Exagen Q2 2026 Earnings Report

Exagen EPS Results

• Actual EPS: -$0.13
• Consensus EPS: -$0.19
• Beat/Miss: Beat by +$0.06
• One Year Ago EPS: N/A

Exagen Revenue Results

• Actual Revenue: $19.94 million
• Expected Revenue: $17.80 million
• Beat/Miss: Beat by +$2.14 million
• YoY Revenue Growth: N/A

Exagen Announcement Details

• Quarter: Q2 2026
• Date: 8/4/2026
• Time: Before Market Opens
• Conference Call Date: Tuesday, August 4, 2026
• Conference Call Time: 8:30AM ET

Exagen (NASDAQ:XGN) 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. These tests combine proprietary immunoassay technology with algorithm-driven analysis to deliver more precise and actionable diagnostic insights. All assays are performed in Exagen’s CLIA-certified, CAP-accredited laboratory to ensure consistent quality and reliability.

Exagen works closely with rheumatologists, immunologists and other healthcare providers across the United States, and is pursuing strategic partnerships to extend its reach into European markets. By filling critical gaps in standard autoimmune testing, the company aims to support earlier diagnosis, guide treatment decisions and improve long-term patient outcomes.

The company is led by President and Chief Executive Officer Stephen Heyser, whose background spans diagnostics, biotech and laboratory services. Under his leadership, Exagen continues to invest in research and development to enhance its existing testing platform and explore new assay applications within the autoimmune space.

Exagen Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record Q2 performance: Revenue rose 16% year over year to $19.9 million, while AVISE CTD volume reached nearly 39,000 tests and adjusted EBITDA loss narrowed to approximately $0.1 million.
• Positive Sentiment: Exagen raised 2026 revenue guidance to $72 million-$75 million from $70 million-$73 million, citing strong first-half execution and continued high-single-digit volume growth.
• Positive Sentiment: Revenue cycle initiatives drove the trailing 12-month ASP to $446, up 4% year over year and marking the 13th consecutive quarter of growth; management continues targeting approximately $600-$650 per test over time.
• Positive Sentiment: Pharma Services revenue exceeded $1 million for the first time in a quarter, up more than 200% year over year, while contract backlog grew to over $6 million.
• Neutral Sentiment: The myositis test remains on track for a commercial launch in early 2027 using established CPT codes and the existing 45-territory sales force, although management cautioned that second-half seasonality may prevent near-term adjusted EBITDA profitability from being sustained.

Presentation

[Operator]

Greetings, welcome to the Exagen Inc. Q2 2026 earnings call. It is now my pleasure to introduce your host, Tina Jacobsen, Investor Relations. Thank you. You may begin.

[Tina Jacobsen, Investor Relations at Exagen]

Thanks, operator. Good morning, thank you for joining us to discuss Exagen's financial results for the quarter ended June 30th, 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 risk 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.

[Tina Jacobsen, Investor Relations at Exagen]

Descriptions of these non-GAAP financial measures and the reconciliations of GAAP to non-GAAP financial measures are included in today's press release. Now I will turn the call over to John Aballi. John?

[John Aballi, President and CEO at Exagen]

Good morning, everyone, thank you for joining us today. The second quarter was an outstanding one at Exagen, there's a lot to be excited about, 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. 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 break even, 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-$75 million. Results like these don't happen by accident.

[John Aballi, President and CEO at Exagen]

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. 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.

[John Aballi, President and CEO at Exagen]

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've 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.

[John Aballi, President and CEO at Exagen]

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. Salesforce 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 is carried into the current quarter. Turning to ASP.

[John Aballi, President and CEO at Exagen]

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.

[John Aballi, President and CEO at Exagen]

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.

[John Aballi, President and CEO at Exagen]

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+ 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.

[John Aballi, President and CEO at Exagen]

This is the kind of clinical impact we strive to deliver across our portfolio, and this manuscript helps make the impact clear. 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.

[John Aballi, President and CEO at Exagen]

This quarter, we approached break-even 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.

[Jeff Black, CFO at Exagen]

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 one 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%.

[Jeff Black, CFO at Exagen]

AVISE CTD trailing 12-month ASP expanded to $446 per test, up 4% compared to last year. Execution of our revenue cycle management initiative supported a strong end-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-$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 $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.

[Jeff Black, CFO at Exagen]

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. 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.

[Jeff Black, CFO at Exagen]

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. 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 non-cash stock-based compensation of about $1 million, an increase of over $500,000 versus second quarter last year.

