Exagen Inc. Q1 FY2023 Earnings Call

Good day, ladies and gentlemen, and welcome to the Exagen Q1 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ryan Douglas of Investor Relations. Please go ahead.

Good afternoon and thank you for joining us today. Earlier today, Exagen Inc. released financial results for the quarter ended March 31st, 2023. The release is currently available on the company's website at www.exagen.com. John Aballi, President and Chief Executive Officer; and Kamal Adawi, Chief Financial Officer, will host this afternoon's call. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including, without limitation, statements regarding our business strategy and future financial and operating performance, including guidance for the quarter ended June 30th, 2023, potential profitability, our current and future product offerings, and reimbursement and coverage are based upon current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with the business, please see our filings with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2022 and subsequent filings. The information provided in this conference call speaks only to the live broadcast today, May 15th, 2023. Exagen disclaims any intention or obligation, except as required by law, to update or revise any information, financial projections or other forward-looking statements, whether because of new information, future events, or otherwise. I will now turn the call over to John Aballi, President and CEO of Exagen.

Thanks, Ryan, and thank you to everyone joining the call. Today, I will discuss our first quarter results and give updates on our strategic initiatives, path to profitability, and research pipeline. I'll then hand it over to Kamal, our CFO, for details on our financial results. As always, we appreciate your continued support of Exagen. When I arrived at Exagen, we put together a plan to reduce expenses across the organization and grow the business to profitability. Now that I've been leading Exagen for seven months, it's great to see that the changes we've implemented are starting to have a meaningful impact on the business and are reflected in our commercial results and reduced operating expenses. For the first quarter, I'm happy to report that total revenue was $11.2 million, driven by a record volume of 37,300 AVISE CTD tests. Volume increased 10% over last quarter and 21% year-over-year. I'm excited about the momentum our commercial team has created as they remain focused and highly motivated throughout the implementation of these changes. My strategy has been to orient the company on a path to profitability and the results this quarter give us our first opportunity to convey the impact of our initiatives. For the first quarter, SG&A and R&D expenses decreased to $13 million, which is an improvement from an average of $15.5 million per quarter throughout 2022. The decrease was primarily due to the reduction in force that took place in December. The assumptions we made in planning the reduction have proven to be on target. And we now believe that we have the right people in place and are operating at the optimal size. Kamal will elaborate on the financial performance, but in short, I'm very pleased with how we have started the year. Increasing ASP through changes to our operations and revenue cycle management is a key component of our strategy. Trailing 12-month ASP through Q1 was $279, which we anticipate improving in nine to 12 months as our efforts begin to materialize. Keeping in mind that first quarter ASP numbers include the effects from deductible resets and final Medicare pricing on the clinical laboratory fee schedule, we feel ASP trended in line with expectations for the first quarter. As we've consistently detailed, we aim to improve ASP through multiple initiatives, both in the short and long term. These initiatives include steps taken recently to improve our revenue cycle operations by increasing our required documentation at the time of test order and revamping our appeals process. Additionally, we've been aggressive with appeals, filing more than we did for the entirety of 2022. As a reminder, the appeals process can take upwards of a year depending on what level of appeal is reached, and we should see the results reflected in higher ASPs. Over the long term, we believe this approach will be an effective way to educate insurance companies regarding the value of AVISE CTD and expect these efforts to improve coverage with plans. As part of our initiative to improve revenue cycle management, we made a strategic decision to hold first quarter claims until the second quarter while we optimized our appeals process. This additional time enabled us to focus on process improvement without the pressure of triggering timely filing deadlines. As anticipated, this resulted in a temporary increase in our accounts receivable balance by $3.2 million and subsequently impacts the cash balance, the effects of which will diminish as the year progresses. We recently refinanced our term loan to better align with our strategic focus and to alleviate performance covenants that restricted our pursuit of profitability. In a tightening debt market, we had the opportunity to refinance from a position of strength to obtain terms we found advantageous. This benefits the company in multiple ways. The new loan provides flexibility in the performance covenants, it deleverages the organization and resets the interest-only period to three years, all of which allow us to focus on achieving profitability in the medium term. Additionally, our monthly payment is lower, and we were able to make a $10 million principal payment without penalty. There are a few other details Kamal will cover, but in general, we found this to be a very positive development, which better aligns with our strategy. Moving to R&D. After a thorough review, I've decided to end our RADR program, including associated clinical trials. While there remains a strong clinical need for a predictor of drug response in rheumatoid arthritis, and RADR has many promising aspects to meet this clinical need, we believe the commercialization hurdles are significant and therefore prohibitory given the current strategy of the organization. We continue to develop products for monitoring of disease activity in lupus, along with a predictor of drug response for lupus nephritis. Both efforts remain active, and we plan to give updates when we have meaningful outcomes from our development. We ended the first quarter with $1.1 million in R&D spend, which was light due to the timing of pipeline projects and trials. And for the full year, we anticipate our R&D spend to be around $6 million. Lastly, I really value in-person connections with our customers, and I'd like to share an opportunity I had to spend a day in the field with a top rheumatologist in Los Angeles, who sees in excess of 20 patients per day. These types of opportunities are incredibly rewarding. As I was able to experience firsthand how our test is used in clinical practice and the positive impact it has on patient care. First and foremost, what was really insightful and motivating was seeing the clinician serving patients. And it's very clear that clinicians in the subspecialty have a unique bond with the patients in their practice given the types of challenges they face in their journey to achieve a correct diagnosis. The physician I shadowed really connected with their patients on a personal level, and this was the motivating part to be welcomed into the clinician-patient interaction and observe firsthand how our test was being positioned and utilized as the definitive solution to answering a patient's prior ENA positive finding. The office environment is fast-paced and clinicians trust Exagen and the AVISE brand to deliver superior quality and service in helping them solve the differential diagnosis of their referred patients. This was the first of several visits, I hope to have in the coming year. And as I saw firsthand, in combination with the record AVISE CTD volume we demonstrated this quarter, clinicians find the AVISE platform extremely helpful in their everyday clinical practice as the brand they can trust. Overall, I'm extremely proud of the progress made by the Exagen team this past quarter. Our strategy has been highly targeted, as we've gone through every aspect of the organization, and it's exciting to see the progress reflected in the quarterly results. We still have a significant amount of work ahead of us regarding the reimbursement of AVISE, which we're working on, and we'll continue to provide regular updates. But so far, what we have set out to accomplish is starting to take shape. I'll now turn the call over to Kamal.

