Exact Sciences Corp (EXAS) 2020 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Exact Sciences First Quarter 2020 Webcast and Conference Call. (Operator Instructions) I would now like to hand the conference over to your host for today, Megan Jones.

Thank you, operator, and thank all of you for joining us for Exact Sciences First Quarter 2020 Conference Call. On the call today are Kevin Conroy, the company's Chairman and CEO; and Jeff Elliott, our Chief Financial Officer.

Exact Sciences issued a news release earlier this afternoon detailing our first 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 be materially different 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.

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

Thanks, Megan. Even in unprecedented times, cancer doesn't stop. The coronavirus pandemic highlights and increases the need for novel ways to screen for cancer, detect it early and guide treatment. Our Cologuard, Oncotype DX and Paradigm tests meet that need. In a world that is trying to avoid unnecessary physician office visits, invasive procedures and treatments, our tests and deep pipeline are more valuable now than ever. We plan to play an even greater role in cancer screening and guiding therapy decisions after the coronavirus pandemic abates.

Today, we'll provide details on 3 key topics: near-term challenges presented by the coronavirus and steps our team is taking to respond; our positioning to provide smarter solutions to patients and providers across the cancer continuum; and answers we're taking to deliver value over the long term.

Our CFO, Jeff Elliott, will now highlight our financial results.

Thanks, Kevin, and good afternoon, everyone.

Total first quarter revenue was $348 million, consistent with our preannouncement last month. In our screening business, which primarily includes Cologuard, revenue of $219 million increased 35%, driven by test volume growth. Approximately 9,000 new health care providers ordered Cologuard during the first quarter and nearly 206,000 have ordered since launch.

Cologuard revenue has been negatively impacted in 2 key ways by COVID-19 and related actions, such as stay-at-home measures and decreased wellness visits. First, fewer Cologuard tests are being ordered. Second, patients are completing tests at a lower rate.

After a 63% year-over-year decline in Cologuard test orders during the first 20 days of April, we have recently seen a slight recovery. Orders declined 47% year-over-year in the last 10 days of April with continued positive trends in May. Our world-class customer care team is contacting people with a Cologuard collection kit to remind them of the importance of colon cancer screening and support them in completing the test.

In Precision Oncology, which primarily includes the former Genomic Health business, first quarter revenue was a record $128 million, with growth across all major products and geographies. First quarter benefited from the timing of Oncotype DX breast test volumes in the U.S. Some patients are delaying surgery because of COVID-19 fears and completed Oncotype testing earlier to help inform them whether to use chemotherapy on a neoadjuvant basis. Growth in the U.S. breast business continued in April. We expect the widespread decrease in screening mammograms due to COVID-19 to negatively impact test volumes in the coming months through the typical lag between a mammogram and an Oncotype DX test.

In the international business, COVID-19 created weaker underlying conditions in certain geographies, resulting in a test volume decline from March to April. While first quarter U.S. prostate growth was strong, during April, COVID-19 contributed to a 26% year-over-year volume decrease as physician office visits declined.

Total first quarter gross margin, including amortization of acquired intangibles, was 71%. Non-GAAP gross margin, which excludes amortization of acquired intangibles, was 77%, helped by higher mix of Precision Oncology revenue.

Total sales and marketing expense was $168 million, including the Pfizer service fee of $20 million. Spending was below our original expectations due to COVID-19-related savings, the timing of certain initiatives and a lower Pfizer service fee.

G&A expense was $114 million, slightly above our expectations due to additional Genomic Health integration costs. R&D expense was $44 million, lower than we expected due to COVID-19 related savings and the delay of certain clinical trials.

First quarter net loss was $106 million, and adjusted EBITDA was negative $8 million. Total first quarter CapEx was $26 million.

We ended the quarter with cash and securities of $1.2 billion, including the proceeds from our February convertible debt offering. We have a strong balance sheet that provides us flexibility to invest in the business and withstand uncertainty. We are taking steps to minimize disruption from COVID-19 and reduce spending in areas not immediately critical to patient care. The company identified more than $400 million of savings relative to our original 2020 budget, with the majority coming from reduced operating expense. If we see a faster-than-expected recovery from COVID-19, savings will be lower as we would invest to support that growth.

Since the COVID-19 environment is rapidly evolving and there are continued uncertainties surrounding its impact, we are not providing financial guidance at this time.

I will now turn the call back to Kevin.

