EXAS - NASDAQ

Good day, and welcome to the Exact Sciences Second Quarter 2022 Earnings Call. Today's call is being recorded. I would now like to turn the call over to Megan Jones, Senior Director of Investor Relations. Please go ahead.

Thanks for joining us for Exact Sciences' Second Quarter 2022 Conference Call. On the call today are Kevin Conroy, the company's Chairman and CEO; and Jeff Elliott, our Chief Financial Officer and Chief Operating Officer; Everett Cunningham, our Chief Commercial Officer, will also be available for questions. Exact Sciences issued in this release earlier this afternoon detailing our second 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 have material differences from such statements. Reconciliations to GAAP figures are available 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'll now turn the call over to Kevin.

Thanks Megan. During the second quarter, the team made several advancements toward our vision to eradicate cancer through earlier detection and smarter answers for patients and their health care providers. The highlights from the quarter include being a Great Place to Work certified for the fourth consecutive year, screening more than 700,000 people for colon cancer with Cologuard, securing an improved position in ASCO guidelines for Oncotype DX Breast as the preferred test for early-stage breast cancer patients, improving our path to profitability and cash liquidity position. Cutting adjusted EBITDA loss in half quarter-over-quarter, showcasing the breadth of our screening and precision oncology pipeline with 13 abstracts at ASCO. Making progress towards completing BLUE-C, our pivotal study to support our next-generation Cologuard and colon cancer blood test, publishing evidence for our tumor minimum residual disease testing colon cancer. Generating additional evidence for our multi-cancer early detection test, which we plan to share at the European Society for Medical Oncology or ESMO conference in September. And finally, enhancing our sequencing capabilities by partnering with Ultima Genomics. We're focused on executing with our core business of Cologuard and Oncotype DX prioritizing the highest-impact projects to reach profitability and generating high-quality evidence for our pipeline of advanced cancer tests. Jeff will now review our financial results.

Thanks Kevin. Good afternoon. Second quarter revenue was $522 million, an increase of 20% or 20 [Technical Difficulty] COVID testing. Screening revenue was $354 million, an increase of 34%, including four points from PreventionGenetics. Cologuard growth was driven by improved sales team productivity, our marketing partnership with Katie Couric, three-year streams, and used in the 45 to 49 age group. 9,000 new healthcare providers ordered Cologuard during the quarter and nearly 282,000 have ordered since launch. Precision Oncology revenue was $154 million, an increase of 12%, driven by Oncotype DX Breast and therapy selection. Foreign exchange was a $2 million headwind. COVID testing revenue decreased 58% to $14 million. Second quarter GAAP gross margin was 68%. Non-GAAP gross margin, which excludes amortization of acquired intangibles, was 72%. Margins were lower than expected due to inflation, especially shipping and wages. We expect inflation and unfavorable foreign exchange to be about a two-point headwind in the second half of the year, compared to our prior guidance of about 73%. We expect margins to expand, as we absorb the additional lab capacity brought online for Cologuard and introduce new automation. Sales and marketing expense was $216 million. G&A expense was $182 million, including a $24 million net gain, mainly related to Thrive and a $5 million expense from cost reduction activities. R&D expense was $106 million. Net loss was $166 million and adjusted EBITDA was a loss of $46 million. This improved $76 million from two quarters ago and $44 million from last quarter. We ended the quarter with $728 million. We established an AR securitization facility during the quarter, with up to $150 million in borrowing capacity. For the agreement, we borrowed $50 million under the facility. We also have about $150 million available on our revolving credit facilities. This provides total liquidity of almost $1 billion. We're also exploring ways to unlock capital from our real estate facilities. We expect our cash used to be lower in the second half of the year compared to the first half, and we're confident in achieving adjusted EBITDA profitability in 2024, while we continue investing in future growth and efficiencies. For example, we're investing $300 million in IT this year to improve our digital tools and support initiatives like Cologuard rescreens, enhance our customer experience and billing systems, and limited redundant costs from legacy IT platforms. Turning to our guidance. We expect total revenue between $490 million and $505 million during the third quarter and between $1.98 billion and $2.022 billion for the year. We expect screening revenue between $350 million and $355 million for the third quarter and between $1.35 billion and $1.372 billion for the year. This includes PreventionGenetics revenue of approximately $10 million during the third quarter and between $40 million and $42 million for the year. We expect Precision Oncology revenue between $135 million and $140 million for the third quarter and between $580 million and $590 million for the year. Our expectations for global Oncotype DX Breast are unchanged. We're up in our guidance to reflect portfolio -- product portfolio changes and a $4 million incremental FX headwind for the year. We divested our Oncotype DX Genomic Prostate Score test to ensure our team is focused on the highest impact projects and improving our profitability. Certain members of our dedicated urology team will transition to MDX Health, a commercial-stage precision diagnostics company, focused solely on prostate cancer and other urological diseases. We have agreed to provide certain transition services to MDX Health, including lab services to ensure a smooth transition for patients. For the agreement, Exact Sciences received $30 million upfront, including $25 million in cash and $5 million in MDX Health Equity. An additional $70 million is payable to Exact Sciences upon achievement of certain revenue milestones. We expect COVID testing revenue between $5 million and $10 million for the third quarter and between $50 million and $60 million for the year. Moving to OpEx for the full year, we are lowering our sales and marketing expense by $30 million and now expect between $870 million and $890 million. In the second quarter, we saw improvement in key sales and marketing metrics, such as revenue per sales representative. We expect this to improve further as we grow Cologuard and make more products available. We're also lowering our research and development expense by $5 million and now expect between $425 million and $445 million. Our expectations for G&A, CapEx and intangible amortization remain the same. I'll now turn the call back to Kevin.

