Exagen(US:XGN)2023-03-20 23:53Financial Data and Key Metrics Changes - Revenue in Q4 2022 was $12.8 million, with full year revenue of $45.6 million, representing a 1.2% increase over Q4 2021 [9][32] - The annual average selling price (ASP) for AVISE CTD was $285 in 2022, down from $306 in 2021, indicating a significant opportunity for improvement [14] - Gross margin for Q4 2022 was 50.9%, down from 61.1% in Q4 2021, primarily due to inflationary pressures and decreased testing volumes [33] Business Line Data and Key Metrics Changes - AVISE CTD testing revenue was $11.1 million in Q4 2022, contributing to a total of $38.5 million for the full year [33] - The company delivered a record 135,210 AVISE CTD tests for the full year, with 33,819 tests in Q4 2022 [32] Market Data and Key Metrics Changes - The total ordering physician base reached a record 2,419 healthcare providers in Q4 2022, up from 2,126 in Q4 2021 [32][27] Company Strategy and Development Direction - The company aims to optimize operations around AVISE CTD, focusing on growing ASP and volume while reducing costs to achieve profitability [12][29] - A reduction in sales territories from 63 to 40 was implemented to balance expenses with revenue potential, alongside a reduction in force of 42 employees [20][21] - The company is refining its R&D focus, eliminating projects that do not have a clear return on investment, and concentrating on lupus nephritis and rheumatoid arthritis therapies [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving cash flow breakeven with gross margins around 60% and revenue of approximately $75 million [30] - The company is focused on improving ASP as the most sensitive lever for revenue growth, with ongoing efforts in revenue cycle management and reimbursement strategies [66][68] Other Important Information - The company has a cash balance of approximately $62.4 million as of December 31, 2022, providing a buffer to reach positive cash flow [38][104] - A significant focus is placed on obtaining positive medical policy from payers, which is crucial for future revenue growth [90][91] Q&A Session Summary Question: What prompted the increase in Q1 revenue guidance? - The increase was due to strong momentum from Q4 2022 continuing into Q1 2023, with volume remaining steady [41][42] Question: Is the AVISE RADR program still in development? - Yes, the program is still active but has been narrowed in focus to second-line therapy predictions [48] Question: How did the company decide on the number of sales territories? - The decision was based on an analytical approach to ensure each territory could cover the costs associated with a sales rep [52][54] Question: What is the status of the company's efforts in improving gross margins? - The company is implementing automation and infrastructure improvements to reduce costs and improve efficiencies in lab operations [61] Question: What are the key levers for the company's performance in 2023? - The primary lever is ASP improvement, alongside maintaining strong testing volumes and expanding the physician base [66][68] Question: How does the company view payer coverage moving forward? - Payer coverage is central to the company's strategy, with ongoing efforts to secure positive medical policies from commercial payers [88][90]