Thanks, Jeff. The Exact Sciences team rewrote our 2020 priorities in response to the coronavirus pandemic. Our new priorities are getting people tested, taking care of our customers and preserving our financial strength.

We know that cancer is relentless, and Exact Sciences labs in Madison, Redwood City and Phoenix continue to deliver critical answers to patients even in the face of COVID-19. To protect the health of our employees, we've minimized team members on site to those who perform patient-critical work. We're taking steps to limit exposure and transmission of the disease.

Our field sales team suspended face-to-face interactions with health care providers and is working to serve them via telephone and online technologies until it's safe to return to the field. We're using our marketing and inside sales tools to reach health care providers virtually.

The coronavirus has highlighted the importance of accessible, easy-to-use at-home screening tools and telehealth improved access to colorectal cancer screening for the 46 million unscreened Americans. We accelerated the launch of our telehealth site with patient education resources, highlighting their ability to request Cologuard online through a telehealth provider. People can now request a telehealth consult specific to Cologuard from home. To raise awareness of the importance of staying up to date with screening and the opportunity to order Cologuard online, we've introduced new social, digital and TV advertisements. COVID-19 will change the way people interact with their health care providers. And with these investments, Cologuard fits seamlessly into, we believe, a permanently changed health care environment.

A significant backlog is building of those who need to be screened. This backlog will continue to grow as focus remains on more urgent diagnostic colonoscopies. GI societies have recommended prioritizing essential services while delaying elective procedures, which -- this significantly reduces the number of screening colonoscopies being performed. Putting off screening can lead to diagnoses in later stages where outcomes are poor. Cologuard is a solution here. We can help health care providers prioritize procedures and send patients at the highest risk, including those with a positive Cologuard, to colonoscopy first. Cologuard can play an important role in alleviating this backlog and getting more people screened.

Exact Sciences can also provide critical answers to patients diagnosed with breast and prostate cancer. In response to COVID-19, breast cancer societies have recommended physicians consider delaying surgery because invasive procedures, such as mastectomies, can expose patients to the coronavirus. While Oncotype DX is typically run on tissue removed during surgery, it also can be performed using tissue taken from a needle biopsy. Physicians and patients are increasingly using the Oncotype DX Breast Recurrence Score from a needle biopsy to evaluate the use of chemotherapy on a neoadjuvant basis before surgery. If neoadjuvant therapy shrinks the tumor, a lumpectomy can potentially be performed instead of a mastectomy.

The Oncotype DX Genomic Prostate Score also provides valuable information to men with low- and intermediate-risk prostate cancer. It helps the patient decide whether he can safely undergo active surveillance versus aggressive treatment, and it changes treatment recommendations for 1 out of 4 patients. Giving a patient the confidence to avoid radical prostate surgery is highly valuable, now more than ever.

Exact Sciences has built the foundation needed to provide more precise smarter answers to patients across the cancer continuum. We recently closed the acquisition of Paradigm, a company specialized in advanced cancer therapy selection. We added a high-quality team and an important test to our Precision Oncology portfolio. The Paradigm test helps late-stage cancer patients determine the best path forward for treatment. This test has exceptionally fast turnaround times and is designed to require less sample input than other therapy selection tests. This allows us to test -- this allows for a high test completion rate and helps patients who may not have access to therapy selection testing because it takes too long or there's not enough DNA in the sample to obtain a valid result.

We plan to expand the launch of the tissue-based Paradigm test by adding it to the Precision Oncology team's product portfolio later this year, followed by a full sales force rollout next year. In the future, we also plan to make an enhanced tissue-based and a blood-based version of the Paradigm test available to oncologists through our broader Precision Oncology team. Exact Sciences is well equipped to bring these and other advanced cancer tests, especially in minimum residual disease and recurrence testing to patients and oncologists who need them.

Exact Sciences decided to develop and rapidly roll out testing for the SARS-CoV-2 virus. We now have the capacity to test more than 60,000 people per week. Our goal is to keep our team healthy through ready access to our own testing. It also allows us to do our part in helping to increase our country's overall testing capacity.

I couldn't be more proud of the entire team that developed, secured FDA Emergency Use Authorization and scaled up our Madison lab sites to handle significant volumes. This highlights our research and development, laboratory and manufacturing abilities as well as our nimbleness. These qualities will help us achieve our long-term goals in cancer diagnostics.

