EXAGEN INC.
For the period ended Jun 30, 2025. Filed Jul 29, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Jul 29, 2025
XGN$5.81-23.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-05.
0001274737-25-000026
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-07-29.
0001274737-25-000063
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 113 previous paragraphs and 125 current paragraphs.
69 unchanged; 27 reworded; 23 added; 16 removed; 1 previous and 6 current paragraphs rearranged.
Tables are not compared: 2 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
2025 Public Offering
Current report
On May 8, 2025, we entered into the Underwriting Agreement with the Underwriter relating to the issuance and sale of an aggregate of 3,852,500 shares of our common stock, including 502,500 shares of our common stock issued and sold pursuant to the exercise in full of the Underwriters’ option to purchase additional shares, to the Underwriter at a price to the public of $5.25 per share. The 2025 Public Offering closed on May 9, 2025. The net proceeds to us from the 2025 Public Offering were approximately $18.6 million after deducting $1.6 million of the underwriting discounts and commissions and other offering expenses payable by us.
Current report
On April 25, 2025, we entered into the Credit Agreement with Perceptive, which provides for a senior secured delayed draw term loan facility in an aggregate principal amount of up to $75.0 million. The Tranche A Loan of $25.0 million was funded on April 25, 2025. The Tranche B Loan, the Tranche C Loan, and the Tranche D Loan may be drawn subject to the Company’s satisfaction of certain conditions precedent, including specified revenue milestones (the funding date of the Tranche B Loan, the Tranche B Borrowing Date, the funding date of the Tranche C Loan, the Tranche C Borrowing Date, and the funding date of the Tranche D Loan, the Tranche D Borrowing Date). The Perceptive Term Loan Facility matures on April 25, 2030, and includes an interest-only period through maturity, with all outstanding principal and accrued interest due on the maturity date.
Current report
The Perceptive Term Loan Facility accrues interest at an annual rate equal to the greater of (i) Term SOFR or (ii) 4.75%, plus the Applicable Margin, payable monthly in arrears. Upon the occurrence and during the continuance of an event of default, the Applicable Margin may be increased by 4.0% at Perceptive’s election. We may prepay the Term Loans at any time, subject to prepayment premiums ranging from 2.0% to 10.0% of the principal amount, depending on the date of prepayment.
Current report
The Credit Agreement is secured by a first-priority lien on substantially all of our existing and future assets. In connection with the Credit Agreement, we also issued Perceptive the Warrant Certificate, with portions of the Warrant Certificate vesting upon funding of the various tranches. The Warrant Certificate has a ten-year term from the applicable vesting date and includes customary anti-dilution and registration rights provisions.
Current report
The Credit Agreement includes customary affirmative, negative, and financial covenants. These include, among others, restrictions on additional indebtedness, liens, dividends, mergers and acquisitions, and affiliate transactions. The Credit Agreement also requires that we maintain a minimum unrestricted cash balance of $3.0 million and achieve specified net revenue levels on a quarterly basis beginning with the quarter ending June 30, 2025.
Current report
Loss on extinguishment of debt consists of the unamortized debt issuance costs and final payment fee due under the terms of the Amended Loan Agreement. The Amended Loan Agreement was fully repaid and terminated on April 25, 2025.
Current report
Changes in the fair value of the warrant liability relates to our issued warrants and commitments to issue warrants for the purchase of our common stock in connection with the Credit Agreement with Perceptive.
Current report
Gross margin as a percentage of revenue increased slightly to 60.4% for the three months ended June 30, 2025 compared to 60.1% for the three months ended June 30, 2024, primarily due to ASP expansion driven by our new biomarkers and improved overhead absorption.
Current report
Interest expense increased by $0.6 million, including an increase of $0.2 million in non-cash interest expense, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to the Perceptive Term Loan Facility that we entered into in April 2025.
Current report
Loss on extinguishment of debt increased by $0.3 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, as a result of our early payoff of all outstanding indebtedness under the Amended Loan Agreement in April 2025.
Current report
The fair value of the warrant liability increased by $0.4 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to increases in the fair value of the underlying common stock.
Current report
Revenue
Current report
Gross Margin
Current report
Gross margin as a percentage of revenue decreased slightly to 59.7% for the six months ended June 30, 2025 compared to 59.9% for the six months ended June 30, 2024. We invested ahead of the curve in lab operations to accommodate the new biomarker launch and anticipated volume increase in 2025. In addition, during the process of amending our existing client direct bill contracts to include our new biomarkers, we absorbed the cost of running the new biomarkers even in cases where contracted pricing had not yet been fully updated and we were unable to bill for them. The majority of our client direct bill contracts have now been amended accordingly. We believe these factors are transitory headwinds and we expect gross margin to maintain or improve moderately in the second half of 2025.
Current report
Selling, general and administrative expenses increased $1.7 million, or 8.3%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. This increase was primarily due to an increases of $1.0 million in employee-related expenses (including salaries, benefits and stock-based compensation) related to increased headcount, $0.4 million in other expenses, $0.2 million in outside services, partially offset by a decrease of $0.2 million in facilities.
Current report
Research and development expenses increased $0.5 million, or 23.6%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. This increase was primarily due to an increases of $0.3 million in employee-related expenses (including salaries, benefits and stock-based compensation), $0.1 million in outside services and $0.1 million in other expenses.
