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Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 8:30 a.m. ET Investor Relations - Tina Jacobsen President and Chief Executive Officer - John Aballi Chief Financial Officer - Jeffrey Black Operator: Greetings, and welcome to the Exagen Inc. Q2 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tina Jacobsen, Investor Relations. Thank you. You may begin. Tina Jacobsen: Thanks, operator. Good morning, and thank you for joining us to discuss Exagen's financial results for the quarter ended June 30, 2026. Today, I'm joined by John Aballi, our President and Chief Executive Officer; and Jeff Black, our Chief Financial Officer. The recording of this call, the press release announcing our financial results and a slide presentation can be accessed on our website at www.exagen.com. Today's call will include forward-looking statements. We encourage you to review the statements contained in today's press release and the risks and uncertainties described in our SEC filings, which identify certain factors that may cause the company's actual events, performance and results to differ materially from those contained in the forward-looking statements made on today's call. We also will discuss non-GAAP financial measures on this call. Descriptions of these non-GAAP financial measures and the reconciliations of GAAP to non-GAAP financial measures are included in today's press release. And now I will turn the call over to John Aballi. John? John Aballi: Good morning, everyone, and thank you for joining us today. The second quarter was an outstanding one at Exagen, and there's a lot to be excited about. So I'll get right into the details. This morning, we reported revenue of $19.9 million, up 16% year-over-year and the highest quarterly revenue in company history. And while total revenue was a record, we also achieved several other records in the quarter, including quarterly AVISE test volume, trailing 12-month ASP and pharma services revenue. We delivered those top line achievements while narrowing adjusted EBITDA loss to $0.1 million, essentially breakeven and a significant improvement compared to the $1.7 million loss in the second quarter of last year. Based on the strength of the first half of 2026, we are increasing full year revenue guidance to $72 million to $75 million. Results like these don't happen by accident. They reflect execution against the same 3 core objectives we've prioritized for the last several years. First, expanding adoption of our products; second, increasing ASP through disciplined revenue cycle management; and third, delivering a steady cadence of innovation to address the unmet needs of our clinicians. In our business, individual quarters will always have some variability, but the structural changes we've made are clearly improving our long-term trajectory of both volume and ASP. Q2 was the strongest demonstration yet that our strategy is working and our business can scale. As always, we anchor to our mission. Autoimmune disease is diagnosed too late and too inconsistently, and it's the patients that suffer. Exagen exists to bring clarity to that complexity. We have now surpassed 1.2 million AVISE CTD results delivered to clinicians and their patients since product inception. That's a meaningful milestone, but we're just getting started. With just over 3% share of an autoimmune testing market, we estimate at more than $2.2 billion and growing about 5% annually, the opportunity ahead of us is significant. We intend to continue to earn share the same way we build trust in this underserved channel through the best science, more timely answers and world-class service. Let me start with clinical adoption. AVISE CTD volume reached nearly 39,000 tests in the second quarter, up 11% year-over-year and the highest quarterly volume in Exagen's history. I also want to put that volume record in context. In 2023, we deliberately reset our ASP strategy and rebuilt our commercial approach, accepting that volume would contract as a consequence. This quarter, volume exceeded those previous levels, and we crossed that threshold with a trailing 12-month ASP nearly 40% higher than it was back then. We established the right strategy, executed with discipline and have now rebuilt the volume base on a dramatically stronger economic foundation. The quality of that growth is exactly what we want to see. Over 2,800 clinicians ordered AVISE CTD in the quarter, up approximately 9% year-over-year, which speaks to the value our testing has established within the rheumatology community. Sales force productivity reached record levels with trailing 12-month AVISE CTD revenue per territory of over $1.4 million in the second quarter. This is compared to roughly $1.3 million for the full year 2025. The investments we've made to upgrade, expand and enhance the training of our sales organization are delivering. We continue to advance the clinical aptitude of the team and the momentum has carried into the current quarter. Turning to ASP. Trailing 12-month ASP is the metric we use as operators to assess the performance of our business because it smooths the variability associated with accrual accounting and the timing of collections. We believe it's the most reliable indicator of progress in what is a highly critical area of our business. In the second quarter, trailing 12-month ASP expanded to $446, up $18 per test or 4% versus last year and marking our 13th consecutive quarter of growth. Our revenue cycle team deserves recognition for another quarter of strong collections, including meaningful recoveries on older claims. The performance reflects years of disciplined work to structurally improve how this team operates. This year, our revenue cycle strategy has shifted more towards optimization of our processes. We're leveraging analytics and AI to prioritize where the highest value opportunities lie to automate appeals and to streamline medical record extraction. Together, these initiatives have driven trailing 12-month ASP from $284 at the end of 2022 to $446 today, and I'm confident there's more ground to gain. Pharma services also delivered a record quarter with quarterly revenue crossing the $1 million point for the first time. This is a business we've built deliberately over the past couple of years and the strong results are early proof that the unique data, biobank and scientific capabilities we've assembled serve not only clinicians, but also partners developing the next generation of autoimmune therapies. During the quarter, we began to build on the success we've achieved in incorporating AI across RCM processes by investing in the development of customer-facing applications. This AI-powered commercial infrastructure is designed to deepen clinical engagement, support AVISE utilization and embed Exagen directly in the rheumatology workflow. It's early, and we'll share more as development progresses. But over time, we believe the investment will complement our commercial team and reinforce Exagen's leadership within autoimmune diagnostics. On the evidence front, we published a systematic review validating real-world AVISE Lupus performance. This manuscript is one of the most extensive evidence generation efforts behind any novel lupus diagnostic, pooling years of data representing 3,100-plus patients across 14 medical centers into the most diverse analysis of the AVISE test to date. Most notably, AVISE Lupus identified approximately 25% of SLE patients who were missed by conventional markers. And this was noted by the authors, including some of the most prominent lupus physicians in the space. AVISE meaningfully influences diagnosis, physician confidence and patient management. This is the kind of clinical impact we strive to deliver across our portfolio, and this manuscript helps make the impact clear. And on that note, our innovation engine remains on track. Our myositis offering, the first new stand-alone product for Exagen in many years, continues to progress towards commercialization in early 2027, and we remain committed to a cadence of approximately 1 new product every 12 or so months thereafter. We've deliberately built an R&D to commercial machine that can deliver on that cadence, and our channel is eager for what's to come. Before I hand it over, I want to take a second to highlight the immense progress we've made. In 2022, our full year adjusted EBITDA loss was around $40 million and worsening. This quarter, we approached breakeven adjusted EBITDA while setting records across the business, and we did it before our next wave of products has even launched. This is what disciplined execution compounds into, a business that grows, innovates and generates cash. Sustained profitability is within reach, and we intend to cross that threshold through the same disciplined execution that brought us here, delivering on our commitments and building a durable long-term organization. With that, I'll turn it over to Jeff for additional comments on the financials. Jeffrey Black: Thank you, John, and good morning, everybody. As John just highlighted, our second quarter results reflect another strong quarter of execution across the business. We achieved record top line performance driven by record testing volume and trailing 12-month ASP and a record contribution from our pharma services offering. Starting with revenue, we generated $19.9 million in the second quarter, an increase of 16% year-over-year and 15% sequentially. AVISE CTD test volume grew 11% year-over-year, reflecting continued strength in clinician adoption and utilization as well as the impact of last year's investment in commercial expansion. Our commercial investments are delivering solid returns. Even with several sales territories under 1 year old, productivity continued to ramp. Trailing 12-month CTD revenue per territory grew about 6% year-over-year and ordering clinicians increased approximately 9%. AVISE CTD trailing 12-month ASP expanded to $446 per test, up 4% compared to last year. Execution of our revenue cycle management initiatives supported a strong in-period ASP result, which included over $1 million collected from claims older than 360 days. Notably, our total cash collections in the first half of 2026 exceeded first half 2025 levels by $9 million. Over time, we continue to target an ASP of at least 50% of our Medicare reimbursement or approximately $600 to $650 per test, recognizing that this will take time and that quarterly contribution from our revenue cycle initiatives can be variable. Pharma services generated revenue of just over $1 million in the second quarter, up over 200% compared to the second quarter last year, reflecting continued execution against contract backlog and broadening contribution from this offering. To put our 2026 performance in perspective, in 2024, we generated just over $100,000 in full year pharma services revenue, growing to $1.7 million in 2025 and now to $1.3 million in only the first half of 2026. At the same time, we grew our contract backlog in Q2 by about $1 million to over $6 million. And while revenue recognition from this business can fluctuate significantly from quarter-to-quarter, we see this as another long-term growth lever with the trend line tracking positively. Moving to gross margin. We reported just over 61% for the second quarter, up approximately 90 basis points compared to last year. Gross margin in the quarter benefited from ASP expansion, operating leverage and ongoing COGS rationalization that has streamlined workflows in the lab and reduce costs across our supply chain. We remain confident that gross margin will progress to the mid-60s over time as we achieve further ASP expansion, generate additional scale and fixed cost leverage and further optimize costs. Turning to expenses. Total operating expenses for the second quarter were just under $14 million or approximately 70% of revenue, a significant improvement compared to 75% in the second quarter last year. And this performance reflects the operating leverage inherent in our model. We delivered 16% revenue growth while holding OpEx growth to 7%. While OpEx level will vary from quarter-to-quarter, that kind of discipline will continue as we scale even with planned investments in the R&D pipeline. Note that second quarter OpEx included noncash stock-based compensation of about $1 million, an increase of over $0.5 million versus second quarter last year. Breaking out the components of OpEx, second quarter SG&A was $12.5 million, an increase of just under $1 million compared to second quarter '25, driven primarily by increased stock-based compensation and investment in commercial talent and territory expansion. R&D was $1.4 million in the second quarter, down modestly compared to last year due primarily to timing of investments while continuing to support pipeline development, including the preparation for our myositis product launch expected in early 2027. Adjusted EBITDA loss, which excludes depreciation and noncash stock-based comp expense, improved significantly at a loss of just over $100,000 in the second quarter compared to $1.7 million loss in the second quarter last year. While we don't expect adjusted EBITDA to sustain at this level in the second half of '26, this quarter's roughly $20 million in revenue and near breakeven adjusted EBITDA are strong proof points for our operating model that demonstrate the leverage we believe the business will deliver as we scale. Turning to the balance sheet. We generated $3.1 million in cash in the second quarter, ending the period with cash, cash equivalents and restricted cash of just under $25 million. This improvement reflects the rebound following heavy cash used in the first quarter associated with our revenue cycle management process, where we hold claims in the first quarter of the year. With $37 million in cash and accounts receivable at June 30, we continue to believe that our balance sheet provides the runway needed to support the business to reach sustainable adjusted positive EBITDA and positive free operating cash flow. Shifting to guidance. Today, we raised our 2026 