Exagen Inc.

Greetings and welcome to the Exogen first quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Tina Jacobson, Vice President of Investor Relations. Thank you. You may begin.

Thanks operator. Good morning and thank you for joining us to discuss exigence financial results for the quarter ended March 31st, 2026. Today, I'm joined by John Bali, our president and chief executive officer and Jeff Black, our chief financial officer. The recording of this call, the press release announcing our financial results and the slide presentation can be accessed on our website at www.exogen.com. Today's call will include 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. We also will discuss non-GAAP financial measures on this call. Descriptions of these non-GAAP financial measures and the reconciliations of GAAP to non-GAAP financial measures are included in today's press release. And now, I will turn the call over to John Abali. John?

Good morning, everyone, and thank you for joining us. We're starting 2026 off well. Today, we reported record first quarter revenue of $17.3 million, up 12% year over year, and with continued improvement in profitability metrics as we execute our plan. Gross margin was 59% and adjusted EBITDA loss reduced to 2.2 million, a 14% improvement versus last year. These results continue our efforts to build Exygen into a durable company that compounds value over time by prioritizing three core objectives. Expanding adoption of our products, increasing ASP through disciplined revenue cycle execution, and delivering a steady cadence of innovation that meets the unmet needs of our clinicians. Q1 was another good example. We are executing, and our strategy is working. At the same time, our mission remains our anchor point. Autoimmune disease is still a category where patients often struggle to get clear answers, and clinicians lack the tools to diagnose and treat with confidence in a timely manner. We exist to change that. and will do so by pairing better science with best-in-class execution. Our innovation efforts are on track, and we believe Exogen is well positioned to bring clarity to the complexities of autoimmune disease, ultimately improving outcomes for patients. When I look at our market opportunity, I'm incredibly energized by what's ahead. Drawing on our knowledge of the space and third-party research, we estimate the autoimmune testing market at over $2.2 billion. growing about 5% annually. With just over 3% market share today, we believe there is significant and realistic opportunity to systematically gain share by bringing better science, more timely results, and world-class service to our underserved channel. Thriving adoption within that opportunity will be central to volume growth, and in the first quarter, AdviseCTD test volume grew 10% year-over-year. which compared to a 5% market growth rate suggests we continued to earn share in the quarter. Test volume remained in the mid 30,000 quarterly run rate range. I feel very positive about that performance, especially in light of a couple week disruption related to winter storms in late January and early February that reduced patient access and physician office days in specific US regions. Demand outside of the weather-impacted weeks tracked well with our expectations. We entered Q2 focused on execution, and one month in have seen a strong start, consistent with expected ordering patterns. In fact, year-to-date, we've seen several weeks where testing volume has exceeded 2025 weekly highs, and this is obviously just over a quarter into the year. A big part of my optimism stems from a review of our sales metrics, which continue to show a broadening of our ordering base. Ordering clinicians were up 15% year over year, reflecting continued penetration and engagement within our channel. Our team is executing well, and the results continue to build. Now to ASP. One of the clearest indications that our operating strategy is translating into durable business improvement. We expanded trailing 12-month ASP to $444, up $25 per test, or 6% versus last year. Strength in the first quarter was driven by continued progress in revenue cycle management and favorable collections timing. We've now delivered 12 consecutive quarters of increasing trailing 12-month ASP and view this metric as the most reliable indicator of progress, as it smooths the variability associated with accrual accounting and timing of collections. Overall, we're encouraged by continued improvement in our underlying reimbursement. It reinforces that we're investing in the right processes and the right tools to drive sustainable ASP expansion over time. In the first quarter, we continue to advance our processes around innovation and remain on track with our development priorities. We've been deliberately building the R&D to commercial muscle to deliver a dependable cadence for new products, with the objective of launching approximately one product every 12 or so months to our clinician base. Our next key priority is an offering for myositis, our first new standalone product since 2020, currently targeted for commercialization in early 2027. This is among the most requested diagnostic need within our channel and will fit well with our commercial reach. Myositis is an autoimmune disease that can present in many forms, but often causes chronic muscle inflammation, progressive weakness, or rapidly progressing interstitial lung disease. Less untreated, it can lead to irreversible damage that extends beyond the muscles to vital organs. And in the most severe forms, this results in complications leading to complete loss of lung function or even death. The testing dynamic for myositis is similar to connective tissue disease, where specifically with early disease, symptomatic presentation is ambiguous and the differential is broad. While roughly 100,000 patients in the U.S. are affected by the disease currently, We believe this number dramatically under represents the true disease prevalence, given the number of patients that ultimately go undiagnosed due to inadequate tests in the market. We believe the patient population under evaluation for myositis is many times this number. While most clinicians rely on conventional testing today, the vast majority of them lack confidence in those results. We're developing a comprehensive offering that will bring clarity to this population that clearly needs a better solution. We are also excited about our scientific visibility to start 2026. At Autoimmunity 2026, a key autoimmune conference this month in Prague, Exogen had nine abstracts accepted, including several tied to our myositis research and continued evidence generation across the advice portfolio. We've also had two manuscripts accepted for publication related to our research in myositis and SLE. Those should be out for publication later this month as well. Our progress reflects the rigor, quality, and practicality of the work our clinical team is driving. Looking ahead, we are reaffirming our full year 2026 revenue guidance of $70 to $73 million. We're incredibly pleased with the start to 2026 while working to build successive quarters and ultimately years of profitable growth. We remain focused on our priorities in delivering consistent execution. To close, I want to thank our team. The quality of this organization continues to improve, and the solid results we're delivering are the product of real collaboration across every function. I am grateful for the tremendous energy, the effort, and the high character that our people bring every day in service of autoimmune patients and clinicians. With that, I'll turn it over to Jeff for additional comments on the financials.