Current report
Interest expense increased by $0.6 million, including an increase of $0.2 million in non-cash interest expense, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to the Perceptive Term Loan Facility that we entered into in April 2025.
Current report
Loss on extinguishment of debt increased by $0.3 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, as a result of our early payoff of all outstanding indebtedness under the Amended Loan Agreement in April 2025.
Current report
The fair value of the warrant liability increased by $0.4 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to increases in the fair value of the underlying common stock.
Current report
Our obligations under the Perceptive Term Loan Facility are secured by a first-priority lien on substantially all of our existing and future assets. In connection with the Credit Agreement, we have issued the Warrant Certificate to Perceptive. The Warrant Certificate has a ten-year term from the applicable issuance date and includes customary anti-dilution and registration rights provisions. The Perceptive Term Loan Facility includes customary affirmative, negative, and financial covenants. These include, among others, restrictions on additional indebtedness, liens, dividends, mergers and acquisitions, and affiliate transactions. The Perceptive Term Loan Facility also requires that we maintain a minimum unrestricted cash balance of $3.0 million and achieve specified net revenue levels on a quarterly basis beginning with the quarter ending June 30, 2025. In addition, upon the occurrence of an event of default, Perceptive, among other things, can declare all indebtedness due and payable immediately, which would adversely impact our liquidity and reduce the availability of our cash flows to fund working capital needs, capital expenditures and other general corporate purposes. As of June 30, 2025, we were in compliance with all covenants of the Perceptive Term Loan Facility.
Current report
On May 9, 2025, we issued and sold an aggregate of 3,852,500 shares of our common stock (inclusive of 502,500 shares pursuant to the exercise in full of the Underwriters’ option to purchase additional shares) at a public offering price of $5.25 per share, for aggregate net proceeds of $18.6 million after deducting underwriting discounts and commissions and other offering expenses.
Current report
Net cash provided by financing activities for the six months ended June 30, 2025 was $21.9 million, primarily resulting from $23.7 million in proceeds from the issuance of debt and warrants, net of discounts, $18.8 million in proceeds from common stock issued, net of issuance costs and $0.2 million in proceeds from common stock issued under the ESPP, partially offset by a $19.7 million payment to early extinguish debt, $0.7 million in payments of debt issuance costs, $0.3 million in principal payments on notes payable obligations, and $0.1 million in principal payments on finance lease obligations.
Removed paragraphs (16)
Previous report
On April 25, 2025, we entered into the Perceptive Term Loan Facility, under which an initial term loan of $25.0 million was funded, $19.7 million of which we used to repay the 2017 Term Loan. See “Note 10 Subsequent Events—Perceptive Term Loan Facility” of our unaudited consolidated financial statements for more information.
Previous report
Laboratory Developed Tests (“LDT”)
Previous report
The federal Food and Drug Administration (“FDA”) announced a final rule on the regulation of LDTs on April 29, 2024 (the “Final Rule”), which sought to amend the federal Food, Drug, and Cosmetic Act (“FDCA”) to make it explicit that the FDA has the authority to regulate LDTs as medical devices and to phase out, over the course of four years, its general enforcement discretion approach to the regulation of LDTs. This Final Rule was challenged in the U.S. District Court for the Eastern District of Texas (the “Court”) by the American Clinical Laboratory Association. On March 31, 2025, the Court ruled that the FDA lacks the statutory authority under the FDCA to regulate LDTs. As a result, the Final Rule and LDTs remain regulated under existing state and federal regulations. The FDA may appeal the Court’s decisions and, if it does so successfully, the Final Rule could resume effect. Affected stakeholders may also continue to advocate for comprehensive congressional rulemaking that could expressly grant the FDA the requisite authority to implement the Final Rule (or a similar version of the Final Rule), which may be disruptive to the industry and to patient access to certain diagnostic tests. However, the FDA rulemaking for the Final Rule was initiated after years of failed congressional attempts to harmonize the regulatory paradigms applicable to LDTs and other IVDs. So, it is unclear whether any such legislative efforts would be successful or likely in the near term.
Previous report
Cost of Revenue
Previous report
Selling, General and Administrative Expenses
Previous report
Research and Development Expenses
Previous report
Interest Expense
Previous report
Interest Income
Previous report
Cost of Revenue
Previous report
Gross margin as a percentage of revenue decreased to 58.9% for the three months ended March 31, 2025 compared to 59.6% for the three months ended March 31, 2024, primarily due to the changes to revenue and cost of revenue described above and our bearing costs associated with processing tests that include our new biomarkers under client direct bill contracts prior to amending such contracts to update the contract price to reflect the additional biomarkers. The majority of our client direct bill contracts have now been amended accordingly.
