Exact Sciences Corporation (EXAS) Earnings Call Transcript & Summary

Great. Well, thank you for joining us. I'm Patrick Donnelly, the tools and diagnostics analyst here at Citi. Happy to have Jeff Elliott, CFO of Exact Sciences with us, fresh off the quarter last night, so a lot to go through with that one. And Jeff, I guess maybe we can start from there. You guys reported, obviously, results in line with the pre-announcement, but maybe talk to the trends you saw last year and then what that flowed into in terms of kind of the 1Q guide and the full year, and then we'll kind of dive into the details, but maybe at a high level, talk through what we saw last night.

Yes. Thanks, Patrick. Great to be here. Last year, I think we ended at a very strong note. We grew Cologuard nearly 30%. We grew at Precision Oncology business also nearly 30%. And so all in, I thought good growth. The important thing here is that the pandemic appears to be abating, which is a good thing going forward when you look at it this year, some of the headwinds we faced over the past 2 years around physician office access and patient wellness visits appear to be recovering. That all bodes well for the future. We also set up now, over the course of the next 18 months, kind of a very robust period of pipeline data readouts. So we've laid the foundation for that last year, earlier this year reported data on Cologuard 2.0. Over the course of this year, we expect big data readouts on our cancer program, on MRD, also on Cologuard 2.0. So we're entering a very exciting period at Exact Sciences. It feels good to have 4Q behind this where I think we've really turned a corner, and it's going to be an exciting time across our business this year.

Yes, that's helpful. And I guess maybe for the 1Q guide, it felt like it came in maybe a little ahead of expectations, particularly the Cologuard side, I think given December and January, obviously, with the Omicron impact, it felt like it was going to be subdued, maybe came in a little ahead. So maybe talk about how you guys navigated those because, again, obviously, with a month delay on the order side, December matters. So what did you see those couple of months? And how should we expect things to be recovering here as hopefully the pandemic subsides a little bit?

Yes. The Omicron did have an effect on the business. And normally, you would expect Cologuard to step down from Q4 to Q1 because of the timing of the holidays. The holidays really impact patient wellness visits late in the year, and that hurts our revenue temporarily in Q1. So we're excited that we expect the business to grow sequentially. What really is happening, Patrick, is that we expanded our sales team last year by welcoming over 400 people from Pfizer into the Exact family. That team, combined with the existing -- the legacy Exact reps, are all back in the field. We're seeing productivity increase dramatically. That's helping drive growth sequentially and again, in the quarter you normally expect it down. So we're excited as that team gets out there and spends more time in the field, visiting face-to-face with doctors, that should help growth going forward. So I really think we turn the corner here. With each subsequent wave of the pandemic, and there has been more than one, the team has got better adept at finding ways, creative ways to get around the impact from the virus.

Right. Yes. And then you kind of mentioned the reps, I guess one of the questions we've been getting today is around kind of that '22 guidance. You guys have the increased reps. You have the rescreen opportunity, the 45 to 49. Can you just talk through, I guess, the impact of each of those? And then what that implies, I guess, kind of like core, if you would, Cologuard? Because again, I know you talked through some of the levers and the impact last night.

Yes. So we're excited to have many different growth drivers that really work together. So the big ones we talk about are things like the sales force, and that's probably the biggest growth driver over the next several years, the expanded sales team, educating physicians on the benefits of Cologuard. Another really big important one is multi -- repeat testing, right? So you do Cologuard, the guidelines recommended every 3 years. That's a recurring source of high-margin revenue. It could eventually become over half of our sales. So it's a big driver. Last year, we did over $100 million of revenue from that part of the business. This year, we guided to $220 million. So a big step-up there. 45 to 49, that's younger population now because of this rise in incidents, we're seeing this younger population, that part of the market now has opened up for the first time. That business last year did over $40 million of revenue. This year, we expect a big step-up to $100 million. Why that's important is because somebody say 45, that's a patient that we can test over a period of 30 to 40 years. So there's a long kind of lifetime value, right? I mentioned 10-plus Cologuard's over a period of time. So those are very attractive customers, and that's why the sales force is paying so much attention to things like free or rescreening in 45 because of the opportunity there.