Thank you, John, and good morning, everyone. 2026 is off to a solid start with first quarter results reflecting continued deliberate execution across the business. Once again, we achieved record top line performance by growth in both testing volume and ASP. I'll dive into the financial results starting with revenue. First quarter 2026 revenue reached 17.3 million, an increase of 12% compared to last year. testing volume grew 10% driven by continued momentum from the investments we made last year to upgrade and expand the commercial organization. The team's productivity continues to ramp. In fact, even with many of our new territories less than a year old, we drove a 4% improvement in sales productivity based on trailing 12 month volume per territory. And as John mentioned, we increased the number of ordering clinicians in the first quarter by 15% year over year, These are both clear indications that our commercial investments are translating into tangible performance gains. Our VIA CTD training 12-month ASP expanded 6% to $444. Execution of our revenue cycle management initiative supported a strong in-period ASP result, including the collection of over 900,000 in claims older than 360 days. Over time, we continue to target an ASP of at least 50% of our Medicare reimbursement for approximately $600, $650, recognizing that the quarterly contribution from our revenue cycle initiatives can be variable. Our farmer services offering generated roughly $300,000 of revenue in the quarter. Early efforts here are coming to fruition. We now have over $5 million in contract backlog value and growing that we expect to realize over the next two to three years. Moving to gross margin, We reported 59% for the first quarter of 2026, relatively unchanged compared to first quarter 2025, and up 360 basis points sequentially. Gross margin in the quarter benefited from the strength of our in-period ASP and our continued COGS rationalization that is streamlining workflows in the lab and reducing costs across our supply chain. We remain confident the gross margin will progress to the mid-60s over time as we achieve further ASP expansion, generate scale and fixed cost leverage, and further optimize costs. Turning to operating expenses, first quarter 2026, OpEx was $13.6 million, up about 9% compared to last year. We continue to exercise expense discipline and direct incremental spend toward growth investments, including commercial, and R&D initiatives. Breaking out the components of OPAC's first quarter SG&A was just over $12 million, an increase of 8 percent compared to our first quarter 2025, and driven primarily by investment in commercial talent and territory expansion. Notably, revenue growth continues to consistently outpace SG&A growth, indicating sustained operating leverage in the business. R&D accounted for about $1.6 million of OpEx in the first quarter, growing over 20% compared to last year to support continued pipeline development, including preparation for the myositis product launch expected in early 2027. Our adjusted EBITDA loss, which excludes depreciation and non-cash stock comp expense, was $2.2 million in the first quarter, a 14% improvement compared to last year. Please refer to the press release we issued earlier today for a reconciliation of our net loss to adjusted EBITDA. Turning to cash, we ended the first quarter with cash, cash equivalents, and restricted cash of just under $22 million and ahead of our internal expectations. We continue to maximize our revenue cycle management, which includes beginning the year by holding most claims. Consistent with previous years, this temporarily increases accounts receivable and results in a higher use of cash in the first half of the year, which we expect to normalize in the second half. We continue to believe that our balance sheet provides us the runway needed to support the business's sustainable, positive free operating cash flow. Shifting to guidance, as John mentioned, we're reaffirming full year 2026 revenue guidance of $70 to $73 million. The midpoint continues to assume high single digit percent volume growth, and low single digit percent ASP growth relative to our Q4 2025 in period rate of approximately $430. In closing, we remain committed to creating and sustaining shareholder value through financial and operational discipline as we deliver better care for autoimmune disease. Our financial performance reflects continued execution across top line expansion, cost management, and targeted investment to create a durable business well positioned for self-funded growth and scale. Operator, we will now open the call for questions.

Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Kyle Mixon with Canada Core Genuity. Please proceed with your question.

Hey, guys. Thanks for the questions. Congrats on a great quarter. I wanted to talk about the quarterly, like the in-quarter ASP for a second. It was good to see the improvement in the trailing 12-month, but the quarterly was interesting. So it looks like maybe like 470 or high 400s, and that would obviously be a pretty big increase from the last few quarters, but I bring it up because it just seems like your first quarter ASP is typically the highest of the year of any of the four quarters. And so as we think about the step down going forward, if that is the case, just what's the progression going to look like? I know you have the ASP guidance, but maybe just talk a little bit about the seasonality, what you're seeing with RCM and that stuff and how we should just be thinking about it as it kind of builds to the full year TTM ASP. Thank you.

Hey, Kyle. Good morning. Thanks a lot for the question. Appreciate it. When we look at this quarter, very happy with how our revenue cycle team was able to deliver, specifically related to the prior period cash collections, which drove some of that upside or outsized performance in the quarter. Tough for us to project that each quarter going forward or know exactly. That prior period collection tends to be a little bit lumpy for us. So, I don't think we're ready to say that there's going to be a step down in sequential quarters or characterize exactly the size of it. But our revenue cycle approach has yielded pretty decent returns as it relates to prior period collections in in quarters in the past, and it was great to see it happen again this quarter. Looking forward to it in future quarters as well, but the exact magnitude is always difficult for us to project. Anything you'd add, Jeff?

Yeah, Kyle, I would say you had done the calculation on in-period. Our out-of-period collections, just to put it in perspective, we set about $900,000 in out-of-period, greater than 12-month collections. Put that in perspective, we did about $1.5 million for the entire year last year. tracking very nicely and, again, very hard to predict whether that becomes a run rate or otherwise. But that had about a $25 impact on the end period ASP. So, we are tracking, you know, ahead of that, you know, Q3 or Q4 exit rate, which is encouraging. But, again, I think it's too early for us to make a call on what we expect Q2 in terms of whether it's continued enhancement. We'll say we did see a full quarter of collections per pad 4, so that's tracking right around where we expect it to be. And then some of the increases really relative to pair mix, which, which can change quarter to quarter. But again, very encouraged about a 25 dollar impact on the out of period. Out of period collections, hoping that we'll continue to see that traction, but not yet ready to make the call.

Okay, yeah, John, that was helpful. And Jeff, that was really there as well. Thank you for that. On the ordering positions in the quarters, that increased, I think, 15%, I guess, year over year. That's great to see. I just was wondering what were some of the reasons for that. You know, I think that might imply like a lower, you know, average test order per doctor, which is, you know, probably probably extended through that cohort of newer to advise clinicians on this. So what are some of the ordering trends of the more recent cohorts and physicians given, you know, several developments in the autoimmune field the last few years?

Great question, Kyle. So you're exactly right. The ordering physician base increased 15% year over year to about just over 2,700 physicians here for the first quarter. A big part of that has to do with our sales expansion. Obviously, with the additional territories we added in the back half of last year, those folks are really high-caliber individuals, but they've just gotten into the field, established those relationships, and we're seeing the traction there. As it relates to orders per physician, you're on the mark there as well. I think part of the lower orders per physician for Q1 would be related to more of the weather impact, to be honest with you. We had about two weeks in the end of January, early February, where we lost around 30% or so, a third of our volume for those two weeks, just related to That severe weather in the Northeast and and so that, you know, on an average basis orders per per physician would would pull that number down a little bit. So that's all we're seeing there the weeks outside of the weather impact. We saw very robust demand on orders per physician physician base in here into Q2 as well.

