Exagen Q2 Earnings Call Highlights

Exagen (NASDAQ:XGN) reported record second-quarter revenue as growth in AVISE CTD test volume, average selling price and Pharma Services revenue brought the autoimmune diagnostics company close to adjusted EBITDA break-even.

Revenue for the quarter ended June 30 rose 16% year over year and 15% sequentially to $19.9 million, the highest quarterly total in company history. Adjusted EBITDA loss narrowed to just over $100,000 from a $1.7 million loss a year earlier. The company raised its full-year 2026 revenue outlook to $72 million to $75 million, from prior guidance of $70 million to $73 million.

“Q2 was the strongest demonstration yet that our strategy is working and our business can scale,” President and Chief Executive Officer John Aballi said on the company’s earnings call.

AVISE CTD growth and pricing gains

AVISE CTD test volume reached nearly 39,000 tests during the second quarter, up 11% from the prior-year period and representing a quarterly record. AVISE CTD revenue totaled $17.7 million, Aballi said in response to an analyst question.

More than 2,800 clinicians ordered the test during the quarter, an increase of approximately 9% year over year. Trailing 12-month AVISE CTD revenue per sales territory exceeded $1.4 million, compared with roughly $1.3 million for full-year 2025.

Exagen’s trailing 12-month average selling price, or ASP, increased $18 per test, or 4% year over year, to $446. The company said this marked its 13th consecutive quarter of ASP growth. Aballi attributed the improvement to revenue cycle management efforts, including the use of analytics and artificial intelligence to identify higher-value collection opportunities, automate appeals and streamline medical-record extraction.

Chief Financial Officer Jeff Black said the quarter included more than $1 million in collections from claims older than 360 days. Total cash collections during the first half exceeded the year-earlier period by $9 million.

Management continues to target an ASP of at least 50% of Medicare reimbursement, or roughly $600 to $650 per test, while noting that progress will take time and quarterly revenue-cycle contributions can vary. Black said the company’s newer T-cell RA33 and anti-PAD4 biomarkers were tracking in the mid-$90 range toward an earlier expectation of approximately $100 in combined reimbursement.

Margins improve as Pharma Services expands

Gross margin was slightly above 61%, improving about 90 basis points from the prior-year quarter. Black said ASP expansion, operating leverage, laboratory workflow improvements and supply-chain cost reductions supported the gain. He said Exagen now sees a path to exit 2026 at gross margin of 60% or higher, compared with a prior view that the high-50% range was more likely.

Operating expenses were just under $14 million, or about 70% of revenue, versus 75% of revenue in the second quarter of 2025. Revenue increased 16% while operating expenses rose 7%. Second-quarter expenses included about $1 million in non-cash stock-based compensation, up more than $500,000 from a year earlier.

Pharma Services generated just over $1 million in second-quarter revenue, more than triple its contribution in the comparable 2025 period. First-half Pharma Services revenue reached $1.3 million, compared with $1.7 million for all of 2025 and slightly more than $100,000 in 2024. Contract backlog increased by about $1 million during the quarter to more than $6 million.

Black cautioned that Pharma Services revenue recognition may fluctuate substantially between quarters, but described the business as a longer-term growth lever.

Cash position, outlook and seasonality

Exagen generated $3.1 million of cash during the second quarter and ended June with just under $25 million in cash equivalents and restricted cash. The company had $37 million in cash and accounts receivable at June 30, which Black said provides runway to reach sustainable adjusted positive EBITDA and positive free operating cash flow.

The updated 2026 outlook assumes high-single-digit test-volume growth for the full year and mid-single-digit ASP growth relative to the company’s fourth-quarter 2025 ASP exit rate. Management also incorporated typical second-half seasonality into its forecast.

Aballi said the company saw unusual strength in the second half of 2025, when volumes remained relatively flat with the second quarter rather than following historical seasonal patterns. In contrast, Exagen has experienced 10 years of prior seasonality, including fewer business days and physician vacations during the latter half of the year.

Black reiterated management’s view that Exagen can reach adjusted EBITDA break-even at approximately $80 million in annual revenue. He said the company does not expect to sustain its near-break-even second-quarter adjusted EBITDA performance in the second half of 2026.

Pipeline and reimbursement developments

Exagen said its standalone myositis test remains on track for commercialization in early 2027. Aballi described myositis as the most frequently requested product among the company’s rheumatology customers. The company has added two laboratory platforms and is conducting clinical validation using patient sample cohorts.

The initial product launch is expected to use established methodology-based CPT codes. Aballi said the company may later pursue algorithmic interpretation and value-based reimbursement as clinical validation matures. Exagen plans to train its existing sales force in the product near the end of the third quarter and offer it across all 45 territories, rather than expanding the sales force before launch.

The company also said it published a systematic review of real-world AVISE Lupus performance involving more than 3,100 patients across 14 medical centers. According to Aballi, the analysis found that AVISE Lupus identified approximately 25% of systemic lupus erythematosus patients missed by conventional markers.

On Medicare coverage, Aballi said Exagen’s completed request remains with MolDX, where it has been pending since summer 2022. The company expects a potential update in mid- to late 2026 but said the process is opaque and outside its control. Medicare reimbursement has remained stable, he said.

About Exagen (NASDAQ:XGN)

Exagen 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.