Yes. And I guess on the 45 to 49, I mean, how have you guys evolved kind of the marketing message there, to your point, predicting a big step-up in revenue there, really important customer base, obviously, a focus for you guys? Maybe talk about, again, kind of adjusting the marketing towards that population that new population for kind of the whole market.

When you think of the typical 45- to 49-year old, they're typically -- they're busy. They're active with their work and kids and other activities. They don't have time to take off 2 days for a colonoscopy. So Cologuard fits well into their lifestyle. They care about accuracy. Everybody cares about accuracy. This group cares even more about convenience than somebody who's [ 15 ] over or even somebody who's retired who may have more time on their hands. So this is a group who -- they're also very adept at ordering things online. They're adept at digital engagement. So we've got to make sure that we reach these patients kind of where they're at, right, so think of online advertising and ways to reach out digitally and tailored our marketing message to somebody who really cares about accuracy and convenience, which is right where Cologuard is. So we've got some new things we've rolled out last year to target this group. We have a brand-new exciting marketing campaign coming on just a few weeks from now to really add to the urgency of getting tested.

Okay. And then I guess a similar question on the rescreen again, obviously becoming bigger and bigger every single year, talking about some big numbers for '22. How has that kind of rate improved in terms of people actually coming back? How long are they taking? Obviously, it was never going to be 3 years in a day. So what's the time frame you're seeing? And then again, what percentage retention? Have you seen that improve as you guys have kind of refined the marketing and capture rate on those guys?

Yes, we've seen great success here, Patrick. Over the course of the pandemic, we've seen a very steady improvement in our success rate of rescreens. Today, it's over 35%. Over 35% of the patients who are eligible for repeat testing, we successfully test within 1 year. After a 1-year period, we continue to target those patients, so the rate continues to grow far above that number. But we're having good success there. This, to me, is one of the most exciting parts of the business because again, recurring revenue, higher margin revenue. And over time, this will continue to grow. We're successfully engaging these patients using a variety of tools. A big one here again is our digital platforms, ways to reach on online through text messages, various ways we can target these patients and the physicians. It's important we cast a wide net here because the pool today, there's 1 million patients right now who are eligible for 3-year repeat testing. This year, another 1.2 million people will become eligible. So huge opportunity now that continues to grow over time.

Yes, absolutely. And I guess, again, one of the main questions last night tended to be around kind of the guidance, level of conservatism, whatever you will. How are you guys thinking about -- how do you model out kind of that recovery path in terms of office accessibility? I know that's a big metric. I think Kevin said, it's still down 50% from pre-pandemic. So what are you anticipating there? How important is that? And again, what's kind of baked into the guide here?

Yes. Rep access to physicians is extremely important. Typically, in sales, your biggest driver of growth is your sales force over much of the past 2 years, we've really operated with one hand behind our back because our sales force has been out of the field or facing a limited access environment. If you look back to the middle of fourth quarter, access was in that 50% to 60% range. I think things have been relatively stable there. Omicron did introduce a new dynamic where because the case count went so high, you saw that of doctors and nurses calling in sick. Temporarily, that affected our ability to go on and reach those docs. When the case counts are coming down pretty dramatically, you're seeing more doctors getting back to work. Again, reps are getting back in there. But still, it's a very muted environment. What I expect to happen is that access will gradually improve over the course of this year. I don't think things will fully get back to normal. I think there's going to be some lingering overhang, at least, into next year. But that's okay, just even gradual improvements here can go a long ways. As far as sources of upside, I think you and analysts have asked this, one of the biggest potential areas is rep access. If things dramatically improve quickly, then that's a clear path to possible upside. So access to doctors is one of the big things we watch closely.

Yes. Yes. And again, to your point, it's obviously improving pretty rapidly, hopefully, over the last few weeks. Are you anticipating that trend to continue? I mean a lot of time people are kind of looking at last year, the seasonality of it, right, spring and summer was pretty good. I guess what did you see last year in terms of that? And how are you expecting that trend to look this year as we go through it?

