Jeff Elliott: Sure. Doug, you asked initially on the reorder rate. I know you like to do the math on this. The pool of doctors or ordering providers has grown so large, over 350,000 now. Looking at that entire base for reordering math, I think is misleading. We internally often look at the different cohorts of doctors based on when they first ordered. Go back and look at the cohort that first ordered in 14, 15, you name it, by year. What I’ll say is that every cohort of providers based on when they first ordered continues to climb. We have seen no slowing down. Kevin talked about that promotion response curve. It is up and to the right. The more time we spend educating a doctor, the more they order. And overall market share is still at this point, we’re about 12% now.
That’s going to continue climbing for years. You get a little misleading when that pool of 350,000 providers, some of those have since retired. So that puts a little downward pressure on the math you’re doing. The underlying trends there are very strong. Your second point on transitory impact, yes, this year was a more normal flu year. A little bit more kind of flu into January, February. Last year flu was almost nonexistent. It was really early. So this year it was more of a typical trend. When you look Q4 to Q1 Cologuard was down low single digits. That’s more of a typical quarter-to-quarter progression than we got last year. Again, last year ’22, Q4 to Q1 of ’23, we were up. That was unusual. You asked on, I think Kevin covered the question on rep impact.
On rescreens, the pool of patients becoming eligible grows by a third this year. It goes from 1.2 million last year to 1.6 million this year. So it’s a significant growth driver for us. It’s maybe the biggest growth driver this year. And our success rate at getting patients to come back to Cologuard does continue to grow. When you look down on a quarter-by-quarter basis, the pool of patients becoming eligible in Q2 is significantly larger than Q1. This is just the way it works when you look back at the pool from three years ago. So rescreens will be a huge driver. It’s going to be a bigger driver in Q2 and beyond than it was in Q1.
Everett Cunningham: If I could just add a little bit more color, Doug, this is Everett, to the rep impact and timeline. Couple of things to that. First of all, we were very intentional to hire experienced reps that have deep relationships already existing in primary care. So while they’re new to exact sciences, they are not new to primary care and selling in the space. And then the second thing is, we were again intentional to ensure that they know the geography. They have deep relationships already, these new reps do. So Kevin said they’re in training now, they’ll be in the field next week. And I’m confident that they’ll hit the ground running. And because of our intentional nature, I think they’re going to have a quicker impact than six months. I think it’ll be more three to four months.
Operator: Great. Your next question comes from Patrick Donnelly with Citi. Please go ahead.
Patrick Donnelly: Hey guys, thanks for taking the questions. Obviously, a lot on the kind of reps, rep ad side, if I could just continue to add on that. Kevin, I guess, how do you think about potential revenue upside flowing through? I mean, obviously last year when you guys were able to raise the revenue targets, EBITDA seemed to go up by more every single time. Do you feel like now that you’ve added these reps and the cost base is set here, if you do see revenue upside, is the flow through there going to be pretty attractive or does additional costs come back? You’ve obviously mentioned a few times, investing in these high impact sales marketing opportunities. So do you see more costs coming if there is revenue upside or are we in a pretty good spot here? And then I don’t know if I missed it, but just the magnitude of the rep ads in terms of head count would be helpful if you could break that up? Thank you, guys.
Kevin Conroy: Yes. We are staying away from indicating the number of reps we are adding, but it is the math around this is pretty clear. You get a ton of leverage by adding these reps. So if there is an — you have a fixed amount of costs that you’re adding, for example, we’re not adding new area managers here. Our current area managers roughly end up with about one new rep per territory that they oversee. And the leverage is incredible. I mean, what we have seen is the productivity in terms of the number of Cologuard orders per call that our sales force makes continues to increase year-over-year and that matter quarter-over- quarter. So the productivity here is going to be significant and we want to make sure that investors know we are doing this as we all — we took a pause for the first time in 10 years in terms of the total number of reps promoting Cologuard.
And what we’re saying is, yes, we probably shouldn’t have taken that pause. We probably should have kept to keep adding, because of the size of the opportunity. And so, the leverage that we will continue to get over time by thoughtfully adding reps, we expect more reps, more revenue. Everett?
Everett Cunningham: Yes. And in addition to that it was said earlier that there’s 50,000 new providers since the beginning of 2023. And we know based on what Kevin said, the more frequency that we have with, not only our existing footprint, but the 50,000 new providers, and it’s going to be so much leverage that our reps can generate with getting access into those offices. So we’re excited. Our goal is in commercial simple is to drive our existing footprint and to continue to create new providers, writing Cologuard first line.
Jeff Elliott: So just to add a little more color, this is Jeff. We expect P&L leverage through every line in the P&L this year. It won’t be the same kind of leverage we had last year. They’d be on like 16 points of improvement. We are tracking ahead of where we expect to be for our long-term 2027 guidance there. So feel very good about hitting those numbers. When you add new reps though, again, leverage flows through very nicely. Think of gross margin, 80% plus, and very strong throughout the P&L. So feel good about the pace of leverage improvement from here. Patrick, you did mention the upside. I think you were tying that to the rep investment. I would just say that when we contemplated guidance to start the year, we did assume these investments being made. So I wouldn’t assume any growth we get from the reps and market we’re adding. That’s not above and beyond the guidance. That’s already big to the guidance.
