Exact Sciences (EXAS) Q1 2025: Cologuard Plus Drives 40% Reduction in False Positives, Accelerating Screening Adoption

Summary

• Cologuard Plus Launch Accelerates Adoption: New test delivers improved accuracy and rapid payer traction, reshaping provider behavior.
• Commercial Execution Delivers: Territory realignment and targeted engagement drive 30% higher provider interaction and record satisfaction.
• Margin Expansion Signals Operating Leverage: Cost discipline and scale enable Exact to raise EBITDA guidance despite ongoing investment.

Performance Analysis

Exact Sciences’ Q1 2025 results reflect a business in operational transition, with both top-line growth and margin expansion outpacing expectations. Screening revenue, now the company’s dominant engine, grew at a double-digit rate, supported by rescreen programs, CareGap partnerships (payer-driven patient outreach), and a surge in new ordering providers. Precision oncology, which includes Oncotype DX (cancer recurrence test), also posted growth, though at a more modest rate, with international traction offsetting a slower domestic ramp.

Profitability levers became more evident this quarter: Adjusted EBITDA margin expanded by nearly 300 basis points, driven by productivity, cost-cutting, and G&A (general and administrative) discipline. Free cash flow reached break-even, a $120 million improvement year-over-year, and the company’s cash position remained strong after debt paydown. Notably, the launch of Cologuard Plus is expected to be accretive to gross margin, as the test’s lower cost structure and higher pricing offset incremental launch costs.

• Revenue Mix Shift: Screening now comprises the majority of revenue, with 25% coming from rescreens, providing a recurring annuity effect.
• Operational Leverage: G&A expense as a percentage of revenue improved by over 500 basis points, while sales and marketing investments were outpaced by revenue growth.
• Cash Generation Inflection: Working capital initiatives and improved days payable delivered free cash flow break-even, with further gains forecasted for the year.

Commercial execution improvements and product launches are converging to create a more durable, higher-margin Exact Sciences, as evidenced by both the raised guidance and robust leading indicators from the field.

Executive Commentary

Strategic Positioning

1. Cologuard Plus: Raising the Bar in Colorectal Cancer Screening

Cologuard Plus, the company’s next-generation stool DNA test, achieved rapid Medicare coverage and quality measure inclusion, positioning Exact to capture a larger share of first-line screening. The test’s improved sensitivity (95%) and specificity (94%)—resulting in a 40% reduction in false positives—directly address payer and provider concerns, facilitating faster adoption and stronger payer relationships. Early commercial feedback is highly positive, and the company is already processing tens of thousands of tests, with Medicare patients representing about 15% of initial volume. As additional commercial payers come online, management expects a step-up in adoption through the year.

2. Commercial Execution and Provider Engagement

Exact’s commercial transformation—including territory realignment, dynamic provider targeting, and expanded field teams—has increased provider engagement by more than 30% year-over-year. New ordering providers are being reached faster, and per-rep productivity is up 10%. The company’s “no order left behind” approach ensures rapid follow-up with new providers, and customer satisfaction is at an all-time high, underpinned by robust DTC (direct-to-consumer) and provider marketing. These efforts are translating into record rates of new and repeat orders.

3. Recurring Revenue and Rescreen Program Scale

Rescreening, or repeat testing of patients at recommended intervals, now contributes over 25% of screening revenue and is expected to rise further. This recurring revenue stream provides stability and predictability, with more than two million patients eligible for rescreening in 2025. Adherence rates are improving gradually, and management sees this as a durable growth driver as the eligible population expands and programmatic follow-up becomes more sophisticated.

4. Pipeline and Platform Expansion

Exact’s innovation pipeline remains robust, with OncoDetect (molecular residual disease test) launched and CancerGuard (multi-cancer early detection) slated for 2H 2025. The company’s Blue Sea pivotal blood-based screening study is on track for a midsummer readout, with management confident in both scientific differentiation and commercial fit. The ExactNexus platform, an integrated technology and data backbone, underpins both new product launches and payer/provider engagement, enhancing operational scale and customer targeting.

