Good day, ladies and gentlemen. 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. If anyone should require operator assistance during the conference, please press star and then zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ryan Douglas, Investor Relations. Please proceed. Good afternoon and thank you for joining us. 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 fact 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 30, 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 our 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 15, 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'll now turn the call over to John Aballi, President and CEO of Exagen. Thanks, Ryan, thank you to everyone for 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've remained focused and highly motivated throughout the implementation of these changes. My strategy has been to orientate the company on a path to profitability. The results in 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've 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 9 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 time of test order and revamping our appeals process. 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 de-leverages 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. 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 RADAR program, including associated clinical trials. While there remains a strong clinical need for a predictor of drug response in rheumatoid arthritis, and RADAR 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. 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 an 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. It's very clear that clinicians in this 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 her 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 ANA 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. 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 will continue to provide regular updates. 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 twelve-month ASP was $279 per test, compared to $285 per test in Q4 of 2022. Cost of revenue were $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% was primarily due to an increase in AVISE CTD volume, which resulted in favorable impact of absorption of COGS and lower royalty expense due to holding claims. OpEx 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, who we have a great relationship with and have been working with 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 risks 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. For Q2, we're projecting revenue in the range of $10.7 million-$11.2 million. For year-over-year comparisons, please remember that in 2022, payments from 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 the question and answer session. If you'd like to ask a question, please press star and then 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then 2 if you would like to remove a question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. 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. Congrats on the strong prints. I guess on the guide, it looks like the midpoint of the Q2 guide is below Q1 levels. I guess, Kamal, you mentioned towards the end of your remarks, but what are the assumptions on the balance between ASP and volumes and I guess just any conservatism factored in there? Thanks. Hi, Vivian. Thanks for the question. In terms of the assumptions being made, obviously it's a composite of ASP and volume. Volume exceeded expectations in Q1. We came off a reduction force on December fifth, where we reduced the territory from 63 to 40. I was very pleased to see the volume come in where it did for Q1. 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 9 to 12 months before we see ASP at the levels that we want it to contribute to the growth. Okay, perfect. 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? Maybe you could also help us think about how to quantify the savings that you might expect to see with the discontinuation of Radar? Thanks. Sure. The one-time expenses were captured in Q4 of 2022. That was the severance payments and the goodwill impairment of $5.5 million. 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 fifteen and a half million. Q1 of 2023 came in at $13 million. Look at that as about a two and a half million dollar saving, annualized $10 million savings on the year. That's how I'm thinking about the recurring expenses. Now, to the second part of your question with RADAR, we didn't have a lot of RADAR expenses in 2022. That's why you can't look at the year-over-year savings and assume RADAR is in there. John did guide to R&D expenses full year 2023 will be around $6 million. Okay, perfect. Maybe if I can just squeeze in one more. You spoke about holding some Q1 claims until Q2. I guess on that front, I was wondering if there were any material revenue collections from prior periods in Q1. That's it from me. Thanks. Sure. In terms of impact on revenue, there is no impact from holding claims. Where you do see an impact is an increase in our AR, which ultimately is offset with lower cash. The way I'm looking at this, as 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. It's just a temporary lower cash that will be offset during the year. Okay, awesome. Thanks for taking the questions. Thank you. The next question is 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. It wasn't quite clear what you just said, Kamal, about the kind of volume in ASP dynamics. I feel like ASP, you know, we shouldn't really expect that to really bump up too much quarter to quarter. On the volume front, I mean, you just put up the most volume in like 2 years or so. Like, it's just great numbers. Would you mind just talking about that a little bit? If you kind of back out the payment that was shifted from 2Q to 3Q last year, you get, like, minus 4% decline year-over-year in the second quarter of 2023. maybe, like, just walk through some of these factors and how you're thinking about it, Kamal. Thanks. Sure. Obviously the driver there is going to be ASP. Let me walk you through the quarter-over-quarter ASP because it came in in Q1 exactly where our internal models had it. There was no surprise internally for Q1 ASP. The drivers there are going to be Medicare moving to the CLFS schedule or pricing. 