Exagen Inc. (XGN) on Q3 2022 Results - Earnings Call Transcript
Operator: Greetings, and welcome to the Exagen Inc. Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A brief 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, Investor Relations. Thank you, sir. You may begin.
Ryan Douglas: Good afternoon and thank you for joining us today. Earlier today, Exagen Inc. released financial results for the quarter ended September 30th, 2022. The release is currently available on the company's website atwww.exagen.com. John Aballi, President and Chief Executive Officer; Kamal Adawi, Chief Financial Officer; and Mark Hazeltine, Chief Operating 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 meanings of federal securities laws, which are made pursuant to the Safe Harbor provisions with 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 2022 guidance, our current and future product offerings, and reimbursement and coverage, restatement of our financial statements for the second quarter of 2022 and our plan for remediation with respect to the one or more material weaknesses in internal controls over financial reporting that we expect to identify 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 31st, 2021, and subsequent filings. Information provided in this conference call speaks only to the live broadcast today, November 14th, 2022. 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. As previously announced on October 17th, Exagen appointed a new President and Chief Executive Officer, John Aballi. I'm pleased to introduce John and will now turn the call over to him.
John Aballi: Thanks Ryan and thank you to everyone joining the call. I'm very excited to be joining Exagen as CEO. We have developed a leadership position in one of the largest fields of medicine with our proprietary AVISE testing platform. Having spent the majority of my career working in labs, developing and commercializing diagnostics and oncology, I'm looking forward to bringing that same successful approach to rheumatology with the incredible team here at Exagen. Today, I will discuss my initial impressions along with our third quarter business highlights and give updates on Medicare reimbursement in addition to our pipeline. I'll then hand the call over to Kamal, our CFO, for details on our financial results. Over the past four weeks, I've started to evaluate Exagen's current business and product portfolio. Specifically, I wanted to gain a better understanding of our competitive advantages and what can be done to enhance them. The AVISE platform is based on proprietary technology. And Exagen has established itself as a rheumatologist's preferred partner in navigating the differential diagnosis of connective tissue disease. The company enhances its competitive advantage by delivering high values of customer service in combination with its innovative technology. I believe we can continue to differentiate through both service and our platform. I'm working with the teams at Exagen to better define our plan in this area and anticipate speaking to it more in the coming quarters. I've grown more excited about the opportunities I see in the organization and believe that my past experiences will provide great reference for improving the company. Of specific note is my experience leading the growth of sales organizations and products, developing medical policy with Medicare on several laboratory-developed tests, recent management of 4 CAP and CLIA Laboratories, and optimizing revenue billing operations. I expect my experiences to add value as I continue to evaluate all aspects of the company. Regarding Exagen's most recent quarterly performance. Our total revenue for the third quarter was $14.7million, which included a record 35,569 AVISE CTD tests delivered. This is up 12% year-over-year. We also had 2,287 total ordering health care providers, which is a 16% increase over the prior year quarter. We have now delivered a record 101,000 AVISE CTD tests year-to-date. We finished the quarter with 63 sales territories occupied by 54 reps. While it's great to see the continued strong utilization amongst our existing health care provider base, I believe we can grow faster. I'm working with the management team to review, prioritize, and take action on all aspects of commercial execution to accelerate the growth of our AVISE products. Turning now to an update on Medicare reimbursement for AVISE Lupus. For the past few months, we've been working with Noridian to resubmit claims, including responding to their request for additional information. Following these efforts, Medicare resumed paying claims and has continued to do so at a rate of$1,085. We have recognized approximately $3.7 million from claims that were submitted for Q2. With respect to obtaining a formal coverage determination from CMS, we submitted our application for coverage to the Noridian Medical Directors on July 29th of this year. We received notice that Noridian has deemed our application for a local coverage determination, or LCD, to be valid on September 27th. Ultimately, receiving a favorable LCD is uncertain and may be time consuming, but our request for Medicare coverage for AVISE Lupus is now officially in queue. A successful LCD will