Thank you, Jeff. A recent study showed that about half of Americans between ages 50 and 75 are not up to date with colon cancer screen. That means as many as 60 million Americans need to be screened. Cologuard is helping to solve this problem. Almost half of first-time Cologuard users are new to screen. The Centers for Medicare and Medicaid Services or CMS recently proposed removing a barrier to getting more people screened by eliminating Medicare cost sharing for a follow-up colonoscopy after a positive stool-based screening test. This follows a federal regulation requiring private payers to eliminate cost sharing starting in 2023, addressing a top concern patients and providers have about using Cologuard. --: A powerful data and digital infrastructure is one key to unlocking the full potential of Cologuard, Oncotype DX and our future tests. We have spent nearly a decade thoughtfully designing and enhancing our IT systems, including a custom-built laboratory information system, and installing Epic as the backbone of all processes from ordering to billing. This will power one interface to meet our health system and physician partners testing needs in hereditary cancer, colon cancer, multi-cancer, cancer prognosis, minimum residual – and late-stage therapy selection. Our goal is to make it easy for healthcare providers to order all advanced cancer tests through one partner, making prevention and diagnose as simple and personalized instead of complicated and fragmented. Exact Sciences has the foundation in precision oncology to provide answers to key questions of cancer patient, oncologists, biopharma or academic partner may have. The Oncotype DX Breast test is now the most strongly recommended in ASCO guidelines with the highest evidence quality of all multi-gene tests. To expand our precision oncology test offering, we're developing a minimum residual disease test, enhancing our therapy selection test and partnering with biopharma companies to help identify and develop better therapies for patients. In therapy selection, we're taking aspects from our current test, oncomap and oncomap ExTra to bring one market-leading comprehensive test to patients. PreventionGenetics recently received approval for the first FDA authorized Class II molecular companion diagnostic device, developing collaboration with Rhythm Pharmaceuticals, with 40 biopharma partnerships, the PreventionGenetics team provides invaluable relationships to build upon for future diagnostics. The team is also planning a focused pilot launch of hereditary cancer testing later this year to help breast cancer patients make better treatment decisions based on the genetic makeup of their team. In the next 12 months, we plan to deliver evidence supporting three of the most important cancer diagnostic advancements for patients. Colon cancer screening, multi-cancer early detection and minimum residual disease testing. We displayed the breadth and depth of our pipeline at ASCO with 13 abstracts. In our prospective BLUE-C trial, which is up colon cancer screening programs. We're happy to announce that we've enrolled the number of cancers necessary to power an FDA submission for our next-generation Cologuard test. We will continue enrollment to ensure we have no cancer cases to support our colon cancer blood test. In multi-cancer early detection, we plan to share data at ASMO in September that demonstrates the power of our multimarker approach. In minimum residual disease, we published evidence supporting our tumor-naive panel in colon cancer at ASCO. We also initiated a study with the West German Study Group to validate our tumor-informed approach in breast cancer and expect to have additional data in colon cancer later this year. We want to provide patients better information before diagnosis and across all stages of cancer treatment. We have a team with expertise across many technologies and biomarker classes. This provides flexibility to deliver the best test on the right platform place for each question we're answering before and throughout a cancer diagnosis. Our development work with Ultima Genomics and Singular Genomics may provide future access to a differentiated and affordable sequencing technology and another tool to help the best outcome for patients. We're now happy to take your questions.

