MDxHealth Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 14, 2025

There are 9 speakers on the call.

Operator

note this event is being recorded. I would now like to turn the conference over to mister John Fernandez with LifeSci Advisors.

Operator

Please go ahead.

Speaker 1

Good afternoon, and thank you for joining us for the MDX Health first quarter twenty twenty five earnings conference call. Joining me on today's call are Michael McGarity, Chief Executive Officer and Ron Kalpas, Chief Financial Officer. Before we begin, I would like to remind everyone that the company will be making forward looking statements during today's call. Whether in prepared remarks or during the Q and A session, these forward looking statements are subject to inherent risks and uncertainties. These risks and uncertainties are detailed in the Risk Factors section of the company's filings with the Securities and Exchange Commission, specifically in the company's annual report on Form 20 F.

Speaker 1

I'll now turn the call over to Michael McGarity, Chief Executive Officer.

Speaker 2

Thanks, John, and thank you all for joining us for the first quarter twenty twenty five earnings conference call for MDxHealth. With me today is Ron Kalfas, Chief Financial Officer. Our Q1 results reflect continued execution across our organization, led by our commercial team, and we remain well on track to achieve our goal of 20% or greater revenue growth in 2025 and beyond. As further evidence of our commitment to this growth objective, I think it's important to note that this Q1 twenty twenty five is our sixteenth consecutive quarter of 20% or greater revenue growth for MDxHealth. Again, we expect our results every quarter to reflect our unwavering focus on operating discipline and commercial execution.

Speaker 2

As we look at our progress, I would point to a number of defining milestones that reflect the talent, commitment, and success of the team across our organization. We achieved Q1 revenue growth of 22%, and our tissue based test volume grew 41 for the quarter. More specifically, Q1 total billable volume was approximately 24,000 tests, representing total test unit growth of 24%. Volumes for our tissue based tests, which include ConfirmMDx and GPS, came in at approximately 12,600 for the quarter, an increase of 41% over the prior year period. For our liquid based tests, which include SelectMDx, ResolveMDx, and Germline, test volumes were almost 12,000, an increase of 9% over the prior year period.

Speaker 2

It is clear that a number of key factors are driving the continued growth of the tissue based segment of our menu, which accounted for 85% of our Q1 revenue. The diagnostic value of our Confirm test is becoming increasingly appreciated by our urology customers, and our accelerated growth is evidence of the influence our focus on pathology has provided as a key supporting driver of urology adoption. The Confirm test has several unique value attributes that account for this growth trajectory. Most notably, it is estimated that thirty percent of negative initial biopsies are false negatives. This is not a function of a poor biopsy by the urologist, nor a misread by pathology.

Speaker 2

It is solely due to the limitations of needle biopsy that sample less than 1% of the prostate. Our Confirm test addresses this limitation by interrogating each core of the biopsy. And with a 96% negative predictive value, Confirm can obviate or defer the need for repeat biopsy, which is often a reflex protocol for these patients. Of equal importance and value, a positive confirmed test identifies the specific core or core of the biopsy that may indicate a lesion, informing follow-up or intervention for the patient. The value to the patient of avoiding potentially unnecessary repeat biopsies, coupled with the corresponding value of detecting cancer that was missed upon initial biopsy, carries compelling value from both a healthcare economics and patient care perspective.

Speaker 2

Based on this compelling clinical value, we believe the market opportunity for Confirm is quite significant and growing with the rate of prostate cancer rising an estimated five percent to ten percent annually. We have demonstrated that Confirm is relevant for every negative biopsy, and with no competitive tissue test to meet this unique and clinically actionable value, we are confident in Confirm's continued accelerating growth and our ability to capture a significant portion of this $500,000,000 market opportunity. Our Genomic Prostate Score, or GPS, test presents a similarly compelling value to both clinician and patient. Our GPS test measures the expression levels of a group of cancer related genes that are in a patient's tumor tissue. The activity of these genes can provide important information about how a specific cancer might best be treated.