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. The second aspect of the ASP from Q4 to Q1 is deductibles resetting. Keep in mind, in Q4 of 2022, if you're looking at a quarter-over-quarter, there were some year-end adjustments that were very favorable to the Q4 2022 ASP. Great. Thanks, Kamal. The volume, I mean, it looks like a record, just by the way, I think I haven't mentioned in a few years. That's all good. I guess that makes sense. Maybe John, on the ASP, I mean, I'm coming up with, like, $263 for the quarter, like, for AVISE. Maybe just walk through why that was a decline quarter to quarter. Like, you kind of mentioned some factors, but I think it would be helpful to describe, you know, why there's these moving pieces and what kind of contributed to, like, the biggest kind of headwind or bottleneck for average revenue per test. Certainly. Thanks for joining, Kyle. Good afternoon. From an ASP perspective, some of the headwinds, as Kamal mentioned is, you know, in Q1 we have the deductible reset, which is consistent with most of the industry, occurs annually and then kind of 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. 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 9 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. 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've 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 level of adjudication, external type appeal, for example, I think will be primary drivers for the ASP over time. 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, really moved past any of our internal models. 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, you know, when exactly some of these effects, which we anticipate, are likely to come into play. All right. That was great, John. Thanks for that. just moving to the some of the things that the company can actually, you know, kind of control itself, and that's the termination of the RADAR program. That was kind of an attractive asset at one point, but I felt like on the last, you know, earnings call that it was sort of almost de-emphasized a bit. This makes sense, I guess. I'm just curious, though, if that was about the ROI of that program, or was that one of these tests that had, like, a lower gross margin, and that's kind of consistent with, like, your strategy going forward? Yeah, I mean, just on the gross margin note, I know, like, the instrumentation for that was kind of sophisticated relative to, like, maybe some of the AVISE tests. Just curious about that. Just overall, I mean, how is this, you know, discontinuing lower margin test, you know, strategy kind of affecting margins thus far, if at all? Certainly. I'll try to unpack your first question, and you just guide me in terms of if I'm hitting also on the second portion. As it relates to RADAR, you know, if you evaluate this against this product, this development product against the development criteria we put in place, it checks a lot of boxes. We've been trying to be as clear as we can as to what criteria we're evaluating against internally. Just, you know, 2 notes, it certainly hits a top need within the space. It's proprietary technology that we had licensed out of Queen Mary. The utility was very likely to be proven out. I think that it had some very attractive qualities, and that's really, to be honest with you, why it took some time on my side to evaluate it to its full potential. I did end up hiring, actually, some external consultants that I've worked with in the past to come in, and I just... There was a lot of internal emotion tied up in this project, and I wanted to evaluate it more objectively. From my perspective, there were some uncertainties there, certainly around Medicare and ultimately the path to obtaining coverage. I can go into that in more detail if needed. I think, on the surface, you know, there's a long line, significant timelines associated with getting through the MolDX program and this product. There remains some uncertainties with that, the ability to do that. It was also highly dependent on a procedure which is not in widespread use across the industry, and I thought that that hurdle was substantial. Nevertheless, I mean, when I take a look at everything that was on the table for development of this opportunity, I just came to a different conclusion as to how realistic it is to bring this to market and the capital requirements needed to do so. I felt like the timelines were likely much more significant than we had originally planned for. As you mentioned, that certainly impacts the ROI. The second part around gross margin and directly how some of the other testing is impacting that and discontinuation of some of that other testing, we've really tried to focus on AVISE CTD. I think you see that reflected in the performance this past quarter with volume. We really are excited about the results that that's generated. Our other testing revenue has come down a little bit in Q1. I think that that's just a factor of our focus on AVISE CTD. Some of the discontinuation, as we said, would turn out to be relatively immaterial to the entire story. I think you're seeing that in general. But again, very excited about how the AVISE CTD product has performed here over the last quarter. If we can continue to execute on our ASP efforts, I think hopefully we'll start to see some of those effects as well. Okay, that makes sense. Thanks, John, for the detail, and thanks, Kamal, too. Thanks, guys. Thank you. The next question is from Andrew Brackman of William Blair. Please go ahead. Hey, guys. This is Dustin on for Andrew. Thanks for taking our questions. First, I just want to get an update on the Medicare LCD you guys submitted last year, confirming you guys are still getting paid at that crosswalk rate. Then secondarily, just a general update on the PO-PLA code related disruptions you're seeing with 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, an update on the LCD. No material changes to report at this point in time. Just to recap, we have submitted a request for an LCD for