Exact Sciences(EXAS) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue grew 13% year-over-year to $709 million, driven by broad-based momentum in Cologuard adoption and international expansion of Oncotype DX [13][14] - Adjusted EBITDA increased by 75$99 million, with an adjusted EBITDA margin expanding 500 basis points to 14% [4][15] - Free cash flow reached a record $113 million, up nearly 60$1 billion [4][14] Business Line Data and Key Metrics Changes - Screening revenue increased 15% to $545 million, primarily due to Cologuard volume [14] - Precision Oncology revenue grew 5$164 million, with Oncotype DX expanding 28% internationally [14] Market Data and Key Metrics Changes - Cologuard customer satisfaction and brand awareness reached all-time highs, with nearly 250,000 healthcare providers relying on Cologuard [6][24] - The number of people due for rescreening is projected to grow from 1.6 million this year to 2 million in 2025 and 2.6 million in 2026 [9] Company Strategy and Development Direction - The company plans to launch Cologuard Plus in Q2 2025, which sets a new performance standard with 95% cancer sensitivity and 94% specificity [8][28] - The ExactNexus platform is expected to drive growth in care gap screening programs, with nearly 50 programs run this year [10][24] - The company aims to achieve 15% compounded revenue growth and greater than 20% adjusted EBITDA margin by 2027 [22] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with the growth in Cologuard testing frequency but remains optimistic about future growth driven by new products and enhanced commercial execution [6][22] - The impact of Hurricane Helene and Milton on Cologuard orders was acknowledged, with approximately 18% of tests coming from affected areas [19][44] - Management expects growth to accelerate in 2025, supported by rescreens, care gap programs, and the launch of Cologuard Plus [22][46] Other Important Information - The company received FDA approval for Cologuard Plus, which is expected to enhance market penetration and pricing power [28][29] - The transition to the ExactNexus platform for Precision Oncology faced challenges but is expected to improve efficiency over time [21] Q&A Session Questions and Answers Question: What changed in the second half outlook relative to where you stood 90 days ago? - Management acknowledged accountability for the less-than-expected performance and outlined plans to address execution issues, emphasizing the long-term growth potential of Cologuard [33][34] Question: Can you quantify the impacts of care gap, hurricane disruptions, and slower ramp from new reps? - Management indicated that the hurricanes had a significant impact on orders, particularly in September and October, and that care gap programs continue to be a strong growth driver [40][44] Question: How do you expect care gap and rep productivity issues to linger? - Management expects care gap programs to continue driving growth, while new sales representatives are anticipated to become more efficient over time [46][56] Question: How did the headwinds develop during the quarter? - Management noted that the challenges became apparent starting in September, with a slower growth rate than historically expected during the typical peak season [93] Question: What is the trajectory for EBITDA going forward? - Management remains confident in achieving long-term EBITDA targets, with ongoing efforts to improve profitability and leverage across the P&L [95][97]