Exagen Inc.

Greetings. Welcome to Exogen Incorporated's fourth quarter 2025 earnings call. At this time, all participants are in listen-only mode. Question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note that this conference is being recorded. At this time, I'll turn the conference over to Tina Jacobson, Vice President of Investor Relations. Thank you, Tina. You may now begin.

Good morning, and thank you for joining us. Earlier this morning, Exogen released financial results for the quarter ended December 31, 2025. John Abali, our President and Chief Executive Officer, and Jeff Black, our Chief Financial Officer, will host this morning's call. The 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 risks 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 will discuss non-GAAP financial measures on this call. Descriptions of those non-GAAP financial measures and the reconciliations of GAAP to non-GAAP financial measures are included in today's press release. With that, I'll turn the call over to John Ibali, our President and CEO.

Good morning, everyone, and thanks for joining the call today to review our 2025 performance. Before we get into the details, I wanted to start with why what we are working toward matters so much Autoimmune disease is still diagnosed too late, too imprecisely, and too inconsistently. Consequently, it's the patient that suffers. Every delay, every misclassification, every uncertain answer shows up as real human cost. I'll put a finer point in the problem with a comparison to oncology, where it's well known how important it is to get the diagnosis right as soon as possible and at the earliest stages of the disease, when the course of action can be directed towards a cure. Significant investment has gone into improving the precision around and detection of disease in oncology. And the results show, as the median time to diagnosis is about four months, regardless of the type of cancer. And this is when measured from initial clinical suspicion to the date of diagnosis. I want to contrast that with autoimmune disease, where the diagnostic journey can be dramatically longer. For lupus, the often cited average time to diagnosis is around six years. And for rheumatoid arthritis, it's roughly two years. This diagnostic gap is at the heart of what we're working to address. Autoimmune patients are suffering in a broken system. At Exogen, we exist to solve this problem, not with more noise, but by listening to our customers and developing better solutions. And over the past few years, we've been deliberately rebuilding our company so that we have the foundation to make a profound impact on the future of autoimmune care. impact for patients who want clarity, impact for clinicians who want confidence, and impact for a healthcare ecosystem that desperately needs a better solution. As we work to address these significant unmet needs, we expect to have a meaningful impact for our investors as well. What I hope you'll come away with today is how Exogen's evolving into a company that doesn't just participate in an area of autoimmune diagnostics. We are working to own the entire space, providing more comprehensive care for the channel that relies on us and to move the field forward. Today I'll cover the progress we've made, the momentum we're seeing, and just as importantly, what we've deprioritized so we can stay focused on what truly moves the needle. Our story is about discipline, conviction, and building something durable. And that's the lens we'll maintain going forward. With that framing, and given that we've come to the end of another year, I want to start with a review of the progress made since I joined in 2022, because it highlights our ability to reshape and build a viable business. A lot of the work that needed to be done early on was behind the scenes. We have strong science and a meaningful mission, but the organization needed a healthier operating foundation to consistently translate that into durable financial performance and a platform for innovation. So we rebuilt the core of our company. deliberately and systematically. First, we advanced our revenue cycle management efforts, and I've detailed this at length, but it started with upgrading our customer service routinely, collecting clinical records, establishing a prior authorization process, and getting great at appeals so we could continue to improve reimbursement in a sustainable way. Next, we restructured our sales force pretty much from the start, reducing the team by roughly one-third managing out those that couldn't perform, along with people that didn't fit the culture we were building, while steadily upgrading the overall talent level across the entire organization. We've continued to cultivate a culture that is conducive to innovation, hard work, integrity, all with a dose of humility, and the group of folks that currently comprise Exogen certainly embody this spirit. Third, we reviewed our R&D efforts and streamlined the portfolio, discontinuing lower potential initiatives and prioritizing the opportunities our clinicians were advocating for, projects with clear commercial viability. This effort brought to the surface a significant number of challenges, including consolidating operations from multiple locations and walking away from programs with significant sunk costs. But where we sit now is at a place where we've launched three sets of innovative markers into the clinic within an 18-month period. We've educated clinicians and are having real impact on patient care. We have manuscripts pending which highlight the caliber of science we're now regularly conducting, and we're shortening the time for patients to be diagnosed correctly and treated effectively. Our impact highlighted in the most meaningful way. Lastly, we transitioned away from unprofitable customers and processes. That's always a gamble because it's challenging to estimate second and third order impacts that result from these types of decisions. but we knew they were the right decisions if we were going to succeed in rebuilding this company. None of these actions were easy, especially as a microcap public company, but they're exactly the kinds of decisions that build a business clinicians and patients can rely on to advance the field long term. The result today is straightforward, and while there remains a lot of work to do, the financial reflection of our decisions continues to materialize. I'll highlight a few of our results from last year to make the point. First, I want to highlight volume because it reflects extraordinary execution and our sales team is absolutely killing it. In 2025, we reset the volume run rate from roughly 30,000 tests in the first quarter to 35,000 plus in the following quarters. Q4 was the