Exact Sciences (EXAS) Q4 2021 Earnings Call Transcript

Exact Sciences (EXAS -3.29%)
Q4 2021 Earnings Call
Feb 22, 2022, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, good afternoon. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Exact Sciences Corporation fourth quarter 2021 earnings conference call. Today's conference is being recorded.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator instructions] And I would like to introduce Megan Jones, senior director of investor relations. Ms.

Jones, you may begin your conference.

Megan Jones -- Senior Director of Investor Relations

Thanks, Abby, and thank all of you for joining us for Exact Sciences' fourth quarter 2021 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. Exact Sciences issued a news release earlier this afternoon detailing our fourth-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.

Kevin Conroy -- Chairman and Chief Executive Officer

Thanks, Megan. Our mission is to eradicate cancer by making earlier detection a routine part of medical care. We've brought together a talented team dedicated to making that goal a reality. Highlights from 2021 include being Great Place to Work certified for our third year in a row, testing nearly 4 million people and growing our core business by 29%; generating over $1 billion in Cologuard revenue, the first diagnostic test to reach that milestone; exceeding $500 million in our Precision Oncology business for the first time ever; adding new tests to support hereditary cancer testing, liver cancer surveillance and comprehensive tumor profiling for advanced cancer; strengthening our commercial engine by welcoming a talented sales team from Pfizer; and generating evidence to support tests solving real patient needs.

We're the leader in advanced cancer diagnostics because of our scientific capabilities, commercial engine, and focus on screening and early detection. And we're just getting started. Jeff will now review our financial results.

Jeff Elliott -- Chief Financial Officer and Chief Operating Officer

Thanks, Kevin. Good afternoon. Fourth-quarter revenue was $474 million, an increase of 2% or 16% excluding COVID testing. Screening revenue was $278 million, up 11%, driven by Cologuard volume.

10,000 new healthcare providers ordered Cologuard during the quarter and more than 263,000 have ordered since launch. Precision Oncology revenue was $149 million, an increase of 27%, driven by Oncotype DX Breast volume. Our acquisition of Ashion added 7 points of growth in the quarter. COVID testing revenue decreased 52% to $47 million, which was above our expectations due to increased testing for the Omicron variant.

Fourth-quarter GAAP gross margin was 70%. Non-GAAP gross margin, which excludes amortization of acquired intangibles, was 75%. Sales and marketing expense was $284 million, above our guidance, due to a $36 million payment to Pfizer related to our co-promotion agreement, which ended in December -- in November. G&A expense was $179 million.

And R&D expense was $88 million, both consistent with our guidance. Net loss was $221 million. Adjusted EBITDA was a loss of $122 million. We ended the quarter with cash and securities of over $1 billion.

Turning to our guidance. We expect total revenue between $449 million and $469 million during the first quarter and between $1.975 billion and $2.027 billion for the year. We expect screening revenue between $284 million and $294 million for the first quarter and between $1.34 billion and $1.367 billion for the year. This includes PreventionGenetics revenue of approximately $9 million for the first quarter and between $40 million and $42 million for the year.

We expect Precision Oncology revenue between $140 million and $145 million for the first quarter and between $595 million and $610 million for the year. We expect COVID testing revenue between $25 million and $30 million for the first quarter and between $40 million and $50 million for the year. Guidance assumes that pandemic continues to abate and sales force access and wellness visits gradually improve throughout 2022. We expect screening revenue to be slightly less back-end-loaded than current consensus estimates.

For Precision Oncology, we expect continued momentum from Oncotype DX Breast globally. We're expecting the total U.S. business to grow in the mid-single-digit percent range and international to grow over 20%. We expect the Ashion acquisition to contribute similar growth in the first quarter as the fourth quarter, and then it will annualize in April.

We expect our COVID testing revenue to continue decreasing following a steep decline in the business during February. We expected about a 1-point decrease in non-GAAP gross margins this year to approximately 73%. This is due to unfavorable mix and negative leverage as COVID testing volumes decline. We had added capacity to our labs to support the fight against COVID and prepare for accelerating Cologuard growth.

We expect strong Cologuard gross margin improvement as we absorb this capacity and benefit from automation enhancement. Long term, we remain confident Cologuard gross margins will reach at least 80%. Moving to opex. We're invested in growth given our confidence in the long-term outlook for Cologuard, Oncotype, and our pipeline of innovative cancer diagnostics.

For the full year, we expect sales and marketing expense of $900 million to $920 million. This includes the full-year impact of the sales team we hired from Pfizer last year and expanded advertising for Cologuard with a new campaign to reach the 46 million unscreened Americans. We expect our sales team to drive strong incremental profitability as we grow the business and launch new products such as our hereditary cancer tests. For G&A, we expect $770 million to $790 million, a significant leverage going forward.

We're investing in several initiatives to provide scale and drive tens of millions of dollars in recurring savings. One example is within our revenue cycle operations. We are upgrading our systems in benefit and eligibility checks, reducing errors and manual work. These new tools streamline our revenue cycle efforts and enable lowered cost and faster collection.

We expect this to just deliver over $30 million in incremental cash flows on a run-rate basis within three years. For R&D, we expect $430 million to $450 million. More than 70% of R&D is supporting future products. We expect to run $99 million for intangible amortization and capex to be around $200 million.

We're investing in facilities to support future growth and develop state-of-the-art R&D centers around the country. I'll now turn the call back to Kevin.

Kevin Conroy -- Chairman and Chief Executive Officer

Thanks, Jeff. We exceeded our goals for several Cologuard growth initiatives last year, providing lasting benefits and advancing our leadership in colorectal cancer screening. We achieved more than $100 million in revenue from patients being rescreened with Cologuard, more than $40 million from patients in the 45 to 49 age group and a 10-point improvement in the electronic ordering rate to 50%, making it much easier to order Cologuard. These initiatives and our strengthened commercial team will fuel Cologuard growth for years to come.

