Operator: Thank you. [Operator Instructions]. We’ll pause for just a moment to assemble the queue. We’ll go first this afternoon to Catherine Schulte at Baird.
Catherine Schulte: Hey guys, thanks for the questions. Kevin, I just wanted to kick things off with a big picture question on Cologuard. Just given where you sit today, around 10% market share, how do you think Cologuard is positioned for the long-term? And can you just help us think about the strategy to get from where we are today to your 50% long-term market share target?
Kevin Conroy : Thanks Catherine. We’re so excited about the impact that Cologuard can have over the long term. And as you know, it’s been a long road to start to change the standard of care and screening. You’re talking about a population of over a 100 million Americans that need to be screened and 60 million who are not upto date today. So if you take a look at this over the next decade, you have to look at who has the best team. We believe we have the best team. We have the best test presently and our next generation Cologuard test. And the best clinical evidence is BLUE-C data is sterling and such a strong case for moving screening generally to non-invasive at home testing. And then you couple this with the incredible services and IT infrastructure and commercial organization that we have.
We believe that we can go get a large percentage of those 60 million people screened. And we also believe we can leverage this then outside the U.S. over the next decade and reach well over 100 million people outside the U.S. So we’re excited. We’re excited about the other programs we have in colon cancer screening and the ability to surround our customer patients and physicians and health systems, large organized health systems to get more people screened. So over the next decade, we see growth continuing for as far as we can see with all of these strengths.
Operator: Thank you. We go next now to Brandon Couillard at Jefferies.
Brandon Couillard: Hey. Good afternoon. Jeff or Kevin, just curious how you are thinking about the fourth quarter, which usually is tricky in terms of seasonality. Do you think this year will be any different in terms of seasonality? Just thinking about Cologuard being so much more ingrained in so much deeper penetrated in health systems. Just curious if you anticipate a big bolus of GAAP testing. How are we thinking about, I guess, fourth quarter dynamics?
Jeff Elliott: Hey, Brandon. This is Jeff. I’ll start and then maybe Everett can jump in. Look, we’re really pleased with the results through the three quarters. The team has delivered, I think outstanding results. We’ve made very good progress towards our long-term 2027 financial goals. Maybe you just look at what we’ve done so far, what we’re – the new guide, the updated guide calls for is over $420 million of incremental growth this year, which is the best so far. It’s a really good year. So we feel good about that. When you look at your comments on 3Q, 4Q, that trend, just take a step back here. Look, I don’t expect any differences here because the main reason, the reason for the seasonal effect is not really ours. It really relates to the holidays.
When you think of Thanksgiving, Christmas, and New Year, fewer people go out and get physicals. They are spending time at home with their families and friends, which they should be, as opposed to going out and seeking preventative care. So that leads to fewer physicals and fewer Cologuard orders temporarily during the holidays. Patients are also slower to return the kits that are out in the field during that time. So again, temporarily Q4 feels a bit of that, and then Q1 feels a bigger impact from the holidays. So I don’t expect that to change this year. Yeah, that trend is always going to be there. And again, it’s not specific to us. It’s more primary care in general. You mentioned the Care GAP business. It’s a smaller part of the business.
I do expect that to be a little weighted towards Q4, but I know what Everett and team are doing are looking to build that up as a bigger part of the business as we scale. I did notice this year that some of the business we had previously expected to come in Q4 actually fell into Q3. So that explains part of the dynamic, 3Q to 4Q this year.
Operator: Thank you. We go next down to Derik de Bruin of Bank of America.
Derik de Bruin : Hi, good afternoon. Thanks a lot for taking my question. So I got a couple. So on Cologuard 2.0, really good data. How should we think about pricing and reimbursement versus Cologuard Classic, I guess? Is there going to be a price benefit to that? And on rescreening, what was the tailwind from rescreens in ‘23? And how do you think about the opportunity for rescreening in ‘24? Thank you.
Kevin Conroy : I’ll take the first part of that and toss the rescreening over to Jeff and Everett. What’s the first part, Cologuard. Yeah, in terms of pricing we are not prepared to talk about price at a detailed level. Taking a step up, Cologuard 2.0 or Next Generation Cologuard is, provides a significant increment in value because there are 30% fewer false positives. False positives lead to unnecessary colonoscopies, lead to unnecessary complications, etcetera, leading to costs and diminished care. So by eliminating those – the 30% of false positives, it gives tremendous value to commercial payers and to Medicare. So, those are conversations that we plan to have. It’s too early to tell where that will go, but we’ll talk more about those plans as we head into 2025 when we launch Cologuard 2.0 next gen.
Jeff Elliott: Derik, thanks for the question. This is Jeff. Even without a change in pricing for 2.0, we expect incremental revenue to Exact Sciences, because as Kevin mentioned, a reduction in false positives means more patients stay with Exact Sciences and Cologuard over time. So it should really help the re-screen business, which is doing well today and I think it can do even better going forward. Also to remind you, the cost of goods for 2.0, we expect to be at least 5% below what we see today. So, that should help. That’s the per test cost of goods. So, that should help both the revenue growth and margin profile. To your second question on re-screens, on re-screens we had a good quarter. The team is doing a very nice job managing through the headwind that we faced this year.
The headwind, to remind folks on the call, relates back to 2020 when COVID first hit. That led to a temporary pause and people getting screens. So now three years later, as people are looking to do or would normally look to do a re-screen for Cologuard, we see a bit of a headwind. That’s about a $50 million headwind to the business this year. So again, the team is doing a nice job of navigating that. When you look at the number of new patients who are becoming eligible for re-screens this year, it’s 1.2 million. That’s the same as what it was last year. However, when you look ahead to next year, it jumps up to 1.6 million. So not only are we improving our success rate at getting more people re-screened, the pool of patients is also growing who are eligible for re-screening.
