Hello, and welcome to the Exact Sciences Third Quarter 2025 Earnings Call. I would now like to turn the conference over to Derek Leckow. You may begin.

Thank you for joining us for Exact Sciences' Third Quarter 2025 Conference Call today, November 3, 2025. On the call today are Kevin Conroy, the company's Chairman and CEO; and Aaron Bloomer, our Chief Financial Officer. Earlier this afternoon, Exact Sciences issued a news release detailing our third quarter financial results. This news release and today's presentation are available on our website at exactsciences.com. During today's call, we will make forward-looking statements based on current expectations. Our actual results may be materially different from such statements. Discussions of non-GAAP figures and reconciliations to GAAP figures are included in our earnings press release, and descriptions of the risks and uncertainties associated with Exact Sciences are included in our SEC filings. Both can be accessed through our website. I will now turn the call over to Kevin.

Thanks, Derek. The Exact Sciences team delivered record results in the third quarter. Thanks to the team's execution, we're raising our full year 2025 revenue and adjusted EBITDA guidance. A few highlights from the quarter include growing revenue 20% to $851 million, the highest quarterly growth rate in over 2 years. This was driven by Cologuard's strong brand awareness, inspiring commercial execution, accelerating health systems integrations, and a record number of ordering providers. Screening 0.25 million more people in the third quarter versus last year, deepening our relationships with payers and health systems by helping close gaps in guideline recommended cancer screening and launching Cancerguard, our multi-cancer early detection test. Our team is focused on continued commercial effectiveness, expanding access to Cologuard Plus, and driving adoption of our new tests to close a strong year. I will now pass the call to Aaron to discuss our financial results.

Thanks, Kevin, and good afternoon, everyone. Total revenue grew 20% year-over-year to $851 million, $43 million above the midpoint of our guidance. Growth was led by screening, which increased 22% year-over-year to $666 million. We saw broad-based Cologuard growth led by strong execution from the commercial organization, care gap programs, and rescreens. Precision Oncology revenue increased 12% year-over-year on a core basis to $183 million. Growth was led by continued Oncotype DX expansion internationally, U.S. Oncotype DX volumes, and partner revenues. We generated $135 million in adjusted EBITDA, an increase of $37 million or 37% year-over-year. Adjusted EBITDA margins expanded 200 basis points to 16%, driven by continued efficiency efforts across our lab, supply chain, G&A, and support functions. Non-GAAP gross margins were 71%, down 100 basis points versus last year. The reduction was driven by record care gap shipments, which can cause a temporary timing difference between cost of goods and revenue. Free cash flow was $190 million during the quarter, an increase of $77 million. This was driven by increased receivables collections following the Cologuard Plus launch and continued working capital improvements. Year-to-date free cash flow is $236 million, an increase of $173 million or 270% year-over-year. We ended the quarter with cash and securities of just over $1 billion. Turning to guidance. We are raising total full year revenue to between $3.22 billion and $3.235 billion, an increase of $78 million at midpoint. This includes screening revenue between $2.51 billion and $2.52 billion or 20% growth at midpoint, and Precision Oncology revenue between $710 million and $715 million or 9% growth at midpoint. We are raising our adjusted EBITDA guidance to between $470 million and $480 million for the full year or 14.7% adjusted EBITDA margins at this point. Guidance at midpoint implies more than 47% adjusted EBITDA growth or about 300 basis points of adjusted EBITDA margin expansion. As stated on our last call, our adjusted EBITDA guidance does not reflect any potential impact from the Freenome licensing agreement. The upfront payment of $75 million will be expensed to R&D upon clearance of HSR, and it will not be an add back to adjusted EBITDA. Overall, this quarter marks an inflection point in our business. Momentum is building across the company. Operating leverage is expanding and cash generation continues to strengthen. We are well positioned to achieve our 2027 financial targets and create long-term value. Back to you, Kevin.