Well, last year, we had -- we really had 3 spikes. We had the one kind of about a year ago, almost a year to the day of Omicron. Then we had the kind of the midyear delta impact and then kind of Omicron started late last year. So you had a very different environment throughout the year. So things actually started pretty slow, and then things start to open back up in kind of May or June. And then when Delta hit late July, things got really kind of -- access went way down. At that same time, our partner, Pfizer, made the decision to pull reps out of the field. We then hired all those reps in late September, early October and put them all back in the field because it's safe to do so now with the vaccine. So as has really kind of shifted throughout the year pretty dramatically. This year, I'm not expecting another big wave. I think that when you look at either vaccination or natural immunity, rates are pretty high in this country such that I don't expect today another big wave, meaning that throughout the year, I expect gradual improvement in both the economy and things opening back up also in terms of rep access to doctors.

Right. Yes. And I know another big emphasis for you guys is kind of that shift towards electronic ordering. I think you talked about maybe a 10-point improvement in last night. Can you just talk about the trends there? How you're driving more and more business towards that? How important that is to you guys?

Well, electronic order is extremely important. It's important because if a doctor can quickly open up his or her screen -- and when you go to a doctor today, they're often looking down or looking at their screen, not even paying attention to the patient. So if they can look right at their screen and click one button and order Cologuard, that's simple, right? It's simple for the doctor, it's simple for the patient. It's better for us because as that order comes in electronically, it's a lot easier. We don't have to have as many people interpreting faxes and typing them into a computer. So it's a better experience for everybody, and that physician order's far more when it's easy. The electronic order rate has been a big focus of ours for years. If you go back 2 years ago, 30% of Cologuard orders came in electronic. Today, it's about 50%. I expect continued improvement over the course of this year. That provides a very strong foundation. As we launch other new tests, we'll launch them into an environment where we have electronic order in place. Imagine launching colon blood or multi-cancer will lapse that at 2 high levels of electronic ordering, which again will help the -- should help the launch go faster and provide an overall better customer experience.

Yes. Okay. And then maybe kind of dovetailing off that, you mentioned other tests. Maybe we can talk about Cologuard 2.0 a little bit. You guys showed data -- it's about a month ago at this point. Maybe just talk to, I guess, the improvement you saw, the focus points. I know you guys do a lot of survey work. If you've heard feedback from docs since how much focus is on kind of the advanced adenomas versus the improvement on the kind of the general side and how you guys view the data relative to expectations?

Yes. The goal of our Cologuard 2 program is to address the 2 biggest areas of clinical pushback from physicians on Cologuard 1, and that's around the false positive rate in pre-Cancer detection. And so Cologuard 2 hits both of those head on. When we set up on this journey with Cologuard 2, we thought we'd be able to improve the false positive rate by 3 points. The data we shared last month shows that we should be able to do that. In the study we shared, we saw just that, 3 points of improvement. On the pre-Cancer side, we expected some improvement. What we saw in this study really surprised us. We saw a 15-point improvement, again, in the study we shared last month in the precancer detection rate. We weren't expecting that. So that's something we're pleasantly surprised at. Going forward, we plan to share the pivotal data on Cologuard 2, hopefully, later this year, possibly early next year, and then work through the FDA process from there. If you ask physicians, which -- look, we've screened 8 million people. When you ask physicians what matters, like why do you select one test versus the other, this -- in fact, these 2 type things are sensitivity for cancer and precancer. You really can't emphasize enough how important precancer detection is. Precancer goes a long way to inform test interval, guideline inclusion, pricing for a test. Really, precancer is one of the determining factors for that. So we're pleased to see this incremental performance in 2.0.

Yes. I mean you touched on it a little bit there, but I guess how do you think that changes the conversation when -- obviously, there's some blood-based tests kind of looming in terms of their data, pretty big focus on the precancer detection. I guess, how do you think 2.0 changes that conversation? How big of a focus was that for docs kind of in your conversations beyond the data? And again, what do you expect in terms of blood-based part of the market as we start to see real data and approaching commerciality?

