the world. For example, in September, Oncotype DX has been in market for over a decade. Japan is now paying for Oncotype DX. And in about a 7-8-month period of time, Japan is the second largest market in the world. So we have the ability to keep growing Oncotype in countries where there is not a high percentage of patients getting tested. And then on top of that platform, so we have about 250 incredible people globally, we can bring additional tests, including an MRD test to patients. It took about a decade to build that international commercial organization that could deliver what is now a very profitable base of business. And we can reinvest those profits into products that we can bring to the rest of the world, like MRD and also Cologuard because today Cologuard is limited to the U.S. Got it. If we turn to your pipeline for a little bit, and one of the things I wanted to discuss was the blood test for CRC screening. You've mentioned that you're guiding sort of to a data release in October. How do you see the blood test fitting into the overall Exact Sciences portfolio? What do you see as the role of blood in CRC screening? Yeah. So first of all, there's some challenges, real challenges with getting a blood test to be adopted. I talked about the performance of Cologuard Plus, 90+% cancer detection, 40% precancer detection at a 91% specificity or 90% false positive rate. With blood testing, the data that has been out so far says about 80% cancer detection. And basically, these tests are blind to precancerous polyps. And it's a flip of the coin for stage 1 cancer detection, approximately. And the challenge is that those are the things you can't miss. You don't want to miss these precancerous polyps, and especially you can't miss stage 1 cancer. But the blood tests, colon is designed really well by nature to keep things from the gut out of the blood supply. The studies in this field of blood-based colon cancer screening show that the DNA from the cells that start growing on the inner lining of the colon don't make its way into the blood supply, those precancers. So that's part of the problem. As a result of the low precancer detection, it's very tough to get into the guidelines because the guideline modeling folks understand, and their models show that 83% of the benefit of detecting things comes from detecting precancerous polyps. That leads to prevention, which gives you more QALYs gained. And you can't get into quality measures if you don't get into the pivotal guidelines, USPSTF. So that's another part of the problem. And then you have cost-effectiveness. The AGA, the most respected gastro society, recently commissioned, interestingly, by Exact and two of the aspiring entrants into the blood business, two modeling studies with the best colon cancer screening people in the world who did the modeling. And both of them concluded, here's one, compared to the FIT test, Cologuard, colonoscopy, blood-based screening was not cost-effective with a decrease in quality-adjusted life years gained and an increase in costs. And even if you assume that a blood test had an uptake in compliance for which there is no evidence relative to the FIT test by 20 percentage points, it is still less effective and more expensive. So these are the folks who actually are involved in the modeling efforts, like Ann Zauber runs the modeling group that informs the guidelines. And they concluded that it's basically blood testing is not ready for prime time. This group concluded that potential benchmarks that industry might use to assess an effective liquid biopsy test would be sensitivity for Stage I through III CRCs or cancers of 90% and sensitivity for advanced adenomas of at least 40%. That's the Cologuard performance. And so those are the challenges. We think there is going to be a market for people who refuse colonoscopy, the Cologuard or the FIT test. And we are able to identify patients who have refused Cologuard and guide those people to a blood test with the hope of bringing them back into either Cologuard testing or colonoscopy testing in the future. We have a system that is built for that, and that is our commercial platform. And then our IT platform also gives us a huge advantage. There's one other thing with our approach to blood testing, and we expect our pivotal study to read out this fall. We're shooting for October, that our test is built on a very unique, sensitive, and specific PCR platform. PCR is a heck of a lot less expensive than next-generation sequencing than others. So we can price this at a price point that makes sense to the health system. Whereas I don't know if you gave Exact Sciences a next-generation sequencing test. You're hearing about pricing of $900. It just doesn't make sense. That's an uphill battle to get Medicare Advantage plans to pay for and commercial plans. So we think that to the extent that a blood-based market does develop, we're in a perfect position with our sales force, a PCR-based lower unit cost test in the range of, let's say, $100 cost of goods, and the ability to drive this through our platform. So we should be the winner in that space. Got it. And maybe just going back to Cologuard Plus for a minute, maybe just talk about sort of, obviously, we're looking to post approval, but in terms of the rollout, and then talk about maybe, Aaron, your side, the COGS differential between current Cologuard and Cologuard Plus and what that could look like financially for