Thank you, John, and good afternoon, everyone. Total revenues in the first quarter of 2023 were $11.2 million, compared with $10.4 million in the first quarter of 2022. Total revenues were driven primarily by testing volumes for AVISE CTD, which, as John mentioned, was a record 37,300 tests delivered. Other testing revenue was $1.4 million in the first quarter of 2023, compared with $1.7 million in the first quarter of 2022. The trailing 12-month ASP was $279 per test compared to $285 per test in Q4 of 2022. Cost of revenues was $5.9 million in Q1, resulting in a total gross margin of 47%, compared to 44% in the first quarter of 2022. The increase in gross margin percentage was primarily due to an increase in AVISE CTD volume, which resulted in a favorable impact of absorption of costs of goods sold and lower royalty expense due to holding claims. Operating expenses were $18.9 million in the first quarter of 2023, compared with $20.1 million in the first quarter of 2022, primarily driven by a decrease in employee-related expenses due to a reduction in force in early December 2022. For the first quarter of 2023, our net loss was $7.7 million compared to a net loss of $10.3 million for the first quarter of 2022. Looking at our balance sheet, as John mentioned, we refinanced our debt on April 28. The refinance was through our existing lender with whom we have a very strong relationship and have been working for six years. After the prepayment, the balance of the loan is $18 million. As disclosed in the 8-K, the terms of the agreement include a floating interest rate, which is the greater of 10% or prime plus 2%, resetting the interest-only period to three years, the implementation of a new management plan, and improved covenants. Cash and cash equivalents as of March 31, 2023 were approximately $52.2 million. As John mentioned, with our revenue cycle management strategy, the claims held from Q1 until Q2 contributed to the AR balance increasing by $3.2 million, which is offset by a lower cash balance. Our cash burn of $10 million includes the $3.2 million of AR that was a result of holding claims. If the AR increase was excluded, the cash burn would have been around $7 million. While there is always risk to the execution of our strategy, we expect cash burn to improve throughout this year. Post-refinancing, our debt and cost-cutting measures, we believe we are well capitalized to continue executing on our strategy. Given the breadth of the changes that are in progress, we remain prudent in our approach to guidance. And for Q2, we are projecting revenue in the range of $10.7 million to $11.2 million. For year-over-year comparisons, please remember that in 2022, payments for Medicare were delayed from Q2 to Q3. Finally, as these strategies materialize, our revenue growth will be a composite of both volume and ASP improvements. We will now open the call for questions.

