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What changed in EXACT SCIENCES CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of EXACT SCIENCES CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+468 added−457 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-21)

Top changes in EXACT SCIENCES CORP's 2024 10-K

468 paragraphs added · 457 removed · 322 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

85 edited+44 added−52 removed83 unchanged
Biggest changeCertain of these companies have or may be acquired by, or enter into commercial partnerships with, larger companies with greater expertise or resources, which may increase their ability to offer or develop products that compete with ours. 10 Table of Contents Some of our current and potential competitors may have significant competitive advantage over us, which may make them more attractive to hospitals, clinics, group purchasing organizations and physicians, including: • technology breakthroughs that we do not have access to; • entrenched leaders in new areas that we are entering; and • alternative distribution models that customers prefer.
Biggest changeCertain of these companies have or may be acquired by, or enter into commercial partnerships with, larger companies with greater expertise, resources or brand recognition, which may increase their ability to offer or develop products that compete with ours.
Johns Hopkins University Through the acquisition of Thrive Earlier Detection Corporation (“Thrive”), we acquired a worldwide exclusive license agreement with JHU for use of several JHU patents and licensed know-how. We are seeking to utilize the JHU licensed technology to develop and commercialize a blood-based MCED test.
Johns Hopkins University Through the acquisition of Thrive Earlier Detection Corporation (“Thrive”), we acquired a worldwide exclusive license agreement with The Johns Hopkins University for use of several JHU patents and licensed know-how. We are seeking to utilize the JHU licensed technology to develop and commercialize a blood-based MCED test.
Some payers may apply various medical management requirements, including a requirement that they give prior authorization for an precision oncology test before they are willing to pay for it. Where there is no payer policy in place, we pursue third-party reimbursement on behalf of each patient on a case-by-case basis.
Some payers may apply various medical management requirements, including a requirement that they give prior authorization for a precision oncology test before they are willing to pay for it. Where there is no payer policy in place, we pursue third-party reimbursement on behalf of each patient on a case-by-case basis.
From facilitated workshops and podcasts to eLearning modules, individual development plans, mentoring and coaching, we have invested in developmental capabilities to meet our employees at any stage of their career and help them grow. We have a variety of tools to facilitate developmental feedback.
From facilitated workshops to eLearning modules, individual development plans, mentoring, and coaching, we have invested in developmental capabilities to meet our employees at any stage of their career and help them grow. We have a variety of tools to facilitate developmental feedback.
More than 55% of Americans between the ages of 45 and 85 who are at average risk for colorectal cancer are not up-to-date with screening according to the American Cancer Society’s (“ACS”) colorectal cancer screening guidelines. We believe our Cologuard test helps more people get screened for colorectal cancer.
More than 40% of Americans between the ages of 45 and 85 who are at average risk for colorectal cancer are not up-to-date with screening according to the American Cancer Society’s (“ACS”) colorectal cancer screening guidelines. We believe our Cologuard test helps more people get screened for colorectal cancer.
Our total lab capacity at both facilities is approximately seven million Cologuard tests per year, with the opportunity to add additional capacity, if needed. We currently manufacture our Cologuard test at two facilities in Madison, Wisconsin. We are committed to manufacturing and providing medical devices and related products that meet customer expectations and applicable regulatory requirements.
Our total lab capacity at both facilities is approximately seven million Cologuard tests per year, with the opportunity to add additional capacity, if needed. We currently manufacture our Cologuard and Cologuard Plus tests at our facilities in Madison, Wisconsin. We are committed to manufacturing and providing medical devices and related products that meet customer expectations and applicable regulatory requirements.
Most commercial payers have issued positive coverage decisions for our Cologuard test, and we continue to negotiate contracts with payers to include our Cologuard test as an in-network service. In-network agreements with payers have varying terms and conditions, including reimbursement rate, term, and termination. Other payers may perform post-payment reviews or audits, which may lead to payment recoupments.
Most commercial payers have issued positive coverage decisions for our Cologuard test, and we have negotiated contracts with most payers to include our Cologuard test as an in-network service. In-network agreements with payers have varying terms and conditions, including reimbursement rate, term, and termination. Other payers may perform post-payment reviews or audits, which may lead to payment recoupments.
Reimbursement of our precision oncology tests by third-party payers is essential to our commercial success. Where there is a payer policy, contract or agreement in place, we bill the third-party payer, the hospital or referring laboratory and/or the patient (for deductibles and coinsurance or co-payments, where applicable) in accordance with established policy, contract or agreement terms.
Reimbursement of our precision oncology tests by third-party payers is essential to our commercial success. Where there is a payer policy, contract or agreement in place, we bill the third-party payer, the hospital or referring laboratory and/or the patient (for deductibles and coinsurance or co-payments, where applicable) in accordance with established policy, contract or 9 Table of Contents agreement terms.
Our Oncotype DX breast cancer test is reimbursed for certain patients in the public health systems in more than ten countries. We are exploring opportunities to establish local laboratories in certain locations outside of the U.S. and established local testing capacity in Germany beginning in late 2021.
Our Oncotype DX breast cancer test is reimbursed for certain patients in the public health systems in more than ten countries. 8 Table of Contents We are exploring opportunities to establish local laboratories in certain locations outside of the U.S. and established local testing capacity in Germany beginning in late 2021.
Many state laws are not preempted by HIPAA because they are more stringent or are broader in scope than HIPAA including the California Consumer Privacy Act of 2018 (“CCPA”), including expansions and amendments to CCPA pursuant to the California Privacy Rights Act which became operative on January 1, 2023.
Many state laws are not preempted by HIPAA because they are more stringent or are broader in scope than HIPAA, including the California Consumer 13 Table of Contents Privacy Act of 2018 (“CCPA”), including expansions and amendments to CCPA pursuant to the California Privacy Rights Act which became operative on January 1, 2023.
Some states have similar transparency laws. 15 Table of Contents International When marketing our tests outside of the U.S., we are subject to other countries' regulatory requirements governing human clinical testing, export of tissue, marketing approval for our products, and performance and reporting of tests in each market.
Some states have similar transparency laws. International When marketing our tests outside of the U.S., we are subject to other countries' regulatory requirements governing human clinical testing, export of tissue, marketing approval for our products, and performance and reporting of tests in each market.
Under some patents and patent applications, we have elected to allow exclusive options to lapse without exercising the option. The joint ownership agreements generally are in the form of material data transfer agreements that were executed at the onset of our collaborations with third parties.
Under some patents and patent applications, we have elected to allow exclusive options to lapse without exercising the option. The joint ownership agreements generally are in the form of agreements that were executed at the onset of our collaborations with third parties.
This process may involve, among other things, successfully completing clinical trials and submitting a premarket clearance notice or filing a premarket approval application with the FDA. Laboratory Developed Tests (“LDTs”) Our Oncotype tests, OncoExTra test, and certain other tests we offer are regulated as LDTs, and we may seek to commercialize certain of our products in development as LDTs.
This process may involve, among other things, successfully completing clinical trials and submitting a premarket clearance notice or filing a premarket approval application with the FDA. 12 Table of Contents Laboratory Developed Tests Our Oncotype ® tests, OncoExTra test, and certain other tests we offer are regulated as LDTs, and we may seek to commercialize certain of our products in development as LDTs.
To help our eligible employees achieve financial well-being and share in the success they create, we offer competitive base pay, a company-sponsored 401(k) plan with employer matching, retirement planning resources, employee stock purchase plan opportunities, stock awards upon hire and annually thereafter, and annual cash bonus programs.
To help our eligible employees achieve financial well-being and share in the success they create, we offer competitive base pay, a company-sponsored 401(k) plan with employer matching, retirement planning resources, employee stock purchase plan opportunities, stock awards, and annual cash bonus programs.
In addition, it is illegal for a company that reports to the Securities and Exchange Commission (“SEC”) to have false or inaccurate books or records or to fail to maintain a system of internal accounting controls.
In addition, it is illegal for a company that reports to the Securities and 15 Table of Contents Exchange Commission (“SEC”) to have false or inaccurate books or records or to fail to maintain a system of internal accounting controls.
Our issued U.S. patents expire at various times between 2024 and 2043. In addition, we have pending patent applications in the U.S. and in other countries, including provisional and non-provisional filings. Some of these U.S. patent applications also have corresponding pending or granted applications under the Patent Cooperation Treaty in Canada, Europe, Japan, Australia, and other jurisdictions.
Our issued U.S. patents expire at various times between 2025 and 2044. In addition, we have pending patent applications in the U.S. and in other countries, including provisional and non-provisional filings. Some of these U.S. patent applications also have corresponding pending or granted applications under the Patent Cooperation Treaty in Canada, Europe, Japan, Australia, and other jurisdictions.
In order to increase the pool of diverse candidates for open positions, we partner with community resource groups and participate in diversity-focused career recruiting efforts. Our talent strategy and inclusion team, led by our Executive VP of Human Resources, is responsible for developing and implementing our inclusion and diversity programs.
In order to increase the pool of diverse candidates for open positions, we partner with community resource groups and participate in diversity-focused career recruiting efforts. Our talent strategy and inclusion team, led by our Executive Vice President, Human Resources and Service, is responsible for developing and implementing our inclusion and diversity programs.
Our peer-reviewed study, “Multi-target Stool DNA Testing for Colorectal-Cancer Screening,” published in the New England Journal of Medicine in April 2014, highlighted the performance of the Cologuard test in its 10,000 patient Deep-C clinical trial: • Cancer Sensitivity: 92% • Stage I and II Cancer Sensitivity: 94% • High-Grade Dysplasia Sensitivity: 69% • Specificity: 87% We believe the competitive advantages of sDNA screening provide a significant market opportunity.
Our peer-reviewed study, “Multitarget Stool DNA Testing for Colorectal-Cancer Screening,” published in the New England Journal of Medicine in April 2014, highlighted the performance of the Cologuard test in its 10,000 patient Deep-C clinical trial: • Cancer Sensitivity: 92% • Stage I and II Cancer Sensitivity: 94% 4 Table of Contents • High-Grade Dysplasia Sensitivity: 69% • Specificity: 87% We believe the competitive advantages of sDNA screening provide a significant market opportunity.
Reimbursement for Future Products Successful commercialization of our newly developed products will also depend on our ability to obtain and maintain reimbursement at adequate reimbursement rates from government insurance plans, managed care organizations, commercial insurance plans, and public healthcare systems outside the U.S. for such products.
Reimbursement for Future Products Successful commercialization of our newly developed products, including our Oncodetect and our Cancerguard tests, will also depend on our ability to obtain and maintain reimbursement at adequate reimbursement rates from government insurance plans, managed care organizations, commercial insurance plans, and public healthcare systems outside the U.S. for such products.
The U.S. market for colorectal cancer screening is large, consisting of nearly 110 million eligible individuals between the ages of 45 and 85, and has attracted numerous competitors.
Screening Competition The U.S. opportunity for colorectal cancer screening is large, consisting of nearly 110 million eligible individuals between the ages of 45 and 85, and has attracted numerous competitors.
Palmetto, the MAC that establishes the coverage and coding policies for most of our tests under Medicare, developed the Molecular Diagnostic Services Program (“MolDx”), to identify and establish Medicare coverage for molecular diagnostic tests that fall within the scope of its Molecular Diagnostic Test local coverage decision (“LCD”).
Palmetto, the MAC that establishes the coverage and coding policies for most of our tests under Medicare, developed the MolDX, to identify and establish Medicare coverage for molecular diagnostic tests that fall within the scope of its Molecular Diagnostic Test local coverage decision (“LCD”).
As of December 31, 2023, we had 208 issued patents in the U.S. and 878 issued patents outside of the U.S., which includes validated patents issued by the European Patent Office in key E.U. countries, covering genes and methods that are components of the Cologuard test, Oncoguard ® Liver test, Oncotype DX tests, pipeline technologies or research methods, and platform technologies.
As of December 31, 2024, we had 257 issued patents in the U.S. and 930 issued patents outside of the U.S., which includes validated patents issued by the European Patent Office in key E.U. countries, covering genes and methods that are components of the Cologuard test, Oncoguard ® Liver test, Oncotype DX tests, pipeline technologies or research methods, and platform technologies.
To facilitate talent attraction and retention, we strive to make Exact Sciences a diverse and inclusive workplace, with opportunities for our employees to grow and develop in their careers, supported by strong compensation, benefits, and health and wellness programs. At December 31, 2023, we had approximately 6,600 full-time, part-time and temporary employees, 6,500 of which were full-time employees.
To facilitate talent attraction and retention, we strive to make Exact Sciences a diverse and inclusive workplace, with opportunities for our employees to grow and develop in their careers, supported by strong compensation, benefits, and health and wellness programs. At December 31, 2024, we had approximately 7,000 full-time, part-time and temporary employees, 6,900 of which were full-time employees.
Thanks, in part, to our compelling mission, competitive benefits and the positive results of our diversity and inclusion program, women make up approximately 54% of total employees (full-time and part-time), and 49% of management positions. Our eleven-member Board of Directors includes four female members to support diversity of opinion and perspective at the board level.
Thanks, in part, to our compelling mission, competitive benefits and the positive results of our diversity and inclusion program, women make up approximately 53% of total employees (full-time and part-time), and 47% of management positions. Our ten-member Board of Directors includes four female members to support diversity of opinion and perspective at the board level.
This customer-oriented support activity is focused on encouraging and helping patients complete Cologuard tests that have been ordered for them by their providers. We undertake a variety of activities to promote patient adherence including letters, text messages, online chat, emails, and phone calls.
This customer-oriented support activity is focused on encouraging and helping patients complete Cologuard tests that have been ordered for them by their providers. We undertake a variety of health care activities to promote patient adherence including letters, text messages, online chat, emails, phone calls, and other direct-to-consumer digital efforts.
Gallen International Breast Cancer Expert Panel and European Society for Medical Oncology. Our Oncotype DX breast cancer test has been recommended to guide certain patients’ chemotherapy treatment decisions by the National Institute for Health and Care Excellence in England, the Gynecologic Oncology Working Group in Germany, and the Japan Breast Cancer Society.
Our Oncotype DX breast cancer test has been recommended to guide certain patients’ chemotherapy treatment decisions by the National Institute for Health and Care Excellence in England, the Gynecologic Oncology Working Group in Germany, and the Japan Breast Cancer Society.
As we seek to enhance our product portfolio and advance our pipeline, we expect that our research and development expenditures will continue to be a significant portion of our operating expenditures. Commercial Operations We have one core commercial function with specific teams focused on screening, precision oncology, and international markets.
As we seek to enhance our product portfolio and advance our pipeline, we expect that our research and development expenditures will continue to be a significant portion of our operating expenditures. Commercial Operations Our commercial functions include specific teams focused on screening, precision oncology, and international markets.
Additional Part B cost sharing for procedures performed in addition to follow-on colonoscopy (e.g. polyp removal or pathology) will be phased out by 2030. • We believe the laws of approximately 30 states currently mandate coverage of our Cologuard test by certain health insurance plans.
Additional Part B cost sharing for procedures performed in addition to follow-on colonoscopy (e.g. polyp removal or pathology) will be phased out by 2030. • We believe that most states' laws mandate coverage of our Cologuard test by certain health insurance plans.
Our commercial infrastructure, including our sales force, managed care group, and patient support network, is critical to the success of our precision oncology products. In our domestic sales, marketing and reimbursement efforts, we interact directly with medical, radiation, and surgical oncologists, pathologists, and payers.
Our commercial infrastructure, including our sales force, managed care group, and patient support network, is critical to the success of our precision oncology products. In our domestic sales, marketing, and reimbursement efforts, we interact directly with medical, radiation, and surgical oncologists, pathologists, and payers. We employ a direct sales approach that targets oncologists and cancer surgeons.
International Commercial Operations We commercialize or plan to commercialize our Oncotype ® tests outside the United States through employees in Canada, Japan, and a number of European countries, as well as through exclusive distribution agreements. We have provided our Oncotype tests in approximately 120 countries. We do not offer our Cologuard test outside of the U.S.
International Commercial Operations We commercialize or plan to commercialize our Oncotype ® tests internationally through employees in Canada, Japan, and a number of European countries, as well as through exclusive distribution agreements. We have provided our Oncotype tests in approximately 120 countries outside of the U.S.
The agreement terms would require us to pay single-digit sales-based royalties and up to $45.0 million in sales-based milestone payments if net sales of a licensed product using JHU proprietary data reach specified levels. In addition to granting us a license to the covered JHU intellectual property, JHU provides us with research and development assistance pursuant to other collaboration arrangements.
The agreement terms would require us to pay single-digit sales-based royalties and up to $45.0 million in sales-based milestone payments for each JHU licensed product that reaches specified net sales levels. In addition to granting us a license to the covered JHU intellectual property, JHU provides us with research and development assistance pursuant to other collaboration arrangements.
Medicare Part B covers our Cologuard test once every three years for beneficiaries who are age 45 to 85, asymptomatic and at average risk for developing colorectal cancer. 8 Table of Contents The following laws and regulations establish coverage requirements relevant to our Cologuard test. • Section 2713 of the Patient Protection and Affordable Care Act (“ACA”) mandates that certain health insurers cover, without imposing any patient cost-sharing, evidence-based items or services that have in effect a rating of “A” or “B” in the current recommendations of USPSTF (“ACA Mandate”), which includes follow-up colonoscopy after a positive non-invasive stool-based screening test be covered without cost sharing. • Federal regulations require that Medicare Advantage plans cover “A” or “B” rated preventive services without patient cost-sharing, and CMS has issued a notice affirming that Medicare Advantage plans must include coverage of our Cologuard test every three years without patient cost-sharing including coverage of a follow-up colonoscopy after a positive non-invasive stool-based screening test effective January 1, 2023.
The following laws and regulations establish coverage requirements relevant to our Cologuard test. • Section 2713 of the Patient Protection and Affordable Care Act (“ACA”) mandates that certain health insurers cover, without imposing any patient cost-sharing, evidence-based items or services that have in effect a rating of “A” or “B” in the current recommendations of USPSTF (“ACA Mandate”), which includes follow-up colonoscopy after a positive non-invasive stool-based screening test be covered without cost sharing. • Federal regulations require that Medicare Advantage plans cover “A” or “B” rated preventive services without patient cost-sharing, and CMS has issued a notice affirming that Medicare Advantage plans must include coverage of our Cologuard test every three years without patient cost-sharing including coverage of a follow-up colonoscopy after a positive non-invasive stool-based screening test effective January 1, 2023.
From March 2020 through June 2023, we partnered with various customers, including the State of Wisconsin Department of Health Services, to administer testing. Customers were responsible for employing trained personnel to collect specimens.