Speaker 2

In 2022, we acquired the GPS test from Exact Sciences, informed by our diligence and based on the thesis that the strength of our channel and access to large urology group practices, coupled with our advanced access to pathology, would not only accelerate GPS revenue, but also drive gross margin accretion for our overall business. It was also critical to establishing our partnership with urologists by informing care following biopsy. We now stand alone as the only company that can deliver actionable diagnostic answers to both positive and negative patient profiles. And while there are two competitors in the GPS market opportunity, we are confident that our thesis is becoming reality. As our growth rate indicates, we are both converting the market and taking competitive share.

Speaker 2

Based on focus, execution, and a few key characteristics and dynamics in the clinical practice of prostate cancer. The quality of data associated with GPS for localized prostate cancer patients, which is estimated to account for approximately seventy percent of the eligible patient population, is, we believe, the most compelling, with twenty year follow-up data for both adverse pathology and prostate specific mortality. Also of note is the additional benefit that significantly less tumor tissue is needed for GPS than for competing tests, offering a higher valid result rate, serving a larger pool of eligible patients. This particular feature is again compelling to urologists and pathologists, as it provides a pathway that is best for patients. Each of these features of our tissue based tests positions MDX Health as a clear leader in precision diagnostics for prostate cancer, providing the highest quality diagnostic menu for clinicians and patients.

Speaker 2

Based on the proprietary value of this menu, coupled with the talent and execution of our sales and support teams, we remain confident in achieving our committed goal of 20% revenue growth, as we have now demonstrated consistently over the last sixteen quarters. Of course, all of this progress and success would not be realized without all of our operating groups' dedication to our vision of being the most consistent growth company in the urology diagnostics space. True excellence is measured by performance over time, and we believe our consistent and strong performance quarter after quarter reflects that commitment to excellence. To summarize, I believe no other company is better positioned to help improve the patient journey through prostate cancer diagnosis and treatment, and our results continue to reflect our success in bringing value to this patient population. Based on these dynamics, we are confirming our previously announced revenue guidance of $108,000,000 to $110,000,000 for 2025, meeting or exceeding our 20% revenue growth goal, and delivering positive adjusted EBITDA in this Q2 of twenty twenty five.

Speaker 2

I will follow-up with closing comments and view forward, but first let me turn the call over to Ron for a review of our financial and operating results for Q1. Ron?

Speaker 3

Thank you, Mike. To follow on Mike's remarks, we are very pleased to report strong performance in the first quarter of twenty twenty five. Revenues for the first quarter ended 03/31/2025 increased by 22% to $24,300,000 versus $19,800,000 for the first quarter of twenty twenty four. Like the prior quarter, our growth was organic and delivered without expansion of our sales organization, reflecting the leverage we continue to generate from our sales channel and the greater market penetration of our tests. Moving below the revenue line, our gross profit for the quarter was $15,500,000 an increase of 29%, as compared to $12,100,000 for the first quarter of twenty twenty four.

Speaker 3

Gross margins were 63.8%, compared to 60.8% for Q1 'twenty four, an increase of three percentage points, primarily attributed to our test mix. Our operating loss for the quarter declined 31% to $4,600,000 compared to $6,600,000 for the first quarter of twenty twenty four, primarily driven by a growth in sales and gross profit, partially offset by a growth of 8% in operating expenses, which were primarily related to an increase in clinical studies, stock based compensation, and scale. Our net loss increased 8% to $9,200,000 compared to $8,500,000 for the prior year period, primarily driven by non cash fair value adjustments of $2,500,000 Excluding these non cash fair value adjustments, our net loss would have decreased 70% to $6,700,000 Finally, our fourth quarter adjusted EBITDA was negative $1,300,000 a 71% improvement over the first quarter twenty twenty four adjusted EBITDA of negative $4,500,000 We believe that we are on track to achieving our goal of positive adjusted EBITDA in the second quarter of this year. A reconciliation of IFRS to non IFRS financial measures has been provided in the tables included in this press release. Cash and cash equivalents as of 03/31/2025, were $65,700,000 Note that on April 29, we made our 2024 earnout payment to Exact Sciences in the amount of $28,000,000 After taking into account this earnout payment, our pro form a cash balance as of 03/31/2025 would have been $37,700,000 As a final comment, we have not seen, and we do not expect to see, a material impact on our financial operations from the recent developments related to tariffs.

