EXAGEN INC. Q1 FY2026 earnings call

• Core Strategic Priorities

  • Maintain three core long-term objectives: expand product adoption, increase ASP through disciplined revenue cycle execution, and deliver consistent new product innovation to address unmet clinical needs in autoimmune diagnostics.
  • Focus on gaining share in the $2.2 billion U.S. autoimmune testing market, where Exogen currently holds just over 3% market share.

• Commercial Operations

  • Q1 2026 AdviseCTD test volume grew 10% year-over-year, outpacing the overall 5% annual market growth rate, with a quarterly run rate in the mid 30,000 tests range. A two-week winter storm disruption in late January/early February reduced volume in impacted U.S. regions, but demand outside this period met expectations, and Q2 2026 has started strong with several weeks of volume exceeding 2025 weekly highs.
  • The total number of ordering clinicians increased 15% year-over-year to just over 2,700, driven by 2025 second-half territory expansion, reflecting continued channel penetration. Two-thirds of the growth in ordering clinicians came from rheumatology (Exogen's core target specialty), with the remaining one-third from adjacent specialties including OBGYN, pulmonology, internal medicine and general practice.
  • The company achieved 4% improvement in trailing 12-month sales volume per territory, even with most new territories less than one year old, demonstrating operating leverage from commercial investments.
  • ASP has increased for 12 consecutive quarters on a trailing 12-month basis, with Q1 2026 collecting $900,000 in claims older than 360 days, compared to $1.5 million in total prior period collections for all of 2025. The long-term target ASP is at least 50% of Medicare reimbursement, equal to roughly $600-$650 per test.

• Research & Development

  • Exogen remains on track to launch its first new standalone diagnostic product for myositis in early 2027, which is the most requested new test from the company's clinical customer base. The company estimates 100,000 diagnosed U.S. myositis patients, with a far larger undiagnosed population currently lacking confidence in existing testing options.
  • Nine Exogen abstracts (including multiple tied to myositis research) were accepted for the 2026 Autoimmunity conference, and two myositis and SLE research manuscripts have been accepted for publication later in April 2026. New 2025-launched biomarkers (PAD4, RA33) are progressing as expected, with new pharma testing contracts secured for these markers.
  • R&D spending increased 20% year-over-year in Q1 2026 to $1.6 million to support myositis launch preparation.

• Financial Performance

  • Gross margin was 59% in Q1 2026, flat year-over-year and up 360 basis points sequentially, supported by stronger ASP and continued cost rationalization in lab workflows and supply chains. The long-term target for gross margin is the mid-60% range.
  • Total operating expenses were $13.6 million, up 9% year-over-year, with SG&A rising 8% to just over $12 million driven by commercial talent and territory expansion. Revenue growth has consistently outpaced SG&A growth, demonstrating sustained operating leverage.
  • Adjusted EBITDA loss improved 14% year-over-year to $2.2 million. End-of-quarter cash, cash equivalents and restricted cash totaled just under $22 million, ahead of internal expectations.

Exogen operates two primary business segments: diagnostic testing and pharma services. For Q1 2026, total company revenue was $17.3 million, representing 100% of total revenue. The core diagnostic testing segment generated ~$17 million in revenue (98.3% of total revenue), with 10% year-over-year test volume growth and a trailing 12-month average selling price (ASP) of $444, up 6% year-over-year. The pharma services segment generated ~$300,000 in revenue (1.7% of total revenue) in the quarter, and holds over $5 million in total contract backlog expected to be realized over the next 2-3 years.

• Management reaffirms the full year 2026 revenue guidance range of $70 million to $73 million, unchanged from prior guidance.
• The midpoint of the guidance range assumes high single-digit percentage total test volume growth and low single-digit percentage ASP growth compared to the Q4 2025 in-period ASP of approximately $430.
• Management noted that Q1 2026 outperformance was partially driven by lumpy prior-period collections that cannot be assumed to repeat at the same level in subsequent quarters, so the company will retain the existing full-year guidance range until another quarter of results is available to evaluate trends.

• Seasonality and variability in quarterly ASP driven by the lumpy nature of out-of-period/prior-period collections, which can create quarterly swings that do not reflect an underlying trend.
• Uncertainty around the timing of a Local Coverage Determination (LCD) for AdviseCTD from CMS, as the company remains in the queue for review but has no visibility into when a decision will be issued.
• Loss of test volume due to unexpected weather-related disruptions to physician offices and patient access, which cannot be recovered in subsequent quarters due to the perishable nature of the peripheral blood samples the company uses for testing.
• Reimbursement uncertainty for new and existing biomarkers, even as the company's appeal and revenue cycle processes continue to improve collection rates.
• Dependence on ramp-up timing for new sales territories, which typically takes 6-9 months to reach target productivity and can impact near-term volume growth.

Q: Q1 in-period ASP appears much higher than recent quarters, and Q1 historically has the highest ASP of the year. What is the expected ASP progression through the rest of the year, and what is driving the Q1 upside? / A: The Q1 upside is heavily driven by $900,000 in out-of-period collections (claims older than 12 months), which equals 60% of all out-of-period collections collected in the full year 2025. This out-of-period activity added approximately $25 to the in-period ASP. Out-of-period collections are inherently lumpy and hard to predict, so management cannot say if this level of collections will continue, though the team is encouraged by the ongoing traction of revenue cycle initiatives.

Q: What is driving the 15% year-over-year growth in ordering clinicians, and what are ordering trends for new physician cohorts? / A: The growth is primarily driven by new territory expansion added in the second half of 2025, as new sales reps build relationships with new customers. The slight pullback in average orders per physician seen in Q1 was almost entirely due to winter storm disruptions that reduced patient access for two weeks; outside the weather disruption, orders per physician have been robust, and strength has continued into Q2.

Q: What is the update on the CMS Local Coverage Determination (LCD) application for AdviseCTD, and what impact would an LCD have on the business? / A: An approved LCD would formalize Medicare coverage for AdviseCTD, and the company would be able to leverage this approval to negotiate better coverage terms with Medicare Advantage and commercial payers. Exogen remains in the queue for review, maintains regular quarterly check-ins with the CMS MolDX team, and recently completed a new systematic review publication that adds to the clinical evidence dossier. There is no visibility into how long the review process will take.

Q: What is the profile of new ordering clinicians, and what is the opportunity to expand into primary care/generalist specialties? / A: Growth remains proportional to historical segment mix, with ~two-thirds of new ordering clinicians being rheumatologists (Exogen's core target) and ~one-third coming from adjacent specialties including pulmonology, OBGYN and general internal medicine. Exogen does not currently target primary care directly; most non-specialist growth comes from referrals from partner rheumatologists to local clinicians that also treat autoimmune patients, so expansion remains focused and targeted rather than broad.