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EI

EXAGEN INC. (XGN)·Q1 2025 Earnings Summary

Executive Summary

  • Record Q1 2025 revenue of $15.50M, up ~7.5% YoY, driven by continued ASP expansion (TTM ASP $419) and modest volume growth; gross margin was 58.9% with management indicating transitory headwinds that would have put GM >60% with full-quarter ASP capture .
  • Revenue beat Wall Street consensus ($14.55M*) and EPS was a slight beat (-$0.20 vs -$0.204*), with 5 estimates contributing to each metric*; prior quarter guidance of “≥$14.5M” was exceeded (S&P Global).
  • FY 2025 guidance initiated: revenue of at least $65M and on track for positive adjusted EBITDA in Q4 2025 (maintained from prior commentary), supported by biomarker launches and debt refinance with Perceptive Advisors .
  • Catalysts: successful ALJ reimbursement appeals and TRICARE positive medical policy (payers), RA biomarker adoption, and debt facility optionality; operating leverage expected to improve through H2 as ASP, contracts, and volume scale .

What Went Well and What Went Wrong

What Went Well

  • “Ninth consecutive quarter” of increasing TTM ASP, reaching $419, aided by new biomarkers, with early reimbursement aligning to ~$90/test incremental revenue; management expects mid‑60s GM over time .
  • Positive payer momentum: first ALJ hearing win setting precedent for appeals and TRICARE positive medical policy to support future ASP and coverage .
  • Volume improved sequentially by ~6% on energized sales force and RA launch; sales territory expansion underway, with improved turnover and team stability .

What Went Wrong

  • Gross margin down ~70 bps YoY (58.9% vs 59.6%) due to partial-quarter biomarker impact and direct-bill contracts not yet updated; lab investments ahead of demand also weighed near term .
  • Adjusted EBITDA loss widened YoY (-$2.51M vs -$1.99M) given higher SG&A from commercial investments and R&D activity; net loss increased to -$3.75M vs -$3.36M YoY .
  • Cash fell to $11.19M as AR rose to $14.73M due to strategy to hold claims early in the year; management expects normalization as claims are released and AR converts to cash .

Financial Results

Multi-Quarter Comparison (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$12.51 $13.66 $15.50
Gross Margin (%)55.8% 62.1% 58.9%
Net Loss ($USD Millions)$(5.03) $(3.76) $(3.75)
Net Loss Per Share (EPS) ($USD)$(0.28) $(0.20) $(0.20)
Adjusted EBITDA ($USD Millions)$(4.02) $(2.54) $(2.51)

Q1 2025 vs Q1 2024 and vs Estimates

MetricQ1 2024Q1 2025 ActualConsensus Estimate*Surprise
Revenue ($USD Millions)$14.42 $15.50 $14.55*+$0.95M / +6.5%
EPS ($USD)$(0.19) $(0.20) $(0.204)*+$0.004

Note: Values retrieved from S&P Global.*

KPIs and Operating Metrics (oldest → newest)

KPIQ3 2024Q4 2024Q1 2025
Trailing-12M ASP ($ per test)$404 $411 $419
Cash and Cash Equivalents ($USD Millions)$22.04 $22.24 $11.19
Accounts Receivable ($USD Millions)$9.39 $7.84 $14.73