We plan to build on the momentum we created during 2021 by educating more providers in the health systems about the benefits of Cologuard through our expanded sales reach, enhancing our customer experience to make repeat Cologuard testing easier for both healthcare providers and patients, screening more people earlier starting at age 45 and releasing a new exciting advertising campaign in March to encourage the 46 million unscreened Americans to take action. Our Precision Oncology team delivered outstanding results last year by testing a record number of people with Oncotype DX, supporting the publication of the RxPONDER study in the New England Journal of Medicine, and adding a new test to support comprehensive tumor profiling for advanced cancer, oncomap ExTra. The Oncotype DX Breast test has answered the important question of chemotherapy benefit and risk of recurrence for 1.3 million women diagnosed with early stage breast cancer. And we have an opportunity to continue to impact even more lives.

The RxPONDER study quickly led to our Oncotype DX test becoming the standard of care for women with early stage, node-positive breast cancer just as TAILORx did for node-negative. We're making our Oncotype DX Breast test available to more women globally, focusing this year on the two countries with the largest incremental growth opportunities, Japan and Italy. We're also successfully integrating our Ashion acquisition, which provides the foundation necessary to extend our leadership in Precision Oncology. Ashion gives us additional sequencing in bioinformatics, capabilities, a differentiated, comprehensive tumor profiling tests, the foundation of our tumor-informed minimum residual disease test, and biopharma partnership opportunities like our recently announced license agreement with OncXerna Therapeutics.

Helping more people understand their inherited risk of cancer can motivate them to undergo screening, detect their cancer earlier and also guide more effective treatment. We provide an Oncotype DX test to more than 70% of all women diagnosed with ER-positive HER2-negative early stage breast cancer each year in the U.S. Oncologists order hereditary testing only 40% of these. Offering the hereditary cancer and Oncotype DX test for all of them could provide the full picture necessary to understand and treat their cancer.

We have relationships with 98% of oncologists in the U.S. Our team can reach most of the 290,000 patients diagnosed with breast cancer, not just those eligible for Oncotype DX and the nearly 2 million people diagnosed with cancer each year. We plan to expand hereditary cancer testing beyond oncology into primary care to engage people in proactive care earlier. We have established relationships with more than 200,000 primary care providers.

They can help their patients understand their germline risk of cancer, leading to risk-reducing actions like more frequent screenings with our multi-cancer early detection test. The team at PreventionGenetics provides a customizable test, a high-quality lab, and experience PhD geneticists. Combined with our sales, marketing, and insurance coverage expertise, we're positioned to make this vision a reality with minimal incremental investment. We're off to a good start generating evidence for our test within the three largest patient impact opportunities in diagnostics with more data.

Our pipeline goals over the next 18 months are to present colon cancer blood data and announce top-line results from our prospective BLUE-C study to support FDA submissions for Cologuard 2.0, our next-generation version of Cologuard; and our colon blood test; present multi-cancer feasibility and validation data; finalizing the design of our multi-cancer test before beginning our prospective study; and launching a lab development; and share data in colorectal cancer for our tumor-informed and tumor-naïve minimum residual disease and recurrence monitoring tests. Our pipeline of cancer tests could transform how patients are treated and contribute billions of dollars of growth on top of Cologuard and Oncotype DX. We're pleased with recent progress from our multi-cancer team on test development and plans for lab-developed tests and commercial launch. Our hereditary cancer, Cologuard 2.0, colon cancer blood and multi-cancer test, will create the most broad and compelling screening offerings available.

Combining this with our Precision Oncology efforts, we have tests, technologies, and teams supporting a cancer patient every step. This will make Exact Sciences unique in the value we provide and how we serve providers, health systems, and most importantly, patients. We're now happy to take your questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] And we will take our first question from Matt Sykes with Goldman Sachs.

Matt Sykes -- Goldman Sachs -- Analyst

Hi. Good afternoon, everyone. Thanks for taking my questions. Maybe just start on the '22 guide first.

And I would just want to get maybe a little bit more how you're thinking about the cadence of recovery. I know you guys talked about probably less back-end-loaded than what consensus expects for screening. But just would love to kind of hear how you're thinking about physician access, wellness visits as we move through the first quarter and the second quarter of this year, and what you guys are baking in for the overall guide.

Jeff Elliott -- Chief Financial Officer and Chief Operating Officer

Hi, Matt. This is Jeff. I'll take that one. If you look at IQVIA data, what IQVIA would talk about in November that physician office access in primary care was somewhere between 50% and 60% of where it was before the pandemic started.

Since then, obviously, we had the holidays and the omicron variant of the pandemic. And so, I think access hasn't changed a whole lot. The good news here is that now the omicron cases are way down, which means fewer people are calling in sick and it's having less of an impact on this country. Going forward, expect continued improvement in both physician office access and wellness visits.

So, that said, we're in a highly uncertain environment with the pandemic. So, there could be other variants that are out there. And then over time, I think our reps are finding even better ways to access physicians and educate them on Cologuard and Oncotype. So, the team has done a nice job to work to overcome these headwinds, but they still exist.

So, I don't think things will fully normalize yet there in the market this year.

Matt Sykes -- Goldman Sachs -- Analyst

Got it. Thanks for that, Jeff. And then maybe one more just on -- you had mentioned the gross margin impact for '22, which is understandable, given the COVID capacity build-out. But you talked about the potential for Cologuard to hit sort of 80%.

As we kind of think about your path to profitability and the importance of Cologuard within that, is sort of 2024 when we should be thinking about that potential? And then you mentioned sort of adding in automation. Do you think you could accelerate that gross margin expansion for Cologuard specifically to the 80% prior to that? Or is that sort of what you're working with today in terms of your timeline?

