• Total Revenue: $12.5 million for Q3 2024, including $1.2 million in one-time adjustments.
• Adjusted Revenue: $13.7 million, up 2% over Q3 2023, excluding one-time adjustments.
• Year-to-Date Revenue: $42 million, up 8% over 2023.
• Gross Margin: 55.8% for Q3 2024; 59.7% excluding one-time adjustments.
• Year-to-Date Gross Margin: 58.7%, compared to 54.9% in 2023.
• Operating Expenses: $11.6 million for Q3 2024, down 9% compared to 2023.
• Year-to-Date Operating Expenses: $34.9 million, down 10% compared to 2023.
• Net Loss: $5 million for Q3 2024; $11.4 million for the first nine months of 2024, a 40% improvement over 2023.
• Adjusted EBITDA Loss: $4 million for Q3 2024; $7.6 million year-to-date, a 40% improvement over 2023.
• Cash and Cash Equivalents: $22 million at the end of Q3 2024.
• Accounts Receivable: $9.4 million at the end of Q3 2024, down from $11.7 million at the end of Q2.
• Full-Year 2024 Revenue Guidance: $55 million to $56 million.
• Full-Year 2024 Adjusted EBITDA Loss Guidance: Better than $12 million.

• Warning! GuruFocus has detected 4 Warning Signs with XGN.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Exagen Inc (NASDAQ:XGN) reported a 30% revenue growth over the first nine months of 2024 compared to the same period in 2022.
• The company achieved a 45% increase in average selling price (ASP) for its AVISE tests over the same period.
• Exagen Inc (NASDAQ:XGN) improved its gross margins by over 1,300 basis points compared to 2022.
• The company is on track to launch new biomarkers, which are expected to drive significant near-term profitable growth.
• Exagen Inc (NASDAQ:XGN) has successfully reduced operating expenses by nearly 20% and improved adjusted EBITDA loss by over 70% compared to 2022.

Negative Points

• Third-quarter revenue decreased by 7% compared to the third quarter of 2023, primarily due to one-time adjustments.
• The company faced a $1.2 million negative impact from one-time adjustments, including a $300,000 revenue reversal due to a coding discrepancy.
• Gross margin for the third quarter was negatively impacted by approximately 400 basis points due to the one-time adjustments.
• Testing volume for the AVISE business was slightly down quarter over quarter due to seasonal factors and weather-related events.
• Exagen Inc (NASDAQ:XGN) reported a net loss of $5 million for the third quarter, although this was an improvement over the previous year.

Q & A Highlights

Q: Can you explain the one-time adjustments and their impact on the financials? Are these issues likely to recur? A: Jeff Black, Chief Financial Officer, explained that the $1.2 million in adjustments were due to a historical coding discrepancy and a review of accounts receivable. The $300,000 adjustment was a one-time correction for a coding issue, while the $900,000 was a reserve for at-risk accounts receivable. These adjustments are not systemic, and the company is confident in the accuracy of future reporting.

Q: What is the expected impact of the new biomarker launch on the company's performance in 2025? A: John Aballi, President and CEO, stated that the new biomarker launch is expected to have a substantial impact. While specific ASP or volume impacts are not quantified, the company anticipates significant benefits due to established CTD codes and pricing on the CLFS. The launch is expected to contribute to achieving cash flow positivity by the end of 2025.

Q: How did the storms in Q3 affect the company's operations? A: John Aballi noted that hurricanes impacted testing volumes, particularly in Florida, where approximately 50% of testing volume was lost for 2.5 weeks. The company is seeing recovery in its Florida business as clinics resume operations.

Q: With the adjustments made, should we expect no more prior-period positive developments going forward? A: Jeff Black clarified that the $1.2 million adjustments were specific and unrelated to prior-period collections. While prior-period collections are tapering as expected, the company continues to see ASP expansion, indicating ongoing improvements in collections and payor relationships.

Q: Can you provide more details on the capacity expansion initiatives in preparation for increased demand next year? A: John Aballi explained that the lab operates on a Tuesday through Saturday shift and has the capacity to add a night shift, effectively doubling current capacity. The company has already made capital upgrades and added licensed personnel to prepare for potential increased demand.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.