Speaker 3

This concludes my overview of the results. I will now turn the call back to Mike.

Speaker 2

Thanks, Ron. To be successful in the dynamic market of precision diagnostics, companies must have in place the resources to access high growth market opportunities with a comprehensive commercial channel, a disciplined operating team informed by experience, and a differentiated menu that brings a high level of clinically actionable value to the physician and patient. Over the last five years, MDX Health has built a strategy to put these resources into place, and our consistent financial performance reflects the successful execution of this strategy. We believe our leadership position within the high growth urology markets we serve is highly sustainable based on the following: Our most valuable asset is our people across the organization and every operating discipline. While MDX Health has amassed a high quality portfolio of IP, trade secrets, know how, and world class laboratory operations, I firmly believe it is our best in class sales channel that has significantly driven our performance.

Speaker 2

As many of you may know, my experience with world class commercial organizations includes Stryker, where I was part of a team that defined excellence for thirteen years. I can say with confidence that our company's sales and marketing teams are functioning at that same level of excellence. Our business became sticky and sustainable when we locked our sales channel post the GPS acquisition, and it should be noted we have not expanded, nor do we see the need to materially expand our sales and marketing investment to meet our growth objectives. Our demonstrated sales force productivity has allowed us to meet or exceed our growth goals and double our revenue over the past three years without material additional investment, and we expect that productivity to continue in a very sustainable way. Additionally, our willingness and ability to access capital from high quality investors over the past fifteen months enables us to meet all of our financial obligations, which is further supported by increasing leverage in our business model as we turn to operating profitability.

Speaker 2

Finally, we have demonstrated experience in identifying and capitalizing on growth opportunities, which has served as the foundation of our menu expansion and gross margin accretion over the past few years. Whether in the sales force, laboratory operations, revenue cycle management, client services, patient advocacy, quality, or regulatory, our entire MDx team operates under the mission that there is a patient and family on the other side of every sample we receive. This is what drives our customer base to trust MDxHealth as their laboratory partner for these critical diagnostic tests that inform patient pathways. We will continue to strive to deliver on our commitments of growth and value while positioning MDX Health as the leading growth precision diagnostics company, focused solely into our high growth target urology market. And as always, we carry a great deal of responsibility to provide value to all of our stakeholders, including patients, customers, payers, and shareholders.

Speaker 2

So thank you for your interest in and support of MDX Health, and now I'll turn the call back over to the operator for questions.

Operator

We will now begin the question and answer session. The first question comes from Andrew Brackmann with William Blair. Please go ahead.

Speaker 4

Good afternoon and thanks for taking the questions. Mike, in your remarks, you sort of mentioned the importance of pathology. That's something you've done for the last several quarters or probably over a year now. And tissue's clearly now performing quite well versus sort of where it was a year ago. So anything in particular that you'd sort of say is resonating now with that group of pathologists versus say a year ago where the growth rates were lower than where they're at today?

Speaker 4

Thanks.

Speaker 2

Yeah, Andrew. I think to be clear, I think maybe we were operating under a little bit of a false premise that pathology would be reluctant to adopt or advance confirm because the implication was that there was a missed read on biopsy. And that has clearly been dismissed as factually inaccurate. It's the limitations of the biopsy that can miss a lesion. When pathology became clear on that, working closely with urology, what we know and what we've seen is that a number of these large urology group practices have their own pathology lab.