Previous report
Selling, General and Administrative Expenses
Previous report
Research and Development Expenses
Previous report
Interest Expense
Previous report
Interest Income
Previous report
Our obligations under the Amended Loan Agreement are secured by a security interest in substantially all of our assets, including our intellectual property. The Amended Loan Agreement contains customary conditions to borrowing, events of default, and covenants, including covenants requiring us to maintain minimum liquidity of $2.0 million, covenants to achieve certain minimum amounts of revenue, and covenants limiting our ability to dispose of assets, undergo a change in control, merge with or acquire other entities, incur debt, incur liens, pay dividends or other distributions to holders of our capital stock, repurchase stock and make investments, in each case subject to certain exceptions. Per the Amended Loan Agreement, we are not required to comply with the revenue covenant for any quarter during which we maintain a minimum aggregate cash balance equal to 50.0% of the aggregate principal amount of the 2017 Term Loan funded (excluding any capitalized interest paid-in-kind) at all times during such quarter. The consequences of failing to achieve the performance covenants, when applicable, will be cured if, (i) within 30 days of failing to achieve the performance covenant, we submit a new financial plan approved by our Board to Innovatus under which we are expected to break even on a cash flow basis prior to the maturity date, and (ii) within 30 days of the submission of such financial plan, we issue additional equity securities or subordinated debt with net proceeds sufficient to fund any cash flow deficiency generated from operations, as defined in the Amended Loan Agreement. In addition, upon the occurrence of an event of default, Innovatus, among other things, can declare all indebtedness due and payable immediately, which would adversely impact our liquidity and reduce the availability of our cash flows to fund working capital needs, capital expenditures and other general corporate purposes. As of March 31, 2025, we were in compliance with all covenants of the Amended Loan Agreement with Innovatus.
Previous report
On April 25, 2025, we entered into the Perceptive Term Loan Facility, which provides for a senior secured delayed draw term loan facility in an aggregate principal amount of up to $75.0 million, including an initial tranche of $25.0 million funded on the closing date, of which $19.7 million was used to repay the 2017 Term Loan. As of April 30, 2025, following the funding of the initial tranche and the repayment of the 2017 Term Loan, we had approximately $28.0 million in cash, cash equivalents and accounts receivable. The Perceptive Term Loan Facility enhances our liquidity position and provides additional financial flexibility, subject to the satisfaction of certain revenue-based and other customary conditions for future tranches
Reworded paragraphs (27)
Previous wording
Since launching AVISE® CTD, we have produced an extensive body of peer-reviewed literature supporting the test’s clinical validity and utility, demonstrating the importance of AVISE® CTD in patient care. Revenue from this product comprised 92% and 90% of our revenue for the three months ended March 31, 2025 and 2024, respectively.
Current wording
Since launching AVISE® CTD, we have produced an extensive body of peer-reviewed literature supporting the test’s clinical validity and utility, demonstrating the importance of AVISE® CTD in patient care. Revenue from this product comprised 91% and 90% of our revenue for the six months ended June 30, 2025 and 2024, respectively.
Previous wording
We market our AVISE® testing products using our specialized sales force covering 39 territories in the United States. Many diagnostic sales forces are trained only to understand the comparative benefits of the tests they promote. In contrast, the specialized backgrounds of our sales personnel, coupled with our comprehensive training, enables our sales representatives to interpret results from our de-identified patient test reports and provide unique insights in a highly tailored discussion with rheumatologists. We believe our focus on and experience in the field of rheumatology, combined with our commitment to excellent customer service and support, position us very well to respond to the needs of rheumatologists and the patients they serve.
Current wording
We market our AVISE® testing products using our specialized sales force covering 40 territories in the United States. Many diagnostic sales forces are trained only to understand the comparative benefits of the tests they promote. In contrast, the specialized backgrounds of our sales personnel, coupled with our comprehensive training, enables our sales representatives to interpret results from our de-identified patient test reports and provide unique insights in a highly tailored discussion with rheumatologists. We believe our focus on and experience in the field of rheumatology, combined with our commitment to excellent customer service and support, position us very well to respond to the needs of rheumatologists and the patients they serve.
Previous wording
▪PAD4 Biomarkers. We currently plan to commercially launch our peptidyl arginine deiminase 4 (PAD4) biomarker around the end of this year. We expect to gain ~8% in overall sensitivity for identifying patients with RA who would otherwise be serologically negative. This sensitivity gain would put our overall ability to detect the RA patient population at approximately 85%, far above conventional markers alone.
Current wording
▪Peptidyl Arginine Deiminase 4 (PAD4) Biomarkers. We currently plan to commercially launch our PAD4 biomarker around the end of this year. We expect to gain ~8% in overall sensitivity for identifying patients with RA who would otherwise be serologically negative. This sensitivity gain would put our overall ability to detect the RA patient population at approximately 85%, far above conventional markers alone.
Previous wording
▪Lupus Nephritis Biomarkers. We continue to leverage our intellectual property licensed from Johns Hopkins University (JHU) to develop a test for detecting protein analytes in urine that can aid rheumatologists in the ongoing management and risk stratification of patients suffering from Lupus Nephritis (LN). We are currently testing a new customized array and currently expect to have results of this testing in the third quarter of 2025. We expect to make this panel available initially through Pharma collaborations for research use prior to releasing commercially through our clinical lab.
Current wording
▪Lupus Nephritis (LN) Biomarkers. We continue to leverage our intellectual property licensed from Johns Hopkins University to develop a test for detecting protein analytes in urine that can aid rheumatologists in the ongoing management and risk stratification of patients suffering from LN. We are currently testing a new customized array and currently expect to have results of this testing in the third quarter of 2025. We expect to make this panel available initially through Pharma collaborations for research use prior to releasing commercially through our clinical lab.
Previous wording
In January 2025, we announced conditional approval by the New York State Department of Health (NYSDOH) and commercial launch of our new SLE and RA biomarker assays on the AVISE® CTD platform. Collectively, we believe these new biomarkers will further improve the clinical utility of AVISE® CTD, providing clinicians with the information they need to definitively diagnose patients and shorten their autoimmune diagnostic journeys. We expect the addition of these new biomarkers will drive gains in our AVISE® CTD average selling price, gross margin expansion and increase demand while positioning us for profitability.
