Exagen (XGN) 7 Aug 232023 Q2 Earnings call transcript

Greetings. Welcome to the Exagen Inc.

Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Instructions]. [Operator

this recorded. reminder, is conference a being As

At call Investor over I would Relations. hand the like to to you. this time, Thank Ryan Douglas of

You may begin.

call. us. released Good Chief today, XXXX. Executive President Chief website The available Adawi, quarter for at thank currently morning XX, Financial joining Officer; is host the and ended June Kamal Exagen results this financial Officer, and on Inc. release for www.exagen.com. the you Aballi, morning's Earlier will company's John

get would statements Reform that this statements I we made management the Harbor will federal call forward-looking pursuant everyone Before to remind are Safe of provisions started, like include laws, of meaning be during within Litigation of Act XXXX. which to Securities securities the making the that Private

in business call historical including operating future statements. All current materially performance, not statements contained be to limitation, implied our statements statements. could based without strategy and the guidance assumptions. our reimbursement including, for various and material are product this and anticipated statements those be of deemed that regarding and forward-looking forward-looking quarter, should potential facts and Any to statements financial offerings, forward-looking are involve estimates current results differ actual and These uncertainties upon cause risks by and that these from or coverage future statements, profitability,

statements. on should you these undue place Accordingly, reliance not

our of filings and December list for Commission, description any XXXX ended and subsequent please XX-K risks Securities with our the filings. XX, uncertainties our and see year a the For Form with including associated business, and Exchange

new revise information, or obligation, future as today, events, August otherwise. update to only speaks any required of The broadcast by or other information, whether X, live intention conference law, information disclaims provided call this statements, because projections any the in XXXX. financial forward-looking except Exagen or to or

to I CEO President Exagen. will call turn and Aballi, the now John over of

updates our to the Thanks, and second to joining I'll for Ryan, over cycle CFO, initiatives, including discuss our our I’ll financial our path call. the provide on quarter call on everyone and Kamal, our to results profitability. Today, turn details performance. thank revenue then you

on total Our resulted XX.X CTD and of strong AVISE million. CTD and AVISE quarter, strategy tests to over with another revenues delivered XX,XXX prioritize in focus has

we've As fact the sales to that team of reminder, continue made to rheumatology substantial a and that testament our effective size we the to community we structure performance changes manner. and is serve our a QX highly in the believe

decisions we in get also quarterly the to operational I'm this encouraged as Exagen improvements at we're reflected and the has to volume end last of our see see reinforces company the of performance the exciting to this we consecutive strategic make as a starting But team. progress opportunity It's growth really made our in business. to track quarter. ahead, significant on year.

quarter the quarters. in but for of cash reflective a result prior strong also and in revenue collections second testing QX, improved testing Our performed the demand from was volume delivered of

have We our QX operations in continue detail to our made to processes, and major I'll cycle heavily focus revenue on improve shortly. which strides

early improvement profitability seeing our incremental momentum our in cash believe into positive Overall, positive move as in see and to XXXX, ASP to we we're but to improvements sign. expect We these we efforts operations are achieve progress. a early collections in continue

recur expect in timing by to was the saw don't increase ASP, our QX key aided was prior necessarily from of trailing claims quarter-over-quarter improvement quarter. we increased where to The $XXX from periods, we which collections on cash $XXX. each of One XX-month metrics which

this a However, reflected the in development nonetheless improvement positive was ASP. in

into our XXXX. expect but efforts materialize we're the In in trend the to to general, of beginning direction, right bulk

of appeals. the we optimize appeal increase overall an our and to effort As time process, ourselves held including we persistence to to conveyed QX, claims in volume, give quality

writer restructured the every To the to to We've and worked process. with all we've on denied internal appeals area a of process in business. to person some responsibilities brought the claims. technical our roles team, letters payers efforts color We've revise give of involved redefining with extent our leadership on this to date, new in appeal our sent for

advice. they in increase our worked companies, the We've improve to allowing rationale to outbound on lessen calls the staff. to the clinical to our ordering to other clients our team with appeal with to brought burden and improve on the status. these us for keep exchanging progress to notes for customer our better the track process notes each patient draft communicate of worked utilizing We've We insurance personnel better

testing the strengthen to compared efficiently these of manner have still progress seen the and ago. the for XX ordering a even doing last in customers adjustment disruption this been which a reinforces with with execute our documentation And continues. changes. around requires AVISE value and what they've substantial communication All the resetting we're efforts expectations making years. and list months test We were with to six we These minimizes

loan million. We refinanced included profitable business. this continue our achieving a a which principal focus to payment quarter, We on of $XX

revenue changes our million. by accounts to management receivable X.X increased Our cycle

these second Excluding X.X items, two the million our decreased quarter. cash in

team operate the the a service organization, deliver to We effective progress Exagen the markedly are in and structure. in improved striving areas to a leaner, making all with of at is cost best as industry the company more

