Exact Sciences' Q3 2025 Earnings Call: Contradictions Emerge in Blood Test Strategy, Cologuard Plus Revenue, and Care Gap Guidance

Date of Call: November 3, 2025

Financials Results

• Revenue: $851 million, up 20% year over year
• Gross Margin: Non-GAAP gross margin 71%, down 100 basis points versus last year
• Operating Margin: Adjusted EBITDA margin 16%, expanded 200 basis points year over year (adjusted EBITDA $135M, up 37% YoY)

Guidance:

• Raised full-year 2025 revenue to $3.22B–$3.235B (≈$78M uplift at midpoint)
• Screening revenue guide $2.51B–$2.52B (≈20% growth at midpoint)
• Precision oncology revenue guide $710M–$715M (≈9% growth at midpoint)
• Raised adjusted EBITDA to $470M–$480M (14.7% margin at midpoint; implies >47% adjusted EBITDA growth)
• Guidance excludes potential Freedom licensing impacts; $75M upfront will be expensed to R&D and not added back to adjusted EBITDA

Business Commentary:

• Record Revenue and Growth:
• Exact Sciences reported a revenue of $851 million for Q3 2025, representing a 20% increase year-over-year.

• The growth was driven by strong Cologuard brand awareness, effective commercial execution, expanding health systems integrations, and the launch of CancerGuard.

• Screening Volume Increase:

• Screening volume increased by 22% year-over-year to $666 million, with over 250,000 more people screened in Q3 compared to the previous year.

• This was due to enhanced commercial execution, care gap programs, and rescreens, as well as positive coverage decisions from key payers.

• Precision Oncology Growth:

• Precision oncology revenue grew 12% year-over-year on a core basis to $183 million.

• Expansion of Oncotype DX internationally, U.S. Oncotype DX volumes, and partner revenues contributed to this growth.

• Adjusted EBITDA and Margin Expansion:

• Adjusted EBITDA increased by 37% year-over-year to $135 million, with margins expanding 200 basis points to 16%.
• This was attributed to continued efficiency efforts across lab, supply chain, G&A, and support functions.

Sentiment Analysis:

Overall Tone: Positive

• Management: “The team delivered record results…we’re raising our full-year 2025 revenue and adjusted EBITDA guidance.” CFO: “Total revenue grew 20%…we generated $135 million in adjusted EBITDA, an increase of $37 million, or 37% YoY.” CEO: “Momentum is building…we’re well-positioned to achieve our 2027 financial targets.”

Q&A:

• Question from Vijay Kumar (Evercore ISI): Can you talk about what drove the speed in screening growth -- care gap vs rescreens vs first-time rescreens -- and any early comments on 2026 given your YTD performance?
  Response: Management: Growth driven by deeper health-system relationships, territory redesign, better targeting and messaging, care-gap programs, rescreens and CIO; no 2026 guide provided now—refer to long-term 15% CAGR target and plan to give 2026 guidance at next earnings call.

• Question from Tycho Peterson (Jefferies): How should we think about care gap strength and its impact on margins going forward? Also, how are you thinking about CancerGuard reimbursement relative to competitors taking a CRC-first path?
  Response: Management: Care gaps produced record volume, are slightly lower gross-margin but accretive overall and expected to ease in Q4 (raising gross margins); CancerGuard priced at $689, pursuing long-term payer engagement, expects Medicare/commercial coverage to evolve and favors keeping tests separate for Medicare.

• Question from Patrick Donnelly (Citi): Update on Freedom timelines (V2), and how you’re thinking about your internal CRC blood program alongside Freedom?
  Response: Management: No change to timelines; Freedom V2 data expected to be presented at a scientific meeting in coming months, pivotal work continues, and Freedom test will be integrated as Exact’s offering subject to regulatory approvals.

• Question from Brad Cole (Mizuho): How are you thinking about sunsetting original Cologuard in favor of Cologuard Plus and payer alignment on that pacing?
  Response: Management: Sunset is planned for next year; top 10 payers have positive coverage decisions for Cologuard Plus, four of the top 10 (plus Medicare) contracted so far, and discussions with remaining payers are ongoing.

• Question from Catherine Schulte (Baird): Are OncoDetect and CancerGuard material contributors in 2025 and how should success be measured for 2026 ramp?
  Response: Management: Neither is material to 2025 revenue today; both are nascent but expected to be material over time—success measured by evidence generation, coverage and adoption trends.