Current wording
In January 2025, we announced conditional approval by the New York State Department of Health and commercial launch of our new SLE and RA biomarker assays on the AVISE® CTD platform. Collectively, we believe these new biomarkers will further improve the clinical utility of AVISE® CTD, providing clinicians with the information they need to definitively diagnose patients and shorten their autoimmune diagnostic journeys. We expect the addition of these new biomarkers will continue to drive gains in our AVISE® CTD average selling price, gross margin expansion and increase demand while positioning us for profitability.
Previous wording
▪Reimbursement for Our Testing Products. Our revenue depends on achieving broad coverage and reimbursement for our tests from third-party payors, including both commercial payors and government payors. Payment from third-party payors differs depending on whether we are considered a "participating provider" (have entered into a contract with the payors as a participating provider) or a "non-participating provider" (do not have a contract and are considered a "non-participating provider"). Payors will often reimburse non-participating providers at a lower amount than participating providers, if at all. We have received a substantial portion of our revenue from a limited number of commercial payors, most of which have not contracted with us to be a participating provider. Historically, we have experienced situations where commercial payors proactively reduced the amounts they were willing to reimburse for our tests, and in other situations, commercial payors have determined that the amounts they previously paid were too high and have sought to recover those perceived excess payments by deducting such amounts from payments otherwise being made. When we contract to serve as a participating provider, reimbursements are made pursuant to a negotiated fee schedule and are limited to only covered indications. If we are not able to obtain or maintain coverage and adequate reimbursement from third-party payors, we may not be able to effectively increase our testing volume and revenue as expected. Additionally, changes in our estimated reimbursements for tests performed in prior periods can positively or negatively impact our revenue in the current period and cause our financial results to fluctuate. In addition, in connection with our revenue cycle management initiatives, we held claims in the first half of the fiscal year ended December 31, 2024, which resulted in increases in our accounts receivable and an accelerated decrease in our cash in the first half of the fiscal year ended December 31, 2024. As expected, this trend reversed in the second half of the fiscal year ended December 31, 2024 as cash was collected on billed tests. We held claims in the first quarter of the fiscal year ending December 31, 2025, which resulted in increases in our accounts receivable and an accelerated decrease in our cash in the first quarter of the fiscal year ending December 31, 2025 and a reversal of that trend is expected in the remaining three quarters of the fiscal year ending December 31, 2025.
Current wording
▪Reimbursement for Our Testing Products. Our revenue depends on achieving broad coverage and reimbursement for our tests from third-party payors, including both commercial payors and government payors. Payment from third-party payors differs depending on whether we are considered a "participating provider" (have entered into a contract with the payors as a participating provider) or a "non-participating provider" (do not have a contract and are considered a "non-participating provider"). Payors will often reimburse non-participating providers at a lower amount than participating providers, if at all. We have received a substantial portion of our revenue from a limited number of commercial payors, most of which have not contracted with us to be a participating provider. Historically, we have experienced situations where commercial payors proactively reduced the amounts they were willing to reimburse for our tests, and in other situations, commercial payors have determined that the amounts they previously paid were too high and have sought to recover those perceived excess payments by deducting such amounts from payments otherwise being made. When we contract to serve as a participating provider, reimbursements are made pursuant to a negotiated fee schedule and are limited to only covered indications. If we are not able to obtain or maintain coverage and adequate reimbursement from third-party payors, we may not be able to effectively increase our testing volume and revenue as expected. Additionally, changes in our estimated reimbursements for tests performed in prior periods can positively or negatively impact our revenue in the current period and cause our financial results to fluctuate. In addition, in connection with our revenue cycle management initiatives, we held claims in the first half of the fiscal year ended December 31, 2024, which resulted in increases in our accounts receivable and an accelerated decrease in our cash in the same period. As expected, this trend reversed in the second half of the fiscal year ended December 31, 2024 as cash was collected on billed tests. We held claims in the first quarter of the fiscal year ending December 31, 2025, which resulted in increases in our accounts receivable and an accelerated decrease in our cash in the same period and a reversal of that trend is expected in the remaining two quarters of the fiscal year ending December 31, 2025.
Previous wording
▪Expanding Adoption of AVISE® CTD. Since the launch of AVISE® CTD in 2012 and through March 31, 2025, we have delivered over one million of these tests. During the three months ended March 31, 2025, the number of AVISE® CTD tests delivered increased by approximately 2% over the same period in 2024. Revenue growth for our testing products will depend, in part, on our ability to continue to expand our base of ordering healthcare providers and increase our penetration with existing healthcare providers, and on the success of the T-Cell Biomarkers and RA Sub-Profile Biomarkers which we added to our AVISE® CTD tests in January 2025.
Current wording
▪Expanding Adoption of AVISE® CTD. Since the launch of AVISE® CTD in 2012 and through June 30, 2025, we have delivered over one million of these tests. During the three months ended June 30, 2025, the number of AVISE® CTD tests delivered increased by approximately 7% over the same period in 2024 and increased by approximately 14% over the first quarter of 2025. Revenue growth for our testing products will depend, in part, on our ability to continue to expand our base of ordering healthcare providers and increase our penetration with existing healthcare providers, and on the success of the T-Cell Biomarkers and RA Sub-Profile Biomarkers which we added to our AVISE® CTD tests in January 2025.