Thank you. [Operator Instructions] We'll take our first question from Derik De Bruin with Bank of America.

Hi. Good afternoon. Thank you for taking my question. I guess to start off, I mean, there was a $12 million beat on Cologuard relative to consensus and our estimates on the quarter, yet you're still maintaining the full year guide. I guess why the conservatism for the second half of the year, given you should have a number of tailwinds that are sort of there given the sales force and less COVID? And I guess additional thoughts on how we should think about Cologuard for 2023?

Well, let me start and then hand that over to Jeff as well. I start by saying, we are guiding to 22% growth in the back half of the year. And taking a step back, Cologuard has a tremendously long runway ahead of it. There are between 45 million and 60 million unscreened people who need to be screened. The people 45 to 49 are starting to be screened at an increasing clip. And the environment for access to physicians has not changed. It has been essentially flat over the first half of the year. We expected that to increase. Eventually, it will again. What we're seeing is that we moved from a period where access was limited because of COVID to now access being more limited because of office staff shortages. All of those things are temporary in nature and the need for colon cancer screening is persistent, and we're seeing a fundamental shift that is that Cologuard is becoming more commonly accepted within large health systems, among primary care physicians, importantly, among patients as a great way to get screened. It's just becoming more common and the data back that up, Jeff on some of those aspects of ordering behaviors, but the positive is the upside is tremendous. And we continue to expect to meet or beat our 40% long-term market share goal with Cologuard.

Derik, this is Jeff. As Kevin talked about, we're guiding to 22% growth in the back half of this year for Cologuard. That's $120 million of incremental revenue. I mean keep in mind, Cologuard, as you know, is the $1 billion plus product. It is profitable today. But we're emphasizing profitable growth going forward. We want to make sure that we built here sustainable and generating kind of consistent growth in cash flow. We'll guide to next year as we typically do, like in our fourth quarter call. There was a ton [ph] that we excited about, Kevin talked about that. As he mentioned the efficiency of things as we’re doing with health systems work 54% now. Electronic ordering, that number will continue to climb higher with the backlog of systems that are signing up and just really waiting to converts electronic ordering and when you do that you see a niceflips [ph]in orders. So, I feel good about the progress we’ve made on growth. Today, we are about 3.5 months less than a year, from a Cologuard order perspective, because things really goes down for us our ability to turn orders into revenue really goes down after Thanksgiving. So here today about 3.5 months left in the year, we will try to do everything we can, but you should think of our – the midpoint of guidance for the year as the most likely outcome.

We'll take our next question from Brandon Couillard with Jefferies.

Hey, thanks. Two-part question for Jeff. First, million reduction in sales and marketing – on the drivers of that? And then on G&A, I think there was a $25 million gain in the second quarter. But your spending outlook unchanged. Is that right?