Additionally, expected QX of we expenses expect by continue to timing aided million, R&D the to performance these and our of was approach our some expenses. therefore X annual

ancillary we initiated conduct investigation was occurred related XXXX. recently in XXXX of investigation to of in February As Department an This settle XXXX. the that was an and reached an to in item, principle agreement with that Justice

so The we ultimately, operating us going behind can to subject and we liability. is on a our look business. payment require approximately negotiations. this to fees to did monitor agreement settlement definitive with operations putting associated to of outside not focus agreed We admitted to continue facts, an principle oversee we $XXX,XXX The settlement issue certain further forward not although will in make DoJ to forward. the But compliance concede

rheumatology is In quarter to testament closing, our where see of it's hard Exagen direction. AVISE to work the see trending that recent results and right and very continue improve encouraged to the we performance value many rewarding provides is team performance, have to This yet community. in another the by several areas organizational ongoing knowing the testing from in the I'm our the efforts.

retired Jim personally. Jim has of I support the for the a and me the meeting for throughout the member a call I annual and Kamal, years Jim team. him note strong hand Exagen and the a Jim to of to on guidance vital a of history, Board as nine that member had our of we Before Board over his past I'd like to this well. Tullis director quarter, Directors. at of been company's wish Exagen to supportive want thank much been

Paul warm and played Paul a our and growing profitable Additionally, Kim, Genetics, CFO member where of pivotal in Board. as role vast I'd to business to newest like a us leadership a experience he and Fulgent business. successful welcome the of into joins with extend the currently serves the company

call Kamal. I'll to over now turn the

and everyone. John, good you, Thank morning,

second total of XXXX quarter compared XXXX, were QX with X.X the million in For in and of million million QX XXXX. XX.X XX.X revenues

by delayed improved QX ASP for in was to increase Medicare XXXX, mostly As than an QX. quarters in in collections. payments result were of Sequential prior collections a to in due for dating The reminder, XXXX, QX to cash increase from a year-over-year driven growth revenue quarter from comparisons, ASP. primarily back greater was expected

to X.X of was quarter million XXXX compared of Cost and revenue Testing testing of gross million Other in in XX.X% the XXXX. gross million XX.X% X.X quarter in AVISE CTD of improved in second collections XXXX, first second million in revenue margin in for the compared accrual and volumes increased from of prior first rates X.X were increase were X.X margin QX in quarter resulting percentage the a the The XXXX quarter record QX, the XX.X% of in primarily XX,XXX. with periods. total XXXX. quarter was from in to of second due

of XX.X a early primarily expenses expenses in the in the XXXX quarter XXXX, Operating XX.X by with driven XXXX. second million due compared in in decrease force in were second the million reduction quarter December of to employee-related

with was of the of second and compared our quarter quarter the XXXX for X.X million of XXXX. for quarter loss first net For million net the million of loss XX.X second XXXX, X a

included or As XX.X current the rate, a is reminder, the which principal include prepayment of on XX%, was which XX we interest-only of of and the plus a a greater three is through million. refinanced refinance The XX the and the April improved years, period terms our loan covenants. million. X%, The lender debt existing plan balance prime new management our to of implementation resetting floating of a interest agreement

XXXX XX, XX.X June cash Cash as of and equivalents approximately million. were

QX management the increasing results John offset and And our balance. we company lower in AR to is contributed by Overall, the even is than cash to balance which were the our we're operationally quarters metrics. with claims held seeing a As ago. the mentioned, strategy, XX.X in a better cycle performing key revenue million, few QX

second John, As team X.X our to have loan in to a and principal path of prepayment start balance the decrease off very quarter. as excluding changes this AR, you of in we great cash the resulted a the heard from million our implemented the in we're and in I'm changes proud in profitability.