Previous wording
In April 2022, we were granted a Proprietary Laboratory Analyses code (PLA code) for our protein-based test, AVISE® Lupus, which is offered standalone or as part of our AVISE®CTD test. Noridian Healthcare Solutions (Noridian), our Medicare Administrative Contractor, has set the current pricing for this PLA code at $840.65 per test through December 31, 2025. The process for obtaining and maintaining consistent reimbursement for new tests can be uncertain, lengthy and time consuming. A pricing determination is not synonymous with a coverage determination. Having a price associated with the PLA code for any particular test does not secure coverage or reimbursement for that PLA code from Medicare or any other third-party payor.
Current wording
In April 2022, we were granted a Proprietary Laboratory Analyses code (PLA code) for our protein-based test, AVISE® Lupus, which is offered standalone or as part of our AVISE® CTD test. Noridian Healthcare Solutions (Noridian), our Medicare Administrative Contractor (MAC), has set the current pricing for this PLA code at $840.65 per test. CMS will align local MAC pricing with national payment rates for the PLA code on the 2026 Clinical Laboratory Fee Schedule (CLFS) through their annual payment determination process to provide a standardized, nationally determined payment rate. The process for obtaining and maintaining consistent reimbursement for new tests can be uncertain, lengthy and time consuming. A pricing determination is not synonymous with a coverage determination. Having a price associated with the PLA code for any particular test does not secure coverage or reimbursement for that PLA code from Medicare or any other third-party payor.
Previous wording
We submitted a formal request to Noridian for coverage of our AVISE® Lupus test under the new PLA Code and on September 27, 2022, we received notice that Noridian deemed our application for a Local Coverage Determination (LCD) to be valid, but our application is still pending. Ultimately receiving a favorable LCD is uncertain and may be time-consuming, resource intensive and require multiple quarterly or annual periods to complete and is subject to risks and uncertainties described in the section entitled "Risk Factors" in our 2024 Annual Report and this Quarterly Report. In the meantime, we have continued to submit Medicare claims for AVISE® Lupus, appeal denials and respond to requests for additional information. On January 31, 2024, CMS released a coverage article under which all multi-analyte proteomic testing will be considered within the scope of the Molecular Diagnostic Services Program administered by Palmetto GBA on behalf of CMS (MolDX) and reviewed through their technology assessment process. The article listed several such tests, including the AVISE® Lupus test, and requires all laboratories furnishing multi-analyte proteomics testing in MolDX jurisdictions to register with the DEX® Diagnostics Exchange Registry and obtain a Z-Code® identifier. We were issued a Z-Code® identifier in May 2024. To determine if the submitted tests are compliant with relevant policy requirements, these tests will undergo technical assessment by Palmetto GBA as part of the MolDX program.
Current wording
In the meantime, we have continued to submit Medicare claims for AVISE® Lupus, appeal denials and responses to requests for additional information. On January 31, 2024, CMS released a coverage article under which all multi-analyte proteomic testing will be considered within the scope of the Molecular Diagnostic Services Program administered by Palmetto GBA on behalf of CMS (MolDX) and reviewed through their technology assessment process. The article listed several such tests, including the AVISE® Lupus test, and requires all laboratories furnishing multi-analyte proteomics testing in MolDX jurisdictions to register with the DEX® Diagnostics Exchange Registry and obtain a Z-Code® identifier. We were issued a Z-Code® identifier in May 2024. To determine if the submitted tests are compliant with relevant policy requirements, these tests will undergo technical assessment by Palmetto GBA as part of the MolDX program. That technical assessment is on hold until such time as an LCD is issued by CMS. In the interim, our current status with CMS will remain unchanged.
Previous wording
During the year ended December 31, 2023, we implemented several revenue cycle management initiatives, including among others, withholding the submission of commercial payor claims for reimbursement until subsequent quarters, increasing appeals efforts, adjusting the documentation required of physicians when ordering our tests and implementing increases to our patient payment rates. Additionally, in November 2023, we increased the list price billed for our tests. These ongoing revenue cycle management initiatives aim to optimize our appeals process and the potential for cash collections. During the fiscal year ended December 31, 2024, we experienced moderate declines in test volume since the second half of the fiscal year ended December 31, 2023, as rheumatologists and patients adjusted to these changes. During the first quarter of 2024, we saw a return to volume growth. The number of AVISE® CTD tests delivered during the three months ended March 31, 2025 improved by approximately 2.0% as compared to the number of AVISE® CTD tests delivered during the three months ended March 31, 2024 due continuing physician demand and adoption, early traction from our new biomarkers, and salesforce expansion.
Current wording
During the year ended December 31, 2023, we implemented several revenue cycle management initiatives, including among others, withholding the submission of commercial payor claims for reimbursement until subsequent quarters, increasing appeals efforts, adjusting the documentation required of physicians when ordering our tests and implementing increases to our patient payment rates. Additionally, in November 2023, we increased the list price billed for our tests. These ongoing revenue cycle management initiatives aim to optimize our appeals process and the potential for cash collections. During the fiscal year ended December 31, 2024, we experienced moderate declines in test volume since the second half of the fiscal year ended December 31, 2023, as rheumatologists and patients adjusted to these changes. During the first half of 2025, we saw a return to volume growth. The number of AVISE® CTD tests delivered during the three months ended June 30, 2025 improved by approximately 7% as compared to the number of AVISE® CTD tests delivered during the three months ended June 30, 2024 due continuing physician demand and adoption, early traction from our new biomarkers, and salesforce expansion. Additionally, the trailing-twelve-month ASP of our AVISE® CTD tests increased by approximately 7% during the three months ended June 30, 2025 compared to the same period in 2024.
