exdx-20250630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2025
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-39049

EXAGEN INC.

(Exact name of registrant as specified in its charter)

Delaware

20-0434866

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification No.)

1261 Liberty Way

Vista,

92081

(Address of Principal Executive Offices)

(Zip Code)


(760)			560-1501
(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

XGN

The Nasdaq Global Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Total shares of common stock outstanding as of the close of business on July 24, 2025 was 22,003,641.

TABLE OF CONTENTS


		Page
Part I.	Financial Information
Item 1.	Unaudited Condensed Financial Statements	1
	Unaudited Condensed Balance Sheets as of June 30, 2025 and December 31, 2024	1
	Unaudited Condensed Statements of Operations for the Three and Six Months ended June 30, 2025 and 2024	2
	Unaudited Condensed Statements of Stockholders' Equity for the Three and Six Months ended June 30, 2025 and 2024	3
	Unaudited Condensed Statements of Cash Flows for the Six Months ended June 30, 2025 and 2024	5
	Notes to Unaudited Condensed Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	35

Part II.	Other Information
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 5.	Other Information	37
Item 6.	Exhibits	38
	Signatures	40

Part I. Financial Information

Item 1. Unaudited Condensed Financial Statements

Exagen Inc.

Unaudited Condensed Balance Sheets

(in thousands, except share and per share amounts)


	June 30, 2025		December 31, 2024

Assets
Current assets:
Cash and cash equivalents	$	30,033	$	22,036
Accounts receivable, net	14,272		7,835
Prepaid expenses and other current assets	6,681		6,584
Total current assets	50,986		36,455
Property and equipment, net	4,582		5,283
Operating lease right-of-use assets	1,929		2,401
Other assets	1,263		550
Total assets	$	58,760	$	44,689
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	2,510	$	4,137
Accrued and other current liabilities	4,942		7,117
Deferred revenue	1,016		733
Operating lease liabilities, current	1,160		1,096
Borrowings, current	667		423
Total current liabilities	10,295		13,506
Borrowings, non-current, net of discounts and debt issuance costs	22,310		19,822
Operating lease liabilities, non-current	1,067		1,664
Warrant liability	3,963		—
Other liabilities, non-current	91		157
Total liabilities	37,726		35,149
Commitments and contingencies (Note 5)
Stockholders' equity:
Preferred stock, $0.001 par value per share; 10,000,000 shares authorized, no shares issued or outstanding as of June 30, 2025 and December 31, 2024	—		—
Common stock, $0.001 par value per share; 200,000,000 shares authorized as of June 30, 2025 and December 31, 2024; 21,998,739 and 17,640,328 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively	22		18
Additional paid-in capital	323,534		303,853
Accumulated deficit	(302,522)		(294,331)
Total stockholders' equity	21,034		9,540
Total liabilities and stockholders' equity	$	58,760	$	44,689

The accompanying notes are an integral part of these unaudited condensed financial statements

Exagen Inc.

Unaudited Condensed Statements of Operations

(in thousands, except share and per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024

Revenue	$	17,202	$	15,064	$	32,700	$	29,479
Cost of revenue	6,807		6,008		13,182		11,825
Gross margin	10,395		9,056		19,518		17,654
Operating expenses:
Selling, general and administrative expenses	11,542		10,464		22,746		21,006
Research and development expenses	1,483		1,179		2,767		2,238
Total operating expenses	13,025		11,643		25,513		23,244
Loss from operations	(2,630)		(2,587)		(5,995)		(5,590)
Interest expense	(1,124)		(560)		(1,669)		(1,109)
Loss on extinguishment of debt	(295)		—		(295)		—
Change in fair value of warrant liability	(438)		—		(438)		—
Interest income	85		181		243		373
Loss before income taxes	(4,402)		(2,966)		(8,154)		(6,326)
Income tax expense	(37)		—		(37)		—
Net loss	$	(4,439)	$	(2,966)	$	(8,191)	$	(6,326)
Net loss per share, basic and diluted	$	(0.21)	$	(0.16)	$	(0.41)	$	(0.35)
Weighted-average number of shares used to compute net loss per share, basic and diluted	21,085,749		18,178,185		19,830,265		18,061,312

The accompanying notes are an integral part of these unaudited condensed financial statements

Exagen Inc.