Jeff Elliott -- Chief Financial Officer and Chief Operating Officer

Eighty percent is the long-term target, Matt, but I do expect to make some very nice progress toward that. Recall, before the pandemic, we actually opened up a new lab ahead of the anticipated growth of Cologuard. We have been approaching and actually reaching the high 70% range for Cologuard gross margin. Bringing on that new lab added about $10 of cost per test.

Again, this is because of expected growth long term. And now with the pandemic, that added some additional leverage. Going forward, though, as we absorb that additional fixed cost, I'm very confident not only we'll get back to where we were pre the pandemic, but we'll reach new highs. It's going to be a combination of both automation, which the team has done a very nice job of automating these labs; leveraging that fixed cost, also improvement in our Cologuard revenue per test.

Longer term there, expect the clear path through this $500 per test, given the value that Cologuard provides. So, when you do the math on that, again, I think there's a clear path to longer-term 80% gross margin for Cologuard.

Operator

And we will take our next question from Brandon Couillard with Jefferies.

Brandon Couillard -- Jefferies -- Analyst

Hi. Thanks. Good morning or good afternoon. I think, Jeff, you mentioned, I think, 10,000 new docs added in the fourth quarter, which is pretty good, given seasonality.

Just kind of talk about your outlook over the course of '22 and just how the integration with the kind of Pfizer reps has gone so far and whether you're kind of happy with the productivity you're seeing from that team.

Jeff Elliott -- Chief Financial Officer and Chief Operating Officer

Hey, Brandon, I can start on the outlook for new docs, and maybe Kevin can chime in on the sales force outlook. As far as new providers, I was very excited to see the 10,000 new in the quarter. It's a very good number, especially in light of the pandemic. Going forward, I think the number can probably be in the 35-plus thousand range this year, maybe up to 40,000.

There is a significant number of new providers out there that we still have to reach with Cologuard in our innovative marketing campaign. The bigger opportunity is to continue lifting that order rate, the number of orders per provider. And that will be the biggest driver of growth this year. When you look at the number of new drivers we have, things like Cologuard rescreens, Cologuard 45, this expanded sales force that -- where we expect additional productivity from this year, we're very fortunate to have a wide variety of growth drivers.

So, the core part of the growth this year, Brandon, will be higher orders per doc rather than the number of new doctors ordering. Kevin, do you want to talk about the sales force?

Kevin Conroy -- Chairman and Chief Executive Officer

Yes. We're really proud of the work that the sales force did to integrate 450 new team members. We have an amazing commercial organization, both on the Screening side and the Precision Oncology side. On the Screening side with Cologuard, the team has just done a remarkable job through Omicron, forming together as one team, organizing into four large teams across the country, being very thoughtful about how we approach health systems.

We're bullish on what additional upside there will be this year, potentially with this really focused effort to bring more digital tools to physicians through our instance of Epic and the investments that we're making in IT. There is an intense focus on the 45- to 49-year-old group. We saw a lot of progress there last year, even with half a year. The team is chomping at the bit to grow that more and to make Cologuard the standard of care for people 45 to, let's say, prior to retirement, that -- just people up for Cologuard over colonoscopy.

The rescreen initiative, this new campaign, we believe, is going to provoke action. We can talk more about that. So, that's the sales force, so that's where it all starts with. And as offices start to open up, we expect great things to happen across over the course of the year.

Brandon Couillard -- Jefferies -- Analyst

That's helpful. Thanks. And then on the hereditary cancer launch, should we talk about timeline of bringing that into primary care? And is there any embedded in the revenue outlook for this year? And would that be actually Precision Oncology or Screening, Jeff, it's not really clear to me.

Jeff Elliott -- Chief Financial Officer and Chief Operating Officer

Brandon, I'll start with the HCT. We do not have any HCT revenue baked into the outlook this year. So, that is a potential source of upside. I did, however, bake in the PreventionGenetics' base business.

I said in my remarks, $40 million to $42 million this year is baked to the guidance. As far as timing, do you want to cover that, Kevin?

Kevin Conroy -- Chairman and Chief Executive Officer

Yes. And I want to encourage nobody -- I don't want to encourage anybody to bake in hereditary cancer testing revenue this year. But there is that upside. The step 1 in that process is to talk with the payers and to get on contract with the major payers for hereditary testing, to add some digital services to the test to make it easier for our physicians to order it through our instance of Epic and to result in -- similarly to provide a strong connection to the medical geneticists that we're proud of that are part of that team.

That's going to take some time, and we expect that will start to kick in, in the second half. But again, we want to express caution there about the timing where you start to build that into expectations.

Operator

And we will take our next question from Derik De Bruin with Bank of America.

Derik De Bruin -- Bank of America Merrill Lynch -- Analyst

Hey, good afternoon. Hey, just to clarify, PreventionGenetics is in the Screening segment, that $40 million?

Jeff Elliott -- Chief Financial Officer and Chief Operating Officer

That's correct, Derik. It is.

Derik De Bruin -- Bank of America Merrill Lynch -- Analyst

OK. So, with that being said and given all the new sales force additions and sort of the rebound, I mean, the Cologuard -- the implied Cologuard growth is still a little bit below, I think, where some of us were looking. And so, it sort of begs the question on what's the level of conservatism that you have in that number? And is that sort of more driven by the fact that the markets are still sort of recovering from COVID, sort of salesforce? Just that -- with that embedded $40 million in the number, the revenue number was a little bit below, I think, where people were looking.

Jeff Elliott -- Chief Financial Officer and Chief Operating Officer

Yes. What's implied for Cologuard is $1.3 billion to $1.325 billion. That equates to about 24% growth. And again, we're fortunate to have a significant number of growth drivers.

You think of things like three-year rescreening, we've baked in $220 million of revenues there. Obviously, when you look at the opportunity there, today already there's 1 million people available for rescreening. Another 1.2 million become eligible this year. So, obviously, if we go out and hit the ball out of the park, there's room to deliver a lot more revenue than $220 million.

