Great. Welcome. Day one of the conference, TD Cowen Healthcare Conference. Dan Brennan, life sciences and diagnostic tools analyst, really pleased to be joined with me on the stage here. Kevin Conroy, CEO and Chairman of Exact Sciences. And to his left, Kyle Stacey, SVP of Finance. So, gentlemen, welcome. Thank you, Dan. It's great to be here. I just have one question for you. It's been, what, three years since you've g one from there to here. What's the biggest change? Oh, wow. Listen, TD Cowen's an amazing spot. TD Cowen's an amazing spot. Great research franchise. Great. Just global team of people. So it's just been really just amazing to be part of it, really. That's the biggest change. And realizing how hard the other side is as well, so. I give credit. So listen, Kevin, you guys just, you know, reported the fourth quarter, got it a little over a week ago. Maybe just from a high level, just kinda recap your view, company's position, you know, momentum, kinda what excites you about 2024. Yeah, you know, Dan, it was 15 years ago, this month that I first had my first meeting, before joining Exact. And so it's been an amazing, really journey. And last year was, like, the proof point that we had escaped this you know, reached escape velocity with Cologuard, with this amazing brand in Oncotype DX. And we have this rich pipeline. And so last year, being able to grow as much as we did on the top line, deliver good results on the bottom line, and keep developing this, pipeline. It's coming into this year, we think about the tremendous growth for Cologuard that will continue, the opportunities that that opens up in the primary care prevention, early detection setting. And then in the oncology setting, with the market leadership that we have with Oncotype DX in the U.S. and globally, the ability to bring that rich pipeline of tissue therapy selection, blood therapy selection, MRD into that call point is exciting. And it starts with last year, we served 4.1 million people. This year, it's gonna grow appreciably. And so you think about this human impact that we can have with great people and this, you know, this focus on eradicating cancer, helping to eradicate cancer with tests that prevent it, detect it earlier, guide treatment. It's just like, that's our north star. We keep going. And, we're in a position now, I think, you look out 15 years, everything is gonna be different in 15 years because of the power of genomics and cancer. And so 15 years from now, we think that we're gonna be in a position to keep making a huge difference. Great. Maybe in terms of, I think, a lot of the excitement last year, in addition to the really strong top line, was, you know, the leverage that you generated and at the Investor Day kinda setting those long-term margin targets. Maybe how do you assess the right balance of investing in the business and continuing to drive margin expansion? And, you know, can you kinda speak to the, you know, kind of what's assumed this year in this whole G&A opportunity that you guys have discussed? Yeah, it's definitely an and. We've gotta deliver on the top line growth and deliver on the bottom line. The way that we articulate it internally, just to really simplify it, is, "Look, if we want to deliver results for all of you, we need three parts growth and we need one part profitability." It's like, you can't miss on the growth. We have to deliver on the bottom line. But Kyle probably can go a little bit more nuanced than that. Yeah. I think it really starts with owning the core business and understanding the market we're operating in. That really helps us understand where to make investments, where to make the right investments, and where to invest to help get that leverage. So I think about sales and marketing as an example. We reduced sales and marketing spend $100 million the last two years while growing the top line $870 million. So you've seen that leverage in the sales and marketing line as we've grown that. It's also helped us understand where to make smart investments, where to spend the right dollars on marketing, and where to add sales reps. So we're gonna keep adding more leverage to that sales and marketing line, but also growing it smartly to grow that top line. When I think about G&A, that's where we can see the most leverage, I think, as we keep growing. We've built a tremendous platform around our IT infrastructure, around our customer experience, around our compliance engine with Cologuard. We can keep leveraging as we grow the business, grow that top line. Okay. So yeah, we can dig back in. I'd love to understand. One of the biggest areas is leverage on people. Kyle joined us one month after I joined Exact Sciences. He was the youngest controller, I think, in healthcare. He has grown with the company to become SVP of Finance. So, I mean, it's just like, he's a great example. Nobody knows the business deeper and better than Kyle across this. As our people continue to