Previous wording
Each payor, whether commercial, government, or individual, reimburses us at different amounts. These differences can be significant. As a result, our cost of revenue as a percentage of revenue may vary significantly from period to period due to the composition of payors for each period's billings. We expect that our cost of revenue will increase year-over-year in the near-term as a result of costs associated with the addition of the T-Cell Biomarkers and RA Sub-Profile Biomarkers to our AVISE® CTD test.
Current wording
Each payor, whether commercial, government, or individual, reimburses us at different amounts. These differences can be significant. As a result, our cost of revenue as a percentage of revenue may vary significantly from period to period due to the composition of payors for each period's billings. Our cost per AVISE® CTD test has increased year-over-year as a result of costs associated with the addition of the T-Cell Biomarkers and RA Sub-Profile Biomarkers to our AVISE® CTD test.
Previous wording
Interest expense consists of cash and non-cash interest expense associated with our financing arrangements, including the borrowings under our Amended Loan Agreement with Innovatus. We expect interest expense to increase by approximately $1.0 million annually in the year ending December 31, 2025 as compared to the year ended December 31, 2024, as a result of borrowings under the Perceptive Term Loan Facility.
Current wording
Interest expense consists of cash and non-cash interest expense associated with our financing arrangements. We expect interest expense to increase by approximately $1.7 million annually, including an increase of $0.9 million in non-cash interest expense, in the year ending December 31, 2025 as compared to the year ended December 31, 2024, as a result of borrowings under the Perceptive Term Loan Facility.
Previous wording
Revenue increased $1.1 million, or 7.5%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to ASP expansion driven primarily by our new biomarkers, and, to a lesser extent, an increase in test volume. The number of AVISE® CTD tests delivered in the three months ended March 31, 2025 increased by approximately 2% compared to the same period in 2024.
Current wording
Revenue increased $2.1 million, or 14.2%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to ASP expansion driven primarily by our new biomarkers, and, to a lesser extent, an increase in test volume. The number of AVISE® CTD tests delivered in the three months ended June 30, 2025 increased by approximately 7% compared to the same period in 2024.
Previous wording
Selling, general and administrative expenses increased $0.7 million, or 6.3%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This increase was primarily due to an increase of $0.7 million in employee-related expenses (including salaries, benefits and stock-based compensation) related to increased headcount, and an increase of $0.2 million in travel and entertainment, offset by a decrease of $0.1 million in outside services and a decrease of $0.1 million in facilities.
Current wording
Selling, general and administrative expenses increased $1.1 million, or 10.3%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. This increase was primarily due to an increase of $0.5 million in employee-related expenses (including salaries, benefits and stock-based compensation) related to increased headcount, and an increase of $0.3 million in outside services, and an increase of $0.3 million in other expenses.
Previous wording
Research and development expenses increased $0.2 million, or 21.2%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This increase was primarily due to an increase of $0.1 million in employee-related expenses (including salaries, benefits and stock-based compensation) and an increase of $0.1 million in outside services.
Current wording
Research and development expenses increased $0.3 million, or 25.8%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. This increase was primarily due to an increase of $0.2 million in employee-related expenses (including salaries, benefits and stock-based compensation) and an increase of $0.1 million in outside services.
Previous wording
Cost of revenue increased $0.6 million, or 9.6%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This increase was primarily due to increases of $0.5 million in materials and supplies and $0.5 million in employee-related expenses (including salaries, benefits and stock-based compensation) related to increased headcount, partially offset by a decrease of $0.2 million in royalties, a decrease of $0.1 million in shipping and handling costs and a decrease of $0.1 million in outside services.
Current wording
Cost of revenue increased $1.4 million, or 11.5%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. This increase was primarily due to increases of $1.3 million in materials and supplies and $0.6 million in employee-related expenses (including salaries, benefits and stock-based compensation) related to increased headcount, partially offset by decreases of $0.2 million in shipping and handling costs, $0.1 million in royalties, $0.1 million in facilities and $0.1 million in outside services.
Previous wording
Interest expense remained substantially consistent for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.
Current wording
Interest income remained substantially consistent for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.
Previous wording
We have incurred net losses since our inception. For the three months ended March 31, 2025 and 2024, we incurred a net loss of $3.8 million and $3.4 million, respectively, and we expect to incur additional losses in future periods. To date, we have generated only limited revenue, and despite any estimates we may make regarding our ability to become profitable, we may never achieve revenue sufficient to offset our expenses. As of March 31, 2025, we had an accumulated deficit of $298.1 million and cash and cash equivalents of $11.2 million. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation. Currently, our funds are held in cash and money market funds. The Company held claims in the first quarter of the fiscal year ending December 31, 2025, which resulted in increases in its accounts receivable and an accelerated decrease in its cash and cash equivalents in the first quarter of the fiscal year ending December 31, 2025 and a reversal of that trend is expected in the remaining three quarters of the fiscal year ending December 31, 2025.