COVID-19 Testing Business We discontinued our COVID-19 testing operations in the second quarter of 2023. From March 2020 through June 2023, we partnered with various customers, including the State of Wisconsin Department of Health Services, to administer testing. Customers were responsible for employing trained personnel to collect specimens.
Reimbursement for our Tests Reimbursement for our Cologuard Test Our Cologuard test has broad reimbursement coverage from Medicare and commercial payers. Updated USPSTF colorectal cancer screening guidelines became final in May 2021 and after a transition period, mandate coverage of our Cologuard test beginning at age 45 for ACA covered health plans.
Reimbursement for our Tests Reimbursement for our Cologuard Test Our Cologuard test has broad reimbursement coverage from Medicare and commercial payers. Updated USPSTF colorectal cancer screening guidelines mandate coverage of our Cologuard test beginning at age 45 for ACA covered health plans.
We discontinued our COVID-19 testing in the second quarter of 2023. A majority of our internally developed Oncotype tests for domestic and international patients are currently processed in our CLIA-certified and CAP-accredited clinical reference laboratory facilities in Redwood City, California.
A majority of our internally developed Oncotype tests for domestic and international patients are currently processed in our CLIA-certified and CAP-accredited clinical reference laboratory facilities in Redwood City, California.
Our Cologuard test faces competition from procedure-based detection technologies such as colonoscopy, flexible sigmoidoscopy, “virtual” colonoscopy—a radiological imaging approach that visualizes the inside of the bowel by CT scan (spiral computerized axial tomography)—as well as other common screening tests, such as the fecal occult blood test (“FOBT”) and the fecal immunochemical test (“FIT”).
Our Cologuard and Cologuard Plus tests face competition from procedure-based detection technologies such as colonoscopy, flexible sigmoidoscopy, “virtual” colonoscopy—a radiological imaging approach that visualizes the inside of the bowel by CT scan (spiral computerized axial tomography)—as well as other stool-based colorectal cancer tests (including the fecal occult blood test, the fecal immunochemical test (“FIT”)), capsule endoscopy, and liquid biopsy tests.
We focus on specific healthcare providers based on a combination of Cologuard order history and ordering potential data. We also focus on healthcare provider groups and larger regional and national health systems. A critical part of the value proposition of our Cologuard test is its adherence program, which involves active engagement with patients and providers by our adherence team.
We also focus on healthcare provider groups and larger regional and national health systems through large, organized screening programs. A critical part of the value proposition of our Cologuard test is its adherence program, which involves active engagement with patients and providers by our adherence team.
LDTs are clinical laboratory tests that are developed and validated by a laboratory for its own use. The FDA historically has taken the position that it has the authority to regulate such tests as medical devices under the FDCA but has for the most part exercised enforcement discretion and has not required clearance or approval of LDTs prior to marketing.
The FDA historically has taken the position that it has the authority to regulate such tests as medical devices under the FDCA and until recently has for the most part exercised enforcement discretion and not required clearance or approval of LDTs prior to marketing.
In addition, we have been awarded with a Great Place to Work Certification ® in 2023, Forbes' Best-in-State Employer in 2023, and Wisconsin State Journal Top Workplaces in 2023. 18 Table of Contents Compensation and Benefits Attracting the best talent starts with offering industry-leading compensation and benefits.
In addition, we have been awarded with a Great Place to Work Certification ® , Gallup Exceptional Workplace Award, and Wisconsin State Journal Top Workplaces in 2024. Compensation and Benefits Attracting the best talent starts with offering industry-leading compensation and benefits.
Our current products and services focus on screening and precision oncology tests. Our Screening Tests Cologuard Test Our flagship screening product, the Cologuard test, is a patient-friendly, non-invasive, stool-based DNA (“sDNA”) screening test that utilizes a multi-target approach to detect DNA and hemoglobin biomarkers associated with colorectal cancer and pre-cancer.
Our Screening Tests Cologuard Test Our flagship screening product, the Cologuard test, is a patient-friendly, non-invasive, stool-based DNA (“sDNA”) screening test that utilizes a multi-target approach to detect DNA and hemoglobin biomarkers associated with colorectal cancer and pre-cancer. Eleven biomarkers are targeted that have been shown to be strongly associated with colorectal cancer and pre-cancer.
Overpayments may occur from time to time in the healthcare industry without any fraudulent intent. For example, overpayments may result from mistakes in reimbursement claim forms or from improper processing by governmental payers. We maintain protocols intended to identify any overpayments. From time to time we have identified overpayments and made refunds to government payers.
These amendments could subject our procedures for identifying and processing payments to greater scrutiny. Overpayments may occur from time to time in the healthcare industry without any fraudulent intent. For example, overpayments may result from mistakes in reimbursement claim forms or from improper processing by governmental payers. We maintain protocols intended to identify any overpayments.
We adhere to manufacturing and safety standards required by federal, state, and local laws and regulations and operate our manufacturing facilities under a quality management system. We purchase certain components for our Cologuard test from third-party suppliers and manufacturers. Beginning in March 2020, we allocated space at our clinical laboratories in Madison, Wisconsin to process our COVID-19 tests.
We adhere to manufacturing and safety standards required by federal, state, and local laws and regulations and operate our manufacturing facilities under a quality management system. We purchase certain components for our Cologuard and Cologuard Plus tests from third-party suppliers and manufacturers.
To avoid liability, we must carefully and accurately code claims for reimbursement, proactively monitor the accuracy and appropriateness of Medicare claims and payments received, diligently investigate any credible information indicating that we may have received an overpayment, and promptly return any overpayments. Federal and State “Self-Referral” and “Anti-Kickback” Restrictions Anti-Kickback Statute.
From time to time we have identified overpayments and made refunds to government payers. To avoid liability, we must carefully and accurately code claims for reimbursement, proactively monitor the accuracy and appropriateness of Medicare claims and payments received, diligently investigate any credible information indicating that we may have received an overpayment, and promptly return any overpayments.
Based on our experience to date, we expect some seasonal variations in our financial results due to a variety of factors, such as the year-end holiday period and other major holidays, vacation patterns of both patients and healthcare providers, climate and weather conditions in our markets, seasonal conditions that may affect medical practices and patient and provider activity, including influenza outbreaks that may reduce the percentage of patients that can be seen or decrease patient’s willingness to visit medical practices, and other factors relating to the timing of patient deductibles and co-insurance limits. 12 Table of Contents Regulation Certain of our activities are subject to regulatory oversight by the FDA under provisions of the Federal Food, Drug, and Cosmetic Act (“FDCA”) and regulations thereunder, including regulations governing the development, marketing, labeling, promotion, manufacturing, distribution, and export of diagnostic products.
Based on our experience to date, we expect some seasonal variations in our financial results due to a variety of factors, such as the year-end holiday period and other major holidays, vacation patterns of both patients and healthcare providers, climate and weather conditions in our markets, seasonal conditions that may affect medical practices and patient, payer, and provider activity, including influenza outbreaks that may reduce the percentage of patients that can be seen or decrease patient’s willingness to visit medical practices, and other factors relating to the timing of patient deductibles and co-insurance limits.
Our Cologuard test is regulated by the FDA as a Class III medical device. The FDA granted premarket approval (“PMA”) for our Cologuard test in August 2014. The regulations governing our Cologuard test’s approval place substantial restrictions on how our Cologuard test is marketed and sold, specifically, by prescription only.
Our Cologuard and Cologuard Plus tests are regulated by the FDA as a Class III medical devices. The FDA granted premarket approval (“PMA”) for our Cologuard and Cologuard Plus tests in August 2014 and October 2024, respectively. The regulations governing our PMA-approved tests’ approval place substantial restrictions on how our tests may be marketed and sold, specifically, by prescription only.
State Medicaid agencies generally assign a reimbursement rate for our Cologuard test equal to or less than the prevailing Medicare rate, often determined by state law as a percentage of the Medicare reimbursement rate. Reimbursement for our Precision Oncology Tests We depend on government insurance plans, managed care organizations, and commercial insurance plans for reimbursement of our precision oncology tests.
State Medicaid agencies generally assign a reimbursement rate for our Cologuard test equal to or less than the prevailing Medicare rate, often determined by state law as a percentage of the Medicare reimbursement rate.
Worldwide, it is estimated that there are approximately 2.3 million newly diagnosed cases of breast cancer each year. The Oncotype DX Breast Recurrence Score test examines the activity of 21 genes in a patient’s breast tumor tissue to provide personalized information for tailoring treatment based on the biology of the patient’s individual disease.
The Oncotype DX Breast Recurrence Score test examines the activity of 21 genes in a patient’s breast tumor tissue to provide personalized information for tailoring treatment based on the biology of the patient’s individual disease.
We are exploring opportunities to make available outside of the U.S. our Cologuard test and other current and future products. Inclusion of our products in guidelines and quality measures will be critical to our international success. The Oncotype DX breast cancer test is recognized in international guidelines issued by the St.
We do not offer our Cologuard test, Cancerguard test, or Oncodetect test outside of the U.S. We are exploring opportunities to make these tests and other future products available outside of the U.S. Inclusion of our products in guidelines and quality measures will be critical to our international success.
The test is supported by multiple rigorous clinical validation studies, including the landmark TAILORx and RxPONDER studies, confirming the test’s ability to predict the likelihood of chemotherapy benefit as well as the chance of cancer recurrence in certain common types of early-stage breast cancer.
The test is supported by multiple rigorous clinical validation studies, including the landmark TAILORx and RxPONDER studies, confirming the test’s ability to predict the likelihood of chemotherapy benefit as well as the chance of cancer recurrence in the most common sub-type of early-stage breast cancer. 5 Table of Contents As the only test proven to predict both the likelihood of chemotherapy benefit and cancer recurrence, the Oncotype DX Breast Recurrence Score test is recognized globally as standard of care and is included in all major breast cancer treatment guidelines.
PreventionGenetics’ laboratory provides more than 5,000 predefined genetic tests for nearly all clinically relevant genes, additional custom panels, and comprehensive germline whole exome and whole genome sequencing tests in addition to our hereditary cancer test, Riskguard. We believe that we currently have sufficient capacity to process all of our tests.
We process our predefined genetic tests for nearly all clinically relevant genes, additional custom panels, and comprehensive germline whole exome and whole genome sequencing tests in addition to our hereditary cancer test, Riskguard at our CLIA-certified and CAP-accredited DNA testing laboratory in Marshfield, Wisconsin.
Action by the FDA to phase out its current policy of enforcement discretion over LDTs may materially impact our development and commercialization of LDTs, including our Oncotype tests. 13 Table of Contents Laboratory Certification, Accreditation, and Licensing We are also subject to U.S. and state laws and regulations regarding the operation of clinical laboratories.
Even if the LDT Rule remains in its current form, the FDA will likely develop new policies to implement the rule that may materially impact our development and commercialization of LDTs, including our Oncotype tests. Laboratory Certification, Accreditation, and Licensing We are also subject to U.S. and state laws and regulations regarding the operation of clinical laboratories.
We face competition from a variety of sources, including Ambry Genetics, a subsidiary of Konica Minolta Inc.; Myriad Genetics, Inc.; Invitae; Natera; Color Health, Inc.; and Sema4 Genomics; a few large, established general testing companies such as Laboratory Corporation of America Holdings and Quest Diagnostics Incorporated; and clinical laboratories in an academic or healthcare provider setting that perform clinical genetic testing on behalf of their affiliated institutions.
We face competition from a variety of sources, including Ambry Genetics (now owned by Tempus AI); Myriad Genetics, Inc.; Natera; Color Health, Inc.; GeneDx; Illumina; Variantyx; 3billion; a few large, established general testing companies such as Laboratory Corporation of America Holdings (LabCorp) and Quest Diagnostics Incorporated; and clinical laboratories in an academic or healthcare provider setting that perform clinical genetic testing on behalf of their affiliated institutions. 11 Table of Contents Precision Oncology Competition Our precision oncology products compete against a number of companies that are developing or commercializing products to profile genes and gene expression in breast and colon cancer.
In the future, we plan to begin recruiting patients for the FDA registrational Study of All comeRs (“SOAR”) trial, which we expect to be the largest prospective, interventional MCED trial ever conducted in the U.S. • MRD Test Development.
In the future, we plan to begin recruiting patients for the FDA registrational Study of All comeRs (“SOAR”) trial, which we expect to be one of the largest prospective, interventional multi-cancer screening trial ever conducted in the U.S. 7 Table of Contents Research and development, which includes our clinical study programs, accounts for a material portion of our operating expenses.
In addition, the Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) imposes criminal penalties for knowing or willful payment or offer, or solicitation or receipt, of any remuneration, whether directly or indirectly, overtly or covertly, in cash or in kind, in exchange for the referral or inducement of laboratory testing (among other healthcare services) unless a specific exception applies.
Many states have also adopted laws similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare items or services reimbursed by any source, not only the Medicare and Medicaid programs, and do not contain identical safe harbors. 14 Table of Contents In addition, the Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) imposes criminal penalties for knowing or willful payment or offer, or solicitation or receipt, of any remuneration, whether directly or indirectly, overtly or covertly, in cash or in kind, in exchange for the referral or inducement of laboratory testing (among other healthcare services) unless a specific exception applies.
Mayo Foundation for Medical Education and Research In June 2009, we entered into an exclusive, worldwide license agreement with Mayo Foundation for Medical Education and Research, under which Mayo granted us an exclusive, worldwide license to certain Mayo patents and patent applications, as well as a non-exclusive, worldwide license with regard to certain Mayo know-how.
Generally, the license agreements require us to pay single-digit royalties based on net revenues received using the technologies and may require minimum royalty amounts, milestone payments, or maintenance fees. 16 Table of Contents Mayo Foundation for Medical Education and Research In June 2009, we entered into an exclusive, worldwide license agreement with Mayo Foundation for Medical Education and Research, under which Mayo granted us an exclusive, worldwide license to certain Mayo patents and patent applications, as well as a non-exclusive, worldwide license with regard to certain Mayo know-how.
Patients who are diagnosed early in the progression of the disease — with pre-cancerous lesions or early-stage cancer — are more likely to have a complete recovery and to be treated less expensively. Colorectal cancer is the second leading cause of cancer deaths in the United States (“U.S.”) and the leading cause of cancer deaths in the U.S. among non-smokers.
Colorectal cancer can take up to 10-15 years to progress from a pre-cancerous lesion to metastatic cancer and death. Patients who are diagnosed early in the progression of the disease — with pre-cancerous lesions or early-stage cancer — are more likely to have a complete recovery and to be treated less expensively.
Cologuard Test Commercial Operations We promote our Cologuard test through a region and market-based model comprised of our health systems, primary care, market development, and inside sales team members. 7 Table of Contents Our sales team actively engages with healthcare providers and their staff to emphasize the need for colorectal cancer screening, educate them on the value of our Cologuard test, and facilitate their ability to order the test.
Our sales team actively engages with healthcare providers and payers to emphasize the need for colorectal cancer screening, educate them on the value of our Cologuard test, and facilitate their ability to order the test. We focus on specific healthcare providers and payers based on a combination of Cologuard order history and ordering potential data.
We are also required to pay Mayo up to $3.0 million in sales-based milestone payments upon cumulative net sales of each product using the licensed Mayo intellectual property reaching specified levels. 17 Table of Contents The license agreement will remain in effect, unless earlier terminated by the parties in accordance with the agreement, until the last of the licensed patents expires in 2043 (or later, if certain licensed patent applications are issued).
We are also required to pay Mayo up to $3.0 million in sales-based milestone payments upon cumulative net sales of each product using the licensed Mayo intellectual property reaching specified levels.
We enable patients to take a more active role in their cancer care and make it easy for providers to order tests, interpret results, and personalize medicine by applying real-world evidence and guideline recommendations. 5 Table of Contents Oncotype DX Breast Recurrence Score Test Our Oncotype DX Breast Recurrence Score test has been demonstrated to identify patients who are most likely to benefit from chemotherapy as well as those who may receive no clinical benefit from chemotherapy.
We enable patients to take a more active role in their cancer care and make it easy for providers to order tests, interpret results, and personalize medicine by applying real-world evidence and guideline recommendations.
We believe the large, underserved population of unscreened and inadequately screened patients represents a significant opportunity for our Cologuard test. It is widely accepted that colorectal cancer is among the most preventable, yet least prevented cancers. Colorectal cancer can take up to 10-15 years to progress from a pre-cancerous lesion to metastatic cancer and death.
Methylation, mutation, and hemoglobin results are combined in the laboratory analysis through a proprietary algorithm to provide a single positive or negative reportable result. We believe the large, underserved population of unscreened and inadequately screened patients represents a significant opportunity for our Cologuard test. It is widely accepted that colorectal cancer is among the most preventable, yet least prevented cancers.
We have undertaken a significant public relations effort to engage patients in the U.S., and launched demographically-targeted, direct-to-patient advertising campaigns in digital, social, print, and other channels. We promote our Cologuard test through a national television advertising campaign, with a majority of placements in national cable and syndicated programming widely viewed by our target patient demographic.
We have undertaken a significant marketing public relations effort to engage prospective patients in the U.S., including through the launch of targeted, direct-to-consumer advertising campaigns across national television, digital, social media, print, and audio channels.
We are in the process of expanding our existing facilities to prepare for the expected future growth in our operations. Competition We operate in a rapidly evolving and highly competitive industry. There are a number of private and public companies that offer products or have announced that they are developing products that compete with ours.
We believe that we currently have sufficient capacity to process all of our tests for at least the next 12 months. We are in the process of expanding our existing facilities to prepare for the expected future growth in our operations. 10 Table of Contents Competition We operate in a rapidly evolving and highly competitive industry.
Within 60 days of identifying and quantifying an overpayment, a provider is required to notify CMS or the Medicare contractor of the overpayment and the reason for it and return the overpayment. These amendments could subject our procedures for identifying and processing payments to greater scrutiny.
In addition, amendments to the False Claims Act impose severe penalties for the knowing and improper retention of overpayments collected from governmental payers. Within 60 days of identifying and quantifying an overpayment, a provider is required to notify CMS or the Medicare contractor of the overpayment and the reason for it and return the overpayment.
Our success depends upon our ability to protect our technologies through patent coverage and, where necessary, defend and enforce our patents in administrative proceedings and litigation.
We have intellectual property rights to a wide variety of technologies including sample preparation, sample preservation, biomarkers, gene expression and sequencing technology, and related methods and formulations. Our success depends upon our ability to protect our technologies through patent coverage and, where necessary, defend and enforce our patents in administrative proceedings and litigation.