Segment revenue breakdown not disclosed.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ1 2025≥$14.50M Actual $15.50M Beat prior guidance
RevenueFY 2025—≥$65.00M Initiated
Adjusted EBITDAQ4 2025Positive in Q4 2025 Positive in Q4 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
ASP expansion and pricingTTM ASP up to $404; detailed payer/AR clean-up and coding corrections; trajectory to mid-60s GM TTM ASP $419; ~$90 per test early reimbursement; full-quarter capture would have GM >60% Improving
Volume growth and sales forceVolume down slightly vs seasonality; plan to expand territories; rebuild commercial org Volume +6% seq; territory expansion underway; turnover improved to 7% TTM Improving
Reimbursement and payer appealsAR policy review and reserves; set stage for 2025 First ALJ win; TRICARE positive policy; holding/releasing claims strategy Improving
RA biomarkersSubmitted to NYS; expectation of sizable impact; RA seronegative capture roadmap RA second wave targeted by year-end/early 2026; adds ~8% sensitivity, total ~85% detection; clinical enthusiasm Strengthening
Lupus (SLE) biomarkersManuscript accepted; planned ACR launch and education Frontiers in Immunology publication; T‑cell markers enhancing diagnosis Strengthening
Gross margin trajectoryGM ~62% in Q4, aiming mid-60s over time GM 58.9% with transitory headwinds; low-60s in H2 and mid-60s over time Near-term dip, long-term up
Balance sheet and financingQ4 cash neutral; maturity wall in 2026 highlighted Perceptive facility: $25M drawn; maturity to 2030; up to $50M more; optional $30M for strategic transactions Improved flexibility
Regulatory (NYS, LDT)Await NYS approval; FDA rules context Conditional NYS approval achieved; LDT context noted Progressing

Management Commentary

  • CEO on reimbursement progress: “We have started to win administrative law judge or ALJ hearings... This past quarter, we successfully won our first ALJ hearing...” .
  • CFO on gross margin headwinds: “We launched the new markers in late-January, so the impact was reflected for only a partial quarter... direct bill contracts had not yet been updated... If the full quarter... our gross margin... would have been over 60%.” .
  • CEO on RA pipeline: “We expect to gain approximately 8% in overall sensitivity... puts our overall ability to detect... ~85%...” .
  • CFO on debt facility: “At close, we drew $25 million... now have up to $50 million available for future tranches... borrowings mature in April 2030... interest-only...” .

Q&A Highlights

  • Volume and commercial execution: sequential volume +6%; focus on increasing tests per physician and territory expansion; improved sales turnover to 7% TTM .
  • Profitability path: EBITDA loss impacted by transitory GM factors; OpEx to rise modestly but show leverage; still targeting adjusted EBITDA positivity in Q4 2025 .
  • RA biomarkers timeline and market awareness: second wave targeted by year-end/early 2026; physician education ongoing; regional differences in awareness acknowledged .
  • Payers: cadence of ALJ hearings (several scheduled through May/June); TRICARE policy expected to aid broader payer discussions .
  • Financing: Perceptive facility structure and optional strategic capital; context of ~$80M combined cash, AR, and available credit capacity as of April 30 .

Estimates Context

  • Q1 2025 revenue: Actual $15.50M vs consensus $14.55M*; ~6.5% beat (5 estimates)* (S&P Global).
  • Q1 2025 EPS: Actual $(0.20) vs consensus $(0.204); modest beat (5 estimates) (S&P Global).
  • Implications: FY 2025 revenue guidance of ≥$65M may prompt upward revisions to full-year revenue and margin trajectories as ASP and pricing contracts fully roll through H2 .

Note: Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue and ASP momentum: sustained ASP gains (TTM $419) and early ~$90/test benefit from new markers underpin revenue growth; expect GM to recover >60% as direct-bill pricing updates and full-quarter capture occur .
  • Payer unlocks: ALJ win and TRICARE positive policy support reimbursement durability and ASP trajectory; additional hearings scheduled may catalyze broader policy improvements .
  • RA expansion: growing RA footprint with biomarkers expected to lift sensitivity and open a larger TAM; second wave targeted by year-end/early 2026 .
  • Operating leverage: near-term OpEx investments to support scale, but management expects leverage in H2 with ASP and volume improvements; adjusted EBITDA positivity targeted in Q4 .
  • Balance sheet strength: Perceptive facility extends maturity to 2030 and adds optional capital; post-claim releases, combined cash+AR improved to ~$28M as of April 30 .
  • Trading setup: beat vs consensus on revenue and slight EPS, plus initiated FY guidance; watch H2 GM trajectory, RA marker adoption pace, and payer decisions as stock catalysts .
  • Risk flags: temporary GM headwinds, AR build from claim holds, and continued need for payer education/contract updates; monitor execution on territory expansion and biomarker reimbursement .