Speaker 2

And a number of the pathology labs we work with serve multiple urology group practices. So when they understand really the two part value of our tissue based test, confirm, if they report on a negative biopsy, recommend confirm, you can imagine the leverage that we see there. And secondly, that feature that I know which sounds a little trivial but is not to pathologists with the tissue requirement of the GPS test being materially lower than the two competing tests, that aligns as well with pathology's desire to preserve as much tissue as possible. So what we've seen is that push for support from pathology to Confirm and GPS for the reasons I've stated, it's just driven a real partnership and our reps have found the opportunity and taken advantage of connecting those two in that process because it's really a twofold process with urologist doing the biopsy and then relying on pathology to report back. That's the clear adjustment that we made to our strategy, and it has really probably exceeded our expectations of the impact, how quickly that's happened and how well it's working.

Speaker 2

But we think that's really sustainable. And again, that understanding of acceptance of and belief in the value has clearly catalyzed our growth.

Speaker 4

That's great color. And then maybe just as a related follow-up there. You also mentioned that you're taking share and converting the market for the GPS test. When you are taking share, what are your customers telling you as sort of the key reason for that? Is it the portfolio, all of the sort of the benefits that you talked about throughout the script and reply to the last question?

Speaker 4

Is there anything sort of in particular that a common thread that you hear throughout? Thanks.

Speaker 2

Yeah, I would say yes. It's really that entire story. I think it starts with an excellent sales rep, right? So my comments, I don't want to overstate, but what we're seeing is the talent, the focus, the execution, and the access and influence we have with our customer base is really reflective of a super high quality rep who is consultative, two ears and one mouth, and is able to identify how to best position both GPS and Confirm within a practice. And then with the support of the data and the features I noted, candidly, we think we have a better test.

Speaker 2

Confirm is the only test. So having an understanding of the value proposition there and the unique value to the practice of prostate cancer and the real patient benefit of avoiding repeat biopsy. I've stated this before, but I think the traditional protocol upon a negative biopsy is the good news is your biopsy is negative, we'd like you to come back in nine to twelve months for a repeat biopsy and patient compliance becomes a significant issue there. So it's what we believe to be a best in class sales channel. And standing on the other side of that biopsy was an answer for both.

Speaker 2

I think when I say we become their laboratory partner, it's our support team also that plays a key role there. So we're very confident that we are doing both, converting the market and taking share for those reasons.

Speaker 4

Okay, well that's great color. I'll leave it there. Thanks guys.

Speaker 2

Thanks, Andrew.

Operator

Thank you. The next question comes from Mark Massaro with BTIG. Please go ahead.

Speaker 5

Hey, guys. Thanks for taking the questions. Congrats on our strong quarter. Other labs in the space this quarter talked about one less day in weather impacts. Now you put up a nice beat and 20% plus revenue and volume growth despite the weather and despite the fewer the less day.

Speaker 5

So can you just speak to what or if any impacts you saw in the weather and if that means perhaps that Q2 might I know that Q2 is usually seasonally stronger than Q1, but any thoughts as we think about Q2 relative to Q1?

Speaker 2

Well, I think I would probably lean toward your second part of your view that we do occasionally see seasonality. Don't normally point to whether or sales days is important when we think about that in Q4 and Q1. But we feel like our performance, I don't know, is normalized or overcame that, I guess, for lack of better term. So I'm not pointing to anything that really mitigated our performance in Q1. And as we go through Q2 and report, we'd expect to see continued execution without providing you a Q2 guide mark.

Speaker 5

Understood, understood. The volume growth was well in excess of our modeling. Course, you did talk about GPS gaining share. So my inclination is that GPS was very strong in the quarter. Would you be able to also comment on Confirm and maybe just talk about the synergies of selling both?

Speaker 2

Yeah, Mark. Guess while we don't break out individually, we've demonstrated over the last number of quarters, I think Q4 was 50% growth, Q1 '40 '1 percent growth. That can't happen unless it's balanced. We're seeing is very balanced growth, let me say it that way. So it's not like one is growing 60 and the other 20.

