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Exact Sciences Corp (EXAS) Q1 2019 Earnings Call Transcript

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Exact Sciences Corp  (NASDAQ: EXAS)
Q1 2019 Earnings Call
April 30, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon. My name is Emily, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Exact Sciences Corp. First Quarter 2019 Earnings Call. 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) Thank you.

Megan Jones, Manager, Investor Relations, please go ahead.

Megan Jones -- Investor Relations

Thank you, Emily, and thank all of you for joining us for Exact Sciences first quarter 2019 conference call. On the call today are Kevin Conroy, the company's Chairman and CEO; Jeff Elliott, our Chief Financial Officer; and Mark Stenhouse, President of Cologuard. Exact Sciences issued a news release earlier this afternoon detailing our first quarter financial results. This new 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 differ materially from such statements. Descriptions of the risks and uncertainties associated with Exact Sciences are included in our SEC filings, which can be accessed through our website.

It is now my pleasure to introduce the company's Chairman and CEO, Kevin Conroy.

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

Thank you for joining us this afternoon. The first quarter was a strong start to 2019 for Exact Sciences. Cologuard's momentum gives us confidence we'll reach our long-term goal of at least 40% share of the U.S. colon cancer screening market. During the first quarter, the Exact Sciences team screened the 2 millionth person with Cologuard, delivered $162 million in revenue, and continued to build the foundation for future growth. We are well-positioned for success in 2019 and the long-term. Today, we will review our first quarter financial performance, full-year guidance, and discuss progress on our 2019 priorities.

Our Chief Financial Officer, Jeff Elliott will now review our financial results.

Jeff Elliott -- Chief Financial Officer

Thanks, Kevin, and good afternoon everyone. When discussing the financial results, I'll refer to changes compared to the first quarter of 2018, unless otherwise stated. First quarter revenue increased 79% to $162 million, and Cologuard test volume grew 79% to 334,000 competed tests.

First quarter Cologuard revenue per test declined $2 to $483, primarily due to mixed shift toward commercially insured to customers. On a time length basis, our average Cologuard revenue per test was $480, an increase of $28. First quarter Cologuard cost of sales was $128 per completed test, an increase of $4 to a new capacity expenses partially offset by lab operating efficiencies. We expect second quarter Cologuard cost per test to be in the low $130 range. Bringing our new lab on in the third quarter, we'll about $5 to $10 of cost per test that we will work to offset with volume leverage and operating efficiencies.

First quarter gross margin was 73%, a decline of 130 basis points mainly due to capacity expansion costs. First quarter operating expense totaled $187 million, slightly above our guidance to the higher revenue, and the corresponding Pfizer service fee. Selling and marketing included the Pfizer service fee of $19 million, which was about $4 million more than we had assumed in our guidance. G&A included the additional personnel and IT investments to support the FX project and other IT initiatives. R&D increased primarily due to our pipeline initiatives, including expanding Cologuard label and Cologuard 2.0. We expect operating expense to increase by $6 million to $8 million in the second quarter, driven primarily by IT investments and general hiring to support growth.

We're investing to support our long-term market share goal of at least 40% of the growing colon cancer screening market. We estimate there are 87 million average risk Americans between the ages of 15 to 85. In 2030 that number is expected to grow to 97 million. In 2030 there will also be 20 million average risk people between 45 years and 49 years old for a total available market of a 117 million people assuming Cologuard labels is expanded. That equates to a $20 billion U.S. opportunity, and our goal is to capture at least 40%. In order to support this goal, we're investing in our people, infrastructure, and lab capacity. Total first quarter CapEx was $52 million. For the full-year, we continue to expect CapEx of a $175 million to $200 million. First quarter cash used totaled $77 million. We expect the majority of our cash used in 2019 to be CapEx-related similar to last year. We ended the quarter with cash and securities of $1.3 billion, including a $236 million net raised in relation to the refinancing of outstanding convertible notes.

Turning to our guidance, based on our first quarter performance and our updated expectations for the rest of 2019, we're raising our full-year revenue outlook to $725 million to $740 million from a prior range of $710 million to $730 million. This assumes $1.52 million to $1.54 million completed Cologuard tests. For the second quarter, we expect revenue of $178 million to $183 million, and Cologuard volume of 372,000 to 382,000 completed tests.

I will now turn the call back to Kevin.

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

Thanks, Jeff. The Exact Sciences team is focused on three priorities in 2019: powering our partnership with Pfizer, enhancing Cologuard, and advancing our pipeline of blood-based cancer diagnostic tests. Our sales and marketing teams are executing at a high-level. During the past year, they successfully implemented new selling strategies and techniques to continue to grow Cologuard. Demand from new healthcare providers also remain strong with nearly 14,000 ordering their initial Cologuard test during the first quarter. The team is collaborating effectively with Pfizer in embracing a shared commitment to grow Cologuard and screen more people.