revenue outlook to reflect strong execution-driven first half performance. We now expect full year revenue of $72 million to $75 million, up from our previous guide of $70 million to $73 million. Our updated outlook continues to assume high single-digit volume growth for the full year, reflecting improved revenue cycle management performance in the first half, supporting a full year mid-single-digit ASP growth compared to our Q4 2025 ASP exit rate. Our guide also incorporates the seasonality impact we typically experience in the second half of the year. In closing, our second quarter results are a clear demonstration of the scale and leverage we've committed to building and reinforcing our view that the business is positioned to reach adjusted EBITDA breakeven at around $80 million in annual revenue. With that, operator, we will now open the call for questions. Operator: [Operator Instructions] The first question is from Dan Brennan from TD Cowen. William Ruby: This is William on for Dan. So guidance was raised by $2 million at the midpoint. Is there any reason there isn't a fair amount of conservatism baked here on both ASP and volumes? Last year, you did see a sequential uptick in volumes from 2Q to 3Q. So just trying to understand if there's conservatism there. John Aballi: Thanks so much for the question. Very valid. Our thinking on this is for Q2, we had a very nice quarter. And relative to our original projections, we're a couple of million above where we expected to be. The second half of the year, you're right. Last year, we had a phenomenal second half, which didn't have the typical seasonality. It was relatively flat compared to our Q2, but wasn't down. We had 10 years of seasonality prior to that. And so I think from our standpoint, just keeping that in the back of the mind is an important factor as we crafted our guidance this time around. William Ruby: Got it. And then how should we expect sales force expansion contribution to volumes in the second half? Are you expecting any contribution there? John Aballi: Well, we definitely expect contribution. We're putting a lot of investment into those folks, and we're actually really excited about the caliber of individuals that we've been able to find and attract to our company. I know we've spoken in the past, but I sit in on the interview of anyone who comes into the company, especially on our sales organization and man, we really have some fantastic folks. They're actually here doing some training this week as well or a few of them are. So our investments in that group remain very strong. And we have, I think, certainly the best autoimmune sales force out there. So therefore, we expect a pretty decent contribution. But most of these expansion territories were starting from a relatively low basis. And so it will take a little bit of time before they really move the top line number in a meaningful way. But over time, call it, the next 6, 9, 12 months, I think that 10% expansion in our sales force that we executed in the back half of last year should really start to drive some meaningful volume growth for our organization. Operator: The next question is from Bill Bonello from Craig-Hallum Capital Group. William Bonello: First one is just a simple housekeeping question. Can you give us the AVISE revenue for the quarter? John Aballi: Yes. Thanks so much for the question. So AVISE CTD revenue for the quarter was $17.7 million. William Bonello: Perfect. That is what we calculated, but wanted to be sure we were doing it right. And then -- just can you talk to us -- great to see the progress on ASP. Just trying to get a sense of where you're at in terms of getting paid for some of the new markers that you've launched. To what extent the improvement that we've seen in ASP is more related to revenue cycle management versus opportunity in front of us on getting paid for additional markers? Jeffrey Black: Sure, Bill. This is Jeff Black. Thanks for the question. I appreciate you participating in the call. I'll answer it a couple of different ways. I think we're starting to really look at the ASP on a blended basis across the entire AVISE CTD panel. I know we've communicated in the past what our expectation was on the new biomarkers. So we'll certainly share that with you. Combined T-Cell, RA33 and PAD4, our overall expectation we'd communicated was going to be somewhere in that $100 range. Where we're tracking today is really in the mid-90s. So we're tracking very well. We don't think there's any reason we couldn't ultimately get to that target, particularly since that a lot of those claims in the last year are still going through appeals and revenue cycle management. So we're encouraged by the traction. It has been a contributor. Like I said, it's in that mid-90 range and tracking very well. Operator: The next question is from Kyle Mikson from Canaccord Genuity. Kyle Mikson: Congrats on the great quarter. So I had like a multipart guidance question on the components. So on ASP, you raised that kind of guidance from like, I think, low single-digit growth to now mid-single digit, even though the trailing 12-month ASP was kind of flat like quarter-to-quarter. So that's interesting. I'm just curious what you're seeing with just kind of collecting and the RCM benefit, I think you were mentioning. And then maybe some progress commercial payers, like if anything, any progress that you expect to sort of help an inflection maybe towards year-end? And then on the volume side, I mean, I guess it just looks like roughly like similar second half volumes to first half, which I guess makes sense. But just looking at prior years, even though you have some seasonality factors like in the fall and November and so forth, maybe just point to some areas of upside in volume specifically that we could hope for. John Aballi: Yes. Thanks so much for the questions, Kyle, and for joining this morning. So just to kind of take these one at a time. On the guidance side, very proud of now 13 consecutive quarters of increasing ASP. That's not easy to do as I think you'll see across the industry. And I think it speaks a lot to the fact that we have the right strategy in place, the right team, and we're executing diligently. And as I tried to mention a second ago, really a ton of credit goes to our revenue cycle team. They're firing on all cylinders. And I think the more exciting thing from our standpoint is we still have a lot of optimization that we're working into the process and feel very optimistic about the future as well. If you take a look at year-over-year, I believe we're up 4% on ASP. So I think we're tracking exactly as you said it. So low single digits is what we've communicated in terms of growth expectations year-over-year in the past, progressing to mid-single digits is what is baked into the guidance. And as we've said, projections on ASP improvement over time are always difficult to nail down timing and magnitude. So that's what we think is a reasonable expectation for us looking into the second half. The middle part of your question, progress with commercial payers continues to be very strong. Our Medicare rate is static. And so progress over the last 13 quarters has really been with our private payer groups. And we have been highly effective in our administrative law judge hearings. We've been very effective in our appeals efforts. We've continued to develop evidence, which substantiates our report and our processes have improved materially over the last few years. So from our standpoint, that trailing 12-month progression and improvement in growth is 100% attributable to progress with commercial payers. We tend to focus more on cash collections and the blended ASP rather than activity related to some of those individual payers. And my reason for that is I think that's what really matters. And I also think that there can be a dislocation between activity and results over time. So that's what we try to point people to. That's what we've been consistent in communicating and I'm very proud of the way the teams have operated. The last part of your question related to volume, first half roughly equal to second half, I think you nailed that as well. Just keep in mind, second half tends to have less actual business days with a pretty strong slate of holidays coming in, especially in Q4. We also tend to see from a physician standpoint, for some reason or another, the second half tends to be higher on vacations for our clinical group. So July through December, we just end up functionally with less working days than we do typically see in the first half. And as I mentioned a little bit with the prior question, I think it's just important to recognize we have had seasonality in the business. Last year was a phenomenal year for us. We're trying, honestly, like hell to continue to grow the business in the second half and match what we did last year, if not exceed it. But at the same time, I think you have to live in reality, too. So hopefully, that addresses each of your points. Kyle Mikson: Yes, that was great, John. I'll give you a break. Maybe for Jeff on the framework on the path to breakeven EBITDA has proven to be remarkably accurate. Basically, like this quarter, you're at that $80 million run rate, just under the 63% gross margin. I guess, though, going forward, maybe you'll be close to the $80 million kind of annualized run rate. But how should we expect gross margin to sort of track? I think the last time we spoke, it sounded like maybe like high 50s, close to 60s for the rest of the year. I mean, at this point, it seems like maybe you could eclipse that. Jeffrey Black: Yes, Kyle, thanks for the question. Yes, I think even last call, I think we had called 60% for 2026 more aspirational, right? And to think about it more in the high 50s. We actually think there's now a track to ending the year at that 60% or above. So we've seen very good traction. ASP expansion done a really nice job at managing fixed costs, managing supply chain costs. So I think the 60% range is a lot more realistic now and less aspirational for the year. Operator: The next question is from Max Masucci from ROTH Capital Partners. Max Masucci: Congrats on a strong print. First, on sales force productivity, the 5 territory reps you hired in 2025, I believe, are beyond the 6- to 9-month ramp. Just curious if those reps provided a noticeable boost to volume growth in Q2 or if the strength was more broad-based across the entire force and it'd be great to know what's really driving the productivity higher, if you've adopted any new tools or strategies that are making an impact. John Aballi: Yes. Max, welcome to the call, and happy to have you follow the story. From a sales rep productivity standpoint, great question. So trying to pick this apart a little bit. We added 5 territories last year. One of those additions essentially split in existing territories. So you could argue kind of starting over a little bit in 6 areas. We see a pretty decent distribution of productivity at this point in time. We have one of our expansion territories has almost doubled in the time that we've added that group. And then we're seeing kind of right consistent with our national growth on the, call it, the lower end of the growth profile for the expansion territories, so if that makes sense. So somewhere around 10%, 11% growth on the lower end of our expansion territories up to 80%, 90% growth on our higher-end performing territory. So still broad there, different reasons at play. Some of that has to do with potential. Some of that has to do with ramp time for the individual learning curve of that rep. But I think the great thing from our perspective is very confident in the people we have. And over the last 6 to 9 months, certainly proved out the -- almost 12 months now, certainly proved out the thesis that the territories that we chose were the right areas to expand. And that's always a critical variable that you hope to get right and you don't know until you go back out and do it. So happy with that. We saw growth really across the entire nation. So what's driving that? I think the refresh of the product last year with the addition of the new analytes certainly reinvigorated the sales force, but it also expanded our utility into rheumatoid arthritis, where we had classically or historically been focused more on the lupus side. And that's a big deal. And I think you're seeing it play out. We saw it play out in the back half of last year with some of the momentum and that really showed up here in Q2. So very proud of the team. I've been in the field quite a bit. I was actually in the field last week as well. We still have a lot of room to run. So our team is still working on getting that messaging out. We're still working on articulating the clinical value in a more precise and tailored way. And as I mentioned as well, our evidence generation efforts continues to mature. Our systematic review that we just had really refreshes some of the lupus clinical data. And to be identifying 25% of patients missed by conventional serologies is a really big value for clinicians. And so having that printed and out and able to market, I think just in general, it is enhancing the clinical value of the product, and our team is really pushing it. So more to come. Max Masucci: Great. And just a follow-up. So I think historically or more recently, about 1/3 of your ordering clinician growth has come from outside of rheumatology, GPs, internist, OB/GYN, pulmonology. Just curious, is that becoming a deliberate sort of channel strategy? And just how the ordering trends for those types of docs compared to what you're seeing in rheumatology? John Aballi: Yes, it's a really good question. We still see general 80-20 rule here that most of our business comes from our rheumatologist call point. Now at the same time, you're right on in that referral network into rheumatology is finding a significant amount of utility with AVISE CTD, especially with the enhanced biomarkers. And I think multiple reasons at play there, but some of it the workforce shortage within rheumatology is certainly lending to