When you look at Cologuard 45, another big driver, this year, we've baked in about $100 million of revenue. Obviously, the size of that market, there's 19 million people in the age group 45 to 49. They essentially all need to be screened right now. So, again, a huge opportunity there, and things are trending very well on that driver.

And obviously the sales force, the sales force is, as Kevin said, that's where it all starts. The sales force is out there educating doctors on rescreening and 45 and on electronic ordering. So, it all starts there. And now with this expanded team, we're expecting some really great things of that sales force this year.

That's a -- look, I mean, you turn on the news at night, we're still in the middle of COVID. There's a lot of uncertainty there. So, it is important that as a company, we stay sober and just recognize the reality that there are some headwinds out there in the world that we have to account for sitting here early in the year when we provide guidance for the rest of the year.

Kevin Conroy -- Chairman and Chief Executive Officer

Yes. I think the key thing that we don't have -- this is Kevin, that we don't have perfect visibility into is how quickly will offices start to open up again and how quickly will patients return to wellness business, which over the course of the last two years dipped measurably. There is tremendous upside of our face-to-face office visits returns to the pre-pandemic rate. We're off by 50% on average about -- and during the course of the pandemic, the face-to-face visits, we missed about 3 million office visits.

The good news here -- and I want to go back to the first earnings call into the pandemic. So, the question was asked, what do you think the impact will be? And we said we think that marginal users of Cologuard are going to start using Cologuard more. We have seen that. Now, the key is to focus again on the top half of our customers by ordering volume that we haven't been able to reach as frequently as we previously did.

So, we want to be, to use Jeff's words, sober about how we look at this year, not knowing how quickly those offices open up. Personally, I'm pretty positive, just seeing the dynamic around the country and how quickly Omicron has abated. So, that's, I think, the color on our guidance.

Derik De Bruin -- Bank of America Merrill Lynch -- Analyst

Great. Thanks for that great color. That's actually -- that's what I was looking for in that response. And can we just go back and talk a little bit about the ASCO GI data release and sort of like the 57% sensitivity for AA and being obviously up from the 42% for Cologuard 1.0.

Some investors and I think also we had a little bit of difficulty in trying to ascertain what that level of improved sensitivity means of staying above 50%. And really, that was an incremental driver to get more docs to prescribe the test. Can you sort of like help us think about that a little bit more in terms of what that ultimately means that that stays above 50% level once the final BLUE-C data comes in?

Kevin Conroy -- Chairman and Chief Executive Officer

The biggest disappointment with the original data in Cologuard was 42% precancer. And so, what we did is we improved the markers, and then also a team from our Redwood City R&D team used advanced machine learning techniques to help us refine the way that we looked at the data coming off of our Cologuard 2.0 markers, these new and more specific and sensitive markers. So, it's really a combination of machine learning and different markers that bump that sensitivity for advanced adenomas up to 57%. And I want to emphasize that the data is apples to apples, we believe, with the DeeP-C study.

So, these are not case-control samples. They were prospectively collected adenomas of similar size as we saw in DeeP-C. Commercially, what does that do for us? 42% current, 57% with Cologuard next generation, that's a big deal because docs really want to see that we're going to detect about 60% of precancerous polyps. That's in reality about where colonoscopy is because there's so much variability with the detection of precancerous polyps, depending upon your GI, your time of day you get your scope, etc.

So, now we can be a lot more aggressive in how we market Cologuard for precancer detection. And then when you feed that 57% detection rate into the models, it has a big impact on life-years gained. So, with the data that USPSTF will look at will see that Cologuard, the performance, the life-years gained compared to the number of unnecessary colonoscopy or harms is vastly superior to FIT and is approaching that of colonoscopy. So, it's a big deal.

It's going to take a little bit of time to play out, but it sets a new standard for Cologuard and colorectal cancer screening. The way that we see this with the great awareness of Cologuard, with the workup that we're doing to provide a greater urgency to act is that over time, Cologuard becomes considered the coequal standard of care, even though it is presently in the guidelines. But in the minds of physicians and patients, it becomes a coequal standard of care with colonoscopy, and that day, we believe, is coming.

Operator

And we will take our next question from Brian Weinstein with William Blair.

Brian Weinstein -- William Blair & Company -- Analyst

Hi, guys. Thanks for taking the questions. So, you guys have often talked about that 40% penetration for Cologuard. I don't recall the exact time frame.

I think it's something like by the end of the decade. That would take you for about 3 million tests and about $1.3 billion in revenue this year to about 14 million tests or $7 billion in revenue. And I'm curious, as you think about that trajectory, where does that really come from? Have you thoughts advanced at all between the difference between driving that from colonoscopy conversion and unscreened individuals and how you target each differently? Jeff, I think you talked about a new sales and marketing campaign going after the unscreened. So, as part of that answer, maybe you can address that campaign and why you think that could be successful.

Jeff Elliott -- Chief Financial Officer and Chief Operating Officer

Brian, this is Jeff. I'll take that one. So, today, if you look at overall screening rates, they're somewhere in the 55% range. And again, that's including ages 45 and above.

Longer term, we and many others are targeting 80%. We know that's possible. That's possible with options like Cologuard. It's possible because that's where you see screening rates for breast and cervical cancer screening.

So, longer term, to your question, how does Cologuard get from where it's at today to 40% or higher, it's from a mix of lifting overall screening rates, which there is documented evidence out there today that Cologuard is already lifting screening rates in this country, with the mixture of that and taking share in the market, which we know what we're doing. When you look at who is using Cologuard, we ask our patients, have you been screened before? And if so, with what? About 50% of patients had never been screened before. The 40% previously had gotten screened with a colonoscopy, and about 10% previously were screened with fecal blood test. So, we know we're taking screening in this market.

We know we're also importantly expanding the market and getting more people tested. Another way to get there, Brian, is to get more physicians to order Cologuard. And to Kevin's point earlier, the pandemic has helped to accelerate that. We do a decile analysis.