grow, we keep seeing that leverage. So that $810 million of growth and $100 million of bottom line, yes, large parts of that were the systems and structure and brands that we have in place. A bigger part of that has been the growth of people. Okay. Maybe just turning over to liquid biopsy. There's a tremendous focus right now on the potential for blood tests and screening, you know, how they fit into the screening architecture. You know, you've talked about in the past how you feel your blood tests will be best in class. Is that still the case? It is still the case. I think that the market has probably missed the point here. There are a couple of competitors out there developing blood-based colon cancer screening tests with next-generation sequencing technologies. It's really expensive on a per-test basis. And there's no structural way around that unless you can convince Illumina to give you reagents for free, which is not gonna happen anytime soon. We've built our test on a really advanced PCR chemistry, similar to Cologuard, actually an improved version that then is in Cologuard. It confers an enormous cost-of-goods advantage. So with similar performance, with our commercial engine, our deep electronic connections and relationships with, let's call it, 300-400 health systems in the U.S. and growing. We have a distinct competitive advantage over those who are trying to build those relationships, build a really expensive primary care sales force, and sell a really expensive test into that field. So we can price, we price Cologuard at about a third of the cost of colonoscopy. We can do the same thing with our blood test, about a third of the cost of Cologuard, roughly speaking, which, like, this isn't a fair competition. Who is going to win this space? We have deep relationships with all the customers. And there is a need. Like, let's be real here. There are 60 million people who are not up to date for colon cancer screening. And we agree with aspiring entrants into this field that there is a need. The question is and it always comes back to performance. What is the relative level of precancer detection, cancer detection, and the false positive rate? Because the blood tests, biologically, there are barriers. It's just harder to detect those early events, precancer or cancer. And as a result, getting into the guidelines for any of these tests is gonna be hard. Does that mean that they're not gonna be a commercial opportunity? No. Getting into the quality measures is gonna be next to impossible. Is that gonna provide a real pushback on the part of payers to pay and doctors to order? Absolutely. But we know who the patients are that are likely to be in the label. And electronically, we can identify those patients, help get them in for a blood draw, and get them tested. So this is actually a really good growth opportunity for us. I would not wanna be CEO of a company trying to compete against a company like Exact that developed technology that will be equal or better performance at a much, much lower price point with a commercial team that is best in the world at what we do. So we're really looking forward to this. And we think that there is upside over the next three or four years and beyond because of our ability to add Cologuard 2.0 to the mix, our CRC blood test, as we call it, to the mix. It'll have a real name at some point. And, so, you know, we think we're really the real question here should be, how can others compete with Exact? So I have a few more questions on this, and then we'll jump back into Cologuard. Just since you brought it up, and it's, you know, it's been a focal point, what do you think the minimum bar is for adenoma sensitivity and early stage sensitivity to warrant USPSTF-type inclusion, assuming any blood test hits this 90% specificity level? Yeah. Okay. So there's a lot in there. Like, what is an adenoma? An advanced adenoma is a precancerous polyp that is 1 centimeter or greater. Cancer or surgery. Yep. Why do you wanna find them? Well, they eventually let's give it 5 or 10 years. And then a 1-cm advanced adenoma, you know, given no other changes, will become a stage I cancer. If you intervene and find that and remove it via colonoscopy, you actually prevent the disease. Now, that's all embedded in the model. So the biggest impact on saving people's lives and gaining life years is, is not by finding cancer. It's actually by finding precancerous polyps and removing them. And that's how the main guideline group looks at this. And the fecal immunochemical test, which has been in market forever, detects 24%-25% of precancerous polyps. So it models well because over time, it takes 10 years for precancerous polyps to turn into cancer. And eventually, you test every year with a FIT test, and you find most precancerous polyps in the model. In the real world, most people don't actually comply with a FIT test every year, but let's put that aside. In the models, you do. With a