We are the leading cancer diagnostics company globally. Our people, experience and infrastructure, combined with our financial strength, provide a great foundation for growth. Cancer doesn't stop for anything, and COVID-19 highlights the value of Cologuard and Oncotype DX, which can limit the number of people exposed to unnecessary invasive procedures and treatments. In a changed health care environment, Exact Sciences is positioned to lead the increasingly important advanced cancer diagnostics field. We have unmatched breadth in diagnostics, covering primary care, oncology, gastroenterology, urology and women's health. This allows us to provide smarter answers across the cancer continuum. We're confident in the long-term growth opportunities for Cologuard and Oncotype DX and in successfully bringing additional tests like Paradigm's to patients in need.

We're now happy to take your questions.

(Operator Instructions) And your first question comes from the line of Brian Weinstein with William Blair.

Maybe starting off on the comments about the positive trends that you're seeing a bit more. Can you be a little bit more specific there? Are you seeing those across the country? Or are those in just small pockets? And I'm curious if you're seeing them in areas where the shutdown is starting to abate? Or are you believing that maybe some of this is from some of the efforts that you guys have had in telehealth and some of the other things you're doing?

Yes. Thanks, Brian. So the comments around Cologuard were really broad-based. We are seeing improving trends broadly across the country. The areas that have larger outbreaks of the COVID-19 pandemic, obviously, are still impacted, but we're seeing across the board, even in the Northeast, New York City, we are seeing recoveries. So the recovery is broad-based. I think, in part, it is due to the actions we've taken, such as telehealth. Telehealth is really a foundational investment for us that opens up a broader part of this market. It really helps us leverage the investments we've made for years in consumer marketing. Now patients have another way to access Cologuard from the safety of their own home. It really speaks to the value of our tests. So I think the investments we are making, the actions we've taken are helping. That said, there's also a very large backlog of colon cancer screening that couldn't happen during the early days of the pandemic when people were quarantining and really hit -- their lives have gone on pause. So this backlog is immense, will take a long time to clear, and Cologuard is a big part of the solution here.

Yes. And I want to push you a little bit on that comment about the colonoscopies and what's not happening. I think there's, what, roughly 300,000 to 350,000 screening colonoscopies a month that are not happening right now. So can you talk more specifically about some of the interactions that your team is having with GIs and any kind of success you're seeing? I know you had a GI-specific sales force. Is there more focus on that sales force now? How can you really go and try and dig into that growing backlog? How do you guys actually begin to see some of that materialize for you?

Brian, it's Kevin. The challenge that exists out there in the gastroenterology practices is that ASGE actually recommended against office visits and elective procedures, in particular. And so you've seen many practices that have just simply shut down. And now they're starting to come back, and they're first starting to come back with diagnostic colonoscopies. Our team is not yet in the field. So what we feel good about here is the value that we're seeing is -- with Cologuard, it did not fall anywhere near as fast as screening colonoscopies.

And now the return to screening is first happening, obviously, with the noninvasive at-home test. And the real value of Cologuard, I think, is being highlighted during these incredibly challenging times. And one of the first things that we did was to reach out to GI societies and start to engage in a conversation about how we can partner with GIs to get these people who are screened, screened because if we don't, we are going to have a shift, we believe, from earlier-stage detection to later-stage detection, and we simply can't afford that.

So much more to come down the road, but know that we are working with gastroenterologists around the country and their societies to be their partner in addressing this large problem and opportunity.

Great. Wonderful. Can I just sneak one quick one in on Biomatrica? Are there capabilities there that, that product has for COVID-19? I think they were selling some master mix or components at one point. I don't know if that's continuing. But the opportunity for a saliva-based option, is there anything you're doing with Biomatrica there?

No. The COVID-19 test that we have brought up was developed here in Madison without using any of the Biomatrica components.

And your next question comes from the line of Brandon Couillard with Jefferies.

This is Matt on for Brandon this afternoon. I wanted to touch a little bit more on the telehealth and online ordering functionality rolled out. Understanding it's early days, curious if you're wondering if you're going to provide any additional color on the mix or trends you're seeing so far, whether it be new ordering docs, higher-volume docs directing patients there, people from the rescreening population. Any color you can provide on early trends there? And then if we look out over the next 12 to 18 months, how much of this new opportunities you think could be of the total mix of people ordering Cologuard tests?

Matt, this is Jeff. First, I want to thank the team at Exact Sciences that brought the telehealth capability up in very quick -- in a very quick time frame.