5. Margin Expansion and Operational Excellence

Cost optimization and scale benefits are showing up in the P&L: G&A leverage, lower cost per test, and ongoing operational excellence initiatives are expanding margins even as the company invests for growth. The launch of Cologuard Plus is expected to be margin accretive, and further cost actions are planned for the remainder of the year. Management is signaling a multi-year path to higher incremental margins as the business matures.

Key Considerations

Q1 marked a pivotal quarter where commercial, operational, and product strategies converged, setting Exact up for sustained growth and improved profitability. Investors should weigh the following:

Key Considerations:

• Provider Engagement Efficiency: Commercial team productivity gains are translating directly into higher order rates and faster market penetration for new tests.
• Recurring Revenue Stability: Rescreen and CareGap programs provide a growing, predictable revenue base, de-risking the screening business model.
• Margin Expansion Trajectory: Early evidence of G&A and gross margin leverage suggests Exact can sustain high incremental margins as revenue scales.
• Pipeline Execution Risk: Success of OncoDetect and the Blue Sea blood-based test will determine the company’s ability to diversify beyond core stool DNA screening.
• Payer Coverage Expansion: The speed at which commercial payers contract for Cologuard Plus will be a key swing factor for volume and revenue acceleration in 2H 2025.

Risks

Key risks include payer adoption delays, particularly for Cologuard Plus outside Medicare, and execution risk on pipeline launches (notably, the pivotal blood test readout). Competitive threats from blood-based screening entrants and evolving guideline dynamics could impact long-term share and pricing. Management notes the timeline for guideline inclusion (USPSTF, HEDIS, STARS) is uncertain and subject to regulatory budget constraints.

Forward Outlook

For Q2 2025, Exact Sciences guided to:

• Revenue between $765 and $780 million
• Screening revenue of $595 to $605 million
• Precision oncology revenue of $170 to $175 million

For full-year 2025, management raised guidance:

• Total revenue of $3.07 to $3.12 billion
• Adjusted EBITDA of $425 to $455 million (14.2% margin at midpoint)

Management highlighted:

• Back half revenue acceleration driven by Cologuard Plus adoption and pricing
• Continued cost leverage and operational excellence as margin drivers

Takeaways

Exact Sciences is executing a strategic pivot from single-product growth to platform-based, recurring revenue and margin expansion. The Q1 inflection in commercial execution, rescreen scale, and new product launches positions the company for sustained multi-year growth.

• Cologuard Plus Sets New Standard: The launch’s rapid adoption, payer enthusiasm, and clinical differentiation are reshaping the colorectal screening landscape.
• Margin and Cash Flow Leverage: Operational discipline is unlocking margin expansion, with free cash flow inflecting positive ahead of schedule.
• Pipeline Execution Remains Central: Blue Sea blood-based test readout and CancerGuard launch are critical to future growth and competitive positioning.

Conclusion

Exact Sciences’ Q1 2025 results demonstrate a business reaching operational scale, with commercial and product execution converging to drive both growth and margin expansion. The successful launch of Cologuard Plus and improved provider engagement provide a strong foundation for future pipeline success and sustained shareholder value creation.

Industry Read-Through

Exact’s rapid payer and provider traction for Cologuard Plus underscores the growing demand for non-invasive, high-accuracy cancer screening solutions. The shift toward recurring revenue via rescreens and CareGap programs highlights the value of integrated payer-provider partnerships and data-driven patient engagement. For diagnostics peers, operational leverage and cost discipline will become increasingly critical as reimbursement and competitive dynamics evolve. The industry should watch for further evidence of blood-based screening adoption, as Exact’s Blue Sea readout and subsequent guideline decisions could set new standards for colorectal cancer detection and influence broader multi-cancer screening strategies.

EXAS Healthcare Diagnostics Screening Recurring Revenue Margin Expansion Pipeline