Numerous federal and state agencies enforce the anti-fraud and abuse laws. In addition, private insurers may also bring private actions.
Numerous federal and state agencies enforce the anti-fraud and abuse laws. In addition, private insurers may also bring private actions. In some circumstances, private whistleblowers are authorized to bring fraud suits on behalf of the government against providers and are entitled to receive a portion of any final recovery.
Among women, breast cancer is the most commonly diagnosed cancer and the leading cause of cancer death. In 2024, nearly 311,000 women are expected to be diagnosed with invasive breast cancer in the U.S. according to ACS, and nearly 56,000 women are expected to be diagnosed with non-invasive (in situ) breast cancer.
In 2025, nearly 317,000 women are expected to be diagnosed with invasive breast cancer in the U.S. according to ACS, and nearly 59,000 women are expected to be diagnosed with non-invasive (in situ) breast cancer. Worldwide, it is estimated that there are approximately 2.3 million newly diagnosed cases of breast cancer each year.
Item 1. Business Overview Exact Sciences Corporation (together with its subsidiaries, “Exact,” “we,” “us,” “our” or the “Company”) is a leading, global, advanced cancer diagnostics company.
Item 1. Business Overview A leading provider of cancer screening and diagnostic tests, Exact Sciences Corporation (together with its subsidiaries, “Exact,” “we,” “us,” “our” or the “Company”) gives patients and health care professionals the clarity needed to take life-changing action earlier.
With an extensive panel of approximately 20,000 genes and 169 introns, the OncoExTra test is one of the most comprehensive genomic (DNA) and transcriptomic (RNA) panels available today. COVID-19 Testing Business We discontinued our COVID-19 testing operations in the second quarter of 2023.
With an extensive panel of approximately 20,000 genes and 169 introns, the OncoExTra test is one of the most comprehensive genomic (DNA) and transcriptomic (RNA) panels available today. Riskguard ® Test Riskguard, our hereditary cancer test, helps people understand their inherited risk of cancer, arming them with critical information to make more informed treatment decisions.
Our Cologuard test is now indicated for average risk adults 45 years of age and older.
Upon approval by the FDA in August 2014, our Cologuard test became the first and only FDA-approved sDNA non-invasive colorectal cancer screening test. Our Cologuard test is now indicated for average risk adults 45 years of age and older.
Clinical Genetic Testing We provide more than 5,000 predefined genetic tests for nearly all clinically relevant genes, additional custom panels, and comprehensive germline, whole exome (“PGxome ® ”), and whole genome (“PGnome ® ”) sequencing tests.
Genetic Testing We have an extensive menu of predefined genetic tests for nearly all clinically relevant genes, additional custom panels, and comprehensive germline, whole exome (“PGxome ® ”), and whole genome (“PGnome ® ”) sequencing tests. Our Precision Oncology Tests Our precision oncology portfolio delivers actionable genomic insights to inform prognosis and cancer treatment after a diagnosis.
More than 95% of our employees are located in the United States and none of our employees are represented by a labor union. During fiscal year 2023, our voluntary turnover rate was approximately 8%, below the healthcare industry benchmark, which is comprised of certain of our key competitors (Aon, 2023 Salary Increase and Turnover Study — Second Edition, June 2023).
During fiscal year 2024, our voluntary turnover rate was approximately 8%, below the healthcare industry benchmark, which is comprised of certain of our key competitors (Aon, 2024 Salary Increase and Turnover Study — Second Edition, June 2024). 17 Table of Contents Diversity and Inclusion We believe diversity in thought, experience, perspective, and background within our team is necessary to support our core value of innovation.
There were no material capital expenditures for environmental control facilities in the year ended December 31, 2023, and there are no material expenditures planned for such purposes for the year ended December 31, 2024. 16 Table of Contents Intellectual Property We rely on a combination of patents, patent applications, copyrights and trademarks, as well as contracts, such as confidentiality, material data transfer, and license and invention assignment agreements to protect our intellectual property rights.
Intellectual Property We rely on a combination of patents, patent applications, copyrights, and trademarks, as well as contracts, such as confidentiality, material data transfer, and license and invention assignment agreements to protect our intellectual property rights. We also rely upon trade secret laws to protect unpatented know-how and continuing technological innovation.
Other potential competitors include companies that develop diagnostic tests such as Roche Diagnostics, a division of Roche Holding, Ltd, and Siemens AG, as well as other companies and academic and research institutions.
Advances in digital pathology and artificial intelligence have the potential to replace or complement these entrenched methods and may offer value comparable to our molecular tests. Other potential competitors include companies that develop diagnostic tests such as Roche Holding, Ltd, and Siemens AG, as well as other companies and academic and research institutions.
The majority of our international precision oncology revenues come from reimbursement (directly or indirectly), payments from our distributors, and patient self-pay.
The majority of our international precision oncology revenues come from reimbursement (directly or indirectly), payments from our distributors, and patient self-pay. We have obtained coverage or other public financing for our Oncotype DX breast cancer test outside of the U.S., including coverage for certain patients in more than ten countries.
We have obtained coverage or other public financing for our breast cancer test outside of the U.S., including coverage for certain patients in Canada, France, Germany, Ireland, Israel, Italy, Japan, the Netherlands, Saudi Arabia, Spain, Sweden, Switzerland, and the United Kingdom (“U.K.”). 9 Table of Contents We expect that our international sales will be heavily dependent on the availability of reimbursement, and broadening coverage and reimbursement for our precision oncology tests and other tests outside of the United States will take years.
We expect that our international sales will be heavily dependent on the availability of reimbursement, and broadening coverage and reimbursement for our precision oncology tests and other tests outside of the United States will take years.
We plan to offer our Oncodetect test, a tumor-informed MRD test to help detect small amounts of tumor DNA that may remain in patients’ blood after they have undergone initial cancer treatment. This test will help patients and oncologists understand the success of initial treatment, guide further treatment, and monitor for cancer recurrence.
We expect to launch our Cologuard Plus test with Medicare coverage and guideline inclusion in the second quarter of 2025. 6 Table of Contents • Oncodetect - Our tumor-informed Oncodetect MRD test is designed to detect small amounts of tumor DNA that may remain in patients’ blood after they have undergone initial treatment.
Thanks, in large part, to our training and development investments, in 2023 we were able to fill 38% of our open positions with internal candidates. Financial Information See our consolidated financial statements included elsewhere in this Form 10-K and accompanying notes to the consolidated financial statements. Available Information We were incorporated in the State of Delaware on February 10, 1995.
Thanks, in large part, to our training and development investments, in 2024 we were able to fill 35% of our open positions with internal candidates.
Historically, our principal competition for our precision oncology tests has also come from existing diagnostic methods used by pathologists and oncologists which can be difficult to compete with or supplement.
With respect to our MRD test in development, each of Natera, Tempus AI, Guardant, NeoGenomics, Myriad Genetics, Inc., Quest Diagnostics, and Personalis have commercially available competitive MRD tests or have such tests in development. Historically, our principal competition for our precision oncology tests has also come from existing diagnostic methods used by pathologists and oncologists.
Specimens were sent to our laboratory in Madison, Wisconsin, where we ran the assay in our laboratories and provided test results to ordering providers. 6 Table of Contents Pipeline Research and Development Our research and development efforts are focused on developing new products and enhancing existing products to address unmet cancer needs and expand the clinical utility and addressable patient populations for our existing tests.
Specimens were sent to our laboratory in Madison, Wisconsin, where we ran the assay in our laboratories and provided test results to ordering providers.
As noted below, a number of companies are developing liquid biopsy tests for colorectal cancer screening, as well as other applications. We also are aware of at least three companies, Geneoscopy, Mainz Biomed, and Prescient Metabiomics, that are seeking to develop or have developed stool-based colorectal cancer tests in the United States.
In the past year, Geneoscopy, Inc. (“Geneoscopy”) received FDA approval for its ColoSense stool-based test which will compete directly with our Cologuard tests in the United States. We are aware of at least two other companies (Mainz Biomed and Prescient Metabiomics) who are developing stool-based colorectal cancer screening tests. We are also aware of many companies including Guardant Health, Inc.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Relating to Product Development, Commercialization and Sales of our Products • The success of our Cologuard test, our Precision Oncology tests, and any other screening or diagnostic product or service we may offer or develop will depend on the degree of market acceptance by healthcare providers, patients, healthcare payers, and others in the medical community. • Recommendations, guidelines, and quality metrics issued by various organizations may significantly affect payers’ willingness to cover, and healthcare providers’ willingness to prescribe or order, our products. • We expect to continue to make significant investments in our research and development efforts, which may not be successful. • Our dependence on distributors for sales in many markets outside of the U.S. could limit or prevent us from selling our tests in those markets and impact our revenue.
Biggest changeRisks Relating to Product Development, Commercialization and Sales of our Products • The success of the screening and diagnostic products and services we currently offer or may offer in the future will depend on the degree of market acceptance by healthcare providers, patients, healthcare payers, and others in the medical community. • Uncertainty in the development and commercialization of our new tests or services could materially adversely affect our business, financial condition and results of operations. • If we do not successfully manage the launch and marketing of new products or services, our financial results could be adversely affected. • Recommendations, guidelines, and quality metrics issued by various organizations may significantly affect payers’ willingness to cover, and healthcare providers’ willingness to prescribe or order, our products. • We expect to continue to make significant investments in our research and development efforts, which may not be successful. • Interim, topline and preliminary data from our clinical studies that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data. • Our industry is subject to rapid change, which could make our current products and any future products we may develop, obsolete. • The sizes of the markets for our current and future products have not been established with precision, and may be smaller than we estimate. • Our dependence on distributors for sales in many countries outside of the U.S. could limit or prevent us from selling our tests in those countries and impact our revenue.
We are subject to regulation in the U.S. by both the federal government and the states in which we conduct our business, as well as in other jurisdictions outside of the U.S., including: • Federal, state, and local laws regarding the use, storage, handling and disposal of medical and hazardous waste, as well as regulations relating to the safety and health of laboratory employees; • the Federal Anti-Kickback Statute and state anti-kickback prohibitions and EKRA; • the Federal Physician Self-Referral Law, commonly known as the Stark Law, and the state equivalents; • the HIPAA, the CCPA, including expansions and amendments pursuant to the California Privacy Rights Act, and other state privacy laws; • Federal, state, and local consumer protection laws governing communications, including the Telephone Consumer Protection Act (“TCPA”) and the Controlling the Assault of Non-Solicited Pornography and Marketing Act (“CAN-SPAM Act”); • the Medicare civil money penalty and exclusion requirements; • the Federal False Claims Act civil and criminal penalties and state equivalents; and • the FCPA, the United Kingdom Anti-Bribery Act, the GDPR and other national or provincial laws protecting personal information, the E.U.
We are subject to regulation in the U.S. by both the federal government and the states in which we conduct our business, as well as in other jurisdictions outside of the U.S., including: • Federal, state, and local laws regarding the use, storage, handling and disposal of medical and hazardous waste, as well as regulations relating to the safety and health of laboratory employees; • the Federal Anti-Kickback Statute and state anti-kickback prohibitions and EKRA; • the Federal Physician Self-Referral Law, commonly known as the Stark Law, and the state equivalents; • the HIPAA, the CCPA, including expansions and amendments pursuant to the California Privacy Rights Act, and other state privacy laws; • Federal, state, and local consumer protection laws governing communications and advertising, including the Telephone Consumer Protection Act (“TCPA”), the Controlling the Assault of Non-Solicited Pornography and Marketing Act (“CAN-SPAM Act”), and the Lanham Act; • the Medicare civil money penalty and exclusion requirements; • the Federal False Claims Act civil and criminal penalties and state equivalents; and • the FCPA, the United Kingdom Anti-Bribery Act, the GDPR and other national or provincial laws protecting personal information, the E.U.
While we believe the ACA Mandate requires certain health insurers to cover our Cologuard test for individuals between the ages of 45 and 75 without patient cost-sharing, some health insurers have disagreed. Enforcement of the ACA Mandate is difficult and depends on state, federal, or other third-party enforcement actions that we do not control.
While we believe the ACA Mandate requires certain health insurers to cover our Cologuard test and Cologuard Plus test for individuals between the ages of 45 and 75 without patient cost-sharing, some health insurers have disagreed. Enforcement of the ACA Mandate is difficult and depends on state, federal, or other third-party enforcement actions that we do not control.
Risks Related to our Business and Business Strategy • We may never become profitable or sustain profitability. • We may need additional capital to execute our strategic plan. • Our success depends heavily on our Cologuard and Precision Oncology tests and the successful commercialization of our tests in development. • Our operating results could be subject to significant fluctuation, which could increase the volatility of our stock price and cause losses to our shareholders. • We face intense competition from other companies and may not be able to compete successfully. • If any of our facilities or our laboratory equipment were damaged or destroyed, or if we experience a significant disruption in our operations for any reason, our ability to continue to operate our business could be materially harmed. • We heavily rely upon certain suppliers, including suppliers that are the sole source of certain supplies and products used in our tests and business operations.
Risks Related to our Business and Business Strategy • We may never become profitable or sustain profitability. • We may need additional capital to execute our strategic plan. • Our success depends heavily on our Screening and Precision Oncology tests and the successful commercialization of our tests in development. • Our operating results could be subject to significant fluctuation, which could increase the volatility of our stock price and cause losses to our shareholders. • We face intense competition from other companies and may not be able to compete successfully. • If any of our facilities or our laboratory equipment were damaged or destroyed, or if we experience a significant disruption in our operations for any reason, our ability to continue to operate our business could be materially harmed. • We heavily rely upon certain suppliers, including suppliers that are the sole source of certain supplies and products used in our tests and business operations.
Further, a court or regulatory agency may agree with arguments that have been made, or that may in the future be made, by insurers and determine that the ACA Mandate does not require that they cover our Cologuard test or future tests we may develop or may otherwise interpret the ACA Mandate in a manner unfavorable to us.
Further, a court or regulatory agency may agree with arguments that have been made, or that may in the future be made, by insurers and determine that the ACA Mandate does not require that they cover our Cologuard test, Cologuard Plus test, or future tests we may develop or may otherwise interpret the ACA Mandate in a manner unfavorable to us.
In addition, our acquisitions have contributed to the increasing complexity of operations, requiring significant changes to our corporate operations as we integrate other companies and their personnel to our systems. This growth has also increased our operating expenses and capital requirements, and we expect that they will continue to increase significantly.
In addition, our acquisitions have contributed to the increasing complexity of operations, requiring significant changes to our corporate operations as we integrate other companies and their personnel to our systems. This growth has also increased our operating expenses and capital requirements, and we expect that they will continue to increase.
Additionally, the ACA has also been the subject of various legal challenges and, if the plaintiffs are successful in any such challenges, insurance coverage for our Cologuard test or future tests we develop could be materially and adversely affected.
Additionally, the ACA has also been the subject of various legal challenges and, if the plaintiffs are successful in any such challenges, insurance coverage for our Cologuard test, Cologuard Plus test, or future tests we develop could be materially and adversely affected.
In particular, research, sales, marketing, education, and other business arrangements in the healthcare industry are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing, and other abusive practices, as well as off-label product promotion.
In particular, research, sales, marketing, education, and other business arrangements in the healthcare industry are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing, bribery, and other abusive practices, as well as off-label product promotion.
We may not be able to successfully establish and maintain such intellectual property. • We may be subject to substantial costs and liability, or be prevented from using technologies incorporated in our tests as a result of litigation or other proceedings relating to patent or other intellectual property rights. • If we are unable to protect or enforce our intellectual property effectively, we may be unable to prevent third parties from using our intellectual property, which would impair any competitive advantage we may otherwise have. • If patent regulations or standards are modified, such changes could have a negative impact on our business.
We may not be able to successfully establish and maintain such intellectual property. • We may be subject to substantial costs and liability, or be prevented from using technologies incorporated in our screening or diagnostic tests as a result of litigation or other proceedings relating to patent or other intellectual property rights. • If we are unable to protect or enforce our intellectual property effectively, we may be unable to prevent third parties from using our intellectual property, which would impair any competitive advantage we may otherwise have. • If patent regulations or standards are modified, such changes could have a negative impact on our business.
Risks Relating to Governmental Regulation and Reimbursement We face uncertainty related to healthcare reform, pricing, coverage, and reimbursement. We must navigate complex healthcare regulations, which control how we conduct our business and how we are paid.
Risks Relating to Governmental Regulation and Reimbursement We face uncertainty related to healthcare reform, pricing, coverage, and reimbursement. We must navigate complex and evolving healthcare regulations, which control how we conduct our business and how we are paid.
The taxes imposed by new legislation, cost reduction measures and the expansion in the government’s role in the U.S. healthcare industry may result in decreased profits to us, which may adversely affect our business, financial condition and results of operations. The Protecting Access to Medicare Act of 2014 (“PAMA”) presents significant uncertainty for future CMS reimbursement rates.
The taxes imposed by new legislation, cost reduction measures and the expansion or contraction in the government’s role in the U.S. healthcare industry may result in decreased profits to us, which may adversely affect our business, financial condition, and results of operations. The Protecting Access to Medicare Act of 2014 (“PAMA”) presents significant uncertainty for future CMS reimbursement rates.
We maintain a global compliance program, including a code of business conduct and ethics and processes and systems for reporting, reviewing and remediating allegations of potential non-compliance or other misconduct, but it is not always possible to identify and deter misconduct by employees and third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws.
We maintain a global compliance program, including a code of business conduct and ethics and processes and systems for reporting, reviewing, and remediating allegations of potential non-compliance or other misconduct, but it is not always possible to identify and deter misconduct by employees and third parties, 39 Table of Contents and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws.
Any update to the USPSTF recommendations that may have the effect of reducing screening, that does not include FIT-DNA in a favorable manner, or that adds new technologies could have a material adverse effect on our business. Maintaining a high USPSTF recommendation for our Cologuard test may have certain potentially significant implications.
Any update to the USPSTF recommendations that may have the effect of reducing screening, that does not include FIT-DNA in a favorable manner, or that adds new technologies could have a material adverse effect on our business. Maintaining a high USPSTF recommendation for our Cologuard test and Cologuard Plus test may have certain potentially significant implications.
Although we believe that we have sufficient capital to fund our operations for at least the next 12 months, we may require additional capital to fully fund our current strategic plan, which includes continuing to scale our Cologuard and precision oncology tests and developing a pipeline of future products and services.
Although we believe that we have sufficient capital to fund our operations for at least the next 12 months, we may require additional capital to fully fund our current strategic plan, which includes continuing to scale our screening and precision oncology tests and developing a pipeline of future products and services.