[Jeff Black, CFO at Exagen]

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 2025, 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 non-cash stock-based comp expense, improved significantly at a loss of just over $100,000 in the second quarter compared to a $1.7 million loss in the second quarter last year.

[Jeff Black, CFO at Exagen]

While we don't expect adjusted EBITDA to sustain at this level in the second half of 2026, 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 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 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.

[Jeff Black, CFO at Exagen]

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-$75 million, up from our previous guide of $70 million-$73 million. Our updated outlook continues to assume high single-digit volume growth through 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]

Thank you. We will now be conducting a question and answer session. The first question is from Dan Brennan from TD Cowen. Please go ahead.

[William Ruby, Analyst at TD Cowen]

Hi, this is William on for Dan. Your 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. Just trying to understand if there's conservatism there. Thank you.

[John Aballi, President and CEO at Exagen]

Hey, William. Good morning. 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 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. 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, Analyst at TD Cowen]

Got it. How should we expect Salesforce expansion contribution to volumes in the second half? Are you expecting any contribution there?

[John Aballi, President and CEO at Exagen]

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. Man, we really have some fantastic folks. They're actually here doing some training this week as well, or a few of them are. Our investments in that group remain very strong and we have, I think, certainly the best autoimmune sales force out there. We expect pretty decent contribution. Most of these expansion territories were starting from relatively low bases. It'll take a little bit of time before they really move the top-line number in a meaningful way.

[John Aballi, President and CEO at Exagen]

Over time, call it the next six, nine, 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 of Craig-Hallum Capital Group. Please go ahead.

[Bill Bonello, Analyst at Craig-Hallum Capital Group]

Hi, guys. Thanks. First one is just a simple housekeeping question. Can you give us the AVISE's revenue for the quarter?

[John Aballi, President and CEO at Exagen]

Yeah. Good morning, Bill. Thanks so much for the question. AVISE CTD revenue for the quarter was $17.7 million.

[Bill Bonello, Analyst at Craig-Hallum Capital Group]

Perfect. That is what we calculated, but wanted to be sure we were doing it right. Can you talk to us, it's 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?

[Jeff Black, CFO at Exagen]

Sure, Bill. This is Jeff Black. Thanks for the question. Appreciate you participating in the call. I'll answer it a couple 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, we'll certainly share that with you. Combined T cell RA33 and anti-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, we're tracking very well. We don't think there's any reason we couldn't ultimately get to that target, particularly since a lot of those claims from the last year are still going through appeals and revenue cycle management. We're encouraged by the traction. It has been a contributor.

[Jeff Black, CFO at Exagen]

Like I said, it's in that mid-90 range and tracking very well.

[Bill Bonello, Analyst at Craig-Hallum Capital Group]

Thank you.

[John Aballi, President and CEO at Exagen]

Thanks, Bill.

[Operator]

The next question is from Kyle Mikson from Canaccord Genuity. Please go ahead.

[Kyle Mikson, Analyst at Canaccord Genuity]

Hey, guys. Thanks for the questions. Congrats on the great quarter. Had a multi-part guidance question on the components. On ASP, you raised that kind of guidance from, I think, low single-digit growth to now mid-single-digit, even though the trailing 12-month ASP was kind of flat quarter-to-quarter. 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 private or commercial payers, if any progress that you expect to sort of help inflection maybe towards year-end. And then on the volume side, I guess it just looks roughly similar second half volumes to first half, which I guess makes sense.

[Kyle Mikson, Analyst at Canaccord Genuity]

Just looking at prior years, even though you have some seasonality factors like in the fall and November and so forth, just maybe point to some areas of upside in volume specifically that we could hope for. Thanks.

[John Aballi, President and CEO at Exagen]

Yeah. Thanks so much for the questions, Kyle Mikson, and for joining this morning. Just to 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. 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. 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.

[John Aballi, President and CEO at Exagen]

I think we're tracking exactly as you said it. 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. As we've said, projections on ASP improvement over time are always difficult to nail down timing and magnitude. 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 progress over the last 13 quarters has really been with our private payer groups. 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.

[John Aballi, President and CEO at Exagen]

From our standpoint, that trailing 12-month progression and improvement and 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. 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. 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.

[John Aballi, President and CEO at Exagen]

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. July through December, we just end up functionally with less working days than we do typically see in the first half. As I mentioned a little bit with a 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. At the same time, I think you have to live in reality too. Hopefully that addresses each of your points.