AVISE Lupus. That submission has been acknowledged by Noridian, who's our local MAC, that it's complete and pending. Until we end up on a meeting agenda, there won't be much to report, and the timelines there are fuzzy at best. We remain in the queue, and until there's something material that Noridian does, we'll continue to remain pending in that queue. But everything that is in our control has been completed relating to the LCD request. Your second part of your question was relating to payments for Medicare. We have claims with 2023 date of service under the new pricing, $840 for our current PLA code, which have been paid by Medicare, and no changes to report there relative to Q4. As we mentioned in the prepared remarks, we have held claims here for Q1 as we revised our appeals process, and so that's part of that as well. We just wanna make sure that we have everything buttoned up before potentially triggering any sort of timelines that are dictated by the payers. We treated all claims similarly there. As it relates to 2023 date of service, nothing new to report and still getting covered and paid by Medicare at the appropriate rate. I think the next part of your question dealt with PLA code disruptions with commercial payers. We continue to see those. We haven't carved those out individually. There's no material write-downs, as you see here in the quarter. Not a whole lot new to report in that in that context. If you do take a look at the trailing 12-month ASP, we're down about $6 here in Q1. We think that's mostly a factor of deductibles along with the revised Medicare pricing. Nothing new to report there. We've tried to drive attention towards trends in ASP over time. I think, you know, we can report on any sort of coverage changes or wins in a given quarter, along with any contracting wins. I think the real thing that matters is do those contracts perform over time and are they reflected in your ASP? I think, you know, if I'm evaluating an organization or a business in this area, I think you would wanna see material changes in the ASP, and that's where we've tried to direct folks as well. I think continuing to monitor that, which we've articulated, we expect to see changes here somewhere 9 to 12 months, gives us a full cycle of appealing with a claimed date of service of Q1. Sometimes towards the end of the year, I think you'll end up seeing some of those changes, but nothing significant to report on either front to directly answer your question. Yeah, 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. 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. 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. 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. Second half of the year, you're correct. Okay, great. 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. In terms of our pipeline right now, we are actively engaged in two programs, one focused in lupus nephritis, the other focused in a disease activity score for monitoring of lupus patients. We believe both are high clinical needs within the space. If you were to talk to rheumatologists who are treating lupus patients, I think it would be easily validated that either product fits a strong clinical need. We believe we have a pathway to proprietary technology in both cases, and we believe there's clear clinical utility along with a proven approach or pathway for us for Medicare and subsequent commercial reimbursement. In terms of checking the boxes for what we're looking for, both of those products exist. We'd sell them through our existing channel. Again, another positive there. I hesitate to go into significant detail on our pipeline products when I don't foresee revenue in the next 12 to 24 months. I know that that's a change from how the company's handled this previously, but I don't want to commit to something and then have to back off it, if you will, at some point in time. For the near, call it near to medium future, you know, we'll continue to develop, I'll report if we file IP or we have some major determination to update on. From this perspective, until we have line of sight to actual revenue within the organization, I'll keep you posted on what programs are ongoing, and then we'll update from there. Great. Thanks for taking my questions. Certainly. Thank you. The next question is from Dan Brennan of TD Cowen. Please go ahead. Great. Thank you. Thanks for taking the questions. Maybe a couple just starting off on the withholding claims in 1 Q. Just what kind of impact did that have and how will that flow through into Q2 and the rest of 2023? Certainly. Thanks for joining the call, Dan. For sure. In terms of impact, as we see it, 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. Just to reiterate at a high level, the reason why we are doing this is so that it 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 clock for those denials, the response to those denials ahead of where we really wanna be. It's really from a strategic aspect, we have the cash that allows us this type of flexibility. We feel it's in the best interest of the organization. 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. That's how this would rectify over the next nine months. Great. Thanks for that. Just for the year, just remind us how we think about the burn for this year and in terms of ultimately tapping the capital markets, like when would you anticipate doing that or the need to do that? Yeah, thanks, Dan. In regards to the burn, you know, we gave that number of around $7 million because of the what we just talked about, withholding claims, that if you back that out, then the burn in Q1 would have been close to $7 million. The way we're looking at this is in each quarter, we should be seeing, you know, relatively, small improvements to the cash burn quarter after quarter as we continue to see our ASP increase over time and control expenses. I think that $7 million number for burn in this quarter is your high point for the year. Then in terms of impact relative to capital markets, the way we're thinking about it internally is, you know, 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. From that, you know, it beat our internal models. So from that perspective, really the timing and magnitude of the ASP impact here over the next 12 months is gonna be highly material to when 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. At this current time, we believe we have the focus, the flexibility to focus on AVISE CTD. That's what we're doing. Depending on how some of these things fall into play, whether they're, you know, ahead of schedule or maybe a little bit behind, we'll have to see, but that will dictate timing. Great. No, thanks for that. Then you've talked about a couple of times how strong the volumes were and some of the 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 Q1, Q2 shouldn't continue in Q2? 