Exagen Inc.

Good morning, ladies and gentlemen, and welcome to Exogen Inc. Q3 25th Earnings Conference call. All participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please key in star and then zero on your telephone keypad. Please note, this event is being recorded. I will now hand you over to Ryan Douglas. Please go ahead, sir.

Good morning, and thank you for joining us. Earlier this morning, Exogen, Inc. released financial results for the quarter ended September 30th, 2025. John Abali, our President and Chief Executive Officer, and Jeff Black, our Chief Financial Officer, will host this morning's call. A recording of today's call and the press release announcing the quarterly results can be found on the company's website at www.exogen.com. As today's call includes forward-looking statements, we encourage you to review the statements contained in today's press release and the risk and uncertainties described in our SEC filings, which identify certain factors that may cause the company's actual events, performance, and results to differ materially from those contained in the forward-looking statements made on today's call. In addition, we'll discuss non-GAAP financial measures on this call. Descriptions of these non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures are included in today's press release. I'll now turn the call over to John.

Good morning, everyone, and thank you for joining us. I'm pleased to report that Q3 was the strongest quarter in Exigent's history, driven by robust volume growth and continued execution across our commercial, scientific, and operational teams. Compared to last year, year to date, we've grown revenue by 19%, comprised of 8% growth in testing volume and 9% growth in ASP. This synergistic impact is exactly how we anticipated our top line performance would evolve when we set our strategy a few years back. These numbers highlight the power of combining volume with reimbursement growth and what effect that can have on top line when both are moving in the same direction. Our team is energized by the opportunities we continue to see in both areas, which I'll break down further in a second. But first, let's start with our recent product launch. At the end of Q3, we successfully launched assays for the detection of anti-PAD4 antibodies, our second novel set of rheumatoid arthritis biomarkers this year. While we expect the revenue impact from PAD4 to be modest, it continues to differentiate our rheumatoid arthritis offering and demonstrates our ability to bring new markers to the clinic. quickly and effectively. The feedback from clinicians has been encouraging, and we're seeing growing interest in how these markers can impact patient care. I personally saw some of this clinical interest at the American College of Rheumatology meeting in Chicago last week, where multiple physicians wanted to dive deeper into the science with our team and where we had a robust attendance at our conference presentation on these markers. We've also had several clinicians share firsthand experience with the testing, highlighting the clinical need for better biomarkers in this patient population, but also several examples where the anti-PAD4 markers were the only serological abnormalities in clinically ambiguous patients. This is highlighting the true value of the markers in the clinic, One specific example that was shared was when a patient had anti-PAD4 positivity as the only abnormality in their serological profile. And because of this, was referred for x-rays where she had evidence of erosive changes. It's important to intensify treatment for these patients as anti-PAD4 antibodies also serve as a prognostic marker for highly erosive disease. But this pathology tends to respond better to treatment escalation. So hopefully this patient is able to get their disease under control soon and our biomarker testing led to the diagnosis and gave insight to guide the treatment in this patient. This is one of the many examples of our clinical utility these markers can bring and that we are hearing about from our customers. With the launch of these markers, we have now completed the development of one of the most sensitive serologic evaluations for rheumatoid arthritis available on the market today. I'm very proud of the work our team has done to deliver these tests to the clinic and in a field which hasn't historically seen a lot of biomarker innovation. We are setting a course to change that and better personalize care for these patients. To remind everyone of the impact our testing now has, conventional biomarker profiling for rheumatoid arthritis consists of rheumatoid factor and anti-CCP antibodies, which are positive in approximately 70% of clinically diagnosed RA patients. With the addition of RA33 antibody testing and our new assays for detection of anti-PAD4 antibodies, our serologic profiling will be positive in approximately 85% of patients, thereby capturing approximately half of the RA patient population, which would have historically been diagnosed as seronegative RA. Additionally, these patients, which are positive for RA33 