If our succession planning efforts are not effective, it could adversely impact our business. We face intense competition for certain highly technical or scientific personnel and experienced salespeople among life science and technology businesses. We also compete with universities and public and private research institutions for highly qualified scientific personnel.
If our succession planning efforts are not effective, it could adversely impact our business. We face intense competition with other life science and technology businesses for certain highly technical or scientific personnel and experienced salespeople. We also compete with universities and public and private research institutions for highly qualified scientific personnel.
Cost inflation, including increases in raw material prices, labor rates, and transportation costs, may continue to impact our profitability. Our ability to recover these cost increases through price increases is significantly limited by the process by which we are reimbursed for our products and services by government and private payers.
Cost inflation, including increases in raw material prices, labor rates, transportation costs, and tariffs, may impact our profitability. Our ability to recover these cost increases through price increases is significantly limited by the process by which we are reimbursed for our products and services by government and private payers.
The FDA historically has taken the position that it has the authority to regulate such tests as medical devices under the FDC Act but has for the most part exercised enforcement discretion and has not required clearance, de novo classification, or approval of LDTs prior to marketing.
The FDA historically has taken the position that it has the authority to regulate such tests as medical devices under the FDC Act but until recently has for the most part exercised enforcement discretion and has not required clearance, de novo classification, or approval of LDTs prior to marketing.
The Sarbanes-Oxley Act also requires that our management report on internal control over financial reporting be attested to by our independent registered public accounting firm. Although we determined that our internal control over financial reporting was effective as of December 31, 2023, we must continue to monitor and assess our internal control over financial reporting.
The Sarbanes-Oxley Act also requires that our management report on internal control over financial reporting be attested to by our independent registered public accounting firm. Although we determined that our internal control over financial reporting was effective as of December 31, 2024, we must continue to monitor and assess our internal control over financial reporting.
The FDA determines whether a medical device will require either regulatory approval or clearance based on statutory criteria that include the risk associated with the device and whether the device is similar to an existing, legally marketed product. The process to obtain either regulatory approval or clearance will likely be costly, time-consuming, and uncertain.
The FDA determines whether a medical device will require either regulatory approval or clearance based on statutory criteria that include the risk associated with the device and whether the device is similar to an existing, legally marketed product. The process to obtain either regulatory approval or clearance is costly, time-consuming, and uncertain.
If our present, or any future facilities, were to be damaged, destroyed or otherwise unable to operate, whether due to fire, floods, storms, tornadoes, earthquakes, other inclement weather events or natural disasters, employee malfeasance, terrorist acts, power outages, or otherwise, it may render it difficult or impossible for us to perform our tests for some period of time, and our business could be severely disrupted.
If our present, or any future facilities, were to be damaged, destroyed or otherwise unable to operate, whether due to fire, floods, storms, tornadoes, earthquakes, other inclement weather events or natural disasters, employee malfeasance, terrorist acts, power outages, or otherwise, it may render it difficult or impossible for us to perform our tests for some period of time, and our 23 Table of Contents business could be severely disrupted.
We pursue a patent strategy that we believe provides us with a competitive advantage in the non-invasive early detection of cancer and pre-cancer as well as in the guidance of cancer treatment decisions, and is designed to maximize our patent protection against third parties.
We pursue a patent strategy that we believe provides us with a competitive advantage in the early detection of cancer and pre-cancer as well as in the guidance of cancer treatment decisions, and is designed to maximize our patent protection against third parties.
In addition, the FDA’s ability to review and clear or approve new products or changes to existing products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions.
In addition, the FDA’s ability to review and clear or approve new products or changes to existing products can be affected by a variety of factors, including government budget, funding, and staffing levels, changes in Presidential administration, statutory, regulatory, and policy changes, the FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions.
Our Oncotype tests, OncoExTra test, and certain other tests we offer are regulated as LDTs and we may seek to commercialize certain of our products in development as LDTs. LDTs are clinical laboratory tests that are developed and validated by a laboratory for its own use.
Our Oncotype tests, OncoExTra test, and certain other tests we offer are marketed as LDTs and we may seek to commercialize certain of our products in development as LDTs. LDTs are clinical laboratory tests that are developed and validated by a laboratory for its own use.
We have filed patent applications that we believe cover the methods we have designed and use in our Cologuard test to detect colorectal cancer and pre-cancer, our Oncotype tests to provide prognosis and guide treatment decisions, and for pipeline cancer tests still in development.
We have filed patent applications that we believe cover the methods we have designed and use in our Cologuard and Cologuard Plus tests to detect colorectal cancer and pre-cancer, our Oncotype tests to provide prognosis and guide treatment decisions, and for pipeline cancer tests still in development.
For these and other reasons, we may choose to 30 Table of Contents settle legal proceedings and claims, regardless of their actual merit. If a legal proceeding is resolved against us, it could result in significant compensatory damages, and in certain circumstances punitive or trebled damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief imposed on us.
For these and other reasons, we may choose to settle legal proceedings and claims, regardless of their actual merit. If a legal proceeding is resolved against us, it could result in significant compensatory damages, and in certain circumstances punitive or trebled damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief imposed on us.
Various macroeconomic factors could adversely affect our business and the results of our operations and financial condition, including changes in inflation, high interest rates, foreign currency exchange rates, weakness in general economic conditions and threatened or actual recessions, including those resulting from the current and future conditions in the global financial markets, and budgeting constraints of governmental entities.
Various macroeconomic factors could adversely affect our business and the results of our operations and financial condition, including changes in inflation, high interest rates, foreign currency exchange rates, weakness in general economic conditions, and threatened or actual recessions, including those resulting from the current and future conditions in the global financial markets, shifting political landscapes, and budgeting constraints of governmental entities.
There can be no assurance that we will be able to continue to grow sales of our Cologuard and precision oncology tests or that we will develop or commercialize any other products or services that will generate significant revenue.
There can be no assurance that we will be able to continue to grow sales of our screening and precision oncology tests or that we will develop or commercialize any other products or services that will generate significant revenue.
While we devote significant resources to protect the security of our IT systems, including the personal data and other information that we receive and store, there can be no assurance that any security measures will be effective against current or future security threats. We have experienced and expect to continue to experience attempted cyber-attacks of our IT systems and networks.
While we devote significant resources to protect the security of our IT systems, including the personal data and other information that we receive and store, there can be no assurance that any security measures will be effective against current or future security threats. We have experienced and expect to continue to experience attempted cyberattacks of our IT systems and networks.
Congress, or the USPTO may change the standards of patentability and validity of patents within the cancer screening and diagnostics space, and any such changes could have a negative impact on our business. 44 Table of Contents There have been several cases involving “gene patents” and diagnostic claims that have been considered by the U.S.
Congress, or the USPTO may change the standards of patentability and validity of patents within the cancer screening and diagnostics space, and any such changes could have a negative impact on our business. There have been several cases involving “gene patents” and diagnostic claims that have been considered by the U.S.
To date, none of these attempted cyber-attacks has had a material effect on our operations or financial condition. However, any such breach or interruption could compromise our networks and the information stored therein could be accessed by unauthorized parties, publicly disclosed, lost or stolen.
To date, none of these attempted cyberattacks has had a material effect on our operations or financial condition. However, any such breach or interruption could compromise our networks and the information stored therein could be accessed by unauthorized parties, publicly disclosed, lost or stolen.
We may also be required to recognize impairment charges as a result of a divestiture. International expansion of our business exposes us to business, regulatory, labor, political, operational, financial, liability, compliance, payment collection, and economic risks associated with doing business outside of the U.S.
We may also be required to recognize impairment charges as a result of a divestiture. 27 Table of Contents International expansion of our business exposes us to business, regulatory, labor, political, operational, financial, liability, compliance, payment collection, and economic risks associated with doing business outside of the U.S.
For example, while we believe the ACA Mandate requires most health insurers to cover our Cologuard test for most patients between the ages of 45 and 75 without patient cost-sharing, some health insurers have disagreed and determined not to cover our Cologuard test and others may take that position in the future.
For example, while we believe the ACA Mandate requires most health insurers to cover our Cologuard and Cologuard Plus tests for most patients between the ages of 45 and 75 without patient cost-sharing, some health insurers have disagreed and determined not to cover our Cologuard and Cologuard Plus tests and others may take that position in the future.
Coverage of our Cologuard test and other screening or diagnostic products that we may develop may also depend, in whole or in part, on whether payers determine, or courts and/or legislative or regulatory authorities determine, coverage is required under applicable federal or state laws mandating coverage of certain cancer screening or diagnostic services.
Coverage of our Cologuard and Cologuard Plus tests and other screening or diagnostic products that we may develop may also depend, in whole or in part, on whether payers determine, or courts and/or legislative or regulatory authorities determine, coverage is required under applicable federal or state laws mandating coverage of certain cancer screening or diagnostic services.
The loss of a critical business partner, or a failure to perform by a critical business partner, could have a disruptive effect on our business and could adversely affect our results of operations. Public health crises, such as the COVID-19 pandemic, have had, and could in the future have, adverse effects on our business and financial results.
The loss of a critical business partner, or a failure to perform by a critical business partner, could have a disruptive effect on our business and could adversely affect our results of operations. 28 Table of Contents Public health crises, such as the COVID-19 pandemic, have had, and could in the future have, adverse effects on our business and financial results.
There can be no assurance that our process of improving existing systems, developing new systems to support our expanding operations, protecting confidential patient information, and improving service levels will not be delayed or will not give rise to additional systems issues in the future.
There can be no assurance that our process of improving existing systems, developing new systems to support our expanding operations, protecting confidential patient 25 Table of Contents information, and improving service levels will not be delayed or will not give rise to additional systems issues in the future.
Further, we cannot assure you that other parties will not challenge any patents issued to us or that courts or regulatory agencies will hold our patents to be valid or enforceable.
Further, we cannot assure you that other parties will not challenge any patents issued to us or that courts will hold our patents to be valid or enforceable.
Patent and Trademark Office (“USPTO”) maintains patent applications in secrecy until a patent application publishes or the patent is issued, we have no way of knowing if others may have filed patent applications covering technologies used by our partners or us.
Because the U.S. Patent and Trademark Office (“USPTO”) maintains patent applications in secrecy until a patent application publishes or the patent is issued, we have no way of knowing if others may have filed patent applications covering technologies used by our partners or us.
Any of the above-listed factors could have an adverse effect on our business, financial condition, and results of operations and our ability to meet our payment obligations under our indebtedness. Our ability to meet our payment and other obligations under our indebtedness depends on our ability to generate significant cash flow in the future.
Any of the above-listed factors could have an adverse effect on our business, financial condition, and results of operations and our ability to meet our payment obligations under our indebtedness. 48 Table of Contents Our ability to meet our payment and other obligations under our indebtedness depends on our ability to generate significant cash flow in the future.
Our success depends heavily on our Cologuard and Precision Oncology tests and the successful commercialization of our tests in development. Our ability to generate revenues depends very substantially on the commercial success of our Cologuard and precision oncology tests.
Our success depends heavily on our Screening and Precision Oncology tests and the successful commercialization of our tests in development. Our ability to generate revenues depends very substantially on the commercial success of our screening and precision oncology tests.
Our manufacturing, testing and laboratory facilities are located in Madison and Marshfield, Wisconsin, Redwood City, California, Kirkland, Washington, Phoenix, Arizona, and Trier, Germany, and our headquarters are also located in Madison, Wisconsin.
Our manufacturing, testing and laboratory facilities are located in Madison and Marshfield, Wisconsin, Redwood City, California, Phoenix, Arizona, and Trier, Germany, and our headquarters are also located in Madison, Wisconsin.
The effects of global climate change present risks to our business. Natural disasters, extreme weather and other conditions caused by or related to climate change could adversely impact our supply chain, the courier delivery services we use, the availability and cost of raw materials and components, energy supply, water, transportation, or other inputs necessary for the operation of our business.
Natural disasters, extreme weather, and other conditions caused by or related to climate change could adversely impact our supply chain, the courier delivery services we use, the availability and cost of raw materials and components, energy supply, water, transportation, or other inputs necessary for the operation of our business.
If we fail to protect our intellectual property, third parties may be able to compete more effectively against us and we may incur substantial litigation costs in our attempts to recover or restrict use of our intellectual property, which may not be entirely successful, if at all. Additionally, certain of our patents began to expire in 2018.
If we fail to protect our intellectual property, third parties may be able to compete more effectively against us and we may incur substantial litigation costs in our attempts to recover or restrict use of our intellectual property, which may not be entirely successful, if at all. Additionally, certain of our patents have begun to expire.
Our success depends largely on the skills, experience, and performance of our senior management team, and of the highly skilled personnel supporting our research and development programs, commercial laboratory operations, sales efforts and information technology infrastructure.
The success of our business substantially depends on the efforts of our senior management team and our qualified personnel. Our success depends largely on the skills, experience, and performance of our senior management team, and of the highly skilled personnel supporting our research and development programs, commercial laboratory operations, sales efforts, and information technology infrastructure.
If the courier delivery services that transport Cologuard collection kits or other test samples institute significant price increases, our profitability would be negatively affected and we may need to identify alternative delivery methods, if possible, modify our service model, or attempt to raise our pricing, which may not be possible with regard to Medicare claims or commercially practicable with regard to commercial claims.
If the courier delivery services that transport Cologuard collection kits or other test samples institute significant price increases, our profitability would be negatively affected and we may need to identify alternative delivery methods, if possible, modify our service model, or attempt to raise our pricing, which may not be possible with regard to tests covered by Medicare or commercially practicable with regard to tests covered by commercial payers.
Further, states may decide to modify their laws, which may include repeal of those coverage mandates that we believe currently apply to our Cologuard test. 31 Table of Contents If payers, including managed care organizations, do not approve and maintain reimbursement for our tests at adequate reimbursement rates, our commercial success could be compromised.
Further, states may decide to modify their laws, which may include repeal of those coverage mandates that we believe currently apply to our Cologuard and Cologuard Plus tests. If payers, including managed care organizations, do not approve and maintain reimbursement for our tests at adequate reimbursement rates, our commercial success could be compromised.
Additionally, if our Cologuard test was removed from or not included in HEDIS, the Star Ratings, or other quality metrics, healthcare providers may not earn quality credit for prescribing our Cologuard test and therefore may be less inclined to do so.
Additionally, if our Cologuard test was removed from or not 42 Table of Contents included in HEDIS, the Star Ratings, or other quality metrics, healthcare providers may not earn quality credit for prescribing our Cologuard test and therefore may be less inclined to do so.
In addition, we have licensing agreements with other partners that provide us with intellectual property and other business rights crucial to our product development and commercialization. We have incorporated licensed technology into our Cologuard test and expect to continue relying on, and incorporating, licensed technology into our pipeline products.
In addition, we have licensing agreements with other partners that provide us with intellectual property and other business rights crucial to our product development and commercialization. We have incorporated licensed technology into our commercialized tests and expect to continue relying on, and incorporating, licensed technology into our pipeline products.
Certain risks may exist as a result of these and other acquisition activities, including, among others: • potential unknown liabilities and unforeseen increased expenses, delays, or unfavorable conditions in connection with the integration of the acquired businesses into our business; • diversion of management’s attention and company resources from our existing operations of our business; • the issuance of dilutive securities, assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our cash in acquisitions; • difficulties in successful integration of the operations and information technology systems of acquired businesses into our business; • the potential loss of key employees, customers and strategic partners of ours and of acquired businesses; • the inability to realize the anticipated benefits of the acquisitions or do so within the anticipated timeframe; • negative impacts on our near-term financial results after an acquisition or on our future financial results if we do not effectively manage our expanded operations; and • the market price of our common stock may decline as a result of the acquisitions. 27 Table of Contents In the future, we may enter into transactions to acquire other businesses, products, services, or technologies, which may ultimately be unsuccessful.
Certain risks may exist as a result of these and other acquisition activities, including, among others: • potential unknown liabilities and unforeseen increased expenses, delays, or unfavorable conditions in connection with the integration of the acquired businesses into our business; • diversion of management’s attention and company resources from our existing operations of our business; • the issuance of dilutive securities, assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our cash in acquisitions; • difficulties in successful integration of the operations and information technology systems of acquired businesses into our business; • the potential loss of key employees, customers, and strategic partners of ours and of acquired businesses; • the inability to realize the anticipated benefits of the acquisitions or do so within the anticipated timeframe; • negative impacts on our near-term financial results after an acquisition or on our future financial results if we do not effectively manage our expanded operations; and • the market price of our common stock may decline as a result of the acquisitions.
While we do not offer our Cologuard test outside of the U.S., we currently commercialize or plan to commercialize our Oncotype DX tests through employees in Canada, Japan, and a number of European countries, as well as through exclusive distribution agreements. We have provided our Oncotype tests in approximately 120 countries.
While we do not offer our Cologuard and Cologuard Plus tests outside of the U.S., we currently commercialize or plan to commercialize our precision oncology tests through employees in Canada, Japan, and a number of European countries, as well as through exclusive distribution agreements. We have provided our Oncotype tests in approximately 120 countries.
Similarly, as an additional example, we rely on Hamilton Company (“Hamilton”) to provide us laboratory equipment and related supplies (such as racking and pipette tips) necessary to perform certain critical steps in our clinical laboratory tests, including our Cologuard and precision oncology tests.
We also rely on Hamilton Company (“Hamilton”) to provide us laboratory equipment and related supplies (such as racking and pipette tips) necessary to perform certain critical steps in our clinical laboratory tests, including our Cologuard and precision oncology tests.
In addition, disruptions in the U.S., Europe or other economies, including due to geopolitical conflict, could disrupt global markets, interrupt global supply chains, and have other potential inflationary or recessionary effects on the global economy.
In addition, disruptions in the U.S., Europe or other economies, including due to geopolitical conflict or uncertainty and changing international trade policies, could disrupt global markets, interrupt global supply chains, and have other potential inflationary or recessionary effects on the global economy.
Litigation is subject to significant uncertainty and may be expensive, time-consuming, and disruptive to our operations. Although we will vigorously defend ourselves in such legal proceedings, their ultimate resolution and potential financial and other impacts on us are uncertain.
Litigation, whether offensive or defensive, is subject to significant uncertainty and may be expensive, time-consuming, and disruptive to our operations. Although we will vigorously defend and advocate for ourselves in such legal proceedings, their ultimate resolution and potential financial and other impacts on us are uncertain.
The loss of a critical supplier, the failure to perform by a critical supplier, the deterioration of our relationship with a critical supplier or any unilateral modification to the contractual terms under which we are supplied certain supplies and/or products could have a disruptive effect on our business, and could adversely affect our results of operations for an extended period of time, particularly if we are required to validate an alternative supplier.