It will change the conversation of corn away because when Cologuard 1 was released, the sensitivity for precancer was 42%, which made it -- while even though that's a significant improvement above and beyond the FIT test, it's still below where most perceived colonoscope to be, which varies by source, but it's still below that. Cologuard 2 to significantly closes that gap or in fact, even brings it close to what some estimates are for precancer sensitivity for colonoscopy. So that changes everything because colonoscopy far and away is the most common way that people are screening in this market. It's probably 50% of people who get screened or in the overall population, 50% choose to do a colonoscopy. So 2.0 will help us take share, not only from the FIT test, but also even more so from colonoscopy. It will change the conversation in a dramatic way. It also has a benefit of by lowering the false positive rate. That means that we send fewer people unnecessarily to a colonoscopy, which means we keep more patients over time. Again, back to rescreening, and this will help improve even further that rescreen opportunity for Cologuard.

Yes. And then also, I guess, the profitability for you guys is a little better. Can you talk about, I guess, how it changes on the financial side for you internally for 2.0?

Yes. I mean profitability is pretty significantly better, really for 2 main reasons. One is on the revenue side, Cologuard 2 has the ability to lift revenue by reducing the expired sample rate. Today, similar around, call it, 2% to 3% of samples that come into our lab are expired. Patients didn't get it back to us fast enough. So we've got to go out and try to recollect that results in lost revenue for us. By lengthening the shelf life, the stability of that sample, we can collect more revenue from the -- essentially from the same number of orders. On the cost side, Cologuard 2 meaningfully simplifies the workflow in our lab that reduces the cost per test by at least 5% above and beyond kind of the improvements in revenue. So it has a pretty meaningful impact on our overall P&L 2.0. In addition, perhaps the biggest benefit is that this will help appeal to more physicians and more patients who previously had pushed back on precancer and specificity.

Yes, makes sense. And then, I guess, other areas of the pipeline, maybe you can highlight as we go through '22, what important catalyst data reveals, we should be keeping an eye out for in terms of pipeline? Obviously, I already talked about 2.0 but that's clearly not the only thing going on in the pipeline. So maybe just highlight a few of those.

Yes. The next big one is in our multi-cancer program, Patrick. So midyear, we expect to release data, a case-control data set on our combined multi-cancer program. So this is looking at the work that Thrive had done before we acquired their company, looking at mutation markers and protein markers. We'll combine that with the methylation work that we've been doing for years. And also, we're also looking at another class or 2 of markers. So this data set will be used to inform which of these market classes and which markers are moved forward to the final product. So it's a marker selection set of data. Later in the year, we'll run another study to really lock down the assay and use that to move forward into our pivotal study and our overall LDT launch, which we plan to do either late this year or early next year.

Yes. In terms of the LDT launch, I guess what are the expectations there? How should we think about the potential ramp? I know Kevin has been relatively conservative on it in terms of realizing that FDA approval will cause that big inflection. But maybe just talk through expectations how you guys are building towards that.

Yes. I mean the primary goal of the LDT launch is to help generate additional evidence that will be important to building out this new testing paradigm, also to refining the workflow. The customer experience is incredibly important, not only for physicians, but also for patients to make sure that we've got this whole thing nailed and make it as easy as possible to get them screened for cancer. So that is the primary goal. We do expect to generate revenue. When you look at who's willing to pay out of pocket for a screening test, it is a smaller part of the market. It's typically considered to be somewhere between 1% and 5% of the market is willing to pay out of pocket. What we are seeing though is strong interest from health systems who want to offer this to their patients or even their employees. So health systems and employers present an attractive opportunity. Over time, we expect those to be key sources of growth, not only for LDT and multi-cancer but also Cologuard and other products.

Yes. And I guess in terms of the multi-cancer, what's the right way to think about the time line to approval being out commercial with kind of a full weight of Exact behind it? Again, obviously, some of that is up to the FDA. But how do you guys think about that piece?

So it starts with the pivotal study, which we plan to start either late this year or early next year. The pivotal study will take about 3 years. In the first year to 2 are enrolling patients, and this is a large study. This is a large study because this will be necessary to get into guidelines and drive reimbursement. We need a large study here. So think up to maybe 80,000 to 100,000 patients enrolled that will take a year to 2, and then there'll be a 1-year follow-up period. So I think 3 years for that study. After that, we'll submit to the FDA and work through that process. So we're talking kind of 2025 or 2026 for FDA approval in the commercial launch.