We're seeing a positive impact from Pfizer's January launch of Cologuard through its women's health field force. The number of OB/GYN providers ordering their initial Cologuard doubled in the first quarter. More than 5,000 in total have ordered since launch. There are more than 30,000 OB/GYNs in the U.S. and approximately 25% of their patients are 50 years and older, making them an important market segment to help screen more people with Cologuard. The marketing team introduced new television ads in the first quarter to maintain the effectiveness of our national advertising campaign.

We continue to work closely with Pfizer's team to enhance creative messaging, optimize the mix of advertisements and effectively invest to raise Cologuard awareness. Gastroenterologists are key influencers in colon cancer screening and partnering with them, will play an important role in achieving our long-term goal of capturing at least 40% of the colon cancer screening market. We're hiring a GI sales team, so we can reach them more frequently and expect them to be in the field in the third quarter. We're also implementing a robust peer-to-peer program to educate primary care providers about the value of Cologuard. This program will provide a new format for providers to learn about Cologuard's benefits from their peers.

As our sales and marketing efforts grow, Cologuard demand. We're investing in our infrastructure to ensure we can efficiently support that growth. Our lab expansion projects remain on schedule and within budget; necessary approvals are progressing to support a significant increase in total lab capacity by the end of this year. We also expect to have Epic's Electronic Health Record System implemented this year. This will reinforce our IT infrastructure, help us scale cost effectively, and enhance the Cologuard user experience for our employees and our customers.

Our second priority is enhancing Cologuard. To expand access to Cologuard and its total market potential to nearly $18 billion, we recently submitted our application to the FDA for a label expansion to age 45. Expanding Cologuard's FDA label to the nearly 19 million average risk Americans between ages 45 and 49, is an important opportunity. More than 10% of the total years of life lost to colorectal cancer are due to a diagnosis between ages 45 and 49. This exceeds the impact and every five-year age group above age 70.

Since 1994, the incidence of colorectal cancer increased more than 50% in people younger than 55. We believe Cologuard could help solve this problem. Since the American Cancer Society updated its guidelines last May, several large insurance providers have lowered their coverage screening age to 45, including Anthem for federal employees, Aetna, and CareFirst. We're excited about this early progress and look forward to working with the agency to insure more Americans have access to an easy-to-use, non-invasive accurate screening option. We are pleased with initial data from new markers we're evaluating for Cologuard 2.0 in terms of both sensitivity and specificity. These markers have the potential to increase Cologuard performance and further improve the overall health economic case for Cologuard. We will provide updates, as we validate these markers and work with the FDA and an approval pathway.

Our third priority is advancing our blood-based cancer diagnostics program. The strong foundation we've built for Cologuard and its commercial momentum position Cologuard to lead this field. Through our long-term collaboration with Mayo Clinic, we have discovered biomarkers associated with 15 of the deadliest cancers. We have identified markers for most of those cancers through our rigorous research and development process. Once we have identified markers for cancer and tissue, our team performed multiple studies to validate the best markers for that cancer. Next month, we'll share several pieces of new early data at Digestive Disease Week. These data are evidence of the strength of our partnership with Mayo Clinic, and the power of our platform for early cancer detection. In addition to our pipeline work, we will present real world evidence supporting continued Cologuard use for providers and guideline groups at DVW.

One of the liquid biopsy tests we're working on in collaboration with Mayo Clinic just for liver cancer, a disease that kills 30,0000 Americans and 600,000 people worldwide each year. There are more than 3 million people who should be tested regularly in the U.S., and our goal is to provide a better option than the current standard of care. Ultrasound, either with or without the alpha-fetoprotein test.

Early stage cancers sensitivity for ultrasound alone is estimated to be 45%, and combined with FDA, it is still less than 65% sensitive. Patients fail to comply with the recommended testing more than two-thirds of the time. A more accurate and convenient test may unlock a large market opportunity and encourage more people to get tested. We're enrolling a large case control study to further validate and finalized development of our liver cancer test. We've also begun evaluating potential sites to opening a new lab for our future pipeline products.

We look forward to providing updates, as we continue this work and refine the go-to-market strategy.

We're now happy to take your questions.

Questions-And-Answers

Operator

(Operator Instructions) And our first question comes from the line of Patrick Donnelly from Goldman Sachs. Your line is open.

Patrick Donnelly -- Goldman Sachs & Co -- Analyst

Great, thanks guys. Maybe one for Kevin or even Mark. Just on the Pfizer reps now that we're few months into this, can you just help us think about how those guys are ramping relative to the exact rep historically whether it's on the utilization side with the new dock -- obviously the new doc add the 14,000 this quarter was an impressive number. So maybe just help us think about how those guys are ramping, again historically -- versus historically?