Yes. It's a two-part question, Brandon. This is Jeff. The first one, I'll start on sales and marketing and maybe Everett, Kevin can chime in too, if he's got something to add. So on the sales and marketing I think what we’re seeing here is an emphasis on prioritization and invested in the highest return areas of growth. So Everett and team has very nice job making sure we're targeting the right doctors, targeting the right territories and always looking at marketing spend closely. So what I'm really pleased to see the improvement that we saw, when you look at the sequentials here, sequential overall growth of 7%, a sequential decline in sales and marketing of 7%. So this is some really nice efficiencies we're getting. I mentioned in my remarks, we're seeing improved efficiency of our sales team. This is part of the plan that we kicked off earlier this year to improve the productivity there. [indiscernible] is on the G&A. We had this dynamic from the last two quarters, a $25 million gain. Really, this relates to the earnout for this five acquisition. The only thing that really happens here is that interest rates go up, the math around the accretion on that earnout says that we've got to take a gain. So that's really the dynamic here. That could happen again in the future. I'm not counting on, but it could happen again as interest rates fluctuate. So that's the change there. As far as the G&A in the back half, we're continuing to invest in things like IT. So that's likely the step up in the back half. IT is a crucial driver for the efficiencies that we expect to get overtime. So I think those investments make a tough steps. Everett, anything to add on the sales and marketing line?

Yes. Jeff, just around the optimal deployment, we've taken a look at putting our resources toward those largest opportunities that we have unlike and I am excited about where we've invested in our commercial organization. We've invested in our health systems organization. We know that health systems have been and will be more important as we – the year goes as we go into 2024, that investment in health systems has allowed us to really develop a deep partnership, and making sure that Cologuard is a major choice for those large systems.

We'll take our next question from Brian Weinstein with William Blair.

Hey, guys. Thanks for taking the question. Not really thrilled that you brought up 3.5 of Thanksgiving – Sunny in Chicago to the -- I don't want to think about that yet. So not cool at all. So you guys divested an asset this quarter, clearly looking at what makes sense and I get that. Maybe Kevin or Everett, if you guys can talk about the portfolio more broadly, any thoughts about the right time to potentially add to the bag to maximize kind of salesforce more broadly and even potentially help Cologuard, and beyond that like even in Precision Oncology, you guys have been an acquirer. Should we expect that to continue? And the reason I'm asking is obviously just strategic intent, but also just wondering how M&A or other types of opportunities to add to bag to help Cologuard potentially how that factors into kind of comments you've made in the past about not raising equity, of course, and then also achieving profitability. So kind of a bunch of stuff bundled up there. Hopefully, that makes sense.

Yeah. Thanks, Brian. This is Kevin. The -- if you go look back to 2016, I think we generated $99 million of revenue and this year, we're guiding to $2 billion. So the company has been transformed an important part of that transformation was joining forces with Genomic Health and building what we believe is the best reach from -- all the way from primary care, GI, OBGYN, other specialties all the way to oncology. So if you then take a look at what is our portfolio strategy, you have two of the we think the best brands in cancer testing Cologuard and Oncotype DX Breast which are anchored to our long-term growth. And now looking at our pipeline, we have multi-cancer early detection testing, really an amazing opportunity to access 135 million Americans on a regular basis and transform cancer care by making detection earlier. Two, our colon cancer next-generation Cologuard test in colon cancer blood programs And three, minimum residual disease. Those three group of products access a total combined TAM of about $60 billion and we are the company that can deliver them. One of the reasons we can deliver it is because we have this amazing IT platform that is suite up from the time a doc learns about a test, they order it, they get a result all the way to billing. The investment to get there is huge. We believe the best commercial organization, not only in cancer diagnostics, but in Diagnostics, this is an incredible team of professionals that engages, deep capabilities in the lab, in clinical, in regulatory. This allows us to take new products and drop them in to this portfolio. And so our M&A philosophy is driven by will the product or technology contribute to this long-term strategy that I just articulated. Is it the right culture of it and does it create shareholder value. When it comes to our Oncotype DX Prostate test, it's a great test. I know people personally who have benefited greatly from the information that test delivers. And MDX Health is -- we know the leadership of the company well. It's a very strong company totally focused on urology. We will be one of the important shareholders of the company. We want to support and help them be successful and we believe that this is the right home for Oncotype DX Prostate. So we'll continue, Everett. I don't know if you have anything to add there.