Okay. Got you. And I know you guys talked a little bit about areas like MRD. Again, a bit of a crowded market, but what's kind of the plan there in some of those other areas outside of 2.0? Obviously, blood cancer screening, maybe talk a little bit about the portfolio on that front.

Yes. MRD is 1 of the big 3 investment areas we have. This market is brand new. It's really the top of the first inning. Things are really just unfolding there. then I get there's others who are entering the space, but we like how we're positioned here. We like our position. When you look at some of the biggest opportunities within MRD, breast stands out. But in breast cancer, we have a large established presence through our Precision Oncology business. Today, 75% of women who have early-stage ER-positive HER2-negative breast cancer, which is the most common type of breast cancer, to get an Oncotype DX test. Well, those women are a prime candidate for an emerging test. So we plan to leverage that foundation. Again, we'll know the patients. We'll know when they need an MRD test. We know the physician they go to. We'll use that foundation to then offer our MRD test over time. Additionally, colon cancer, another big opportunity. It's big because colon cancer is relatively common, and it's important here because we have a presence in colon cancer through Cologuard. So again, here, we'll have an idea of which patients may need an MRD test. We'll know which GIs or which oncologists they work with. So we plan to leverage that foundation as we bring our test to market. So this will replenish our data in colon cancer. We do have multiple studies underway in colon and breast. And then next year, we plan to launch an LDT MRD test.

Understood. Okay. And then you kind of mentioned Oncocyte, obviously, guidance yesterday. I think you talked about mid-single for U.S., over 20% for international. Can you just talk about, I guess, some of the growth drivers in that piece of the business? The mid-single in the U.S. feels sustainable, international probably higher growth over time. But maybe just talk through those parts of the market and again expectations kind of going forward.

Yes. Let's take the U.S. first. The U.S. market share and penetration is actually pretty high, over 70% of women already get this test. So over time, I think there's a bit more share that we can take. However, the primary source of growth, again, for the U.S. breast business will be incidence. So maybe it's an incidence plus 1 or 2 points of growth going forward. On top of that strong foundation, we'll layer in other new products like therapy selection and MRD. So that Oncotype Foundation where 98% of oncologists have ordered the test in the U.S., that gives us a strong foundation then to accelerate growth through new products. Outside the U.S., today, the biggest source of growth is new market expansion. Penetration globally is in the 30% range. So that's going to drive that higher. This year, some new markets are unfolding that provide a significant source of growth. Areas like Italy and Japan, we expect better reimbursement from those countries this year. That will open up some new markets. And lastly, the node-positive data that we shared recently published in the New England Journal of Medicine last year. That data is helping unlock an additional cohort of patients, about 50,000 women outside the U.S. per year, with no positive breast cancer, who could benefit some of the information that Oncotype DX provides.

Okay. That's helpful. And then you obviously kind of throughout the conversation you've highlighted a few different pipeline opportunities that require investments, the sales force expansion. You talked through some of those expenses in terms of the guidance yesterday, how do you think about -- you've kind of laid out this, I think '24, you want to be essentially profitable. Can you talk about the pathway to that? How we should think about the spend? Is it a revenue number that you have circled? Is expenses slow at some point here because, again, obviously, a pretty big step up in '22. So maybe talk through that path to profitability and how important it is for you guys.