improve transparency regarding Medicare support of AVISE Lupus, which would also improve our communication of coverage from Medicare Advantage patients to commercial payers. We believe that our strong support in the rheumatology community, robust clinical validity, and proven clinical utility will help us successfully obtain an LCD for AVISE Lupus. Our CAPSTONE study demonstrates the utility of AVISE Lupus, which we believe will be a key component of the evidentiary review by CMS. However, we must note that the process can be unpredictable. And while we are being reimbursed for AVISE Lupus today, reimbursement is not guaranteed throughout the process. In terms of payment levels, companies that develop new clinical diagnostic laboratory tests such as AVISE Lupus can apply for a new or substantially revised CPT code. For the year in which this code is made effective, the initial reimbursement rates are assigned by the Medicare Administrative Contractor and for Exagen, this is Noridian. As we previously stated, Noridian priced the AVISE Lupus PLA code 0312U at $1,085 for 2022. CMS establishes pricing by either a crosswalk or gap fill methodology before finalizing on the clinical laboratory fee schedule or CLFS. To determine pricing beyond 2022, the CMS pricing process resulted in a recommendation that the AVISE Lupus PLA code be cross walked to the Vectra CPT code at a rate of $840.65. We expect pricing to be finalized on the CLFS by the end of the year. This would then become our price with Medicare effective January 1st, 2023, and remain effective through the end of 2025 given current payment reporting timelines. Until an LCD is secured, we expect Noridian to adjudicate claims for AVISE Lupus on a per claim basis and when determined to be medically necessary paid at the applicable PLA rate. As is common in the specialty diagnostic area, unique laboratory developed tests face significant commercial payer scrutiny for medical necessity. As discussed in the second quarter, we continue to see headwinds relating to commercial payer claim processing and revenue. Now that we are billing under our PLA code, we are experiencing an increase in denials due to unfavorable medical policy with select plans and we expect this to persist. This has resulted in a reversal of revenue and a write-down of $1.7 million of accounts receivable in Q3 from prior period claims. We will continue to engage with commercial payers to obtain and maintain coverage for AVISE Lupus. While the dossier is a key component in engaging commercial payers for medical policy, clinical guidelines do not currently recognize the AVISE Lupus test. We view the inclusion into guidelines as an important catalyst to expanding coverage and payment. Our approach to commercial payers remains a focus point of the company and one that has my full attention. Turning now to our pipeline. Our pipeline has several exciting projects and I'm very impressed with our team, our lab, and our scientific capabilities. As would be expected with the change in leadership, I am currently reviewing every project to assess how it fits into Exagen's long-term portfolio strategy and I plan to bring a fresh perspective to the prioritization of our research program. My criteria for evaluation is as follows; first and foremost, does the product have the potential to deliver impactful results to clinicians and patients? Next, does it have a strong competitive advantage, which is durable or can be improved upon? And finally, does it have a path to reimbursement with an anticipated operating profile, which makes it a viable long-term offering, thereby justifying the investment? I'll discuss some of the milestones that we have reached recently. Of specific note, under the AVISE RADR program, we enrolled our first rheumatoid arthritis patients into our prospective clinical trial known as TiGER. The aim of this trial is to amass a clinical cohort capable of validating the work performed at Queen Mary University of London. We look forward to providing updates on our commercial development of biomarkers from synovial tissue to personalized therapy for rheumatoid arthritis patients. We remain focused on and will communicate our reimbursement pathway for and bias RADR in the near future and plan to provide updates regarding our product pipeline as we continue our review. This past week, I had the opportunity to join our scientific team at the American College of Rheumatology's Annual Conference, where they presented nine abstracts and we were honored to be selected as a featured presenter. At the conference, I spoke with several health care providers that use the AVISE platform. They expressed to me how important AVISE testing has been for them in their practice for helping diagnose connective tissue disorders and specifically stress the value AVISE plays in the clinical management of their patients. As I complete my first month, I'm taking a holistic approach at analyzing the business and implementing changes to improve Exagen's profitability. I'm very excited about Exagen's future and I'm looking forward to building on the solid foundation that's in place and leading the next phase of growth. I'll now turn the call over to Kamal for details on the finances.