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

Our guidance for Pfizer would be consistent to how we've guided the Exact Sciences represent. It takes 6 to 12 months for a representative Cologuard to become effective on their response curve with doctors. But what we're most excited about is the opportunity to grow this business through the partnership. Both the qualitative relationship in terms of the engagement between the field representatives, the marketing organization, the health system teams; we believe it's going to enable us to grow this business from the 4 to 40 share that we're guiding. But it is encouraging to see the new doc add, and it's encouraging to see all of the organic growth in the business as a result of the partnership.

Patrick Donnelly -- Goldman Sachs & Co -- Analyst

Okay, that's helpful. And then just maybe on the new dock add -- you did 15,000 last quarter, another 40,000 this quarter; the historic run rate for the past couple of years, it was around 10,000. So is this kind of the new normal? And then on top of that, what's the real driver. I mean is it Pfizer, is it 100 reps you added mid last year. Maybe help us think about that run rate there.

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

Through the drivers are broad-based there, Patrick. When you think of -- historically, we had seen a number we broke out typically about 90% of the new providers that ordered Cologuard, we're marketing converted. So we're continuing to see strength in our marketing programs and their ability to drive new providers to Cologuard, our sales force continues to add more providers and now the addition of the Pfizer team has been a very nice contributor. So, the drivers are broad base as far as where this can go forward, our focus is on driving long-term sustainable growth for the company. For us to achieve that, we want to capture as many of those providers as possible, today there still over 60% of the primary care providers out there have not ordered Cologuard. So we want to capture as many of them as possible. Can we sustain this level of pacing? Well, historically that growth has been 10,000 a quarter before Pfizer. I hope that we can sustain that level or better at least near term. I don't expect us to reach the 15,000 level, which we did in the fourth quarter. I don't expect that to be sustainable near term.

Operator

Our next question comes from the line of Brandon Couillard from Jefferies. Your line is open.

Brandon Couillard -- Jefferies & Company -- Analyst

Thanks, good afternoon. Jeff, I didn't hear you speak to the compliance rate number in the first quarter. Could you share that with us and kind of your expectations for the next few periods relative to, I think what was an expected uplift in that metric?

Jeff Elliott -- Chief Financial Officer

In Q1 the complaint, it was 65% that did tick up from 64% in the fourth quarter and what we continue to expect for Q2 is 67% SO the teams are making some nice progress there. Long term, nothing's changed, we think we can get that rate over 70% long-term.

Brandon Couillard -- Jefferies & Company -- Analyst

Then a question for Mark. When we spoke in January, I think you mentioned moving to a new sales CRM system, could you give us an update on that progress? And then, more specifically, what you're doing around digital marketing efforts and some of the closed-loop marketing is sort of follow up communications that I think you kind of expect to roll out to the team in terms of functionalities this year.

Mark Stenhouse -- President, Cologuard

Yes, so that we're going on the Veeva or Salesforce.com platform as a company late this year, so we've not migrated to that new platform system. It will enable all the benefits that you've outlined, closely marketing, better management of the field execution, all that will be driven off iPad platform for the reps to engage their physicians and the selling message as well, is to engage them and follow up. The journey to get there though, is not just sticking with the status quo. We've kind of tailored our messaging to specific physicians segments as a way to grow our ordering base of providers, as well as deepen their penetration of use of the brand, so we're evolving kind of the selling strategy, as well as the technology platform. In parallel, it just takes time with the weight of the different IT transformations were happening at Exact Sciences do include to move to Epic, way to sequence the onboarding appropriately behind the Epic platform change.

Operator

Our next question comes from the line of Brian Weinstein from William Blair. Your line is open.

Brian Weinstein -- William Blair -- Analyst

Mark, I've been obsessed with these performance response curves and just wanted to ask you, are those still holding? Can you give us some metrics around that and are you seeing it matter? If it's an exact wrapper, a Pfizer wrapper joint call that sort of influences those performance response curves at this point?

Mark Stenhouse -- President, Cologuard

The response curves are fascinating to look at, we look at weekly performance metrics of call activity, and as you've indicated, we see that data in the share targets, in the independent targets Pfizer and Exact. The curves themselves are holding true and those curves signal, the more effort applied to ordering physician you see greater consumption of our product, so that fundamental is still there. You will also see where we have a share target between Pfizer and Exact Sciences, deeper penetration in that cohort so that holds up the thesis because where they're sharing targets, there's also more activity. So I think the entire story is still what is. I think driving a lot of the value that we're seeing quarter-over-quarter.

Brian Weinstein -- William Blair -- Analyst

Is that concept of 6 and 9 stood -- does that still hold the calling on 6 times in the 9 times as many orders, does that still hold?

Mark Stenhouse -- President, Cologuard

Yes, roughly that's the model that we're looking at internally.

Brian Weinstein -- William Blair -- Analyst

Great. And then Jeff, I think you mentioned or at most, Kevin mentioned, the GI salesforce, can you just tell us how big that is, and is it corollary to that? How does that influence your operating expense, operating expense spend for the year. And what do you expect expense to be for total OpEx for the year?

