EXAGEN INC.

From time to time, we may be involved in legal proceedings or subject to claims incident to the ordinary course of business. Regardless of the outcome, such proceedings or claims can have an adverse impact on our business resulting from defense and settlement costs, diversion of resources and other factors. There can be no assurances that favorable outcomes will be obtained.

Pursuant to a settlement agreement with the DOJ, which has been previously disclosed, Exagen made a single lump-sum remittance to the government in the amount of $0.7 million plus interest in October 2023. The U.S. Attorney’s Office dismissed the “covered conduct” elements in the qui tam with prejudice, while non-covered conduct was dismissed without prejudice. The DOJ excused itself from the case in connection with the settlement. Exagen’s ability to participate in federally funded healthcare programs was unaffected by the settlement. In November 2023, the complaint was unsealed and served on Exagen. Exagen filed a motion to dismiss the complaint. In February 2024, the relator filed a motion for leave to amend the complaint. Exagen opposed this motion. In March 2025, the court granted Exagen’s motion to dismiss with prejudice and denied the relator’s motion for leave to amend. The relator filed an appeal with respect to this ruling. We cannot predict the outcome of such an appeal, or its potential impact or effect on our business, prospects and financial condition. We intend to vigorously defend against the appeal. The Company's participation in federal healthcare programs is not affected by the settlement agreement.