Thanks, Aaron. Strong Cologuard performance was driven by the trust patients, healthcare providers, and health systems have in the Cologuard brand and our commercial organization. The iconic Cologuard brand is recognized by more than 90% of consumers. This brand awareness is driving increased adoption of Cologuard among the 55 million Americans who are not up to date with colorectal cancer screening. To have a trusted diagnostics brand, you need to have best-in-class performance. Cologuard Plus raised the bar for non-invasive CRC screening tests, demonstrating 95% sensitivity and 94% specificity. This performance leads to a 40% reduction in false positives compared to the original Cologuard. A recent modeling study published in the Journal of the National Cancer Institute showed that Cologuard Plus was the only non-invasive screening option shown to be efficient at guideline recommended intervals in age ranges. We continue to make progress expanding patient access to Cologuard Plus, including positive coverage decisions from each of the top 10 payers. In the third quarter, we also signed contracts with Aetna and Highmark to bring the added value of Cologuard Plus to their members. Backing the Cologuard brand is our patient-centered technology platform, ExactNexus. We've spent over a decade building a platform that is deeply integrated within primary care workflows. Our platform connects tens of millions of patient records and integrates access and awareness to accelerate adoption of new tests. Broad insurance coverage, deep provider engagement, health system integrations, and proven product quality allow us to deliver innovative diagnostics efficiently and at scale. The power of the Cologuard brand and our ExactNexus platform is driving triple-digit growth in a new patient demographic, customer-initiated orders or CIO. This enables individuals to easily request tests ordered online by a telehealth provider directly from their phones. ExactNexus is eliminating friction points for individuals who know they want to get screened with Cologuard. Our commercial engine continues to deliver strong results. The sales team is energized by territory realignments, AI-powered efficiency tools, and new products, Cologuard Plus and Cancerguard. The changes we made are working. In the third quarter, we had over 12,000 providers order a Cologuard test for the first time, the greatest number in over 5 years. We also saw the number of active ordering providers climb to over 200,000, a new record. Our commercial team is firing on all cylinders, and they're just getting started. All these efforts will have a lasting impact and fuel momentum in Cologuard rescreens. Rescreens represent the growing base of patients that rely on Cologuard every 3 years to stay up to date on colon cancer screening. Today, these patients make up more than 1/4 of our total screening volume. In the third quarter, we launched Cancerguard, our multi-cancer early detection test. With a blood draw, Cancerguard screens for more than 50 cancer types and subtypes. This launch is a major step forward in our mission to help eradicate cancer through earlier detection. Today, only 14% of cancers are found through screening. Cancerguard will help address this problem. We are bringing Cancerguard to patients through many channels to maximize patient adoption, including primary care physicians, health systems, concierge practices, and our CIO platform. We are leveraging our large sales force to educate providers about Cancerguard. In the third quarter, we trained the first group of sales reps on Cancerguard. We plan to train our entire screening and precision oncology commercial teams in the U.S. by the end of the year. On October 1, we launched our consumer-initiated ordering platform that allows people to request a Cancerguard test directly from our website and builds on the learnings of Cologuard CIO capability. Starting in the fourth quarter, we are investing in direct-to-consumer marketing, including social media campaigns to drive awareness of Cancerguard. Drawing on a decade of consumer marketing experience with Cologuard, these efforts leverage our trusted brand with the message that Cancerguard comes from the makers of Cologuard. We are excited about the launch, and we look forward to sharing more over the next few quarters. Our Precision Oncology team continues to be a global platform for growth. Oncotype DX delivered solid order growth globally in the third quarter. The strong summer was supported by effective commercial execution and the recent expansion in screening guidelines to include younger age groups. We are seeing positive momentum across our Precision Oncology portfolio, including OncoExTra, Riskguard, and our recently launched MRD test Oncodetect. The Oncodetect launch is progressing well. We're seeing encouraging utilization in colorectal cancer and meaningful traction in breast cancer driven by synergies with Oncotype DX. Turning to our pipeline. One of our guiding R&D principles is to invest in areas where we can help patients the most. We have broad technological capabilities through our multi-omic platform, including our proprietary PCR and also deep next-generation sequencing capabilities. These technologies form the backbone of our novel tests. Our platform allows us to advance multiple single cancer screening tests in areas of significant need such as liver, esophageal, and endometrial cancers. Current screening methods for these cancers are outdated and lack effectiveness. Next week, at the liver meeting, the flagship International Congress hosted by the American Association for the Study of Liver Diseases, we will present ONCOGUARD liver data from the ALTUS study, A-L-T-U-S. This readout underscores the test potential to transform liver cancer surveillance for at-risk populations. During the fourth quarter, we will share data supporting Oncodetect's use in triple-negative breast cancer. In 2026, we also look forward to sharing clinical validation data in launching the next-generation version of Oncodetect that leverages our MAESTRO technology. We are investing in MRD evidence generation to support reimbursement and adoption. We have over 10 clinical validation studies planned over the next few years, including 4 key studies in breast cancer, colorectal cancer, and pan-tumor indications. I'm very proud of the strong third quarter the Exact Sciences team delivered. Our best-in-class products, trusted brands, patient-centered platform, and commercial execution provide a foundation for long-term growth as we continue to make transformative new tests available to physicians and their patients who need them. We're now happy to answer your questions.