goals are operations that efficient, and across revenue the continue of drive organization departments is cost much to align Our improved all have our and more operations. lower,

ago, than lost of as reinforced Not XX-month XX the rate. is decreased years ever I stronger of XX% turnover trailing important has originally our the I've and decrease from voluntary company but seen rate XX. to in culture just all the The numbers, culture which a to the is joined XXXX is get end organization. by in June the almost the

Turning to guidance.

the an softening but to volume future in a in by begin mentioned modeling changes in management revenue optimization, to cycle higher due cycle in in will anticipating changes the of volume revenue quarters. lower have that impact offset ASPs to are John We're QX XXXX. be Some on

the million. XX million providing to we're For in revenue range QX, of XX.X guidance

open We will now the for questions. call

you. Thank

question-and-answer Instructions]. now be will a We conducting [Operator session.

the come with questions questions. Please of first Dan your Cowen. from TD Brennan proceed with Our line

this on you from Great. the the of the past can year? quarter. in questions. Congrats had Maybe just Thanks expecting that you terms Maybe of are was? you just benefit more of the And that half kind the back collections, for quarter taking couple. quantify any just benefit what in a

mainly prior collections This is that for going received prior QX But quantify Hi, Dan. to Yes. the million. just view question. period but the it one-time. very $X impact. tough a To is to in was occur of very this positive Thanks the again. if it as under I in It's 'XX, took place were quantify year,

So this comes from mainly XXXX.

it anticipate as And sometimes that for be to a just payments up as in we take to wouldn't large be are and saw received. 'XX future I to year quarters. there But what

And Great. the then on burn in quarter. the

obviously be you kind the net burn way having, -- the forward? understand expecting see what was guess year? then impact stop? underlying of of back in had going the step when that of sounds is, account what And what the we I been have we it should to that's guys it is that normalize should from nice out is that you changes burn on like you're there, the of If you level down burn basically you level highlighted, that going with of receivables the So half saying So a cash million. I which correct, X.X your some

Good morning, Dan. Great. John. is This

of in the question kind bit I the we open broadly. the more up can So little think here's if a burn way cash general, about

almost So burned cash XX million of X quarter we an cash just of or average per million in of XXXX. over

at quarters. was payment, that the change looking AR mentioned, you the past as improvements cash, some we driven by debt two So these far we well XXXX, burned XX the here company million the largely of as principal accounting approximately in made. our for in as operating And

also in we're what to substantial success our working Just to XX up evaluation internal had develop. to strive to cost reduction savings. That criteria operations. consider the We've a at the of reduction We've cost well. we've pursue pipeline. our we the we've in completed opportunities. QX. set real ensure R&D as And our individuals the COGS business was recap, projects seen reduce of force We've of of worked the of These to a end financial

level. expense, an You COG of bit We've awareness transparency implement that's volume see the overall level. one yet year-over-year. head It's way company accountability efforts with we’re way. that little an it spoke it's budgeting I've then increase effort, the to bought a And standpoint, the created similar key and the team the the into culture. at to worked a things business in to certainly especially been the costs. into throughout a that incurring at expenses From a is all organization, as but everyone department reduce about that is our Kamal embraced generally

from intentionally view a you we part huge bit with so opportunity strategy do helped for on how cash let working some is end So we look specifics. of We're claims more our ahead us. has at really to pretty pace our schedule having of cash it. was operations. year quarters. give revenue come a The maybe we relative success We obviously first I very a we're releasing used will details the we we this changes because of reducing are speak put for little the the in substantially, gave the to operations began ago. the down improve But this But I'll the claims months to the significant in were quarter. our undertaking at of even standpoint. and prior to cash six here. wanted Kamal forward of and have the place, we And slow burn positive where going dramatic these cycle in the because I

looking has ultimately, XX we a It sense XXXX. several to in about cash our ways should the always AR increased, as organization. million we're That be in considering Our we months. balance. But weighed here improve for gives of said, cash expect when over the the collect well to next balance as

So cash thinking maybe quarters speak how the for to Kamal bit I'll burn too. we're little and let that a future about

Thanks, Yes. John.