[Kyle Mikson, Analyst at Canaccord Genuity]

Yeah, that was great, John. Thanks so much. I'll give you a break, maybe for Jeff on the framework on the path to break-even 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. How should we expect gross margin to sort of track? I think the last time we spoke, it sounded like maybe high 50s%, close to 60% for the rest of the year. I mean, at this point, it seems like maybe you could eclipse that.

[Jeff Black, CFO at Exagen]

Yeah. Kyle, thanks for the question. Yeah, I think even last call, I think we had called 60% for 2026, more aspirational, right? To think about it more in the high 50s%. We actually think there's now a track to end in the year at that 60% or above. We've seen very good traction. ASP expansion done a really nice job at managing fixed costs, managing supply chain costs. I think the 60% range is a lot more realistic now, and less aspirational for the year.

[Kyle Mikson, Analyst at Canaccord Genuity]

Okay, awesome. Thanks, guys.

[Jeff Black, CFO at Exagen]

Thanks, Kyle.

[Operator]

The next question is from Max Masucci from Roth Capital Partners. Please go ahead.

[Max Masucci, Analyst at Roth Capital Partners]

Hi. Congrats on a strong print. First, on Salesforce productivity, the five territory reps you hired in 2025, I believe, are beyond the six to nine-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. 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, President and CEO at Exagen]

Yeah. Good morning, Max. Welcome to the call and happy to have you follow the story. From a sales rep productivity standpoint, great question. Trying to pick this apart a little bit. We added five territories last year. One of those additions essentially split an existing territory, you could argue you're kind of starting over a little bit in six areas. We see 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. 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 territory. If that makes sense. Somewhere around 10%, 11% growth on the lower end of our expansion territories, up to 80%, 90% growth on our higher end performing territory.

[John Aballi, President and CEO at Exagen]

Still broad there. Different reasons at play. Some of it has to do with potential, some of it has to do with ramp time for the individual learning curve of that rep. I think the great thing from our perspective is very confident in the people we have, and over the last six to nine months, certainly proved out almost 12 months now, certainly proved out the thesis that the territories that we chose were the right areas to expand. 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. Happy with that. We saw growth really across the entire nation. What's driving that?

[John Aballi, President and CEO at Exagen]

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. 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. Very proud of the team. I've been in the field quite a bit, was actually in the field last week as well. We still have a lot of room to run. 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.

[John Aballi, President and CEO at Exagen]

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. To be identifying 25% of patients missed by conventional serologies is a really big value for clinicians. Having that printed and out and able to market, I think just in general, is enhancing the clinical value of the product and our team is really pushing it. More to come.

[Max Masucci, Analyst at Roth Capital Partners]

Great. Just to follow up. I think historically or more recently, about a third of your ordering clinician growth has come from outside of rheumatology, right? GPs, internists, OBGYN, pulmonology. Just curious, is that becoming a deliberate sort of channel strategy? Just how have the ordering trends for those types of docs compared to what you're seeing in rheumatology?

[John Aballi, President and CEO at Exagen]

Yeah, 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. 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'll keep it within our core sales channel, but it has applicability into pulmonology and some of the other subspecialties that manage these patients. Internally, as we look for further sales expansion, understanding what that outside room demand looks like is a pretty decent predicate for our next wave of expansion.

[John Aballi, President and CEO at Exagen]

I think we'll know more here as we start 2027, but we're seeing pretty decent growth within some of these other specialties.

[Max Masucci, Analyst at Roth Capital Partners]

Great. Thanks, team. Nice quarter.

[John Aballi, President and CEO at Exagen]

Thanks, Max.

[Operator]

The next question is from Mark Massaro from BTIG. Please go ahead.

[Mark Massaro, Analyst at BTIG]

Hey, guys. 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, President and CEO at Exagen]

Yeah. Good morning, Mark. Thanks for the question. Very excited about the myositis opportunity. Just as a reminder for folks, this is the number one asked for product amongst our rheumatologist clinical base. When our team's 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 number two asked for offering. 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. That development remains on track, by the way. We had to bring two new platforms into our laboratory, get those analytically validated. That's all occurred.

[John Aballi, President and CEO at Exagen]

We had 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. We remain in line with our expectations to launch commercially in the first part of 2027. 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. 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.