Your first question comes from Vijay Kumar with Evercore ISI.

Kevin, congrats on a nice spring here. My one question is on just the performance in the third quarter, quite remarkable here now for screening. Can you talk about what drove the speed, right? Was this care gap versus rescreens versus first-time rescreens? And related to that, I think the Street is looking at like 14% screening growth for 2026. You guys have done 20% year-to-date. So I'm curious on any early comments on 2026.

Sure. Thank you, Vijay, and I'll let Aaron take the second part of that. But the first part, let's go back a year ago when we had a challenging quarter. The team really came together. I'm incredibly proud of the work that they did to deepen our relationships with health systems to design territories, allowing us to have total ownership of those territories, making more calls with better targeting, stronger messaging, so that you can really bring the Cologuard brand, which is known for its strong test performance, sensitivity, and specificity. Through our ExactNexus platform and then also bringing new products. So this is a total commitment on the part of leadership, and really more so on the part of our frontline sales force, our team members who are out there every day doing important work. And that's both on the screening side and the precision oncology side. So we could not be more proud of the work that is done, and we think that this sets us up for lasting growth and a flywheel effect so we can get those 50 million Americans who are not up-to-date with screening screened.

And then, Vijay, specific to your comment on 2026, I think it's important to keep in mind the long-term guide that we have sitting out there, which is a 15% compounded annual growth rate from 2022 through 2027. And as you referenced, we're obviously accelerating in growth here through the back half of the year. The full year guide for screening is at 20%. The back half of the year is obviously even north of that. And so obviously, we're pacing ahead of our long-term goal, but it's important to note, our normal practice would be to provide our 2026 guidance at our next earnings call as we review the fourth quarter and look ahead to next year. Obviously, as Kevin alluded to, really pleased with the progress on the commercial side, the momentum that we have with care gaps, and then there's a lot of work we have to do in the coming months on Cologuard Plus contracting as well.

The next question comes from Tycho Peterson with Jefferies.

Two hopefully quick ones. Aaron, maybe just on the care gap strength. How should we think about that continuing and then impact on margins going forward? And then for Kevin, can you just talk a little bit more about the Cancerguard strategy with payers and how you're thinking about reimbursement? Obviously, one of your competitors has a CRC first path on MCED reimbursement. So how do you kind of think about that as an approach versus where you're headed?

So on the first part, Tycho, we had a record quarter in terms of our care gap business. We had our largest orders go out in the third quarter. And how we're thinking about this is we're really investing in our care gap program. Obviously, it's slightly lower gross margins, but highly accretive to the total bottom line. And this is really giving us an opportunity to partner with payers, helping them achieve their quality measures. It's also really helping us with patients, getting more and more of that 50 million to 55 million patients out there and get them up to date with screening. And so we view this as an investment that's really bringing accelerated growth here in the back half of the year, that obviously has both near-term as well as long-term patient and financial impact. As it relates to the gross margins, we would expect to see an uptick in the fourth quarter as we will have less care gap shipments go out in the fourth quarter relative to Q3. And again, as a reminder, these are typically back-half weighted. I think we've said in the past, more than 2/3 of the revenue kind of comes in the back half of the year.

Yes. As for the second question, as we talked about with Cancerguard, Cancerguard is priced at $689 distinct from other Medicare-covered tests. We think the approach is being taken by others. It's an interesting approach. I think the more sustainable approach given the regulatory context and compliance context is to keep those 2 tests separate in the Medicare population in terms of the playbook to get coverage across Medicare and commercial payers, we think that that is a long-term game, and we think that the work that is being done in this field by GRAIL, by Exact, by others, is work that will eventually captivate the payers to recognize the positive impact that screening can have. And that's the way that we look at this space.

The next question comes from Patrick Donnelly with Citi.

Kevin, maybe to stay on the screening side, can you just update us the latest on the time lines around Freenome? I know V2 is looming; I would love just an update on some of those time lines. And then on that same topic, just how you're thinking about your internal program? I know you kind of keep it going? Maybe just an update on how you're thinking about the 2 combined there. I appreciate it.

Really, thanks for the question. Really no changes there at all. In terms of the from Freenome V2 time lines. We expect that data to be presented in conjunction with a scientific conference sometime in the next few months. In terms of our internal program, yes, that continues. We haven't given more of an update there other than to say the Freenome test is now the exact test. We're really looking forward to making that available to physicians and patients through our deep network of providers that we have a relationship with over 200,000 ordering in the last quarter, over 250,000 total and our incredible commercial reach. So we're excited about bringing our blood test subject to regulatory approvals to clinicians and to patients.

