Exact Sciences' Q3 2025: Contradictions Emerge on Freenome Acquisition, FDA Timeline, R&D, and Margins

Date of Call: November 3, 2025

Financials Results

• Revenue: $851M, up 20% YOY
• Gross Margin: 71% non-GAAP, down 100 bps YOY

Guidance:

• Full-year revenue raised to $3.22B–$3.235B (up $78M at midpoint)
• Screening revenue expected $2.51B–$2.52B (~20% growth at midpoint)
• Precision Oncology revenue expected $710M–$715M (~9% growth at midpoint)
• Adjusted EBITDA guidance raised to $470M–$480M (~14.7% margin; >47% growth at midpoint)
• Guidance excludes Freenome licensing impact; $75M upfront will be expensed to R&D upon HSR and not added back to adjusted EBITDA

Business Commentary:

• Revenue and Growth in Screening:
• Exact Sciences reported revenue growth of 20% year-over-year to $851 million in Q3 2025, marking the highest quarterly growth in over 2 years.

• The growth was driven by strong brand awareness and commercial execution for Cologuard, accelerating health systems integrations, and increased ordering providers.

• Enhanced Financial Performance:

• The company generated $135 million in adjusted EBITDA, showing 37% year-over-year growth, with adjusted EBITDA margins expanding by 200 basis points to 16%.

• This expansion was due to continued efficiency efforts across lab, supply chain, G&A, and support functions.

• Cologuard Plus and Payer Contracts:

• Cologuard Plus is covered by four out of the top ten payers, with plans to sunset Cologuard to transition all patients to the newer test.

• Positive coverage decisions from payers and active discussions with the remaining six of the top ten payers will drive wider adoption and enhance patient access.

• Launch of Cancerguard and Precision Oncology Expansion:

• The launch of Cancerguard, a multi-cancer early detection test, is expected to expand patient adoption through a variety of channels, including primary care physicians and telehealth platforms.
• The company is leveraging its large sales force and ExactNexus platform to educate providers and drive consumer awareness.

Sentiment Analysis:

Overall Tone: Positive

• Management described 'record results' and raised full-year revenue and adjusted EBITDA guidance; highlighted $851M revenue (+20% YOY), $135M adjusted EBITDA (+37% YOY) and $190M free cash flow in Q3, and said 'momentum is building' with expanding operating leverage.

Q&A:

• Question from Vijay Kumar (Evercore ISI): Can you explain what drove the Q3 screening strength (care gap vs rescreens vs first-time users) and any early comments on 2026 given YTD outperformance?
  Response: Management said Q3 strength was driven by improved commercial execution, deeper health-system integrations and ExactNexus-enabled targeting across care gaps, rescreens and first-time providers; no 2026 guide provided—long-term 2022–2027 CAGR target remains ~15%.

• Question from Tycho Peterson (Jefferies): How should we think about care gap durability and margin impact, and what's the payer/reimbursement strategy for Cancerguard versus competitors' CRC-first approaches?
  Response: Care gap volumes are intentionally growing (record quarter), are lower-margin but accretive and expected to reduce in Q4 boosting gross margins; Cancerguard is priced at $689 and management plans a payer-by-payer coverage approach keeping tests separate for Medicare and commercial reimbursement.

• Question from Patrick Donnelly (Citi): Update on Freenome timelines (V2) and how Exact's internal CRC blood program fits with the partnership?
  Response: No timeline changes: initial V2 data expected at a scientific conference in coming months, pivotal data next year; internal commercialization preparations continue and the Freenome-derived CRC test will be distributed through Exact upon regulatory approvals.

• Question from Bradley Bowers (Mizuho): What's the plan/timing to sunset Cologuard in favor of Cologuard Plus and payer alignment?
  Response: Management said a sunset plan is in progress with positive coverage from top 10 payers, four top payers plus Medicare contracted, six remaining in active discussions, and an intent to sunset original Cologuard next year to move patients to Cologuard Plus.

• Question from Catherine Ramsey (Baird): Are Oncodetect or Cancerguard material in 2025 and how should success be measured in their 2026 ramp?
  Response: Both products are nascent and not material in 2025; success metrics will be evidence generation, coverage decisions and commercial adoption with expectation of becoming material over time.