exclude in it we're QX. QX QX X.X was have So from in number X.X claims where AR to midway to holding we through X.X. QX as started from one the was why get increased John reason the mentioned, that quarter of part of to And items we to to all the the

timing where going burn some And prior that, tough of million QX. guidance under again [indiscernible] regards a just in very QX that. on on of it's And impact like to to project quarters to had positive so the tough very we a items. margins. increased quarterly we sometimes received from just periods see positive into our timing saw these those providing additional basis because very from cash of forward, impact to We had gross but That in we're X there's the of XX.X%, had

we On was come $X what QX the mentioned previous I had burn call, the cash down QX, on million earnings a gradually it and we were quarter-after-quarter. in see at

see at to from believe. good again, We believe a a really again, is But That in what we improvements. come quarter. we just still each coming we projected. changed. that collections. Now expect starting we're QX, that we going had but with And down and to there. X was year-over-year additional beat say QX QX million wasn't very that has But surprise the it slightly That would did not down pleasant

to the some benefit. and sales are you've from know sequentially on disruptions term, place? you're volume loss But the Obviously, on could to so lower last you of are in And force the the the XQ But Thank why just the begin given the why one, volumes talked years, incremental. is last maybe have some in one see Great. you go I couple near guidance. over in here then all lower the volumes? guiding XQ that a call, in you. guys guys positive journey you would positive reason eventually putting changes about be might next a the maybe realignment,

Certainly.

impact the were So QX, a QX, force. color up We end from in at based. give the reduction sales reduction sales the expected the was that we extensively. some the individuals that December, there, Dan, that detailed little XX to Of of third extra a to in of caught

into sales and QX to That impact growth So or quarters here. seen base to And and we've more even U.S. so. from XX% totally a some guidance. able QX It condensed happen, force, with footprint was be reducing actually deliver we streamlined expected of factored about frank. didn't volume record now we're multiple by our that our

pleasant. very operations, in, the cycle QX our are What been we're to which customer. that's factoring revenue in to are being So changes translated some

the sense, hasn't give the we've this sharing towards which So decade. about quarter, our a changed you past patients a price to implemented end new in a just AVISE really this example, cost policy past The quarter, one the billing of for of proportion testing. increases test on

profitable, business. And making changes as so pursue we're we've telegraphed clearly, those as pretty profitable more we

some we will but changes of have near-term these so improve anticipate, the volume. profitability impact portfolio, our could to And

magnitude the ahead that's know our to of we what time, again, so are guide. QX And in challenging always really into timing and but factored

Thank much. Great. you very the back in queue. get I'll

Thank you.

from of Please next come Massaro with the your line Our with proceed BTIG. Mark questions questions.

Congrats guess, reduction and Hi, burn. growth guys. Thanks much. on revenue one John. you, so for the in strong cash I

You've the outlined changes a And certainly, you color to revenue lot lot management. of that appreciate I cycle a of provided.

see get interesting think the and it'd we're improvement beyond? what think in revenue changes to I much to you be the about do inning continued think sense XXXX determine just into to how you we trying can do business for as cycle think we with management? your like I'm

we're analogy, especially Thanks Great. for Thanks the season. Mark. joining call. Good love the love inning morning, in? it. for I given the question. the I What baseball

to point efforts of I've half that early is of be, some put play my to I say because game really, in a to claims for claims was the give those process. first prepping. much from filing lot put core of we're starting there. just our lot improving we trigger didn't operations the to whole -- do think work into terms And is of XXXX to what timely a And innings. of whole considered of And that comments. So standpoint, our reason in improvement we're cycle revenue I of planning appeals context That's The kind the holding So of core we right? those a way we -- appeals. tenet the of holding point the deadlines

I impact rubber in of really think term. terms that's the longer where the us for road meets

as I with deadlines possible be that timely denials. to claim really as the postpone so would associated And long wanted filing

with those expect the we on, everyone, third I into And as so -- to That of those, And I of September-ish tried refresh start to proposition will that and specialist. with to then think an oftentimes expect first around think we to for seeing we're And really we just somewhere to our this to be are But I we've that's value that level have round sometime is past. be in value the that started data around going detail October. resonate appeals. clinical release denied the claims appeal review most going to opportunity come of in by appeal the that where times. three reviewer. a the will the associated external assembled I've

we've ASP think driven sensitive that's but Again, consistency I in growth ASP to maintain to that's that is, this from organization. really it XXXX, growth, always the will But I lever of think growth and standpoint, the communicating in opportunity down be we tried it's both year have our to most growth. combination the -- what we've a will organization. be and for towards employ tough And by revenue that into our really growing timing. nail largely volume So of the end exact been is sometime this our

with AVISE CTD -- I sales our more have can need grow business to is continue volume. our I’ve is we list of the to pursue from Medicare just current footprint, also for price AVISE shown we And rate $X,XXX. We've that CTD and $X,XXX. We standpoint. detailed think profitable volume the substantial

our quarterly quarter, see the ASP our was XXX You months trailing about in XX is range this XXX.