Yeah. Kevin, I will just add one thing. I've been out in the field over the last 1.5 months, talking to large health systems about this portfolio approach to our cancer continuum. And the response that they -- that the health systems are giving us, the CEOs, the CMOs, they're saying, if you can simplify the number of lab partners that we had to deal with, and you have the back-end support of all your IT solutions to help our workflow, they're going to partner with us. We're going to move from selling individual products to being their cancer continuum partner, that's what health systems are looking for. That's what we've seen over the last -- that's what I've seen over the last month and a half that I've been in the field. So it's inspiring.

Thanks Everett.

We'll take our next question from Catherine Schulte with Baird.

Hey guys. Thanks for the question. Yes, first, in the past, you've talked about the group of docs that had represented the top 40% of orders pre-COVID still down, while the bottom group is ordering much more than they did pre-pandemic. Did that trend continue in the second quarter? And how long do you think it takes for that top tier of orders to come back?

Hey Catherine, this is Jeff. This is a really exciting part of the business. Something I know Kevin and I never look at closely and we're really sort of the futures here. So, that trend, it actually accelerated in the quarter relative to prior quarters. So, we saw those doctors that order -- historically had ordered most recently. They improved their orders now are down just under 10% relative to the start of the pandemic. Again, that's an environment of more limited access. That was -- that compares to about down 15% in the first quarter. So, again, improvement sequentially. These are doctors that are the true believers. They order still at a higher rate, the patient flow is ticking back up and as excess improves, they will come back even more and expand from their current levels. The doctors who historically only doubled, ordered infrequently, oftentimes, we didn't even call them. This part of the business tremendously exciting. Those doctors have essentially doubled their order rate relative to the start of the pandemic. It continues to improve. Last quarter, I think it was up 60%, now it's closer to 100% improvement since the start of the pandemic. So, this provides a huge growth opportunity for us for years to come. We can selectively call the most promising doctors in this group we're seeing this broadening of the order base. That really bodes well now for Cologuard, also other products like hereditary cancer and multi-cancer as we launch them, we'll have a broader base of physicians to launch them through.

We'll take our next question from Dan Brennan with Cowen.

Great. Thanks, guys. Thanks for the question. Kevin, I thought I'd just ask you about with Eclipse coming, obviously, you've spoken pretty prominently on expectations, but net-net, by the time we get to the next call, the data could be out. Just wondering if you can update us anything incremental in kind of how you're thinking about the different scenarios and kind of how Exact will react depending upon the scenario and kind of how Cologuard will be positioned versus scenarios?

Well, let me remind you the -- there are many challenges in bringing a blood -- colon cancer blood test, to market as a leading way to screen people for cancer. There are five main reasons. Number one is that any of the blood tests, the data that we've seen are less accurate than Cologuard and colonoscopy and other established screening approaches. Equivalent FDA approval and claim language is unlikely. And that's a challenge when it comes to introducing a new test into the offlay challenging and complicated screening paradigm. Bar for guideline inclusion, which drives commercial coverage is very high. Pricing is likely to be sub-$200. And -- then there's the question of where does the blood test fit given that you have tremendous performance in terms of efficacy with colonoscopy and Cologuard. So I think the market is challenged. Our view hasn't changed here. We have a blood test that we expect to be priced appropriately. We have a commercial team, a lab infrastructure and IT system where we will be able to drop our blood test into that ecosystem, making it really easy for docs to order in patients to use a test if for any reason they opt not to get a Cologuard test. And so that's our view of this in terms of data. Data is step one. There's FDA approval. There's getting claim language, Medicare coverage, et cetera that will take -- most likely will take multiple years. USPSTF's next output is probably three years to four years away.