What's really exciting about telehealth is what it can mean for the future. Telehealth opens up parts of the market that historically we did not serve. One example here is through our website. Historically, we've driven a significant amount of traffic to our website. But before, patients could not request the Cologuard test through the website. Today, they can.

Other channels that we see opportunities in are the employer channel and the payer channel. We've had active conversations with other partners that are now enabled by the telehealth capability.

So we're pleased with the early launch. We're pleased with the growth we've seen so far, and we're very excited about the long-term opportunity with telehealth, especially in a COVID world. COVID, one of the lasting impacts that we see is a shift towards telehealth, and Cologuard fits into that market very well. Again, this really highlights the at-home convenient nature and the underlying value of Cologuard. So we're excited about what it can mean. We're not going to provide guidance or specific numbers on the opportunity yet. It is early, but it does open up a big part of the market to us.

And then just another quick one. Any slowdown or changes to the previous anticipated rollout of the electronic ordering functionality across Epic's platform in the fourth quarter, either from your end or on theirs?

No, the plans are still on track there, Matt. The exciting thing about electronic ordering, as we've discussed before, is that when physicians order electronically, not only is it easier for them and easier for us, they order at a much higher rate. So we are seeing a steady shift from fax ordering, which is still the majority of our Cologuard test orders, to electronic ordering. And later this year, through our Epic partnership, a significant percent of primary care providers -- today, between 40% and 50% of all primary care providers in this country are on the Epic platform. Well, later this year, Epic will release new functionality that will enable them to order electronically. Now it will take some time to roll out. That doesn't all happen overnight, but we'll have a significant shift towards electronic ordering capability in the first half of next year. So we're excited about what that can mean. Those plans are still on track.

And your next question comes from the line of Doug Schenkel with Cowen.

It makes sense that orders are going to be pressured given a decline across the board in any procedure or anything you're going to order that could be viewed as remotely elective. How effective can you be in the current environment in adding new practices? Does that freeze -- did that freeze up initially as the pandemic spread? And then as people started to at least kind of get a little more used to what's going on, if that's probably one way of putting it, as that happens and as you guys pivot to e-detailing, does it kind of get back to the point where you could add new practices in a way that resembles what you would normally do in a quarter?

Thanks, Doug. This is Jeff. I go back to the size of this market. Obviously, there's over 300,000 primary care providers out there. And so there's still a significant pool of providers who have never ordered. So there's still a long runway ahead.

And recall that, historically, most of the new providers that try Cologuard did so as a result of our marketing campaign. That highly effective marketing campaign is leading patients to come into their provider or request their provider a Cologuard test. And so those efforts still continue. We are seeing continued adoption from new providers.

In Q1, we added 9,000 new providers. We did see a slightly softer March. Things have slowed down there, but there's still a massive pool of their new providers that can come in. And in this market, in a COVID world, what you're seeing is TV viewership rates are a lot higher now than they were pre-COVID. So our heads are still out there. We recently rolled out a new TV ad campaign that I think will help us tap into this large pool of doctors who haven't used the test.

And again, I go back to the backlog. This backlog is massive, and Cologuard can help providers clear that backlog during this COVID pandemic.

Yes. So a couple of follow-ups on that. In terms of being able to detail docs, I know I built that into the last question, but as you've talked about many times over the years, detailing is what actually really helps doctors order more. Is that something you're able to do a lot on the PCPs or at home and their volumes are actually down as well? Is there actually an opportunity to do more with e-detailing to get them in a position where they would order more? And then to that other point which you just referenced again, the ability for Cologuard to play a role in helping the system catch up with colorectal cancer screening, from a mathematics standpoint, do you have a sense for how many colonoscopies actually could be done per month? I'm just trying to get at the capacity there because there is going to be a catch-up necessary, and it may be, frankly, just necessary for folks, even if they weren't inclined to, to push colonoscopy patients to Exact.

It's Kevin, Doug. Thanks for the question. e-detailing is occurring. It's happening over the phone. It's happening with other electronic tools that we have. It's happening with our partner, Pfizer. It's clearly not as effective as being in the office, talking to physicians. But our sales force is waking up and engaging with physicians every day. Initially, many of the offices were shut. They are clearly opening again and actively engaged with patients. And we're seeing the effect of that.