The next question comes from Brad Bowers with Mizuho.

Just wanted to hear about kind of the Cologuard to Cologuard plus Sunset plan. I would imagine, it sounds like you're more aligned with payers than ever and payers would want to have their members on the better test. So I just wanted to kind of hear about how you're thinking of pacing?

Thank you for your question. Yes, the Sunset plan is currently in development, but I haven't shared any public details yet. We will do so when the time is right. As you mentioned, Cologuard Plus is a superior test, with 95% sensitivity and 94% specificity, and it's the only noninvasive test with these metrics that we know of. We're actively engaging with payers, and I'm pleased to share that all top 10 payers have recognized Cologuard Plus in their coverage decisions. We are now in negotiations with 6 of the remaining 10 payers to establish contracts, while 4 have already contracted with us. Additionally, we're targeting a number of smaller payers. At some point next year, we plan to phase out Cologuard in favor of making Cologuard Plus the available test for all patients. We believe this is the best course of action due to its advanced technology and benefits for patients.

The next question comes from Catherine Schulte with Baird.

Maybe just on your overall portfolio. You have some new products now with Oncodetect now covered by Medicare and Cancerguard launching. Are either of those material contributors in '25? And how should we think about measurements for success as those ramp in '26?

Thanks, Catherine. We do have these wonderful new products. As we've said from the beginning of the year, we don't expect them to be material in terms of the overall mix of revenues. Over time, we expect them to be very material. And those are big markets. They take time to penetrate. And we are pleased in terms of how they are progressing. Cancerguard, of course, just launched within the last couple of months. And as a result, that's nascent. But we're excited about what we're seeing and the growth that we have seen, not only week over week, but day over day. And we have big expectations there. And with Oncodetect, and I'm sure there will be more questions more in depth there. But we are doing all of the things you need to do in terms of getting the scientific evidence to secure a broad base of coverage so that we can go out there and serve patients in this large and growing opportunity. We're excited about it.

The next question comes from Brandon Couillard with Wells Fargo.

Aaron, could you give us a sense of what Cologuard Plus contributed to screening growth in the quarter? And where you see that mix exiting the year? And Kevin, would be great to get an update just on care gap compliance and how that's playing out. And if you've been able to move the needle more using your compliance engine maybe relative to where you were 12 months ago?

Brandon, thanks for the questions. On the first part, as it relates to Cologuard Plus, so when we originally did the guide for the year, we expected a couple of points in terms of contribution to growth coming from Cologuard Plus pricing and mix. What we saw in the third quarter, just given some of the progress we had made and updated everybody on the last call with Medicare and 2 of the top 10 payers, we were kind of in the 200 to 300 basis points range in terms of price impact on overall screening growth rates. With now having 4 of the top 10 plus Medicare, we would expect kind of in the 300 to 400 basis points impact on growth in terms of the fourth quarter. And you kind of package that all together, those 4 payers plus Medicare represent approximately 30% of our volume, which is where we will be exiting then as we head into 2026. And as Kevin alluded to earlier, obviously, in active discussions with the remaining top payers as well.

Thanks, Brandon. In terms of care gap compliance, let me first just remind folks what care gap is. Care gap is what we refer to payers who are approaching us to help them improve their CRC screening rates within their membership. And unfortunately, again, about half of the population in the U.S. eligible for colon cancer screening is not up to date. And payers care about it. Health systems also care deeply about getting more of their members screened, and capacity is limited with GIs having pretty much full capacity across the country. So what is occurring is they're approaching us to help get an order initiated, prescribed by a physician so that the patient gets a Cologuard kit. In terms of compliance, we see room for improvement there, Brandon. In terms of total volumes, we're seeing a significant year-over-year increase. As you may know, FIT programs, care gap program started about 20 years ago. That has been the predominant way to fill those care gaps. Many payers and now health systems are converting to Cologuard because they see an opportunity to secure a longer duration of somebody being screened and therefore, getting 3 years of credit versus 1 year of credit. And then also, they have fallen in love with our compliance engine, our ability to engage with patients. But the patients that we get are typically people who have refused screening over and over again. So I think it's just going to take more work for us to get the uplift we know we can with care gap compliance. We're pleased with the volume increase and the people we're getting screened that this, over time, we think can be even more impactful.

The next question comes from Puneet Souda with Leerink Partners.