• Question from Brandon Couillard (Wells Fargo): How much did Cologuard Plus contribute to screening growth and what's care gap compliance doing?
  Response: Cologuard Plus contributed ~200–300 bps of price impact in Q3 and management expects ~300–400 bps in Q4 as four top payers plus Medicare (~30% of volume) are in place; care gap volumes are up materially YoY with room to improve compliance.

• Question from Puneet Souda (Leerink Partners): Timing for contracting with the six remaining top payers and how you'll price CRC blood if V2 data is positive?
  Response: Contracting with remaining top payers is ongoing with no public timelines; CRC blood pricing has not been decided and will be set to maximize access and value to patients and payers.

• Question from Jack Meehan (Nephron Research): Status of the $150M cost-savings/productivity program and have Q2 AR related to Cologuard Plus been collected?
  Response: Productivity program is progressing well toward $150M of 2026 savings (≈$100M year-over-year impact); one-time expenses for 2025 now expected ~ $85M and Q2 AR related to Cologuard Plus was fully collected in Q3.

• Question from Daniel Brennan (TD Cowen): Can you disaggregate screening growth by buckets (first-time, rescreens, care gaps) and comment on OpEx movements into Q4?
  Response: Management reported broad-based double-digit growth across rescreens, care gaps, CIO and first-time users; R&D spend remains elevated (to continue evidence generation) and marketing will increase to support the Cancerguard launch.

• Question from Douglas Schenkel (Wolfe Research): Is seasonality changing given care gap growth, and how will you avoid channel conflict and preserve margins when launching CRC blood?
  Response: Care gap demand is back-end weighted and can mute typical seasonality (Q4 uplift expected); CRC blood will be positioned to complement stool testing with targeted patient segmentation and pricing intended to maintain margins.

• Question from Andrew Brackmann (William Blair): Any signals on MRD (Oncodetect) halo effect in breast cancer and how Oncotype helps?
  Response: Oncotype's long-standing trust with oncologists supports Oncodetect adoption in breast as evidence programs (e.g., Exact DNA 003) progress and MAESTRO technology readout is expected to further enable broader indications.

• Question from Daniel Arias (Stifel): What rescreen penetration are you assuming this year and any update to that target for next year?
  Response: Current rescreen penetration remains mid-50s to high-50s percent; the long-term goal is to reach ~70–75% through automation and prescription-focused workflows.

• Question from William Bonello (Craig-Hallum): How does consumer-initiated ordering (telehealth/CIO) integrate with PCP records and will PCPs still get quality credit?
  Response: ExactNexus integration (powered via Epic/MyChart) is designed to return results to the EMR so PCPs see the test and receive quality credit; full integration will take time but the capability exists.

• Question from Michael Ryskin (BofA Securities): Should care gap strength be expected to similarly impact gross margins in Q4 and how did revenue upside flow to EBITDA given R&D and other investment?
  Response: Q3 gross margin headwind was driven by care gap shipments and margins should rebound in Q4 as care gap shipments normalize; adjusted EBITDA is expanding (back-half margins ~16–17%) with leverage mainly from G&A reductions while R&D and marketing investments continue.

• Question from Subhalaxmi Nambi (Guggenheim): Were ASPs up this quarter, did you screen ~250k more patients YoY, and how meaningful is the PCP commercial advantage for Cancerguard given cash-pay dynamics?
  Response: ASPs were up sequentially Q3 vs Q2 and expected to rise further in Q4; the company screened >250k more patients YoY in Q3; PCP infrastructure and health-system relationships are a material advantage for Cancerguard commercialization despite an initially cash-pay market.

• Question from Mark Massaro (BTIG): Could Oncodetect be a material contributor to Precision Oncology in 2026 and how much of PO growth this quarter was from Oncodetect versus Oncotype DX?
  Response: Oncodetect is not material yet and unlikely to be a meaningful PO contributor in 2026; Q3 PO growth was driven by Oncotype DX (domestic and international expansion).

• Question from Luke Sergott (Barclays): Any FDA feedback/timing on Freenome V2 and can Exact use its large CRC screening database to target patients for the blood test/commercialize MCED?
  Response: Initial V2 data will be presented in the coming months and pivotal data is expected next year for submission; Exact plans to leverage its large patient/provider database to identify screening refusers and target appropriate patients for the blood test.

