Exagen(US:XGN)2023-11-20 13:37Financial Data and Key Metrics Changes - For Q3 2023, total revenues were $13.4 million, down from $14.1 million in Q2 2023 and $14.7 million in Q3 2022 [27] - The trailing 12-month average selling price (ASP) for AVISE CTD testing increased from $279 at the start of the year to over $320 in Q3, reflecting a $40 increase [11] - Adjusted EBITDA for the first three quarters of 2023 was negative $13.2 million, significantly improved from negative $26.4 million in the same period of 2022 [15][30] - The net loss for Q3 2023 was $5.4 million, compared to a net loss of $8.1 million in Q3 2022 [29] Business Line Data and Key Metrics Changes - AVISE CTD testing volumes were 32,618 in Q3 2023, reflecting a decline in test volume [27][18] - Other testing revenue was $1.4 million in Q3 2023, down from $1.6 million in Q2 2023 and $1.9 million in Q3 2022 [27] Market Data and Key Metrics Changes - The company experienced a modest decline in test volume in Q3, attributed to changes in ordering patterns rather than a contraction in the physician base [18][19] - The accounts receivable balance at the end of Q3 was $17 million, which improved to approximately $11.6 million by October 31 [16][32] Company Strategy and Development Direction - The company is focusing on higher-margin products and implementing changes to expand margins while controlling costs [9][10] - A significant milestone was achieved with an exclusive license agreement with Johns Hopkins University to develop clinical tests for lupus nephritis [21][22] - The strategy remains centered on improving AVISE CTD ASP and pursuing more profitable business [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to prior volume levels in the latter half of 2024, with Q4 expected to be the low point due to seasonality and recent changes [20][40] - The company anticipates finishing 2023 with more than $30 million in cash, providing sufficient funds to execute its operating strategy into late 2025 or early 2026 [17][87] Other Important Information - The company finalized a settlement with the Department of Justice for $650,000 related to past activities [25] - Management is closely monitoring proposed FDA regulations for lab-developed tests, believing AVISE CTD is well-positioned to comply [24] Q&A Session Summary Question: What is the reason for the decline in test volume? - Management indicated that the decline is due to changes in the billing process and adjustments by clinicians, not a reduction in the physician base [34][36] Question: Were there any one-time impacts in the quarter? - Management confirmed that $600,000 collected from prior period tests contributed to the quarter's performance, but this is not considered a one-time event [44][47] Question: What is the outlook for cash flow and working capital in 2024? - Management expects to see continued improvement in cash collections and a decrease in accounts receivable, indicating a positive trend into early next year [52][73] Question: What is the status of the Noridian LCD request? - The company remains in a holding pattern regarding the Noridian LCD request, awaiting further developments [66] Question: How is the company evaluating the success of the Johns Hopkins agreement? - Management emphasized the importance of developing clinically meaningful technology and expects to see progress in the next 24 months [94][96]