Thank you very much, sir. Ladies and gentlemen, we will now be conducting a question-and-answer session. Our first question is from Mark Massaro of BTIG. Please go ahead.

Hey guys. This is Vivian on for Mark. Thanks for taking the questions. I'll be back from the strong print. I guess, on the guide, it looks like the mid-point of the Q2 guide is below Q1 levels. So I guess, Kamal, you mentioned towards the end of your remarks, but what are the assumptions on the balance between ASP and volume? And I guess, just any conservatism factored in there? Thanks.

Hi, Vivian, thanks for the question. So in terms of the assumptions being made, obviously, it's a composite of ASP and volume. Now volume exceeded expectations in Q1, we came off a reduction in force on December 5, where we reduced the territories from 63 to 40. So I was very pleased to see the volume come in where it did for Q1. As we stated in the prepared remarks, the ASP could take time for it to grow to the levels that we want to see it grow to. We've signaled nine to 12 months before we see ASP at the levels that we wanted to contribute to the growth.

Okay. Perfect. And then maybe another one for you, Kamal. In terms of OpEx, which came in, I guess, a little above our thinking. Can you help us think about any one-timers that may have been in there from a workforce reduction? And maybe you could also help us think about how to quantify the savings that you might expect to see with the discontinuation of RADR? Thanks.

Sure. So the one-time expenses were captured in Q4, 2022 that was the severance payments and the goodwill impairment of $5.5 million. So Q1 was a very clean quarter. That's why we felt comfortable in saying that if you look at the average OpEx for 2022 by quarter, it comes in at around $15.5 million. And then Q1 of 2023 came in at $13 million. So we look at that as about a $2.5 million savings, annualized $10 million savings on the year. So that's what I'm thinking about the recurring expenses. Now to the second part of your question with RADR, we have a lot of RADR expenses in 2022. That's why you can look at the year-over-year savings and assume RADR’s in there. But John did guide to R&D expenses, full year 2023 will be around $6 million.

Okay. Perfect. And maybe if I can just squeeze in one more. You spoke about holding some Q1 claims until Q2. So I guess on that front, I was wondering if there were any material revenue collections from prior periods in Q1. And that's it for me. Thanks.

Sure. So in terms of impact on revenue, there is no impact from holding claims. But where you do see an impact is an increase in our AR, which ultimately is offset with lower cash. So the way I'm looking at this is AR is about $3.2 million higher quarter-over-quarter from Q4 to Q1, and that negatively impacted cash, which will be offset as we start to bill and collect on that. So it's just a temporary lower cash that will be offset during the year.

Okay, awesome. Thanks for taking the questions.

Thank you. Next questions from Kyle Mikson of Canaccord. Please go ahead.

Hey, guys. Thanks for taking the questions. Congrats on the quarter. Just starting with the second quarter, it is like a little bit of a step down. And it wasn't quite clear, you just said, Kamal about the volume and ASP dynamic. I feel like ASP, we shouldn't really expect that to really bump up too much quarter-to-quarter. But on the volume front, I mean, you just put up the most volume in like two years or so, like, it's just great numbers. Would you mind just talking about that a little bit, because if you back out the payment how we shifted from 2Q to 3Q last year, you get like minus 4% decline year-over-year in the second quarter of 2023. So maybe just walk through some of these factors and how you're thinking about it, Kamal? Thanks.

Sure. So, obviously, the driver there is going to be ASP. And let me walk you through the quarter-over-quarter ASP, because it came in, in Q1 exactly where our internal models had. So there is no surprise internally for Q1 ASP, and the drivers there are going to be Medicare moving to the CLFS schedule or pricing. So the PLA code starting in April 1, 2022, was around 200 higher than the CLFS pricing, which is still significantly higher than what it was prior to having the PLA code in place. And then the second aspect of the ASP from Q4 to Q1 is deductibles resetting. And then keep in mind in Q4 2022, if you were looking at it quarter-over-quarter, there were some year-end adjustments that were very favorable to the Q4 2022 ASP.