Unaudited Condensed Statements of Stockholders' Equity

(in thousands, except share amounts)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount






Balances as of December 31, 2024	17,640,328	$	18	$	303,853	$	(294,331)	$	9,540
Issuance of stock from vested restricted stock units	229,151	—		—		—		—
Issuance of stock under Employee Stock Purchase Plan	80,554	—		198		—		198
Stock-based compensation	—	—		417		—		417
Net loss	—	—		—		(3,752)		(3,752)
Balances as of March 31, 2025	17,950,033	18		304,468		(298,083)		6,403
Issuance of stock from public offering, net of issuance costs of $1,598	3,852,500	4		18,623		—		18,627
Issuance of stock from warrant exercises	107,969	—		—		—		—
Issuance of stock from vested restricted stock units	88,129	—		—		—		—

Exercise of stock options	108	—		—		—		—
Stock-based compensation	—	—		443		—		443
Net loss	—	—		—		(4,439)		(4,439)
Balances as of June 30, 2025	21,998,739	$	22	$	323,534	$	(302,522)	$	21,034

The accompanying notes are an integral part of these unaudited condensed financial statements

Exagen Inc.

Unaudited Condensed Statements of Stockholders' Equity

(in thousands, except share amounts)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount





Balances as of December 31, 2023	17,045,954	$	17	$	301,893	$	(279,216)	$	22,694
Issuance of stock from vested restricted stock units	217,056	—		—		—		—
Exercise of stock options	326	—		—		—		—
Issuance of stock under Employee Stock Purchase Plan	54,605	—		104		—		104
Stock-based compensation	—	—		553		—		553
Net loss	—	—		—		(3,360)		(3,360)
Balances as of March 31, 2024	17,317,941	17		302,550		(282,576)		19,991
Issuance of stock from vested restricted stock units	62,998	—		—		—		—
Exercise of stock options	636	—		—		—		—

Stock-based compensation	—	—		560		—		560
Net loss	—	—		—		(2,966)		(2,966)
Balances as of June 30, 2024	17,381,575	$	17	$	303,110	$	(285,542)	$	17,585

The accompanying notes are an integral part of these unaudited condensed financial statements

Exagen Inc.

Unaudited Condensed Statements of Cash Flows

(in thousands)


	Six Months Ended June 30,
	2025		2024

Cash flows from operating activities:
Net loss	$	(8,191)	$	(6,326)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	906		887
Amortization of debt discount and debt issuance costs	121		78
Amortization of loan commitment fees	184		—
Change in fair value of warrant liability	438		—
Loss on extinguishment of debt	295		—
Bad debt expense	455		—
Non-cash interest expense	68		137

Non-cash lease expense	473		433
Stock-based compensation	860		1,113
Other	78		111
Changes in assets and liabilities:
Accounts receivable, net	(6,892)		(5,152)
Prepaid expenses and other current assets	798		185
Other assets	288		102
Operating lease liabilities	(533)		(475)
Accounts payable	(1,577)		(820)
Deferred revenue	283		—
Accrued and other current liabilities	(1,610)		(1,739)
Net cash used in operating activities	(13,556)		(11,466)
Cash flows from investing activities:
Purchases of property and equipment	(322)		(222)
Proceeds from disposal of property and equipment	6		—
Net cash used in investing activities	(316)		(222)
Cash flows from financing activities:

Proceeds from common stock issued, net of issuance costs	18,777		—
Proceeds from common stock issued under Employee Stock Purchase Plan	199		104
Principal payments on finance lease obligations	(139)		(267)
Principal payments on notes payable obligations	(265)		(163)
Proceeds from issuance of debt and warrants, net of discounts	23,672		—
Payment to extinguish debt	(19,705)		—

Payment of debt issuance costs	(670)		—
Net cash provided by (used in) financing activities	21,869		(326)
Net increase (decrease) in cash, cash equivalents and restricted cash	7,997		(12,014)
Cash, cash equivalents and restricted cash, beginning of period	22,236		36,693
Cash, cash equivalents and restricted cash, end of period	$	30,233	$	24,679
Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,222	$	871
Supplemental disclosure of non-cash items:
Unpaid equipment settled under financing arrangement	$	682	$	—
Recognition of warrant liability	$	3,525	$	—
Equipment purchased under notes payable obligations	$	—	$	706
Unpaid financing costs included in accounts payable and accrued liabilities	$	350	$	—
Costs incurred, but not paid, in connection with capital expenditures	$	—	$	39

The accompanying notes are an integral part of these unaudited condensed financial statements

Exagen Inc.