Kamal Adawi: Thank you, John, and good afternoon, everyone. First, I would like to address the material weakness that we identified during the third quarter close process. The material weakness was caused by the transition to the PLA code for billing. We had to correct the test charge in error and reverse the revenue accrual that was built incorrectly. As a company, we are committed to best practices in our financial reporting and have taken immediate action towards remediating this weakness. Earlier this year, we hired a consulting firm for our upcoming SOX 404(b)requirement and are working with them to strengthen our internal controls. Due to this weakness, we will be restating second quarter results and filing a restated 10-Q for the second quarter. The identified PLA code issue had an impact on revenue, accounts receivables, and other liabilities on the second quarter financials. The effect of these errors was an overstatement of revenue and accounts receivable in the amount of $1.4 million and $0.9 million, respectively, and an understatement of other liabilities in the amount of $0.5 million. Second quarter revenue will be restated to $7.6 million. As mentioned earlier, we continue to see the number of ordering health care providers increase. This quarter, we achieved 2,287 ordering health care providers compared with 1,969 in the third quarter of 2021, a 16%increase. In the third quarter, tests grew approximately 12% year-over-year and 2% quarter-over-quarter to35,569 tests delivered compared with 31,742 tests in the third quarter of 2021 and 34,919 tests in Q2 2022. We did see an impact on demand from Hurricane Ian during the last week of the quarter as people began to evacuate. Florida is one of our largest markets and we saw the impact on demand continue through the first weeks of Q4. Total revenues in the third quarter of 2022 were $14.7 million compared to $12.3 million in the third quarter of 2021. This represents an increase of 20.2% over the third quarter of 2021. As John mentioned, this includes $3.7 million in revenue from Q2 Medicare claims. We saw a continued disruption caused by the PLA code with commercial payers, which resulted in a reduction in revenue due to write-downs from the trailing 2 quarters. We are not collecting at the rate we have previously accrued and have to reduce the accrual rate down per ASC 606. The $14.7 million of Q3 revenue contains $3.7 million from Q2 Medicare claims. AVISE CTD test revenue was $12.8 million in the third quarter of 2022 compared with $9.9 million in the third quarter of 2021. Other testing revenue was $1.9 million in the third quarter of 2022 compared with $2 million in the third quarter of2021. Our AVISE CTD and other testing revenue resulted in testing revenues of $14.7 million in the third quarter of 2022 compared with $11.9 million in the third quarter of 2021. With Q2 financials restated, year-to-date revenue through the third quarter is $32.7 million compared to $35.6 million through the third quarter of last year. The $2.9 million decrease in year-over-year revenue is primarily due to a decrease of $1.4 million in AVISE CTD testing due to lower ASPs, partially offset by an increase in volume, a $1 million decrease due to the termination of the SIMPONI agreement and a $0.5 million decrease from other testing. Cost of revenue were $6 million in Q3, resulting in total gross margin of 59.2% compared to 55.2% in the third quarter of 2021. Testing gross margin was 59.2% in the third quarter of 2022 compared to 53.7% in the third quarter of 2021. Operating expenses in the quarter were $22.5 million compared with $18.8 million in the third quarter of 2021. The increase was primarily due to larger expenses in the following areas; employee-related expenses associated with the overall increase in headcount, marketing spend, R&D expenses, cost of revenue due tithe increase in testing volumes and public company cost. This equated to a net loss in the quarter of $8.1 million compared with $7.2 million in the third quarter of 2021. Looking at our balance sheet. Cash and cash equivalents as of September 30th, 2022 were approximately $68.7 million. We put an ATM facility in place during the third quarter. We do not have any immediate plans to raise capital from an ATM offering. We view this as a prudent way to make sure we have access to capital at opportunistic time to support the business as capital needs change. Our burn in Q3 was $7.6 million. We're reviewing all aspects of the organization's control spend. We are focused on improving our profitability profile. We aim to provide a more detailed strategy of our path to profitability once our current analysis is complete. For full year 2022, given current reimbursement trends, we are increasing our guidance to the revised range of $40 million to $43 million. We will now open the call for questions.
Operator: Thank you. We'll now be conducting a question-and-answer session. Our first question comes from the line of Max Masucci with Cowen & Company. Please proceed with your question.
Max Masucci: Hi, good afternoon. First question for John. I just want to first congratulate you on your next chapter and nice start out of the gate. So, you served in a leadership role at Decipher during the company's triple-digit growth phase, through major reimbursement milestones into a more maturing phase under the umbrella of Veracyte. So, it would be great to hear what initially piqued your interest in joining Exagen, how the reality is compared to your expectations and where you're seeing opportunity to make an immediate impact.