First one, just wanted to understand the 6 commercial payers that are not in paying for Cologuard under the contracted rate, when do you think they will be contracted? If you can provide some timeline on that? I'm just wondering, Kevin, on CRC blood, how are you thinking about pricing? And if the data was positive for V2, how are you thinking about pricing there?

We are actively working with the remaining top 10 payers regarding contracting for Cologuard Plus. Our plan is to transition all patients to newer and more effective tests, and we have strong relationships with these payers, which gives us optimism for a timely resolution. While we are not providing specific timelines, we are making significant progress. As for the pricing of our CRC blood test, we have not made a decision yet. Our approach to pricing focuses on maximizing access and impact. The effectiveness of a screening program depends on test sensitivity, access, and compliance. Access is crucial, as commercial payers are mindful of pricing and consider test performance in their evaluations. Thus, our pricing strategy will align with our overarching goal of delivering value to both patients and payers in the healthcare ecosystem. We believe this approach contributed to the success of Cologuard, given its pricing compared to colonoscopy.

The next question comes from Jack Meehan with Nephron Research.

Just had a couple financial ones I wanted to ask. First is just more color on the $150 million cost savings program you've talked about in the past. Just how is that progressing and how you think that steps up into 2026? And then last quarter, you had the accounts receivable stepped up because of the timing of the Cologuard Plus payments. I was just wondering if you were fully caught up on that. It looked like yes, but I wanted confirmation.

Jack. So on the first piece around the productivity program, really pleased with the progress that we've made. Just as a reminder, what we committed to was to deliver $150 million in savings in 2026, which would be about $100 million year-over-year impact. We're progressing very nicely against that. The actions that we need to take to deliver against that have been taken. If you think about the other component to that is the one-time expenses. And last quarter, we guided to kind of $90 million to $95 million in 2025 and then $105 million to $120 million in total. We're going to come in a little bit lighter on that, which is a good thing. So we now expect approximately $85 million in terms of one-time expenses for this year. So making good progress and the team is executing against that nicely. As it pertains to the AR, yes, all of the AR from Q2 related to Cologuard Plus has now been collected on in the third quarter. And maybe just take a step back on just the progress that the teams have made across Exact to really lean in and deliver record amounts of free cash flow for the company. On a year-to-date basis, we're at $236 million. And obviously, the strength in the third quarter came from collecting on the Cologuard Plus claims but also all of the progress that the teams have really made in terms of working capital improvements. So inventory optimization as well as renegotiation of payment terms with suppliers. So really, really pleased with the progress that the team has made across the company.

The next question comes from Dan Brennan with Cowen.

Congrats on the quarter. Maybe just one. I know Aaron, in the past, you've typically updated in terms of the contribution within the screening guide between the different buckets, whether it's first-time users or care gap or rescreens, you've given some color. I wonder if you can disaggregate that, like how you're thinking about that for the year and maybe for the fourth quarter? And then just any comment on OpEx. Sales and marketing kind of was below our expectation. R&D was above. Just wondering kind of moving pieces, as we head into the fourth quarter, how we think about like the different buckets within OpEx.

Thanks, Dan. So we saw broad growth in the third quarter, really across all lines of business. And no matter which way you cut it, 50-plus, 45 to 49 rescreens, care gaps, CIO, all elements of the business were growing north of double digits. So really pleased with the progress. All of the commercial improvements that Kevin alluded to earlier, we're really seeing that flow through, not only in the leading indicators in the sales rep productivity but now obviously also into volumes. I think we talked at length already about care gap and the record amount of volume that we're seeing there as well. Just in terms of some of the OpEx items, yes, R&D spend did step up a little bit in Q3. We would expect similar levels of spending in Q4. A lot of that is tied to all of the clinical evidence generation and the work we're doing to continue to improve our Oncodetect test and get additional cancer indications on that into the future. In terms of sales and marketing, Kevin talked about that earlier as well, but we would expect and are investing in our Cancerguard launch, particularly as it pertains to marketing and then you'll probably start to see whether you're watching on YouTube or Netflix or any of the other social channels, you'll start to see some Cancerguard ads start to take flight here as soon as this week.

The next question comes from Doug Schenkel with Wolfe Research.

I have a couple of questions. First, regarding seasonality, the fourth quarter has usually been a weaker quarter due to the holiday season. However, your guidance suggests that this might not be the case this year. I think part of this is based on the assumption that average selling prices will increase sequentially, and the other part relates to the care gap. Is that correct? If so, is this how we should consider your business going forward, not just for this year? My second question is about CRC blood. It may be premature, but I'm curious about your strategy for managing that launch to avoid any channel conflict. Additionally, as we analyze the profit and loss, especially regarding gross profit per test, is there a pricing strategy that can maintain the same level of gross profitability for both stool and blood tests? Again, I know it's early, but have you brainstormed on this topic?