that. I actually think that this will be very interesting as we launch myositis as well. That primary call point will be the rheumatologist. It will keep it within our core sales channel, but it has applicability into pulmonology and some of the other subspecialties that manage these patients. And internally, as we look for further sales expansion, this is understanding what that outside room demand looks like is a pretty decent predicate for our next wave of expansion. And so I think we'll know more here as we start 2027, but we're seeing pretty decent growth within some of these other specialties. Operator: The next question is from Mark Massaro from BTIG. Mark Massaro: Congrats on a strong quarter. I wanted to ask about the myositis launch. Can you just give us a sense for what we should be on the lookout for in terms of any data readouts, timing? And then can you give us maybe a sneak preview on how you're thinking about pricing the test? John Aballi: Yes. Mark, thanks for the question. So very excited about the myositis opportunity. Just as a reminder for folks, this is the #1 asked for product amongst our rheumatologists clinical base. So when our teams in the field, and this is our product development team, our marketing team, our sales or myself, as we talk to our clinicians and ask them how we can better serve them, this comes up, and it's not even close to the #2 asked for offering. So really excited to be able to provide a comprehensive solution here for folks that we think will dramatically impact patient care and find folks at very high risk of some pretty dangerous clinical outcomes. So that development remains on track. By the way we had to bring 2 new platforms into our laboratory, get those analytically validated. That's all occurred. We have to obviously get the sample cohorts to conduct clinical validation. All of that's in process and remains on track. Very happy with the way the teams are executing there. And so we remain in line with our expectations to launch commercially in the first part of 2027. So pricing-wise, from our standpoint, we're going to launch similar to what we did with the analytes that we launched last year, and that is there's methodology-based CPT codes that correspond with the various analyte testing. So you would have ELISA-based testing, for example, has an established CPT code. That's all been vetted, and we believe we have the right set of codes to build this out. We don't have a significant track record of billing all of these codes. And so as we launch from a revenue standpoint, we're going to mirror very close to cash collections and then over time, establish that accrual rate and then we'll be able to set an expectation publicly as well. So that's how we'll launch for reimbursement. And we expect, as our clinical validation matures to be able to provide algorithmic interpretation and potentially pursue value-based reimbursement long term, but that's going to be down the line. The initial launch will be with established CPT codes. Mark Massaro: Yes, that makes sense. That's really helpful. And then you guys are making a lot of strides commercially with all the metrics you've provided. You're really knocking on EBITDA positivity here. On the other hand, you're basically saying that you can get to adjusted EBITDA breakeven at $80 million of revenue. I guess my question is, it looks like you could do it sooner than that. So how should we think about the -- some of the factors that would lead you to not getting there before $80 million? Is that investments you're making in the business? Maybe is there any way you can quantify some of those investments you're making in the business, whether it's headcount or R&D, that would be really helpful. John Aballi: So if I understand the question, Mark, you're just saying what are the risks to reaching adjusted EBITDA positivity and why not a little bit sooner. Mark Massaro: Yes. John Aballi: Okay. Great. Thanks for that question. I think it's absolutely relevant. So we're not guiding on adjusted EBITDA positivity. I think we're very close. Obviously, with the results that we turned in this quarter, we're knocking on the door there. From our standpoint, second half seasonality is going to come into play with hitting a sustained $20 million-plus revenue number on a quarterly basis. We're also right around the corner from a product launch. So I don't think we're too far off. And whether we're plus or minus a quarter, we've got the balance sheet to get there, and we just want to get there in a measured, sustainable fashion. And I think we've tried to grow the business, but with an eye towards profitability, and that's what we've executed on for the last several of years. So risk-wise, there's always reimbursement risks that exist in this business. I guess, theoretically, you could also have some hit from a volume standpoint, a key client or something like that, but nothing is foreseen at this point in time. And in fact, if anything, most of what we're seeing is very positive related to the efforts and energy that the team is executing against. So I think we're well on track, and it should be around the corner. Mark Massaro: Fantastic. And one last one. You guys have been collecting close to $1 million or a little over $1 million in prior period collections in the last couple of quarters. Obviously, you've made some good changes to revenue cycle management. Should we expect these initiatives to continue or at least to be able to collect from prior periods in the coming quarters? Jeffrey Black: Yes, Mark, this is Jeff. Yes, I guess the way I would answer that maybe flippantly is as long as there is an appeals queue, and we're focusing on revenue cycle management and maximizing the appeals process, then yes, we do expect that we'll continue to see excess cash. That said, the better we do in any given quarter, we're kind of working against ourselves because that typically has an impact on the accrual rate. So the better we do, the higher our accrual rate will go. And we try to be very conservative as much as we can about the accrual rate and not get ahead of ourselves. But -- the expectation is we're seeing really nice momentum. First half of this last -- of this year, we collected about $2.3 million in cash greater than 360 days. Just to put that in perspective, I think a year ago for the full year, it was about $1.5 million and in '24 was $2.7 million for the full year. So we're tracking well ahead of historical trends. Operator: The next question is from Matthew Parisi from KeyBanc Capital Markets. Matthew Parisi: On the great quarter. This is Matt Parisi on for Paul Knight at KeyBanc Capital Markets. I was wondering if you could give an update regarding the local coverage determination. Last we heard there was an expectation of an update in mid- to late 2026. Is that still the expectation? John Aballi: Matt, thanks so much for the question. That is still our expectation, but we don't control it, and it's a fairly opaque process. So just as a reminder, where we sit now, we have completed request in to MolDX. We've actually had that in since the summer of 2022 and are waiting for their feedback. Our reimbursement with Medicare continues to be very stable and no changes there. So -- but still looking for that next step, which would either be a CAC meeting or a draft LCD to come out. So no update as of right now. We do -- with the generation of this new systematic review, we're working to get that in front of the MolDX team and review it with them. So we maintain a very good relationship with that group, but no update now. Matthew Parisi: Appreciate the insight. And then if I can ask one more, does Exagen expect to expand its sales force in advance of the myositis launch? Or would the current sales force be focused on both the AVISE CTD test and then myositis? John Aballi: Yes. Great question. So we anticipate selling it concurrently with the AVISE CTD offering along with the rest of our portfolio. So our existing sales force will go through training on the myositis product here at the end of Q3 in anticipation of the launch. It will be available to all 45 territories and the clinicians within those territories. And like I said, it's a very consistent call point, primarily the rheumatologists with some applicability into the referral network. It may have more applicability into the pulmonology space than, call it, CTD does currently, but we'll just have to figure that out over time and that won't be our initial push. So we'll stick within our existing customer base and offer it with our existing team. We do anticipate taking a look at sales expansion opportunities after the launch because we want to -- depending on the uptake, that changes the opportunity rating essentially of each expansion opportunity. So we'll get through that launch and then look to the next wave. Operator: There are no further questions at this time. I would like to turn the floor back over to John Aballi for closing comments. John Aballi: Fantastic. And thanks so much. I really appreciate everyone joining the call today. This was about as fun as quarters get from my perspective. We had records in revenue, volume, trailing 12-month ASP and pharma services revenue, all delivered at essentially breakeven adjusted EBITDA. That's been a milestone that have been a long time coming from my perspective. And in fact, 3 years ago for our organization, that combination would have sounded crazy, to be honest. Our team made it a reality through consistent disciplined execution, and I'm really proud of the group here. The talent and character across Exagen continues to transform the organization into what I think is the preeminent diagnostic company serving autoimmune patients. And honestly, I'm as excited about the opportunity ahead of us as I've been since joining just a few years ago. We're within reach of the financial inflection we've been building toward. And while others are focused elsewhere, we'll keep chipping away to build a truly incredible autoimmune powerhouse. We appreciate the support of all our stakeholders and look forward to updating you on our progress. Thanks again. Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Before you buy stock in Exagen, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Exagen wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $411,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 11, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Exagen (XGN) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved record quarterly revenue of $19.9 million, driven by a 16% year-over-year increase and record AVISE test volumes. Successfully rebuilt the volume base on a stronger economic foundation, with trailing 12-month ASP nearly 40% higher than 2023 levels following a deliberate commercial reset. Expanded trailing 12-month ASP to $446, marking the 13th consecutive quarter of growth through disciplined revenue cycle management and commercial payer appeals. Leveraged analytics and AI within the revenue cycle team to automate appeals and streamline medical record extraction, contributing to improved collections. Pharma services revenue crossed the $1 million quarterly threshold for the first time, validating the company's unique data and biobank capabilities for drug developers. Published a systematic review showing AVISE Lupus identified approximately 25% of SLE patients missed by conventional markers, strengthening the clinical evidence base. Sales force productivity reached record levels of $1.4 million per territory, reflecting successful training and the 10% expansion executed in late 2025. Raised full-year 2026 revenue guidance to $72 million to $75 million, assuming high single-digit volume growth and mid-single-digit ASP growth. Anticipates reaching sustainable adjusted EBITDA breakeven at approximately $80 million in annual revenue, supported by inherent operating leverage. Commercialization of the new myositis stand-alone product remains on track for early 2027, with a goal of launching one new product every 12 months thereafter. Targets a long-term ASP of $600 to $650 per test, representing at least 50% of Medicare reimbursement, though timing remains variable. Guidance incorporates typical second-half seasonality, accounting for fewer working days and physician vacation patterns compared to the first half. Collected over $1 million from claims older than 360 days in Q2, highlighting the variability and impact of prior-period recoveries on current results. Operating expenses grew only 7% despite 16% revenue growth, demonstrating cost discipline even as R&D investments for the pipeline continue. Medicare reimbursement remains stable, but the timing for an updated Local Coverage Determination (LCD) from MolDX remains opaque and outside company control. Cash and accounts receivable of $37 million are deemed sufficient to reach sustainable profitability without requiring additional capital. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that while 2025 saw an atypical lack of seasonality, they are assuming a return to historical patterns with fewer working days in Q4. The $2 million guidance raise reflects first-half outperformance while remaining cautious about the 'reality' of second-half holiday impacts. New biomarkers (T-Cell, RA33, and PAD4) are currently tracking in the mid-$90 range per test, close to the long-term target of $100. ASP growth is currently driven by a blend of these new markers and improved collections from private payers through the appeals process. The existing 45-territory sales force will sell the myositis test concurrently with AVISE CTD, as the clinician call point is identical. Management will evaluate further sales force expansion only after the 2027 launch once initial uptake and territory potential are assessed. While Q2 was near breakeven, management cautioned that seasonality and upcoming product launch investments might cause fluctuations in the second half. The primary risks to the profitability timeline include reimbursement shifts and potential volume hits from key clients, though neither is currently foreseen.

