Exagen Earnings Call Highlights Growth Amid Key Risks

Exagen ((XGN)) has held its Q1 earnings call. Read on for the main highlights of the call.

Exagen’s latest earnings call struck a cautiously optimistic tone, with management emphasizing record revenue, solid test volume growth, and improving profitability metrics. Executives acknowledged ongoing GAAP losses, reimbursement uncertainty, and some one‑off boosts to pricing, but argued that commercial momentum, innovation, and a strong balance sheet position the company well for the coming years.

Record Revenue Momentum and Growth Trajectory

Exagen reported record first‑quarter revenue of $17.3 million, up 12% from the prior year and underscoring what management called a strong start to the year. The company reiterated its confidence in the longer‑term trajectory by reaffirming full‑year 2026 revenue guidance in the $70 million to $73 million range.

Test Volume Growth and Market Share Gains

Core AVISE CTD test volumes rose 10% year over year, keeping the business in a mid‑30,000 quarterly test run rate despite weather‑related disruptions. With the overall market growing around 5%, management highlighted continued share gains from an estimated 3% share, suggesting further upside if execution holds.

ASP Expansion and Revenue Cycle Tailwinds

Pricing trends remained favorable as trailing 12‑month ASP climbed to $444, an increase of $25 or 6% from last year and marking the twelfth consecutive quarter of TTM ASP expansion. The quarter benefited from more than $900,000 of collections on older claims, which added roughly $25 to the in‑period ASP and may not repeat at the same level.

Improving Profitability and Margin Progress

Adjusted EBITDA loss narrowed to $2.2 million, a 14% improvement versus the prior year, reflecting better operating leverage as the business scales. Gross margin rose sequentially to 59%, up 360 basis points, and management reiterated a longer‑term goal of reaching the mid‑60% range through further ASP gains and efficiencies.

Commercial Expansion and Sales Productivity

Ordering clinicians increased about 15% year over year to just over 2,700, signaling broader adoption of Exagen’s testing portfolio. Trailing 12‑month volume per territory improved roughly 4%, and the company expanded its sales territory footprint, pointing to additional ramp potential as newer representatives mature.

Biopharma Services Growth and Backlog Visibility

Biopharma services contributed roughly $300,000 of revenue in the quarter, a small but growing adjunct to the core testing business. Importantly, management cited a contract backlog of more than $5 million expected to convert over the next two to three years, providing multi‑year revenue visibility from this segment.

Pipeline Progress and Scientific Profile

Research and development efforts are advancing with a myositis stand‑alone product targeted for early 2027, extending the company’s autoimmune testing reach. Exagen also highlighted nine abstracts accepted at a major autoimmunity conference, two accepted manuscripts, and the commercialization of new markers such as PAD4 and RA33 that are already supporting pharma partnerships.

Liquidity and Cash Runway

The company ended the quarter with just under $22 million in cash, cash equivalents, and restricted cash, which management believes is sufficient to fund operations toward sustainable positive free operating cash flow. This liquidity buffer is important as Exagen continues to invest in R&D and commercial expansion while still operating at a loss.

Weather‑Driven Volume Hit and Non‑Recoverable Tests

Severe winter storms in late January and early February disrupted patient access and cut into physician office days, reducing Exagen’s testing volumes. Management estimated losing roughly one‑third of expected volume over a two‑week period, equating to a couple thousand tests that are effectively lost rather than deferred.

Continuing Operating Losses and Higher OpEx

Despite the progress, Exagen remains unprofitable with an adjusted EBITDA loss of $2.2 million and total operating expenses of $13.6 million, up about 9% from last year. SG&A costs rose 8% to just over $12 million while R&D climbed more than 20% to about $1.6 million, reflecting ongoing investment in growth and innovation.

Lumpy Collections and ASP Sustainability Risk

A notable portion of the quarter’s ASP uplift came from approximately $900,000 of prior‑period collections on claims more than 360 days old, which are inherently uneven. Management cautioned that these collections are not embedded as a recurring driver and that ASP trends may fluctuate in the near term as such items normalize.

Reimbursement Uncertainty and LCD Timing

The company’s key MolDX local coverage determination remains pending with no clear timeline, leaving an overhang on reimbursement clarity. Until this coverage decision is finalized, Exagen may have limited leverage with Medicare and some commercial payers, which could affect pricing and broader adoption.

Client‑Bill Loss Highlights Concentration Risk

Exagen also reminded investors of the loss of a client‑bill contract with Northwell last July, which removed a notable account from its base. Management framed the event as largely one‑off but acknowledged it underscores the commercial and concentration risks tied to large customer relationships.

Cash Usage and Accounts Receivable Dynamics

The company is deliberately holding some claims early in the year, temporarily elevating accounts receivable balances and cash usage in the first half. Management expects these timing effects to reverse and cash flow to normalize in the second half, though investors will be watching working‑capital discipline closely.

Gross Margin Still Below Long‑Term Ambitions

While gross margin improved to 59%, it remains below the company’s target of mid‑60%, implying more work is needed on both the pricing and cost fronts. Management pointed to continued ASP expansion, operating scale, and cost optimizations as the levers that should gradually close this margin gap.

Guidance and Long‑Term Outlook

Management reaffirmed full‑year 2026 revenue guidance of $70 million to $73 million, assuming high‑single‑digit volume growth and low‑single‑digit ASP growth from a Q4 2025 ASP baseline. They expect ASP to move toward at least half of Medicare reimbursement and see gross margins progressing to the mid‑60s over time, while noting that prior‑period collections, seasonality, and accounts‑receivable timing will make quarterly trends uneven.

Exagen’s earnings call painted a picture of a company growing into its niche with improving fundamentals but still facing operational and reimbursement headwinds. For investors, the key watchpoints will be sustained volume and share gains, more stable ASP progression without relying on old collections, and steady margin expansion as the pipeline and biopharma services contribute more meaningfully to the bottom line.