EXAGEN INC. Q3 FY2024 earnings call

• Welcomed Jeff Black as new Chief Financial Officer. - Third quarter performance in line with expectations, set to achieve cash flow positivity by end of next year. - AVISE business had testing volume affected by seasonality but ASP improved. - Over two years, revenue growth, ASP expansion, gross margin improvement, operating expense reduction, and adjusted EBITDA loss improvement. - In final innings of new biomarker launches, submitted to New York State Department of Health, had five abstracts accepted for ACR meeting. - Laboratory and clinical teams worked on validation studies and lab capacity expansion. - Commercial team prepared for launch, met with clinicians and revised test reports/requisitions.

Third quarter total revenue was $12.5 million, including $1.2 million in one-time adjustments. Excluding adjustments, revenue in the quarter was $13.7 million, up about 2% over 2023. Year-to-date revenue was $42 million, up 8% over 2023. The AVISE business saw testing volume down slightly quarter-over-quarter due to seasonal factors. Trailing 12-month AVISE ASP improved for the 7th consecutive quarter to $404 per CTD test. Comparing the first nine months of 2024 to the same period in 2022, revenue grew nearly 30%, ASP expanded 45%, gross margins improved over 1300 basis points, operating expenses were reduced almost 20%, and adjusted EBITDA loss was improved over 70%.

• Full year 2024 revenue expected $55 - $56 million, adjusted EBITDA loss better than $12 million. - Anticipate achieving cash flow positivity by end of 2025. - New product launches expected to accelerate ASP and margin expansion and drive profitability.

• One-time adjustments related to CPT coding discrepancy and AR reserves, but matters non-systemic. - Hurricanes in Q3 impacted Florida AVISE testing volume, with approximately 50% loss for two and a half weeks.

Q: Mark Massaro asked Jeff Black about confidence in no repeat of one-time adjustments and impact of storms in Q3.

A: Jeff Black said the $1.2 million adjustments were due to a CPT coding discrepancy and AR reserve review, non-systemic. John Aballi mentioned storm in Florida led to about 50% loss of testing volume for two and a half weeks.

Q: Daniel Brennan asked John Aballi about impact of new biomarker launch in 2025 and abstracts.

A: John Aballi said new markers, especially seronegative RA markers, are exciting and launch expected to have sizable impact.

Q: Kyle Mikson asked about Q4 sequential increase and profitability path.

A: John Aballi said Q4 had expected volume decline with some headwinds but strategy viable, and company expects to be cash flow positive by end of 2025 with run rate revenue in low to mid $70 million.

Q: Ross Osborn asked about biopharma contract update.

A: John Aballi said no material update but reinforced the opportunity.

Q: Andrew Brackmann asked about new test report improvements.

A: John Aballi said they revised report, index visualization, and requisition to make it easier for clinicians.