This article first appeared on GuruFocus. Revenue: $19.9 million in Q2 2026, up 16% year over year and 15% sequentially, a record high. AVISE CTD Test Volume: Nearly 39,000 tests in Q2, up 11% year over year, a record quarterly volume. Trailing 12-Month ASP: $446 per test, up $18 or 4% year over year, marking the 13th consecutive quarter of growth. Pharma Services Revenue: Just over $1 million in Q2, up over 200% year over year, a record quarter. Gross Margin: Just over 61% in Q2, up approximately 90 basis points year over year. Total Operating Expenses: Just under $40 million, or approximately 70% of revenue, down from 75% in Q2 last year. SG&A Expense: $12.5 million in Q2, up just under $1 million year over year. R&D Expense: $1.4 million in Q2, down modestly year over year. Adjusted EBITDA Loss: Just over $0.1 million in Q2, compared to a $1.7 million loss in Q2 last year. Cash Flow: Generated $3.1 million in cash in Q2, ending with cash, cash equivalents, and restricted cash of just under $25 million. Cash and Accounts Receivable: $37 million at June 30. Full-Year 2026 Revenue Guidance: Raised to $72 million to $75 million, up from the previous $70 million to $73 million. Warning! GuruFocus has detected 3 Warning Signs with XGN. Is XGN fairly valued? Test your thesis with our free DCF calculator. Release Date: August 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record quarterly revenue of $19.9 million, up 16% year over year, with record AVISE test volume, trailing 12-month ASP, and Pharma Services revenue. Adjusted EBITDA loss narrowed significantly to $0.1 million, nearly breakeven, compared to a $1.7 million loss in Q2 2025. Trailing 12-month ASP expanded to $446, marking the 13th consecutive quarter of growth, driven by successful revenue cycle management and commercial payer progress. Pharma Services revenue crossed $1 million for the first time in a quarter, with contract backlog growing to over $6 million. Raised full-year 2026 revenue guidance to $72 million-$75 million, reflecting strong first-half execution and confidence in continued growth. Published a systematic review validating AVISE lupus performance, showing it identifies 25% of SLE patients missed by conventional markers, strengthening clinical evidence. Adjusted EBITDA is not expected to sustain at near-breakeven levels in the second half of 2026 due to typical seasonality and fewer working days. The company remains dependent on continued revenue cycle management improvements, with a significant portion of ASP growth tied to collections on older claims. The local coverage determination (LCD) from MolDX remains pending with no update, creating uncertainty around future Medicare reimbursement. Sales force expansion contributions are still ramping, with newer territories taking 6-12 months to meaningfully impact top-line growth. Gross margin, while improved, is still below the mid-60s target, and the company faces ongoing reimbursement risks that could impact future performance. Q: Can you provide an update on the myositis product launch timing and pricing strategy?A: John Aballi (President and CEO) confirmed the myositis offering remains on track for commercial launch in early 2027. The product is the number one most requested test by rheumatologists. The company has completed analytical validation on two new lab platforms and is progressing through clinical validation. For pricing, Exagen will launch using established methodology-based CPT codes (e.g., ELISA-based testing), mirroring cash collections initially before establishing accrual rates. Long-term, they may pursue algorithmic interpretation and value-based reimbursement, but the initial launch will use standard CPT codes. Q: Why was the full-year 2026 revenue guidance raised by only $2 million at the midpoint, and is there conservatism baked into the ASP and volume assumptions?A: John Aballi (President and CEO) explained that while Q2 exceeded expectations by roughly $2 million, the guidance reflects caution around second-half seasonality. Although last year's second half was unusually strong and flat versus Q2, the company has experienced 10 years of typical seasonality prior to that, which they factored into their updated guidance of $72 million to $75 million. Q: How should we think about the path to adjusted EBITDA breakeven, and what factors could delay reaching that milestone before the $80 million revenue threshold?A: John Aballi (President and CEO) noted the company is "knocking on the door" of adjusted EBITDA positivity, given the near-breakeven Q2 results. However, second-half seasonality and the upcoming myositis product launch are factors to consider. The company aims to achieve profitability in a measured, sustainable fashion and has the balance sheet to support reaching that goal. Key risks include reimbursement changes or volume hits, but nothing adverse is currently foreseen. Q: Can you break down the ASP improvementhow much is driven by revenue cycle management versus getting paid for the new biomarkers (T-cell RA33 and PAD4)?A: Jeffrey Black (CFO) stated that the combined contribution from the new biomarkers T-cell RA33 and PAD4 is tracking in the mid-$90s range, versus the communicated expectation of around $100. The company is confident it can reach that target as older claims continue through appeals. The ASP improvement is a blend of new biomarker contributions and broader revenue cycle management execution, with the trailing 12-month ASP reaching $446, up 4% year-over-year. Q: What is driving the strong sales force productivity, and are the five new territories added in 2025 contributing noticeably to volume growth?A: John Aballi (President and CEO) reported record trailing 12-month AVISE CTD revenue per territory of over $1.4 million. The expansion territories show a wide distribution of productivity, ranging from roughly 10-11% growth on the lower end to 80-90% growth on the highest-performing territory. The growth is broad-based across the nation, driven by the product refresh with new analytes that expanded utility into rheumatoid arthritis, improved sales force training, and the recent publication of a systematic review validating AVISE lupus performance. Q: What is the expectation for gross margin progression for the rest of 2026?A: Jeffrey Black (CFO) indicated that the company now believes there is a track to end the year at 60% gross margin or above, which is more realistic than the previous aspirational target. Q2 gross margin came in at just over 61%, benefiting from ASP expansion, operating leverage, and COGS rationalization. The long-term target remains mid-60s as the company achieves further scale and ASP growth. Q: Can you provide an update on the local coverage determination (LCD) from MolDX?A: John Aballi (President and CEO) stated that the expectation for an update in mid-to-late 2026 remains, but the process is opaque and outside the company's control. Exagen has had a completed request in to MolDX since summer 2022 and is awaiting feedback, which could be a CAC meeting or draft LCD. Medicare reimbursement remains stable. The company is working to present the new systematic review data to the MolDX team to support the review process. Q: Will Exagen expand its sales force ahead of the myositis launch, or will the current team sell both products?A: John Aballi (President and CEO) confirmed that the existing 45-territory sales force will sell myositis concurrently with AVISE CTD. Training is scheduled for the end of Q3 in anticipation of the early 2027 launch. The primary call point remains rheumatologists, though myositis may have more applicability in pulmonology. The company will evaluate sales force expansion opportunities after the launch based on uptake and territory performance. Q: Should we expect the strong prior-period collections (claims older than 360 days) to continue in coming quarters?A: Jeffrey Black (CFO) confirmed that as long as there is an appeals queue and the company continues focusing on revenue cycle management, they expect to see excess cash collections. In the first half of 2026, the company collected approximately $2.3 million in cash from claims older than 360 days, well ahead of the $1.5 million collected in all of 2025 and $2.7 million in 2024. However, better performance in any given quarter can impact the accrual rate, so the company remains conservative in its accounting. Q: Is the growth in ordering clinicians coming from outside rheumatology becoming a deliberate channel strategy?A: John Aballi (President and CEO) acknowledged that while rheumatologists still represent roughly 80% of business, the referral network (GPs, internists, OBGYNs, pulmonologists) is finding significant utility with AVISE CTD, partly due to workforce shortages in rheumatology. This outside demand is being evaluated as a predicate for the next wave of sales force expansion, particularly as the myositis product may have broader applicability in pulmonology. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Exagen Inc.? Here are five stocks we like better. Record revenue and improved profitability: Exagen’s second-quarter revenue rose 16% year over year to $19.9 million, while its adjusted EBITDA loss narrowed to just over $100,000. The company raised its 2026 revenue guidance to $72 million–$75 million. AVISE CTD performance strengthened: Test volume reached a quarterly record of nearly 39,000, while average selling price increased 4% to $446 per test, marking the 13th consecutive quarter of ASP growth. Revenue-cycle improvements and higher collections supported margins and cash flow. Growth pipeline and financial runway: Pharma Services revenue more than tripled year over year, with backlog exceeding $6 million, and Exagen ended June with nearly $25 million in cash and restricted cash. The company remains on track to launch its standalone myositis test in early 2027, though management expects seasonal pressure in the second half of 2026. Exagen (NASDAQ:XGN) reported record second-quarter revenue as growth in AVISE CTD test volume, average selling price and Pharma Services revenue brought the autoimmune diagnostics company close to adjusted EBITDA break-even. Revenue for the quarter ended June 30 rose 16% year over year and 15% sequentially to $19.9 million, the highest quarterly total in company history. Adjusted EBITDA loss narrowed to just over $100,000 from a $1.7 million loss a year earlier. The company raised its full-year 2026 revenue outlook to $72 million to $75 million, from prior guidance of $70 million to $73 million. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control “Q2 was the strongest demonstration yet that our strategy is working and our business can scale,” President and Chief Executive Officer John Aballi said on the company’s earnings call. AVISE CTD test volume reached nearly 39,000 tests during the second quarter, up 11% from the prior-year period and representing a quarterly record. AVISE CTD revenue totaled $17.7 million, Aballi said in response to an analyst question. → Financials Hit Record Highs as the AI Trade Unravels—Can They Keep Leading? More than 2,800 clinicians ordered the test during the quarter, an increase of approximately 9% year over year. Trailing 12-month AVISE CTD revenue per sales territory exceeded $1.4 million, compared with roughly $1.3 million for full-year 2025. Exagen’s trailing 12-month average selling price, or ASP, increased $18 per test, or 4% year over year, to $446. The company said this marked its 13th consecutive quarter of ASP growth. Aballi attributed the improvement to revenue cycle management efforts, including the use of analytics and artificial intelligence to identify higher-value collection opportunities, automate appeals and streamline medical-record extraction. → Why Rare Earth Processing Could Be the Real 2027 Opportunity Chief Financial Officer Jeff Black said the quarter included more than $1 million in collections from claims older than 360 days. Total cash collections during the first half exceeded the year-earlier period by $9 million. Management continues to target an ASP of at least 50% of Medicare reimbursement, or roughly $600 to $650 per test, while noting that progress will take time and quarterly revenue-cycle contributions can vary. Black said the company’s newer T-cell RA33 and anti-PAD4 biomarkers were tracking in the mid-$90 range toward an earlier expectation of approximately $100 in combined reimbursement. Gross margin was slightly above 61%, improving about 90 basis points from the prior-year quarter. Black said ASP expansion, operating leverage, laboratory workflow improvements and supply-chain cost reductions supported the gain. He said Exagen now sees a path to exit 2026 at gross margin of 60% or higher, compared with a prior view that the high-50% range was more likely. Operating expenses were just under $14 million, or about 70% of revenue, versus 75% of revenue in the second quarter of 2025. Revenue increased 16% while operating expenses rose 7%. Second-quarter expenses included about $1 million in non-cash stock-based compensation, up more than $500,000 from a year earlier. Pharma Services generated just over $1 million in second-quarter revenue, more than triple its contribution in the comparable 2025 period. First-half Pharma Services revenue reached $1.3 million, compared with $1.7 million for all of 2025 and slightly more than $100,000 in 2024. Contract backlog increased by about $1 million during the quarter to more than $6 million. Black cautioned that Pharma Services revenue recognition may fluctuate substantially between quarters, but described the business as a longer-term growth lever. Exagen generated $3.1 million of cash during the second quarter and ended June with just under $25 million in cash equivalents and restricted cash. The company had $37 million in cash and accounts receivable at June 30, which Black said provides runway to reach sustainable adjusted positive EBITDA and positive free operating cash flow. The updated 2026 outlook assumes high-single-digit test-volume growth for the full year and mid-single-digit ASP growth relative to the company’s fourth-quarter 2025 ASP exit rate. Management also incorporated typical second-half seasonality into its forecast. Aballi said the company saw unusual strength in the second half of 2025, when volumes remained relatively flat with the second quarter rather than following historical seasonal patterns. In contrast, Exagen has experienced 10 years of prior seasonality, including fewer business days and physician vacations during the latter half of the year. Black reiterated management’s view that Exagen can reach adjusted EBITDA break-even at approximately $80 million in annual revenue. He said the company does not expect to sustain its near-break-even second-quarter adjusted EBITDA performance in the second half of 2026. Exagen said its standalone myositis test remains on track for commercialization in early 2027. Aballi described myositis as the most frequently requested product among the company’s rheumatology customers. The company has added two laboratory platforms and is conducting clinical validation using patient sample cohorts. The initial product launch is expected to use established methodology-based CPT codes. Aballi said the company may later pursue algorithmic interpretation and value-based reimbursement as clinical validation matures. Exagen plans to train its existing sales force in the product near the end of the third quarter and offer it across all 45 territories, rather than expanding the sales force before launch. The company also said it published a systematic review of real-world AVISE Lupus performance involving more than 3,100 patients across 14 medical centers. According to Aballi, the analysis found that AVISE Lupus identified approximately 25% of systemic lupus erythematosus patients missed by conventional markers. On Medicare coverage, Aballi said Exagen’s completed request remains with MolDX, where it has been pending since summer 2022. The company expects a potential update in mid- to late 2026 but said the process is opaque and outside its control. Medicare reimbursement has remained stable, he said. Exagen Inc is a molecular diagnostics company focused on improving the detection and management of autoimmune diseases. Headquartered in the United States, the company develops, manufactures and markets laboratory tests designed to help clinicians address diagnostic challenges associated with complex connective tissue disorders. The company's flagship product portfolio, marketed under the Avise® brand, includes multi-analyte assays such as the Avise® Connective Tissue Disease (CTD) panel, Avise® Lupus panel and Avise® Sjögren's panel. