Pivoting From Poop: How Exact Sciences is Turning to Option #2

Exact Sciences Chairman and CEO Kevin Conroy joins Yahoo Finance’s Anjalee Khemlani and Seana Smith to discuss how his company is pivoting its testing labs to help with coronavirus testing.

Video Transcript

SEANA SMITH: Welcome back to "The Ticker" on Yahoo Finance. Companies around the world are stepping up in the fight against COVID-19, altering their factories and labs in an effort to mitigate the spread of the virus. So for more on this, I want to bring in Kevin Conroy, chairman and CEO of Exact Sciences. And we also have our own Anjalee Khemlani joining the conversation. And Kevin, thanks so much for taking the time to join the show once again.

We last spoke about a year ago. And at that time, we were talking about the success that your company was having with at-home colon cancer test-- at-home colon cancer screening. So in the wake of the coronavirus pandemic, you've shifted your business a little bit. You converted part of your lab to process COVID-19 tests. Let's start with-- just tell us about the shift in your business and how you went from really assessing stool samples to working with the nasal swabs that you are now presently doing with COVID-19.

KEVIN CONROY: Well, thank you. And yes, you know, the team first said, we need to bring up a test so that we can take care of our own employees. And as we evaluated the opportunity, we looked and said, we can bring up testing to probably 10,000 a day, and now we think that we can expand that to 20,000 a day over time.

So I couldn't be more proud to be part of a team that has kind of worked around the clock to be able to do their part. Because ultimately, when history is written, I think that we all want to be known as having done whatever we could to help out our fellow citizens and the country.

ANJALEE KHEMLANI: Kevin, looking at what it takes to really process these, I've heard from labs that payment is still a problem, when you're are talking about insurers or at the government level. What has been your experience in this whole chain? Where do you stand, and are you able to get paid for this?

KEVIN CONROY: Yes, well, we're working directly with states and municipalities, and so we are entering into contracts with them. And they are-- so they are paying. This is an issue, though. Insurance companies, by and large, have stepped up to pay for COVID testing, but not all of them. And really, if you want to unlock the testing capacity that our nation has, you really need to make sure that the labs get paid for that. Because right now, they're stressed like every other business.

ANJALEE KHEMLANI: And looking at what you've done, it seems like, you know, as we've seen and heard, so many companies have taken on the burden of pivoting either part or a lot of their operations. What has that been like for you? What has the cost been to pivot, and is this in order to make up for the lost regular business?

KEVIN CONROY: The cost of bringing up this kind of testing is real, and it's during a time when everybody's business-- most companies' businesses are challenged. But you kind of put that aside and say, OK, what's the right thing to do here? Yes, it's expensive to bring up a whole new type of testing. The important thing, though, is that you just do it. And that's what the team here has done, and that's true throughout the lab industry.

So today, we're test-- the whole lab industry in the US is testing about 400,000 people a day. To fully bring people back to work, some estimates are 4 million tests per day. And--

SEANA SMITH: Kevin, when--

KEVIN CONROY: --so, you know, it's a--

SEANA SMITH: Kevin, I'm going to go off of that, just in terms of the number of tests that not only you are processing per day, but really so many of these other companies that are stepping up to the plate and also taking this into their own hands and trying to contribute here. Just in terms of the capacity, earlier you said you had 20,000-- the ability to do 20,000 a day, yet you're not at that capacity. Why are we seeing a disconnect there?

KEVIN CONROY: Yeah, there is a disconnect because if you're sick and you call your doctor frequently, you're told there's not testing available when, in fact, there is. The problem is, where does that patient go to get a test? And shutting down our nation's primary care offices or limiting them there's a real problem. Through telemedicine, you can't get a nasal swab.

So cities and states are setting up collection sites, and that's a really important first step. And then they're developing plans, like here in Wisconsin, Governor Evers is setting up testing in nursing homes to get all of their residents and employees tested. So it will take a little bit of time, but it's headed in the right direction.

ANJALEE KHEMLANI: And when you're talking about, you know, the work that you're doing now, are you able to predict when you might get sort of that normal flow of operations back?

KEVIN CONROY: Well, that's something that's really important here because COVID isn't only a-- has a terrible effect because of the disease itself. It is also delaying preventative medicine. And one of the big areas there is cancer screenings. And in fact, colon cancer screenings are down 90% since this started. And just-- that is going to have a real impact, a real-- I mean, the death rate willing increase if we don't quickly get those people screened.

Cologuard is a test that has seen real strength here, especially in the last three or four weeks, because people know they can get a really accurate test done in the privacy of their own home. And then if that is positive, they can get in and see a gastroenterologist. But most of the time, it isn't positive. And so it feels great to be able to do our part on that front, too. We need to get our country screened for colon cancer and breast cancer and cervical cancer. That's a must.

SEANA SMITH: Yeah, Kevin, this is so important. And we talk about the delaying of preventative medicine and the impact that could have it, but it's also having a financial impact when you take a look at some of the tough decisions that Exact Sciences has had to make over the last several weeks. I know you've been forced to furlough some of your employees. You've also announced pay cuts. How else are you addressing some of the financial weakness expected in the future because of the COVID-19 outbreak?

KEVIN CONROY: Well, we moved very quickly to rightsize our budget. And as we see strength, we will be able to bring people back from furlough. That's the goal. And so the mantra at Exact Sciences is make sure that we're fighting not only for our customers and patients, but also for each other to make sure that we are able to bring people back to work fully. And we're confident we're going to be able to do it, but we have to do it very safely.

ANJALEE KHEMLANI: Kevin, I've heard some experimental ideas out there. I know that at the FDA, they're looking into the idea of being able to test wastewater at colleges or even identifying COVID patients, or those who have passed, from stool samples. Is that something that you're looking into as well or that's a potential for you?

KEVIN CONROY: That is a potential. The immediate opportunity, though, is to test people who may have-- who have symptoms and people who are going back into the workplace and health care workers that are fully being tested yet. For the nation to bring our economy back, we need to bring workers back. And for workers to be back, you have to do so safely. Testing is an important part of that. Ultimately, will you get to those other types of tests? Yes. Right now, we need to use our capacity to get people back to work.

SEANA SMITH: All right, Kevin Conroy, Exact Sciences' chairman and CEO. We really appreciate you taking the time to join the show once again. We hope to have you back in the future. Thanks so much.

KEVIN CONROY: Thank you.