Mark Stenhouse -- President, Cologuard

Right. Why don't I take sizing and I'll give it back to Jeff for operating expense. The sizing of the sales versus 60 representatives plus management over half that group has already been hired, all the management and half the reps of the half it's been hired. Was an internal promotion for the very best of our front-line PMR representatives that are the field sales force in primary care, the other half will be externally hired with significant GI experience, and they will be in the field in the third quarter.

Jeff Elliott -- Chief Financial Officer

So for the second quarter, I guided to a sequential OpEx increase of $68 billion that assumes selling marketing relatively flat sequentially with about two-thirds of the sequential growth from G&A and the rest from R&D. If you look at selling and marketing for the year in total, and compared to the fourth quarter of last year, about two-thirds of the growth that we expect this year in selling and marketing is related to the Pfizer service fee. Above one-third is related to internal investments, primarily the GI sales force, that will more likely hit the back half of the year as those reps come online.

Brian Weinstein -- William Blair -- Analyst

Last question from me. On data, Kevin I think you said that you have something DVW. Is there other -- are there other datasets for products that we should be expecting later this year or DVW is sort of the main place that we'd see something at any of your products in the pipeline this year?

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

Well, we do have data and Cologuard 2.0 that is internal data presently and we are looking for the right conference to present that data showing the performance of -- with the new markers. What Cologuard 2.0 looks like relative to Cologuard and we can talk about that more later.

Operator

Our next question comes from the line of Derik de Bruin from Bank of America, Merrill, your line is open.

Ivie -- Bank of America Merrill -- Analyst

Hi, this is Ivie (ph) for Derik today. Thank you for taking the question. There was a lot of noise as we see in past months on genomics market development from a lot of smaller pay players. We know that's the heart of the Cologuard 1.0 but appreciate any additional color on that. And then any color on the our Cologuard 2.0 biomarker that we just talked about. Thank you.

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

Why don't we start with Cologuard 2.0. We have seen data, it's quite promising internally and our goal with Cologuard 2.0 is to maintain the same level of sensitivity for detecting cancer 92% and 90% stage one, so when you're in a screening setting you don't want to miss cancers, especially early stage cancers. And then our primary goal thereafter, is to improve the specificity and therefore lower the false positive rate. We saw that and with the Cologuard 2.0 markers in stool. And we had a head-to-head comparison in those samples with the current Cologuard test. So we're really pleased with a sufficient number of samples that gives us confidence to continue moving forward with the program and to sit down with the FDA, which will do this year and then thereafter begin a prospective -- a most likely prospective study. In terms of any data from blood based test, we don't comment on what others may do in terms of presenting data.

The thing that is important to us and in key opinion leaders. But most importantly to key opinion leaders, is the ability to detect early stage cancers with confidence, at a high specificity. If you're going to have a blood-based test -- and most blood-based test that we've looked at, don't have the ability to detect precancerous polyps. So by definition, you have a test that detects cancer. Remember that, almost half of cancers in a screening population are found Stage 1, and so it is at a minimum, you really want to be pretty close to where the fit test is, detecting two out of three cancers. We haven't seen data like that in a prospective study from anybody, and that's the data that you want to see, even then, that indicates that there is probably a biological barrier to detecting early stage cancers, and we think such a blood-based test would have to be priced appropriately, and it is not likely to displace the two leading test Cologuard and colonoscopy, as the preferred high sensitivity ways to detect Stage 1 colon cancer.

Ivie -- Bank of America Merrill -- Analyst

Thank you for the color. Just a couple timing updates. Congrats on submitting the FDA application for Cologuard 45. Just wanted to see, if we have any updates on the timing for approval, and once approved, how long should we expect to get any traction on that? Thank you.

Jeff Elliott -- Chief Financial Officer

So there is no change in guidance to the FDA approval because that we've given previously which is first half of next year. We don't want to speculate in terms of how the agency may come back to us with questions. But obviously we have confidence in our submission, based on the strength of the evidence that was submitted, and our conversations with agencies themselves. And you had a second question; beyond timing of review by the agency?

Ivie -- Bank of America Merrill -- Analyst

Yes, just how long we could get, what should we expect to -- for that to get traction. And then, yes.

Jeff Elliott -- Chief Financial Officer

So I think the traction question is really a byproduct of both coverage and reimbursement. There's a couple of things that we can signal here, one is that the ACS mandate for coverage of the screening population, which is grounded in the underlying science epidemiology incidents rise in this population, really inspired the submission, and are charged to a screen this important age cohort. It is central to the idea of detecting cancer early, and I would also say, what we're seeing is not only do the ACS decision influence payers like Aetna and CareFirst, and the Anthem FEP business that Kevin mentioned earlier. But even in our early discussions with our partners, our payer partners, we're seeing many that we believe will likely move in the direction similar to Aetna, and others that we'll wait for USPSTF guidance. So my view is that we will have a variable access market at the labeled indication approval, and that we'll see how that matures overtime.