The loss of a critical supplier or other vendor, the failure to perform by any such party, the deterioration of our relationship with any such party or any unfavorable modification to the contractual terms under which we are supplied certain supplies or services could have a disruptive effect on our business, and could adversely affect our results of operations for an extended period of time, particularly if we are required to validate an alternative vendor.
If we identify material weaknesses in our internal control over financial reporting or if we are unable to assert that our internal control over financial reporting is effective when required in the future, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be adversely affected.
If we identify material weaknesses in our internal control over financial reporting or if we are unable to assert that our internal control over financial reporting is effective when required in the future, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be adversely affected. 47 Table of Contents Our stock price has fluctuated widely and is likely to continue to be volatile.
Risks Relating to Governmental Regulation and Reimbursement • We face uncertainty related to healthcare reform, pricing, coverage, and reimbursement. • If payers, including managed care organizations, do not approve and maintain reimbursement for our tests at adequate reimbursement rates, our commercial success could be compromised. • If we are unable to obtain or maintain reimbursement at adequate reimbursement rates for our Oncotype DX tests outside of the U.S., our ability to expand internationally will be compromised. • Failure to comply with federal, state and foreign laboratory licensing and related requirements could cause us to lose the ability to perform our tests, experience disruptions to our business, or become subject to administrative or judicial sanctions. • Our products could be subject to recall. • Delays in receipt of, or failure to obtain, required FDA clearances or approvals for our products in development, or improvements to or expanded indications for our current offerings, could materially delay or prevent us from commercializing or otherwise adversely impact future product commercialization. 20 Table of Contents • The FDA may change its position with respect to its regulation of the laboratory developed tests we offer or may seek to offer in the future, causing us to incur substantial costs and time delays and decreased demand for or reimbursement of our tests. • We are subject to numerous U.S. and foreign laws and governmental regulations, and any governmental enforcement action may materially affect our financial condition and business operations. • Our business is subject to various complex laws and regulations applicable to providers of clinical diagnostics and services. • Due to billing complexities in the diagnostic and laboratory service industry, we may have difficulties receiving timely payment for the tests we perform, and may face write-offs, disputes with payers and patients, and long collection cycles. • Some of our activities may subject us to risks under federal, state, and foreign laws prohibiting “kickbacks” and false or fraudulent claims as well as the Foreign Corrupt Practices Act and similar anti-bribery laws. • Failure to comply with privacy, security, and consumer protection laws and regulations could result in fines, penalties and damage to our reputation and have a material adverse effect on our business. • Our employees, independent contractors, consultants, commercial partners, and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements. • We expect to rely on third parties to conduct any future studies of our technologies that may be required by the FDA or other U.S. or foreign regulatory bodies, and those third parties may not perform satisfactorily. • Changes in tax laws or regulations or exposure to tax liabilities could adversely affect our financial condition and results of operations.
Risks Relating to Governmental Regulation and Reimbursement • We face uncertainty related to healthcare reform, pricing, coverage, and reimbursement. • If payers, including managed care organizations, do not approve and maintain reimbursement for our tests at adequate reimbursement rates, our commercial success could be compromised. • If we are unable to obtain or maintain reimbursement at adequate reimbursement rates for our Oncotype DX tests outside of the U.S., our ability to expand internationally will be compromised. • Failure to comply with federal, state, and foreign laboratory licensing and related requirements could cause us to lose the ability to perform our tests, experience disruptions to our business, or become subject to administrative or judicial sanctions. • Our products could be subject to recall. • Delays in receipt of, or failure to obtain, required FDA clearances or approvals for our products in development, or improvements to or expanded indications for our current offerings, could materially delay or prevent us from commercializing or otherwise adversely impact future product commercialization. • The FDA's implementation of the LDT Rule may cause us to incur substantial costs and time delays associated with meeting requirements for pre-market clearance or approval or we could experience decreased demand for or reimbursement of our tests. 20 Table of Contents • We are subject to numerous U.S. and foreign laws and governmental regulations, and any governmental enforcement action may materially affect our financial condition and business operations. • Our business is subject to various complex laws and regulations applicable to providers of clinical diagnostics and services. • Due to billing complexities in the diagnostic and laboratory service industry, we may have difficulties receiving timely payment for the tests we perform, and may face write-offs, disputes with payers and patients, and long collection cycles. • Some of our activities may subject us to risks under federal, state, and foreign laws prohibiting “kickbacks” and false or fraudulent claims. • Some of our activities may subject us to risks under the Foreign Corrupt Practices Act and similar anti-bribery laws in non-U.S. jurisdictions. • Failure to comply with privacy, security, and consumer protection laws and regulations could result in fines, penalties, and damage to our reputation and have a material adverse effect on our business. • Our employees, independent contractors, consultants, commercial partners, and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements. • Changes in tax laws or regulations or exposure to tax liabilities could adversely affect our financial condition and results of operations.
An adverse decision in any such challenge may result in the loss of rights under a patent or patent application. We cannot guarantee that we will be successful in defending challenges made against our patents and patent applications.
An adverse decision in any such challenge may result in the loss of rights under a patent or patent application. We cannot guarantee that we will be successful in defending challenges made against our patents and patent applications. Any successful third-party challenge to our patents could result in the unenforceability or invalidity of such patents.
Risks Relating to our Securities • If we fail to maintain an effective system of internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our reported financial information and our stock price may be adversely impacted. • Our stock price has fluctuated widely and is likely to continue to be volatile. • Our balance sheet includes significant amounts of goodwill and intangible assets.
Risks Relating to our Securities • If we fail to maintain an effective system of internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our reported financial information and our stock price may be adversely impacted. • Our stock price has fluctuated widely and is likely to continue to be volatile. • We have recorded significant impairment charges and could do so again in the future • Our balance sheet includes significant amounts of goodwill and intangible assets.
In order to protect or enforce our patent and other intellectual property rights, we may have to initiate actions against third parties. Any actions regarding patents could be costly and time consuming and divert the attention of our management and key personnel from our business.
In order to protect or enforce our patent and other intellectual property rights, we may have to initiate actions against third parties. Any actions regarding patents could be costly and time-consuming and divert the attention of our management and key personnel from our business. Additionally, such actions could result in challenges to the validity, enforceability, or applicability of our patents.
Our revenues and results of operations have historically, and may in the future, fluctuate significantly, depending on a variety of factors, including the following: • our success in marketing and selling, and changes in demand for, our Cologuard and precision oncology tests, and the level of reimbursement and collection obtained for such tests; • seasonal variations or non-seasonal events or circumstances affecting healthcare provider recommendations for our tests and patient compliance with healthcare provider recommendations, including without limitation, holidays, weather events, and circumstances such as the outbreak of influenza that may limit patient access to medical practices or institutions for diagnostic tests and preventive services; • our success in collecting payments from third-party and other payers, patients and collaborative partners, variation in the timing of these payments and recognition of these payments as revenues; • the pricing of our tests, including potential changes in CMS or other reimbursement rates; • circumstances affecting our ability to provide our tests, including weather events, supply shortages, or regulatory or other circumstances that adversely affect our ability to manufacture our tests or process tests in our clinical laboratories; • fluctuations in the amount and timing of our selling and marketing costs and our ability to manage costs and expenses and effectively implement our business; and • our research and development activities, including the timing, size, complexity, and cost of clinical studies.
Our revenues and results of operations have historically, and may in the future, fluctuate significantly, depending on a variety of factors, including the following: • our success in marketing and selling, and changes in demand for, our screening and precision oncology tests, and the level of reimbursement and collection obtained for such tests; • seasonal variations or non-seasonal events or circumstances affecting healthcare provider recommendations for our tests and patient compliance with healthcare provider recommendations, including without limitation, holidays, weather events, and circumstances such as disease outbreaks that may limit patient access to medical practices or institutions for diagnostic tests and preventive services; • our success in collecting payments from third-party and other payers, patients and collaborative partners, variation in the timing of these payments and recognition of these payments as revenues; • the pricing of our tests, including potential changes in CMS or other reimbursement rates; • circumstances affecting our ability to provide our tests, including weather events, supply shortages, or regulatory or other circumstances that adversely affect our ability to manufacture our tests or process tests in our clinical laboratories; • the results of our annual testing of intangible assets and goodwill for impairment charges when events or changes in circumstances indicate the carrying value may not be recoverable; • fluctuations in the amount and timing of our selling and marketing costs and our ability to manage costs and expenses and effectively implement our business; and • our research and development activities, including the timing, size, complexity, and cost of clinical studies.
The loss or interruption of supply from our suppliers could have a disruptive effect on our business. • Failure in our information technology, storage systems, or our clinical laboratory equipment could significantly disrupt our operations and our research and development efforts. • If the courier delivery services we use in connection with our tests are disrupted or become significantly more expensive, customer satisfaction and our business could be negatively impacted. • The success of our business substantially depends on the efforts of our senior management team and qualified personnel and our ability to foster and maintain an inclusive and collaborative corporate culture. • Our business and reputation will suffer if we are unable to establish and comply with stringent quality standards to assure that the highest level of quality is observed in the performance of our tests. • Our inability to manage growth could harm our business. • We may engage in acquisitions or divestitures that are not successful and which could disrupt our business and reduce our financial resources and shareholder value. • International expansion of our business exposes us to business, regulatory, labor, political, operational, financial, compliance, payment collection, and economic risks associated with doing business outside of the U.S. • Our business may be adversely affected by global macroeconomic conditions and volatility in the capital markets. • Public health crises, such as the COVID-19 pandemic, have had, and could in the future have, adverse effects on our business and financial results. • Ethical, legal and social concerns related to the use of genetic information could reduce demand for our genetic tests. • Climate change, or legal or regulatory measures to address climate change or other corporate social responsibility and sustainability matters, could adversely affect our business, financial condition and results of operations. • The use of Artificial Intelligence presents new risks and challenges to our business. • We may be a party to litigation in the normal course of business or otherwise, which could affect our business and financial position.
If these delivery services are disrupted or become significantly more expensive, customer satisfaction and our business could be negatively impacted. • The success of our business substantially depends on the efforts of our senior management team and qualified personnel. • Our business and reputation will suffer if we are unable to establish and comply with stringent quality standards to assure that the highest level of quality is observed in the performance of our tests. • Our inability to manage growth could harm our business. • We may engage in acquisitions or divestitures that are not successful and which could disrupt our business and reduce our financial resources and shareholder value. • International expansion of our business exposes us to business, regulatory, labor, political, operational, financial, liability, compliance, payment collection, and economic risks associated with doing business outside of the U.S. • Our business may be adversely affected by global macroeconomic conditions and volatility in the capital markets. • Public health crises, such as the COVID-19 pandemic, have had, and could in the future have, adverse effects on our business and financial results. • Ethical, legal, and social concerns related to the use of genetic information could reduce demand for our genetic tests. • Climate change, or legal or regulatory measures to address climate change or other corporate social responsibility and sustainability matters, could adversely affect our business, financial condition, and results of operations. • The use of Artificial Intelligence presents new risks and challenges to our business. • We may be a party to litigation in the normal course of business or otherwise, which could affect our business and financial position.
We have incurred losses since we were formed. From our date of inception on February 10, 1995 through December 31, 2023, we have accumulated a total deficit of approximately $3.47 billion. Our net loss was $204.1 million, $623.5 million and $595.6 million for the years ended December 31, 2023, December 31, 2022 and December 31, 2021, respectively.
We have incurred losses since we were formed. From our date of inception on February 10, 1995 through December 31, 2024, we have accumulated a total deficit of approximately $4.50 billion. Our net loss was $1.03 billion, $204.1 million and $623.5 million for the years ended December 31, 2024, December 31, 2023, and December 31, 2022, respectively.
Further, patients may not adhere to any recommended testing interval. Recommendations, guidelines, and quality metrics issued by various organizations may significantly affect payers’ willingness to cover, and healthcare providers’ willingness to prescribe or order, our products. Securing influential recommendations, inclusion in healthcare guidelines, and inclusion in quality measures are keys to our healthcare provider and payer engagement strategies.
Recommendations, guidelines, and quality metrics issued by various organizations may significantly affect payers’ willingness to cover, and healthcare providers’ willingness to prescribe or order, our products. Securing influential recommendations, inclusion in healthcare guidelines, and inclusion in quality measures are keys to our healthcare provider and payer engagement strategies.
Any violation of these laws, or allegations of such violations, by us or any of our commercial partners could disrupt our operations, involve significant management distraction, cause us to incur significant costs and expenses, including legal fees, and result in a material adverse effect on our business.
While there currently exists uncertainty regarding future enforcement of the FCPA, any violation of these laws, or allegations of such violations, by us or any of our commercial partners could disrupt our operations, involve significant management distraction, cause us to incur significant costs and expenses, including legal fees, and result in a material adverse effect on our business.
Although we received a positive coverage decision and what we believe is an adequate reimbursement rate from CMS for our Cologuard test, it is also critical that other third-party payers approve and maintain reimbursement for our Cologuard test at adequate reimbursement rates.
Although we received positive coverage decisions and what we believe are adequate reimbursement rates from CMS for our Cologuard and Cologuard Plus tests, it is also critical that other third-party payers approve and maintain reimbursement for our Cologuard test at adequate reimbursement rates.
Additionally, successful commercialization of our newly developed products will also depend on our ability to obtain and maintain reimbursement from government insurance plans, managed care organizations, and commercial insurance plans at adequate reimbursement rates.
Additionally, successful commercialization of our newly developed products, including our Cologuard Plus test, our Oncodetect MRD test, and our Cancerguard MCED test, will also depend on our ability to obtain and maintain reimbursement from government insurance plans, managed care organizations, and commercial insurance plans at adequate reimbursement rates.
As described further in Note 15 of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K, in September 2023, we entered into settlement agreements with the United States, acting through the U.S. DOJ, with respect to (1) a civil investigative demand initiated by the U.S.
As described further in Note 15 of the Notes to Consolidated Financial Statements, in September 2023, we entered into settlement agreements with the United States, acting through the U.S. DOJ, with respect to (1) a civil investigative demand initiated by the U.S.
We may engage in acquisitions or divestitures that are not successful and which could disrupt our business and reduce our financial resources and shareholder value. We undertake acquisition activities from time to time. For example, in September 2023, we acquired Resolution Bioscience, Inc.
We may engage in acquisitions or divestitures that are not successful and which could disrupt our business and reduce our financial resources and shareholder value. We undertake acquisition activities from time to time.
We expect to rely on third parties, such as contract research organizations, medical institutions and clinical investigators to conduct studies of our technologies that may be required by the FDA or other U.S. or foreign regulatory bodies. Our reliance on these third parties for clinical development activities will reduce our control over these activities.
We rely on third parties, such as contract research organizations, medical institutions and clinical investigators to conduct studies of our technologies that may be required by the FDA or other U.S. or foreign regulatory bodies.
Doing business internationally involves a number of risks, including: • difficulties in complying with multiple, conflicting, and changing laws and regulations, such as tax laws, export and import restrictions, employment laws, privacy and data protection laws, regulatory requirements and other governmental approvals, permits and licenses, including the changing regulation in Europe with regard to medical device and in vitro diagnostic regulations; • significant competition from local and regional product offerings and the fact that products designed for U.S. markets may not be preferred by foreign authorities, payers, medical providers and patients; • restrictions or prohibitions of transmitting personal data, including patient data, from foreign jurisdictions to our centralized laboratories in the U.S.; • difficulties in staffing and managing foreign operations; • difficulties in managing distributor relationships; • complexities associated with managing multiple payer reimbursement regimes, public payers, or patient self-pay systems; • logistics and regulations associated with shipping tissue samples, performing tests locally or complying with local regulations concerning the analysis of tissue, including infrastructure conditions and transportation delays; • limits in our ability to access or penetrate international markets if we are not able to process tests locally; • lack of intellectual property protection in certain markets; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, lower margins resulting from smaller scale foreign operations, the impact of local and regional financial crises on demand and payment for our tests, and exposure to foreign currency exchange rate fluctuations; • natural disasters, political and economic instability, including wars, strikes, terrorism, and political unrest, outbreak of disease, boycotts, curtailment of trade, and other business restrictions; • staffing difficulties, funding restrictions, and other difficulties facing medical institutions and payers; 28 Table of Contents • regulatory and compliance risks that relate to maintaining accurate information and control over the activities of our sales force and distributors that may fall within the purview of the FCPA, its books and records provisions or its anti-bribery provisions, or similar anti-bribery or anti-corruption laws or regulations, such as the U.K.
Doing business internationally involves a number of risks, including: • difficulties in complying with multiple, conflicting, and changing laws, regulations, and policies, such as tax laws, trade policies, export and import restrictions, tariffs, employment laws, privacy and data protection laws, regulatory requirements and other governmental approvals, permits, and licenses, including the changing regulation in Europe with regard to medical device and in vitro diagnostic regulations; • significant competition from local and regional product offerings and the fact that products designed for U.S. markets may not be preferred by foreign authorities, payers, medical providers, and patients; • restrictions or prohibitions of transmitting personal data, including patient data, from foreign jurisdictions to our centralized laboratories in the U.S.; • difficulties in staffing and managing foreign operations; • difficulties in managing distributor relationships; • complexities associated with managing multiple payer reimbursement regimes, public payers, or patient self-pay systems; • logistics and regulations associated with shipping tissue samples, performing tests locally or complying with local regulations concerning the analysis of tissue, including infrastructure conditions and transportation delays; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, lower margins resulting from smaller scale foreign operations, and exposure to foreign currency exchange rate fluctuations; • regulatory and compliance risks that relate to maintaining accurate information and control over the activities of our sales force and distributors that may fall within the purview of the FCPA, its books and records provisions or its anti-bribery provisions, or similar anti-bribery or anti-corruption laws or regulations, such as the United Kingdom (“U.K.”) Anti-bribery Act and the U.K.
The ACA has also been the subject of various legal challenges and if the plaintiffs in any case challenging the ACA are ultimately successful insurance coverage for our tests could be materially and adversely affected.
The ACA has also been the subject of various legal challenges and if the plaintiffs in any case challenging the ACA are ultimately successful insurance coverage for our tests could be materially and adversely affected. For example, in June 2024, the Fifth Circuit Court of Appeals in Braidwood Management v.
We may also be adversely affected to the extent third parties develop or commercialize competing products or services in countries where we did not apply for patents, where our patents have not issued, or where our intellectual property rights are not recognized or are poorly enforced.