direction. So the we're moving right along in

range think moving transform gyrations, need far really like to have in, we're I level $XXX we and generally but ASP organization. on think quarter-to-quarter the to I they'll the that have I some so -- some get $XXX, an to trajectory

about it. gives some to that hopefully, how you and context timing we're So thinking

And great. done one-time out around you strip QX. maybe I Kamal, the Kamal. if of one Okay, in $X million for would have payments, XX nearly million

in the from to decrease sequential dynamics? related payments prior guiding How the versus XX.XX of or to QX that reduction QX. you softening volumes much and/or at midpoint ASP You’re is think in the other some collections the would of

question, Thanks Yes. Mark. for your

X collections when So back out does ASP. our ASP, periods did still from approximately impact from million collections, is that prior prior We have quarter an increasing. on improved you current period that see

So That's QX. into accrual going we QX. did in test our have rate our to for up adjust to continue performed forward

So what I improvement, that anticipate be do we our to going to than in QX. higher it's ASP continue saw so

not question, driven to a volume softening your to improved. So the that has ASPs driven answer it’s be being primarily since going by from and in

maybe to just I know you quarters stepped in volumes through it in versus have been down seasonality know the in QX. maybe question, just me how factors? seasonality I some sequentially. sometimes, And Yes. other versus of the asked Dan there's in reduction obviously, confirm, where walk there But force is prior much can summer years, you prior

Mark. I’ll chime in Certainly, here.

of that some QX, soft. away but also of and month right? sitting In terms with holiday to It's I've the a actually Tuesday, we well, able seasonality, mix customers our from standpoint well. one has of And our I seen key on executed we’re research good and some team I reporting extremely a of So restructuring July very customers. but international go the in our service. have well. X extended we at especially high impact And of we ate really started level confidence a leaner travel some a the customer trips. force we're our number a quarter we're our We've sales of From of delivering we're know this the decent ourselves is key in today We've base first believe, standpoint, to where some think I off week this as we're initial a of had fairly up, surveyed airline seeing between transition a that the vacations. had serve positions. basically with our of very are July, international them on portion of a lot organization, conducted is

don't is seasonality I a more -- of to of force? related with on So in business. the much the believe policy in I is pursuit along mix much. think reduction believe our profitable some here how the impact billing side of I transition

As your the you patient the of a some small sharing, tests. you of don't I mentioned, amount. our increase the prices some while cost impact we And change impact it bulk of will believe of business, it will

So about that's we kind think of how it.

for the for it That's questions. Okay. Thanks me.

Thanks.

you. Thank

Our next Please your questions come Andrew with Blair. from with questions. of the Brackmann line William proceed

a and is there Hi, Maybe on we know Dustin so volume about you've how more little Is people? but besides a more Andrew. impact line maybe the the third past tracking in in sales which should And questions, that guys. I really the how think on you expect bit maybe any productivity, that are forward? those fourth you touched going This territory quarters reduction per exactly from might and still rep? people linger for in

morning. Thanks joining Good call. the the for Dustin. Thanks question. Hi, for

can on we that look some from I of this to qualitative in [ph] So really the queue things a at. standpoint speak

in physician take higher our growth look orders of take as We our terms a in we per growth QX, look a our we at In ordering had a physician organization, In base. We've physicians. performance a an physician. had base. at

the all have for metrics. we key performance really board of our overall the think I outsized across

think new the take with look we be phenomenal job job further at when -- standpoint, transition, in done that the be whether we've a I penetration a whether from well. it a business, throughout done phenomenal business, executing So team's any existing driving it it rep

that think I so And in regard. strong very we're that

Our completely brands transition has impact to and the our originally rheumatology within anticipated the much than community frank. we less is of strong, be extremely reputation, an had

price especially of standpoint, ingrained into comes pricing changed there’s And to we track. always a change think, when think right? detail, customer when when with QX, are on it XX the I there. our base. slightly for comes scenario, right we an our I out changing expectations You're behavior. Really that test expectation as from hasn't physician is So it's and it get years, I tried different that's to management challenging especially to And as

team has is product adept company a the of and The So history portfolio. this. expanding our at launching