It's extremely important, Patrick. The path between here and there starts with growth. This starts with growing the core business. So what have assumed in that 24% number. As a conservative CFO, I don't count on growth from the new products. So I haven't assumed any growth from MRD or multi-cancer or colon blood. I've kept those out of the model for now, again, really just to be conservative. So if you look at core on-market products with the growth that we have in margin improvement there that generates a significant amount of gross profit then to both fund the business and let some of that fall through into an adjusted EBITDA line that expect -- that should be profitable for the full year in '24. From a leverage standpoint, this is really important. I don't think it's got enough attention today. When you look at the sales and marketing line, we did see a step up in Q4. That's because we want to finish building out this broader sales force. But when you look at the Q4 run rate going forward, this year, we expect it to be down. So from a revenue basis, our sales and marketing is down versus Q4. It's down as we drive additional efficiencies throughout the business. So going forward, sales and marketing is a big source of leverage in the P&L. R&D, the big drivers there are the pipeline programs we talked about. 75% of R&D investments go towards new products. Look, that's the right thing to do for our shareholders. It's the right thing to do for patients. These programs carry significant NPVs. But look, I want to make sure that we maintain a strong balance sheet, and we will do everything we can to do that. As needed, we can always adjust some of these new product investments into the future, if needed. But lastly, on G&A, G&A will be probably the biggest source of leverage in the coming years. We've pulled in some G&A investments to accelerate savings. An example that I shared last night is in our billing systems. Our billing systems are a key differentiator. By point in these investments, I see at least $30 million in incremental cash flow. That's from a mix of better Cologuard ASPs and efficiencies through our billing processes from a run rate basis, I expect to get that $30 million within that 24 horizon. So there's significant leverage coming in the G&A line as well.

Okay. That's helpful. And I guess you mentioned the balance sheet. Obviously, relatively healthy cash burn this year in terms of the metrics you gave, I don't know, $600 million, maybe something in that ballpark. Correct me, if I'm wrong. I guess how do you think about the cash balance and that getting you to profitability? Are you going to need to raise again? What's the right way to think about that? How are you telling investors to approach that?

Yes. And Patrick, we do have a strong balance sheet. We had over $1 billion of cash on hand at the end of last year. On top of that, we have a credit facility, $150 million of liquidity, untouched right now that helps. Beyond that, there's other sources. As we continue to grow the top line and improve margins and approach profitability, we have other sources of financing, if we need it. An example here would be real estate. We self-finance essentially all of our real estate, which companies typically don't do that. We've tied up a significant amount of cash flow, over $200 million into our real estate. We did that because we wanted to move quickly. We want to move quickly. However, now those facilities, most of those paces are in place today. We can start to pull some of that money back out through the form of a mortgage or possible sale leaseback. There's significant capital we can pull back out in the near term, if needed, through those vehicles. So my plans call for continued self-financing, possible nondilutive financing. I do not intend to issue any new equity during that time horizon.

Okay. That's very definitive. I appreciate that. And I guess kind of staying on the balance sheet, you guys have done a handful of deals over the past few years. You mentioned being one of the bigger ones. Prevention genetics is one you kind of broke out in terms of what the revenue looked like yesterday. Can you just talk about, I guess, that technology -- again, obviously, the revenue is pretty clear as to what you're expecting for '22, how that ramp has gone and how the integration is.

Yes. It's off to a great start. We just closed that acquisition at the very end of last year. So it is early. But what we get with PreventionGenetics is a really high-quality team of about 200 people that generates -- this year, we expect to generate over $40 million of revenue. It's a profitable business. It's a business that provides a very strong foundation for us to grow. The first area of growth that we intend is hereditary cancer testing. This fits into the mix very well because every person out there should know their germline risk for cancer. Adoption of hereditary cancer test has been pretty low in the screening setting so far. We think that we can move the needle there and really expand this market through our established relationships with primary care doctors. We also see a pretty significant opportunity calling on oncologists and GIs, urologists with hereditary cancer testing. So we're excited. I haven't baked any growth for heretic cancer testing yet this year, although we do expect to launch it this year.

Yes. And I guess kind of in the landscape of other deals, I mean, how do you feel about the portfolio currently, you guys have been acquisitive, as kind of mentioned in the past, whether it's smaller technology stuff, larger Thrives in the world? How do you think about the general landscape now, your portfolio? Are you kind of content with the areas you're going after? Do you want to be broader? What's kind of the thinking there?

Patrick, the focus is the core business. The core business of Cologuard, Oncotype, the pipeline products we have across MRD, Cologuard 2.0, colon blood, you name it. That is the focus. I think we're fortunate to have many different growth drivers, both in terms of on-market products and new products. So that is the focus. Not to say we won't do anything, but as of now, we love what we have in-house.