Speaker 2

We're seeing very balanced growth there, and I think that reflects our view that the combined adoption, what we're seeing is that our urology customers using both Confirm and GPS has accelerated. And that was our view. That was, as I noted, a significant part of the thesis on the GPS acquisition. And we're seeing that. And I think it's very, very sustainable.

Speaker 2

So with no competition for Confirm, a better understanding of the real value of Confirm and that market opportunity is significant. I think my view of the upside on Confirm and the runway we have for continued sustained growth there is significantly high from a confidence level. And our positioning of GPS, I think, has really cemented our position. I think our focus of the sales organization and our incentive comp plan is intentional, to use that word, to drive the behavior we want from our sales team. And I think that's reflected in our results.

Speaker 2

And we believe we have an opportunity to cement our position on the other side of that initial biopsy because of the unique position we have with an answer for both.

Speaker 5

We're pretty excited the

Speaker 2

performance of the sales team in doing that. Go ahead, Mark. I'm sorry.

Speaker 5

I apologize for interrupting you. Yes, I've got that. And then if I can sneak one more in. I know in recent earnings calls, Mike, you've talked about having visibility to some other opportunities, in the urology space. You've talked about not likely being looking to do something transformative, but perhaps adding something to the bag, to strengthen, the portfolio or or perhaps, you know, make a change to kinda stand out further in the industry relative to competition.

Speaker 5

Recognizing that valuations have been volatile, but in some cases, we've seen some assets go for very small dollar amounts. How are you guys thinking about M and A? And if you could just perhaps comment about what your funnel might look like.

Speaker 2

Yeah, Mark. So I wouldn't comment specifically. Think what we have is when I noted our experience with taking advantage of growth opportunities, I think they look two ways. We did have the GPS, was transformative M and A. But if I look at Resolve, that's really a channel growth opportunity that we also have in front of us.

Speaker 2

So our growth strategy process that I referred to over time over the last few years that we run here, What I would note is that we were always looking outward. I think that that's flipped to inbound because of the challenges of putting together what we have in place here after a lot of work and a significant period of time. But our channel leverage and the setup we have here is conducive to taking advantage of growth opportunities. There are some opportunities that we like, but we're just very disciplined in, as you know, and what is clear is the dynamic landscape related to regulatory reimbursement. We just want to we like to derisk those pretty significantly.

Speaker 2

So would I expect our menu to look different down the road? I think that's a reasonable assumption based on how different it looks than a couple of years ago. But nothing specific at this time. We'll be opportunistic, but we'll also be very disciplined in going to market and keep hopefully our track record of credibility there that we're not just trying things out.

Speaker 5

Yep, okay, great. Congrats on all the progress.

Speaker 2

Thank you, Mark.

Operator

Thank you. The next question comes from Dan Brennan with UBS. Please go ahead.

Speaker 6

Great. Thank you. Thanks for the questions, guys. Maybe just on the same thread since I was going to go to the same question, but maybe a little more color. Just on the tissue growth, which really has accelerated these last three or four quarters.

Speaker 6

I know, Mike, you just talked about balanced growth and you talked about the combination of cross selling to these doctors which was part of the strategy. Can you give us some flavor on how many doctors are actually doing it today since that is really a driver of the uptake when maybe they order both? Just how far into that opportunity are you? Any context you can give there?

Speaker 2

Yeah, Dan. Not a specific number, that growth, to your point, it happens two ways, I think I would say. So our sales team, there's plus or minus eleven thousand urologists in The US, Eight Thousand practice in prostate cancer. And our penetration is well represented there. Our growth and what our sales reps have been really successful at is twofold.

Speaker 2

First of that pathology push really matters. To my point, if pathology is on board within a urology group practice, that's a multiplier. And if a pathology group is on board with the value in serving multiple urology group practices, that's also a push. What we've seen with our reps is if they're in a large urology group practice, just like any former sales rep, you get some adopters within that practice and then pushing that through the practice is what we've seen. I think that was a good concept and we believe that would happen.