We may also be adversely affected to the extent third parties develop or commercialize competing products or services in countries where we did not apply for patents, where our patents have not issued, or where our intellectual property rights are not recognized or are poorly enforced. 46 Table of Contents We depend on trademarks to establish a market identity for our company and our products and services.
If current or future distributors do not perform adequately, or we are unable to enter into or maintain arrangements with distributors to market our tests in particular geographic areas, we may not realize long-term international revenue growth.
Despite contractual obligations, distributors may not commit the necessary resources to market and sell our tests to the level of our expectations. If current or future distributors do not perform adequately, or we are unable to enter into or maintain arrangements with distributors to market our tests in particular geographic areas, we may not realize long-term international revenue growth.
Our business may be adversely affected by global macroeconomic conditions and volatility in the capital markets. The growth of our business is, and will continue to be, affected by changes in the overall global economy.
The growth of our business is, and will continue to be, affected by changes in the overall global economy.
The commercial success of our tests, our successful commercialization of any new products and our ability to generate revenues will depend on a variety of factors, including the following: • acceptance in the medical community; • inclusion in healthcare guidelines and recommendations, such as those developed by ACS, USPSTF, American Society of Clinical Oncology, and NCCN, and similar guidelines and recommendations outside the U.S.; • inclusion in quality measures, including the HEDIS measures and the CMS Medicare Advantage Star Ratings; • recommendations and studies that may be published by government agencies, companies, professional organizations, academic or medical journals or other key opinion leaders; • patient acceptance and demand; • patient compliance with orders for our tests by healthcare providers, and patient adherence to recommendations regarding periodic re-testing; • successful new screening initiatives, including gap closure programs through which we partner with health systems and payers to deliver Cologuard test kits to their patients or members who are due for colorectal cancer screening under applicable guidelines; • effective marketing and educational programs, including successful direct-to-patient marketing such as television advertising and social media; • the number of patients screened for colorectal cancer, as well as the number of patients who use our Cologuard test for that purpose; 22 Table of Contents • the number of women diagnosed with breast cancer; • sufficient coverage and reimbursement by payers; • the existence of federal or state laws that mandate coverage for colorectal cancer and other types of screening, the extent to which those laws mandate coverage of our tests and the enforcement of those laws; • the amount and nature of competition from other products and procedures; • maintaining regulatory approvals to legally market; • the ease of use of our ordering process for healthcare providers; • maintaining and defending patent protection for the intellectual property relevant to our products and services; and • our ability to establish and maintain adequate commercial manufacturing, distribution, sales and CLIA laboratory testing capabilities.
The commercial success of our tests, our successful commercialization of any new products and our ability to generate revenues will depend on a variety of factors, including the following: • acceptance in the medical community; • inclusion in healthcare guidelines and recommendations; • inclusion in quality measures, including the HEDIS measures and the CMS Medicare Advantage Star Ratings; • recommendations and studies that may be published by government agencies, professional organizations, academic or medical journals or other key opinion leaders; • patient acceptance and demand; • patient compliance with orders for our tests by healthcare providers, and patient adherence to recommendations regarding periodic re-testing; • successful new screening initiatives, including gap closure programs through which we partner with health systems and payers to deliver Cologuard test kits to their patients or members who are due for colorectal cancer screening under applicable guidelines; • effective marketing and educational programs, including successful direct-to-patient marketing such as television advertising and social media; • sufficient coverage and reimbursement by payers; • the existence of federal or state laws that mandate coverage for colorectal cancer and other types of screening, the extent to which those laws mandate coverage of our tests and the enforcement of those laws; • the amount and nature of competition from other products and procedures; • maintaining regulatory approvals to legally market our products and services; and • the ease of use of our ordering process for healthcare providers. 22 Table of Contents If we are unable to continue growing sales of our screening and precision oncology tests, we are delayed or limited in doing so, or we are unable to successfully commercialize our tests in development or other new products, our business prospects, financial condition, and results of operations would be adversely affected.
We may also be subject to laboratory regulations in foreign jurisdictions as we seek to expand international utilization of our tests or as such jurisdictions adopt new licensure requirements, which may require review of our tests in order to offer them or may have other limitations such as restrictions on the transport of specimens necessary for us to perform our tests that may limit our ability to make our tests available outside of the U.S.
Even if we were able to bring our laboratory back into compliance, we could incur significant expenses and potentially lose revenue in doing so. 32 Table of Contents We may also be subject to laboratory regulations in foreign jurisdictions as we seek to expand international utilization of our tests or as such jurisdictions adopt new licensure requirements, which may require review of our tests in order to offer them or may have other limitations such as restrictions on the transport of specimens necessary for us to perform our tests that may limit our ability to make our tests available outside of the U.S.
IT systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious human acts from criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage and employee malfeasance, breaches due to employee error and natural disasters.
IT systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious human acts from criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage and employee malfeasance, breaches due to employee error and natural disasters. Cyberattacks are becoming more sophisticated and frequent, and in some cases have caused significant harm at other companies.
Moreover, coverage determinations and reimbursement rates are subject to change, and we cannot guarantee that even if we initially achieve adequate coverage and reimbursement rates for our tests, they will continue to apply in the future or remain adequate as we face increases in operating costs, such as labor and supply costs that are subject to inflation, and government and commercial payers may cause us to accept lower prices.
Moreover, coverage determinations and reimbursement rates are subject to change, and we cannot guarantee that even if we initially achieve adequate coverage and reimbursement rates for our tests, they will continue to apply in the future or remain adequate as we face increases in operating costs, such as labor and supply costs that are subject to inflation, and government and commercial payers may cause us to accept lower prices. 31 Table of Contents Even where a third-party payer agrees to cover one of our tests, other factors may have a significant impact on the actual reimbursement we receive from that payer.
We depend on trademarks to establish a market identity for our company and our products and services. To maintain the value of our trademarks, we may have to file lawsuits against third parties to prevent them from using trademarks confusingly similar to or dilutive of our registered or unregistered trademarks.
To maintain the value of our trademarks, we may have to file lawsuits against third parties to prevent them from using trademarks confusingly similar to or dilutive of our registered or unregistered trademarks.
These and other ethical, legal and social concerns may limit market acceptance of our genetic tests or reduce the potential markets for these tests, either of which could have an adverse effect on our business, financial condition or results of operations. 29 Table of Contents Climate change, or legal or regulatory measures to address climate change or other corporate social responsibility and sustainability matters, could adversely affect our business, financial condition and results of operations.
These and other ethical, legal, and social concerns may limit market acceptance of our genetic tests or reduce the potential markets for these tests, either of which could have an adverse effect on our business, financial condition or results of operations.
If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if the third parties need to be replaced or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our studies may be extended, delayed, suspended or terminated, the study data may be invalidated, and we may not be able to obtain a required regulatory approval.
If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, our studies may be extended, delayed, suspended or terminated, the study data may be invalidated, and we may not be able to obtain a required regulatory approval.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe CISO has been with the Company for two years and has over 30 years of experience in technology, including 15 years in cybersecurity, and has held the CISO position at prior companies before joining Exact Sciences.
Biggest changeThe CISO has been with the Company for three years, bringing more than 30 years of technology experience, including 15 years in cybersecurity, and has held the CISO position at other companies before joining Exact Sciences. The CISO leads the cybersecurity team consisting of experts in strategy, governance, risk management, compliance, engineering and development, security operations, and incident management.
Processes for incorporating cybersecurity risks into the overall risk management process Our process for identifying, assessing, and managing risks related to cybersecurity is incorporated into our Enterprise Risk Management (“ERM”) process. The Risk Management team meets at least annually with cybersecurity leadership to discuss cybersecurity related risks identified and the potential likelihood and severity of each risk.
Processes for incorporating cybersecurity risks into the overall risk management process Our process for identifying, assessing, and managing risks related to cybersecurity is incorporated into our Enterprise Risk Management (“ERM”) process. The Risk Management team meets at least annually with cybersecurity leadership to discuss identified cybersecurity-related risks and the potential likelihood and severity of each risk.
Additionally, our AFC oversees the process by which our Board of Directors is informed regarding the risks facing the Company and coordinates with the Company's legal counsel to ensure our Board of Directors receives regular risk assessment updates from management. The Chief Information Security Officer (“CISO”) is responsible for identifying, assessing and managing the Company’s risks from cybersecurity threats.
Additionally, our AFC oversees the process by which our Board of Directors is informed regarding the risks facing the Company and coordinates with our legal counsel to ensure our Board of Directors receives regular risk assessment updates from management. The Chief Information Security Officer (“CISO”) is responsible for identifying, assessing, and managing our risks from cybersecurity threats.
Processes for managing cybersecurity risks The cybersecurity team tracks risks and incidents related to cybersecurity until the risk is mitigated to an acceptable level or fully remediated. When risks are identified, the cybersecurity team oversees mitigation plans with the risk owner which are communicated to necessary teams and remediation steps are taken.
Processes for managing cybersecurity risks The cybersecurity team tracks risks and incidents related to cybersecurity until the risk is mitigated to an acceptable level or fully remediated. When risks are identified, the cybersecurity team oversees mitigation plans with the risk owner. The plans communicated to necessary teams and remediation steps are taken.
Item 1C. Cybersecurity Governance Our Board of Directors administers its cybersecurity risk oversight function directly through our Audit and Finance Committee (“AFC”). Our AFC has primary responsibility for overseeing our risk management practices, programs, policies, and procedures related to data privacy, data protection, and cybersecurity.
Item 1C. Cybersecurity Governance Our Board of Directors administers its cybersecurity risk oversight function directly through our Audit and Finance Committee (“AFC”). Our AFC has primary responsibility for overseeing our risk management practices, programs, and policies related to data privacy, data protection, and cybersecurity.
The AFC reviews and evaluates the processes utilized by management to identify and assess the material internal and external risks that may affect the Company's business. Our AFC regularly discusses with management, Company legal counsel, and the internal audit department the Company's major risk exposures.
The AFC reviews and evaluates the processes utilized by management to identify and assess the material internal and external risks that may affect our business. Our AFC regularly discusses the our major risk exposures with management, legal counsel, and the internal audit department.
Through the ERM process, cybersecurity risks are presented to the executive leadership team, including the CEO and CFO, as well as reported to the AFC. Currently, we are not aware of any risks from cybersecurity threats, or from previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect the Company. 47 Table of Contents
Through the ERM process, cybersecurity risks are presented to the executive leadership team, including the CEO and CFO, as well as reported to the AFC. Currently, we are not aware of any risks from cybersecurity threats or cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company.
Cybersecurity risks, threats, and incidents, including those from third-party service providers, are tracked and regularly provided to the CISO. Beginning in 2024, the Cybersecurity Leadership Team, which includes the CISO and executives from all business functions across the organization, meet at least quarterly to review and discuss cybersecurity risks facing the Company.
Cybersecurity risks, threats, and incidents, including those from third-party service providers, are tracked and regularly provided to the CISO. The Cybersecurity Leadership Team, which includes the CISO and executives from all business functions across the organization, meets at least quarterly to review and discuss cybersecurity risks facing the Company.
This includes potential financial impact on the Company and the steps taken to monitor and control those risks. Reviews with management are done annually which includes a summary of legal and regulatory compliance matters and risk management activities, including a review of the Company's cybersecurity program.
This includes potential financial impact on the Company and the steps taken to monitor and control those risks. Annual reviews with management include a summary of legal and regulatory compliance matters, risk management activities, and including a review of our cybersecurity program.
Risk Management and Strategy Processes for identifying and assessing cybersecurity risks The CISO, with the support of the cybersecurity team and the owners of information technology across the business, monitors current events and trends related to cybersecurity and assesses any potential impact on current systems and operations.
This includes updates on cybersecurity practices and projects designed to strengthen internal cybersecurity and data protection. 49 Table of Contents Risk Management and Strategy Processes for identifying and assessing cybersecurity risks The CISO, with the support of the cybersecurity team and the owners of information technology across the business, monitors current events and trends related to cybersecurity and assesses impact on current systems and operations.
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The CISO is supported by a cybersecurity team that is staffed with experts in strategy, governance, risk management, compliance, engineering and development, security operations, and incident management. The CISO provides our AFC with quarterly updates about our cybersecurity program and material risks.
Added
Our Artificial Intelligence Council, which includes the CISO, oversees adherence to AI ethical principles and regulatory requirements in the development and utilization of AI systems, including generative AI tools. AI governance is integrated within the broader governance framework discussed above. The CISO provides our AFC with periodic updates about our cybersecurity program and material risks.
Removed
This includes updates on cybersecurity practices, programs, and the status of projects designed to strengthen internal cybersecurity and data protection.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties As of December 31, 2023 , our material facilities are as follows: Location Primary Function Total Square Feet (approx.) Leased or Owned Madison, Wisconsin Research and development, corporate, operations and clinical laboratory 1,581,000 Leased/Owned Redwood City, California Research and development, corporate, operations and clinical laboratory 243,000 Leased See Note 15 in the Notes to Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” for further discussion surrounding our leased facilities.
Biggest changeProperties As of December 31, 2024 , our material facilities are as follows: Location Primary Function Total Square Feet (approx.) Leased or Owned Madison, Wisconsin Research and development, corporate, operations, and clinical laboratory 1,566,000 Leased/Owned Redwood City, California Research and development, corporate, operations, and clinical laboratory 243,000 Leased See Note 15 in the Notes to Consolidated Financial Statements for further discussion surrounding our leased facilities.
The information called for by this item is incorporated by reference to the information in Note 15 of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
The information called for by this item is incorporated by reference to the information in Note 15 of the Notes to Consolidated Financial Statements.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is currently listed on the NASDAQ Capital Market under the symbol “EXAS.” As of February 20, 2024, there were 181,530,967 shares of our common stock outstanding held by approximately 179 holders of record.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is currently listed on the NASDAQ Capital Market under the symbol “EXAS.” As of February 18, 2025, there were 185,755,406 shares of our common stock outstanding held by approximately 172 holders of record.
The following graph compares the cumulative total return on our common stock with the cumulative total return of the NASDAQ Composite Index and the NASDAQ Biotechnology Index for the five-year period ended December 31, 2023 .
The following graph compares the cumulative total return on our common stock with the cumulative total return of the NASDAQ Composite Index and the NASDAQ Biotechnology Index for the five-year period ended December 31, 2024 .
The graph assumes that the value of the investment in our stock and in each index was $100 on December 31, 2018 and assumes that all dividends were reinvested. _________________________________ * $100 invested on December 31, 2018 in stock or index including reinvestment of dividends. Unregistered Sales of Equity Securities Not applicable. Item 6. Reserved 49 Table of Contents
The graph assumes that the value of the investment in our stock and in each index was $100 on December 31, 2019 and assumes that all dividends were reinvested. _________________________________ * $100 invested on December 31, 2019 in stock or index including reinvestment of dividends. Unregistered Sales of Equity Securities Not applicable. Item 6. Reserved 51 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

80 edited+25 added−37 removed30 unchanged
Biggest changeThe $13.2 million loss for the year ended December 31, 2022 represents the loss on the sale of our GPS test to MDxHealth. The sale of the GPS test is further discussed in Note 18 of our consolidated financial statements included in this Annual Report on Form 10-K. Investment income (loss), net.
Biggest changeThe sale of the GPS test is further discussed in Note 18 of our Note to Consolidated Financial Statements. Investment income (loss), net. Net investment income increased to $39.6 million for the year ended December 31, 2024 compared to a net investment income of $32.7 million for the year ended December 31, 2023.
Refer to Note 11 and Note 18 in the Notes to Consolidated Financial Statements for further information. Capital Expenditures We expect to continue to invest in capital expenditures to support the growth of our existing products and our research and development activities.
Refer to Note 11 and Note 18 of our Notes to Consolidated Financial Statements for further information. Capital Expenditures We expect to continue to invest in capital expenditures to support the growth of our existing products and our research and development activities.
Business combinations may include contingent consideration to be paid based on the occurrence of future events, such as the achievement of certain development, regulatory and sales milestones. Contingent consideration is a financial liability recorded at fair value at the acquisition date. We remeasure the fair value of outstanding contingent consideration liabilities at each reporting period.
Contingent Consideration Liabilities. Business combinations may include contingent consideration to be paid based on the occurrence of future events, such as the achievement of certain development, regulatory, and sales milestones. Contingent consideration is a financial liability recorded at fair value at the acquisition date. We remeasure the fair value of outstanding contingent consideration liabilities at each reporting period.
The capacity for screening colonoscopies in the U.S. is relatively fixed because it is dependent on the number of gastroenterologists available to perform the procedures. Health systems and health care providers are motivated to increase screening rates because they are measured as part of the HEDIS and Medicare Stars quality measure systems.
The capacity for screening colonoscopies in the U.S. is relatively fixed because it is dependent on the number of gastroenterologists available to perform the procedures. Health systems, payers, and health care providers are motivated to increase screening rates because they are measured as part of the HEDIS and Medicare Stars quality measure systems.
While our significant accounting policies are more fully described in Note 1 in the Notes to Consolidated Financial Statements, we believe that the following judgments are most critical to aid in fully understanding and evaluating our reported financial results. Revenue Recognition.
While our significant accounting policies are more fully described in Note 1 of our Notes to Consolidated Financial Statements, we believe that the following judgments are most critical to aid in fully understanding and evaluating our reported financial results. Revenue Recognition.
However, we may need to raise additional capital to fully fund our current business plan and meet all commitments discussed above. We continuously evaluate our liquidity and capital resources, including access to external capital, in light of current economic and market conditions and our operational performance. As of December 31, 2023, we had no off-balance sheet arrangements.
However, we may need to raise additional capital to fully fund our current business plan and meet all commitments discussed above. We continuously evaluate our liquidity and capital resources, including access to external capital, in light of current economic and market conditions and our operational performance. As of December 31, 2024, we had no off-balance sheet arrangements.
Our contingent consideration liability is primarily due to our acquisition of Thrive, which resulted in a contingent consideration liability of $352.0 million.
Our contingent consideration liability is primarily due to our acquisition of Thrive, which resulted in a contingent consideration liability of $352.0 million upon acquisition.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Objective The purpose of this Management's Discussion and Analysis is to better allow our investors to understand and view our Company from management's perspective. We are providing an overview of our business and strategy including a discussion of our financial condition and results of operations.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Objective The purpose of this Management's Discussion and Analysis (“MD&A”) is to better allow our investors to understand and view our Company from management's perspective. We are providing an overview of our business and strategy including a discussion of our financial condition and results of operations.
We expect that cash, cash equivalents and marketable securities on hand at December 31, 2023, along with cash flows generated through our operations, will be sufficient to fund our current operations for at least the next twelve months based on current operating plans.
