Full Transcript: Exagen Q2 2026 Earnings Call

On Tuesday, Exagen (NASDAQ: XGN ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. For comprehensive financial data and transcripts, visit View the webcast at Summary Exagen Inc.

9 million, up 16% year over year, marking the highest revenue in company history. 1 million, nearing breakeven. Exagen raised its full-year 2026 revenue guidance to $72 to $75 million, driven by strong execution and strategic focus on expanding product adoption, increasing ASP, and continuous innovation to address unmet clinical needs. The company reported a significant increase in clinical adoption, with AVISE CTD test volume reaching nearly 39,000 tests, up 11% year over year.

Trailing 12-month ASP increased to $446, marking the 13th consecutive quarter of growth, supported by enhanced revenue cycle management, including the use of AI for process optimization. Pharma Services revenue exceeded $1 million in the quarter, reflecting ongoing expansion and the value of Exagen's unique data and biobank capabilities. The contract backlog also grew to over $6 million. Exagen is on track for the commercialization of its new Myositis offering in early 2027, with plans to release a new product approximately every 12 months thereafter.

The company reported a gross margin of over 61%, up 90 basis points from last year, and operating expenses were managed efficiently, reflecting a significant improvement in operating leverage. Management highlighted the company's progress towards sustainable profitability, with the expectation of reaching adjusted EBITDA breakeven at around $80 million in annual revenue. Full Transcript OPERATOR Greetings and welcome to the Exagen Inc. Q2 2026 earnings call.

At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. 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, Vice President, Investor Relations 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 Abali, 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 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 Abali.

John Abali, President and Chief Executive Officer 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. 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.

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 to $75 million. Results like these don't happen by accident. They reflect execution against the same three 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. 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. 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 built 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. 4 million in the second quarter. 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 is 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 million-dollar 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 are 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 standalone product for Exagen in many years, continues to progress towards commercialization in early 2027, and we remain committed to a cadence of approximately one 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 G. Black, Chief Financial Officer 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.

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 one year old. Productivity continued to ramp up.

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 this will take time and that quarterly contribution from our revenue cycle initiatives can be variable. Pharma Services generated revenue of just over a million dollars 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. 3 million in only the first half of 2026. At the same time, we grew our contract backlog in Q2 by about a million dollars 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 reduced 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 levels 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 non-cash stock-based compensation of about a million dollars, an increase of over half a million versus the second quarter last year. 5 million, an increase of just under a million dollars compared to second quarter 2025, driven primarily by increased stock-based compensation and investment in commercial talent and territory expansion.

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. 7 million loss in the second quarter last year. While we don't expect adjusted EBITDA to sustain at this level in 2H26, 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.

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 use 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 30th. We continue to believe that our balance sheet provides a 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 to $75 million, up from our previous guide of $70 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 reinforce 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 Thank you. We will now be conducting a question-and-answer session.

We ask that you please limit yourselves to two questions each in order to accommodate everyone. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please. While we poll for questions, the first question is from Dan Brennan from TD Cowen. Please go ahead.

William, Analyst at TD Cowen Hi, 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?