Exagen Inc. (NASDAQ:XGN) Q2 2023 Earnings Call Transcript

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Mark Massaro: Okay, great. And maybe one for Kamal. Kamal, if I strip out the nearly $2 million of one-time payments, you would have done around 12 million in Q2. You’re guiding to 10.25 at the midpoint in Q3. How much of that sequential decrease would you think is related to the reduction or the softening volumes in Q3 versus some of the collections from prior payments and/or other ASP dynamics?

Kamal Adawi: Yes. Thanks for your question, Mark. So our ASP, when you back out that approximately 2 million from prior period collections, is still increasing. We did see that improved collections from prior periods does have an impact on current quarter ASP. So we did have to adjust our accrual rate up for our test performed in Q2. That’s going to continue forward into Q3. So I do anticipate our ASP to continue that improvement, so it’s going to be higher than what we saw in Q1. So to answer your question, it’s primarily going to be driven from a softening in volume and not being driven by the ASPs since that has improved.

Mark Massaro: Yes. And just to confirm, I know Dan asked you in the prior question, sometimes, obviously, there’s summer seasonality in Q3. I know in prior years, there have been some quarters where volumes stepped down sequentially. But can you just maybe walk me through maybe how much of it is seasonality versus the reduction in force versus other factors?

John Aballi: Certainly, Mark. I’ll chime in here. In terms of seasonality, we had July 4 on a Tuesday, really ate away a good portion of the first week of July, and we’re basically one month in to Q3, right? So where we’re sitting at today is the quarter started off soft. It’s a mix between the holiday impact that we believe, but we’re also actually seeing in our customer base a decent number of vacations. I know I’ve seen this with some of the airline reporting as well, international travel is up, especially with some of our key positions. We’ve had them go on fairly extended international trips. We’ve conducted some of this research ourselves and surveyed some of our customers. From our standpoint, I have a lot of confidence that our team has executed the initial transition from a sales force restructuring standpoint very well.

And I think we are a leaner organization, but we’re delivering a very high level of service. And we’re able to serve our key customers extremely well. So I think — how much is related to the reduction in force? I don’t believe much. I believe the impact here is a mix of seasonality along with some of our transition on the billing policy side in pursuit of more profitable business. As I mentioned, you increase some of the patient cost sharing, you change some of the prices of your tests. And while we don’t believe it will impact the bulk of our business, it will impact a small amount. So that’s kind of how we think about it.

Mark Massaro: Okay. That’s it for me. Thanks for the questions.

John Aballi: Thanks.

Operator: Thank you. Our next questions come from the line of Andrew Brackmann with William Blair. Please proceed with your questions.

Dustin Scaringe: Hi, guys. This is Dustin on the line for Andrew. Maybe a little bit more about the sales productivity, which I know you’ve touched on in past questions, but maybe more so how should we expect that going forward? Is there really any impact that you still think might linger in the third and fourth quarters from a reduction in territory and people? And how exactly are you tracking those people maybe besides volume per rep?

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