blood test, you need about the same number of, same percentage of precancerous polyps, 5%. But that the FIT test only has a 5% false positive rate. So it doesn't generate a huge number of unnecessary colonoscopies. At a 10% false positive rate, which most of these blood tests are set at, you generate too many unnecessary colonoscopies. So the cost equation of, the colonoscopy utilization goes higher. So this it's complicated. Suffice it to say is that these blood tests, most likely I'd give it a 5%-10% chance that the blood tests get into guidelines at an A rating, like Cologuard, like colonoscopy, like the FIT test. Is there a role? Yes. Most likely, we think, the label indication and all this has to be decided by the FDA, is that this would be a second-line screening test. And maybe just one more on this topic. So what are your thoughts on, you know, this potential accelerated pathway for getting second-generation versions of blood tests approved? You know, there's a view, you know, companies can make changes to the calling algorithms, and they could maybe run the updated tests on existing kind of samples that have been untouched. And it really could accelerate this timetable to get approval. Is that something that excites you as, you know, your blood test is gonna come out at some point? Or just what do you think about that process? I think it's called the PCCP path. It's a path that has been around for a long time. It's never been used. It certainly has never been used for a screening test. And the idea is that you should be able to go into a study and define two different tests. And the key thing is you have to lock down the definition of the second test before testing the samples. And can you test the same samples that you tested on previously? It's never been done before. Theoretically, are some of these things possible? Yes. In a screening setting, are they gonna not require a new prospective collection of samples? Can you use samples that were used in a prior study? Look, if we could have done that, we would have done it for other tests. But the key thing is, no matter what, you would have to predefine and lock down and not make any changes. The reason is if you show me the samples and the results, I can change the algorithm to improve it if I know what the answers are. I would have done a lot better in college that I know what all the answers were. Got it. Okay. But that is the problem. And one thing that I have learned over time is I would never make public pronouncements about for sure about what the FDA will do or not do. This is up to them. And, you know, I think it's probably a difficult pathway. Okay. Maybe, maybe just moving over to core Cologuard. Tremendous growth last year, tremendous growth the last couple of years. This year, you know, healthy growth, but, you know, below what it's been for a couple of reasons which you've cited. Just kinda walk through some of the levers on that core Cologuard growth for 2024, and kinda what could take you maybe above your guide and kind of, you know, what are the key maybe risks on the downside? Yeah. You know, the Cologuard franchise has come a long way. This year, we'll exceed $2 billion. And that's gonna be a real hallmark for the company and for investors. But taking a step back, the big impact has been on patients. Last year, we had between 3.5 and 4 million people tested with Cologuard. We see a day where that's gonna be 10 million. And that day isn't terribly far off. What drives that? Number one is continued brand strength. Cologuard, 89% of physicians know Cologuard on an unbranded basis. So that is a huge advantage. The deep relationships that we have with health systems, which is where 60%-70% of all primary care physicians today are employed and work. We have deep relationships there. We call on primary care offices kinda by decile of their likelihood to do a wellness visit. And, still today, 10 years after Cologuard was launched, the more frequently you call on a primary care office, talk to them about Cologuard, talk to them about screening, talk to them about rescreens, the more frequently they order Cologuard. So if you take any cohort of physicians that started in any quarter over the last 10 years, and then you track the frequency of their ordering rate of Cologuard, it keeps going up and to the right. And we have never seen a cohort flatten out, even a cohort from the fourth quarter in 2014. That cohort of physicians keeps ordering Cologuard more and more frequently every month. The base keeps growing. So last year, we had 40,000 first-time users of Cologuard from a healthcare provider perspective. If you add this together, that gives us a lot of excitement about the future. And there are 60 million Americans today not up to date with colon cancer screening. So one thing we know is the opportunity is not going away. It's also why we believe the blood test someday will achieve 2-3 million tests per year or more, maybe. And