All right. Awesome. Perfect. And then finally, Jeff, you were mentioning the R&D that this quarter was evaluated partially due to preparation for the launch, I guess, early next year. I just was wondering if you guys could talk about how much education or, like, additional marketing is going to have to be, you know, kind of executed, I guess, this year for that test and how much of this is maybe R&D versus, like, an SG&A type thought process.

Yeah, I'll let John chime in on some details, but generally this is going to be new product, really outside of ICTD, but it will be distributed through the same sales channel. So, the expectation is we're adding to the bag. So, there will be some incremental, you know, marketing efforts, but we don't expect to see OpEx ramp up substantially. We will continue to see investment this year on the R&D side. But this will be our first standalone product beyond Avaya CTD, really since, what, 2020. So really excited about it, and we don't think it's going to add really incremental burn. It's really just adding to the existing bag.

The way we take a look at this, Kyle, or at least the way I think about it internally is, We have to have very strong relationships with our customer base, but also the other innovators in the field and the KOLs. And that serves several purposes, but one of them being as you launch a new product and you conduct studies with folks, that can serve very much as incredibly powerful marketing material related to the new product. So we've already started that. We've got abstraction actually in an accepted manuscript now related to myositis and some of the research we're doing there. And that's all done with the existing budget. And a big part of that or credit goes to our research team for having those relationships, finding creative ways to conduct studies in a, call it, economical way. And we'll continue to do that. There may be some marketing expense that associated with the product launch, but it'll be measured and generally consistent with our current operating profile.

Thanks Kyle.

Thank you. Our next question comes from the line of Bill Bonella with Craig Howland Capital Group. Please proceed with your question.

Hey guys, thanks a lot and thanks for all the color. So on the First of all, on the volume, on the weather, you talked about, you know, a couple of tough weeks. Any sense of maybe what the impact on volume growth might have been? I mean, did you, in theory, lose a day or two of productivity, or how might we think about that?

Hey, Bill. Good morning. Thanks so much for the question. So, the way we have characterized it is, For those two weeks, we lost about a third of volume over the course of two solid weeks. So that's a couple thousand tests. That should be, I think, give you the exact color you need.

Yeah. And then just to expand on that, is there anything else just, you know, as we see the ASP trend moving in the right direction, is there anything different that's happening at all on the volume front in terms of either maybe walking away from some lower-priced business or being more cautious about some of the accounts you're adding? Or would we say that maybe differential in the growth rate and the sequential downtrend would pretty much all be the weather?

So great question. So in the quarter, the impact of volume was pretty much weather related. I mean, not really any other drivers there or motivators there. And then on the ASP side, really what's driving that continues to be just the strategy we employed a few years ago. And we just continue to get better at it. Our appeals continue to get better. These are long cycles, as you know. And as we learn through various successes or failures in our appeal efforts, we adjust our approach and make changes there. We're always evaluating our Medicaid patient population is maybe one area that I would say continues to evolve. And certainly on the managed Medicaid side, what level of patient responsibility the market can support there. And so those are some changes we have made here in Q1, but I don't think those are big contributors to volume impact. They may have had some impact on the ASP side, but mostly ASP gains are due to wins on the revenue cycle side.

Okay, that's really helpful. And then maybe just a follow-up on that on the ASP side. So, you know, obviously, you know, having improvement on both the collections front and it sounds like on the, you know, fighting denials and all of that. Can you just remind us maybe what some of the key opportunities are? I know as we, you know, were going through last year, there were some really specific opportunities you saw where you, you know, for things that you could get paid for because of some of what you had added to the product over the course of the last year. And maybe just give us a little bit of an update on how you're feeling about that and where those opportunities stand today.