Our next question comes from Vijay Kumar with Evercore ISI.

Hi, guys. Congrats on the [indiscernible] and thanks for taking my question. I had one on this path to profitability. Jeff, it looks like your gross margin assumptions changed. I heard some comments on inflation. What's your updated free cash flow burn rate for the year? And when you think about the 2024 adjusted EBITDA pack of profitability, assuming revenues to grow teens gross margins are consistent. I mean, your OpEx has to grow low singles over the next two years. Are those assumptions reasonable? Did that make sense for you, given we're looking at an exact being at the high end of your Pure Group growth set?

Thanks, Vijay. This is Jeff. And I just want to say it again. I know we've said this before, but we are firmly committed to adjusted EBITDA profitability for the full year of 2024. And we made great progress towards it. This team pulled together, came up with just awesome new ideas on how to get more and more efficient as we grow. And going forward, it will start with revenue growth, and Everett and the team are doing a nice job growing the top-line. I do expect some gross margin improvement over that period. Inflation here in the near-term is what I pointed to, should be in wage inflation or incremental headwind relative to our last update where we have significant lab automation projects in flight now that will help us drive improvement on top of the -- leveraging that the fixed cost of our labs. So I do expect some gross margin improvement. And then you're seeing the OpEx discipline. It's starting with the sales and marketing line, look at even more of that of G&A in the coming years. So I feel very good about the path here is going forward.

We'll take our next question from Dan Arias with Stifel.

Good afternoon, guys. Thanks. Kevin, maybe a couple on the pipeline. Starting with Cologuard 2.0. Is the 2023 commercial launch for that assay in the picture at all just given the current submission time line expectations? And then maybe on MRD and the dual approach that you have there? I mean, obviously, there's a need for data generation. It sounds like there's some data on the way. So how are you thinking about the time lines that those tests are on? Should they more or less arrive together, or is the development path is not something that's going to allow that to happen? Thanks.

Our Cologuard 2.0 or what we call next-generation Cologuard will – 2023 is a possibility. We have not yet made a determination internally as to when that test will be launched, it will obviously depend upon the test performance. And then there are a whole bunch of things you need to do to make that flow. So we may or may not need a new CPT code that will affect the launch timing and the Medicare coverage and insurance coverage. You want to make sure all of that is locked. So when you flip the switch, you have a very smooth billing process and patient experience process. In terms of MRD, we are – have a couple – we have access to a couple of important sample sets that will allow us to seek an LVT status and then work towards getting inclusion as one of the reimbursed tests we see this space is developing very nicely, it's setting us up for a product launch in MRD, not this year on a reimbursed basis, most likely next year.

We'll take our next question from Matt Sykes with Goldman Sachs.

Hey, guys. This is Dave on for Matt. Congrats on the strong print. Could you tell us – I hate to ask about physician office access for the millions of time in the past two years. But any comments on the percent of pre-pandemic office access your sales reps are getting in person and any directionality there?

Yes. This is Jeff. I'll take that one, too. We've talked about access being relatively unchanged since our last call, one of the newer dynamics, and this isn't just I'm sure you've heard the companies talk about this -- is a critical staffing shortage that you're seeing in the health care provider setting. So that has the effect access further. So I would say, where is it relative to pre-pandemic you're probably some here at 50%, 60% of pre-pandemic levels. That's what we talked about on our last call. Everett and the team are keen really creative and finding ways around that and making sure that we are a good partner to health systems and other providers, and that's what's helped us deliver upon that growth, including 22% growth in the second half of the year.

We'll take our next question from Patrick Donnelly with Citi.