Notes to Unaudited Interim Condensed Financial Statements

Note 1. Organization

Description of Business

Exagen Inc. (the Company) is a medical technology company primarily focused on the design, development and commercialization of a next-generation portfolio of testing products under the AVISE® brand, which allow for the differential diagnosis, prognosis and monitoring of complex rheumatic, autoimmune and autoimmune-related disease including, among others, systemic lupus erythematosus (SLE) and rheumatoid arthritis (RA).

Liquidity

The Company has incurred recurring losses and negative cash flows from operating activities since inception. The Company anticipates that it will continue to incur net losses in future periods. As of June 30, 2025, the Company had cash and cash equivalents of $30.0 million and had an accumulated deficit of $302.5 million. Since inception, the Company has financed its operations primarily through a combination of equity financings, debt financing arrangements, and revenue from sales of the Company's products. Based on the Company's current business plan, management believes that its existing capital resources will be sufficient to fund the Company's obligations for at least twelve months following the issuance of these condensed financial statements.

On April 25, 2025, the Company and Perceptive Credit Holdings IV, LP (Perceptive) entered into the Credit Agreement (as defined below), under which an initial term loan of $25.0 million was funded, $19.7 million of which the Company used to repay the 2017 Term Loan (as defined below). The Company received $3.0 million in proceeds, net of issuance costs and repayment of the 2017 Term Loan. The term loan facility allows the Company to draw up to an aggregate principal amount of $75.0 million in several tranches, subject to specified milestone requirements. Additionally, pursuant to the Credit Agreement, the Company also issued a warrant certificate to purchase up to 1,150,000 shares of common stock (the Warrant Certificate), 400,000 of which vested and became exercisable upon issuance (the Tranche A Warrant Shares) and up to 750,000 of which will vest and become exercisable if and when the additional debt tranches are drawn by the Company. See “Note 4 Borrowings—Perceptive Term Loan Facility” for more information.

On May 9, 2025, the Company issued and sold an aggregate of 3,852,500 shares of its common stock 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. See “Note 7 Stockholders' Equity—2025 Public Offering” for more information.

To execute its business plans, the Company may need additional funding to support its continuing operations and pursue its growth strategy. Until such time as the Company can achieve significant cash flows from operations, if ever, it may need to finance its operations through the sale of its stock, debt financings or other strategic transactions. Although the Company has been successful in raising capital in the past, there is no assurance that it will be successful in obtaining such additional financing on terms acceptable to the Company, if at all. The terms of any financing may adversely affect the holdings or the rights of the Company's stockholders. Although management believes the Company's existing capital resources are adequate to fund operations for the next twelve months, if the Company is unable to obtain additional funding in the future, the Company could be forced to delay, reduce or eliminate some or all of its programs, product portfolio expansion plans or commercialization efforts, which could have a material adverse effect on the Company's business, operating results and financial condition and the Company's ability to achieve its intended business objectives.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The accompanying unaudited interim condensed balance sheets as of June 30, 2025, condensed statements of operations and stockholders' equity for the three and six months ended June 30, 2025 and 2024, cash flows for the

six months ended June 30, 2025 and 2024 and the related footnote disclosures are unaudited and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC), and with accounting principles generally accepted in the United States (GAAP) applicable to interim financial statements. These unaudited condensed financial statements and related footnote disclosures should be read in conjunction with the Company’s audited financial statements for the fiscal year ended December 31, 2024, included in its Annual Report on Form 10-K filed with the SEC on March 11, 2025 (the 2024 Annual Report). In management's opinion, the unaudited interim condensed financial statements have been prepared on the same basis as the audited financial statements included in the 2024 Annual Report and include all normal adjustments, necessary for the fair presentation of the Company's financial position as of June 30, 2025 and its results of operations for the periods presented. The results for the three and six months ended June 30, 2025 are not necessarily indicative of the results expected for the full fiscal year or any other interim period. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. Certain reclassifications have been made to prior period amounts to conform to the current presentation.

The preparation of the accompanying unaudited condensed financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the condensed financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates.

Significant estimates and assumptions made in the accompanying unaudited condensed financial statements include, but are not limited to revenue recognition, the fair value of the warrant liability, the estimated incremental borrowing rate for the determination of the Company's operating lease right-of-use (ROU) assets, and the recoverability of its long-lived assets and net deferred tax assets (and related valuation allowance). The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.