I communicate of extremely to And well. educating base, bit terms so good new in at the We've of gone to we're quite We've aid collateral really the a the and that's explaining very think prepared in why the changes We've generated out physician it. change of physician. bit to a very well. how have then patients how educated as been And quite developed that's as well clinicians. articulate to internally as compassionate we support material a team patient to as these and to them

for think I've have I are over There a So it what understand clinicians, them price it it our was visited, some will done of some and the it period. that positive. we And clinicians over explain can received. Louis off what to different majority you I sensitive. XX working the of And Once was this conversations think and very St. why, mean specifically the I And I I the of of changes was last XX practice. better, couple or prepare. firsthand. their these use key to week more couple visited think well cases that weeks, we've was field reason, likely seen I in over the with challenges fall for actually in Houston

we as organization, as rep I and think we that's best account can. standpoint so preparation But a be, want being we're an guide. into to standpoint our handling sales from a from where taken And it right into I think

also the you've academic In past, with institutions. Got about talked opportunities it. large

there in you trends? and tracking in how are dates wondering of guys Just terms ordering

question. Great

an I So to we can as on, don't individual a metric give pull you this few highlights. report out but

do to academic well continue large We with institutions.

the practices, if pressures, will. XX per you business in I day. a seeing rheumatologists upwards operate trying They're we where community-based own, of different to and of kind patients are effective think strongest their have they're more on

large the In essence in setting of that demands. setting, or in clinical with is time even demands a institution combination context. So research of academic the the there's typically along maybe

take some the with major to And the time a offer well, see through some you has for patient tend But likely they some community-based on additionally, practices institution contract there had multiyear their less partnership AVISE academic but the we've system actually also some we're may then of our of a we've discussion, to year, disease them that may to into And of had cases. more and more And so your progressed, signed this severe that's -- half QX. San as Diego had of you've worked in we've and was get system. we've that Once the likely academic institutions, for patient test contract some get here be be well. over flow had the entire a as first filtered effort significant wins. We've throughout product, that a in with. That system us, within launching Northwestern major new established. we referred

well. continue So think I to do we

the save will, we I strong very very money. the system value customer We client think and if well a we serve have you bill, proposition.

the mention it's proposition and are within the very a integrated share maintain attractive clinical value so of And test. not for those themselves benefit a component, to systems which cost

to both we fronts. So do well continue on

a We There's bit team on have some responsibility bureaucracy. that at these of of individuals their a is team this area, quite look that's large practices. take a sole focused of to

to the institutions. have the skill experience to work have through you So set, these you to have have

it, mostly really we've when this And don't within matters of that down the continues basis the do those to some improvements. regular seen performance just whole I part team And telegraph to have We comes a on a of out strong a as so. all kill is because what the them think organization and it or of so we numbers.

people trailing queued the we've revenue so taken And per at then ASP, XX-month into a look we've and the overall revenue. cost

a subsequently And of improvements us our so all there achieve culminate efforts we organization. in think that profitable will help and

the Got Any just Thank it. mid the you. there. last on July? on see last small us. Good progress CTD to to And update for AVISE going one

Sure.

finalized pricing and testing PLA coverage over And XX as procedure that then well and it set to payment just so. claims maintained XXXX. months code January the everyone XXXX was as for year. XXXX And granted in we on a process. through the Lupus AVISE April past went for for of the AVISE this in the or So throughout of we've We level was Lupus pricing obtained well proprietary as call,

part welcomed time, timelines time this, year meeting, published. the be to advisory year. statutory that it At approximately will that this for no any requirement for of to Medicare be valid of in forward. will waiting local and approach. Noridian be just document will and our draft submission. last was comments apply when point LCD be so will about throughout for hold at we're and coverage push for to public MAC, LCD. meeting, to And the contractor there's September the before CAC We finalized a meeting now, understand us are on But had ball a that and that's acknowledgement it a got we asked waiting And committee did As submit we in for next an

for now, no additional So updates.

have We us they've relationship as Noridian great And that to to no given the working with occur. date, when indication team. meeting a will

in So at this almost ago we exactly we year a queue and were remain time. the where

John. you, Thank Great.

you. Thank

from come next Mikson questions your Please Kyle line with Canaccord. questions. Our proceed the with of

guys. a on for Hi, to here. stab questions. quarter. the going something at Thanks take great Congrats the taking I’m

impacted reflect [indiscernible] of pocket, surface mid any guidance from kind in Convergence among coming So past, of ACR? is ACR should the be least we November, to second considering ask leading to up on that a XQ air the fourth seasonality the the year. up of Apart just so I half around saw docs at I quarter. want the question actually ACR relatively in these RCM quarter, kind guess, the but And fourth early factors changes, in