Great. Thanks Kamal. And the volume, I mean, it looks like a record, just by the way, I think I mentioned it two years. So that's so all good. And I guess that makes sense. Maybe, John, on the ASP, I mean, I'm coming up with 263 for the quarter for AVISE, maybe just walk through why that would have declined quarter-to-quarter like you kind of mentioned some factors, but I think it would be helpful to describe why there are these moving thesis and what contributed to the biggest headwind or bottleneck for average revenue per test?

Certainly. And thanks for joining the call. Good afternoon. From an ASP perspective, some of the headwinds, as Kamal mentioned, are in Q1, we have a deductible reset, which is consistent with most of the industry occurs annually and then smooths out throughout the rest of the year. We also had our Medicare pricing on the clinical laboratory fee schedule, as we mentioned. Headwinds or tailwinds, throughout the year, will be gains in medical policy from the different insurance plans, and that's something we're actively focused on. We've set that as a top priority with our market access team. We've adjusted the compensation structure for all of them to focus on that. And we do think that our appeals efforts will really help in that respect. I think that will be a main driver for us in terms of progress for ASP, over the course of the next, call it, nine to 12 months is really what our revenue cycle optimization yields. I think that, from our perspective, we're trying to increase the quantity of appeals and then also the quality. And we've hired technical writers, who I've worked with in the past that digest all of our clinical information, all of our dossiers, along with the studies which we published on. And really help us draft a concise message, which articulates to the payers, the value of the test. That coupled with high-frequency of appeals, and taking those to higher levels of adjudication, external type appeal, for example, I think, will be primary drivers for the ASP over time. And again, we think maybe the back half of this year into 2024 will be the appropriate timing for starting to see some of those impacts. We do agree with you on the volume side. It was a fantastic quarter. It really moves past any of our internal models. And that's, to be honest with you, we're still identifying some of the business patterns that are developing with some of the changes that we've implemented and that is the primary driver behind our guidance for Q2. We're just trying to be prudent in maintaining a conservative approach there and seeing when exactly some of these effects, which we anticipate are likely to come into play.

Thank you, John. That was informative. Now, regarding the areas the company can manage, I want to discuss the termination of the RADR program. It was once considered a valuable asset, but from the last earnings call, it seemed to be downplayed. I'm curious if the decision was based on the program's return on investment or if it involved a lower gross margin, aligning with your future strategy. Additionally, the instrumentation for that program was quite advanced compared to some of the AVISE tests. How is the shift away from lower-margin tests impacting margins so far, if at all?

Certainly. I'll address your first question regarding RADR. When evaluated against our development criteria, it meets many key requirements. We've aimed to be transparent about the criteria used for internal assessments. Notably, it addresses a significant need in the market and involves proprietary technology licensed from Queen Mary, with a strong likelihood of utility being established. This is why it took me some time to fully assess its potential. I enlisted external consultants I've worked with before to gain an objective perspective, given the strong emotions tied to this project. I had some uncertainties, particularly regarding Medicare and the process for obtaining coverage, which I can elaborate on if needed. On the surface, there are lengthy timelines associated with navigating the MolDX Program for this product, and uncertainties regarding its feasibility remain. Additionally, it relies heavily on a procedure that isn't widely adopted in the industry, which presents a significant challenge. However, after reviewing everything related to this opportunity, I concluded that bringing this product to market and the associated capital requirements may take longer than we initially anticipated, which definitely affects the ROI. Regarding gross margin and how other tests have influenced it, we've concentrated on AVISE CTD, which is reflected in the recent quarter’s performance in terms of volume, and we are pleased with the results. Revenue from our other tests decreased slightly in Q1 due to this focus, but the impact of discontinuing some of those tests has been relatively minor to the overall narrative. Generally, we are quite enthusiastic about the performance of the AVISE CTD product this past quarter. If we can continue to effectively implement our ASP initiatives, we hope to see further positive effects.

Okay. That makes sense. Thanks, John for the detail and thanks all of you. Thanks, guys.

Thank you. The next question is from Andrew Brackmann of William Blair. Please go ahead.