Operator

Our next question comes from the line of Doug Schenkel from Cowen. Your line is open.

Doug Schenkel -- Cowen and Company, LLC, Research Division -- Analyst

All right. Good afternoon, and thank you. Q1 cash volume of 334,000 tests was 19,000 better than the midpoint of your guidance. I'd be curious, how much of this was new doctor additions versus order rates, in terms of how those tracked versus your internal plan. I guess really what I'm trying to get at is, exactly that last point, I guess, which is -- what are the key drivers to the volume upside and what is really going much better than you expected when you issued guidance earlier this year?

Jeff Elliott -- Chief Financial Officer

Sure, this is Jeff. I can start, then maybe Mark could chime in some of the broader drivers. As far as the first quarter upside, most of the growth in the business comes from the increasing order rate from physicians. So we think back historically, we had been added about 10,000 new providers per quarter. Q1 was a bit better at 14,000. Remember, that's just in quarter, not all those orders result in a completed test during the quarter. So, by far, the biggest contributor in the quarter, is an increasing order rate from physicians, and there in the drivers are extremely broad-based. And maybe Mark can chime on some of those.

Mark Stenhouse -- President, Cologuard

Yes, I think the things we've guided to historically Doug, are still in play here. 100 rep ads that we put in the business in August of last year. Obviously, the strength of the region frequency of the Pfizer sales force, the overlapping performance in the sheer targets in terms of the responder growth. The value of the TV, the value of broad market access and reimbursement, the value of health systems, all of those are maturing drivers of growth, that really I think attributed to this quarter and last quarter's momentum.

Doug Schenkel -- Cowen and Company, LLC, Research Division -- Analyst

Okay. So that's a perfect setup for my second question, which is, if we look back over the past six quarters, the number of completed orders per physician has increased, or practice has increased by an average of 0.6 sequential. I mean, in quarter-to-quarter. This quarter, it increased by 0.9 and then, I guess looking forward, as the Pfizer reps increased their physician detailing, as the new Exact reps you hired last year continue to gain efficiencies, and as the practice prioritization tools put in place last year continue to improve and gain steam. Would you think it's fair to expect that, if all tracks your internal plan that the slope of improvement in orders for practice will continue to ramp over the next several quarters?

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

So, obviously, Doug, our goal is to keep driving that rate higher. If you look today, we are only between 5% and 10% penetrated into the average providers office. So there's a long ways to go, the internal data we have on provider stickiness and provider adoption is incredibly attractive. So we're very optimistic about the long-term. We are making the investments today to get to our long-term market share goal of at least 40%. So we do expect that orders per provider number to continue to raise, it won't always be a straight line though. When you look at the guidance for the year, it does reflect our confidence in the business. It also reflects some soberness when you think of the uncertainties for the remainder of the year. For example, Mark talked about the new GI reps.

Well, we have to factor in a range of outcomes for the productivity of those GI reps. In addition, we are making some significant IT upgrades this year. We have to allow for a range of outcomes at a range of impacts from those changes in the business.

Doug Schenkel -- Cowen and Company, LLC, Research Division -- Analyst

Another good set up for my last question. Your Q2 guidance for volume and revenue suggests that you expect at least partial continuation of Q4 and Q1 trends when it comes to completed order growth sequentially and ostensibly by extension the number of new ordering providers and the number of completed orders per practice. That said, when I take your new full-year guidance and back out Q1 results and your Q2 guidance, it seems to imply that you are expecting a moderation in the pace of new practice additions and/or growth in orders for practice. And that's different from being cautious on the other impact of the OB/GYN detailing. It, I didn't hear anything on the call that suggests a second half moderation in the pace of momentum is likely to occur. Again, new advertising and the efficiencies associated with the Pfizer agreement would seemingly yield more gains in practice additions over time and Pfizer should help with practice detailing frequency and by extension order rates. Am I missing something here or are you just trying to be prudent early in the year?

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

Well, you're correct Doug. It is early in the year. We've raised the full-year guidance by more than the first quarter upside. For the second quarter, what be baked into guidance there, is the highest reorder rate that we've ever seen. And the second largest sequential step-up in growth, off of a very good first quarter. So we are extremely confident in the business, we do expect continued growth, both near-term and long-term. Again 40% plus is what we're targeting long-term. In the second half of the year, what we've implied for the sequential growth, is a piece above the rate that we had historically seen pre the Pfizer relationship. So we do expect continued strong growth. It is early in the year.

Operator

And our next question comes from the line of Catherine Schulte from Baird. Your line is open.

Catherine Schulte -- Robert W. Baird & Co. Incorporated, Research Division -- Analyst

Hi, thanks for the questions. First, any thoughts on Medicare recently announced primary care first program including colorectal cancer screening, as one as it measures. How much of a tailwind could this be for you guys? Do you typically see higher order rates from providers that are in value-based models?

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

We're still evaluating the impact, it's early. So I think we'll be able to give you more guidance as we had a little more time.