John Aballi: Hi Max. Thanks so much for the question. Really appreciate it. So, I've been part of some successful teams and certainly had the opportunity to benefit in that regard and I think Exagen very much has a similar foundation. I was attracted to Exagen because it has proprietary testing and is working to deliver a service model that differentiates. And I think that that's something that is a winning combination and that I'm well-suited to help with and provide value on. I'm -- maybe I can speak a little bit to my process right now. So, for the last four weeks, what I've really tried to do is meet with as many folks within the organization as possible. I've conducted one-on-one meetings with a significant number of individuals in all facets of the organization, so field-based folks, our billing and provider relations, our customer service organization. In the laboratory, I spent time talking to our scientists and I've spent time with our research arm as well. I think the opportunities are starting to arise but it is early for me to conclude or suggest exactly what is an appropriate path forward. I think -- as I mentioned, I'm starting to see trends. And I think as I continue to have some of these one-on-one conversations and meet more folks, the clear path will be reinforced throughout. I don't necessarily think that I had the prescription right off the bat. I think that would likely be a mistake in many regards. And so I'm learning what's special to Exagen, what's special to the products here and then leveraging some of the experience I have to assist in improvement. So, hopefully, that provides a little color. I do anticipate and recognize people are looking for a little more specificity here. And I think over the coming quarters, I'll be able to provide it. But I'm very excited about what I've seen so far.
Max Masucci: That's fantastic. I appreciate the color. For Kamal, just with all the moving pieces, can you just sort of help us understand the bridge to the implied Q4 guidance? And I know it might be a bit premature to talk about 2023, but how are you thinking -- is there anything you can provide us to help us think about ASP and margin trends in 2023?
Kamal Adawi: Yes, thanks for the question, Max. As you saw, we had some strong volumes in Q3 and that's continuing into our projections for guidance for the full year. Reimbursement is definitely one of the biggest challenges. We saw Medicare resume paying, but we still have headwinds with our commercial payers. We did note a write-down in Q3 of about $1.7 million. That gets us clear through Q3 and our guidance that we provided on this call is take into account any future headwinds that we can see at this point. But that's pretty much the most I can say with where we are at this point and improving our guidance to $40 million to$43 million. Historically, we haven't commented on the next year's guidance until we get through our Q4 call. And I think given the fluid situation of what's changed in the past quarter with Medicare resuming payment and commercial payer headwinds, it's very prudent for us to wait until that time to give more color to 2023.
Max Masucci: No worries. Final question from me. Would just love to hear any feedback, maybe from John, that you received following some of the presentations at the ACR conference in September, just how RADR was received and just generally, the sort of feedback you had coming out of that event.
John Aballi: Certainly. I think it's an important point and thanks again for the question. ACR was exciting from my perspective. The rheumatology space is newer to me and so I got the opportunity to interact with our team there along with several rheumatologists and learn from them. Feedback from some of the individual presentations has been positive. I still actually need to connect with our team in greater depth. The conference runs through tomorrow actually. So, we had a talk today and we had one yesterday as well. So, looking forward to finalizing some of that feedback. But I know our talks were well attended. We had a significant number of physicians sign up to attend the talk regarding our CAPSTONE study. And I really leverage the time to meet one-on-one with physicians, our team as well. But I was able to speak with a few academics and it became apparent that our tests do have proprietary aspects, which are differentiating and that was reassuring to me and the value that they are providing is significant. And so I think if we take a look at the business as a whole and continue to improve our service offering, it gives me a lot of optimism going forward. So it was great in that respect, I think, well-received certainly.
Max Masucci: Well, congrats again on the new role and thanks for taking the questions.
John Aballi: Thanks a lot.
Operator: Thank you. Our next question comes from the line of Mark Massaro with BTIG. Please proceed with your question.
Unidentified Analyst: Hey guys, this is Vivian on for Mark. Thanks for taking the question. So, I believe on the last call, you guys talked about the percentage of claims that were denied by Medicare as well as the percentage that required additional information. So, I think we found that color quite helpful if you could just comment on the denial rate. Thanks.
Kamal Adawi: When it comes to Medicare, we've resumed getting paid from all their testing and this goes back to Q2. That's why we have that adjustment of a positive revenue recognition of $3.7 million in Q3 for the Q2 claims and we are being paid for the Q3 claims. So, right now, we're getting paid for all the claims for AVISE CTD and Lupus that's being submitted to Medicare.
John Aballi: The other thing I will add, Vivian, that maybe helps is a little context to the process so far. So, we applied for our PLA code, which became effective in April of this past year. And then throughout the summer, we worked with Medicare and specifically Noridian, our local MAC, to really address questions they had regarding additional information on a per claim basis but also regarding our test in general. As I'm sure you can imagine, when we obtained the PLA code, it differentiates us in a positive manner, we believe. But it also -- you have to re-explain exactly who you are and what you're doing. And so as we worked with Noridian over the summer to address those requests for additional information, they subsequently have resumed paying. So hopefully, that provides a little color. And they've actually paid back to all claims from Q2as well as Q3.