And I'll go back and say, to add to what Jeff said there, we're actually pleased and maybe even really pleasantly surprised at the level of ordering activity that is occurring right now, even though there aren't very many people going to see their primary care physician. So we -- this is an experiment that we've been able to -- not one we would ever like to do again, where we have seen what the bottom is when offices are shut and people aren't going to see their doctor, that Cologuard is still a choice.

And then that leads into your next question about colonoscopy capacity. That colonoscopy capacity is coming back, but it's coming back at about -- offices are just starting to open up at maybe 25% or 50% capacity, and they're addressing the patients who really need a colonoscopy for a diagnostic purpose. And frequently, that's because of a positive Cologuard test. They are not prioritizing screening colonoscopy. So if you're getting behind -- we have seen numbers as high as 500,000 colonoscopies per month lagging. There -- if you want to get people screened in this environment, Cologuard becomes an increasingly important option. So we're cautiously optimistic about the future. We have -- we're pleased with the rebound and the team -- our team, the Pfizer team, they're hungry to move forward.

And your next question comes from the line of Derik De Bruin with Bank of America.

So I'm going to follow up on Doug's question in that instead of catch-up screening, I'm just wondering, would people potentially delay just doing this? I mean, the average age for colonoscopy, I believe, is still around 53, like that. Would people just maybe delay it a little bit more? And that follows on to the question of, obviously, we have a really significant spike in the unemployment rate. How are you sort of seeing the impact of the job market, potential recession sort of impacting the business?

In terms of the impact on -- recession, high unemployment impacting colon cancer screening, obviously, it's going to have some impact, and we just don't know yet. We have been so focused on the first 3 priorities, trying to assess the economic future, and the impact on health care is hard to assess. Keep in mind, though, there are 45 million Americans who are unscreened today, so there is always going to be this need. And at least at the present, we are not -- we're optimistic about what the future holds.

Yes. Just to add to what Kevin said, Derik. Keep in mind that Cologuard today has extremely broad coverage across commercial insurance, which, obviously, with the higher unemployment rates, could be impacted. We also have high coverage in Medicare and increasing coverage in Medicaid. That wasn't the case, say, 3 to 5 years ago. So that broad coverage will help lessen the impact of rising unemployment. Obviously, there would be some impact. But a broad coverage and a test that offers, we think, very good value for the price helps to offset some of that.

And as a follow-up question, you're doing this and moving on to cost savings in this. Can you talk about whether this impacts the pipeline, the liver test and just sort of like are any sort of your initial projects going to be a little bit delayed either because of reprioritization or not being able to do clinical trials?

Yes. Thanks, Derik. So some of the major trials that we had underway are temporarily paused given the -- for example, BLUE-C is temporarily paused, given the decline in number of people going to a screening colonoscopy. That said, the major R&D programs that we have, we've talked about before, do continue. There's a lot of work happening in -- outside of the trials that can continue. So big efforts. Cologuard 2.0 continues. Our colon blood product continues. Liver, that program does continue. The timing of that, the initial launch of that is likely next year as opposed to later this year, given the impact from COVID. But major initiatives still continue. We're really excited about this broader platform we have, capabilities across -- the R&D capabilities, lab, IT, this whole sales and marketing infrastructure we have. And the pipeline really will help us leverage that broader infrastructure. So we -- the adjustments we've made to our spending will allow the major products to continue. A lot of the spending reductions in R&D relate to the studies that have been put on hold temporarily. We largely left the major initiatives untouched.

And your next question comes from the line of Patrick Donnelly with Citi.

Great. Maybe just kind of deep diving a little deeper into the telehealth angle. Certainly, very timely to get that out during the pandemic here. When we think about the go forward, I guess, any way you frame it in terms of what percentage of volume you think could shift over there? Again, I assume you get a much higher compliance rate. Maybe even profitability improved, given it's a little less heavy on the sales force. But maybe just help us think about, again, what percent of volume you think could shift over there over time?

Thanks, Patrick. I think the larger opportunity is with telehealth generally. So think of a person who is 60 years old. They haven't had colonoscopy. They need to get screened. Or a person who is 45 years old now, and they're engaging with their physician over a FaceTime-like application. We see that occurring more often. As long as that physician can order Cologuard easily, this becomes more of a check-the-box occurrence rather than trying to cajole somebody to go get a colonoscopy. And everybody appreciates the ease of that and seeing a Cologuard box show up at that person's home where they can perform the test and send it back. And this, we think that's the major underlying trend. cologuardtest.com ordering is for a lot of people who just don't have a primary care physician. And we have heard that over and over and over again over the years that, "I'd love to get a Cologuard test, but I don't even have a primary care physician or I haven't seen a doctor in a couple of years, but I really do want to get screened."