Concentration of Credit Risk and Other Risk and Uncertainties

Financial instruments that potentially subject the Company to credit risk consist principally of cash, cash equivalents and accounts receivable. Substantially all the Company's cash and cash equivalents are held at one financial institution that management believes is of high credit quality. Such deposits may, at times, exceed federally insured limits. The Company has not experienced any losses on its cash or cash equivalents.

Significant payors and customers are those which represent more than 10% of the Company's total revenue or accounts receivable balance at each respective balance sheet date. For each significant payor and customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable are as follows:


	Revenue
	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Customer A	23	%	23	%	23	%	25	%
Customer B	16	%	25	%	17	%	21	%
Customer C	*		11	%	10	%	*
Customer D	10	%	*		*		*


	Accounts Receivable, Net
	June 30, 2025		December 31, 2024
Customer A	14	%	13	%
Customer B	22	%	25	%



*						Less than 10%.

For the three months ended June 30, 2025 and 2024, approximately 91% and 90%, respectively, of the Company's revenue was related to the AVISE® CTD test. Revenue related to AVISE® CTD test for the six months ended June 30, 2025 and 2024 was approximately 91% and 90%, respectively.

The Company is dependent on key suppliers for certain laboratory materials, consisting primarily of reagents and biomarkers used in our diagnostic tests. For the three months ended June 30, 2025 and 2024 approximately 87% and 99%, respectively, of the Company's diagnostic testing supplies were purchased from two suppliers. For the six months ended June 30, 2025 and 2024, approximately 92% and 97%, respectively, of the Company's diagnostic testing supplies were purchased from three suppliers. An interruption in the supply of these materials would impact the Company's ability to perform testing services.

Disaggregation of Revenue

The following table includes the Company's revenues as disaggregated by payor and customer category (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenue:
Commercial	$	8,811	$	8,672	$	17,571	$	15,535
Government	3,926		3,457		7,633		7,643
Client direct bill(1)	4,371		2,910		7,367		6,194
Other(2)	94		25		129		107
Total revenue	$	17,202	$	15,064	$	32,700	$	29,479

(1)Includes hospitals, other laboratories, etc.

(2)Includes patient self-pay.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments purchased with a remaining maturity date of three months or less upon acquisition to be cash equivalents. These investments are stated at cost, which approximates fair value.

The Company has an arrangement with a financial institution with which it has an existing banking relationship, whereby in exchange for the issuance of corporate credit cards, the Company agreed to obtain a certificate of deposit with this financial institution in the amount of $0.2 million as collateral for the balances borrowed on these cards (the Credit Card Program). The Company has classified the value of this certificate of deposit (including all interest earned thereon) within other assets in the accompanying balance sheets. The Company has the right to terminate the Credit Card Program at any time. Upon termination of the Credit Card Program and repayment of all outstanding balances owed, the Company may redeem the certificate of deposit (and all interest earned thereon).

Cash, cash equivalents, and restricted cash presented in the accompanying condensed statements of cash flows consist of the following (in thousands):


	June 30, 2025		December 31, 2024
Cash and cash equivalents	$	30,033	$	22,036
Restricted cash	200		200
Total cash, cash equivalents and restricted cash	$	30,233	$	22,236

Long-Lived Assets

The Company’s long-lived assets are comprised principally of its property and equipment and operating lease assets. The Company amortizes all finite-lived intangible assets over their respective estimated useful lives. Operating lease assets are amortized over the term of the leases. In considering whether long-lived assets are impaired, the Company combines its long-lived assets into groupings, a determination which is made principally on the basis of whether the assets are specific to a particular test offered or technology being developed. If the

Company identifies a change in the circumstances related to its long-lived assets that indicates the carrying value of any such asset may not be recoverable, the Company will perform an impairment analysis. A long-lived asset is deemed to be impaired when the undiscounted cash flows expected to be generated by the asset (or asset group) are less than the asset’s carrying amount. Management’s estimates of future cash flows are impacted by projected test volume and levels of reimbursement, as well as expectations related to the future cost structure of the entity. Any required impairment loss would be measured as the amount by which the asset’s carrying value exceeds its fair value, and would be recorded as a reduction in the carrying value of the related asset and a charge to operating expense.

Revenue Recognition

Substantially all of the Company's revenue has been derived from sales of its testing products and is primarily comprised of a high volume of relatively low-dollar transactions. The Company primarily markets its testing products to rheumatologists and their physician assistants in the United States. The healthcare professionals who order the Company's testing products and to whom test results are reported are generally not responsible for payment for these products. The parties that pay for these services (each, a payor) consist of commercial payors (healthcare insurers), government payors (primarily Medicare and Medicaid), client payors (hospitals, other laboratories, etc.) and patient self-pay.