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, two, three, four quarters from now, but you're seeing some of it now. Is there any reason why it was a one-time pop and then it's gonna revert back, or just kinda help us think through Q2 and the volume progression as we look out sequentially? Certainly. I think that's a great question. From our perspective, you know, we reduced about a third, a little bit more than a third of our sales footprint in the U.S., and we expected that impact to hit more in Q1. Now it didn't. In fact, we actually had very substantial growth in Q1. I think the way we're thinking about it internally is we still have to anticipate some impact from reducing a third of our sales force. We think the revised focus on AVISE CTD is the right strategy, and it's showing up in the numbers. Until we see a couple quarters of consistent growth in that, in that respect, I think the hypothesis is still valid. You know, historically, the company has conveyed that it takes roughly two quarters before you see some trail off when a territory gets vacant. I'm, you know, new to the story in that sense and still am analyzing this from my perspective, seeing how we can minimize that. Like I said, when you make such a dramatic cut here at the end of Q4, I anticipated some impact in Q1. That's why we're thinking kind of Q2. That's anticipated in the guide. Again, just trying to be conservative that, given the significant size of the changes that we've made, there should be some impact here in Q2. Again, we were proven wrong in Q1. No, that's great. Then, then maybe just last one just on pricing. There's obviously this is critical focus and there's a lot of moving pieces. I'm still getting my head around it. Just as we think about for the year then, you talked about seems like sequentially pricing is you expect it to go up. Just I know there's a lot of levers here and there's a range of outcomes that'll persist as you get through the year with some of the initiatives, but just any color how to think of the sequential pacing, when you might see maybe some of the bigger step-ups or just kind of any help how that progression occurs? Thank you. Yeah. Yeah. Again, a great follow on. The way we're thinking about it internally is the changes that we're making now, call it Q1, we anticipate seeing the effects of those changes in approximately 9 to 12 months. The rationale behind that being, you know, you initially perform a test, you file a claim. We're conveying that we think the opportunity exists in our appeals process. That appeals process is several cycles, call it 2 to 3 cycles per claim. For that entire process to play out takes somewhere in the 9 to 12 month range, and that's just based on my experience. We would expect to see the effects of the changes we're implementing now reflected in ASP sometime in the fourth quarter, potentially Q1 of 2024. That's as simple as that, really. The way we're thinking about it is, we're likely at a stable ASP with maybe some minor fluctuations, positive or negative over the next two or 3 quarters. We would start to see the effects of our strategy materializing here in nine to 12 months. Does that give you the clarity you're looking for? Yeah, that's great. Thank you very much. Appreciate it. Yep. Thank you. The next question is from Paul Knight of KeyBank. Please go ahead. John, what's the AVISE CTD price today? I mean, list. Yes. Hey, Paul. great to see you. The list price for AVISE CTD, this is the PLA code plus an additional 12-13 markers. There's one marker there that's on reflex. Just to be terribly clear is $1,650. Without reflex? That's drops about $40. Call it $16.10. Based on your experience at other diagnostics firms, what do you think the company should operate at as it goes through the process of getting payers? Should it be at a third of list, a half a list? What's your opinion? My opinion is that we should be operating above our Medicare rate. Under the PAMA legislation, I think the system's designed to either penalize or adjust the rate or reward those who can work through the market dynamic in terms of pricing for their tests. That's our goal, that's our objective. Just to give you that number as well, the entire Medicare reimbursed rate is $1,067. I think we should be operating closer to that level, if not above. That's what we're working to do. Do you think more data is needed by commercial payers? What is your opinion, what they might be looking for on publications? I think that we are likely to hear from multiple commercial payers that they will need more data. I think it's up to us to explain why we disagree, and we do disagree with that premise. That's an easy first objection to throw out there, is that the studies that you have are insufficient, are poorly designed, et cetera. We have 17 studies covering AVISE CTD across, and AVISE Lupus covering the full spectrum, clinical validity, analytical validity, utility, budget impact, in every area. We have real-world evidence that supports the use of the test, and we even have prospective studies showing the patient impact, and utility even at a societal level. I think we have a strong data package. I don't think it will move every payer. Okay. Thank you very much. Thank you. Ladies and gentlemen, we have reached the end of the question and answer session, and I would like to turn the call back to John Aballi for closing remarks. Great. We've 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. Thank you 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.