Speaker 2

It's really beginning to happen. So without giving a specific number, I think our market penetration is probably in a really good spot right now. We've demonstrated and derisked the sustainable adoption. I pointed to the I used the term sticky because that's what's happened, right? The fact that we've been able to see this growth and progress in our revenue over the past three years since the GPS acquisition without really adding a single direct sales rep.

Speaker 2

That only happens if that adoption is sticky, sustainable, and moving through practice. When I joined here, it was very manual. Reps were going in, did you have any negative biopsies this week or this month? The key to our progress without Salesforce expansion is a direct result of compliant adoption. That's an inside term.

Speaker 2

But we have a number of tools where we're able to determine that a urologist or a urology group practices has adopted our diagnostic pathway. And that's hopefully reflected clearly in the growth with a fixed number of sales reps.

Speaker 6

Great. I know you tend to really want to focus on the volume side as a kind of the success point here. But I'm just wondering if you can shed any insight on the pricing side, particularly for GPS. Anything you can share there and kind of the headroom opportunity. It sounds like biomarker bills for most of the group have been maybe an incremental small positive, but nothing really being called out.

Speaker 6

But I'm wondering what your success or strategy is and in the next call it twelve, eighteen months. Is there an opportunity to drive like an uptick in realized price?

Speaker 2

I think there is. I wouldn't point to it. I'd probably join that group with little evidence to point to. I think what we're seeing is the tissue based tests clearly impact the gross margin. What we have seen, the focus of our market access managed care team has demonstrated the ability to hold or advance ASPs.

Speaker 2

But we've also seen a corresponding benefit through our operating team here with driving COGS through scale, candidly with our growth trajectory. But also, we've seen cost reduction since our transfer of the GPS from Exact to MDX Health. Our view was that the cost of them running the test would be offset by headcount here to bring it live. Our profile has been better than we anticipated. So that comes through clearly in the margin.

Speaker 2

But we'll continue to focus on both levers, driving costs down from manufacturing and lab perspective and driving coverage, which will show up in ASP and we'll continue to update that as we go forward. But we view it as a two part P and L impact.

Speaker 6

And then maybe last one. I know the liquid side is certainly smaller given the pricing, but the volume growth has kind of come down a decent amount from where we were sitting at the beginning of twenty twenty four to where we sit today and exiting 4Q twenty twenty four. Just any color? I mean, you're up against some really tough comps, but just what's happening on kind of the liquid side?

Speaker 2

Yeah, I think that's somewhat tactical. We feel we have an opportunity to really seize our position on the tissue and cement our position there on the other side of that initial biopsy. And so by proxy, maybe directing a little bit of our sales force incentive comp and focus. But we're still confident in the liquid side of the business. And again, no material contribution from germline likely to come in the second half partly by that focused design that we came into this year when we set our sales team out with their incentive comp plan.

Speaker 2

And I would suggest that it's working. But we're confident that both it's an important part of our business. But clearly the tissue carries the day from a pricing, from a margin, and from a growth perspective. So we're confident in the menu, but that's what you're seeing there.

Speaker 4

Great. Okay, thanks guys.

Speaker 2

Thank you, Dan.

Operator

Thank you. The next question comes from Jason Bednar with Piper Sandler. Please go ahead.

Speaker 7

Hey, good afternoon guys. Nice start to the year here and thanks for taking the questions. Ron, I want to pull you in give you an opportunity here and Mike feel free to weigh in as well. But you both sound really confident delivering against the full year guide, flipping to positive EBITDA here in the current second quarter. It's probably a good signal about what you're seeing here real time halfway through the quarter.