Current wording
We have incurred net losses since our inception. For the six months ended June 30, 2025 and 2024, we incurred a net loss of $8.2 million and $6.3 million, respectively, and we expect to incur additional losses in future periods. To date, we have generated only limited revenue, and despite any estimates we may make regarding our ability to become profitable, we may never achieve revenue sufficient to offset our expenses. As of June 30, 2025, we had an accumulated deficit of $302.5 million and cash and cash equivalents of $30.0 million. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation. Currently, our funds are held in cash. We held claims in the first quarter of the fiscal year ending December 31, 2025, which resulted in increases in its accounts receivable and an accelerated decrease in its cash and cash equivalents in the first quarter of the fiscal year ending December 31, 2025 and a reversal of that trend is expected in the remaining two quarters of the fiscal year ending December 31, 2025. A total of an additional $50.0 million is available at our option under the Perceptive Term Loan Facility should we attain specified revenue levels and satisfy other conditions.
Previous wording
Since becoming a public company, our primary sources of capital have been cash inflows from product sales, sales of our common stock and, to a lesser extent, borrowings under our Amended Loan Agreement.
Current wording
Since becoming a public company, our primary sources of capital have been cash inflows from product sales, sales of our common stock and, to a lesser extent, borrowings under term loan facilities.
Previous wording
On November 17, 2023, we filed the 2023 Shelf Registration Statement covering the offering, from time to time, of up to $150.0 million shares of our common stock, preferred stock, debt securities, warrants and units, all of which remain available for sale at March 31, 2025.
Current wording
On November 17, 2023, we filed the 2023 Shelf Registration Statement covering the offering, from time to time, of up to $150.0 million shares of our common stock, preferred stock, debt securities, warrants and units, of which $129.8 million remains available for sale at June 30, 2025.
Previous wording
We expect that our near- and longer-term liquidity requirements will continue to consist of working capital and general corporate expenses associated with the growth of our business, including payments we may be required to make upon the achievement of previously negotiated milestones associated with intellectual property we have licensed, payments related to non-cancelable purchase obligations for reagents, payments related to our principal and interest under our long term borrowing arrangements, payments for operating leases related to our office and laboratory space in Vista, CA and our office space in Carlsbad, CA and payments for finance leases related to our laboratory equipment (see Note 4, Borrowings, and Note 5, Commitments and Contingencies, to our unaudited financial statements included in this Quarterly Report). Based on our current business plan, we believe that our existing cash and cash equivalents and our anticipated future revenue, will be sufficient to meet our anticipated cash requirements for at least the next 12 months from the date of this filing.
Current wording
We expect that our near- and longer-term liquidity requirements will continue to consist of working capital and general corporate expenses associated with the growth of our business, including payments we may be required to make upon the achievement of previously negotiated milestones associated with intellectual property we have licensed, payments related to non-cancelable purchase obligations for reagents, payments related to our principal and interest under our long term borrowing arrangements, payments for operating leases related to our office and laboratory space in Vista, CA and our office space in Carlsbad, CA and payments for operating and finance leases related to our laboratory equipment (see Note 4, Borrowings, and Note 5, Commitments and Contingencies, to our unaudited financial statements included in this Quarterly Report). Based on our current business plan, we believe that our existing cash and cash equivalents and our anticipated future revenue, will be sufficient to meet our anticipated cash requirements for at least the next 12 months from the date of this filing.
Previous wording
Until such time, if ever, as we can generate revenue to support our costs structure, we expect to finance our operations as needed through equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements. The Perceptive Term Loan Facility involves, and any additional debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. If additional funding is required or desired, there can be no assurance that additional funds will be available to us on acceptable terms on a timely basis, if at all, or that we will generate sufficient cash from operations to adequately fund our operating needs or achieve or sustain profitability. If we are unable to raise additional capital or generate sufficient cash from operations to adequately fund our operations, we will need to delay, reduce or eliminate some or all of our research and development programs, product portfolio expansion plans or commercialization efforts. Doing so will likely have an unfavorable effect on our ability to execute on our business plan and could have a negative impact on our commercial and strategic relationships. If we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, financial condition, and results of operations could be adversely affected.
Current wording
Until such time, if ever, as we can generate revenue to support our costs structure, we may be required to finance our operations as needed through equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements. The Perceptive Term Loan Facility involves, and any additional debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. If additional funding is required or desired, there can be no assurance that additional funds will be available to us on acceptable terms on a timely basis, if at all, or that we will generate sufficient cash from operations to adequately fund our operating needs or achieve or sustain profitability. If we are unable to raise additional capital or generate sufficient cash from operations to adequately fund our operations, we will need to delay, reduce or eliminate some or all of our research and development programs, product portfolio expansion plans or commercialization efforts. Doing so will likely have an unfavorable effect on our ability to execute on our business plan and could have a negative impact on our commercial and strategic relationships. If we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, financial condition, and results of operations could be adversely affected.
Previous wording
Net cash used in operating activities for the three months ended March 31, 2025 was $10.7 million, primarily resulting from (i) our net loss of $3.8 million adjusted for non-cash charges of $1.2 million primarily related to stock-based compensation, depreciation, amortization, non-cash lease expense and non-cash interest and (ii) changes in our net operating assets of $8.1 million primarily related to net increases in accounts receivable and net decreases in accrued and other current liabilities and operating lease liabilities, partially offset by net increases in accounts payable.