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Exagen Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Achieved record total revenue, test volume and trailing twelve-month ASP Reduced net loss by nearly 30% and narrowed adjusted EBITDA loss to $0.1 million Increased full-year revenue guidance to $72 - $75 million CARLSBAD, Calif., Aug. 04, 2026 (GLOBE NEWSWIRE) -- Exagen Inc. (Nasdaq: XGN), a leading provider of autoimmune testing solutions, today reported financial results for the quarter ended June 30, 2026, and recent corporate updates. Second Quarter 2026 and Recent Corporate Highlights: Achieved record total revenue of $19.9 million, an increase of 16% compared to second quarter 2025. Grew AVISE CTD test volume 11% compared to second quarter 2025. Expanded AVISE CTD trailing twelve-month ASP to $446 per test, an increase of $18 per test, or 4% compared to second quarter 2025. Drove a significant improvement in adjusted EBITDA, reporting a loss of $0.1 million compared to a loss of $1.7 million in second quarter 2025. Ended the quarter with approximately $25 million in cash and cash equivalents. Published a systematic review validating strong real-world AVISE Lupus performance in an analysis of over 3,100 patients across 14 medical centers, which demonstrated that use of AVISE CTD correctly identified approximately 25% of SLE patients missed by conventional markers. “We continue to advance Exagen’s unique mission to bring clarity to autoimmune disease,” said John Aballi, President and Chief Executive Officer. “Second quarter financial results demonstrate the progress we’re making in improving the growth and operating profile of our business, putting us within reach of sustainable profitability and cash generation. At the same time, we are building on Exagen’s leadership in autoimmune diagnostics through continued investment in clinical evidence generation, pipeline innovation and AI-powered tools that support rheumatology workflows to strengthen our role in rheumatology decision-making.” 2026 Guidance The Company increased full-year 2026 revenue guidance to $72 million - $75 million compared to previous guidance of $70 million - $73 million. Conference Call and Webcast Date: August 4, 2026 Time: 8:30 a.m. ET/ 5:30 a.m. PT U.S. dial-in: 877-407-0890 International dial-in: +1 201-389-0918 Webcast: Available via the Exagen Investor Relations website at investors.exagen.com Replay: A telephone replay will be available until Tuesday, August 18, 2026: U.S. replay: 877-660-6853 International replay: +1 201-612-7415 Replay passcode: 13760979 Webcast: A recording of the webcast will be available one hour after the call concludes via the Exagen Investor Relations website at investors.exagen.com Use of Non-GAAP Financial Measures (Unaudited) In addition to the financial results prepared in accordance with generally accepted accounting principles in the United States (GAAP), this press release contains the metric adjusted EBITDA, which is not calculated in accordance with GAAP and is a non-GAAP financial measure. Adjusted EBITDA is defined as net loss adjusted for interest income (expense), income tax expense (benefit), depreciation and amortization expense, stock‑based compensation expense, change in fair value of warrant liability, and certain other non‑cash, unusual or non‑recurring items, including, for example, losses on extinguishment of debt and changes in the fair value of warrant liabilities; we do not exclude normal, recurring, cash operating expenses from this measure. Such items could have a significant impact on the calculation of GAAP net loss. Exagen uses adjusted EBITDA internally because the company believes these metrics provide useful supplemental information in assessing its operating performance reported in accordance with GAAP. Exagen believes adjusted EBITDA may enhance an evaluation of the operating performance because it excludes the impact of prior decisions made about capital investment, financing, investing and certain expenses the company believes are not indicative of the ongoing performance. However, this non-GAAP financial measure may be different from non-GAAP financial measures used by other companies, even when the same or similarly titled terms are used to identify such measures, limiting their usefulness for comparative purposes. This non-GAAP financial measure is not meant to be considered in isolation or used as a substitute for net loss reported in accordance with GAAP, should be considered in conjunction with the financial information presented in accordance with GAAP, has no standardized meaning prescribed by GAAP, is unaudited, and is not prepared under any comprehensive set of accounting rules or principles. In addition, from time to time in the future, there may be other items that Exagen may exclude for purposes of these non-GAAP financial measures, and the company may in the future cease to exclude items that it has historically excluded for purposes of these non-GAAP financial measures. Likewise, Exagen may determine to modify the nature of adjustments to arrive at these non-GAAP financial measures. Because of the non-standardized definitions of non-GAAP financial measures, the non-GAAP financial measure as used by the company in this press release and the accompanying reconciliation table have limits in their usefulness to investors and may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. Accordingly, investors should not place undue reliance on non-GAAP financial measures. A reconciliation of net loss to non-GAAP adjusted EBITDA is provided in the financial schedules that are part of this press release. About Exagen Exagen Inc. (Nasdaq: XGN) is a leading provider of autoimmune diagnostics, committed to transforming care for patients with chronic and debilitating autoimmune conditions. Based in San Diego County, California, Exagen’s mission is to provide clarity in autoimmune disease decision-making and improve clinical outcomes through its innovative testing portfolio. The company’s flagship product, AVISE® CTD, enables clinicians to more effectively diagnose complex autoimmune conditions such as lupus, rheumatoid arthritis, and Sjögren’s disease earlier and with greater accuracy. Exagen’s CLIA-certified, CAP-accredited laboratory specializes in the testing of rheumatic diseases, delivering precise and timely results, supported by a suite of AVISE-branded tests for disease diagnosis, prognosis, and monitoring. With a focus on research, innovation, education, and patient-centered care, Exagen is dedicated to addressing the ongoing challenges of autoimmune disease management. For more information, visit Exagen.com or follow Exagen on LinkedIn. Forward Looking Statements Exagen cautions you that statements contained in this press release regarding matters that are not historical facts are forward-looking statements. These statements are based on Exagen’s current beliefs and expectations. Such forward-looking statements include, but are not limited to, statements regarding: Exagen’s goals, strategies, positioning, and ambitions; evaluations and judgments regarding financial results and the potential implications of those results, potential future financial and business performance, including any improvements to adjusted EBITDA, ASP, net loss and potential profitability; the potential utility and effectiveness of Exagen’s services and testing solutions; the impact of Exagen’s revenue cycle management strategy on the timing of collections and cash burn; potential stockholder value and growth and full-year 2026 guidance. The inclusion of forward-looking statements should not be regarded as a representation by Exagen that any of its plans will be achieved. Actual results may differ from those set forth in this press release due to the risks and uncertainties inherent in Exagen’s business, including, without limitation: delays in reimbursement and coverage decisions from Medicare and third-party payors and interactions with regulatory authorities, and delays in ongoing and planned clinical trials involving its tests; the potential effects of inflation and tariffs on Exagen’s margins; and changes in laws and regulations related to Exagen’s regulatory requirements. Exagen’s commercial success depends upon attaining and maintaining significant market acceptance of its testing products among rheumatologists, patients, third-party payors and others in the medical community; Exagen’s ability to successfully execute on its business strategies; and ability to obtain additional funding; third-party payors not providing coverage and adequate reimbursement for Exagen’s testing products, including Exagen’s ability to collect on funds due; Exagen’s ability to obtain and maintain intellectual property protection for its testing products; regulatory developments affecting Exagen’s business; and other risks described in Exagen’s prior press releases and Exagen’s filings with the Securities and Exchange Commission (SEC), including under the heading “Risk Factors” in Exagen’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 10, 2026, and any subsequent filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and Exagen undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors: Tina Jacobsen, CFA Exagen Inc. [email protected]

Exagen (NASDAQ:XGN) delivered record quarterly revenue, narrowed losses, improved adjusted EBITDA, and increased its full-year revenue outlook as demand for its autoimmune testing portfolio continued to grow. Exagen (NASDAQ:XGN) reported record second-quarter revenue of $19.9 million, up 16% year over year. AVISE CTD testing volume increased 11%, while average selling price rose 4% to a trailing twelve-month average of $446 per test. The company significantly reduced its adjusted EBITDA loss to $0.1 million, moving closer to profitability. Management raised full-year 2026 revenue guidance to $72 million-$75 million from the previous range of $70 million-$73 million. New clinical evidence supporting AVISE Lupus may strengthen adoption of Exagen’s autoimmune diagnostics platform. Exagen (NASDAQ:XGN) reported record second-quarter 2026 revenue of $19.9 million, representing a 16% increase from the same period last year. Growth was supported by an 11% increase in AVISE CTD testing volume and continued pricing improvement, with the trailing twelve-month average selling price rising to $446 per test from $428 a year earlier. The company’s profitability metrics also improved. Gross margin expanded to 61.3% from 60.4%, operating loss narrowed to $1.7 million from $2.6 million, and net loss improved to $3.2 million from $4.4 million. Adjusted EBITDA loss declined sharply to $0.1 million compared with a $1.7 million loss in the prior-year quarter. Exagen ended the quarter with approximately $24.6 million in cash and cash equivalents. The company also announced publication of a systematic review involving more than 3,100 patients across 14 medical centers. According to Exagen, the analysis demonstrated that use of AVISE CTD identified approximately 25% of systemic lupus erythematosus (SLE) patients who were missed by conventional diagnostic markers. Reflecting its operating performance, management increased full-year 2026 revenue guidance to a range of $72 million to $75 million. The combination of double-digit revenue growth, higher testing volumes, improving pricing, and narrower losses suggests Exagen is making progress toward its stated goal of sustainable profitability. The guidance increase indicates management expects business momentum to continue through the remainder of 2026. At the same time, the sharp improvement in adjusted EBITDA may be viewed as evidence that revenue growth is translating into better operating leverage. Beyond the financial results, the publication of additional real-world clinical evidence could support broader physician adoption of AVISE CTD. Continued investment in AI-powered rheumatology tools also reflects the company’s strategy to expand beyond diagnostic testing into workflow support, although the commercial impact of those initiatives remains to be demonstrated. Investors will likely monitor whether Exagen can sustain testing volume growth while maintaining higher average selling prices and improving profitability. Key catalysts include execution against the updated revenue guidance of $72 million to $75 million, continued progress toward positive adjusted EBITDA and cash generation, additional clinical evidence supporting AVISE products, and adoption of the company’s AI-enabled tools within rheumatology practices. Exagen stock price

A week ago, Exagen Inc. (NASDAQ:XGN) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Results overall were solid, with revenues arriving 5.5% better than analyst forecasts at US$17m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.17 per share, were 5.5% smaller than the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. Taking into account the latest results, the most recent consensus for Exagen from seven analysts is for revenues of US$71.6m in 2026. If met, it would imply a satisfactory 4.7% increase on its revenue over the past 12 months. Losses are supposed to decline, shrinking 17% from last year to US$0.69. Before this latest report, the consensus had been expecting revenues of US$71.3m and US$0.73 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year. See our latest analysis for Exagen The average price target held steady at US$8.67, seeming to indicate that business is performing in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Exagen analyst has a price target of US$10.00 per share, while the most pessimistic values it at US$8.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth. Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Exagen's revenue growth is expected to slow, with the forecast 6.3% annualised growth rate until the end of 2026 being well below the historical 8.2% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 22% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Exagen. The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates. With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Exagen going out to 2028, and you can see them free on our platform here. Before you take the next step you should know about the 4 warning signs for Exagen that we have uncovered. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