Speaker 7

Also, I'm confident in the overall outlook. But mean, I kind want to get to the next milestone on EBITDA, and I'll ask it this way. Can you see confidence sustaining 20% revenue growth? Are there any shifts from the recent trend line in OpEx spend as we think forward? Or should we expect a lot of that revenue that growth in revenue dollars to be dropping through to EBITDA dollars as we model forward this year and then into next year as well?

Speaker 3

Hey, Jason. Yeah, so the trends you're seeing so, you know, there's two things, right? There's the revenue growth and on the OpEx side, I think we've said that in our last call as well, that we expect to keep OpEx fairly flat. And so with these two, with revenue growing and with OpEx remaining fairly flat, and only maybe slightly changing based on scale, that's how we see and have confidence in getting to our adjusted EBITDA in the second quarter.

Speaker 7

And sorry, just maybe to put a finer point. Beyond the second quarter run, I guess, do you feel about that outlook? Is that, I guess, is the right way to think about revenue dollar growth dropping through almost one for one to EBITDA dollar growth? And then secondarily, the follow-up here. The gross margin was really impressive in the first quarter.

Speaker 7

Typically, see your gross margin scale as the year goes on. I guess, is that the right path we should be thinking about as we model gross margins here for 2025?

Speaker 3

So first of all, on the OpEx comment, so again, for the rest of the year, we kind of expect OpEx to be flat, and we don't expect that to fluctuate much. On the gross margin, like you said, it depends on the mix. The more the mix relies on tissue, the better the margins will be. But as revenue continues to grow, we will see that go down to the EBITDA line.

Speaker 2

Yeah, the only thing I would add, Jason, is we're not counting on any margin heroics to A, flip this quarter or take us through the leverage Ron referred to in the P and L. Our margin as it was running coming into this year is what we expected to make the EBITDA turn. So Q1 came in stronger. We'll work to sustain that. But you would see that kind of, again, to Ron's point, we're not counting on accretion on the gross margin line, but we are counting on continued discipline on the OpEx line, to Ron's point, with the exception of scale.

Speaker 7

Okay. All right, makes sense. Just one last one, a little bit bigger picture. Mike, Mark earlier was asking about interest in M and A. I'll ask about interest in just maybe just more broadly bringing in more to the menu through other means that isn't necessarily outright M and A.

Speaker 7

I guess, would do you have a preference or interest in just if it was to be something like partnering or licensing agreements, things that maybe are a little more financially palatable for you versus just outright acquiring assets? I guess do you have a preference one way or the other, or are you just kind of preaching discipline on all fronts?

Speaker 2

Probably the latter. But I think I would agree with your assumption, right? That we have examples of both. And it could be a combination. But we have a dashboard of opportunities that we continue to track.

Speaker 2

I think we have a process of derisking them. And I don't have anything provide as far as a clear view of additional opportunities. I'll just go ahead and give you an example. Bladder cancer is something that would be an obvious fit for us that we like. We have good visibility to a number of ways to access that market, but we'd like to have a number of aspects of that market be derisked.

Speaker 2

To your point, there's a couple of different ways we could access that with the right setup.

Speaker 7

Got it, very helpful, thank you.

Operator

Thank you.

Speaker 2

Thanks, Jason.

Operator

The next question comes from Thomas Franken with KBC Securities. Please go ahead.

Speaker 8

Hi, Mike. Congrats on the strong results and thanks for taking my questions. Maybe for first question, wanted to zoom in a bit deeper on, you mentioned that you're gaining market share with GPS. Is it something you could quantify a bit more further or give a bit more grounds on how you see that where you see that market share today compared to, let's say,

Speaker 4

when you acquired the test?

Speaker 2

Hey, Thomas. Yeah, I'd be reluctant to kind of quantify. Our view is that the rate of prostate cancer is growing estimated to five percent to ten percent annually as it would be expected post pandemic. Still patient catch up there remarkably, as well as the aging population. And I think just the general I've made the comment that I think prostate cancer is where breast cancer was twenty five years ago.