Catherine Schulte -- Robert W. Baird & Co. Incorporated, Research Division -- Analyst

Okay. And then how is the class of reps hired last summer ramp, relative to your expectations? And then we'll look to get any go-to-market strategy color for the GI sales force and how that might differ from its traditional primary care reps.

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

It's in every new cohort of rep we add into the population continues to outperform its precedent, and even the original cohort continues to grow over time. So it's a good news story, there's growth everywhere. I think the conditions obviously for the latter cohorts are better in terms of you know coverage and reimbursement which allows for kind of incremental growth. And we're getting better at training and knowing that you know better ways to activate our reps once they get into the market. Specific to GI, here's the fundamentals are clear. We have 8,000 ordering doctors, but they've ordered very thinly in the GI community, but yet we know they influence their primary care networks. So the idea here is really twofold, one is we have a pipeline that Kevin's acknowledged that has opportunity for our GI sales force to gain efficiencies on this pipeline assets when they come to market, but Cologuard for specifically, the idea and go to market is to make sure that they can not only educate the doctor clinically on the value of our product, but then they use their partnership to then unlock their community referring physicians.

Clearly GI are biased a colonoscopy, but they also recognize the value of a non-invasive test and they recognize the value of Cologuard as the best non-invasive test available and now that it has universal coverage, we see that there is a real partnership opportunity here that will enable us to grow this brand, a 40% market share overtime.

Catherine Schulte -- Robert W. Baird & Co. Incorporated, Research Division -- Analyst

Great. And then last one for me. Now that the Pfizer is helping out on the health system side, any potential for care programs, with those health systems or payers?

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

I think we've just left a very productive collaboration meeting with Pfizer across our health system team and there's to continue to evolve our strategy. The thing that I was most excited about is less about care gaps, but really about focusing on the fundamental strategy of putting in a quarter to cancer screening pathway within the health system and then making sure that Cologuard sits appropriately within that care pathway and we're already seeing evidence of this partnership and the focus on those two core fundamentals to include electronic ordering, to include physician access, which are things that we've guided to historically. Those four things pathway Cologuard appropriate placement electronic ordering and access to physicians, really unlock value, and that's one of the things we're seeing embedded in the revenue guide. And I think that will only mature over time. The sales cycle is still long because you've got to, you got to move across a large matrix organization, but we definitely see that we focused on the right fundamentals.

Operator

Our next question comes from the line of Dan Brennan from UBS. Your line is open.

Dan Brennan -- UBS -- Analyst

Thanks for taking the question. So the first one is on the test utilization, back to Derik's question. Just wondering, maybe Mark, Jeff or Kevin for that matter. What are the reasons you hear why doctors among yours say 160,000 and so ordered at least one. Why they might order once or twice and don't reorder and kind of what are the methods in place to overcome that push back? I mean, we just finished the second survey that showed nearly 40% of docs still site lack of insurance coverage, out of pocket expenses hurdles, obviously you had that messaging last year, but now the time has lapsed. I'm just wondering why that's still such a hurdle.

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

I think there's two answers. One is the one-year survey acknowledged, which is once you have broad access and you have 300,000 potential ordering physicians getting the message through that universe of doctors takes time and it takes repetitive effort to really stick the message in their mind space before converts to actual ordering behavior. I think the other real issue is, you've got a market has been anchored to colonoscopy for years, right. And you will find some physicians that leave any of our non-invasive test as an alternative test versus offering patients the choice at the-at the offer at the age of 50 when they convert.

So I think it's really converting doctors to believe that Cologuard is a front-line screening option for all patients and doctors get to that adoption cycle at different points in time. If you look underneath that what motivates them to move faster is more frequent rep contact, the more rep contact we have between Pfizer and Exact Sciences it does drive that behavior over time so it does signal where we need to place our reps the frequency of which we need to place them in doctors which should give you some sense of how we think about sizing of the sales force and how we then also apply the media TV effort that mirrors it.

Dan Brennan -- UBS -- Analyst

Okay, thank you for that. And then maybe on the retest opportunity, Jeff, maybe could you just talk through if you don't want to give us an exact number but biomass nearly 240,000 patients are eligible and if you kind of take out positives and assume some kind of move or patient or excuse me patients lost due to move or whatever else might be still coming up, but probably north of a 150,000 patient opportunity. So I'm just wondering kind of what you've assumed in your guidance for 2019 and any other color on how that retest opportunity is developing?

Jeff Elliott -- Chief Financial Officer

We've assumed that we continue to make steady progress which we have done. We're not satisfied with the rates that we're at. We've got a Tier 1 project team on this one and I'm confident that long-term we will do a better job at capturing more of these patients. I think Mark could talk to some of the initiatives under way to capture them?