Yeah, absolutely. Thanks for the chance to expand on it. From my standpoint, opportunistically, we continue to pursue prior period collections. I mean, we've talked about this a little bit with the new product launches, and you have your initial payment or your initial ASP, call it, from when you perform the test. And then over the course of about a 12-month, maybe even a little bit longer, 12 to 18-month period, you're able to continue to work with the insurance company, with the patient in various ways, through appeals, advocacy, what have you, and drive further collections. And that's That's what we anticipated doing with the new product launches on the existing product. And it's just, it's coming to fruition. You know, to have 900,000 in prior period collections here in Q1 when all of last year we had about a million and a half, that's phenomenal. We are, to be honest, so proud of the team because it's coming from multiple payers and through multiple initiatives. And so it's not just one single win that drove this, but it's on improving some of those collections for the new product launches. It's on the base business across multiple payers. And our level of payer engagement just continues to improve as well. I mean, here in the first quarter, We had presentations to three different medical directors at various Blues plans. They continue to be engaged. These aren't just join a conference call, they sit silent, and you present your clinical dossier and then the call is over. There's high levels of engagement, lots of Q&A, follow-up requests for additional material. We are, our strategy is getting the attention of various payers. It's yielding improvement in ASP on the individual claim level for multiple CPT codes, and we'll just continue marching along. And that's been the strategy from day one, and just continues to improve in terms of efficacy.

Okay, and then if I could, just one last follow-up on that, and that's helpful, but just in terms of you know, getting paid for the additional markers and obviously that's part of the success presumably on the prior period collections. But as you look forward, are you feeling, you know, how are you feeling about consistency of payment for those additional markers? Are you thinking that's going to be I hate to say easier, but as you look forward, do you expect to see maybe the rate of denials moderate or a bit given the success you've had with the prior period collections? Or is it too early to say on that?

No, so it definitely will improve the rate going forward, especially just because just because we're on accrual accounting, right? So as you have a track record of improved collections, you can actually accrue it and then it'll factor into the rate going forward, right? So from that perspective, we'll have greater certainty, we'll have greater clarity because we'll have firsthand experience in seeing this through full cycle. This is more specific to the new marker reimbursement. So from that perspective, we'll improve. But I think the other thing I would say is we now have a, three-year track record of consistent improvement in ASP. And so I have a lot of confidence that our processes work and that they'll continue to yield positive results over time as well. So all of that will be factors. The way to really lock it in, as you know, is through in-network contracting, and then your velocity of payments will improve and you'll I don't know that you ever sleep soundly at night regarding this area, but at the same time, it may speed everything up a little bit.

Great. Thank you so much.

Thank you. Our next question comes from the line of Dan Brennan with TD Cowan. Please proceed with your question.

Great, thanks. Thanks for the questions. Maybe guys, just on pacing for the year, just Q2 streets just shy of 18 million. Can you give us some flavor about maybe price volumes? You guys seem okay with that number. How do we think about that?

Hey, Dan. Good morning, by the way. And from a guidance standpoint, you know, we are guiding quarterly. I think we feel very comfortable about our annual guide. that 70 to 73. Obviously, you know, very nice quarter here for Q1. Some of it driven by the prior period collections that we aren't quite ready to earmark for the rest of the year, you know, each quarter. So we're still filling it out. We'd like to get another quarter behind us before we take a look at that annual number. And, you know, I think the quarterly spread is what it is on the analyst side, but I don't think we're too far off.

Okay, thanks for that. And then maybe just one thoughts on the weather. So you lost those. Couple 1000 tests, I guess in Q1, so I guess. Presumably do those come back in Q2 or they gone. And that kind of create a favorable comp in the Q2.

Yeah, so. Because the sample type that we work in is peripheral blood, it's got a viability component to it. Really, it gets moved. Those tests get moved theoretically. If we were dealing with paraffin-embedded tissue or fixed tissue or something like that, you could envision a catch-up period that's maybe a little bit more realistic. But for us, in essence, those are gone. Those are clinic days that are completely gone. There's only so many patients that a physician can see in a single day. So those are essentially gone.

Got it. Okay. Maybe if you could just give us an update on the path towards an LCD. I know that's been on file for a couple years now. Just wondering kind of any update there, how we think about that, and what kind of, if in fact that were to come, how do we think about the impact that would mean on your ASP up list?

Sure. So maybe I'll start with the impact first. Impact-wise, an LCD is a very nice progress for our organization. It will memorialize the coverage of with Medicare that we have, I guess, in plain sight, but also allow us to leverage that for Medicare Advantage conversations and even Policy discussions related to commercial lives with various plans. So we're looking forward to it still waiting Continue to have very good relationship with the mold X team meet with them on a regular basis, you know about every quarter just to get an update we do have Our body of evidence supporting advise CTD continues to expand in fact we had a a systematic review, a very significant publication for us internally, just get accepted for publication. That'll come out maybe in a month's time or so. And we look forward to updating the Moldex team with that evidence as well. But where we sit right now is we're in the queue. They are unable to tell us exactly where in the queue we are, but we remain in the queue and they have a complete understanding of of our product and the clinical evidence behind it. But that's about all we can say at the moment.