So, we look at kind of different ordering trends at different doctors. The one thing that I've talked about before in these calls that really stands out to me is when you look at the doctors that represented the top 40% of orders before the pandemic, well, those doctors today in Q4, their order trends are down. They're down about 15% versus the start of the pandemic. Well, they're down because they have fewer patients coming through their doors, again, because of the pandemic.

And our sales force access there has been somewhat limited because of the pandemic. However, what gets us really excited is that as we come out of the pandemic, reps will get back in there, patients will get back in there, and those doctors will come back. They are the true believers. The doctors that represent the bottom 60% of orders, again, before the pandemic, those doctors, as of Q4, were ordering 60% more -- nearly 60% more than they did at start of the pandemic.

So, we're seeing a significant broadening of the order base, a deepening of that penetration among the doctors kind of near the bottom. That all bodes well for the future. So, that's how we're going to get there. This new marketing campaign of stay tuned there, Brian, it rolls out in the very near term here, that one I'm very confident that that one will help increase the urgency to get more people screened and lift the overall streaming rates in this country.

Brian Weinstein -- William Blair & Company -- Analyst

OK. And then just a follow-up on timing for data readouts. Just want to make sure that there's been kind of no change in things. Would you mind just sort of running through the timing on when you expect various readouts over the next kind of year or so to take place?

Kevin Conroy -- Chairman and Chief Executive Officer

Yes, I'd be happy to take that, Brian. Next-generation Cologuard, the BLUE-C top line, we expect to read out in the second half, probably fourth quarter of this year, our FDA submission in the first half of next year. Colon cancer blood, we expect to have data this year that will then lead to our BLUE-C study top-line pivotal data in the first half of 2023. Multi-cancer early detection drive test combined with the Exact Sciences technology, the case-control data, feasibility data in mid-2022.

Case-control clinical validation, second half 2022. Our prospective study starts late 2022. Our MRD test clinical validation will be in the second half of this year. And I just want to call attention to the fact that our Oncoguard Liver test reimbursement, MolDX one is a different type of study that will probably take about 18 months to complete.

So, that, unfortunately, is pushed off before we can get reimbursement. We'll continue to offer that cash pay out of pocket and continue to build real-world evidence with key partners. And that's the summary. Anything else that I didn't touch upon, Brian?

Brian Weinstein -- William Blair & Company -- Analyst

I think you got everything that I had, and I'm sure if you missed one, someone else will pick up on it. But thank you, guys, and we'll talk to you after the call. Thanks.

Operator

We will take our next question from Vijay Kumar with Evercore.

Vijay Kumar -- Evercore ISI -- Analyst

Hi, guys. Thanks for taking my question. Jeff, maybe one on the guidance here. The screening revenue guidance here, $1.34.

Ex acquisition, it's about, round it, $1.3 billion-ish at the low end. I think last year, you guys noted about rescreening perhaps being $100 million and you expect that to go to double up in '22, screening in 40 to 45 age group, perhaps, 40 in fiscal '21, doubling up in fiscal '22. If I back out those rescreening and the 40 to 45 age contribution, your base Cologuard, and inclusive of Pfizer contribution, I mean, it seems to be decelerating year on year. I'm not sure if that makes sense to you.

But maybe just walk us through on why if your physician access is improving other device companies, or assuming procedures improve, why Cologuard revenues would decelerate ex rescreening and the 40- to 45-year-old contribution?

Jeff Elliott -- Chief Financial Officer and Chief Operating Officer

Sure, Vijay. This is Jeff. I mean, first, to start, we're guiding to an incremental $250 million of revenue at the midpoint. That's pretty consistent from year to year.

So, I don't see that as a deceleration. The beauty of this business model is that we have multiple large growth drivers that all work together, right? As an example here, our sales force, which we expanded last year and we have high expectations for this year to see incremental productivity, well, that sales force is the biggest driver of our three-year rescreening program and Cologuard 45. So, they all work hand in hand. So, you really -- you can't parse all those things out.

I think the point where you're getting at is what is the core business doing, kind of 50 and above. We do expect very good growth out of that part of the business. It's not to say that over time, other parts won't grow faster. Cologuard rescreens and Cologuard 45 are probably the fastest part -- growing parts of our business now.

And that's a good thing. The rescreen business is a recurring source of revenue. It's a higher-margin source of revenue. And over time, I expect it to grow faster because that eventually becomes half our revenue.

And that will drive margins higher, that will drive patient compliance higher. That's a good thing, right? That's a way for us to get more people screened and keep them screened for a long period of time. Cologuard 45, again, that's exciting because that's 19 million people. That was a significant increase in the pool of patients who are eligible.

45-year-olds, when we screen them, we have 30, 40 years to keep them screened. So, again, a big source of recurring revenue. We have a significant amount of attention on rescreens and 45. But we expect broad-based growth this year, Vijay, to your point.

But earlier, we talked about, look, we've got to stay sober here. The fact that access is still somewhat limited and wellness visits are down because of the pandemic, so we bake all those things in when we provide our guidance.

Vijay Kumar -- Evercore ISI -- Analyst

And maybe one follow-up to that, Jeff. So, the $250 million of increase, that's roughly similar to what fiscal '21 increase was for our screening revenues. And I think in the past, you had mentioned the incremental 400 plus of Pfizer sales reps. You expect them to be cash flow neutral.

Is that still the case? And I'm just looking at the guidance, right? Last year, we didn't have Pfizer. Access was severely curtailed. And we added $250 million of revenues. We have Pfizer this year, and we're still on a dollar basis, it seems to be in line with the dollar increase in '21.

Perhaps there's some conservatism in the guidance here?

Jeff Elliott -- Chief Financial Officer and Chief Operating Officer

Well, Vijay, the team that we hired from Pfizer, again, we're thrilled to have them on board. The incremental productivity has been good. I do expect for them to at least be breakeven on a cash flow basis, actually probably better, given the productivity that we've seen so far, to answer that question. Do keep in mind that that team, while they weren't employees of Exact last year until October, they were working for Pfizer out there driving some productivity.