Mark Stenhouse -- President, Cologuard

Yes, I mean I think it's very clear that we've made some progress, but not enough to address this. So the way that you really anchor patients to reorder is to, you know part of this is the early cohort at a variable experience and we had a modest coverage in terms of reimbursement. They may have had a bill, right, so getting that patient back to us requires different types of marketing initiatives and we're really kind of testing it if it doesn't work, trashing and trying something different, so there's a lot of testing control experimentation going on to try to find the right sequence of engagement with patients. But I would say there's a still lot to learn here. This is an area of opportunity for us and I think we'll get better at this simply by going through that experimentation phase.

Dan Brennan -- UBS -- Analyst

And maybe just one final one for Kevin, Kevin as you kind of look back at the way the Pfizer relationship has progressed two quarters of live action under your belt kind of, can you to speak to anything that may have surprised you or anything that's either going better or maybe not as well as expected? Thank you.

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

Thank you. Dan, Pfizer is a tremendous partner with quality people who are committed to the same cause that we are, so we're thrilled with the caliber of the team we're working with and it's early where we still have a lot of work to do together and so I think the best is yet to come there.

Operator

Our next question comes from the line of Puneet Souda from SVB Leerink. Your line is open.

Puneet Souda -- SVB Leerink -- Analyst

These practices -- I was hoping to understand what's your sense of overlap now among the sales forces and sort of I'm wanting to understand are you still employing the same targeted strategy of select high potential physicians or has that broadened a bit or what's the timing, when do you think that can potentially broaden out that you have more reps?

Mark Stenhouse -- President, Cologuard

So, yes, the targeting strategy is biased based on previous ordering history and Medicare affiliation is the kind of two-by-two grid that we use, that Exact Sciences, you have to remember that Pfizer has a portfolio of products that they're targeting strategies based on the range of products. So there is an exact overlap in the targeting methodologies at nor will there it be because Pfizer isn't selling Cologuard in a P2 or P3 position again against the portfolio. So we have overlapping targets, we have independent targets. What we see is in the overlap targets, you see a greater traction and growth and the new order rate. I think we will evolve based on our understanding of responsiveness as response curves that we've talked about over the past several calls. We will use that data to inform our sales force sizing strategy at Exact and where we decide to take the size and scale of our front-line sales force going forward.

Puneet Souda -- SVB Leerink -- Analyst

Okay, great. And this one is for, Kevin, maybe if I could ask around DVW, is it safe to assume that the highlight there is going to be really around liver or should we be actually looking for some of the markers maybe not specifically around blood, but may be around Cologuard 2.0? Thank you.

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

Two main things, number one, a number of abstracts focused on Cologuard wait to DVW to see what those abstracts are, I think five or six altogether. And then also data around pancreatic cancer detection from blood a sizable study in collaboration with the Mayo Clinic. So those-those are the key things that you'll see Cologuard 2.0 will come at a later date Cologuard for a colon cancer from blood. I'd like to restate what we've said in the past. We think that we have a product that is best positioned to enter the market at some point. It's still not a test that would displace Cologuard or cannibalize Cologuard in a meaningful way. Eventually, we think that is something that we would want to bring to patients and physicians who refuse either colonoscopy or Cologuard. And that data, we haven't decided that the right time to present.

Operator

And our next question comes from the line of Mark Massaro from Canaccord Genuity. Your line is open.

Mark Massaro -- Canaccord Genuity Limited, Research Division -- Analyst

Thanks for the questions and congrats on a good quarter. My first question is not all Americans have a primary care physician, and so there are some lab providers that do enable consumers to go online and request a physician that order a test. Can you just speak to how or whether or not this is something that you're thinking about employing going forward because theoretically it could drive some additional utilization?

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

We agree that there is a disconnected patient physician base that could be activated with consumer initiated testing being able to go online and activate with a ordering doctor Cologuard. This is something we are actively researching and exploring. And I think you would likely see us pilot something within the back half of this year or early next year.

Mark Massaro -- Canaccord Genuity Limited, Research Division -- Analyst

Okay, great. And I know since working with Pfizer, I think it's my understanding that you've been able to go in network at a lower rate, say, per commercial. So, I guess my question is, is there an opportunity at some point to find an optimal level of advertising that's effective that can drive enhanced utilization while perhaps shrinking the dollar amount of the spend?

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

So, we definitely have response curves like we have in the sales force for TV media investment. That level of responsive medicine where we are in the curve guides the overall level of investment we need to make. The shifting patterns of consumer consumption of network TV versus video-on-demand versus cable and the expense of each of those cohorts of TV consumption or media consumption drives ultimately our media and buying plan. We gain the efficiencies of Pfizer, but frankly, some of our demographic target is consuming media and more expensive channels. So, we actually have to figure out the right level of investment in aggregate and then we have to figure out where to place that investment in terms of where our consumers are actively watching TV. And that is how we are going to guide the investment. Whether the overall investment goes up, down or stays neutral, we don't fully know at this point in time, but I definitely think it's an evolving strategy.

