Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Exact Sciences Corp (EXAS, Financial) screened over 1 million people in a quarter with Cologuard for colon cancer, marking a significant milestone.
- The company achieved a record adjusted EBITDA of $110 million, reflecting strong financial performance.
- Exact Sciences Corp (EXAS) reported year-over-year core revenue growth of 13%, driven by increased penetration of Cologuard and international growth of Oncotype DX.
- The company generated $71 million in free cash flow, a $5 million improvement from the previous period.
- Exact Sciences Corp (EXAS) secured an exclusive license with rights to sublicense patented sequencing technologies, strengthening its intellectual property portfolio.
Negative Points
- There was a slight decline in non-GAAP gross margin by about 190 basis points, attributed to prior period billing corrections.
- The transition to Cologuard Plus may take 12 to 24 months for insurance coverage to fully convert, potentially delaying revenue realization.
- The company faces challenges in the blood test market, with concerns about performance and guideline inclusion for its blood-based colon cancer screening test.
- Exact Sciences Corp (EXAS) anticipates a complex process for setting a new Medicare rate for Cologuard Plus, which could impact pricing strategy.
- The company did not provide specific sizing for the care gap program, leading to uncertainty about its impact on future revenue.
Q & A Highlights
Q: Kevin, can you discuss the key drivers behind the increase in profitability and your confidence in long-term expectations? Also, how do you view your internal blood program in light of recent FDA approvals for competitors?
A: Kevin Conroy, CEO: We're thrilled with the 15% screening growth and record 16% adjusted EBITDA margins. The growth is driven by increased brand awareness of Cologuard, deepening relationships with health systems, and leveraging our Exact Nexus platform. Regarding the blood program, we're confident in our data and believe our test will meet Medicare requirements. The TwinStrand agreement complements our existing IP and doesn't change our approach.
Q: Can you elaborate on the transition process for Cologuard Plus and any feedback on pricing? Also, why not release the blood study results now?
A: Kevin Conroy, CEO: The transition to Cologuard Plus will take 12 to 24 months as insurance coverage changes. We're working on setting a new rate with Medicare. Regarding the blood study, we're looking for the right scientific conference to present the data before releasing top-line results.
Q: Aaron, can you discuss the initiatives to increase rescreen orders and any expected investments in the second half of the year?
A: Aaron Bloomer, CFO: Rescreens are crucial for growth, with eligible patients increasing from 1.2 million to 1.6 million this year. We're improving patient engagement through digital platforms and Exact Nexus. Once a test is ordered, adherence rates are high, and we're finding new ways to engage patients.
Q: Can you provide more details on the care gap programs and their impact on guidance? Also, what's the timeline for the blood program's pivotal study?
A: Kevin Conroy, CEO: Care gap programs help address the decline in office visits by enabling remote screenings. We expect strong growth, especially in Q4. For the blood program, we're preparing for the pivotal study and expect to announce results in Q4.
Q: How do you plan to counter competition from new blood tests in the market, and what are your expectations for Cologuard Plus adoption?
A: Kevin Conroy, CEO: We have deep relationships with healthcare providers and a strong commercial team. Cologuard Plus offers a lower false positive rate, which is appealing to doctors. We believe competition will drive growth and improve our offerings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