Okay. And then maybe on kind of blood cancer screening and colon specifically, obviously, some large competitive data expected out in the relative near term, how do you guys think about where that fits in the market? I think it's part on the [indiscernible] on the fits part. But how do you think about where that settles out? Do you think it takes share? Obviously you guys have your own internal initiative as well. Just maybe talk about, again, that market holistically, if we look out a few years, and this is on the market, what does the data look like -- have to look like to be competitive, would love your thoughts.

I think people should take a huge breadth and just relax about colon blood. Any possible readouts in the market aren't the binary event that it's being made out to be. I've been studying this market for 10 years now, either part of Exact or my former life. And look, we know how hard it is to launch a new product in this market and get it up to a point where it's profitable. It takes a long time. It's not just one data readout. It's -- you've got to build all the pieces of Salesforce lab, you name it, it's billions of dollars of investment. It takes time. It takes a long time to get there. And these are huge markets. So where does blood fit in? Blood can serve an important role. If the data are good enough, it can serve an important role. The minimum level of performance is the FIT test. You've got to be at least as good as a FIT test or the product -- they're really is going to path forward. Remember, there is a blood test on the market today that's FDA-approved that doesn't really sell anything. It's because the performance is lower than the FIT test. So FIT test is really kind of the minimal level. Remember, the FIT test is reimbursement in Medicare at $16. So you've got to do better than that. I think the blood test will primarily be market-expanding, and there's a lot of evidence out there showing when you offer patients more options, more people choose to get screened, which is why I think the -- or the blood test is something -- it's an important test. It's one that we're pursuing. Ultimately, I think where things will settle out is that Cologuard will settle in around 40% share. I think colonoscopy will probably come down to the 30% share range, which is kind of a flat number of colonoscopies when you consider the growing pool of patients. And then the FIT and blood test will secure somewhere around 15% share. To do that, what that means is that 80-plus percent of people in this broader market are getting screened. And that's where you see breast and cervical cancer, which is why we think colon cancer can get up to those levels.

And then I guess, how do you guys think about in that aspect, is there a certain -- do you think the focus is going to be on kind of that precancer area? Is that what you've heard from doctors -- and again, it seems, again, I guess maybe not as binary as you're kind of framing it. But when we get out, I guess, multiple years, do you see that data improving? I know you've talked about some of the case control stuff diluting as you kind of -- obviously, you look at your own data. Is that the expectation for what some of these other companies are going to see as well from -- obviously, we've seen some pretty good data so far. I know you maybe expect some dilution from there. What's -- how do you guys frame that as people think about other data sets?

Yes. I mean, look, almost by definition, when you go from a case-control study to a real-world prospective study, you see dilution. It really doesn't matter how well you design a case control study, there's going to be differences. When you go out into the wild, you're going to see comorbidities, you'll see really hard-to-detect cancers that are essentially never in a case controlled study. So that happens. This is -- we always try to be clear when we really stated, look, you shouldn't expect this case control data to hold out. That's okay. Look, it's still conserve an important role. It doesn't mean that the blood test won't come to market. It can serve an important role even if that happens.

Okay. That's helpful. And maybe last one. I know we're almost out of time. Just on the COVID piece, obviously, we saw the guidance. Are you guys -- the data is showing in the last 2 weeks, it's obviously come down pretty significantly in terms of test run. You guys seem like you took a very conservative approach. Is it basically the line of sight to the tests you see, you've run and kind of calling out a pretty sharp decline after that. obviously, not the most important revenue line for you guys.

Sure. I mean, look, COVID testing really started off the year, as you can imagine, really, really strong. And then things kind of fell off a cliff in mid-February, which is a good thing. That's a good thing for all of us here, right? The sooner the pandemic can move on, the better. So things did slow down pretty dramatically in mid-February. So for Q1, I'm more or less assuming kind of what we've already done with COVID testing. And I think things continue to slow down for the rest of the year. So we didn't put a whole lot into COVID testing. Going forward, I think that the only real testing we'll do is around return to work and return to school, those sort of things. I'm not counting on another big outbreak.

Okay. I think we'll leave it there, Jeff. This was great. It was great to cover some of the stuff from yesterday and some long-term stuff as well. So I always appreciate your time.

Thank you, Patrick, and thanks to Citi.

Thank you. Take care.

Take care.