So we think that this may be a small part of the overall opportunity here with telehealth. The big one is the ease of ordering a Cologuard test electronically, and that gets back to what Jeff was highlighting is that, this time next year, we expect that to be really rolled out through the addition of Cologuard in all instances of Epic, which is about 50% of primary care physicians. So we don't know what the future holds with cologuardtest.com. Broadly, we're really excited about the opportunity.

Okay. And then maybe one for Jeff, just on the expense side. Again, nice to see you guys be able to pull the levers, pull out a bunch of costs here. How should we be thinking about those expenses coming? I guess, what percent or what number is permanent versus how much expense is just being pushed out and we should see a big uptick in 2021? Or do you feel like you're now maybe a little bit of a leaner platform and, again, some of these expenses fully disappear and maybe the pathway to greater profitability is a little clearer?

Yes. Thanks, Patrick. So the $400 million we took out, again, that is across our cost of sales, operating expense, CapEx, kind of across all spending areas. As and when the business picks back up, like we are starting to see with Cologuard, then we'll start to reinvest in the business to support that growth.

One of the benefits of this is that, as we come out of COVID, we expect to be a more profitable company than we would have been otherwise. So we do expect most of these investments will come back online, but there will be some that we've taken out and allow us to drop through revenue at a higher rate of profitability.

Your next question comes from the line of Dan Arias with Stifel.

Kevin, I guess it's been about 3 weeks or so since the preannounced. Has the volume decline rate moved materially from the 63% level that you noted in the press release? How would you have us think about the way that you're trending there into mid-May on volumes?

Dan, this is Jeff. As I said in the remarks, we did see improving trends through the last 10 days of April and in the first week or so of May. So I think I said before that's in part due to the actions that we've taken, such as telehealth, to continue driving the business. Also in part, I think that people have started to adjust to the -- some of the stay-at-home measures and, in some areas of the country, started to get back to work. So we are starting to see, in some cases, offices opening back up and people getting back to business. So think all those factors related to improving trends. We're very pleased to see that.

And this is Kevin. As we talked to some of our primary care customers, one of the things that they have done is rapidly, over the last few weeks, converted to telehealth. And they're engaging all day long with their patients and, in some cases, are even busier than they were before. As a result of that, it is appearing that colon cancer screening is coming back on to the list of important things, and this is something that we're excited about.

Got it. Okay. And then, Jeff, just on the cost savings, how much of the $400 million in total savings do you think will come from the lower COGS on the lower volumes?

And then if I just think about what you've done in the workforce, can you just talk a little bit to where furloughs have been put in place rather than full reductions? And then conversely, where you've actually had to make some headcount decisions, permanent headcount decisions?

Yes. If you think about the magnitude of the P&L line items that existed at the start the year, the biggest area of spend was in operating expense within that line item. So that's going to get the biggest chunk of the $400 million of savings. The change to capital expenditures was pretty modest considering that our long-term outlook has not changed. In fact, as we said before, COVID really underscores and amplifies the benefit of the test that we offer. So the capital investments are largely unchanged. We had said before, we had guided previously to about $125 million of capital expenditures for the year, so the changes to that are relatively modest.

Cost of sale, there will be some, really commensurate with the expected decline in revenue. I'm not going to break out specifics there because we're not going to provide guidance for the rest of the year right now. But directionally, operating expenses are the biggest one.

As far as on the personnel side, look, the personnel changes we made, most of these are just to adjust the business for the volumes we're seeing. And as the business picks back up, we're going to start getting reps back out in the field and unwinding some of these changes. We're excited to see how the team has responded. This has been -- it's been really exciting to see how the team has all kind of raised their hands on ways to help contribute. Whether it's telehealth or COVID testing, the team has really responded rapidly. So we're excited for the business to pick back up and get people back to work.

And your next question comes from the line of Catherine Schulte with -- from Baird.

I guess, first, just how should we think about your plans to redeploy your sales force? Are you opening up in certain regions as local stay-at-home orders are lifted? Or are your plans to wait it out a bit longer until you see more patient flow?