Exact as you kind of phase that product in. Yeah. So the rollout we will start, the goal is late first quarter, early second quarter of next year in that general time frame. I mean, we still need to get FDA approval. So that's one of those forward-looking statements here. And the goal is first to launch that into the Medicare population as we work through contracting with commercial payers. We will be seeking a modest price increase. And the economics of Cologuard Plus generate less cost downstream because of a lower false positive rate, fewer unnecessary colonoscopies, more savings to the health system. Yeah. So then just in terms of the margin impact, the single biggest benefit will be from wherever the modest price increase ends up landing over a phased-out approach. But the unit cost on Cologuard Plus is also lower than existing Cologuard by about 5%. Got it. Can we just talk about for Cologuard compliance, adherence, and trends that you've seen? You've been sort of in the high 60% in terms of adherence. As rescreens start becoming a bigger and bigger part, one would assume that adherence or rescreens is just better than first-time users. Maybe talk about what your expectations are for adherence for Cologuard and steps you're taking to improve that. Sure. Yeah. So as you become eligible for your second rescreen, you typically have about closer to an 80% compliance rate. And then the third time, it's 90%. And so it's intuitive, right? The more familiar you are with the product, again, you're going to be completing and more compliant than the first time going about it. As Kevin talked about before, though, we've got a commercial engine, an IT platform, as well as a lot of digital. So again, really help drive that compliance rate up over time. We could see that going north of 70% over the course of the next few years as rescreen becomes a greater percentage of the total population. Got it. I do want to go back to one of the things that you've talked about in terms of investments. You made some investments into automation in the first quarter. It kind of hit margins a little bit, which is expected. But maybe just talk about sort of the level of investment you're putting into automation and what the eventual output and efficiency will be from those investments. Yeah, absolutely. So what we've said is that by 2030, we will have roughly $200 million worth of annualized savings coming through from an automation perspective. And as you think about what's in our lab, obviously, one of the things that we want to do is continue to have cost out. And the single biggest opportunity to do that, apart from the compliance that we talked about before, would be on automation. We did implement automation equipment that went live in Q1. Anytime you implement automation equipment, you always kind of have this added cost in the quarter that you do it and the quarter following because you've got the depreciation, plus you still have all of the labor and the staff to make sure that you can get the kits out the door. But we're really excited about what that looks like in the half of the year and into the future. It's a big part of our gross margin improvement over the course of the next few years. Got it. Maybe just in the time we have left, maybe, Aaron, you could talk a little bit about sort of capital deployment and how you're thinking about that. There's been a lot of organic investment. You guys have talked a lot about the pipeline and a lot of the projects you have going on. How are you thinking about capital deployment balance sheet just in general? Yeah, for sure. So our number one priority continues to be reinvesting back in the business. So our North Star is to continue to ensure that we're investing back in the business in R&D as well as in sales and marketing to sustain the top-line open-ended growth story that Kevin talked about. Our highest ROI continues to be on sales and marketing investments. That's going to be the priority. We always are looking at M&A opportunities as well, provided that it's a good strategic fit. It's a cultural fit into Exact Sciences, and it can augment the technologies or be able to drop into the existing either commercial infrastructure that we have or our IT Exact Nexus platform as well. But we will be looking at more broadly capital deployment and how we think about the balance sheet into 2025 and beyond. Got it. And just some closing remarks from you, Kevin. Maybe what do you feel is underappreciated about the Exact story currently? I'm thinking it's probably back to the start. This is an open-ended growth story with needs in the precision oncology area with MRDs. That testing is about 5% penetrated. And with colon cancer screening, it's Cologuard. It has It has an 11% share. And we expect that to grow significantly over time. We can take Cologuard alone to about $7 billion in revenue, driven in part by the constant improvement and how we will continue to reset the bar for performance. International expansion is a huge opportunity. All of this comes back to the culture and to the commitment of the people at Exact who come to work every day to live out that vision of playing a role in helping to eradicate cancer. So we're excited about the year. We're excited about the next five years. We're in a golden era of cancer diagnostics, and we hope to lead the way. Perfect. Kevin, Aaron, thank you so much for joining us. Really appreciate it. Thanks, Matt. Thank you.