Unidentified Analyst: Okay, got it. Thanks for this clarification. So, could you also discuss any color you might have on potential timing for guideline inclusion and any additional evidence or action you might take to move along conversations on that front? Thanks.
John Aballi: Certainly, and I think a great follow-up question. I think guideline inclusion is a key aspect of an overall managed care strategy and specifically a key component of progress with payers. The guidelines as they pertain to Lupus specifically are interesting. So, feedback from payers more recently especially post PLA code are that they look to the ACR guidelines, that's the American College of Rheumatology guidelines, for whether or not AVISE Lupus is considered medically necessary. There's a nuance there that I think is important to understand or a distinction that's relevant and that's that those guidelines actually are not diagnostic. They're specific for classification. And so they're designed or their aim intent, if you will, is to provide uniformity in enrolling patients into Lupus trials across the world actually, not even specific necessarily to the United States. And so while payers are looking to those for diagnostic classification, they're providing criteria for clinical trial enrollment. And so we're working with ACR, it's something that we've initiated more recently, but our medical team is actively engaging with them. And then we're also -- we really need to evaluate over the next year how our current evidentiary package is received with some of these payers. So, I believe we'll -- I think it's a mistake to quote a timeline right now. I think it would be uninformed and likely very difficult to predict. So, it's tough to always forecast when these things are going to occur. And so I don't think I'll do that four weeks in. But from our perspective, we recognize the importance. I'm highly focused on it. I think the clinical demand of the product heavily supports its utility. And our evidentiary package is strong. We just have to get a little bit more feedback as to how strong. And so those dialogues are occurring, but I'll be happy to report back here over the coming quarters.
Unidentified Analyst: Got it. Thanks for taking the questions.
Operator: Thank you. Our next question comes from the line of Andrew Brackmann with William Blair. Please proceed with your question.
Griffin Soriano: Hey good afternoon. This is Griffin on for Andrew. Thanks for taking my questions. Kamal, maybe just a quick follow-up on the guide. I think about $8.8 million is implied in Q4 at the midpoint. From an ASP perspective, if you take out that $3.7 million from the claims inQ2, is it right to get to an ASP number about $250 in Q4? And is that how you are sort of thinking about -- excuse me, $250 in Q3 and is that how you sort of think about Q4 here?
Kamal Adawi: Well, when you get down to the $250 million and ASP for Q3, that's assuming that, that $1.7 million write-down continues on in Q4. So that's an assumption that needs to be made and obviously, we had a write-down in Q2 and Q3 and we're facing payer headwinds. So, that's an unknown, but it's definitely a challenge we're facing. So, it does -- we have to take that into account when we provided guidance of $40 million to $43 million. Now, without that $1.7 million, you're closer to just north of $300 ASP in Q3.
Griffin Soriano: Got it, that's very helpful. Thank you. And then just a quick follow-up on RADR timelines. I think initial plans have been for a KOL launch sometime in the fourth quarter and then maybe a commercial launch sort of mid-2023. Any update to those as you are sort of reassessing that, John?
John Aballi: Certainly, Griffin. Thanks for the question. It's an important note. So, I mentioned in the remarks a second ago that I'm evaluating every aspect of our research pipeline. It's very important to me that we have clarity and a higher level of predictability into when we think a product can be reimbursed. And I'm not quite there on the RADR side yet. So, I need to learn more, as I mentioned. It takes a little bit more time for me to make some of those conclusions. But from my perspective, I'll be happy to provide updates here in the coming quarter. But I don't have that level of certainty right now on the reimbursement side with the RADR program. It is proceeding well from a development standpoint and from a research standpoint. Just on the commercialization side, I may have to reset some of those timelines.
Griffin Soriano: Okay. Thanks for the questions.
Operator: Thank you. Our next question comes from the line of Kyle Mikson with Canaccord Genuity. Please proceed with your question.
Kyle Mikson: Hey thanks. Welcome John. I guess Kamal, it's a question for you on this $3.7 million catch-up revenue from the second quarter. How many claims does that represent? It looks like maybe 3,000, 4,000 like that. I was just kind of curious about that given it didn't occur in the third quarter? And then I know the commercial side is kind of uncertain right now. But like is there any risk at all you're not paid for Medicare claims next quarter? Thanks.