This article first appeared on GuruFocus. Revenue: $17.3 million, up 12% year-over-year. Gross Margin: 59%, up 360 basis points sequentially. Adjusted EBITDA Loss: $2.2 million, a 14% improvement versus last year. Testing Volume Growth: 10% year-over-year. Average Selling Price (ASP): $444, up 6% year-over-year. Operating Expenses (OPEX): $13.6 million, up 9% year-over-year. SG&A Expenses: Over $12 million, an 8% increase year-over-year. R&D Expenses: $1.6 million, up over 20% year-over-year. Cash Equivalents and Restricted Cash: Just under $22 million at the end of the first quarter. Full-Year 2026 Revenue Guidance: Reaffirmed at $70 million to $73 million. Warning! GuruFocus has detected 2 Warning Sign with XGN. Is XGN fairly valued? Test your thesis with our free DCF calculator. Release Date: May 11, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Exagen Inc (NASDAQ:XGN) reported record first quarter revenue of $17.3 million, marking a 12% year-over-year increase. Gross margin improved to 59%, with a 14% reduction in adjusted EBITDA loss to $2.2 million. The AVISE CTD test volume grew by 10% year-over-year, surpassing the market growth rate of 5%. The company expanded its ordering clinician base by 15% year-over-year, indicating increased market penetration. Exagen Inc (NASDAQ:XGN) reaffirmed its full-year 2026 revenue guidance of $70 million to $73 million, reflecting confidence in continued growth. The company experienced a disruption due to winter storms, resulting in a temporary reduction in test volume. Operating expenses increased by 9% year-over-year, driven by investments in commercial and R&D initiatives. The adjusted EBITDA loss, although improved, still stands at $2.2 million, indicating ongoing financial challenges. Revenue cycle management improvements are noted, but the variability in collections timing remains a challenge. The company faces uncertainty regarding the timing of achieving an LCD (Local Coverage Determination) for its products. Q: Can you discuss the improvement in the quarterly ASP and how it might progress throughout the year? A: Jeffrey Black, CFO, explained that the improvement was driven by strong revenue cycle management and prior period cash collections, which tend to be variable. John Aballi, CEO, added that out-of-period collections had a significant impact, contributing about $25 to the in-period ASP. However, they are cautious about predicting future quarters' ASP due to its variability. Q: What factors contributed to the 15% increase in ordering clinicians, and how does this affect test orders per doctor? A: John Aballi, CEO, attributed the increase to sales expansion and new territories. The lower average test orders per doctor were partly due to weather-related disruptions. Outside of those disruptions, demand was robust, and they expect continued growth in orders per physician. Q: How are you preparing for the myositis product launch, and what impact will it have on R&D and SG&A expenses? A: Jeffrey Black, CFO, noted that the myositis product will be distributed through existing sales channels, minimizing incremental marketing costs. John Aballi, CEO, emphasized leveraging existing relationships and research to support the launch without significantly increasing expenses. Q: Can you elaborate on the impact of weather disruptions on test volumes and whether these volumes will recover in Q2? A: John Aballi, CEO, stated that the weather disruptions resulted in a loss of about a third of test volumes over two weeks, which are essentially gone as they cannot be recovered in subsequent quarters due to the nature of their testing process. Q: What is the status of the LCD application, and how would it impact ASP if approved? A: John Aballi, CEO, explained that an LCD would formalize Medicare coverage and aid in negotiations with Medicare Advantage and commercial plans. While they remain in the queue for approval, the LCD would enhance ASP consistency and payer engagement. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Image source: The Motley Fool. Monday, May 11, 2026 at 8:30 a.m. ET President & Chief Executive Officer — John Aballi Chief Financial Officer — Jeffrey Black John Aballi: Good morning, everyone, and thank you for joining us. We're starting 2026 off well. Today, we reported record first quarter revenue of $17.3 million, up 12% year-over-year and with continued improvement in profitability metrics as we execute our plan. Gross margin was 59% and adjusted EBITDA loss reduced to $2.2 million, a 14% improvement versus last year. These results continue our efforts to build Exagen into a durable company that compounds value over time by prioritizing 3 core objectives: expanding adoption of our products, increasing ASP through disciplined revenue cycle execution and delivering a steady cadence of innovation that meets the unmet needs of our clinicians. Q1 was another good example. We are executing and our strategy is working. At the same time, our mission remains our anchor point. Autoimmune disease is still a category where patients often struggle to get clear answers and clinicians lack the tools to diagnose and treat with confidence in a timely manner. We exist to change that, and we'll do so by pairing better science with best-in-class execution. Our innovation efforts are on track, and we believe Exagen is well positioned to bring clarity to the complexities of autoimmune disease, ultimately improving outcomes for patients. When I look at our market opportunity, I'm incredibly energized by what's ahead. Drawing on our knowledge of the space and third-party research, we estimate the autoimmune testing market at over $2.2 billion, growing about 5% annually. With just over 3% market share today, we believe there is significant and realistic opportunity to systematically gain share by bringing better science, more timely results and world-class service to our underserved channel. Driving adoption within that opportunity will be central to volume growth. And in the first quarter, AVISE CTD test volume grew 10% year-over-year, which compared to a 5% market growth rate suggests we continue to earn share in the quarter. Test volume remained in the mid-30,000 quarterly run rate range. I feel very positive about that performance, especially in light of a couple of week disruption related to winter storms in late January and early February that reduced patient access and physician office days in specific U.S. regions. Demand outside of the weather-impacted weeks tracked well with our expectations. We entered Q2 focused on execution and 1 month in have seen a strong start, consistent with expected ordering patterns. In fact, year-to-date, we've seen several weeks where testing volume has exceeded 2025 weekly highs, and this is obviously just over a quarter into the year. A big part of my optimism stems from a review of our sales metrics, which continue to show a broadening of our ordering base. Ordering clinicians were up 15% year-over-year, reflecting continued penetration and engagement within our channel. Our team is executing well, and the results continue to build. Now to ASP. One of the clearest indications that our operating strategy is translating into durable business improvement. We expanded trailing 12-month ASP to $444, up $25 per test or 6% versus last year. Strength in the first quarter was driven by continued progress in revenue cycle management and favorable collections timing. We've now delivered 12 consecutive quarters of increasing trailing 12-month ASP and view this metric as the most reliable indicator of progress as it smooths the variability associated with accrual accounting and timing of collections. Overall, we're encouraged by continued improvement in our underlying reimbursement. It reinforces that we're investing in the right processes and the right tools to drive sustainable ASP expansion over time. In the first quarter, we continue to advance our processes around innovation and remain on track with our development priorities. We've been deliberately building the R&D to commercial muscle to deliver a dependable cadence for new products with the objective of launching approximately 1 product every 12 or so months to our clinician base. Our next key priority is an offering for myositis, our first new stand-alone product since 2020, currently targeted for commercialization in early 2027. This is among the most requested diagnostic need within our channel and will fit well with our commercial reach. Myositis is an autoimmune disease that can present in many forms, but often causes chronic muscle inflammation, progressive weakness or rapidly progressing interstitial lung disease. Left untreated, it can lead to irreversible damage that extends beyond the muscles to vital organs. And in the most severe forms, this results in complications leading to complete loss of lung function or even death. The testing dynamic for myositis is similar to connective tissue disease, where specifically with early disease, symptomatic presentation is ambiguous and the differential is broad. While roughly 100,000 patients in the U.S. are affected by the disease currently, we believe this number dramatically underrepresents the true disease prevalence given the number of patients that ultimately go undiagnosed due to inadequate tests in the market. We believe the patient population under evaluation for myositis is many times this number. While most clinicians rely on conventional testing today, the vast majority of them lack confidence in those results. We're developing a comprehensive offering that will bring clarity to this population that clearly needs a better solution. We are also excited about our scientific visibility to start 2026. At Autoimmunity 2026, a key autoimmune conference this month in Prague, Exagen had 9 abstracts accepted, including several tied to our myositis research and continued evidence generation across the AVISE portfolio. We've also had 2 manuscripts accepted for publication related to our research in myositis and SLE. Those should be out for publication later this month as well. Our progress reflects the rigor, quality and practicality of the work our clinical team is driving. Looking ahead, we are reaffirming our full year 2026 revenue guidance of $70 million to $73 million. We're incredibly pleased with the start to 2026 while working to build successive quarters and ultimately years of profitable growth. We remain focused on our priorities and delivering consistent execution. To close, I want to thank our team. The quality of this organization continues to improve and the solid results we're delivering are the product of real collaboration across every function. I am grateful for the tremendous energy, the effort and the high character that our people bring every day in service of autoimmune patients and clinicians. With that, I'll turn it over to Jeff for additional comments on the financials. Jeffrey Black: Thank you, John, and good morning, everyone. 2026 is off to a solid start with first quarter results reflecting continued deliberate execution across the business. Once again, we achieved record top line performance by growth in both testing volume and ASP. I'll dive into the financial results, starting with revenue. First quarter 2026 revenue reached $17.3 million, an increase of 12% compared to last year. Testing volume grew 10%, driven by continued momentum from the investments we made last year to upgrade and expand the commercial organization. The team's productivity continues to ramp. In fact, even with many of our new territories less than a year old, we drove a 4% improvement in sales productivity based on trailing 12-month volume per territory. And as John mentioned, we increased the number of ordering clinicians in the first quarter by 15% year-over-year. These are both clear indications that our commercial investments are translating into tangible performance gains. Our AVISE CTD trailing 12-month ASP expanded 6% to $444. Execution of our revenue cycle management initiatives supported a strong in-period ASP result, including the collection of over $900,000 in claims older than 360 days. Over time, we continue to target an ASP of at least 50% of our Medicare reimbursement or approximately $600 to $650, recognizing that the quarterly contribution from our revenue cycle initiatives can be variable. Our pharma services offering generated roughly $300,000 of revenue in the quarter. Early efforts here are coming to fruition. We now have over $5 million in contract backlog value and growing that we expect to realize over the next 2 to 3 years. Moving to gross margin. We reported 59% for the first quarter of 2026, relatively unchanged compared to first quarter 2025 and up 360 basis points sequentially. Gross margin in the quarter benefited from the strength of our in-period ASP and our continued COGS rationalization that is streamlining workflows in the lab and reducing costs across our supply chain. We remain confident that gross margin will progress to the mid-60s over time as we achieve further ASP expansion, generate scale and fixed cost leverage and further optimize costs. Turning to operating expenses. First quarter 2026 OpEx was $13.6 million, up about 9% compared to last year. We continue to exercise expense discipline and direct incremental spend toward growth investments, including commercial and R&D initiatives. Breaking out the components of OpEx, first quarter SG&A was just over $12 million, an increase of 8% compared to our first quarter 2025 and driven primarily by investment in commercial talent and territory expansion. Notably, revenue growth continues to consistently outpace SG&A growth, indicating sustained operating leverage in the business. R&D accounted for about $1.6 million of OpEx in the first quarter, growing over 20% compared to last year to support continued pipeline development, including preparation for the myositis product launch expected in early 2027. Our adjusted EBITDA loss, which excludes depreciation and non-cash stock comp expense was $2.2 million in the first quarter, a 14% improvement compared to last year. Please refer to the press release we issued earlier today for a reconciliation of our net loss to adjusted EBITDA. Turning to cash. We ended the first quarter with cash, cash equivalents and restricted cash of just under $22 million and ahead of our internal expectations. We continue to maximize our revenue cycle management, which includes beginning the year by holding most claims. Consistent with previous years, this temporarily increases accounts receivable and results in a higher use of cash in the first half of the year, which we expect to normalize in the second half. We continue to believe that our balance sheet provides us the runway needed to support the business to sustainable positive free operating cash flow. Shifting to guidance. As John mentioned, we're reaffirming full year 2026 revenue guidance of $70 million to $73 million. The midpoint continues to assume high single-digit percent volume growth and low single-digit percent ASP growth relative to our Q4 2025 in-period rate of approximately $430. In closing, we remain committed to creating and sustaining shareholder value through financial and operational discipline as we deliver better care for autoimmune disease. Our financial performance reflects continued execution across top line expansion, cost management and targeted investment to create a durable business well positioned for self-funded