• Question from Brandon Couillard (Wells Fargo): How much did Cologuard Plus contribute to screening growth this quarter and where will mix exit the year? Also an update on care-gap compliance impact?
  Response: Management: Cologuard Plus drove ~2–3 ppt price/mix in Q3 and expects ~3–4 ppt impact in Q4; four top payers plus Medicare represent ~30% of volume exiting into 2026; care-gap volumes up materially with room to improve compliance, converting FIT programs to longer-duration Cologuard screening.

• Question from Puneet Souda (Leerink Partners): When will the six remaining top commercial payers contract for Cologuard Plus and how are you thinking about CRC blood pricing if V2 data is positive?
  Response: Management: No public timelines for remaining payer contracts, but active progress ongoing; pricing for CRC blood not finalized—philosophy is to balance test performance, access and payer value to secure broad access.

• Question from Jack Meehan (Nephron Research): Progress on the $150M cost-savings program and status of AR collections tied to Cologuard Plus?
  Response: Management: On track to deliver $150M savings in 2026; one-time expenses now expected ~ $85M (lighter than prior guide); AR from Q2 related to Cologuard Plus was fully collected in Q3.

• Question from Dan Brennan (Talon): Can you disaggregate screening growth between buckets (first-time, rescreens, care gaps) and comment on OpEx cadence (S&M below, R&D above)?
  Response: Management: Broad-based double-digit growth across rescreens, care gaps and CIO; R&D stepped up for clinical evidence (OncoDetect/MRD) and will remain elevated in Q4; additional marketing spend allocated to CancerGuard launch.

• Question from Doug Shankle (Wolfe Research): Seasonality shift—Q4 weakness historically—are care gaps and modest ASP uplift changing that? And how will you avoid channel conflict when launching CRC blood?
  Response: Management: Care-gap demand and a ~100bp sequential ASP uplift reduce traditional Q4 weakness; CRC blood will be targeted to the right patients (e.g., prior refusers), priced to preserve margins, and positioned to avoid channel conflict via provider education.

• Question from Andrew Bracknen (William Blair): Any color on OncoDetect MRD halo from Oncotype in breast cancer and early signals?
  Response: Management: Oncotype’s long-standing trust with breast oncologists provides a natural launch base; OncoDetect showing encouraging utilization in breast and CRC, with future evidence (ExactDNA003/maestro) and next-gen Maestro tech expected to broaden indications.

• Question from Dan Arias (Stifel): What rescreen penetration are you assuming this year and could that number move higher next year?
  Response: Management: Current rescreen penetration mid-50s to high-50s; long-term target ~70–75% as automation and prescription processes improve.

• Question from Bill Bonello (Craig Hallum): How does CIO/telehealth ordering integrate with PCP records and does PCP still receive quality credit?
  Response: Management: Exact Nexus (Epic-integrated) routes results back into EMRs/MyChart over time so PCPs receive credit and population records remain consolidated; integration supports payer/PCP quality tracking.

• Question from Mike Riskin (Bank of America): Clarify gross margin hit from care gaps and why EBITDA guide didn’t move as much as revenue; interplay of G&A, R&D and marketing?
  Response: Management: Q3 gross margin pressure was due to record care-gap shipments (timing); expect gross margins to rebound in Q4; most leverage is in G&A (down significantly vs two years ago) while R&D and CancerGuard marketing drive near-term investments.

• Question from Subu Nambi (Guggenheim): Were Cologuard AFTs up and how material is PCP commercial infrastructure for CancerGuard given cash-pay dynamics?
  Response: Management: AFTs were up sequentially and the company screened >250,000 more people YoY; PCP infrastructure and health-system relationships will help identify and target patients willing to pay and accelerate adoption despite cash-pay dynamics.

• Question from Mark Massaro (BTIG): Could OncoDetect be a material contributor to precision oncology in 2026 and how much did it contribute to Q3 PO growth?
  Response: Management: Too early to call OncoDetect material in 2026; Q3 PO growth was driven primarily by Oncotype DX (U.S. and international expansion); OncoDetect has early traction but not yet material to revenue.

• Question from Luke Sergot (Barclays): Any FDA feedback/timeline on Freedom Simple screen and can you leverage your CRC database to commercialize a blood test?
  Response: Management: Initial V2 data expected in coming months; pivotal data next year for FDA submission; the company plans to leverage its large CRC patient/provider database to identify prior refusers and target blood testing to expand screening.