The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers and follows a five-step process to determine the amount and timing of revenue recognized: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to performance obligations in the contract, and (5) recognize revenue when (or as) the performance obligation is satisfied. The Company's service is a single performance obligation that is completed upon the delivery of test results to the prescribing physician which triggers revenue recognition.

Payors are generally billed at the Company's list price, unless a separate pricing contract is in place. Net revenues recognized consist of amounts billed net of allowances for differences between amounts billed and the estimated consideration the Company expects to receive from such payors. The process for estimating revenues and the ultimate collection of accounts receivable involves significant judgment and estimation. The Company follows a standard process, which considers historical denial and collection experience, insurance reimbursement policies and other factors, to estimate allowances and implicit price concessions. Adjustments are recorded in the current period as changes in estimates occur. Further adjustments to the allowances, based on actual receipts, are recorded upon settlement. Included in revenues for the three months ended June 30, 2025 and 2024 was a $0.1 million and a $3.1 million net revenue increase, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods. Included in revenues for the six months ended June 30, 2025 and 2024 was a $1.0 million and a $5.1 million net revenue increase, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods. The transaction price is estimated using an expected value method on a portfolio basis.

Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. The Company's portfolios are grouped per payor (i.e. each individual commercial payor, Medicare, Medicaid, client payors, patient self-pay, etc.) and per test. Consideration may be constrained and excluded from the transaction price in situations where there is no contractually agreed upon reimbursement coverage or in absence of a predictable pattern and history of collectability with a payor. Accordingly, in such situations revenues are recognized on the basis of actual cash collections. Additionally, from time to time, the Company may issue refunds to payors for overpayments or amounts billed in error. Any refunds are accounted for as reductions in revenues in the condensed statements of operations as an element of variable consideration. The estimated expected refunds are accrued as a liability on the Company’s condensed balance sheets.

Collection of the Company's net revenues from payors is normally a function of providing complete and correct billing information, along with any requested medical or other claims-related information to the healthcare insurers. This generally occurs within 30 to 90 days of billing, however, the amount and timing of any reimbursements or collections for the Company's billed tests may vary by payor and other circumstances. Contracts do not contain significant financing components based on the typical period of time between performance of services and collection of consideration.

Amounts received prior to satisfying the above revenue recognition criteria are recognized as deferred revenue until all applicable revenue recognition criteria are met. Deferred revenue represented the portion of payments received that have not been earned. During the fourth quarter of 2024 and the first quarter of 2025, the Company entered into various work orders to perform diagnostic testing services including identifying and evaluating biomarkers, and received nonrefundable, upfront payments for these services. The Company had deferred revenue related to these contracts of $1.0 million and $0.7 million as of June 30, 2025 and December 31, 2024, respectively. The Company recognized revenue of $0.2 million out of the beginning deferred revenue balance during the six months ended June 30, 2025 and no revenue was recognized out of the beginning deferred revenue balance during the six months ended June 30, 2024. The Company expects to recognize revenue from unfulfilled performance obligations associated with service contracts within one year or less.

Accounts Receivable and Allowance for Credit Losses

The Company accrues an allowance for credit losses against its accounts receivable based on management’s current estimate of amounts that will not be collected. Management’s estimates are typically based on historical loss information adjusted for current conditions. The Company generally does not perform evaluations of the financial condition of the Company's customers and generally does not require collateral. The allowance for credit losses was $0.5 million and zero as of June 30, 2025 and 2024, respectively. Adjustments for implicit price concessions attributable to variable consideration, as discussed above, are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for credit losses. Accounts receivable was $14.3 million and $7.8 million at June 30, 2025, and December 31, 2024, respectively.

Loan Commitment Fees

Loan commitment fees are generally included as a reduction of the proceeds from the outstanding debt. If there were no borrowings drawn on the related credit facility, the loan commitment fees are classified as assets until the related debt is drawn. The Company’s loan commitment fee is comprised of an upfront cash payment and a contingent obligation to issue future warrants to Perceptive in connection with the Credit Agreement (as defined below). The amounts have been recognized in prepaid expenses and other current assets for the short-term portion of $1.1 million and within other assets for the long-term portion of $0.8 million on the condensed balance sheets as of June 30, 2025. As the Company is not reasonably certain it will draw on the future debt tranches, the loan commitment fees are amortized ratably into interest expense over the outstanding draw periods. During the three and six months ended June 30, 2025, the Company recognized $0.2 million in non-cash interest expense related to the amortization of the loan commitment fees within the Company's condensed statements of operations.