growth and scale. Operator, we will now open the call for questions. Operator: [Operator Instructions] Our first question comes from the line of Kyle Mikson with Canaccord. Kyle Mikson: Congrats on a great quarter. I wanted to talk about the quarterly like in quarter ASP for a second. It was good to see the improvement in the trailing 12 months, but the quarterly was interesting. So it looks like maybe like 470 or high 400s, and that would obviously be a pretty big increase from the last few quarters. But I bring it up because it just seems like your first quarter ASP is typically the highest of the year of any of the 4 quarters. And so as we think about the step down going forward, if that is the case, just -- what's the progression going to look like? I know you have the ASP guidance, but maybe just talk a little bit about the seasonality, what you're seeing with RCM and that stuff and how we should just be thinking about it as it kind of builds to the full year TTM. John Aballi: Kyle, thanks a lot for the question. Appreciate it. When we look at this quarter, very happy with how our revenue cycle team was able to deliver, specifically related to the prior period cash collections, which drove some of that upside or outsized performance in the quarter. Tough for us to project that each quarter going forward or know exactly that prior period collections tends to be a little bit lumpy for us. So I don't think we're ready to say that there's going to be a step down in sequential quarters to characterize exactly the size of it. But our revenue cycle approach has yielded pretty decent returns as it relates to prior period collections in quarters in the past, and it was great to see it happen again this quarter. Looking forward to it in future quarters as well. But the exact magnitude is always difficult for us to project. Anything you'd add, Jeff? Jeffrey Black: Yes, Kyle, I would say you had done the calculation on in-period. Our out-of-period collections, just to put in perspective, we said about $900,000 in out-of-period greater than 12-month collections. Put that in perspective, we did about $1.5 million for the entire year last year. So tracking very nicely. And again, very hard to predict whether that becomes a run rate or otherwise. But that had about a $25 impact on the in-period ASP. So we are tracking ahead of that Q3 or Q4 exit rate, which is encouraging. But again, I think it's too early for us to make a call on what we expect Q2 in terms of whether it's continued enhancement. We'll say we did see a full quarter of collections for PAD4. So that's tracking right around where we expect it to be. And then some of the increase is really relative to payer mix, which can change quarter-to-quarter. But again, very encouraged about a $25 impact on the out-of-period collections. Hoping that we'll continue to see that traction, but not yet ready to make the call. Kyle Mikson: Okay. Yes, John, that was helpful. And Jeff, that was a really good color there as well. Thank you for that. On the ordering physicians in the quarter, that increased, I think, 15%, I guess, year-over-year. That's great to see. I just was wondering what were some of the reasons for that. And then I think that might imply like a lower average test order per doctor, which is probably extend that a cohort of newer to AVISE clinicians. On this though, what are some of the ordering trends of the more recent cohorts of physicians given several developments in the autoimmune field the last few years? John Aballi: Great question, Kyle. So you're exactly right. The ordering physician base increased 15% year-over-year to about just over 2,700 physicians here for the first quarter. A big part of that has to do with our sales expansion. Obviously, with the additional territories we added in the back half of last year, those folks really high-caliber individuals, but they've just gotten into the field, established those relationships, and we're seeing the traction there. As it relates to orders per physician, you're on the mark there as well. I think part of the lower orders per physician for Q1, if you would be related to more of the weather impact, to be honest with you. We had about 2 weeks in the end of January, early February, where we lost around 30% or so, 1/3 of our volume for those 2 weeks just related to that severe weather in the Northeast. And so that, on an average basis, orders per physician would pull that number down a little bit. So that's all we're seeing there. The weeks outside of the weather impact, we saw very robust demand on orders per physician, physician base and here into Q2 as well. Kyle Mikson: Awesome. Perfect. And then finally, Jeff, you were mentioning the R&D expense this quarter was a bit elevated, partially due to preparation for the myositis launch, I guess, early next year. I just was wondering if you guys could talk about how much education or like additional marketing is going to have to be kind of executed, I guess, this year for that test? And how much of this is maybe R&D versus like an SG&A type thought process? Jeffrey Black: Yes. I'll let John chime in on some details. But generally, this is going to be new product really outside of AVISE CTD, but it will be distributed through the same sales channel. So the expectation is we're adding to the bag. So there will be some incremental marketing efforts, but we don't expect to see OpEx ramp up substantially. We will continue to see investment this year on the R&D side. But this is -- will be our first stand-alone product beyond AVISE CTD really since, what, 2020? John Aballi: 2020. Jeffrey Black: So really excited about it, and we don't think it's going to add really incremental burn. It's really just adding to the existing bag. John Aballi: The way we take a look at this, Kyle, or at least the way I think about it internally is we have to have very strong relationships with our customer base, but also the other innovators in the field and the KOLs. And that serves several purposes, but one of them being as you launch a new product and you conduct studies with folks, that can serve very much as incredibly powerful marketing material related to the new product. So we've already started that. We've got abstracts and actually an accepted manuscript now related to myositis and some of the research we're doing there. And that's all done with the existing budget. And a big part of that or credit goes to our research team for having those relationships, finding creative ways to conduct studies in, call it, economical way, and we'll continue to do that. There may be some marketing expense that is associated with the product launch, but it will be measured and generally consistent with our current operating profile. Operator: Our next question comes from the line of Bill Bonello with Craig-Hallum Capital Group. William Bonello: So on the -- first of all, on the volume, on the weather, you talked about a couple of tough weeks. Any sense of maybe what the impact on volume growth might have been? I mean, did you, in theory, lose a day or 2 of productivity? Or how might we think about that? John Aballi: Thanks so much for the question. So the way we have characterized it is for those 2 weeks, we lost about 1/3 of volume over the course of 2 solid weeks. So that's a couple of thousand tests. That should be -- I think, give you the exact color you need. William Bonello: Yes. And then just to expand on that, is there anything else just as we see the ASP trend moving in the right direction, is there anything different that's happening at all on the volume front in terms of either maybe walking away from some lower-priced business or being more cautious about some of the accounts you're adding? Or would we say that maybe differential in the growth rate and the sequential downtick would pretty much all be the weather? John Aballi: So great question. So in the quarter, the impact of volume was pretty much weather related. I mean not really any other drivers there or motivators there. And then on the ASP side, really what's driving that continues to be just our -- the strategy we employed a few years ago. And we just continue to get better at it. Our appeals continue to get better. These are long cycles, as you know. And as we learn through various successes or failures in our appeal efforts, we adjust our approach and make changes there. We're always evaluating our Medicaid patient population, is maybe one area that I would say continues to evolve and certainly on the managed Medicaid side, what level of patient responsibility the market can support there. And so those are some changes we have made here in Q1, but I don't think those are big contributors to volume impact. They may have had some impact on the ASP side, but mostly ASP gains are due to wins on the revenue cycle side. William Bonello: Okay. That's really helpful. And then maybe just a follow-up on that on the ASP side. So obviously, having improvement on both the collections front and it sounds like on the fighting denials and all of that. Can you just remind us maybe what some of the key opportunities are? I know as we were going through last year, there were some really specific opportunities you saw where you -- for things that you could get paid for because of some of what you had added to the product over the course of the last year. And maybe just give us a little bit of an update on how you're feeling about that and where those opportunities stand today? John Aballi: Yes, absolutely. Thanks for the chance to expand on it. From my standpoint, opportunistically, we continue to pursue prior period collections. I mean we've talked about this a little bit with the new product launches, and you have your initial payment or your initial ASP, call it, from when you perform the test. And then over the course of about a 12-month, maybe even a little bit longer 12- to 18-month period, you're able to continue to work with the insurance company, with the patient in various ways through appeals, advocacy, what have you, and drive further collections. And that's what we anticipated doing with the new product launches on the existing product. And it's just -- it's coming to fruition. To have 900,000 in prior period collections here in Q1 when all of last year, we had about $1.5 million, that's phenomenal. We are, to be honest, so proud of the team because it's coming from multiple payers and through multiple initiatives. And so it's not just one single win that drove this, but it's on improving some of those collections for the new product launches. It's on the base business across multiple payers. And our level of payer engagement just continues to improve as well. I mean here in the first quarter, we had -- I said it on -- we had presentations to 3 different medical directors at various Blues plans. They continue to be engaged. We're not -- these aren't just join a conference call, they sit silent, and you present your clinical dossier and then the call is over. There's high levels of engagement, lots of Q&A, follow-up requests for additional material. So we are -- our strategy is getting the attention of various payers. It's yielding improvement in ASP on the individual claim level for multiple CPT codes, and we'll just continue marching along. And that's been the strategy from day 1 and just continues to improve in terms of efficacy. William Bonello: Okay. And then if I could, just one last follow-up on that, but -- and that's helpful. But just in terms of getting paid for the additional markers, and obviously, that's part of the success presumably on the prior period collections. But as you look forward, are you feeling -- how are you feeling about consistency of payment for those additional markers? Are you thinking that's going to be -- I hate to say easier, but you -- as you look forward, do you expect to see maybe the rate of denials moderate or a bit given the success you've had with the prior period collections? Or is it too early to say on that? John Aballi: No. So it definitely will improve the rate going forward, especially just because we're on accrual accounting, right? So as you have a track record of improved collections, you can actually accrue it and then it will factor into the rate going forward, right? So from that perspective, we'll have greater certainty, we'll have greater clarity because we'll have firsthand experience in seeing this through full cycle for -- this is more specific to the new marker reimbursement. So from that perspective, we'll improve. But I think the other thing I would say is we now have a 3-year track record of consistent improvement in ASP. And so I have a lot of confidence that our processes work and that they'll continue to yield positive results over time as well. So all of that will be factors. The way to really lock it in, as you know, is through in-network contracting and then your velocity of payments will improve. And I don't know that you ever sleep soundly at night regarding this area, but at the same time, it may speed everything up a little bit. Operator: Our next question comes from the line of Dan Brennan with TD Cowen. Daniel Brennan: Maybe, guys, just on pacing for the year. Just Q2, Street is just shy of $18 million. Can you give us some flavor about maybe price volumes, you guys seem okay with that number? How do we think about that? John Aballi: And from a guidance standpoint, we are guiding quarterly. I think we feel very comfortable about our annual guide that $70 million to $73 million. Obviously, a very nice quarter here for Q1, some of it driven by the prior period collections that we aren't quite ready to earmark for the rest of the year each quarter. So we're still filling it out. We'd like to get another quarter behind us before we take a look at that annual number. And I think the quarterly spread is what it is on the analyst side, but I don't think we're too far off. Daniel Brennan: Okay. And then maybe just one follow-up on the weather. So you lost those a couple of thousand tests, I guess, in Q1. So I guess, presumably, do those come back in Q2? Or are they gone? And does that kind of create a favorable comp in Q2? John Aballi: Yes. So because the sample type that we work in is peripheral blood, it's got a viability component to it. Really, it gets moved -- those tests get moved theoretically. If we were dealing with paraffin-embedded tissue or fixed tissue or something like that, you could envision a catch-up period that's maybe a little bit more realistic. But for us, in essence, those are gone. Those are clinic days that are completely gone. There's only so many patients that a physician can see in a single day. So those are essentially gone. Daniel Brennan: Got it. Okay. Maybe you could just give us an update on the path towards an LCD. I know that's been on file for a couple of years now. Just wondering kind of any update there. How we think about that? And what kind of -- if, in fact, that were to come, how do we think about the impact that would mean on your ASP uplift? John Aballi: Sure. So maybe I'll start with the impact first. Impact-wise, an LCD is a very nice progress for our organization. It will memorialize the coverage with Medicare that we have, I guess, in plain sight but also allow us to leverage that for Medicare Advantage conversations and even policy discussions related to commercial lives with various plans. So we're looking forward to it, still waiting, continue to have a very good relationship with the MolDX team, meet with them on a