Operator: All right. Your next question comes from Dan Arias with Stifel. Please go ahead.
Dan Arias: Afternoon guys. Thanks for the questions. Kevin, just looking at the presentations that you guys have teed up for DUW, one of them relates to helping docs work through colonoscopy backlog, and then one relates to FIT. So two quick ones if I can. Where do you think the collective backlog for colonoscopy is at this point? And then on FIT, do you have any data from the field on just how you’re doing converting FIT users? Is that success improving over time?
Kevin Conroy: Yes. So what we’re seeing is it varies around the country, but let’s say, around three to six month backlog. And we have seen that tick up over the last three months, actually. It’s not a surprise. We have a fixed colonoscopy capacity in the U.S. of about five to six million screening colonoscopies a year, and maybe about six plus million diagnostic colonoscopies. It’s not changing because on average you get about net a couple hundred new GIs every year in the U.S. And Cologuard is taking a share from FIT. So what you’re seeing is, Cologuard is mainly getting people who’ve never been screened. They’re getting people who’ve been screened with Cologuard in the past, and they’re converting FIT. And colonoscopy utilization is staying the same.
It’s just not going to increase. And so these colonoscopy backlogs aren’t going to screen. My wife is overdue for colon cancer screening. She has a family risk. She’s high risk because of a family history. And her backlog is nine to 12 months. Her wait time is nine to 12 months to get screened. She said high risk. So we are seeing that all over the country. There are some parts of the country, New York, where you can get in pretty quickly, but that’s not true in most parts of the country. Everett, do you want to provide any color?
Everett Cunningham: No, thanks, Kevin. I mean, through my travels, I’ve been in the field and I’ve seen this colonoscopy backlog situation, and it is real. It’s not going away. I have one example. We have hundreds of these examples, but one example is of a health system in Florida of where they had 800 patients of average risk with a eight-month backlog. And we met with their C-suite. They, along with us, implemented an alert that went to all their physicians, and it alerted their physicians, a patient that came in, they were due for screening, and that alert stated that for that patient, that they would get Cologuard first line. And that’s a good example of our partnership, making it easy, making it easy to be electronically ordered and have a partnership with that health system to get their patients screened and not have a six-month, eight-month, 12-month backlog. And you’re seeing these all over the country.
Operator: All right. Your next question comes from Jack Meehan with Nephron Research. Please go ahead.
Jack Meehan: Thank you. Good afternoon. Kevin, I think you mentioned the colon blood data from Blue Sea coming later this year. I was wondering if there was any more precision you could provide around the timing there. And just update us on the benchmark you’re looking for in terms of what would mark success?
Kevin Conroy: Sure. We had planned to generate that data in the summer that is now more likely to be in the fall, given the readouts that we have recently seen. We have the luxury of time, and we’ve decided to take a little bit more time and run about 3,000 more samples, other samples with the test, and make sure that we collect more data on the specificity and the cutoff to make sure the test is as robust as possible. So we plan to test it with several thousand full-spectrally collected samples in that extra time that we have. And we think that’s the right thing to do. But let’s position where we think our blood test is going to be. We think that our blood test is probably going to perform similar to, maybe better than, the other readouts that you have seen in the field.
We’ve done seven case control studies, and you see the greatest amount of variability around pre-cancer detection, not around specificity or cancer detection. So that, to me, is the question mark. But at the end of the day, we’re kind of assuming performance like we have seen. And then the thing to remember is that our test is a PCR test, or it’s our proprietary version of PCR, which is a very low cost per test approach. And so, when we have all the data about the people who have refused a frontline screening test, we have the ability to work with the providers, the health systems, the payers, to get those people screened with our CRC blood test, and then to try to encourage them to switch to Cologuard in the year after that. So we think this is a meaningful opportunity for us, and we’re clearly the best situated to deliver on that.
Especially when you look at Medicare today, Medicare Part B is only about — it’s under 20% of our overall opportunity, and Medicare Advantage is probably 22%. It’s more than half of all the Medicare patients. With the lower cost tests, we have the ability to go and contract with those Medicare Advantage plans with a clear plan to switch those patients to a test that gets a quality measure credit of three years, which is what they care about. So we’re excited about this opportunity, and we think it can lead to getting more people screened and also drive growth at Exact.
Operator: The next question comes from Andrew Brackmann with William Blair. Please go ahead.
Andrew Brackmann: Hi, guys. Good afternoon. Thanks for taking the question. Jeff, thanks and enjoy the time away. Best of luck. Aaron, welcome. You guys talked a couple of times about your progress with health systems, but can you maybe talk about your line of sight to additional partnerships with these groups and just the nature of discussions now versus maybe a couple of years ago? Thanks.
Kevin Conroy: Yes. Thanks, Andrew. In addition to backlog of colonoscopy, health systems, they want to make sure that they can partner with companies that go beyond product, that they have other things that can help them with workflow, can help them with staff turnover, and that’s where we fit really, really nicely. The workflow piece of it, we’re electronically interfaced with our products, which is great. In terms of adding additional things to them, we have an amazing customer service organization that not just — we’re not just providing product, but we’re helping them get their patients screened. And that back-end support is tremendous. The other thing I’ll mention about health systems are the data and analytics that we provide.