I'll start maybe the first piece there, Doug, just on the seasonality. Care gaps obviously are just with the tremendous demand that we're seeing from payers are becoming a larger part of our business. And again, given the lumpy nature that those programs have, i.e., they're back-end loaded, that certainly would distort some of the more traditional seasonality trends that we had in our business. And I would just flag in particular, if you think about this Q4 guide and then what that implies for a typical Q4 to Q1 step down in terms of sequential growth as we head into 2026. And again, all driven by the strength in demand in our care gap programs. You did hit on pricing. Pricing will be up slightly sequentially from Q3 to Q4, but that's really only about 100 basis points in terms of the overall uplift.

In response to the second part of your question about our CRC blood test launch, which we licensed from Freenome, we plan to apply lessons learned from the launches of Cologuard and Cologuard Plus, along with our detailed analytics on patients who have declined Cologuard or colonoscopy over time. This will help us ensure that we provide the appropriate test to the right patient at the right time. For patients who consistently refuse colonoscopy or stool tests, the right option may be a blood test. This is crucial because there are many individuals in this non-compliant group, and offering them a test with lower performance is certainly better than providing no test at all. We will structure our pricing to maintain margins as much as possible. We do not foresee any conflicts since we will educate physicians, clinicians, PAs, and nurses about which patient populations are best suited for each test. We view this program as expansive and aligned with our growth ambitions. With 50 million people not up to date on screenings, there is substantial opportunity for significant growth with both Cologuard and our CRC blood test.

The next question comes from Andrew Brackmann with William Blair.

Kevin, I think you made a comment that you're seeing encouraging signals with the MRD launch and in particular, in the breast indication. Anything more you can share with respect to how you're sort of thinking about the halo effect that Oncotype brings to that indication in particular? Any signals or color that you can provide there?

Thank you, Andrew. We have a long-standing relationship, spanning 21 years, with oncologists, surgical oncologists, and pathologists regarding Oncotype. They trust us with tissue samples, particularly in breast cancer, which we see as a key area for growth. Additionally, we have a strong presence in colon cancer. Our current studies in breast cancer include the Exact DNA 003 test, which is enrolling over 1,800 participants in collaboration with NSABP. We are also conducting a pan-tumor study that encompasses 10 different tumor types, including lung cancer. As the evidence develops, we anticipate breaching deeper into the breast cancer market which we are eager to do. Furthermore, our MAESTRO technology, which utilizes a whole genome approach, is set to launch by 2026 and will support additional clinical indications. Starting with breast cancer is crucial; this technology enables us to analyze numerous mutations while minimizing sequencing depth and keeping costs low, which sets us apart. There is significant work ahead in a growing and currently underpenetrated market, and we believe our strong commercial organization and reputation among oncologists will provide a solid foundation.

The next question comes from Dan Arias with Stifel.

Aaron, could you provide an update on your expectations for rescreening this year? Initially, you were projecting a penetration of around the mid-50s percentage. That seems a bit low considering the current strength, so I’d like to hear your revised outlook and whether you anticipate that figure will increase next year.

So rescreens continue to kind of be in that mid-50s to high 50s. We've continued to make progress on that throughout the year, Dan. I think if you take a step back, one of the things that we're really trying to do is automate the rescreen process. And there's a number of different things that we have in flight to be able to do that. And what we have said is that over time, we think that we can get that up into the 70% or 75%. And the reason for that is because we know that the key to getting people rescreened is getting that prescription. And that once we get the prescription and ship the kit back to that patient, we know that the compliance rate is anywhere from 80% to 95%. And so that's what we're laser-focused on right now. No more to update on that. We'll keep you all posted as to what that means for future financial guidance.

Yes. The goal really is to automate the screening process so that people get screened and stay screened throughout the duration of the recommended screening time period. That's important. It's one of the unique things that we can do with Cologuard and the ExactNexus platform that we have invested so heavily in over the last decade.

The next question comes from Bill Bonello with Craig-Hallum.

I wanted to follow up on the telehealth comment that you made, the consumers or patients being able to order directly. Can you just talk a little bit about how that then integrates with the primary care physician, if you have that information or are able to get that information. Does that information get channeled back to the PCP? Would the PCP still get quality credit for that patient being screened? Is there any potential conflict there if the test is ordered via you rather than being prescribed by their PCP? How do we think about that?