Thanks, regarding a thinking Certainly. how bit we’re a share can ACR for with Kyle, the about direct call. guidance, factor. Maybe I joining little it

of it’s think week. it’s directly I part for rheumatology of the out in an their -- community most to pulls ACR a rheumatology pulls approximately annual about of -- your meeting It general for answer certainly just in community. question it. the practice general,

to So occurring in in Diego you patient local It's of through given XXth actually, San September-ish And flow this productivity us. lose XXth I it's quarter. year. or the of believe any

that get I progress engage factor we're specific So we meeting. customers. coming executing necessarily year. productive that's strong seeing for encouraged strategy. by very in in excited of guidance, one the Overall, this to But with driving certainly I It's meeting wasn't where we're that our a hope our guidance. very terms seeing in year-to-date results not am the across. we're

either aspects really in business. of a of magnitude impact in of And business. ultimate the can the contribute to continue We to or these terms both the visibility lack timing or change changes the significant to

consistently start for we pursue And a the to be communicating this to the some make was billing is profitable exact some been that guidance. some driving cost impact. of took be to And extent. the we as that into increase there and to will you the performance when and impact that policy timing component it's account to near-term our share really just related we we've know Obviously, think what change to challenging you making So a that factor more patient, going business. when

of we mentioned, the what We to quantify outsized we've impact still I but the it's on can is magnitude there information we believe job narrow vacations proportionality and exactly think have. the tough impact. As have some of done with physicians, we do we best in from

Yes.

is presentation great. getting to like XXX% should gross Obviously, should in the to Okay. XXs that gross guess the Thanks think what's That XXs quarter going fourth XX%, and good margins on It then, quarter, about was margins, the How Kamal, with going the way dipping John. a this? like like But tied flashbacks third we that's from margin for And forward? high think should decline or But clearly the low margin. expect good. we something in here. I sounds about forward? [indiscernible] and that, revenue if almost

Yes. the Thanks Kyle. question, for

the XXXX, was were in through our XX%. percent gross quarters So XXXX, of margin first two XX%. Year-to-date

that roughly margin. million that gross that in been of the million we've does in keep X A mind or that X an Now lot talking XXXX. collections, impact about occurred on have year prior

margin. back gross a out, if has X% year-to-date you that impact on So about that

pleased performing. lab the very been I'm has with So how

John been doing up. the we're lean a to has on operating a very true company fantastic lab. entire percentage in a company, has path on definitely across gross it's focused of As on, that as margin And focusing And profitability true and there. a driving touched the seeing they're organization. improvements but the job just That's lot of

direction, feel an trending We're the goals about I confident as achieving Now spoke XX%. that going organization. to right in the we're to we of and able XX% be achieve

Now terms tells trying for past. this from I deductible in But should Seasonality start think we is of we in on quarter that we're a guided an how that to the quarter-over-quarter haven't seeing as improvement be margin us. reset impact to the the operating year, guide gross positive goes each an year. organization. of on, of always impact at as It's because the you

our is So of goes we achieve margins company, as to I see direction. higher the on. And target gross should we're trending right in a XX%. the year goal like the said, as But

you of guess in the John, territory walk this market that growth it’s about your 'XX and next to line of through penetration thoughts Okay. profitability, just early kind evaluate the strategic the the the Thanks, sales expansion guys top on of year? I next like And and then, force maybe talking you of everything? footprints priorities. months could XX kind to Kamal. drive hoping you path to But kind increase I early as and are be the know,

Great. here, Thanks detail go to for opportunity Kyle. into the

expense if if individual which variables it's at is rationale field-based a those to the least across we time that the empirical at more we've for on did covered those was but five of from an That's for little territories, take the year, an the we're same right have of a sales change more at also was that. per idea of The cash supplementing a cover it we've on rep. which maintaining at the Actually right done them to answer this then start given the four we're expansion measured, look approach the a as was so really no. for That is the can in And presence the right expansion having the when year. carries Were least XX taken we we And cost expand. some territories our the about even So of of rep. standpoint, working territories, gives visibility territory? to board. and this into And them look now past rep. cost least breaking sizing great area. see to sales we see strategy, now. territory, number the to a us to the cost where meaningful ultimately, lets they also force here right of way. December the And basis than of our a question logic or at of were at it footprint in each territories bit territory that us a tried required, it’s a What the the But answer us lets the is grow to that of it required the at in of