This is Dustin on for Andrew. Thanks for taking our questions. First, I just wanted to get an update on the Medicare LCD, you guys submitted last year, confirming you guys are still getting paid at a crosswalk rate? And then secondarily, just a general update on the PLA code related disruptions you're seeing with the private payers. And those new contracts that you might be getting, is the pricing coming in at where you guys would want that to be medium to longer-term?

Certainly. Thanks for joining the call, Dustin. Briefly, regarding the LCD, there are no material changes to report at this time. We have submitted a request for an LCD for AVISE Lupus, and Noridian has acknowledged that the submission is complete and pending. Until we’re on a meeting agenda, there won’t be much to report, and the timelines are uncertain. We are still in the queue, and unless Noridian takes any significant action, we will remain pending. Everything within our control related to the LCD request has been completed. As for your second question about payments for Medicare, we have claims with 2023 service data under the new pricing of $840 for our current PLA code, which Medicare has paid, and there are no changes to report regarding Q4. As mentioned in our prepared remarks, we are holding claims for Q1 as we revise our appeals process, ensuring that everything is in order before triggering any timelines dictated by the payers. We have treated all claims similarly, and for 2023 service data, nothing new to report; they are still being covered and paid by Medicare at the appropriate rate. Your next question involved PLA code disruptions with commercial payers, which we are still observing. We haven't addressed these individually, and there are no material write-downs reported this quarter. Therefore, there isn't much new to share on that front. Looking at the trailing 12-month ASP, we have seen a decrease of about $6 in Q1, likely due to deductibles and revised Medicare pricing, but again, no new developments to report. We have been focusing on trends in ASP over time, and it's important to note whether contracts perform over time and how they are reflected in your ASP. If evaluating a business in this area, you would want to see significant changes in ASP, which is where we've directed attention. We anticipate changes in around nine to twelve months, giving us a full cycle of appealing with the Q1 claim data, which will surface toward the end of the year. However, I don’t have any significant updates on either front to directly answer your question.

Yes, that was great. Thank you, John. Kind of a related question. In those Medicare, medical policy decisions that are being made, are a lot expected to happen in the second half of this year? Or should that be more spread out over a 12-month basis?

Certainly, we expect to get quite a bit of feedback in the second half of the year. So the first half of the year, I think, is littered with quite a few submission dates, although there are policy determinations occurring in the first half of the year. But I would say the majority are centered in the second half of the year, Q3, Q4, where we expect to get feedback on our existing body of data, including our CAPSTONE study. And we believe we have a strong data package. But as I've tried to communicate to investors and whatnot, we'll know for sure after we get formal feedback from many of these policies. So the second half of the year, you're correct.

Okay. Great. And then just one more on the pipeline. You briefly mentioned the two other projects you're working on; if you could go into more detail on those two, that would be great. Thank you.

Certainly, we are currently working on two programs: one that targets Lupus Nephritis and another that focuses on a disease activity score for monitoring lupus patients. We see a significant clinical need for both. Rheumatologists treating lupus patients would likely agree that both products address urgent requirements in the field. We believe we have a path to proprietary technology for each case, as well as clear clinical utility and a strategy for Medicare and commercial reimbursement. Both products meet our criteria and are sold through our existing channels, which is an additional advantage. I prefer not to provide extensive details on our pipeline products since I don’t expect any revenue in the next 12 to 24 months. This represents a change from our previous communication strategy. I want to avoid overpromising, so for the near to medium future, I’ll keep you informed about our ongoing programs and will provide updates as necessary.

Great. Thanks for taking our question.

Thank you. The next question is from Dan Brennan of TD Cowen. Please go ahead.

Thank you for the question. To start, could you tell us what impact withholding claims had in the first quarter and how that will affect the second quarter and the rest of 2023?

Certainly. Thanks for joining the call, Dan. In terms of impact as we see it. So as we mentioned, we saw accounts receivable increase by $3.2 million, and we had a subsequent impact to cash as a consequence of that. This was all planned. And just to reiterate at a high level, the reason why we are doing this is so that gave us the freedom to adjust our billing and revenue cycle processes ensure that we have basically all of our ducks in a row for our appeals process before filing claims so that in the event we do get denials, we don't start the timely filing a clock for those denials, the response to those denials ahead of where we really want to be. So it's really from a strategic aspect, we have the cash that allows this type of flexibility. We feel it's in the best interest of the organization. So we expect the increased AR to reduce out and then subsequently show up in terms of an increased cash balance or a slower burn over the course of the year, but that's how this would rectify over the next nine months.