Thank you, Bill. We are very aware of this issue as we implement customer-initiated ordering, as well as rescreen and care gap programs. One of the great features of the ExactNexus platform, powered by Epic, is the integration of MyChart accounts, which might take a couple of years to reach its full potential. This integration enables both patients and physicians to access results from any tests performed, consolidating all information into a single electronic medical record. As a result, physicians receive full credit for all screenings, regardless of whether they initiated them. Additionally, payers will also be able to access this information on their platform. Being integrated with Epic allows us to carry out some unique initiatives in managing population health, making this a positive development.

The next question comes from Mike Ryskin with Bank of America.

I want to follow up on a couple of points you guys touched on earlier. I mean, first, the gross margin you called out, I think 100 bps headwind, I think you kind of tied to the record care gap strength. Just to make sure just relatively speaking, talking about care gap being strong again in 4Q. Is that relatively the same impact we should expect then? And then just to make sure I got it right, reverses in 1Q and 2Q just from the seasonality. So I just want to make sure I got the moving pieces right there. And then I'll throw on a follow-up at the same time. I want to bridge the revenue raise to EBITDA, really solid beat, obviously, a nice raise. But even it didn't come up quite as much. Is that the gross price impact, that difference there or maybe some of the incremental R&D investments you talked about earlier, I think when Dan Brennan was asking on OpEx. Just kind of talk about the lines between GM and EBITDA?

There are many questions in there, Mike. I'll do my best to address all of them. Regarding the gross margin in the third quarter, it was primarily due to the exceptional demand we experienced in our care gap programs. We actually anticipate that gross margins will improve in the fourth quarter. Consensus projections for fourth-quarter gross margins suggest an increase, and we expect that as well. The reason is that we typically do not ship as many care gap programs in the fourth quarter compared to the third and second quarters. Payers generally aim to have patients screened by their primary care physician early in the year and then focus on the larger care gap programs later in the year to achieve their quality targets. Therefore, we anticipate growth in the fourth quarter and in the first quarter of 2026. Regarding the flow-through and the EBITDA guidance, it's important to note that this will be our second consecutive year of nearly 50% adjusted EBITDA growth. Margins in the latter half of the year are expected to be in the 16% to 17% range, moving us closer to our long-term goal of 20%. If we look down the profit and loss statement, we see the most leverage coming from general and administrative expenses. We've discussed our productivity plan, and G&A is already down about 700 basis points on an adjusted basis compared to two years ago. However, we indicated that this year would be a year of investment. On the research and development side, we've mentioned the areas where we are investing, particularly in MRD and generating clinical evidence in a vast underpenetrated market. In the second half of the year, our expenses will focus on sales and marketing, especially for Cancerguard. This is a significant market opportunity where we don’t need to hire more salespeople to pursue it. We are committed to maximizing this market and look forward to providing updates in the upcoming quarters and years about how the launch is progressing.

The next question comes from Subbu Nambi with Guggenheim.

A couple of model cleanup questions and then one topic on Cancerguard. What were the Cologuard ASPs this quarter? Were they up quarter-over-quarter? And did I hear you right that Cologuard volumes grew 250,000 tests year-over-year? That's one. And on the topic of Cancerguard, you have an unparalleled PCP commercial infrastructure. That said, given this is largely a cash pay market at this point, I'm curious how impactful you expect the PCP commercial infrastructure advantage to be?

On your first point, Subbu, the ASPs were up sequentially from Q3 versus Q2, and we would expect them to be up sequentially again in 4Q versus 3Q. And yes, we screened more than 0.25 million people more this quarter than we did a year ago at this time. Let's say that again. We screened in this quarter more than 250,000 more patients than we did a year ago. So yes, those are the modeling questions that you had. And then Kevin, maybe you want to take the Cancerguard question.

Yes, that's a great question. As I've been speaking with our field representatives, they are very aware of which offices in their regions have patients willing to pay for a Cancerguard test. This awareness will be crucial in our sales team's discussions and will help them gain better access. We believe this momentum is already beginning. It's important to note that in the U.S. healthcare system, convincing people to pay out of pocket for new technologies isn't easy. However, given the significance of a multi-cancer screening test, we expect to see its adoption, although it may take some time, much like what we experienced with Cologuard. We're encouraged by the early days of this launch, and we think a major advantage will be our frontline sales representatives and the strong relationships we have with health systems. Our quality tests have earned their trust, along with our ability to facilitate electronic ordering and timely results, and our customer service is always available for support. All these elements, from our human resources to our systems capabilities, are essential. Another vital aspect of our company is our international reach, which became evident when we acquired Genomic Health. Cologuard has great potential outside the U.S., even more so than domestically, and the team recently returned from our international headquarters, where they outlined plans for launching Cologuard globally. They are gearing up to execute this, and we are excited about this part of the Exact Sciences platform.