[John Aballi, President and CEO at Exagen]

We don't have a significant track record of billing all of these codes, as we launch from a revenue standpoint, we're going to mirror very close to cash collections over time establish that accrual rate, we'll be able to set an expectation publicly as well. That's how we'll launch for reimbursement, 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, Analyst at BTIG]

Yep, that makes sense. That's really helpful. 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. How should we think about 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, President and CEO at Exagen]

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 than?

[Mark Massaro, Analyst at BTIG]

Yes.

[John Aballi, President and CEO at Exagen]

Okay. Great. Thanks for that question. I think it is absolutely relevant. 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+ revenue number on a quarterly basis. We're also right around the corner from a product launch, I don't think we're too far off. Whether we're ±0.25, we've got the balance sheet to get there, and we just want to get there in a measured, sustainable fashion. 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. Risks-wise, there's always reimbursement risks that exist in this business.

[John Aballi, President and CEO at Exagen]

I guess theoretically, you could also have some hit from a volume standpoint, a key client or something like that, nothing's foreseen at this point in time. In fact, if anything, most of what we're seeing is very positive related to the efforts and energy that the team's executing against. I think we're well on track, and it should be around the corner.

[Mark Massaro, Analyst at BTIG]

Fantastic. One last one. You guys have been collecting close to $1 million or a little over $1 million in prior period collections 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?

[Jeff Black, CFO at Exagen]

Yeah, Mark, this is Jeff. I guess the way I would answer that, maybe flippantly is, as long as there's an appeals queue, and we're focusing on revenue cycle management and maximizing the appeals process, then yeah, 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. 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. The expectation is we're seeing really nice momentum. First half of this year, we collected about $2.3 million in cash greater than 360 days.

[Jeff Black, CFO at Exagen]

Just to put that in perspective, I think a year ago for the full year was about $1.5 million, and in 2024 is $2.7 million for the full year. We're tracking well ahead of historical trends.

[Mark Massaro, Analyst at BTIG]

Fantastic. Thanks, guys.

[John Aballi, President and CEO at Exagen]

Thanks, Mark.

[Operator]

The next question is from Matthew Parisi from KeyBanc Capital Markets. Please go ahead.

[Matthew Parisi, Analyst at KeyBanc Capital Markets]

Hi, congrats 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, President and CEO at Exagen]

Hey, Matt. Good morning. Thanks so much for the question. That is still our expectation, but we don't control it, and it's a fairly opaque process. Just as a reminder where we sit now, we have a 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. Still looking for that next step, which would either be a CAC meeting or a draft LCD to come out. 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. We maintain a very good relationship with that group, but no update now.

[Matthew Parisi, Analyst at KeyBanc Capital Markets]

Appreciate the insight. If I can ask one more. Does Exagen expect to expand its sales force in advance of the myositis launch, or will the current sales force be focused on both the AVISE CTD test and myositis?

[John Aballi, President and CEO at Exagen]

Great question. We anticipate selling it concurrently with the AVISE CTD offering, along with the rest of our portfolio. 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. Like I said, it's a very consistent call point. Primarily the rheumatologist with some applicability into the referral network. It may have more applicability into the pulmonology space than CTD does currently, we'll just have to figure that out over time, that won't be our initial push. We'll stick within our existing customer base and offer it with our existing team.

[John Aballi, President and CEO at Exagen]

We do anticipate taking a look at sales expansion opportunities after the launch because depending on the uptake, that changes the opportunity rating, essentially, of each expansion opportunity. We'll get through that launch and then look for the next wave.

[Matthew Parisi, Analyst at KeyBanc Capital Markets]

That sounds great. Thanks for the questions.

[John Aballi, President and CEO at Exagen]

Thanks, Matt.

[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, President and CEO at Exagen]

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 break-even adjusted EBITDA. That's been a milestone that been a long time coming from my perspective. In fact, three years ago for our organization, that combination would've 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. Honestly, I'm as excited about the opportunity ahead of us as I've been since joining just a few years ago.

[John Aballi, President and CEO at Exagen]

We're within reach of the financial inflection we've been building toward, 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.

Participants

Executives

• Tina Jacobsen, Investor Relations
• John Aballi, President and CEO
• Jeff Black, CFO

Analysts

• William Ruby, Analyst at TD Cowen
• Bill Bonello, Analyst at Craig-Hallum Capital Group
• Kyle Mikson, Analyst at Canaccord Genuity
• Max Masucci, Analyst at Roth Capital Partners
• Mark Massaro, Analyst at BTIG
• Matthew Parisi, Analyst at KeyBanc Capital Markets