Okay. Thanks for that, John. And just in terms of the Northwell transition, I think you guys felt pretty good that other customers weren't looking to kind of switch from direct bill to kind of, I guess, third-party pay. Is there any update there? How do you feel about that? Does that still remain the case today?

Yeah, well, it still stings. I think from my perspective, it's really unfortunate that we weren't able to find a path there. But as it relates to our broader client-built business, no further change. In fact, I think our relationship with our client-built customers continues to be very strong. maybe adjusted our approach a little bit. And we have a lot of senior leadership highly tuned in to our client bill accounts and just continue to foster them as we do with really any other accounts. So no further updates, if you will. And as it relates to Northwell, we continue to find ways to serve their clinician base outside of the system itself, but see it as unlikely that a client bill arrangement comes back in the near future.

Got it. Right. But you're not really hearing, like you think it is kind of more of a one-off, I guess is still the case, correct?

Yeah. And, you know, that happened in July of last year. And since then, you know, we continue to have, like I said, strong relationships with our client bill business. So pretty close to a definition of one-off in my opinion.

Terrific. Okay. That's great, John. Thanks a lot. I'll go back in the queue. Yeah. Appreciate it, Dan.

Thank you. Our next question comes from the line of Mark Massaro with BTNG. Please proceed with your question.

Hey, guys. Thank you for taking the questions. It was really nice to see the 15% increase in ordering clinicians. Can you give us a sense, are these all specialists, so I presume rheumatologists or perhaps did you see any increase in breadth? And then related to that, can you speak to any potential opportunity to market to primary care or more generalist clinicians?

Yeah, good morning, Mark. Thanks for the question. Very interesting one. From the physician-based standpoint, we still target the rheumatologist as our primary care. Customer and that's what we saw in terms of the expansion continued growth, but roughly proportional to what we had previously So, you know about two-thirds devoted to the rheumatology Channel and then about a third of that expansion coming outside of it when we when we see utilization of Of the test outside of rheumatology it can come in a few different ways general practitioners internists But we also see it in the women's health side, so OBG, but also pulmonology as well. And so we don't have targeted we want to keep our sales team focused. And I think you really need to take a look at what the potential is for those physicians before you start targeting and marketing to them. And so from our standpoint, where we've seen expansion outside of the rheumatology specialty work well, it's when the rheumatologist is still involved, even if behind the scenes. They know their referral network very well, and they know which physicians, for whatever geographic reason, are seeing some of these patients, and they'll help direct us in that respect. So that's what we saw with this expansion as well.

Okay, that's great. And I think you expanded to, I believe, 45 territories. Can you just speak to how you're feeling about the productivity of some of the newer reps? How do you think they're ramping? And if they're not fully ramped, do you see any potential for some pickup in the back half of the year?

Yeah. So first of all, they're fantastic people and, uh, been really excited about how we've, how they've been able to come in. Um, we've modified our training now a couple of times, uh, to cater to really refine it, um, over the last couple of years and it's working well. We just had our, we, we split training into two phases. The first is kind of welcome to rheumatology, you know, remove the deer in the headlights sort of, uh, perspective. And we bring them back after a couple months in the field to dive deeper into the science, but also really do more of a Q&A and tailor it to what they're seeing and the challenges that they're facing in their territories. And we did that here in late December. So we've now had a quarter with our new reps going through phase two of the training. And so they're still getting their feet under them. I think we typically see production consistent with our goal targets somewhere in that six to nine month range. But to truly get running, it takes a little bit longer than that. And we've had a few of our territories land some pretty big accounts, clients, which is telling me that They understand the product. They're able to convey the clinical utility of the product in an effective way and develop that relationship. So very happy with how pretty universally these five territories have gotten acclimated to rheumatology in our product, but still a ways to go. And I would think you see a continued build throughout the year. We'll also look to expand our sales organization even further once we have those folks adequately supported. So maybe that comes in the back half of the year or so. We'll have to see.

Okay, fantastic. And then my last question, I know in prior calls there had been more discussion around the newer biomarkers launched in 2025. I know you've talked about PADD4, I think RE33, some others. Just curious how that is ramping and to what extent do you see potential upside in ASPs as we, you know, try to tune up our models? I'm just wondering how those are progressing relative to your internal expectations.