Thanks, Catherine. The #1 priority is safety of our -- the patients we serve and the offices and, of course, our sales force. So we have the ability to do testing. We are working on the ability to make sure that all of our people are tested on a regular basis so they're as safe as possible. And we are putting a plan in place right now to respond to the changes in the various stay-at-home orders. We will probably err on the conservative side there rather than getting out too early and putting anybody in harm's way. So safety is the #1 priority there, and we're really focused on that.

Okay. And on the cost reduction measures, I know you weren't breaking it out specifically between the line items and OpEx. Jeff, any color on how much of those could fall in the second quarter?

Catherine, I'm not going to get that granular now. But considering we put some of these measures in partway through into the second quarter, I think you can take that into consideration for modeling purposes.

Okay. And I saw on your website you updated that to show that about 80% of Cologuard patients 45 to 49 had no out-of-pocket cost, so a nice improvement there. Any comments on the trends in 45 to 49 you saw in the first quarter and where we stand today in terms of Medicare volume mix due to that potential success in the younger age group?

Yes. 45 to 49 is, again, a really exciting opportunity, considering there are about 19 million people in that age group, and the vast majority are unscreened. And really, Cologuard fits very well into their lifestyles. People in that age group are typically working. They often have kids and busy schedules. So Cologuard, as an at-home test, can fit very well into that age group. We are seeing continuing positive trends there. It is outgrowing the age group 50 and above, so we're pleased with that. And I know the sales force is very excited about the opportunity to reach these patients in this market.

Medicare mix, from a volume standpoint, first quarter was about 44%.

And your next question comes from the line of Dan Brennan with UBS.

Great. Maybe the first one is just on -- you guys touched upon this a few times. I just wanted to understand it. So when you think about maybe some of the early feedback that you're seeing from patients who want to avoid invasive procedures post COVID and, obviously, that benefits Cologuard over colonoscopy, is this something you can give us any early indication of in terms of feedback from docs or maybe some of your own diligence on this front and kind of how impactful this could be as we look out? And some of the calls we've done suggests you could see as much as a 15% bump in your volumes as doctors are kind of switching over to Cologuard from colonoscopy in these cases.

Dan, this is Jeff. One piece of feedback I get is just looking at the numbers. We've seen data showing that screening colonoscopies are down around 90% because of COVID-19. We shared some of the numbers that we've seen for Cologuard down just over 60% to start the month and down over 40% exited April and with positive trends continuing. So what that really speaks to is that Cologuard not as impacted by COVID as colonoscopy. And the acceleration we're seeing now speaks to people wanting to get back to business, wanting to start to clear this backlog. And Kevin talked before about some of the feedback we've gotten from the GI societies on Cologuard, how it can play a bigger role. And the backlog for diagnostic colonoscopies is even bigger than it is for screening colonoscopies. So Cologuard, we think, is going to play an even bigger role as we move forward. I think this is one of the changes that is here to stay from COVID. We think at-home test will play an even bigger role in this market.

Great. The number you mentioned, the down 40. What was that, Jeff? Sorry, I joined a few minutes late. So down 40 is what you exited April at, you said?

Yes. Down about just over 45% in the last 10 days of April.

Got it. Okay. And then on telehealth, how are you trying to avoid channel conflict there? Obviously, it's a great opportunity for patients. It's kind of seamless, but at the same time, all the PCPs and GPs that are seeing these patients, to the extent now they're no longer in their office getting the screening -- getting the Cologuard test there, how are you trying to weave in the PCPs and GPs into this process? Or are you?

Well, one of the things that we're doing, Dan, is working with GIs in the local communities where a patient -- or the local community where a patient is being tested so that if they test positive, then we can work to get them to a gastroenterologist that can do the follow-up diagnostic colonoscopy. And that's an opportunity to partner through our sales force, through our relationships with large -- with the societies. And we'll continue to press on that. And then, of course, the results -- the patient requests that their results go to their primary care physician. And that is also an opportunity, again, for us to engage with the physician and remind them of the value of Cologuard. So we don't see this as being a channel conflict. If anything, it really enhances our relationship both with PCPs and GIs.