regular basis, about every quarter just to get an update. We do have -- our body of evidence supporting AVISE CTD continues to expand. In fact, we had a systematic review, a very significant publication for us internally, just get accepted for publication. That will come out maybe in a month's time or so. And we look forward to updating the MolDX team with that evidence as well. But where we sit right now is we're in the queue. They are unable to tell us exactly where in the queue we are, but we remain in the queue, and they have a complete understanding of our product and the clinical evidence behind it. But that's about all we can say at the moment. Daniel Brennan: Okay. And just in terms of the Northwell transition, I think you guys felt pretty good that other customers weren't looking to kind of switch from direct bill to kind of, I guess, third-party pay. Just any update there. How do you feel about that? Does that still remain the case today? John Aballi: Yes. Well, it still stings. I think from my perspective, it's really unfortunate that we weren't able to find a path there. But as it relates to our broader client bill business, no further change. In fact, I think our relationship with our client bill customers continues to be very strong. Maybe adjusted our approach a little bit, and we have a lot of senior leadership highly tuned into our client bill accounts and just continue to foster them as we do with really any other account. So no further updates, if you will. And as it relates to Northwell, we continue to find ways to serve their clinician base outside of the system itself but see it unlikely -- see it as unlikely that a client bill arrangement comes back in the near future. Daniel Brennan: Got it. Right. But you're not really hearing like you think it is kind of more of a one-off, I guess, is still the case, correct? John Aballi: Yes. And that happened in July of last year. And since then, we continue to have, like I said, strong relationships with our client bill business. So pretty close to the definition of one-off, in my opinion. Operator: Our next question comes from the line of Mark Massaro with BTIG. Mark Massaro: It was really nice to see the 15% increase in ordering clinicians. Can you give us a sense, are these all specialists, so I presume rheumatologists? Or perhaps did you see any increase in breadth? And then related to that, can you speak to any potential opportunity to market to primary care or more generalist clinicians? John Aballi: Yes. Thanks for the question. Very interesting one. From the physician base standpoint, we still target the rheumatologists as our primary customer, and that's what we saw in terms of the expansion, continued growth, but roughly proportional to what we had previously. So about 2/3 devoted to the rheumatology channel and then about 1/3 of that expansion coming outside of it. When we see utilization of the test outside of rheumatology, it can come in a few different ways, general practitioners, internists, but we also see it in the women's health side, so OBG, but also pulmonology as well. And so we don't have targeted -- we want to keep our sales team focused. And I think you really need to take a look at what the potential is for those physicians before you start targeting and marketing to them. And so from our standpoint, where we've seen expansion outside of the rheumatology specialty work well, it's when the rheumatologist is still involved even if behind the scenes. They know their referral network very well, and they know which physicians for whatever geographic reason are seeing some of these patients, and they'll help direct us in that respect. So that's what we saw with this expansion as well. Mark Massaro: Okay. That's great. And I think you expanded to, I believe, 45 territories. Can you just speak to how you're feeling about the productivity of some of the newer reps? How do you think they're ramping? And if they're not fully ramped, do you see any potential for some pickup in the back half of the year? John Aballi: Yes. So first of all, they're fantastic people and been really excited about how we've -- how they've been able to come in. We've modified our training now a couple of times to cater -- to really refine it over the last couple of years, and it's working well. We just had our -- we split training into 2 phases. The first is kind of welcome to rheumatology, remove the deer in the headlights sort of perspective. And we bring them back after a couple of months in the field to dive deeper into the science but also really do more of a Q&A and tailor it to what they're seeing and the challenges that they're facing in their territories. And we did that here in late December. So we've now had a quarter with our new reps going through Phase 2 of the training. And so they're still getting their feet under them. I think we typically see production consistent with our goal targets somewhere in that 6- to 9-month range. But to truly get running, it takes a little bit longer than that. And we've had a few of our territories land some pretty big accounts, clients, which is telling me that they understand the product. They're able to convey the clinical utility of the product in an effective way and develop that relationship. So very happy with how pretty universally these 5 territories have gotten acclimated to rheumatology and our product, but still a ways to go. And I would think you see a continued build throughout the year. We'll also look to expand our sales organization even further once we have those folks adequately supported. So maybe that comes in the back half of the year or so. We'll have to see. Mark Massaro: Okay. Fantastic. And then my last question. I know in prior calls, there had been more discussion around the newer biomarkers launched in 2025. I know you've talked about PAD4, I think, RA33, some others. Just curious how that is ramping. And to what extent do you see potential upside in ASPs as we try to tune up our models? I'm just wondering how those are progressing relative to your internal expectations. John Aballi: Yes. The new markers, I think, generally inside the building, we're very happy with the decision to pursue that research and ultimately commercialize those markers. And I think part of what gives us that optimism or excitement is we've actually started to land pharma contracts related to testing with the new markers. We actually have 2, specifically for PAD4 and RA33. So our unique RA markers are not only grabbing the attention of our clinical base and being useful in that context, but we're seeing that utility spread into our pharma partners. And obviously, as you have these new markers incorporated into various trials and subsequent publications leveraging these, it's just going to continue to build. And we continue to be the only group in the U.S. providing these markers and just very excited to drive that innovation into the field. Specifically as it relates to ASP, I think our revenue cycle operations continue to improve the ASP that we're able to generate on our test, but specifically those new markers. And we're still gaining confidence with what that looks like full cycle. I mean PAD4 launched in September of this past year. So we're 6 months in, and we don't guide on ASP. And so I think from that standpoint, it's going to be tough for me to give you some direction there. But we like how the first quarter shaped up related to ASP. Some of that prior period collection was related to the new markers, and we'll just continue to build from here. Mark Massaro: Great. Actually, John, just to clarify that, the pharma business that you're landing, how much of this is lupus related versus RA or any other type of autoimmune disease? John Aballi: That's an interesting question. So it's interesting, Mark, because you sign a contract for up to a certain amount of service and some of that's dependent on trial enrollment, right? But we have -- right now, we have a pharma business heavily focused in lupus, but actually quite a bit in RA as well. We've never broken it out publicly. Jeff, what would you... Jeffrey Black: Yes, it's a great question, Mark. Historically, clearly, lupus, the expansion of the contract backlog, which has expanded from in the 4s to the $5 million range over the course of the last 90 days. A lot of that has been driven by RA. I would still say a bigger percentage is lupus, but we are seeing sort of a growing contribution from RA. John Aballi: Yes, we're doing at least 1/3 of our biopharma business in RA. It may be higher than that, but at least 1/3. Operator: Our next question comes from the line of Matthew Parisi with KeyBanc Capital Markets. Matthew Parisi: This is Matthew Parisi on for Paul Knight over at KeyBanc Capital Markets. Congrats on the quarter. I believe you called -- on the last call, you called out that ACR is now advocating for the AVISE CTD test. Can you talk to any impact that you're seeing as a result of that advocacy? John Aballi: Matthew, thanks for the question. And you're exactly right, very happy to have found a path that ACR can play in helping us drive greater access to our test. And given that we're at various forms of discussions with different payers, I would hesitate to call out a payer by name, but it's been a very positive impact. And any time you have physicians advocating for your product directly to the payer, I think tough to mess that up, to be honest with you. And so we welcome it. We welcome the partnership. We really appreciate that they recognized the role diagnostics play in the ecosystem and that there needs to be a path for advocating greater access for patients. It just continues. So it wasn't a onetime event. It's a partnership that we formed with the ACR and the physicians there, and they're committed to speaking on our behalf and advocating for their constituency related to access. So I would just say it remains strong and continues. Matthew Parisi: That's great to hear. And then if I can squeeze in one more. You previously mentioned revenue per territory in the range of $430,000. Do you have like an updated revenue per territory number for the quarter? And then how should we really think about that as you ramp up the new territories? Jeffrey Black: Yes, Matt, I think that the number you're referring to is a quarterly number. So the annualized number would be north of $1.5 million. That continues to be, what I would say, our target, $1.5 million plus, and we're tracking right about there, maybe moderately improved given the results of Q1. Operator: Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Aballi for any final comments. John Aballi: Thanks so much. I really appreciate everyone who joined the call today. And it's really a lot of fun to start the year off the way we have. Basically, we're continuing our momentum from the second half of '25 but reigniting our progress in ASP gains. And I don't think anything is more fun than that. I'm incredibly proud of our team, as I have been now for several years. They continue to deliver in transforming this organization into, really, the preeminent diagnostic company serving autoimmune patients. Progress at the company has come in spurts, but we've consistently improved our trajectory, and we have put ourselves in a position to own the autoimmune diagnostic space. And while others are focused elsewhere, we'll continue to chip away at this opportunity and build a truly incredible autoimmune powerhouse. We appreciate the support of all stakeholders and look forward to continuing to update on our progress. Thanks so much again. Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Before you buy stock in Exagen, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Exagen wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by a 12% year-over-year revenue increase, fueled by record AVISE CTD test volumes and a 6% expansion in trailing 12-month ASP to $444. Management attributed the volume growth to a 15% increase in the ordering clinician base, reflecting successful integration and productivity from the sales force expansion initiated in late 2025. ASP growth was primarily driven by disciplined revenue cycle management and favorable collections timing, marking 12 consecutive quarters of trailing 12-month ASP improvement. The company successfully navigated a two-week weather disruption in early Q1 that reduced patient access in the Northeast, estimating a loss of approximately 1/3 of volume during that period. Strategic positioning is focused on gaining share in a $2.2 billion autoimmune testing market where Exagen currently holds just over 3% market share. Management is pivoting toward a predictable innovation cadence, aiming to launch one new product approximately every 12 months to leverage their established rheumatology channel. Full-year 2026 revenue guidance is reaffirmed at $70 million to $73 million, assuming high single-digit volume growth and low single-digit ASP growth relative to the Q4 2025 exit rate. The company is targeting early 2027 for the commercial launch of its myositis diagnostic, its first new stand-alone product since 2020, addressing an underserved population of roughly 100,000 U.S. patients. Management expects gross margins to progress toward the mid-60s over time through continued ASP expansion, fixed cost leverage, and supply chain optimization. Cash runway is deemed sufficient to reach sustainable positive free operating cash flow, with a seasonal normalization of accounts receivable expected in the second half of 2026. The long-term ASP target remains $600 to $650, representing approximately 50% of Medicare reimbursement rates, to be achieved through improved payer engagement and in-network contracting. Revenue cycle execution resulted in the collection of over $900,000 in claims older than 360 days during Q1, significantly outpacing the $1.5 million collected in all of 2025. The pharma services segment reached a contract backlog of over $5 million, with roughly 1/3 of current biopharma business focused on Rheumatoid Arthritis (RA). R&D expenses increased over 20% year-over-year, reflecting intensified investment in the myositis pipeline and clinical evidence generation. The transition of Northwell Health away from a client-bill arrangement in 2025 remains a headwind, though management views this as a one-off event rather than a broader trend. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that while the $900,000 in prior period collections provided a $25 boost to in-period ASP, such collections are inherently lumpy and difficult to project as a quarterly run rate. The improvement reflects a three-year track record of refining appeal processes and gaining better reimbursement for new markers like PAD4. The five new territories added in late 2025 are showing strong early traction, with sales productivity improving 4% on a trailing 12-month basis. New reps typically reach target production levels within 6 to 9 months, and management may consider further sales force expansion in the second half of 2026. Exagen remains in the queue for an LCD and continues to meet with the MolDX team quarterly to provide updated clinical evidence, including a recently accepted systematic review. An LCD would memorialize Medicare coverage and provide significant leverage for negotiating with Medicare Advantage and commercial payers. The partnership with the ACR has facilitated direct physician advocacy to payers, which management believes is a positive driver for improving patient access and policy discussions.