highest Q4 testing volume in Exogen's history, and this marks the second consecutive quarter that I'm able to make that claim. What's especially encouraging is we buck typical second half seasonality, which is In our view, a real testament to the durability of the turnaround efforts we've driven and a consequence of having the right team in place. To give you a sense of how impressive this is, we've averaged approximately 1% volume growth from 2022 through 2024, essentially flat, as we're rebuilding many aspects of the company. In 2025, the team delivered over 11% testing growth with strong momentum heading into 2026. Additionally, in 2025, we expanded our sales force from 40 to 45 territories, found incredible people to join our team, and we expect our new sales reps' productivity to continually improve over time as these folks get fully up to speed. We are very much on the right track in this area of our business. Now switching to ASP, and the cleanest way to measure progress here is by viewing it on a trailing 12-month basis. At the end of the year, trailing 12-month ASP was approximately $441 versus $411 at the start, up about 7%. That's meaningful execution for any diagnostics company and is being driven by the launch of our new product enhancements and the processes we've rebuilt over the last couple of years. Cleaner revenue cycle management, more effective appeals, consistent medical director engagement, and strong payer advocacy. Looking forward, there are several drivers to support further AXP expansion, including continued revenue cycle execution and the continued traction we expect from new biomarkers, now that they're roughly 12 months into commercialization. We also have the American College of Rheumatology now advocating for us, a first for our company and something that's materialized over the last three months, with specific plans to drive medical policy progress with payers. It has taken us almost two and a half years to secure solid advocacy from the ACR, and we're excited to see what may come from greater engagement with them. Progress with market access, including the local coverage determination, could be an additional catalyst, though timing is always difficult to predict with these types of things. And finally, our team continues to secure promising meetings with medical directors at various plans. We recently met with 12 different medical directors at various Blues plans, and have other scheduled meetings here in early 2026 to continue educating and advocating for patient access to the Advise franchise. This has been the core objective of our strategy over the past couple of years, and it's exciting to see the progress in a few of these areas. Our strategy works, and now it's about scaling our efforts with discipline while driving a regular cadence of innovation. Turning to our pipeline, we have five promising assets in development and are formalizing a product cadence intended to expand our addressable market opportunity by launching one product each year. That's an important evolution for us because it builds clinical relevance and reinforces discipline, steady innovation, executed reliably, aligned to the needs of our customers. I'll preview a few of the opportunities we're evaluating. First, we feel particularly good about developing a solution to address myositis, a chronic inflammatory condition that's often evaluated under suspicion of a connective tissue disorder. It's a meaningful clinical predicament within our channel where we've already earned distinction and wouldn't require heavy incremental investment to commercialize. It is easily the most requested offering amongst our clinical base, and if we can develop an offering that meets the needs of our clinicians, we believe demand could ramp quickly. We also continue to evolve important efforts with lupus nephritis and disease activity measures for both SLE and RA, but we'll refine the reimbursement pathway before committing to a timeline there. Additionally, we continue to advance our presence internationally and domestically in the autoimmune field with recent manuscript submissions that highlight solutions under development. Those manuscripts will be posted to our website once accepted. But this continues to be a positive consequence of the efforts of our scientific team to support high-quality science with a practical commercial benefit. Later this month, we're looking forward to the International Autoimmune Conference in Prague, where we expect to present seven abstracts. And even further in the year, we expect additional abstract presentations at ACR. We have lots of activity on this front. With the progress at the organization over the last couple of years, it's clear that we continue to build a company well-positioned to bring innovative products to the rheumatology community and fully expect 2026 to be another exciting year. We are therefore guiding revenue expectations for the full year to be between $70 million to $73 million. I'm going to let Jeff cover the assumptions behind that in a moment, but we believe this reflects continued progress with both volume and ASP contributing to growth, as we position the organization for long-term profitability. To close, I'm very encouraged by our progress, while mindful of the hard work that lies ahead. We've demonstrated strong execution, and that execution has fundamentally strengthened Exogen's long-term position. Today, we are very proud to distinctly serve a vast, unmet need in several autoimmune diseases by delivering timely, actionable answers that can dramatically improve patient lives and create clinical clarity. Looking ahead, we intend to expand our reach across autoimmune disease. With the organization better positioned operationally, we can build a differentiated company that through innovative diagnostic tools addresses multiple high impact clinical dilemmas in one of the largest and most underserved markets in healthcare. As we execute that vision, we're focused on delivering sustainable profitable growth by prioritizing three simple objectives. First, advancing adoption. We're driving volume growth through an upgraded and expanding sales force and generating evidence to support our innovation. Second, continuing to expand ASP. We're continuing to effectively execute our revenue cycle optimizations and market access initiatives while engaging with payers at a level we haven't in the past. And third, driving innovation. We're creating a foundation for a meaningful innovative cadence evaluating select inorganic opportunities, and prioritizing R&D efforts that can support our intent to own the autoimmune diagnostic space. I look forward to updating you on our continued progress in the future, and with that, I'll turn it over to Jeff.