Yeah, the new markers, I think generally inside the building, we're very happy with the decision to pursue that research and ultimately commercialize those markers. And I think part of what gives us that optimism or excitement is, We've actually started to land pharma contracts related to testing with the new markers. We actually have two, specifically for PAD4 and RA33. So our unique RA markers are not only grabbing the attention of our clinical base and being useful in that context, but we're seeing that utility spread into our pharma partners. And obviously, as you have these new markers incorporated into various trials and subsequent publications leveraging these, It's just going to continue to build and we continue to be the only group in the US providing these markers and just very excited to drive that innovation into the field specifically as it relates to ASP. I think our revenue cycle operations continue to improve the ASP that we're able to generate on our test, but specifically those new markers. And we're still gaining confidence with what that looks like full cycle. I mean, Pad 4 launched in September of this past year. So we're six months in and we don't guide on ASP. And so I think from that standpoint, it's going to be tough for me to give you some direction there, but we like how the first quarter shaped up related to ASP. Some of that prior period collection was related to the new markers, and we'll just continue to build from here.

Great. Actually, John, just to clarify that, the pharma business that you're landing, how much of this is lupus-related versus RA or any other type of autoimmune disease?

That's an interesting question. So it's interesting, Mark, because you sign a contract for up to a certain amount of service, and some of that's dependent on trial enrollment, right? But we have, right now, we have a pharma business heavily focused in lupus, but actually quite a bit in RA as well. We've never broken it out publicly, Jeff. What would you...

Yeah, it's a great question, Mark. Historically, clearly lupus. The expansion of the contract backlog, which is expanded from, you know, in the fours to the $5 million range over the course of the last 90 days, a lot of that has been driven by RA. Yeah. I would still say bigger percentage is lupus, but we are seeing a sort of a growing contribution from RA.

Yeah, we're doing at least a third of our biopharma business in RA. It may be higher than that, but at least a third.

That's all very helpful. Thanks, guys.

Thank you. Our next question comes from the line of Matthew Parisi with KeyBank Capital Markets. Please proceed with your questions.

yes this is matthew precy on from paul knight over at key bank capital markets um thanks for taking my question and congrats on the quarter i believe you called on the last call you called out that acr was not advocating for the advised cte test um can you talk to any impact impact that you're seeing as a result of said advocacy good morning matthew thanks for the question and you're exactly right very very happy to have found a path

that ACR can play in helping us drive greater access to our test. And given that we're at various forms of discussions with different payers, I would hesitate to call out a payer by name, but it's been a very positive impact. And anytime you have physicians advocating for your product directly to the payer, I think, you know, tough to mess that up, to be honest with you. And so we welcome it. We welcome the partnership. We really appreciate that they've recognized the role diagnostics play in the ecosystem and that there needs to be a path for advocating greater access for patients. It just continues. So it wasn't a one-time event. It's a partnership that we formed with the ACR and the physicians there and they're committed to speaking on our behalf and advocating for their constituency related to access. So I would just say it remains strong and continues.

That's great to hear. And if I can squeeze in one more, you previously mentioned revenue per territory in the range of $430,000. Do you have like an updated revenue per territory number for the quarter? And then how should we really think about that as you ramp up the new territories?

Yeah, man, I think that the number you're referring to is a quarterly number. So, the annualized number would be, you know, north of a million and a half. That continues to be what I would say our target, a million and a half plus. And we're tracking right about there, maybe, you know, moderately improved given the results of Q1.

Thanks for the questions. Thank you for the questions.

Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Abali for any final comments.

Thanks so much. Really appreciate everyone who joined the call today. And it's really a lot of fun to start the year off the way we have. Basically, we're continuing our momentum from the second half of 25, but reigniting our progress in ASP gains. And I don't think anything's more fun than that. I'm incredibly proud of our team. As I have been now for several years, they continue to deliver in transforming this organization into really the preeminent diagnostic company serving autoimmune patients. Progress at the company has come in spurts, but we've consistently improved our trajectory, and we have put ourselves in position to own the autoimmune diagnostic space. And while others are focused elsewhere, we'll continue to chip away at this opportunity and build a truly incredible autoimmune powerhouse. We appreciate the support of all stakeholders and look forward to continuing to update on our progress. Thanks so much again.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.