The next question comes from Mark Massaro with BTIG.

Congrats on the strong 22% growth in screening this quarter. But I wanted to ask about the Oncodetect MRD test. I appreciate the commentary about the meaningful lift in breast cancer and the encouraging utilization in CRC. Kevin, I'm just curious, do you think that Oncodetect could become at least a material contributor to your Precision Oncology business in 2026? You did put up double-digit or 12% growth in PO. I'm just trying to figure out how much of that strong growth this quarter came from OncoExTra versus Oncodetect? And any thoughts about '26?

Mark, it's too early to provide detailed insights regarding 2026. As we mentioned, Oncodetect does not significantly impact this year's revenue, but we've emphasized its importance in our long-term strategy. Just as we saw with Cologuard and Genomic Health's Oncotype, these initiatives are long-term investments that yield results when pursued correctly. I'm proud of our team's commitment to gathering the necessary evidence to present to our customers and demonstrate that our test is the best option for their patients. We're pleased with the progress we've made so far and anticipate being able to show those results quantitatively in the future.

Within the third quarter, we are very pleased with what the PO team delivered, showing double-digit growth in our Precision Oncology business. This growth did not come from Oncodetect. As Kevin mentioned, it is still early days, but it highlights the strength of Oncotype DX. Oncotype DX continues to expand its presence in international markets, and we also noticed a significant increase in volume for Oncotype DX in the U.S. as well.

The next question comes from Luke Sergott with Barclays.

Could you provide an update on the Freenome simple screen and when you expect to receive feedback from the FDA? Additionally, what types of updates do you need to implement? Looking ahead, as you consider launching simple screen in the market, it seems that you have a substantial CRC screening database. Given that patients may be hesitant to participate in tests like Cologuard, there appears to be an opportunity to explore this area as you move forward with commercializing the test. Can you also discuss how this may relate to your future plans for MCED?

Thanks, Luke. To answer your last question, we have a strong relationship with over 30 million patients and more than 250,000 primary care physicians, along with oncologists, GIs, and OB/GYNs. Our CRC blood test is a trusted option that we intend to offer to both clinicians and patients. We can meet the recommendations set forth by organizations like the NCCN, ASGE, and AGA regarding blood tests. However, it’s important to note that these tests are not as effective as Cologuard, Cologuard Plus, or colonoscopy. The key is using the right test for the right patient at the right time, particularly for those who have not been screened at all for colon cancer. We are aware of about 10 million individuals who fall into this category, as they have received a Cologuard kit but did not return it over the past 11 years. This growing customer base allows us to collaborate closely with health systems to identify patients who might benefit from a blood test. If a patient has already attempted to get a colonoscopy or Cologuard test, we are in a unique position to offer them a blood test instead. Ultimately, ensuring that patients get screened is our top priority.

The next question comes from Kyle Mikson with Canaccord.

Congratulations on the quarter. Regarding the CRC blood partnership, I have a couple of questions. Will the data expected early next year be the V2 data that triggers the $100 million opt-in payment upon FDA approval, or will that payment-related data come later in the year or in 2026? Additionally, how do you ensure that the partner does not gain access to your accounts in situations where the provider opts in for the FDA/CMS version and customer ownership may switch to the partner?

Regarding the Freenome V2 data, it's important to clarify that there are two types of data involved. One is concept data, and the other is pivotal study data, which will commence soon. The initial data will be available in the coming months, while the pivotal data is expected next year, although the exact timing is uncertain. This pivotal data will be critical for our submission to the FDA, which is the key point. The FDA approval will rely on the V1 data that we submitted in August, and this process typically takes about a year. To address any confusion about credits for CRC screening, we have the exclusive rights to market the CRC screening test. Freenome plans to launch a lung screening test and eventually a multi-cancer screening test, but we exclusively market the CRC blood screening test.

This concludes the question-and-answer session. I'll turn the call to Kevin Conroy for closing remarks.

Thank you all for joining today and to the Exact Sciences dedicated team for their commitment to deliver on our mission of eradicating cancer. Thank you.

This concludes today's conference call. Thank you for joining. You may now disconnect.