we again will be talking to those physicians about Cologuard 2.0, blood tests, RiskGuard, our hereditary test, and then other tests will be launched into that primary care setting too. So that's the exciting thing is there's growth and growth and growth for years to come. And our relationships with the offices and the physicians only continue to strengthen. So, you know, rescreens were, I think, 20% of revenues in 2023. You said it would be a bit higher in 2024. And you had the headwind last year, obviously, looking back to the COVID period. So, you know, I think, you know, we're modeling, I think, rescreens to go up to 24% in 2024, a little bit of a benefit 'cause as you don't have that headwind. I don't know. Any way to think about the headwind in 2023 and the success on rescreens and what that could mean for 2024? So the headwind that Dan is talking about is that during COVID, we had two years that we were essentially flat with Cologuard. And so in 2023, the patients from 2020 were due for rescreen. That was 1.2 million people. This year, it is 1.6 million people are due, so a significant increase, about a 33% increase in people who are due for their second Cologuard test. This is happening at a time that we're getting better at electronically notifying a patient that they're due for rescreen. For example, last May, I was sitting in a meeting, and my phone buzzed. I, I looked at it. I probably shouldn't, but I looked at it. And it was, "Kevin, you, you're overdue for colon cancer screening," was the message that came through my chart in Epic right to my phone. So this originated from my health system as a reminder. Oh, I clicked on it. By the end of the, you know, the meeting, I had a Cologuard kit being shipped to my home. It was that easy. I could request electronically a Cologuard order. Those are the types of things we're doing to make it easier to get that Cologuard test. The other thing we do is we allow a physician to order Cologuard 12 months in advance. So when one of our reps goes into an office, they know how many Cologuard tests will be due in the next 12 months. That rep doesn't see the names, of course, of the patients but can provoke an email right from their app directly to the doc. And the doc then can enter in all of those Cologuard orders. Or that will go to the medical administrator in the office who does that work. So what we're seeing now is an appreciable number of orders every day, every week, every month of orders for people who are due 12 months from now, anytime during the next 12 months. And those are the types of, you know, unique competitive investments that we've made over time that it's just hard for people to replicate. Got it. And in terms of success, I know you've had a lot of success at getting the compliance on those rescreens from three or four years ago to where you are today. Is there still more room there? Like, where do you sit today? Yeah. Well, we've grown from when we first started doing this, and we'd call the patients and ask them to call their doc, we're you know, maybe we're at 20% or 30% compliance. And now, it's closer to between 50%-60% compliance. And we expect that to go to 80% over time. When people get, a Cologuard kit the second time, they complete it 8/10 times. For people who are due for their, third year, or third Cologuard test, 9/10 people return the collection kit. So you keep getting better over time. And this provides a recurring part of the Exact Sciences revenue base that's very exciting. Over time, 50%-60% of our revenue will come from customers who were prior customers. So this gives us the ability to do longer-term financial planning, margin improvement, etc., that we're excited about. You know, on the 45-49, tremendous success there. And that's also, I think, around 20%. And we've kinda moderated that a little bit in 2024 just because it's gone up so quickly. But is that fair to moderate, like, the impact just because you've had, you know, such traction there? Or could that traction keep going on? Traction with. With 45-49? Like, it's really been a steep, steep, percentage. Three years ago, the main guideline group, USPSTF, lowered the screening age from age 50 to age 45. That meant there are about 20 million people in that age group. Let's say only 2 million of them had ever been screened, 18 million people not up to date with colon cancer screening, 19 million people, something like that. Every year, there's another 4 million people that age into colon cancer screening. We see that eventually going to the same rate of screening or compliance as you have in the 50 and older crowd, which is let's call it 2 out of 3 people are up to date with screening, age 60 and older. This is an enormous opportunity for growth. A lot of primary care docs, three years later, still don't know that the screening age has dropped. Our job is to educate them and to get them to think Cologuard first. And, you know, one thing we haven't