So, it's not that that team is all incremental. They were, at least to some extent, in the base. So, you've got to be careful when you do that year-to-year comparison. Also keep in mind that if you go back 2020, had a pretty significant impact from the COVID pandemic, which allowed the growth in 2021 on an incremental basis still look higher.

It was an easy comp that we faced last year.

Vijay Kumar -- Evercore ISI -- Analyst

And maybe one on the housekeeping, Jeff. Sorry, my third one. Ashion, what was Ashion contribution in 3Q and 2Q of last year?

Jeff Elliott -- Chief Financial Officer and Chief Operating Officer

It's 9 points or so a quarter that closed during April. So, you probably had kind of a partial quarter that way. But kind of think of it kind of in the high single-digit range, Vijay. And then you'll have another quarter of that, and it will annualize in April of this year.

Vijay Kumar -- Evercore ISI -- Analyst

Understood. Thanks, guys.

Operator

We will take our next question from Catherine Schulte with Baird.

Catherine Schulte -- Baird -- Analyst

Hi, guys. Thanks for the questions. I guess, first, for the first quarter screening guide, how much of that is PreventionGenetics? And if we back out some impact for that, it still looks like the core screening business is expected to be flat to slightly up sequentially despite having your typical holiday seasonality, Omicron and, I would imagine, some weather impact. So, can you just talk through some of the positive drivers that you're seeing for that business that would drive that sequential increase?

Jeff Elliott -- Chief Financial Officer and Chief Operating Officer

So, in Q1, Catherine, I mentioned in my remarks, we expect $9 million from PreventionGenetics. If you walk through the transcript, you'll see that we have the full amount for screening, and then we break out the month for Prevention. And that's a good point. The typical seasonal trend here is around the holidays, starting with Thanksgiving and Christmas and New Year's.

Fewer patients go out and seek primary care. And Cologuard is typically ordered during the primary care visits. So, that does have a negative impact. All else equal, you'd expect a pretty meaningful step down from Q4 to Q1 in our Cologuard business.

This year, what we're implying is a better trend. It's a better trend for the reasons we've talked about, things like the incremental sales force productivity, think three-year rescreening, Cologuard 45, all very positive drivers. Yes, there has been some impact from Omicron. You had more people, both patients and physicians, getting the disease and calling in sick.

And that did have an impact, but the good news here is cases have fallen dramatically. And going forward, the sales force and access should improve, and wellness visits should improve as well.

Catherine Schulte -- Baird -- Analyst

Right. Got it. And then you talked about achieving a 10-point improvement in the electronic ordering rate in 2021. Any goals or targets for further improving that this year?

Jeff Elliott -- Chief Financial Officer and Chief Operating Officer

When you look over the past two years, we went from 30% of Cologuard orders electronic to 40%, then now 50%. We expect continued improvement. Each year gets harder to keep going up at 10 points. So, I don't know if we'll get there.

We'll aim for that much, Catherine, but 10 points after the progress we've made in the past couple of years, 10 points will be more challenging this year. Longer term, I'm very confident that that number will keep working higher. And the good news here is when a physician orders electronically, as you know, they order far more, it's a better overall experience for the patient and it's a lower cost order to us. So, again, back to my comments on G&A, we're investing now in G&A.

We're investing to build this robust foundation, to grow this business efficiently, and create a better overall margin P&L for everybody. So, the investments we're making now in IT will help lift that electronic ordering rates higher. It will help drive three-year rescreens. It will improve our billing operations.

So, that's a big part of the investment we're making in G&A is to keep moving that rate higher because it's so important not only for Cologuard now, also for pipeline products down the road. When we launch hereditary cancer or multi-cancer, they will layer into an environment that is very unique. They'll layer into an IT foundation that allows physicians to click one button and order a test. When you compare that to when we launched Cologuard or other companies launch that, they'll have to launch that into a taxing environment, which is far more challenging.

Operator

We will take our next question from Dan Brennan with Cowen.

Dan Brennan -- Cowen and Company -- Analyst

Great. Thanks for taking the questions. If I could start off with sort of a question on the blood-based competition since that's a key focus. Kevin, can you just kind of remind us, is that 85% still the number that you think kind of above which maybe there are share gains and below which there's share loss? And then, B, I know it's a very nuanced question because there's a lot of levers here.

How does precancerous adenoma detection fit into how the blood-based competition will do? And then the final point to this question is while USPSTF decision will likely be years out in the future, should we be looking for other bodies, whether NCCN or AMA or others that could come in and make decisions or recommendations that could have an impact on the paradigm for screening once the blood-based data is out there?

Kevin Conroy -- Chairman and Chief Executive Officer

Yes. Let me start with that one. The most important guidelines by far are USPSTF guidelines. American Cancer Society also weighs in, but the guidelines that payers follow are USPSTF.

So, those are the most important ones. They're also the most rigorous. So, coming to what level of performance do we think is the minimum required to have a positive impact on overall screening. Well, 85% is not -- we think just at 85%, there just is not much of an uptake with a blood-based test.

It will be kind of a test of last resort. Now, that's going to be a test of last resort in a patient population of well over 100 million people is still an important test, but you have to remember where the FIT test is today. The FIT test is about 75% sensitive, detects 24% of precancerous polyps with a 5% false positive. And it reimburses at $15.

So, is a blood test that detects 85% of cancers, a smaller percentage of precancerous polyps with a higher false-positive rate going to have an impact? I don't -- that costs -- some people are targeting multi-hundreds of dollars. No, it's not going to have much of an impact. And part of the reason is take a look at the Medicare guidelines. They're only going to pay every three years.