Current wording
Net cash used in operating activities for the six months ended June 30, 2025 was $13.6 million, primarily resulting from (i) our net loss of $8.2 million adjusted for non-cash charges of $3.9 million primarily related to stock-based compensation, depreciation, amortization, change in fair value of warrant liability, loss on extinguishment of debt, bad debt expense, non-cash lease expense and non-cash interest and (ii) changes in our net operating assets of $9.2 million primarily related to net increases in accounts receivable and net decreases in accrued and other current liabilities and accounts payable, partially offset by net decreases in prepaid expenses and other current assets. Net cash used in operating activities for the three months ended June 30, 2025 was $2.9 million, which is a $7.8 million decrease compared to the first quarter of 2025.
Previous wording
Net cash used in operating activities for the three months ended March 31, 2024 was $9.0 million, primarily resulting from (i) our net loss of $3.4 million adjusted for non-cash charges of $1.4 million primarily related to stock-based compensation, depreciation, amortization, non-cash lease expense and non-cash interest and (ii) changes in our net operating assets of $7.0 million primarily related to net increases in accounts receivable and net decreases in accounts payable and accrued and other current liabilities, partially offset by net decreases in prepaid expenses and other current assets. The increase in accounts receivable was primarily due to delays in claim submission as part of our revenue cycle management initiatives.
Current wording
Net cash used in operating activities for the six months ended June 30, 2024 was $11.5 million, primarily resulting from (i) our net loss of $6.3 million adjusted for non-cash charges of $2.8 million primarily related to stock-based compensation, depreciation, amortization and non-cash lease expense and (ii) changes in our net operating assets of $7.9 million primarily related to net increases in accounts receivable and net decreases in accounts payable, operating lease liabilities and accrued and other current liabilities, partially offset by net decreases in prepaid expenses. The increase in accounts receivable was primarily due to delays in claim submission as part of our revenue cycle management initiatives.
Previous wording
Net cash used in investing activities for the three months ended March 31, 2025 and 2024 was $0.1 million, due to net purchases of property and equipment.
Current wording
Net cash used in investing activities for the six months ended June 30, 2025 and 2024 was $0.3 million and $0.2 million, respectively, due to net purchases of property and equipment.
Previous wording
Net cash used in financing activities for the three months ended March 31, 2024 was $0.1 million, primarily resulting from payments on finance lease and notes payable obligations, partially offset by proceeds from purchases under the Company's 2019 ESPP.
Current wording
Net cash used in financing activities for the six months ended June 30, 2024 was $0.3 million, primarily resulting from payments on finance lease and notes payable obligations, partially offset by proceeds from purchases under the Company's ESPP.
Previous wording
For a description of our critical accounting estimates, please see the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates" contained in our 2024 Annual Report. There have been no significant changes in our critical accounting policies and estimates during the three months ended March 31, 2025 as compared to the critical accounting policies and estimates disclosed in the Management’s Discussion and Analysis of Financial Condition and Operations included in our 2024 Annual Report.
Current wording
For a description of our critical accounting estimates, please see the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates" contained in our 2024 Annual Report. There have been no significant changes in our critical accounting policies and estimates during the six months ended June 30, 2025 as compared to the critical accounting policies and estimates disclosed in the Management’s Discussion and Analysis of Financial Condition and Operations included in our 2024 Annual Report.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
We submitted a formal request to Noridian for coverage of our AVISE® Lupus test under the new PLA Code and on September 27, 2022, we received notice that Noridian deemed our application for a Local Coverage Determination (LCD) to be valid, but our application is still pending. Ultimately receiving a favorable LCD is uncertain and may be time-consuming, resource intensive and require multiple quarterly or annual periods to complete and is subject to risks and uncertainties described in the section entitled "Risk Factors" in our 2024 Annual Report and this Quarterly Report. Further, on January 20, 2025, President Trump issued an Executive Order entitled Regulatory Freeze Pending Review, which halted all federal level regulatory rules and guidance not yet in effect. Because the Executive Order extends to LCDs not yet in effect, it leaves the fate and timing of our LCD application uncertain.
Current report — wording carried from elsewhere
Cost of revenue increased $0.8 million, or 13.3%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. This increase was primarily due to increases of $0.8 million in materials and supplies related to our new biomarkers and $0.1 million in employee-related expenses (including salaries, benefits and stock-based compensation) related to increased headcount, partially offset by a decrease of $0.1 million in shipping and handling costs.
Current report — wording carried from elsewhere
Comparison of the Six Months Ended June 30, 2025 and 2024 (in thousands):
Current report — wording carried from elsewhere
Revenue increased $3.2 million, or 10.9%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to ASP expansion driven primarily by our new biomarkers, and, to a lesser extent, an increase in test volume. The number of AVISE® CTD tests delivered in the six months ended June 30, 2025 increased by approximately 5% compared to the same period in 2024.
Current report — wording carried from elsewhere
We expect that our selling, general and administrative expenses may increase moderately in absolute dollars in the near-term as we expand our sales force and invest in infrastructure to support expected volume and revenue growth, but should decrease year-over-year as a percentage of revenue.
Current report — wording carried from elsewhere
We expect that our research and development expenses may increase moderately in absolute dollars in the near-term as we execute on additional pipeline initiatives, but should remain flat or moderately decrease year-over-year as a percentage of revenue.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Net cash used in financing activities for the three months ended March 31, 2025 was $0.1 million, primarily resulting from payments on finance lease and notes payable obligations, partially offset by proceeds from ESPP purchases.