Great. Maybe one final one. We're trying to think about like if we had a great crystal ball, beyond this year into next year, which is, I guess, the question for a lot of different companies about what the impact is as we look in 2021. But if we think about the factors that would prevent you from reaching what you -- maybe your internal or our own forecast for '21 before this happened, patient visits, I would assume, probably -- assuming that we don't have a really big rebound, potentially, there's some catch-up in '21, so patients -- because it's probably -- it could be greater than they were before. You're going to have share gains from colonoscopy. You had some benefit from telehealth. So as we think about the factors that could either help you or not or kind of hurt you in terms of reaching that pre-COVID forecast, am I thinking about it right? Or are there other factors? Obviously, doc utilization is the last one, where that one, I think, it could be hard to kind of catch up for the 4 to 8 weeks that your sales force isn't there, kind of motivating these doctors to use Cologuard. So maybe if you can just comment on pre and post COVID and kind of '21.

Yes. Well, the question is when is post COVID. So it's too early to tell right now what the -- where we will be by 2021. I think, just to tick off, the trends is the backlog of colonoscopy, the value of at-home screening, the broad reimbursement coverage for Cologuard and the increasing awareness of that.

As you mentioned, the data indicating that both primary care physicians and GIs are more likely to view Cologuard as the solution for patients moving forward, all we think move things in the positive direction. The reason there is -- always reason for caution in this environment is nobody knows what the next month, much less the next 6 to 9 months hold.

So right at the high level, Dan, the thing that I'm really excited about is the team is energized. Look, we've asked people throughout this company to share in the financial pain that is occurring. And if anything, that seems to have brought this team together. People are very, very committed to the overall call -- cause. And I think we come out of this as a stronger company with stronger brands both in Cologuard and, don't forget, Oncotype DX, both the breast and prostate test. Their underlying values and the value that, that team has created, along with now they can't wait to get the PCDx test in their hands, that's the Paradigm tissue selection test, both the urology team and the oncology team. And so there are a lot of positives that can come out of even a storm like this.

And your last question comes from the line of Luke Sergott with Evercore ISI.

Just real quick, I guess, on the COVID testing. Have you given out the number of tests that you've been running per week over the last month?

Thanks, Luke. This is Jeff. We have not given that number. What we've said is that our lab capacity today is at least 60,000, and there's room to ramp that further if the demand is there. And what we are seeing is a lot of demand out there. Clearly, there's a lack of testing capacity in this country, so we're pleased to be part of the solution here.

The team, as Kevin said before, has really rallied to bring this test up and scale it very, very quickly. I'm not going to provide guidance on the path forward here, how much it will contribute. It's safe to say it will be -- we expect it to be a nice contributor going forward. That said, we hope we can get out of this business as soon as possible and COVID is something we never have to talk about again.

Oh, man. That would be nice. And just a follow-on from that. So let's say that Cologuard and things come back online in the back half a little better than you expected, given the telehealth and everything that everybody has been digging in on today, is there a chance that there could be supply chain issues as the overall diagnostic industrial complex shifts their volumes to all types of COVID testing?

Well, one of the -- this is Kevin. One of the values that we didn't think about when we brought up COVID testing is that there is going to be preference given to labs that do COVID testing. And since we adapted the Cologuard instruments, the liquid handling instruments and our PCR instruments, to COVID testing, some of those critical supply chain items, we will be able to more readily access those key components than others. We feel good about our supply chain. It is something that we pay a lot of attention to on a daily basis. And we're in good shape.

And I just want to reiterate what Jeff said. We're really proud of the nimbleness of this team to bring up COVID testing at scale like that on our own instrument. It was a feat of people working nights and weekends around the clock to reconfigure, rewrite the code on these instruments through all of the validation testing and then create a workflow and capability to deliver this to large states in this country. So we expect, over time, to utilize all of that capacity and likely to grow it based on the calls that are coming to us. And we're being cautious about taking on too much here to make sure that there are no supply chain issues because we want to deliver on our promise.

All right. I would now like to turn the call over back to your host.

Thanks all for joining us to review our first quarter results. And mostly, thanks to our employees for their unwavering commitment to our mission. In just the past couple of months, this team has made Cologuard more accessible through telehealth, developed a COVID test to help fight against the coronavirus, and the team has met increasing volume demand in our Precision Oncology lab. They closed an important acquisition, extending our leadership in advanced cancer diagnostics, so we are positioned to provide answers to patients and providers looking for more accessible and precise ways to detect and treat cancer, and we plan to play an even greater role in screening for cancer and guiding therapy decisions in the post-COVID world. Thank you.

All right. Ladies and gentlemen, this does conclude today's conference call. You may now all disconnect.