Exagen outlines $70M–$73M 2026 revenue target while expanding sales force and innovation cadence

Earnings Call Insights: Exagen Inc. (XGN) Q4 2025

MANAGEMENT VIEW

* CEO John Aballi emphasized Exagen’s commitment to addressing diagnostic delays in autoimmune diseases, stating the company is “working to own the entire space, providing more comprehensive care for the channel that relies on us and to move the field forward.” He highlighted the company’s deliberate rebuilding efforts since 2022, including overhauling revenue cycle management and restructuring the sales force, which was reduced by approximately 1/3 and upgraded in talent.
* Aballi reported that Exagen achieved the highest Q4 testing volume in company history, with the volume run rate increasing from around 30,000 tests in Q1 to over 35,000 in subsequent quarters. He noted, “In 2025, the team delivered over 11% testing growth with strong momentum heading into 2026.” The sales force expanded from 40 to 45 territories.
* Average selling price (ASP) on a trailing 12-month basis rose to approximately $441 from $411, a 7% increase. The CEO underscored, “Looking forward, there are several drivers to support further ASP expansion, including continued revenue cycle execution and the continued traction we expect from new biomarkers now that they're roughly 12 months into commercialization.”
* Aballi outlined a pipeline of five assets, aiming to launch one product per year, and previewed a myositis solution targeted for 2027. He said, “We have 5 promising assets in development and are formalizing a product cadence intended to expand our addressable market opportunity by launching one product each year.”
* Exagen is guiding full-year 2026 revenue expectations to $70 million to $73 million.
* CFO Jeffrey Black stated, “Full year 2025 revenue reached a record $66.6 million, a near 20% increase over 2024 with volume up over 11% and trailing 12-month ASP up over 7%.” He added, “We reported just over 58% for the full year 2025 compared to about 60% in 2024, reflecting the ASP pressure we experienced in the second half of the year.” Black also noted the pharma services business generated $1.7 million in revenue, up from about $100,000 in 2024, with a backlog over $4 million.

OUTLOOK

* Exagen’s 2026 revenue guidance is $70 million to $73 million, with both volume and ASP growth contributing. Black explained, “The midpoint of this guide assumes high single-digit volume growth for the full year and low single-digit ASP growth from our Q4 2025 in-period ASP rate.” He stated that breakeven adjusted EBITDA is expected at roughly an $80 million revenue run rate, slightly higher than previously due to increased commercial and R&D investment.
* Black said, “We believe the business will reach breakeven adjusted EBITDA and begin to generate cash at roughly an $80 million revenue run rate with some variation depending on the mix of ASP and volume.”

FINANCIAL RESULTS

* Full year 2025 revenue was $66.6 million, up nearly 20% over 2024, with volume up over 11% and trailing 12-month ASP up over 7%.
* Gross margin was just over 58% for the full year, compared to about 60% in 2024, attributed to ASP pressure and the cost of seven new biomarkers. Operating expenses totaled $53 million, up 13%, primarily from commercial talent and territory expansion, as well as R&D.
* Adjusted EBITDA loss for 2025 was $9.8 million, a moderate improvement over 2024. The company ended 2025 with cash, cash equivalents, and restricted cash of just over $32 million, and total cash and accounts receivable exceeding $43 million.

Q&A

* Daniel Brennan, TD Cowen: Asked about the timing for free cash flow and EBITDA positivity, noting the prior target was $70 million and now is $80 million. Black responded that increased OpEx from investments in commercial and R&D elevated the threshold, but margin improvements are expected as ASP rises.
* Brennan also inquired about the commercialization timeline for myositis. Aballi indicated, “Our goal is starting 2027 to have this offering ready for the clinic.”
* Kyle Mikson, Canaccord Genuity: Queried about the Northwell direct bill account and its impact. Aballi explained the lost account represented about 2% of volume and a $25 contributor to ASP, but deemed the event a one-time setback with growth initiatives making up for the loss.
* Mikson also asked about ACR advocacy. Aballi detailed the relationship-building and recent advocacy efforts, stating, “ACR has confirmed to us on multiple occasions that they're now advocating into certain medical directors.”
* William Bonello, Craig-Hallum: Asked for clarity on in-period ASP. Black said, “We saw the in-period ASP really drop starting in Q3 in that kind of $430 range... So the way we think about it is that we've seen a reset right to about that $430, and then we expect that we'll grow it from there.”
* Mark Massaro, BTIG: Asked about reimbursement for new biomarkers. Black explained the ASP for T-cell and RA33 is approaching $80 per test, with a goal of $90, and PAD4 expected to contribute at least $10 to ASP over time.
* Matthew Parisi, KeyBanc: Asked about sales force ramp impact. Aballi stated that five new additions are progressing well, expecting territories to become more independent by spring to summer.
* Andrew Brackmann, William Blair: Inquired about drivers of volume growth. Aballi reported both new physician adds (from 2,370 to 2,690) and deeper account penetration, along with early-stage halo effect from new markers.

SENTIMENT ANALYSIS

* Analyst sentiment was probing, with questions focused on the sustainability of ASP growth, timing to profitability, and risks tied to payer mix and reimbursement. The tone was neutral to slightly skeptical, especially regarding the shift in breakeven targets and ASP volatility.
* Management maintained a positive and confident tone in prepared remarks and the Q&A, emphasizing execution and transparency. Black and Aballi acknowledged headwinds but expressed strong conviction in the business trajectory, using phrases like “we are very proud,” “we have strong conviction,” and “we feel good about the trajectory.”
* Compared to the previous quarter, management’s tone remained confident, though more detailed about challenges and mitigation. Analyst tone was consistent, with ongoing scrutiny of ASP and profitability targets.

QUARTER-OVER-QUARTER COMPARISON

* Guidance was raised from $65–$70 million in Q3 to $70–$73 million for 2026. The breakeven threshold increased from $70–$75 million to $80 million due to higher investments.
* Strategic focus shifted to formalizing a product cadence of one launch per year and expanding the sales force. Both quarters emphasized ASP and volume as growth drivers, but Q4 highlighted more concrete advocacy gains with ACR and ongoing pipeline development.
* Analysts continued to focus on ASP sustainability, volume growth, and risk from payer mix, with management providing more granular breakdowns of lost accounts and expected ASP evolution.
* ASP growth decelerated in Q4 due to a one-time account loss; management addressed this more openly versus the prior quarter. Volume momentum remained strong, offsetting some ASP headwinds.

RISKS AND CONCERNS

* Management acknowledged ASP headwinds, particularly from a lost direct bill account and slower ramp in new biomarker reimbursement.
* Black described the gross margin dip as driven by the incremental costs from seven new biomarkers, despite COGS per test tracking below targets.
* Analysts raised concerns about further client bill account transitions, payer denials, and the timing for new product reimbursement. Aballi indicated the Northwell situation was a one-time event and outlined ongoing payer engagement and appeals processes as mitigation.

FINAL TAKEAWAY

Exagen’s leadership described 2025 as a year of record growth in both revenue and testing volume, supported by an expanding sales force and ongoing product innovation. The company projects 2026 revenue in the $70 million to $73 million range, with a path to profitability at the $80 million revenue mark as investments in commercial and R&D capabilities increase. While recent ASP headwinds from a lost direct bill account and gradual reimbursement improvements for new biomarkers present challenges, management highlighted robust volume momentum, expanding payer advocacy, and a disciplined approach to operational execution as key drivers for sustained profitable growth.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/xgn/earnings/transcripts]

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