EXAGEN INC. Q1 FY2025 earnings call

• Delivered the ninth consecutive quarter of increasing trailing 12-month ASP.
• Won the first administrative law judge (ALJ) hearing for a Medicare Advantage denial, with several more ALJ hearings planned.
• Secured positive medical policy with TRICARE, finalizing contract efforts for streamlined billing transactions.
• Volume grew 6% over Q4 performance, driven by the new biomarker launch and sales team stability.
• New Head of Sales has had an impact, with sales team trailing 12-month voluntary turnover reduced to 7%.
• R&D ongoing for the next set of seronegative RA markers, with plans to launch by year-end, and efforts in kidney disease diagnostics with clinical validations underway.

Exagen Inc. achieved record revenue of $15.5 million in the first quarter of 2025, representing nearly an 8% increase compared to the first quarter of 2024. This growth was driven by continued expansion of the AVISE CTD's trailing 12-month average selling price, now at $419 per test, thanks to the addition of new markers, and a modest uptick in testing volume. The revenue contribution from the AVISE CTD product segment is the primary driver, with growth fueled by both increasing average selling price and volume.

• Expect 2025 full-year revenue of at least $65 million.
• Aim to reach positive adjusted EBITDA by the fourth quarter of 2025.
• New credit facility with Perceptive Advisors extends debt amortization by 5 years, provides flexibility for growth, and increases potential borrowing capacity based on milestones.

• Delays in regulatory approvals for new markers could impact launch timing.
• Dependence on ALJ hearings and medical policy wins for reimbursement outcomes.
• Fluctuations in cash collections and accounts receivable balances due to claims management practices.

Q: Kyle Mikson asked about volume expectations, test per physician, and the impact of new markers on volume growth.

A: John Aballi responded that volume is expected to grow, with focus on increasing test per physician among existing and new physicians, and new markers driving excitement and expanding into the RA space. Jeff Black discussed prior period cash collections and OpEx impact on profitability.

Q: Ross Osborn inquired about the launch of the second wave of RA markers and physician awareness of new tests.

A: John Aballi stated the second wave of RA markers is expected by year-end, similar to the last set, and physician awareness varies regionally, with ongoing educational efforts.

Q: Mark Massaro asked about strategic transactions, kidney disease efforts, and ALJ hearing impact.

A: John Aballi commented on potential strategic transactions related to autoimmune diagnostics, expressed conviction in kidney disease efforts, and discussed the number of ALJ hearings and learning from them.

Q: Andrew Brackmann asked about learnings from TRICARE medical policy and readiness for next RA markers launch.

A: John Aballi noted learnings from TRICARE include positive policy change from evidence, and for next RA markers, work includes analytical validation and operational readiness.

Q: Paul Knight asked about momentum in March, successful cases needed to change payer practice.

A: John Aballi attributed March momentum to new marker launch and sales team stability, and stated a half dozen to a dozen successful cases could start changing payer practice.