territory $X weigh the million it's the supplementing a when about right of the it we're cost that So year you -- against rep. a now, on

forward. And so that's going to going be our approach

territories that As our we kind add it in new profitable of expansion flip growth state, way, growth And territories into we'll then or fulfilling time that a self territory. over that be manner. will and a have over cyclical will

are is have relative to individual? the We it figure the there. -- there? we What's have that so constantly approach. we I and to hope business But potential working honest with. have that with you. So Is out that's Whether be some our verticals territory? it Again, we to few the evaluate some have right in to quite appropriate the things occurs QX, really a

of the see very So we'll have state. we territories performance them right have. some a that now, we XX And We'll comfortable as add. in point, when growth with profitable over that then at to flips those feel we sustained some of that

communication. very that We clear also in will be

I guys. appreciate there. it great, Thanks, Perfect. John. I'll time. was the leave That

Thanks, Kyle.

Thank you.

the questions Fitzgerald. Cantor Ross next Please Our your with of questions. Osborn with from come proceed line

morning quarter. on the and Good congrats

color curious to can on where you if Thank regard nephritis? Just terms if on one for hear of you more pipeline the to you. any be are with update us. any Would there's time in to provide And market?

first I morning, question. Ross. got Good Sure. the

was timing just those, The second to market question clear. to be for

correct. that's Thank you. Yes,

for clarification. the Okay, great. Thanks

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believe to in that that to And have thought we demonstrate achieve value-based kind so two, place we was realistic; put ability proprietary if an one, that We that ability can thought this we criteria nature; of have before identify product. your certainty we launching have technologies some have to were clinical and a reimbursement in the you three, pricing. utility in

customer want component needs. develop was needs, we customer Medicare to that fourth existing products a Also, meet here. So coverage

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lupus we pipeline. doing resulted few in evaluate how the the context owning It the of efforts journey. a a of in discontinuing we've existing put pipeline. patient way we’re in those kind that so some were internally. ultimately And as of But quite really the rekindled projects it of those place to That's the in

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threatening, available. indication kidney the unfortunately oftentimes significant state. the of that bit context options consequences very patient. market of for inflammatory is kidney, the the that this are context inflammatory where And also in therapeutic life have flare stage progressed in on it’s you to related the it's but the has the late potentially a when So There's detected quite lupus

market on time here. bid You some companies of pharma have a that couple the bit for from a little

really in for is and So so. a committed activity exciting the from but not do cumbersome, so XXXX And nomograms we We're general can we the very I next some now, about into time over the products disease here progressing the something or very have is the over the much exist, AVISE looking well context, then clinical that's pretty selling develop here. that some several is will at excited XXXX. future Right developments, showing they're modulating opportunity What in on consuming come. we're into a And CTD think data practically extremely working we're how also pursuing. understanding the And not initial a to disease this therapy I’ve setting. believe potential talking really great in develop that about we of improvements have execute lupus externally we some meaningful believe for us community and pipeline we essential exciting there's so time as there's standpoint. quarters, ASP to done to other that We're on. few projects our to

XX-month the meaningful current it externally of XX have we which available will path where the assay on if can't in we side our you have of a either opportunistically, of mean that's within or And certainty projects timeline. said think before doesn't comments current performance -- once that technical reimbursement some some clear we I'll And disclose some projects the R&D and I time. them. that But a need into the fall fit derisk to pipeline just be level the doesn't in commenting whether gain over that. that scientific more Right of -- breakthroughs, lot data, I now, to our will, focus So is. those. now, make I've right a commercialization to have

So that's detailing our we've R&D kind that of Ross. pipeline. taken Hopefully, helps, in the conservatism

again quarter. the Congrats update. the for Thanks on

Thanks.

comments. to like Thank There back John would this at for over time. now floor I the are further Aballi closing turn to no you. questions

this work you interest of updates team And improve provide making for continue continuing Thank these another Exagen. where quarter especially effectively Great. objectives progress. QX the And point. as our to to profitable and forward a we look your on on was great progress strong pursuit in for to our Exagen you. through I'm proud execute in we we organization. organization. navigating to changes Thank of our We're

Thank teleconference. you. participation. This today's does We appreciate conclude your

may You at lines this your Enjoy your time. of day. disconnect the rest