Exagen(US:XGN)2025-03-11 17:13Financial Data and Key Metrics Changes - Total revenue for 2024 reached a record $55.6 million, marking a 6% increase from 2023, primarily driven by ASP expansion [31][32] - Adjusted EBITDA loss narrowed to approximately $10 million, showcasing a 40% improvement over 2023 [39] - Gross margin expanded to just under 60% in 2024 compared to 56% in 2023, with Q4 gross margin at about 62% [35][36] Business Line Data and Key Metrics Changes - The average selling price (ASP) for AVISE CTD increased to $411, up $75 from 2023 and $126 since 2022 [32][8] - Testing volume for 2024 was 123,000 AVISE CTD units, down 11% relative to 2023 [136] Market Data and Key Metrics Changes - The company anticipates a significant market opportunity in rheumatoid arthritis (RA), estimating an annual rate of connective tissue disease evaluations at around 2.5 million tests, with a conservative penetration estimate of about 5% [104] Company Strategy and Development Direction - The company is focused on enhancing its value proposition in the RA market with the launch of new biomarkers, which are expected to broaden the utility for clinicians [79][81] - Plans to expand sales territories from 40 to potentially mid-40s during 2025 to drive profitable growth [127] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, expecting strong revenue growth driven by both ASP expansion and volume [24] - The company aims to achieve positive adjusted EBITDA by Q4 2025, marking a key milestone in its turnaround strategy [40] Other Important Information - The company has made significant investments in capacity and technology to meet expected demand, including a $1.2 million investment in flow cytometry equipment [70] - The launch of new biomarkers is seen as a catalyst for both patient care and competitive differentiation in the market [20][22] Q&A Session Summary Question: Can you help us think about modeling for ASP going forward based on the new markers? - Management indicated that while they cannot provide precise guidance for 2025, the $90 incremental revenue from new markers is a reasonable approximation, with potential for ASP to trend upwards [48][49] Question: What is the adjusted EBITDA profitability target for Q4? - Management confirmed that adjusted EBITDA is a good proxy for free cash flow, with expectations for positive adjusted EBITDA in Q4 2025 [54] Question: What is the sensitivity improvement from the RA33 launch? - The new T cell biomarkers improve sensitivity for lupus diagnosis, capturing roughly 51% of previously undiagnosed patients, while RA markers are expected to capture 15-16% of seronegative patients [65][68] Question: How does the company plan to recover lost volume from physicians? - Management believes the business is recoverable and is focused on optimizing processes to facilitate smoother interactions with physicians [94] Question: What is the opportunity for the test to penetrate the RA market? - The company estimates the RA market opportunity at around 2.5 million tests annually, with a conservative penetration estimate of about 5% [104] Question: How will the company balance volume growth with profitability? - Management expects to see volume growth improve in 2025, with plans for sales expansion and a focus on enhancing the quality of the sales team [111][113]