Great. Thanks for that. Can you remind us about our burn rate for this year and when you expect we might need to tap into the capital markets?

Thanks, Dan. Regarding the burn, we mentioned a figure of approximately $7 million due to the discussion about holding claims. If we exclude that, the burn for Q1 would have been nearly $7 million. We anticipate that in each quarter, we should see minor improvements in cash burn as we continue to increase our average selling price and manage expenses. Therefore, I believe that the $7 million burn for this quarter represents the highest point for the year.

And then in terms of impact relative to capital markets, the way we're thinking about it internally is we just came off a quarter where, as mentioned, volume is the highest volume we've ever had from a quarterly perspective relative to AVISE CTD. And from that, be it our internal models. And so from that perspective, really the timing and magnitude of the ASP impact here over the next 12 months is going to be highly material to win any sort of cash needs fall into place. We continue to look at market conditions and stay abreast of that. That's why we moved with some of the debt decisions we did more recently. But at this current time, we believe we have the focus, the flexibility to focus on AVISE CTD. That's what we're doing. And then depending on how some of these things fall into place, whether they're ahead of schedule or maybe a little bit behind, we'll have to see, but that will dictate timing.

Great. Thanks for that. And then you've talked about a couple of times how strong the volumes were in how many initiatives you've already put in place have kicked in faster than expected. Is there any reason why the kind of year-over-year volume growth you achieved in 1Q should continue in 2Q? Just help us think through, I think you had talked about it earlier in the call, you would have expected some of this benefit to be seen maybe in a few quarters, 2Q four quarters from now, but you're seeing some of it now. So is there any reason why it was a one-time pop and then it's going to revert back, or just kind of help us think through Q2 and the volume progression as we look out sequentially?

Certainly, that's a great question. From our perspective, we reduced more than one-third of our sales footprint in the US, and we anticipated that impact to be more pronounced in Q1. However, it turned out that we actually experienced substantial growth in Q1. Internally, we still expect some impact from reducing one-third of our sales force. We believe that the revised focus on AVISE CTD is the right strategy, and it's reflected in the numbers. However, until we see consistent growth over a couple of quarters, we think the hypothesis remains valid. Historically, the company has indicated that it takes about two quarters to observe a decline when a territory becomes vacant. I am new to this situation and am assessing how we can minimize the effects. When making such significant cuts at the end of Q4, I expected some impact in Q1, which is why we are considering Q2 in our guidance. We are trying to be conservative; given the magnitude of the changes we've made, there should be some impact in Q2, but we were surprised in Q1.

That's great. Regarding pricing, this is obviously a critical focus with many moving pieces. I'm still trying to fully understand it. However, looking ahead for the year, it seems that pricing is expected to increase sequentially. I recognize there are various factors at play and a range of potential outcomes as you proceed through the year with some of the initiatives. Could you provide any insight on how to approach the sequential timing, specifically when we might experience some of the more significant increases or any guidance on how that progression will unfold? Thank you.

Yes, again, a great follow-on. We're currently assessing that the changes we're implementing now, in the first quarter, should start showing effects in about 9 to 12 months. The process requires initial testing and filing a claim, and we believe there are opportunities in our appeals process. This appeals process takes a few cycles - typically two to three per claim - which means the whole process will take around 9 to 12 months, based on my experience. We expect to see these changes reflected in ASP by the fourth quarter, possibly in the first quarter of 2024. Overall, we anticipate a stable ASP with minor fluctuations, either positive or negative, over the next two or three quarters before we see the impact of our strategy in 9 to 12 months. Does that provide the clarity you were looking for?

Yes, that's great. Thank you very much. Appreciate it.

Great. We started 2023 off strong as a team and are seeing initial results from a plan we've put in motion. We've successfully reduced meaningful costs in the organization, driven record demand for AVISE CTD, and have reshaped our operations in a way which I believe will continue to improve the business going forward. We hope you find the clear articulation of our goals useful in measuring our progress and look forward to updating everyone on future calls. Thank you for your support of Exagen and I sincerely thank the Exagen team for their efforts this past quarter. Thanks for joining the call today.

Thanks very much, sir. Ladies and gentlemen, that then concludes today's conference. You may disconnect your lines at this time and thank you for your participation.