Exagen Q2 Revenue Jumps 14 Percent

Exagen (XGN 14.34%), a diagnostics company focused on autoimmune conditions, released its second quarter results on July 29, 2025, for the quarter ending June 30. The main headline: revenue (GAAP) beat expectations, climbing to $17.2 million due to expanding sales of its flagship AVISE CTD test, but net loss (GAAP) widened year over year to $4.4 million, and operating expenses rose. Analyst consensus predicted $16.31 million in GAAP revenue and GAAP EPS (earnings per share) of $(0.15), but the EPS (GAAP) result was more negative than expected at $(0.21). The quarter demonstrated robust commercial momentum but highlighted persistent losses as investment in sales, research, and reimbursement efforts continues.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

What Does Exagen Do and What Drives Its Success?

Exagen is a diagnostics company specializing in laboratory tests for autoimmune disorders such as lupus and rheumatoid arthritis. Its main product, AVISE CTD, is a panel of biomarker-based blood tests that help doctors diagnose connective tissue diseases earlier and more accurately. The test accounts for approximately 90% of current annual revenue, underpinning the company's financial results and growth strategy.

Success at Exagen hinges on several factors. These include broadening adoption of AVISE CTD among rheumatologists, driving innovation in new tests, capturing reimbursement from payors like Medicare and commercial insurers, and leveraging proprietary technology that is protected by patents. Securing reimbursement and expanding average selling price (ASP) are crucial.

Q2 2025 Highlights: Growth and Expansion, but Persistent Losses

Revenue (GAAP) climbed 14.2% from the prior year to $17.2 million, driven by the AVISE CTD test. Test volumes rose 14% sequentially and 7% year over year, reflecting rising clinical adoption across both new and existing physician customers. Average selling price for AVISE CTD improved to $428 on a trailing 12-month basis, a $27 increase from one year ago. Management credits recent reimbursement progress, higher pricing on new biomarkers, and sales force stability for this momentum.

Gross margin (GAAP), which measures the portion of revenue left after paying for direct costs of goods sold, inched up to 60.4%. Management aims for gross margin in the mid-60% range over time, and the improvement marks a positive shift after investments in new lab infrastructure earlier in the year put temporary pressure on the metric. The impact of the company's new biomarker panel was only partially felt in Q1 2025 results, but the second quarter benefited from more complete contribution, helping boost both ASP and gross margin.

Operating expenses increased, driven by hiring for expanded sales focus and stepped-up research and development. Research and development outlays (GAAP) rose to $1.5 million from $1.2 million in Q2 2024, as Exagen invested in new markers for seronegative rheumatoid arthritis and continued its push into kidney disease diagnostics. The net loss (GAAP) widened to $4.4 million versus a $3.0 million net loss in Q2 2024, reflecting both the higher spending and ongoing need to scale revenue before profitability is reached. Adjusted EBITDA, a non-GAAP measure used to assess operating performance by stripping out non-cash or one-off items, was a loss of $1.7 million compared to $1.6 million in Q2 2024.

On the reimbursement front, Exagen reported a significant legal win: it prevailed in an Administrative Law Judge hearing over a denied Medicare Advantage claim, which could set a precedent for future appeals. The company also secured positive policy decisions for AVISE CTD with TRICARE, granting coverage for military service members and their families after a two-year evidence review. These are seen as important milestones that could improve average selling price further as payer coverage broadens. Management said, “We've won the case and are highly encouraged by this effort as it starts to set a precedent for future appeals.”

The company raised $20.2 million in an equity offering and secured a new credit facility, bringing cash and cash equivalents to $30.0 million on the balance sheet as of June 30, 2025. These capital moves strengthened Exagen’s liquidity, but also highlight its reliance on external funding as it works toward profitability. New leadership hires included a Chief Scientific Officer with a background in autoimmune diagnostics and expanded the board with an executive experienced in life sciences.

Pipeline innovation remained a focus. Exagen continued to validate and prepare new biomarker panels for diseases such as lupus nephritis and early chronic kidney disease. These efforts are still a few quarters away from potential commercial launch but represent both potential growth drivers and ongoing investment priorities for the company.

Looking Ahead: Management Outlook and What to Watch

For fiscal 2025, Management projects GAAP revenue in the range of $65 million to $70 million for 2025, counting on sustained momentum from AVISE CTD and successful reimbursement efforts. It reiterated a target to reach break-even on adjusted EBITDA (non-GAAP) by Q4 2025, conditioned on continued sales acceleration and expense control. This guides the focus for the remainder of the year: converting operational and reimbursement wins into profitability.

Investors may want to monitor how further progress with payer appeals and policy expansion translates into average selling price gains, whether new biomarkers drive additional volume, and how tightly operating expenses are managed in pursuit of profitability. No quarterly dividend is being paid at this time.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.