talked about, and I don't know if we're gonna get to it. So let's pretend you asked me a question about Cologuard 2.0. Yeah. It's coming up. Yeah. One of the most exciting things this year is the hopeful approval of Cologuard 2.0 as the next-generation Cologuard test. And the performance of Cologuard 2.0 is a 30% improvement in the false positive rate, a reduction in the false positive rate. This is one of the if you poll docs and ask them, "Why do you not order Cologuard?" the false positive rate at 10% or 13%, depending on how one calculates, it's too high. Well, there’s a 30% reduction in that false positive rate. That also allows us to capture economic value for that improvement. So, you know, we will seek a price increase, and we think that's justified based on the significant investment that we've made there. We expect to introduce Cologuard 2.0 next year, see patients realize the benefit of that, the healthcare system. There could be, on an annual basis, $500 million reduction in unnecessary colonoscopies because of this improvement. Well, we should see our fair share of that innovation. And, and we would expect to. And we're already working on Cologuard 3.0. So we see a day where the performance of Cologuard is very similar to the performance of screening colonoscopy. And, and, you know, that puts us in a leadership position over the next three years, five years, 10 years. And we're just committed to doing it. Could you speak a little bit back to sales and marketing, just the reinvestment there, kinda the leverage you got in 2023, and now you're reinvesting, and is that gonna drive acceleration above what you've guided to? Is that a 25 benefit or just walk a little bit through, like, what you're doing in sales and marketing? So our big marketing expense, of course, is advertising. Think about 70% of that is still done on TV. Over time, that's gonna come down to 50% and then less. Streaming advertising today is the most effective advertising you can do. It's four times as expensive as television advertising. It's six times as effective. So streaming, there's gonna be more of. Digital and social, there's going to be more of. And then on the sales side, we have a significant primary care sales force, and about a 100-person health system sales force and about a 60-person health information technology team that helps implement solutions. So you have a big, huge organization. In 2022, we turned the dial up on both of those efforts. In 2023, we turned it down on both of those efforts. I think we found the peak, and we also found the minimum that we would invest. And I would say the answer is somewhere in between those two. And as Cologuard becomes a $3 billion-$4 billion franchise, and you add in hereditary cancer testing and colon cancer blood testing and other tests, that you probably end up with a larger primary care sales force, but you get leverage because that cost as a percentage of sales keeps going down. So that's the way that we look at it. 2023, where we generated incredible leverage, we probably turned the dial down a little bit, too much, on just the sheer size of our sales force activity. The reason being is we know that if we call on a decile 5, 6, 7 doctor, they still see a decile 5 physician may do seven or 800 wellness visits a year. Well, if half of them are not up to date with colon cancer screening, that's an opportunity of 250 Cologuard tests per physician in the middle decile. Today, we don't call on those physicians frequently enough to move the needle as much as if we called on them a little bit more. So you've got an RNA-based stool company. Obviously, you guys are in a bit of a patent case with as well that's seeking to come to market. Just how do we think about the profile of that test? Like, you know, could that have a real impact in the market? Obviously, there's a patent case that's ongoing. So that could also kinda withhold that approach to getting to market. So any call you can provide there? Well, first, I think what we'd say is we welcome competition because the mission here really is to eradicate colon cancer and let the best test for patients win. What we're really proud of on our end is highest performance and being willing to run a test always with a comparator. One thing you'll notice, the other folks who have run these clinical trials, none of them have run a test head-to-head against a FIT test, which is guideline-recommended and included. We've done that with both of our major studies. And there's a reason for that. So we can compare the performance of our tests against a known quantity. You know, I'm not gonna comment about that particular company. Suffice it to say, you wanna run these studies where you see the FDA typically has suggested to us you need at least 60 cancers in a study for it to be really robust. And we had 98 cancers in our BLUE-C study, which supported our submission on Cologuard 2.0. So the performance level is just there