• Question from Kyle Mikson (Canaccord): Is the upcoming V2 data the trigger for the $100M opt-in payment and how do you prevent the partner from taking account ownership if providers opt in?
  Response: Management clarified there are preliminary and pivotal datasets: initial data coming soon, pivotal data next year for submission; FDA approval timeline relates to previously submitted V1 data (~1 year), and Exact retains exclusive marketing rights for CRC screening so partner account ownership concerns are addressed contractually.

Contradiction Point 1

Freenome Acquisition and Strategic Fit

It involves the strategic fit of the Freenome acquisition and the anticipated benefits for Exact Sciences, which impacts investor perceptions of the company's strategic direction.

What is the strategic fit of this agreement for Exact Sciences? - Andrew Brackmann (William Blair & Company L.L.C.)

2025Q3: The Freenome acquisition adds a blood-based option to our portfolio of tests. The agreement provides access to Freenome's technology, which has strong data, and potentially better performance in the future. - [Kevin Conroy](CEO)

How does this partnership with Freenome strategically align with Exact Sciences’ goals? - Andrew Frederick Brackmann (William Blair & Company L.L.C.)

2025Q2: We think it's the best-in-class blood technology available to us. We think that that's a great strategic fit to augment Cologuard with a blood-based test. - [Kevin Conroy](CEO)

Contradiction Point 2

FDA Submission and Timeline for Freenome Test

It pertains to the timeline and status of the FDA submission for the Freenome test, which is crucial for the commercialization of the product and investor confidence.

When is FDA feedback expected for Freenome's CRC test, and how will it be commercialized? - Luke Sergott (Barclays)

2025Q3: Freenome test data expected, with FDA approval anticipated in a year. - [Kevin Conroy](CEO)

What caused the unexpected severe degradation in blood test data? What is the timeline for the FDA decision and next AdCom meeting? - Catherine Walden Ramsey Schulte (Robert W. Baird & Co. Incorporated)

2025Q2: We now expect the submission to be completed in early Q2, and we expect the FDA to review the submission and provide feedback within a few months. We also now anticipate that an AdCom will follow the FDA recommendation in the fall. - [Kevin Conroy](CEO)

Contradiction Point 3

Investment in R&D and Program Timeline

It involves the company's commitment to investing in R&D and the timeline for its internal program, impacting expectations for future product development and innovation.

Can you provide an update on the timeline for Freenome V2 and your internal program? - Patrick Donnelly (Citi)

2025Q3: Our internal program continues with a focus on Freenome's CRC test launch. - [Kevin Conroy](CEO)

What are the internal program investments post-Freenome deal? Why was Freenome's FDA submission timeline delayed? - Patrick Bernard Donnelly (Citigroup Inc.)

2025Q2: Our internal program continues and the investments in that are continuing. - [Kevin Conroy](CEO)

Contradiction Point 4

Screening Growth Expectations

It directly impacts expectations regarding the company's screening growth trajectory, which is crucial for revenue projections and investor expectations.

Could you explain what drove the growth in third-quarter screening performance and your expectations for 2026 screening growth? - Vijay Kumar (Evercore ISI)

2025Q3: Longer-term, we believe that newly insured patients plus existing Cologuard users will lead to a significant uptick in screening rates over the next few years, supporting a long-term 15% annual growth rate. - [Kevin Conroy](CEO)

What are the key drivers behind the revenue guidance increase, including care gap, rescreens, and commercial execution? - Catherine Schulte (Baird)

2025Q1: We believe that we can achieve that 15% annual growth rate that we talked about in the past. And again, our sizing of our investments clearly reflect that view. - [Aaron Bloomer](CFO)

Contradiction Point 5

Impact of Care Gaps on Margins

It involves how care gaps affect the company's margins, which are key financial indicators for investors and stakeholders.

How does care gap strength impact margins, and how is the Cancerguard strategy aligned with payers and reimbursement? - Tycho Peterson (Jefferies LLC)

2025Q3: Aaron, I would just note that we have the benefit of a number of years to understand that care gaps are lower gross margin, but they're certainly part of our financial health. - [Kevin Conroy](CEO)

Will rescreens reach 26% to 28% of total Cologuard volume this year? - Colleen Babington (Wolfe Research)

2025Q1: Care gaps is a lower margin component of our business, but we do see that that's going to grow as a part of our business. - [Aaron Bloomer](CFO)