Kamal Adawi: So, to address the first part of that question, historically, we've seen our Medicare percent of AVISE CTD volume coming at about 13%. It's been pretty constant in terms of volume there. So, you can imply what one quarter would be based on our testing amount. And again, it was all Medicare claims. We are now getting paid on all Medicare claims for AVISE CTD and Lupus for Q2 and Q3 from the start of when the Medicare reimbursement issue occurred. I'm going to let John address the second part of the question in regards to going forward with Medicare in Q4and 2023.
John Aballi: Sure. Thanks for the question, Kyle. From a long-term predictability of Medicare payments regarding the AVISE Lupus claims, I don't think we're in a place to state that with a high degree of confidence. I think what I would -- the way I would look at it is where we're at currently is Medicare has reached out to us and has asked us for additional information regarding our tests and for individual claims. We have provided that information to a satisfactory level such that they have resumed payment on all claims over the prior two quarters. That does give us confidence that on a claim-by-claim basis, they're being adjudicated positively. But as to -- on a go-forward basis, the appropriate path here is to secure an LCD, which we have started, a local coverage determination and then follow those next steps. So hopefully, that gives you what you're looking for.
Kyle Mikson: Okay. Yes, that was great, John. And then just on that point, the crosswalk to Vectra is kind of interesting. I was wondering if you were surprised by that. And what was your reaction? Is this $840 rate like a letdown compared to the $1,085?
John Aballi: So, that's a great question. I think from our perspective, we were looking to secure a price commensurate with the value and the cost of the test being performed, right? And so I think if you take a holistic look at it, we were able to do that. The company was able to do that. Initially, the price that's set is really consistent with your list price. And the only mechanism to maintain that over a longer period of time is really the ADLT route. So, I think from our perspective, to be cross walked to a reasonable code where it's similar resources used and similar analytes evaluated, I think it was a successful endeavor.
Kyle Mikson: Okay, that's helpful. And then just back to the fourth quarter guidance, it does imply this steep revenue decline, but the factors don't make sense to me. It's just not quite clear if volume will increase. Is that implied in the expectation? I think like the trends are typically that fourth quarter volume should increase a little bit, Kamal and John. Like I think maybe 2019, that was different. But just could you just talk about like volume trends? And should we expect like a decline or flat, something like that?
Kamal Adawi: We had one year with Q4 being an anomaly where volume increased and it was the COVID year of 2020. And what we saw was a lot of physicians not -- there was no ACR, it was virtual. They still saw patients and a lot of patients and physicians not taking vacations around the holidays. That was an anomaly. Most of the years, you're going to see Q4 with lower volume than Q3 and that's due to a few reasons. And we see this year-after-year when COVID is not an issue and it's because the physicians are out of the office during ACR, which we just saw last week in Philadelphia and then a fewer number of lab days. So, because of the seasonality of the holidays heading in Q4 with Thanksgiving, Christmas, Hanukkah, we're going to have fewer lab days. And then the lab days that we do have remaining towards the end of the year usually have less patient flow going to the physicians, which is going to cause for lower volume. So, historically, we do see lower volume in Q4 than Q3. I don't think this year will be much different than that. I would anticipate seeing those seasonality factors occur in Q4.
Kyle Mikson: All right. And then how about adopters in the third quarter? I don't -- I didn't see that in the release or in the remarks. Last quarter, that was almost $800, how is that trending now?
John Aballi: Thanks Kyle. Great question. Relatively flat if not a little bit down in Q3 relative to Q2. The reason why it wasn't necessarily in the prepared remarks, this actually ties back to my analysis of the company and evaluation of the company. I'm really looking at every aspect, including all of our metrics and trying to better understand exactly how they drive action on our side. And so I may suggest an alternative metric in the future. I just didn't have one readily available at this time. So, I think adopters is a good concept in general. Our definition, I want to evaluate a little bit.
Kyle Mikson: Okay, no totally fair. I get that John. Thanks a lot. Thanks guys. Appreciate it.
Operator: Thank you. We have reached the end of our question-and-answer session. I would like to turn the call back over to Mr. Aballi for any closing remarks.
John Aballi: Thank you. I wanted to end by thanking everyone for joining the call today and for your interest in Exagen. I also want to thank the team at Exagen as they've continued to serve our customers through this transition in the company. I look forward to continuing to drive improvements within the organization and operations at Exagen and updating you on our progress over the coming months.