We expect that cash, cash equivalents, and marketable securities on hand at December 31, 2024, along with cash flows generated through our operations, will be sufficient to fund our current operations for at least the next twelve months based on current operating plans.
Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”).
Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. GAAP.
We utilized the income approach to measure the fair value of the acquired developed technology intangible asset, supply agreement intangible asset, and building leases, which required management to make estimates including revenue projections, cash flow projections, and discount rates. We believe that the estimates applied are based on reasonable assumptions, but the estimates are inherently uncertain.
We utilized the income approach to measure the fair value of the acquired developed technology intangible asset, supply agreement intangible asset, and building leases and associated leasehold improvements, which required management to make estimates including revenue projections, cash flow projections, and discount rates. We believe that the estimates applied are based on reasonable assumptions, but the estimates are inherently uncertain.
The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K. We have omitted discussion of 2021 results where it would be redundant to the discussion previously included in Item 7.
The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K. We have omitted discussion of certain 2022 results where it would be redundant to the discussion previously included in Item 7.
The $78.4 million gain recorded for the year ended December 31, 2023 primarily relates to a $73.3 million contingent consideration gain and $3.1 million in additional consideration received from MDxHealth as a result of an amendment to the asset purchase agreement in August 2023.
The income recorded for the year ended December 31, 2023 primarily relates to a $73.3 million contingent consideration gain and $3.1 million in additional consideration received from MDxHealth as a result of an amendment to the asset purchase agreement in August 2023.
We recorded impairment charges totaling $0.6 million during the year ended December 31, 2023 related to building leases on certain of our domestic facilities We recorded impairment charges totaling $16.0 million during the year ended December 31, 2022 related to the supply agreement intangible asset acquired as part of the combination with Genomic Health, the developed technology intangible asset acquired as part of the acquisition of Paradigm, and building leases at certain of our domestic locations.
We recorded impairment charges totaling $16.0 million during the year ended December 31, 2022 related to the supply agreement intangible asset acquired as part of the combination with Genomic Health, the developed technology intangible asset acquired as part of the acquisition of Paradigm, and building leases at certain of our domestic locations.
Our Screening revenue primarily includes laboratory service revenue from our Cologuard and PreventionGenetics tests while our Precision Oncology revenue includes laboratory service revenue from global Oncotype DX and therapy selection tests.
Our Screening revenue primarily includes laboratory service revenue from our Cologuard and PreventionGenetics LLC (“PreventionGenetics”) tests while our Precision Oncology revenue includes laboratory service revenue from global Oncotype DX and therapy selection tests.
The amount of revenue we recognize is based on the established billing rates less contractual and other adjustments, which yields the unconstrained amount that we expect to ultimately collect. 57 Table of Contents We determine the amount we expect to ultimately collect using historical collections, established reimbursement rates, and other adjustments.
The amount of revenue we recognize is based on the established billing rates less contractual and other adjustments, which yields the unconstrained amount that we expect to ultimately collect. We determine the amount we expect to ultimately collect using historical collections, established reimbursement rates, and other adjustments.
Due to changes in macroeconomic conditions and a delay in the projected fiscal year of payment for the regulatory and product development milestones associated with our acquisition of Thrive, the weighted average present-value factor decreased from 6.2% as of December 31, 2022 to 5.8% as of December 31, 2023, and the fair value of the contingent consideration liability was remeasured from $284.1 million as of December 31, 2022 to $270.1 million as of December 31, 2023.
Due to changes in macroeconomic conditions and a delay in the projected fiscal year of payment for the regulatory and product development milestones associated with our acquisition of Thrive, the weighted average present-value factor increased from 5.8% as of December 31, 2023 to 6.2% as of December 31, 2024, and the fair value of the contingent consideration liability was remeasured from $270.1 million as of December 31, 2023 to $262.5 million as of December 31, 2024.
Due to the existence of the valuation allowance, future changes in our unrecognized tax benefits will not impact our effective tax rate. Acquired Intangible Assets. We acquire finite-lived intangible assets through our business combinations and asset acquisitions, which primarily consist of developed technology. As of December 31, 2023, our developed technology intangible assets have a carrying value of $559.2 million.
Due to the existence of the valuation allowance, future changes in our unrecognized tax benefits will not impact our effective tax rate. Acquired Intangible Assets. We acquire finite-lived intangible assets through our business combinations and asset acquisitions, which primarily consist of developed technology. As of December 31, 2024, our developed technology intangible assets have a carrying value of $474.6 million.
We evaluate the fair value of long-lived assets, which include property, plant and equipment, leases, finite-lived intangible assets, and investments in privately held companies, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. The review of qualitative factors requires significant judgement.
We evaluate the fair value of long-lived assets, which include property, plant and equipment, leases, finite-lived intangible assets, and investments in non-marketable securities, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. The review of qualitative factors requires significant judgement.
Given the future limitations on and expiration of certain Federal and State deferred tax assets, the recording of a valuation allowance resulted in a deferred tax liability of approximately $17.3 million remaining as of December 31, 2023, which is included in other long-term liabilities on our consolidated balance sheet.
Given the future limitations on and expiration of certain Federal and State deferred tax assets, the recording of a valuation allowance resulted in a deferred tax liability of approximately $7.2 million remaining as of December 31, 2024, which is included in other long-term liabilities on our consolidated balance sheet.
Management has determined that a valuation allowance of $465.8 million and $419.4 million at December 31, 2023 and 2022, respectively is necessary to reduce the tax assets to the amount that is more likely than not to be realized.
Management has determined that a valuation allowance of $708.8 million and $465.8 million at December 31, 2024 and 2023, respectively, is necessary to reduce the tax assets to the amount that is more likely than not to be realized.
Our revenues are affected by the test volume of our products, patient adherence rates, payer mix, the levels of reimbursement, our order to cash operations, and payment patterns of payers and patients. Cost of sales (exclusive of amortization of acquired intangible assets).
Our revenues are affected by the test volume of our products, patient adherence rates, payer mix, the levels of reimbursement, our order to cash operations, and payment patterns of payers and patients. Cost of sales.
Material Cash Requirements Convertible Notes As of December 31, 2023, we had outstanding aggregate principal of $2.34 billion on our convertible notes with maturity dates of January 15, 2025 (the “2025 Notes”), March 15, 2027 (the “2027 Notes”), March 1, 2028 Notes (the “2028 Notes”), and March 1, 2030 (the “2030 Notes” and collectively, the “Notes”).
Material Cash Requirements Convertible Notes As of December 31, 2024, we had outstanding aggregate principal of $2.60 billion on our convertible notes with maturity dates of January 15, 2025 (the “2025 Notes”), March 15, 2027 (the “2027 Notes”), March 1, 2028 Notes (the “2028 Notes”), March 1, 2030 (the “2030 Notes”), and April 15, 2031 (the “2031 Notes” and collectively, the “Notes”).
As a result, the eventual realized value of the IPR&D project may vary from its fair value at the date of acquisition, and material IPR&D impairment charges may occur in future periods. 58 Table of Contents Contingent Consideration Liabilities.
As a result, the eventual realized value of the IPR&D project may vary from its fair value at the date of acquisition, and material IPR&D impairment charges may occur in future periods.
As a result, the actual results may differ from the assumptions and judgments used to determine fair value of the assets acquired, which could result in material impairment charges in the future. Determining the useful life of the developed technology also requires judgment and actual useful life may differ.
As a result, the actual results may differ from the assumptions and judgments used to determine fair value of the assets acquired, which could result in material impairment charges in the future. Determining the useful life of the developed technology also requires judgment and actual useful life may differ. Certain of our acquisitions include the acquisition of indefinite-lived IPR&D.
The increase in cost of sales for the year ended December 31, 2023 was primarily due to an increase in production costs and personnel expenses, which was a result of an increase in completed Cologuard and Oncotype tests and the corresponding increase in headcount to support the increase in tests completed.
The increase in cost of sales for the year ended December 31, 2024 was primarily due to an increase in production costs, personnel expenses, and facility and support services. This was a result of an increase in completed Cologuard and Oncotype tests and the corresponding increase in headcount and facilities related costs to support the increase in tests completed.
Our current projects include the build out of certain lab automation projects at our existing facilities in Madison, WI. These projects are expected to be completed in 2024 and beyond. We also have assets under construction related to leasehold and building improvements, laboratory equipment, and software projects. We expect to incur approximately $150.0 million in capital expenditures in 2024.
Our current projects primarily include the build out of certain lab automation projects at our existing facilities in Madison, WI. These projects are expected to be completed in 2025 and beyond. We also have assets under construction related to laboratory equipment, leasehold and building improvements, and software projects.
We have incurred significant losses since our inception and due to the uncertainty of the amount and timing of future taxable income, it may be necessary to record an allowance to reduce the tax assets we have recognized.
Judgment is required in evaluating our tax positions and determining our annual tax provision. We have incurred significant losses since our inception and due to the uncertainty of the amount and timing of future taxable income, it may be necessary to record an allowance to reduce the tax assets we have recognized.
Lease Commitments We act as lessee in our lease agreements, which include operating leases for corporate offices, laboratory space, warehouse space, vehicles, and certain laboratory and office equipment, and finance leases for certain equipment and vehicles. As of December 31, 2023, we had minimum operating and finance lease payments of $239.7 million and $13.2 million, respectively.
Lease Commitments We act as lessee in our lease agreements, which include operating leases for corporate offices, laboratory space, warehouse space, vehicles, and certain laboratory and office equipment, and finance leases for certain equipment and vehicles. As of December 31, 2024, we had minimum operating and finance lease payments of $235.8 million and $23.0 million, respectively.
An additional $30.0 million would be payable in cash to Ashion's former shareholders upon reaching cumulative revenues of $500.0 million from MRD products, on or before the fifth anniversary of the acquisition of Ashion. See Note 18 in the Notes to Consolidated Financial Statements for further information.
An additional $30.0 million would be payable in cash to Ashion's former shareholders upon reaching cumulative revenues of $500.0 million from MRD products, on or before the fifth anniversary of the acquisition of Ashion.
Further changes in the key assumptions made in determining the fair value of the contingent consideration liability recorded related to the acquisition of Thrive could impact the estimated fair value as follows: Assumption Unit of Measure Change Fair Value Impact (In Thousands) Probability of success 5% $ 15,000 Projected fiscal year of payment 1 Year 14,900 Present-value factor 1% 14,400 Impairment of Indefinite-Lived Assets.
Further changes in the key assumptions made in determining the fair value of the contingent consideration liability recorded related to the acquisition of Thrive could result in a change in the estimated fair value of up to the amounts shown in the following table: 61 Table of Contents Assumption Unit of Measure Change Fair Value Impact (In Thousands) Probability of success 5% $ 14,600 Projected fiscal year of payment 1 Year 15,400 Present-value factor 1% 14,800 Impairment of Indefinite-Lived Assets.
Cash, Cash Equivalents and Marketable Securities As of December 31, 2023, we had approximately $605.4 million in unrestricted cash and cash equivalents and approximately $172.3 million in marketable securities. The majority of our investments in marketable securities consist of fixed income investments, and all are deemed available-for-sale.
Cash, Cash Equivalents, and Marketable Securities As of December 31, 2024, we had approximately $600.9 million in unrestricted cash and cash equivalents and approximately $437.1 million in marketable securities. The majority of our investments in marketable securities consist of fixed income investments, and all are deemed available-for-sale.
We discontinued COVID-19 testing in the second quarter of 2023 due to lower demand, which led to a decrease in COVID-19 testing revenue. During the years ended December 31, 2023 and 2022, revenue recognized from changes in transaction price was $25.2 million and $20.3 million, respectively.
We discontinued COVID-19 testing in the second quarter of 2023 due to lower demand, which led to a decrease in COVID-19 testing revenue. Adjustments to revenue recognized during the years ended December 31, 2024 and 2023 from changes in transaction price were less than 1% and 2%, respectively.
Our Cologuard test market share is increasing in larger health systems, helping us screen more Americans. We have an opportunity to impact even more lives by increasing adoption of Oncotype DX internationally. In 2023, we secured reimbursement for Oncotype DX in Japan.
Cologuard utilization is increasing in this setting, helping us screen more Americans. We have an opportunity to impact even more lives by increasing adoption of Oncotype DX tests internationally. In 2023, we secured reimbursement for the Oncotype DX test in Japan.
A liability is recorded when achievement of a milestone becomes probable for asset acquisitions. 55 Table of Contents As a result of the acquisition of Thrive in January 2021, an additional $450.0 million would be payable in cash to Thrive’s former shareholders upon the achievement of two discrete events, FDA approval and CMS coverage, for $150.0 million, and $300.0 million, respectively, in relation to the development and commercialization of a blood-based, multi-cancer early detection test.
As a result of the acquisition of Thrive in January 2021, an additional $450.0 million would be payable in cash to Thrive’s former shareholders upon the achievement of two discrete events, FDA approval and CMS coverage, for $150.0 million, and $300.0 million, respectively, in relation to the development and commercialization of a blood-based, MCED test.
We expect that research and development expenses will generally continue to increase in future periods as we continue investing in new tests and enhancing current products.
We expect that research and development expenses will generally continue to increase in future periods as we continue to enhance our current products and invest in our pipeline.
Interest expense decreased to $19.4 million for the year ended December 31, 2023 compared to $19.6 million for the year ended December 31, 2022. Interest expense recorded from our outstanding convertible notes totaled $13.2 million, which was partially offset by a net gain on settlement of convertible notes of $10.3 million for the year ended December 31, 2023.
Interest expense recorded from our outstanding convertible notes totaled $22.3 million, which was partially offset by a gain on settlement of convertible notes of $10.3 million, for the year ended December 31, 2024.
Until the six-months immediately preceding the maturity date of the applicable series of Notes, each series of Notes is convertible only upon the occurrence of certain events and during certain periods.
See Note 10 of our Notes to Consolidated Financial Statements for further information. Until the six months immediately preceding the maturity date of the applicable series of Notes, each series of Notes is convertible only upon the occurrence of certain events and during certain periods.
Income tax expense was $2.4 million for the year ended December 31, 2023 compared to a benefit of $9.1 million for the year ended December 31, 2022. Income tax expense for the year ended December 31, 2023 was primarily related to current foreign and state tax expense.
Income tax benefit was $7.3 million for the year ended December 31, 2024 compared to an expense of $2.4 million for the year ended December 31, 2023. Income tax benefit for the year ended December 31, 2024 was primarily related to current foreign and state tax expense offset by a U.S. deferred tax benefit.
The Revolver and Securitization Facility are further described in Note 9 of our consolidated financial statements included in this Annual Report on Form 10-K. 56 Table of Contents We believe that our anticipated income from operations, cash and marketable securities on hand, and borrowing capacity under our Revolver and Securitization Facility will be adequate to meet our commitments for at least 12 months from the issuance of this Annual Report on Form 10-K.
We believe that our anticipated income from operations, cash and marketable securities on hand, and borrowing capacity under our Revolving Credit Agreement will be adequate to meet our commitments for at least 12 months from the issuance of this Annual Report on Form 10-K.
As a result, the eventual realized value of the impaired asset may vary from its fair value. 59 Table of Contents Recent Accounting Pronouncements See Note 1 in the Notes to Consolidated Financial Statements for the discussion of Recent Accounting Pronouncements.
As a result, the eventual realized value of the impaired asset may vary from its fair value. Recent Accounting Pronouncements See Note 1 of our consolidated financial statements included in this Annual Report on Form 10-K for the discussion of Recent Accounting Pronouncements.
Other operating income (loss). Other operating income (loss) increased to a gain of $78.4 million for the year ended December 31, 2023 compared to a loss of $13.2 million for the year ended December 31, 2022.
Other operating income (loss). Other operating income was $9.2 million for the year ended December 31, 2024 compared to $78.4 million for the year ended December 31, 2023.
Of the outstanding operating lease obligations, $39.5 million matures in 2024, and the remaining $200.3 million will mature in periods subsequent to 2024. Of the outstanding finance lease obligations, $5.0 million matures in 2024, and the remaining $8.2 million will mature in periods subsequent to 2024. See Note 15 in the Notes to Consolidated Financial Statements for further information.
Of the outstanding operating lease obligations, $37.4 million matures in 2025, and the remaining $198.4 million will mature in periods subsequent to 2025. Of the outstanding finance lease obligations, $8.9 million matures in 2025, and the remaining $14.1 million will mature in periods subsequent to 2025. See Note 15 of our Notes to Consolidated Financial Statements for further information.
License Agreements We license certain technologies that are, or may be, incorporated into our technology under several license agreements, as well as the rights to commercialize certain diagnostic tests through collaboration agreements.
See Note 7 of our Notes to Consolidated Financial Statements for further information. 58 Table of Contents License Agreements We license certain technologies that are, or may be, incorporated into our technology under several license agreements, as well as the rights to commercialize certain diagnostic tests through collaboration agreements.
A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before we are able to realize their benefit, or that future deductibility is uncertain.
For these reasons, even if we attain profitability, our ability to utilize our NOLs may be limited, potentially significantly so. 59 Table of Contents A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before we are able to realize their benefit, or that future deductibility is uncertain.
The 2025 Notes have an outstanding principal balance of $249.2 million. The 2027 Notes have an outstanding principal balance of $563.8 million. The 2028 Notes have an outstanding principal balance of $949.0 million. The 2030 Notes have an outstanding principal balance of $573.0 million.
The 2025 Notes have an outstanding principal balance of $249.2 million, which was settled in cash upon maturity in January 2025. The 2027 Notes have an outstanding principal balance of $563.8 million. The 2028 Notes have an outstanding principal balance of $589.4 million. The 2030 Notes have an outstanding principal balance of $573.0 million.
Financing activities The increase in cash provided by financing activities for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily due to proceeds of $138.0 million from the issuance of convertible notes in the first quarter of 2023.
In addition, there was a decrease of $14.8 million in our in investments in non-marketable securities. 57 Table of Contents Financing activities The increase in cash provided by financing activities for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to proceeds of $266.8 million from the issuance of convertible notes in the second quarter of 2024 compared to proceeds of $138.0 million from the issuance of convertible notes in the first quarter of 2023.
The 2025 Notes, 2027 Notes, 2028 Notes, and 2030 Notes accrue interest at a fixed rate of 1.0%, 0.375%, 0.375%, and 2.0% per year, respectively, which is payable in cash semi-annually in arrears each year until the maturity date. See Note 10 in the Notes to Consolidated Financial Statements for further information.