Mark Massaro -- Canaccord Genuity Limited, Research Division -- Analyst

Great. And then my last question on the liver test, can you give us a sense for the size of this case controlled study? When you expect to potentially initiate a clinical trial? And then, can you speak to any regulatory pursuits?

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

We have not disclosed whether we will launch a liver test as a lab-developed test or as a FDA cleared or approved test. We certainly will have conversations with the agency and work with them. In terms of the size, if a case control study is in terms of the number of cancers, it's several hundred and in terms of the number of controls it's approximately in the 1,000 range. And we don't plan to run at the present time a prospective study at -- three months ago that was the plan. We know based on further conversations with key opinion leaders, we plan to launch either as an FDA approved test or a lab developed test with a large what will be a fourth or maybe even a fifth case control study that gives us confidence in the sensitivity and specificity.

Operator

And we do have one more question from Bruce Jackson from The Benchmark Company. Your line is open.

Bruce Jackson -- The Benchmark Company -- Analyst

Good evening and thank you for taking my question. I was wondering if I could get the Medicare percentage of the test mix for this quarter, and then do you have a forecast for the -- where you're thinking you might end up by the end of the year?

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

So in Q1, the Medicare volume mix was 50%. That's down from 52% in the fourth quarter. As far as where that goes, I would expect that over the course of this year to continue shifting away from Medicare toward commercial. Long-term, I think they're both somewhere in the mid-40% range both commercial and Medicare. Keep in mind that outside of commercial and Medicare there's some smaller components of this market such as Medicaid that collectively add up to 5 points or 10 points.

Operator

And our last question comes from the line of Per Ostlund from Craig-Hallum. Your line is open.

Per Erik Ostlund -- Craig-Hallum Capital Group LLC, Research Division -- Analyst

Good afternoon, everybody. I wanted to follow up on one of Mark's answers to Mark Massaro's question related to the television campaign so you went on to network TV kind of full bore for the first time in Q4. Do you hold network to a different bogey or a bar than you held cable? Do you measure the ROI any differently do you -- can you really delineate it from each other all that well and or I guess at a point does it even matter as media just media?

Mark Stenhouse -- President, Cologuard

I mean I think the idea with media is to try to drive viewership to your asset and you're trying to chase your demographic target where they're actually consuming media. So our move to network and sports NFL which you saw in fourth quarter and you'll see us likely play in sports going forward because there's broad viewership there is really a mix of optimizing our mix the way I think of it is you should look at our what we're trying to do is gain efficiencies in two different places. We're gaining efficiencies of the Pfizer buy because they buy at a better aggregate rate and we're learning from Pfizer and through our own team, where are our demographic targets consuming media then optimizing that mix of investment by channel and overall that should drive a better return on that investment.

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

I would add the ROI on TV is already very, very strong. What Mark talked about is looking for ways to always improve the ROI. So, even as it stands today, the ROI is great. We've seen payback numbers when you look at the, the amount of ad spending that it takes to drive new physicians. We've seen payback numbers that it takes perhaps fewer than four Cologuard's worth of gross profit to cover the payback on each new provider that orders the test. And that assumes that all of the TV spending goes toward new provider adoption, which we know that it does help drive incremental orders from existing providers. So it's an incredibly good ROI.

Per Erik Ostlund -- Craig-Hallum Capital Group LLC, Research Division -- Analyst

Excellent. Thanks, guys. Appreciate it.

Operator

And I'll now turn the call back over to Kevin Conroy for closing remarks.

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

Thank you for joining us today to review our first quarter results and the progress we made toward our 2019 priorities. Our strong start in this year, the execution of our sales and marketing teams, the foundation we've built for future growth gives us confidence that Exact Sciences is uniquely positioned to become the leader in early cancer detection. Thank you to the entire team at Exact Sciences for your hard work and continued commitment to our mission. Thank you.

Operator

And this does conclude today's conference call. You may now disconnect.

Duration: 53 minutes

Call participants:

Megan Jones -- Investor Relations

Kevin Conroy -- Chairman of the Board, President & Chief Executive Officer

Jeff Elliott -- Chief Financial Officer

Patrick Donnelly -- Goldman Sachs & Co -- Analyst

Brandon Couillard -- Jefferies & Company -- Analyst

Mark Stenhouse -- President, Cologuard

Brian Weinstein -- William Blair -- Analyst

Ivie -- Bank of America Merrill -- Analyst

Doug Schenkel -- Cowen and Company, LLC, Research Division -- Analyst

Catherine Schulte -- Robert W. Baird & Co. Incorporated, Research Division -- Analyst

Dan Brennan -- UBS -- Analyst

Puneet Souda -- SVB Leerink -- Analyst

Mark Massaro -- Canaccord Genuity Limited, Research Division -- Analyst

Bruce Jackson -- The Benchmark Company -- Analyst

Per Erik Ostlund -- Craig-Hallum Capital Group LLC, Research Division -- Analyst

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