But at that level of sensitivity and specificity, it's going to have to be used every year to have an impact, but they're not going to pay for it every. So, who is going to go down that path as a screening approach? It's a challenge, there's no doubt about it. And our data show that one in seven docs say they would not feel comfortable ordering a colon blood test if the sensitivity is 85% or lower and if the precancer sensitivity is 40% or lower. Is it going to have an impact? Yes.

Is it going to have a major impact at that level of sensitivity and specificity? We don't think so. We get asked this question all the time. We have our own blood cancer tests. Is it important to us? Yes.

I know people who have passed away from colon cancer because they refused all other types of screening. So, is there a need? Absolutely. Is it going to impact colonoscopy and Cologuard as the coequal standards of care? No.

Jeff Elliott -- Chief Financial Officer and Chief Operating Officer

Just to clarify the answer there, only -- the survey data said that only one in seven docs would order a test if the cancer sensitivity were below 85% and the precancer sensitivity were below 40%.

Dan Brennan -- Cowen and Company -- Analyst

Got it. Thanks, Kevin. And then -- sorry for that. I just talked over you guys.

And then maybe as a kind of different question for Jeff. Just as we think about the long-term path for the company toward turning profitable and turning self-financing, so free cash flow positive, just what are the markers as we look ahead in the coming years to think about that would enable you to achieve that? All else equal, is there a certain revenue base at which we should expect those things to occur? Or just any helpful thinking along those lines would be great. Thanks.

Jeff Elliott -- Chief Financial Officer and Chief Operating Officer

Look, if you go back kind of two years now, I think we show what this business model can do. Back when the pandemic hit, we quickly pivoted and adjusted the cost structure, pulled back on some of the pipeline investments. And we generated in 2020 over $70 million of free cash. So, that shows what this business can do.

Cologuard at the time generated significant cash flow that over time, right now, helping fund growth in things like IT and R&D. Over time, that will fall through, and we will gladly share that with investors. As far as the road map forward, we're very confident in delivering adjusted EBITDA profitability in 2024. How do we get there? It starts with the top line.

We know that the opportunity ahead is significant. So, we will keep growing that top line. That will generate additional gross profit. Between now and the next few years, I expect some very substantial gross margin improvement as we leverage that fixed cost structure and automate our labs even further.

When you walk down the P&L and you look at things like sales and marketing, we're fortunate to have a broad sales and marketing team now that spans from primary care, GI, women's health, oncology, surgeons. That sales team over time will add more products to their bag. That will help incremental profitability fall through. G&A, we've front-loaded the investment here.

We've front-loaded it because that gives us a strong foundation from what to grow. I gave some color on some of the investments, things like IT systems and billing systems that will drive significant savings and leverage over time. You'll start to see that unfold even this year. I think we'll do a good job of holding the line in the coming years, and you'll see good leverage of the G&A.

R&D, I said in my remarks, the vast majority of R&D, nearly 75% of R&D is on new growth. And I think that's the right thing to do for investors is to keep driving that growth forward. Things like multi-cancer, MRD, Cologuard 2 are the major areas of investment. Over time, that will open up new sources of growth that will allow us to drive even more cash flow through to investors.

So, there's not one single point I'd point you to, Dan, but there's a whole series of things that we've got laid out in our internal plan that will get us to profitability in '24 and then allow continued steady gross margin and cash flow improvement thereafter.

Operator

And we will take our next question from Jack Meehan with Nephron Research.

Jack Meehan -- Nephron Research -- Analyst

Thank you, and good afternoon. I wanted to focus on multi-cancer screening. So, NCI recently announced an RFI for a large-scale RCT. I was wondering if you plan to respond to that RFI and participate and just talk about how does this fit into your development plans versus the pivotal study that you've talked about launching.

Kevin Conroy -- Chairman and Chief Executive Officer

We are responding to the NCI request for proposal, and we're -- the good news with what NCI is doing is showing just how badly our federal government wants to be involved in changing the way that cancer is treated. Today, it's treated largely as a late-stage metastatic disease because 70% of cancers have no screening. With a multi-cancer screening test, it changes everything because, over time, you could move from 15% to 20% of cancers found through screening to north of 50%. And that's where everything changes in oncology.

And that time is not far away. NCI's involvement up here is another good sign. We'll continue, of course, to have our own pivotal study. Others will have their own, too.

And that's needed because to get a new screening modality into USPSTF guidelines is going to take more than one study, and it may take multiple studies. So, the NCI study is yet another way for we and others to generate evidence, and we're excited about that. The other thing is the Moonshot program, which was just brought back to life. One of the things that President Biden emphasized was the way to reduce cancer mortality in half over the next couple of decades is through multi-cancer early detection screening.

So, the NCI's involvement here is a really positive step.

Jack Meehan -- Nephron Research -- Analyst

Great. And as a follow-up, I was wondering if you could just talk about how you're thinking about the FDA review timeline for colon blood and for a multi-cancer test. And on the latter, does the involvement of NCI kind of change your view as to when the FDA might get around to reviewing multi-cancer tests? Thanks.

Kevin Conroy -- Chairman and Chief Executive Officer

So, let's start with multi-cancer and then take colon cancer. Multi-cancer, these studies are going to take a number of years to complete. And so, the FDA typically will have a panel meeting, and then you will need to submit all the data, have the panel review. So, that with Cologuard was, I think, a six- to nine-month process from the submission of data to approval.

Maybe it was about a six-month timeframe from submission to approval. And we would expect probably something similar there with multi-cancer. Colon cancer is the same, I suspect, since there are multiple aspiring entrants into that space that they will have one big panel meeting. That's what they typically would do.

So, it will depend. If there are three or four submissions there, I suspect there would be one-panel meeting to look at all of that data. And again, that's probably a six- to nine-month process. We have to keep in mind right now the Office of In Vitro Diagnostics is just -- has been overwhelmed by COVID testing submissions, and that hasn't abated.

So, it really depends on where the staffing levels are and how busy they are with other projects.

Operator

And we will take our next question from Andrew Cooper with Raymond James.