Stock-Based Compensation

The Company recognizes compensation expense for all stock-based awards to employees and directors based on the grant date estimated fair values over the requisite service period of the awards (usually the vesting period) on a straight-line basis. The fair value of stock options and purchases under the Company's 2019 Employee Stock Purchase Plan (ESPP) is determined using the Black-Scholes-Merton (BSM) option pricing model, which requires management to make certain assumptions regarding a number of complex and subjective variables. Equity award forfeitures are recorded as they occur.

The BSM option pricing model incorporates various inputs, including the fair value of the Company's common stock, expected volatility, expected term and risk-free interest rates. Volatility is based on the Company's historical calculated volatility since being publicly traded. The Company computes the historical volatility data using the daily closing prices of the Company’s common stock during the equivalent period that approximates the calculated expected term of the stock options. The weighted-average expected term of options was calculated using the simplified method, as the Company has concluded that its stock option exercise history does not provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate for periods within the contractual term of the option is based on the U.S. Treasury yield in effect at the time of grant. The dividend yield is zero, as the Company has never declared or paid dividends and has no plans to do so in the foreseeable future.

The fair value of each restricted stock unit (RSU) is determined on the grant date using the closing price of the Company's common stock on that date. The Company's RSUs generally vest in equal annual installments over four years from the date of grant or, for grants to new hires, date of hire. Vesting of the RSU is subject to the holder's continued service with the Company. The Company issues new shares of common stock to satisfy the RSUs upon vesting.

Comprehensive Loss

Comprehensive loss is defined as a change in equity of a business enterprise during a period, resulting from transactions from nonowner sources. There have been no items qualifying as other comprehensive loss and, therefore, for all periods presented, the Company's comprehensive loss was the same as its reported net loss.

Net Loss Per Share

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods. The weighted-average number of shares used to compute basic and diluted shares includes shares issuable upon the exercise of pre-funded warrants at a nominal price. Potentially dilutive common stock equivalents are comprised of warrants for the purchase of common stock, stock options, RSUs outstanding under the Company's 2019 Incentive Award Plan (the 2019 Plan) and shares of the Company's common stock pursuant to the ESPP. For the three and six months ended June 30, 2025 and 2024, there is no difference in the number of shares used to calculate basic and diluted shares outstanding, as the inclusion of the potentially dilutive securities would be anti-dilutive.

Potentially dilutive securities not included in the calculation of diluted net loss per share, because to do so would be anti-dilutive, are as follows (in common stock equivalent shares):


	June 30, 2025	June 30, 2024
Warrants to purchase common stock	580,339	409,108
Common stock options	564,441	817,046
Restricted stock units	1,679,624	1,679,469
Employee stock purchase plan	54,454	38,299
Total	2,878,858	2,943,922

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, Accounting Standards Updates (ASU) not included in the Company’s disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on the Company's financial statements or disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires additional income tax disclosures in the rate reconciliation table for federal, state and foreign income taxes, in addition to more details about the reconciling items in some categories when items meet a certain quantitative threshold. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 with early adoption permitted. This update will result in enhanced income tax disclosures, and the Company does not expect any impact to income tax expense.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (ASU 2024-03). This update requires entities to include more detailed information about the types of expenses, including purchases of inventory, employee compensation, depreciation, amortization, and depletion, in commonly presented expense captions such as cost of sales, research and development, and selling, general and administrative expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this standard on its financial statement presentation and disclosures.

Note 3. Other Financial Information

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):


	June 30, 2025		December 31, 2024
Diagnostic testing supplies	$	3,744	$	5,725
Prepaid maintenance and insurance contracts	1,707		829
Loan commitment fees	1,132		—
Other prepaid expenses and other current assets	98		30
Prepaid expenses and other current assets	$	6,681	$	6,584

Property and Equipment, net

Property and equipment, net consist of the following (in thousands):


	June 30, 2025		December 31, 2024
Furniture and fixtures	$	121	$	105
Laboratory equipment	5,366		4,248
Computer equipment and software	2,112		2,113
Leasehold improvements	3,336		3,286
Construction in progress	10		1,543
Total property and equipment	10,945		11,295
Less: accumulated depreciation and amortization	(6,363)		(6,012)

SEC Form 10-Q filed by Exagen Inc.