• Question from Kyle Stacey (Canaccord): Does the upcoming V2 data trigger the $100M opt-in payment on FDA approval and how do you prevent the partner from accessing your accounts if providers opt in to partner’s offerings?
  Response: Management: Initial and pivotal data timelines differ (initial data soon, pivotal next year) and FDA approval timeline ~1 year from V1 submission; Exact retains exclusive marketing rights for CRC screening under the agreement and will manage account ownership per the partnership terms.

Contradiction Point 1

Blood Test Strategy and Market Share Expectations

It involves conflicting statements about the strategic approach and market share expectations for blood-based CRC tests, which could impact investment decisions and market positioning.

What are the plans for the Freedom Simple Screen and its screening database? - Luke Sergot (Barclays)

2025Q3: The CRC blood test will be offered to patients who have refused other screening methods, leveraging the extensive patient experience and database. This will complement the existing portfolio without conflict. - Kevin Conroy(CEO)

Can the acquired assay compete with competitors, and what market share do you expect for blood-based testing? - Puneet Souda (Leerink Partners LLC)

2025Q2: Blood tests are not expected to be guideline-recommended soon due to performance. We project 5% to 10% market share. The performance delta may shift this, but current guidelines are a barrier. - Kevin Conroy(CEO)

Contradiction Point 2

Internal Program and Investments in Blood-Based Testing

It reflects different statements about internal efforts and strategic investments in blood-based testing, which could influence research and development priorities and capital allocation.

Can you provide an update on the timelines for the Freedom V2 test and internal program? - Patrick Donnelly (Citi)

2025Q3: The Freedom V2 data is expected to be presented at a scientific conference within the next few months. The internal program is progressing, with plans to make the blood test available through the network of providers. - Kevin Conroy(CEO)

Could you discuss your internal programs and future investments in blood-based testing? - Patrick Bernard Donnelly (Citigroup Inc., Research Division)

2025Q2: We exclusively licensed a well-performing test with an option for upgrade. We will continue internal R&D efforts. The Freenome option allows us to leverage their test and platform. - Kevin Conroy(CEO)

Contradiction Point 3

Cologuard Plus Revenue Impact

It involves differing expectations about the revenue contribution and pricing impact of Cologuard Plus, which is a key product for growth and financial forecasting.

How much did Cologuard Plus contribute to screening growth this quarter, and how is care gap compliance progressing? - Brandon Couillard (Wells Fargo)

2025Q3: Cologuard Plus contributed 3-400 basis points to screening growth in the fourth quarter, with contracts covering approximately 30% of volume. - Aaron Bloomer(CFO)

Is there a performance-driven volume lift expected for Cologuard Plus, and any field feedback on Cologuard vs. Shield? - Dan Brennan (TD Cowen)

2024Q4: We expect record revenue growth from Cologuard Plus in the fourth quarter and double-digit percentage revenue growth for the full-year 2025 assuming the previously discussed Medicare pricing. - Aaron Bloomer(CFO)

Contradiction Point 4

Care Gap Compliance and Rescreening Rates

It involves differing expectations and discussions about care gap compliance and rescreening rates, which are critical for forecasting growth and financial performance.

Will Q4 show seasonal weakness due to holidays, considering care gap strength? How will the CRC blood test launch be managed to avoid channel conflicts? - Doug Shankle (Wolfe Research)

2025Q3: We expect care gaps to decline sequentially each quarter and expect to close them by the end of this year. - Aaron Bloomer(CFO)

What is the expected growth in first-time screened individuals? - Bill Bonello (Craig Hallum)

2024Q4: We expect to close approximately 80% of these care gaps by the end of next year. - Aaron Bloomer(CFO)

Contradiction Point 5

Revenue Growth and Guidance

It involves changes in revenue growth expectations and guidance, which are critical for investors to understand the company's financial performance and outlook.

What drove the strong performance in the third quarter for screening? How do you view 2026 growth with 20% year-to-date growth achieved? - Vijay Kumar (Evercore ISI)

2025Q3: The 20% growth year-to-date is above the expected 15% CAGR, but it's too early to provide specific guidance on 2026 due to the normal practice of presenting annual guidance in the following earnings call. - Kevin Conroy(CEO)

What is the expected revenue growth cadence for the second half of the year, and what drives screening revenue pacing? - Catherine Schulte (Baird)

2025Q1: The increase in guidance reflects strong Q1 results and early visibility into Q2. Sustained commercial execution improvements are the main driver. The revenue pacing shows a step-up from 13% growth in the first half to 15% in the second half, led by Cologuard Plus pricing and commercial execution. - Aaron Bloomer(CFO)