antibodies, are more likely to have milder disease, which tends to respond favorably to methotrexate. Patients positive for anti-PAD4 antibodies generally have more aggressive disease, but are likely to respond more favorably to treatment escalation. This level of precision in predicting the disease course and treatment response is exciting to bring to rheumatoid arthritis patients, and it's just the start of what we're doing in this field. Lastly, and this is rare for biomarker innovation, these efforts require less than $3 million in investment, and we expect revenue payback in less than 24 months. We won't always be able to contribute to the clinic in such a valuable way with a relatively small investment and quick return, but we do believe that with our current commercial channel, we can innovate long-term with decent returns on investment. Switching to AdviseCTD testing volume trajectory, Q3 volume was the highest we've ever recorded for a third quarter period. And notably, we did not see the typical quarterly slowdown. In fact, volume remained strong into October. which is a positive trend for Q4 and indicates to me that our team is back to growing the business after helping our customer base adapt to the billing changes we implemented a couple years ago. Our expansion into new territories is also starting to pay off. We see meaningful contributions from these regions, and our per-territory productivity remains strong. Of note, two of our recent expansion territories emerged as top-performing growth territories this past month, and we have others trending similarly. Total ordering physicians and orders per clinician continue to trend upward, and we're seeing increased engagement from both new and existing physicians. This is a testament to having the right team in place and the stability and focus we've built over the past year and a half. We currently operate with 45 sales territories, up from 42 at the end of Q3. Our focus remains on profitable growth, and we will continue adding territories where we see clear opportunity. strong physician engagement, and can find the right talent. Now let's talk about ASP, which is top of mind for me. We've made significant progress over the past two years with our trailing 12-month ASP for CTD now at $441, a 9 percent increase year over year. However, it's important to acknowledge that we're not seeing the full second half of ASP expansion I had anticipated. The new biomarker reimbursement, while creative, has not ramped as quickly as I had hoped. We still believe there's a path to further ASP gains, and our efforts around appeals, revenue cycle operations, and payer education are showing incremental progress. But the reality is these gains are coming more gradually than I expected. Additionally, we lost a large high ASP direct bill account this quarter, which is weighing on our current ASP as we convert this business into standard commercial insurance payer mix. Both of these items have temporarily slowed our trajectory. But as I've constantly conveyed throughout my time here, this is why I view it critical to gauge our success relative to a trailing 12-month measure, which does continue to climb. We continue to be very diligent with our revenue cycle operations and have a strong strategy employed to secure the higher reimbursement we ultimately expect. But you are seeing a somewhat muted ASP reflected in our top and bottom lines as we work through these efforts. Turning to our pharma and CRO business, we generated nearly $800,000 in revenue this quarter, bringing our year-to-date total to $1.2 million. Our order backlog now stands at $3.5 million and continues to grow. While this revenue stream can be lumpy, it's an important and expanding part of our business. We're encouraged by the momentum we're seeing in this area. As I mentioned, I was recently in Chicago attending the American College of Rheumatology annual conference where we had a strong presence this year, highlighting new abstracts and deepening our interactions with clinicians. We submitted and had accepted six different abstracts covering the bulk of our pipeline efforts. One ultimately was chosen for a plenary talk, and in general, we continue to showcase our company as an innovative presence within the rheumatology field. It was a highly successful meeting in this regard. Looking ahead, We remain on track to deliver 65 to 70 million in revenue with the ability to be cash flow positive at the high end of our range, though the timing of sustained cash flow positivity may be pushed to 2026 as we continue to navigate the ASP challenges I just detailed. Generating cash remains a core near-term goal, and we're committed to achieving it in a disciplined, sustainable way. In closing, I want to thank our team for their dedication and execution and our partners and shareholders for their continued support. We continue to build something special at Exogen, and while the path is never perfectly linear, our progress is real and our opportunity remains significant. Thank you, and with that, I'll turn it over to Jeff for additional comments on the financials.