The 2031 Notes have an outstanding principal balance of $620.7 million. The 2025 Notes, 2027 Notes, 2028 Notes, 2030 Notes, and 2031 Notes accrue interest at a fixed rate of 1.0%, 0.375%, 0.375%, 2.0%, and 1.750% per year, respectively, which is payable in cash semi-annually in arrears each year until the maturity date.
We record a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
We record a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. 60 Table of Contents We compute our provision for income taxes based on the statutory tax rates and tax planning opportunities available to us in the various jurisdictions that we operate.
(Amounts in millions) 2023 2022 Change Screening $ 1,864.7 $ 1,424.7 $ 440.0 Precision Oncology 629.1 601.5 27.6 COVID-19 Testing 6.0 58.1 (52.1) Total $ 2,499.8 $ 2,084.3 $ 415.5 The increase in Screening revenue was mainly due to an increase in the number of completed Cologuard tests.
(Amounts in millions) 2024 2023 Change Screening $ 2,103.9 $ 1,864.7 $ 239.2 Precision Oncology 655.0 629.1 25.9 COVID-19 Testing — 6.0 (6.0) Total $ 2,758.9 $ 2,499.8 $ 259.1 The increase in Screening revenue was primarily due to an increase in the number of completed Cologuard tests.
A 1% change in our estimated transaction price for revenue recognized for the year ended December 31, 2023 would result in an adjustment to revenue of approximately $25.0 million in 2024.
We have historically recognized an upward or downward adjustment to revenues from a change in transaction price representing approximately 1% of prior year revenues. A 1% change in our estimated transaction price for revenue recognized for the year ended December 31, 2024 would result in an adjustment to revenue of approximately $27.6 million in 2025.
Management's Discussion and Analysis of Financial Condition and Results of Operations of our Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 21, 2023. Overview Exact Sciences Corporation is a leading, global, advanced cancer diagnostics company.
Management's Discussion and Analysis of Financial Condition and Results of Operations of our Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 21, 2023. Overview A leading provider of cancer screening and diagnostic tests, Exact Sciences Corporation gives patients and health care professionals the clarity needed to take life-changing action earlier.
Cash Flows (Amounts In millions) 2023 2022 Net cash provided by (used in) operating activities $ 156.1 $ (223.6) Net cash provided by investing activities 49.7 74.1 Net cash provided by financing activities 159.8 76.5 Operating activities The increase in cash provided by operating activities for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily due to an increase in revenue, a decrease in operating expenses as a percentage of revenue, and timing of payments on our accounts payable and accrued expenses.
Cash Flows (Amounts In millions) 2024 2023 Net cash provided by operating activities $ 210,536 $ 156,119 Net cash provided by (used in) investing activities (442,155) 49,679 Net cash provided by financing activities 231,874 159,766 Operating activities The increase in cash provided by operating activities for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to an increase in revenue and a decrease in certain of our operating expenses as a percentage of revenue.
Net Operating Loss Carryforwards As of December 31, 2023, we had federal, state, and foreign net operating loss (“NOL”) carryforwards of approximately $402.9 million, $66.0 million, and $10.4 million, respectively. We also had federal and state research tax credit carryforwards of approximately $70.9 million and $33.0 million, respectively.
Net Operating Loss Carryforwards As of December 31, 2024, we had federal, state, and foreign net operating loss (“NOL”) carryforwards of approximately $374.9 million, $65.4 million, and $12.1 million, respectively. We also had federal and state research tax credit carryforwards of approximately $82.5 million and $38.2 million, respectively.
The projected fiscal year of payment range is from 2028 to 2030. See Note 18 in the Notes to Consolidated Financial Statements for further information.
The projected fiscal year of payment range is from 2030 to 2031. See Note 7 of our consolidated financial statements included in this Annual Report on Form 10-K for further information.
We expect that cost of sales will generally continue to increase in future periods as a result of an increase in our existing laboratory testing services and as we launch our pipeline products.
Gross margin decreased in 2024 primarily due to higher Cologuard test volume from organized screening programs, which have lower adherence rates. We expect that cost of sales will generally continue to increase in future periods as a result of an increase in our existing laboratory testing services and as we launch our pipeline products.
The Notes will be convertible into cash, shares of our common stock (plus, if applicable, cash in lieu of any fractional share), or a combination of cash and shares of our common stock, at our election. It is our intent and policy to settle all conversions through a combination settlement.
The Notes will be convertible into cash, shares of our common stock (plus, if applicable, cash in lieu of any fractional share), or a combination of cash and shares of our common stock, at our election. If the notes are not converted prior to the maturity date, the principal amount will be settled in cash upon maturity.
The impairment charges recorded during the year ended December 31, 2023 included impairments to building leases at certain of our domestic locations.
We recorded impairment charges totaling $0.6 million during the year ended December 31, 2023 related to building leases on certain of our domestic facilities.
(Amounts in millions) 2023 2022 Change Personnel expenses $ 180.3 $ 143.3 $ 37.0 Direct research and development expenses 129.7 158.7 (29.0) Facility and support services 64.1 45.5 18.6 Stock-based compensation 41.2 33.8 7.4 Professional fees 7.2 3.9 3.3 Other research and development expenses 3.4 8.2 (4.8) Total research and development expenses $ 425.9 $ 393.4 $ 32.5 Sales and marketing expenses.
(Amounts in millions) 2024 2023 Change Personnel expenses $ 182.2 $ 180.3 $ 1.9 Direct research and development expenses 110.1 129.7 (19.6) Facility and support services 56.2 64.1 (7.9) Stock-based compensation 39.7 41.2 (1.5) License agreement termination 25.8 — 25.8 Professional fees 10.9 7.2 3.7 Intangible asset amortization 3.3 1.0 2.3 Other research and development expenses 3.0 3.4 (0.4) Total research and development expenses $ 431.2 $ 426.9 $ 2.0 Sales and marketing expenses.
Interest expense recorded from our outstanding convertible notes totaled $16.1 million for the year ended December 31, 2022. The convertible notes are further described in Note 10 of our consolidated financial statements included in this Annual Report on Form 10-K. Income tax benefit (expense).
Interest expense recorded from our outstanding convertible notes totaled $13.2 million, which was partially offset by a net gain on settlement of convertible notes of $10.3 million, for the year ended December 31, 2023. The convertible notes are further described in Note 10 of our Notes to Consolidated Financial Statements. Income tax benefit (expense).
The income tax benefit recorded during the year ended December 31, 2022 was primarily related to the future limitations on and expiration of certain Federal and State deferred tax assets, offset by current foreign and state tax expense.
The income tax expense recorded during the year ended December 31, 2023 was primarily related to current foreign and state tax expense.
The decrease in facility and support services was due to fewer costs incurred on commercial related information technology projects. We anticipate sales and marketing expenses will generally increase in future periods while continuing to decrease as a percentage of revenue over time, driven by the growth of Cologuard and Oncotype testing services and the introduction to new tests.
We anticipate sales and marketing expenses will generally increase in future periods as we reinvest in efforts to increase adoption of current products and support the launches of new products. We expect these expenses will continue to decrease as a percentage of revenue over time, driven by the growth of Cologuard and Oncotype testing services.
Certain of our acquisitions include the acquisition of indefinite-lived in-process research and development (“IPR&D”). As a result of the acquisition of Thrive, we recorded an IPR&D asset of $1.25 billion. There are major risks and uncertainties associated with IPR&D due to the regulatory approvals needed, which rely on the success of clinical trials that demonstrate product effectiveness.
There are major risks and uncertainties associated with IPR&D due to the regulatory approvals needed, which rely on the success of clinical trials that demonstrate product effectiveness.
If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. We recorded impairment charges totaling $39.5 million during the year ended December 31, 2024 related to the closure of certain of our domestic facilities.
We expect general and administrative expenses will generally continue to increase in future periods to support the growth in our existing and pipeline products, but we expect it will decrease as a percentage of revenue over time as we leverage efficiencies in our personnel and information technology systems.
We expect general and administrative expenses will decrease over time as we leverage efficiencies in our personnel and information technology systems.
The increase in other general and administrative expenses was primarily due to a $38.6 million decrease in the gain recorded on our outstanding contingent consideration liabilities as a result of change in fair value, as further described in Note 7 of our consolidated financial statements included in this Annual Report on Form 10-K.
This reduction was partially offset by an increase in other general and administrative expense as a result of the change in fair value of our outstanding contingent consideration liabilities. Refer to Note 7 of our Notes to Consolidated Financial Statements for further discussion of our outstanding contingent consideration liabilities.
We also expect to see a corresponding increase in personnel and support services associated with this growth. 51 Table of Contents (Amounts in millions) 2023 2022 Change Production costs $ 393.4 $ 329.5 $ 63.9 Personnel expenses 182.0 160.1 21.9 Facility and support services 54.4 63.6 (9.2) Stock-based compensation 20.8 19.2 1.6 Other cost of sales expenses 3.6 2.0 1.6 Total cost of sales expense $ 654.2 $ 574.4 $ 79.8 Research and development expenses .
(Amounts in millions) 2024 2023 Change Production costs $ 467.3 $ 393.4 $ 73.9 Personnel expenses 197.3 182.0 15.3 Intangible asset amortization 84.1 83.3 0.8 Facility and support services 68.5 54.4 14.1 Stock-based compensation 20.5 20.8 (0.3) Other cost of sales expenses 2.5 3.7 (1.2) Total cost of sales expense $ 840.2 $ 737.6 $ 102.6 53 Table of Contents Research and development expenses .
The net investment loss for the year ended December 31, 2023 was primarily due to gains recorded on our marketable securities and investments in privately held companies. The net investment loss for the year ended December 31, 2022 was primarily due to losses recorded on our investments in privately held companies and marketable securities. 53 Table of Contents Interest expense.
The net investment income for the year ended December 31, 2024 and 2023 was primarily due to gains recorded on our marketable and non-marketable securities. Interest expense. Interest expense increased to $27.0 million for the year ended December 31, 2024 compared to $19.4 million for the year ended December 31, 2023.
Both provisions are applicable for losses arising in tax years beginning after December 31, 2017. As of December 31, 2023, we had $278.5 million of NOLs incurred after December 31, 2017. For these reasons, even if we attain profitability, our ability to utilize our NOLs may be limited, potentially significantly so.
Both provisions are applicable for losses arising in tax years beginning after December 31, 2017. As of December 31, 2024, we had $281.2 million of NOLs incurred after December 31, 2017.
We also elected to bypass the qualitative assessment and performed a quantitative assessment for our annual IPR&D assessment and concluded that there were no impairments for the year ended December 31, 2023.
For the year ended December 31, 2024, we elected to bypass the qualitative assessment and performed a quantitative assessment for our annual IPR&D assessment. We determined that the carrying value exceeded the fair value and recorded an impairment loss of $830.0 million.
More health systems are recognizing the opportunity to partner with Exact Sciences to address their screening rates and related quality measures. We aim to partner with them to implement our Cologuard test as an essential part of their screening toolkit and embed it in their workflows. We continue to implement more electronic ordering interfaces connecting health systems to Exact Sciences.
More health systems and payers are recognizing the opportunity to partner with Exact Sciences to address their screening rates and related quality measures through large, organized screening programs. We aim to partner with them to implement our Cologuard test within these programs as a solution for patients who infrequently visit their health care provider.
Generating sustained profits will put the company in a better position to continue investing in life-changing cancer diagnostics to help achieve our mission. 50 Table of Contents Recent Developments and Trends We estimate there are up to 60 million Americans that are not up to date with their colon cancer screenings.
Amplify our Impact By reaching more patients through an expanded portfolio and growing customer base, we will increase revenue and profitability. Sustained profits will enable continued investment in life-changing cancer diagnostics to help achieve our mission. Recent Developments and Trends We estimate there are up to 55 million Americans that are not up to date with their colon cancer screenings.
(Amounts in millions) 2023 2022 Change Personnel expenses $ 412.9 $ 444.9 $ (32.0) Direct marketing costs 183.7 237.5 (53.8) Stock-based compensation 65.6 62.6 3.0 Professional and legal fees 44.7 49.0 (4.3) Facility and support services 16.9 48.6 (31.7) Other sales and marketing expenses 3.3 3.4 (0.1) Total sales and marketing expenses $ 727.1 $ 846.0 $ (118.9) 52 Table of Contents General and administrative expenses.
(Amounts in millions) 2024 2023 Change Personnel expenses $ 500.3 $ 471.6 $ 28.7 Direct marketing costs 212.8 183.7 29.1 Professional and legal fees 70.4 49.8 20.6 Stock-based compensation 68.2 73.0 (4.8) Other sales and marketing expenses 19.3 24.3 (5.0) Facility and support services 15.4 17.7 (2.3) Intangible asset amortization 7.7 7.7 — Total sales and marketing expenses $ 894.1 $ 827.8 $ 66.3 General and administrative expenses.
Breast cancer is the most common cancer among Japanese women, with about 45,000 new diagnoses of early-stage HR+, HER2- breast cancer each year. With reimbursement in place, we estimate that more than 100 women a day could learn if their cancer is likely to recur, and potentially be spared of unnecessary chemotherapy. Results of Operations Revenue.
Breast cancer is the most common cancer among Japanese women, with about 45,000 new diagnoses of early-stage HR+, HER2- breast cancer each year.
The impairment charges recorded during the year ended December 31, 2022 included an impairment to the supply agreement intangible asset acquired as part of the acquisition of Genomic Health, an impairment of the acquired developed technology intangible asset acquired as part of the acquisition of Paradigm Diagnostics, Inc. (“Paradigm”), and building leases at certain of our domestic locations.
The impairment charges recorded during the year ended December 31, 2024 included impairments to our IPR&D asset acquired as part of our acquisition of Thrive and building leases and corresponding leasehold improvements at certain of our domestic facilities. The impairment of the IPR&D asset is further discussed in Note 6 of our Notes to Consolidated Financial Statements.
Amortization of acquired intangible assets decreased to $92.2 million for the year ended December 31, 2023 compared to $97.5 million for the year ended December 31, 2022.
Impairment of long-lived and indefinite-lived assets increased to $869.5 million for the year ended December 31, 2024 compared to $0.6 million for the year ended December 31, 2023.
The increase in Precision Oncology revenue was mainly due to an increase in the number of completed Oncotype DX breast cancer tests, both domestically and internationally. The increase in completed Oncotype DX tests was partially offset by a decrease of $19.4 million in revenues from our divested GPS test.
This was primarily driven by increased Cologuard adoption by patients, providers, health systems, and payers. The increase in Precision Oncology revenue was primarily due to an increase in the number of completed Oncotype DX breast cancer tests, both domestically and internationally. This was led by an increased number of ordering providers outside the U.S., particularly in Japan.
The revenue recognized from changes in transaction price is a result of improvements made in our billing systems and processes, including international contracting and collections. We expect continuing revenue growth for our Cologuard and Oncotype tests subject to seasonal variability.
The impacts to revenue related to change in transaction price are a function of differences in realized collections compared to original estimates, which includes upward adjustments stemming from optimizations in our reimbursement operations and downward adjustments from things such as payer denials. We expect continuing revenue growth for our Cologuard and Oncotype tests subject to seasonal variability.
PNC Bank, National Association has issued letters of credit totaling $4.4 million, which reduces the amount available for cash advances under the line of credit to $145.6 million. As of December 31, 2023, we had not drawn any funds under the Revolver.
Sources of Cash As of December 31, 2024, we had access to a revolving line-of-credit (the “Revolver”) with PNC Bank, National Association of up to $150.0 million, which we had not drawn any funds from since it was initially executed in November 2021.
The decrease in cash provided by investment activities was offset by a decrease of $90.3 million in purchases of property, plant and equipment due to completion of our clinical lab and warehouse expansions in 2022, and a decrease of $26.3 million in our spend in privately held companies.
We also increased our purchases of property, plant and equipment by $11.8 million due to additional investments in information technology infrastructure and lab automation. The increase in cash used in investing activities was partially offset by a decrease in cash used related to business combinations, asset acquisitions, and investments in non-marketable securities.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−2 removed7 unchanged
Biggest changeBased on a hypothetical 100 basis point decrease in market interest rates, the potential losses in future earnings, fair value of risk-sensitive financial instruments, and cash flows are immaterial, although the actual effects may differ materially from the hypothetical analysis.
Biggest changeWe place our cash, cash equivalents, restricted cash, and marketable securities with high-quality financial institutions, limit the amount of credit exposure to any one institution, and have established investment guidelines relative to diversification and maturities designed to maintain safety and liquidity. 62 Table of Contents Based on a hypothetical 100 basis point decrease in market interest rates, the potential losses in future earnings, fair value of risk-sensitive financial instruments, and cash flows are immaterial, although the actual effects may differ materially from the hypothetical analysis.
We invest our cash, cash equivalents, and marketable securities in securities of the U.S. governments and its agencies and in investment-grade, highly liquid investments consisting of commercial paper, bank certificates of deposit, and corporate bonds, which as of December 31, 2023 and December 31, 2022 were classified as available-for-sale.
We invest our cash, cash equivalents, and marketable securities in securities of the U.S. governments and its agencies and in investment-grade, highly liquid investments consisting of commercial paper, bank certificates of deposit, and corporate bonds, which as of December 31, 2024 and December 31, 2023 were classified as available-for-sale.
Although the impact of currency fluctuations on our financial results has been insignificant in the past, there can be no guarantee that the impact of currency fluctuations related to our international activities will not be material in the future. 60 Table of Contents
Although the impact of currency fluctuations on our financial results has been insignificant in the past, there can be no guarantee that the impact of currency fluctuations related to our international activities will not be material in the future. 63 Table of Contents
As of December 31, 2023, we had open foreign currency forward contracts with notional amounts of $39.5 million.
As of December 31, 2024, we had open foreign currency forward contracts with notional amounts of $44.2 million.
We do not utilize interest rate hedging agreements or other interest rate derivative instruments. As of December 31, 2023, we had $50.0 million in outstanding variable rate debt. Based on a hypothetical 100 basis point increase in market interest rates, annual interest expense on variable rate debt as of December 31, 2023 would increase by approximately $0.5 million.
We do not utilize interest rate hedging agreements or other interest rate derivative instruments. As of December 31, 2024, we had no outstanding variable rate debt. If we were to draw down amounts under our Revolving Loan, we would be impacted by increases in prevailing market interest rates.
Removed
We place our cash, cash equivalents, restricted cash, and marketable securities with high-quality financial institutions, limit the amount of credit exposure to any one institution, and have established investment guidelines relative to diversification and maturities designed to maintain safety and liquidity.
Removed
If we were to draw down additional amounts under either our Revolving Loan or Securitization Facility, the impact of increases in prevailing market interest rates would be even greater.

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