Thanks. Maybe following up on that one there. In terms of kind of the improvement in the second half. I think the Cologuard guidance is basically implying kind of flat to down sequentially from what you did in 2Q, typically, 3Q seasonality is a little bit better. Obviously, a few factors kind of working your way as you've talked about in terms of building the momentum. Is that just conservatism baked into that 3Q number you discussed? Just trying to figure out the moving pieces why that number with 3Q would be better than 2Q sequentially on Cologuard specifically? Thanks.

Yeah, this is Jeff. I would just say, the guidance is the likely view of where we'll end the year based on everything we've seen. Your access is part of that. There's other trends out there too, but I did stick to the guidance that likely – that will be lands. Historically, if you look back at the last couple of calls, I talked about the seasonal trends of Cologuard as the base of this business continues to grow, you're going to see that the seasonal pattern shifts a little bit. I think that's what a lot of the Street has missed. So I think it's between that and just EXAS [ph] historically, in prior quarters, we had assumed EXAS would have improved gradually over the course of this year. Now we're saying it's likely to be flat over the balance of this year. We're just guiding to what we see right now. Maybe it improves, maybe it doesn't, but we're baking in no change to EXAS for the rest of the year.

We'll take our next question from Jack Meehan with Nephron Research.

Thank you. Good afternoon. So Kevin, one of your -- or maybe for Everett as well, one of your competitors launched a colorectal cancer, liquid biopsy test is an LBT [ph] back in May. So obviously, very super early days, but I was wondering if you saw any impact at certain accounts and what you may or may not be seeing about the interplay between Cologuard and liquid biopsy in the field?

We saw zero impact from any other aspiring entrants into colon cancer screening, during the quarter. We're unlikely to see any impact, because tests that aren't reimbursed, that aren't in guidelines that don't count towards a quality measure credit, just don't -- it's challenging to conceive of a way that there would be significant uptake there that could impact that we screened over 700,000 people in the quarter. We expect that to continue to grow throughout the next several years and beyond, so, no. Really, again, blood tests have a role in colon cancer screening, if they achieve at least the same level of cancer sensitivity as a FIT test and better advanced adenoma or pre-cancer detection than we have seen from case-control studies. And if so, and there is widespread reimbursement and validation of these tests, we think that they will have a role just not in the near-term.

We'll take our next question from Mark Massaro with BTIG.

Hey guys. Thanks for taking the question. Maybe a two-parter, Jeff, the first one is for you on Oncotype Prostate, you lowered the guidance by $15 million to $20 million for the year. I just wanted to confirm that the rough GPS revenue run rate was around $30 million to $40 million? And then secondly, I wanted to follow-up on the profitability topic. Clearly, you have significant investment to come in multi-cancer early detection, significant investment in MRD. And I understand that you divested Oncotype Prostate, small part of your business. But I guess I could use some help as to how you expect to achieve adjusted EBITDA profitability in 2024, when you have the investments that I laid out. And so I guess what I want to maybe clarify is, are you -- do you expect to continue investing in DTC, because obviously, that's a pretty significant line item? And then, I'd also be -- since you're divesting the prostate sales force, any comments on your GI sales force?

Sure, Mark, this is Jeff. On the first one, I think, you're in the right ballpark there. We say that they don't break that up, but you're in the right range. On the second one, look, I mean, we are -- again, we are very committed to being profitable in 2024. Our mantra internally is to keep savings, so we can invest in the highest impact priorities and keep growing this business and serving more patients. And I'm confident we can invest in those three key things. Kevin touched on that. Obviously, our colon cancer business, its MRD in multi-cancer. We benefit from having a strong foundation from which to grow. We've got this foundation of lab, IT, sales force, such that we don't have to invest incrementally as we bring these new products to market. The incremental profitability gets even better. So I'm confident. I'm happy to spend some time offline on the math. But I look forward to driving continued leverage of our sales and marketing team and the G&A going forward. I think G&A will be a bigger improvement in the coming years. And then on DTC, yes. We will continue to invest in that. We'll continue to make these investments because the return is very good. The GI sales team is a crucial part of the business going forward, today for Cologuard in the future for a whole series of other products.

