Exact Sciences(EXAS) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter revenue reached $638 million, growing 6% on a reported and core revenue basis [9] - Screening revenue was$ 475 million, an increase of 7%, with a 24% growth on a two-year compounded basis [9] - Precision Oncology revenue grew 5% to $163 million, or 4% on a core basis, excluding foreign exchange and M&A impacts [9] - GAAP gross margin was 70%, while non-GAAP gross margin was 73%, slightly lower year-over-year due to fixed costs from automation [10] - Net loss for the quarter was$ 110 million, with adjusted EBITDA at $39 million [10] - Free cash flow was negative$ 120 million, consistent with seasonal trends, but robust cash flow generation is expected for the rest of the year [11] Business Line Data and Key Metrics Changes - Cologuard adoption increased significantly in large health systems and organized screening programs [8] - Oncotype DX international ordering providers expanded by over 20% year-over-year [8] - The company launched a hereditary cancer test, Risk Guard, to its oncology channel [8] Market Data and Key Metrics Changes - The company tested over 1 million people globally for cancer and rare diseases in the first quarter [7] - There is a significant backlog in colonoscopy screenings, with wait times increasing to three to six months [56] - The number of patients due for rescreening continues to rise, with 400,000 new patients expected in Q2 alone [27] Company Strategy and Development Direction - The company aims to grow Cologuard and Oncotype DX as its top priorities, focusing on high-return pipeline opportunities [12] - Investments in sales and marketing are expected to yield greater demand for Cologuard and Care Gap programs in Q3 and Q4 [13] - The company is set to launch new tests over the next 18 months, including OncoDetect and Cologuard Plus, which will enhance its diagnostic capabilities [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving annual revenue guidance of $2.81 billion to$ 2.85 billion and adjusted EBITDA guidance of $325 million to$ 350 million [12] - The company anticipates faster year-over-year growth for the remainder of the year, particularly in the second half [12] - Management highlighted the importance of health systems and payers in improving screening rates through financial incentives [18] Other Important Information - The company ended the quarter with cash and securities of $652 million, with pro forma cash reaching$ 912 million after refinancing [11] - Management emphasized the need for continued investment in sales force growth to capitalize on market opportunities [72] Q&A Session Summary Question: Cologuard growth outlook and profitability drivers - Management highlighted the significant opportunity in the U.S. with 16 million people not up-to-date with colon cancer screening and the deepening customer relationships [27] - Adjusted EBITDA decline was attributed to tough comparisons from last year and the impact of automation on margins [31] Question: Competitive landscape and CAGR considerations - Management noted that new entrants face challenges in gaining acceptance in quality measures, which takes time [36] - The two-year growth rates were emphasized as informative due to unusual growth last year [38] Question: Cologuard orders and transitory impacts - Management acknowledged a more typical flu season affecting screening rates and emphasized the importance of rescreening as a growth driver [46] Question: Revenue upside and rep additions - Management indicated that adding reps would provide significant leverage and that investments in sales force growth are essential for future success [50][72] Question: Colonoscopy backlog and FIT conversion - Management reported a three to six-month backlog for colonoscopies and noted that Cologuard is converting patients from FIT tests [56][57]