Exagen Inc. Reports Record Revenue and Positive Outlook

Exagen ((XGN)) has held its Q4 earnings call. Read on for the main highlights of the call.

Exagen Inc. has reported a positive sentiment during its latest earnings call, highlighting significant achievements such as record revenue growth, innovative biomarker launches, improved gross margins, and operational enhancements. Despite facing challenges in testing volume and physician attrition, the overall tone remained optimistic due to strong financial performance and strategic advancements.

Record Revenue Growth

Exagen Inc. achieved a record total revenue of $55.6 million for 2024, marking a 6% increase from 2023. This growth was primarily driven by improvements in reimbursement and a focused approach towards profitability, showcasing the company’s ability to enhance its financial standing.

Innovative Biomarker Launch

The company launched new biomarkers for the AVISE CTD test, including RA33 and T cell markers. These innovations have enhanced diagnostic capabilities for rheumatoid arthritis and lupus, and have been well-received, promising to increase both patient care impact and revenue.

Improved Gross Margins

Exagen’s gross margins expanded by over 300 basis points, approaching 60% for the full year 2024. This improvement is attributed to increased average selling prices and operational efficiency, reflecting the company’s strategic focus on financial optimization.

Operational and Cultural Improvements

The company has successfully reduced its losses by over 70%, improved its company culture by significantly reducing voluntary turnover, and enhanced overall team alignment and motivation, contributing to a more robust organizational structure.

Positive Adjusted EBITDA Outlook

Exagen anticipates being adjusted EBITDA positive in the fourth quarter of 2025, marking a key milestone in its financial turnaround and underscoring the company’s commitment to achieving financial stability.

Decline in Testing Volume

Testing volume for AVISE CTD was down 11% in 2024 compared to 2023. This decline was impacted by deliberate reductions in unprofitable sales channels and a strategic focus on reimbursement, indicating a shift towards more sustainable business practices.

Challenges with Physician Attrition

The company faced a loss of about 4.5% of its ordering physician base due to challenges in supporting necessary documentation for reimbursement. This highlights an area for improvement in maintaining and supporting its physician network.

Forward-Looking Guidance

In the Exagen Inc. Fourth Quarter 2024 Earnings Conference Call, significant guidance was provided for the year ahead. Exagen closed 2024 with a record total revenue of $55.6 million, driven by an improved average selling price (ASP) of $411 for AVISE CTD. The company narrowed its adjusted EBITDA loss to approximately $10 million, with gross margins expanding over 300 basis points to nearly 60%. In 2025, Exagen expects revenue growth through ASP expansion and additional sales territories, aiming for positive adjusted EBITDA by Q4. The launch of new biomarkers in January 2025 added approximately $90 in incremental revenue per test, which is expected to further enhance gross margins. Looking ahead, Exagen anticipates achieving at least $14.5 million in Q1 2025 revenue and targets sustainable free cash flow positivity by 2026, with plans for additional product launches and strategic sales expansion to drive growth.

In summary, Exagen Inc.’s earnings call reflects a positive outlook with record revenue growth and strategic advancements in biomarker innovation and operational efficiency. Despite challenges in testing volume and physician attrition, the company’s forward-looking guidance suggests continued growth and financial stability, making it a promising prospect for investors.