Andrew Cooper -- Raymond James -- Analyst

Hello, everybody. Thanks for the questions. A lot has been asked, but maybe to follow up on that last one. I think in the comments you talked or mentioned LDT path for multi-cancer.

So, just wanted to get sort of the latest and greatest on that and how things like the NCI RFI, like what we're hearing from the one player out on the market might be impacting your view of what the best pathway is, how you sort of go down the dual pathway for FDA and LDT and just the latest and greatest thinking there.

Kevin Conroy -- Chairman and Chief Executive Officer

Yes. I think the other aspiring entrant here has done a great job. GRAIL is a type of company you want into a new space like this because they're serious about the data they generate. And you need more than one company, more than one product involved to get Congress to act and cover the test.

They're very unlikely or reluctant to do it if they see that they're doing work for one company. So, we're really pleased to work with GRAIL in the way that we have over the last year with advocacy groups, etc. How does this play out from an LDT perspective? We expect to have a lab-developed test of our own next year. There are over 100 million people, we think, that ultimately will get screened and it's going to be different than Cologuard.

Remember, with Cologuard, there was colorectal cancer screening for a quarter of a century before Cologuard showed up, and there were perceptions about which tests were used. We had to go and change how people were screened. There is no multi-cancer screening that exists today. So, there's going to be a lot of opportunity for growth.

And in my mind, the question is, in the first year of FDA approval, Medicare coverage potentially, just how many people are going to get screened in that first year. It's going to be one of those medical innovations that just changes everything. As the lab-developed tests, there's an opportunity for significant growth. And I think you can see that from what's going on in the market.

It's not going to be -- it's going to be so much greater, though, when you have broad-based insurance coverage, guideline inclusions, etc. So, this is a long-term investment. It's a long-term opportunity. It is, we believe -- let me come back to going from 15% to 20% screen-detected cancers to over 50% screen-detected cancers will change everything about cancer and how it's treated and outcomes.

Andrew Cooper -- Raymond James -- Analyst

OK. Great. Helpful. And then kind of in a nitty-gritty, but you mentioned MolDX wanting some different data for Oncoguard.

I guess can you give us a little bit more flavor for what that means? And then is there anything to take away in terms of what MoldDX may be looking for, for some of the other pipeline items or any changes to your approaches because of the additional request they're looking for on that one?

Kevin Conroy -- Chairman and Chief Executive Officer

Sure. Let me actually come back to multi-cancer screening. The reason that we're so excited about our lab-developed test is because we're going to put that into the hands of over 1,000 people in our commercial team. And we will be able to put that on to our instance of Epic making -- ordering, resulting tremendously easier.

It's a huge advantage that we have. Oncoguard Liver is just a different study approach that, without getting into all the details that MoldDX wanted. And that, unfortunately, extends the time because we have to start that study and complete it before we're able to submit. The read-through on our other products, MRD already has categories for -- that well-established liver just didn't.

And there won't be a lab-developed test. Palmetto, local coverage decision for multi-cancer because the law doesn't permit that. So, I don't think there's any read-through on liver to any of our other pipeline programs.

Operator

And we will take our next question from Puneet Souda with SVB Leerink.

Puneet Souda -- SVB Leerink -- Analyst

Yes. Hi, Jeff, Kevin. Thanks for taking the question. Maybe if I could ask -- simplify the question.

I know a number of questions have been asked on the guide. I think investors are struggling with identifying. Is there anything beyond the general uncertainty associated with the sort of the unpredictability of COVID in the full-year guide that is making you more prudent, if I could use the word that Jeff had, sober? I mean, you have 220 million rescreens, 100 million 45-year-old plus contribution, new docs coming in, a stronger sales force with more than 1,000 electronic ordering, in-person sales reps, and a number of other things. So, I mean, just in a very simple way, if you could just clarify, is it just learnings from a very uncertain last year that is making you more prudent here? I just wanted to understand.

Kevin Conroy -- Chairman and Chief Executive Officer

Well, I think that's accurate, Puneet. I think we still are -- the biggest question again is how fast do the offices open up. I think there's a lot of upside to Cologuard growth. And we look at this in a prudent way, given that offices still -- office access is not what it was pre-pandemic.

And that's probably the main variable as we look out across the year. But I want to start by saying, this -- the growth that we have baked in here is strong growth coming out of the pandemic. And we have had a very good start to the year. The team has worked through the impact of Omicron.

And we are tremendously positive about Cologuard for this year. That's, I think, a good way to summarize here. And so, Megan, do we have any other questions? So, thanks, everybody, for joining us on the call today. From a base of more than $1 billion, we expect Cologuard to grow at least 24% this year.

Our Precision Oncology team tested a record number of patients with Oncotype last year. And we have exciting growth drivers ahead in node-positive breast cancer, international markets, and with our therapy selection tests. In addition to our core business, we have the best team in cancer diagnostics working on a pipeline of innovative tests, MRD, multi-cancer early detection, hereditary cancer testing to support millions of patients and billions of dollars of growth. We look forward to providing updates throughout the year.

Operator

[Operator signoff]

Duration: 64 minutes

Call participants:

Megan Jones -- Senior Director of Investor Relations

Kevin Conroy -- Chairman and Chief Executive Officer

Jeff Elliott -- Chief Financial Officer and Chief Operating Officer

Matt Sykes -- Goldman Sachs -- Analyst

Brandon Couillard -- Jefferies -- Analyst

Derik De Bruin -- Bank of America Merrill Lynch -- Analyst

Brian Weinstein -- William Blair & Company -- Analyst

Vijay Kumar -- Evercore ISI -- Analyst

Catherine Schulte -- Baird -- Analyst

Dan Brennan -- Cowen and Company -- Analyst

Jack Meehan -- Nephron Research -- Analyst

Andrew Cooper -- Raymond James -- Analyst

Puneet Souda -- SVB Leerink -- Analyst

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