is, we believe, is very important for you to perform really well in a large, well-designed study that is also representative on an age basis. So you know we're very confident where Cologuard 2 we're Cologuard 1.0, our current version of Cologuard, and Cologuard 2.0 are going to go. And we keep a close eye on what others are doing. And we're confident that we we've taken the best approach. Maybe just shifting to MRD. You know, you have your CRC MRD tests, I think, expecting Medicare coverage this year. You've indicated the tests will be competitive and unique. Can you just elaborate on is that timing intact, and how will the test be differentiated? Yeah. We have guided to submitting to MolDX for Medicare coverage this year. How long that takes, we haven't guided to. But with data showing the performance in colorectal cancer based on sample cohorts that extend over time, so you can see the performance of an assay, and the sensitivity of that assay in consecutive blood draws for patients who've been diagnosed with cancer. Then, next year, we will submit to MolDX on a breast cancer cohort. And we believe that over time, our MRD test OncoDetect will address a significant percentage of the population. Again, one of the advantages that we have here is that we see about half of all the breast tissues in the U.S. because of the strength of Oncotype, which is standard of care. Oncotype gives a risk of recurrence. So you really know the patients who are at the highest risk of recurrence for breast cancer, those that are higher than a 26 on the Oncotype DX score. And those patients, we believe, over time will be tracked with an MRD test. And, of course, we're in a good position to be able to deliver on that. Kinda, when do you think investors would see performance data for CRC and breast? that will be next year. We haven't given guidance as to what part of next year. Got it. Okay. And at the investor day, you indicated you'll have the best MRD tests and generate multibillion in revenues. Has anything changed in your view? I'm not quite sure it was stated exactly that way. I think what we said around our oncology, precision oncology, will be a multibillion-dollar business. And I think that is accurate. I think that we believe very strongly that the technology that we approach, which examines looks at more mutations and has a selective way of amplifying the mutants, will confer a higher sensitivity advantage. But I'd have to see the transcript to say that we said it was gonna be the very best and multibillion. But it looks at OncoDetect. And, you know, Natera's done a really great job of developing this market. And, you know, you hope that our field continues to advance by doing those studies the right way, because this eventually is gonna help. Most patients diagnosed with cancer are going to get an MRD test that helps guide treatment, either escalation of treatment or de-escalation of treatment. I always use as an example a friend of mine who was diagnosed with kidney cancer and post-treatment, they saw two mets on her pancreas from the kidney. And she got. I actually called the CEO of Natera, and Steve Chapman, and Steve said, "Yeah. We'll get somebody over there." They collected a tissue sample. We actually, at the time, we're doing the sequencing work. Well, they tracked Carol's blood work, and now she's going on three years without a positive result. Well, at some point in time, is she gonna be able to de-escalate Keytruda? Maybe. I mean, she's seemingly perfectly healthy. And the beautiful thing is they can't see those mets. Right. So, you know, it's a powerful framework. And one of the things that we're excited about is a day where you see NCCN guidelines recommend, on a broad basis, this type of testing. And so although we're coming to this a little bit later, obviously, than Natera, and Natera's been working on this for five or six years, this is gonna be a big market, and there's gonna be multiple players in that market. And we have a lot of advantages that it is going to give us access to this big, important market. Kevin, what's the message to leave with investors? I think, discipline, really great people who approach things in a disciplined way. They think about things in a disciplined way, and they take disciplined action. And so that is gonna lead to continued growth. The growth that you saw last year was because of a lot of the work that we did in the many years before that. There was a discipline to that work. I think that you're gonna see that discipline is gonna translate into top-line growth and bottom-line growth. And as we mature as a company, we're going to be able to launch new products, this big, exciting portfolio that we bring to our customer base through our this big, really well-connected IT engine that is second to none. Excellent. Well, thank you, Kevin. Thank you for being here with us today. And, yeah, hope you have a great rest of the conference. Thanks, Dan. Thanks, Kyle.