We'll take our next question from Puneet Souda with SVB Securities.

Yes. Hi, Kevin, Jeff. Thanks for taking the question. And two simple ones for me. First one on CMS coverage of diagnostic colonoscopy. I'm wondering if there is any change in the marketing approach among the sales force as a result of this for full coverage of follow-on colonoscopy? And can you remind us how wide is the coverage of follow-on colonoscopy by commercial payers? And then, just one for Jeff on PreventionGenetics. We have seen a disruption from one of the competitors in the marketplace. I heard your diagnostic peer is reducing their workforce by a-third. So just wondering in terms of share-taking perspective and opportunity to gain talent? Thank you.

So for CMS coverage, for diagnostic colonoscopies. That's pretty uniform today. And the proposed CMS rule is a change that says when a patient has a positive stool test, so either a FIT test or a Cologuard test, a follow-on colonoscopy should be deemed a screening colonoscopy, because it completes that patient's screening journey. And as such, there should be no cost sharing. Today, there is about a 20% cost share or that -- this rule if finalized won't go into effect until next year. So, no, today, we're not out marketing this, but in the future, we will.

And just to add some color to that one. You asked on the commercial side of that. So the seamless uptake goes -- follows the Department of Labor regulation that applies to commercial plans. So this is essentially universal starting in January that diagnostic colonoscopy will be without any cost sharing to the patient. So big wins, something we've advocated for a long time. On your second question on PreventionGenetics, we're really pleased with the growth in the quarter and the amount of opportunities that lie ahead. We highlighted the biopharma partnership there. So couldn't be happier with this new acquisition and all the capabilities there. So it does serve as the foundation for future entrants into hereditary cancer testing. The longer-term goal is to really grow the pie, especially in the primary care channel. Obviously, we've got a strong foundation there with Cologuard today and future products over time. We do plan a kind of an early access type launch later this year in oncology. I think this is a perfect opportunity for us to build upon the relationships we've established over the past 15-plus years with the Oncotype DX Breast. So really pleased about the future opportunity here. I think it's primarily about growing the pie, getting more women, men and women access to this innovative technology.

We'll take our next question from Kyle Mikson with Canaccord.

Hey, guys. Thanks for the question. I just want to talk about BLUE-C. So you enrolled enough Cologuard to put out patients to power the update submission. I think that was expected, but you're going to continue to enroll for the blood arm. I guess how long will that take? And then just maybe remind us of the path that were there any time lines for the CRC blood test? Thanks.

Yes. And it's not -- this is Kevin. This is -- it's not a separate blood arm. Unfortunately, about 10% to 20% of people who are willing to get a stool test don't complete a blood draw. That's probably because that requires a special trip to a blood collection center or because they don't like needles. And so that's why we continue the entire study as we have more patients in the study, it just increases the powering of the study, which is great. That's probably for a few more months. We haven't determined when we will finally lock the study. We're just thrilled that we are in a position that if we wanted to shut down the study for Cologuard -- next-generation Cologuard. We could do that today. We're ultimately excited about the opportunities that blood tests afford to patients.

We'll take our next question from Alex Nowak with Craig-Hallum Capital Group.

Great. Good afternoon everyone. Going back to the portfolio strategy. One of the things that Exact Sciences doesn't have is what I'd call bread-and-butter old-school cancer typing like fish flow, pathology, cytogenetics. Do you need to own a broader testing menus to succeed with that portfolio strategy, or do you eventually see those relatively commodity like task getting ultimately phased out here replaced with neuro modalities that exact would have?

We don't think that those tests will be replaced by molecular tests, rather molecular tests are answering new and different questions that those tissue tests don't always answer. And do we need a flow business or a fish business to be successful. The answer is no. We don't need that business to be successful over time. We've kind of laid out what our strategic plan is. We're excited about that strategic plan, and we're going to execute that plan like our lives depend upon it, because it's the right thing to do for patients.