Speaker 2

I'm not an authority on that. But I think the face of prostate cancer, the awareness, men getting screened earlier, and all those I think are set up well for our menu. I commented on the fact that we really drive adoption of our pathway, particularly on the tissue side. And our share gains there are both Confirm and GPS. There's a significant amount of opportunity there, Confirm alone in that 500,000,000 market opportunity.

Speaker 2

But GPS, there's two ways we're driving growth. One is converting the market, not using biomarker testing. And the other is taking share. I don't think our growth rates that we've demonstrated here can happen without both those levers working with our sales team effectively. So I think we're in a good position where we've demonstrated our position, to my point, where we really think we have an opportunity to cement our position there.

Speaker 2

But there's plenty of room and opportunity which we emphasize rather consistently with our sales organization.

Speaker 4

Okay, very clear. Thanks.

Speaker 8

And I also wanted to ask, we've been talking about adjusted EBITDA profitability coming up for a couple of quarters now. That seems to be very feasible at this point in time. I was just wondering and beyond that and looking also maybe beyond the full year 2025 guidance, what you see as the next key milestones in the coming months and years for the company going forward?

Speaker 2

Well, think growth. So we've worked really hard to put the company in a position to meet all of our obligations. I think we went out and financed the company at a difficult time, maybe at a price that nobody liked. But I thought it was important to put ourselves in a position where we can just focus and execute. And so that's what we'll continue to do now with the backdrop of a couple of the questions earlier on will we consider and potentially take advantage of additional growth opportunities?

Speaker 2

Yes. But we feel like if we can continue to execute, drive our top line growth, be very disciplined on our OpEx, to Ron's point, that the business begins to fund itself with really clear leverage. So we want to be the growth vertical in the urology space. I think we're demonstrating progress in doing that. And we'll continue to update on any additional opportunities that we have in front of us.

Speaker 2

But otherwise, our value creating milestones, I think, are focused on execution. And that's what our entire organization is driving toward.

Speaker 4

Okay, that's clear. Thank you.

Speaker 2

Thank you, Thomas.

Operator

Thank you. The next question comes from Nelson Cox with Lake Street Capital Markets. Please go ahead.

Speaker 4

Great. Thanks for taking the questions. I'll kinda ask a two part question here just as one, answer a lot of the questions already. But, you know, what percent of your revenues today are generated from large urology practices and maybe talk about how that's trended and then maybe talk about how penetration has trended at these practices as the age of the account progresses and as that familiarity deepens? Thanks.

Speaker 2

Yeah, Nelson, I think our progress within the log post, we wouldn't quantify the number of blood posts that were penetrated in, but I would suggest that it's pretty broad. And then within urological practice, when we did the diligence on the GPS acquisition, what we found was a number of urologists use a number of different tests. And candidly, I don't know that there was a good rationale for why. And I think that our approach has been to really create differentiation for the why with regard to GPS position in the market. And when you have Confirm alongside, it can come down to as simple as the decision is with our menu you could be sending to four different laboratories.

Speaker 2

We also sell the value of our organization as a real partner. I think our reputation, which is really, really important and the sales team counts on it for our lab operating at a really high level of performance from a turnaround time, which we think we're getting to best in class on that front. Our client services group and patient advocacy and even our RCM support from a billing and reimbursement side, those matter. I think they make a difference. And I think our sales team has really done a nice job of differentiating why they choose to use a test.

Speaker 2

And if we which we clearly have, our view was that some of these urologists that are using different tests creating a reason or understanding that reason was not based on necessarily in some cases anything specific. And once we're able to connect our service levels with our menu advantages, with the data, particularly associated with GPS, and then the influence of pathology coupled with that and the reasons that they have a lean toward that, all those in aggregate make a big difference. And I think that's made the adoption stickier and sustainable. And then driving it within a large urology group practice. As you know, some of these urology group practices can have ten, fifteen, 20, 20 five urologists.

Speaker 2

So once we get our position, and as a sales rep, that's really optimal use of time where you have access, you have influence, you have credibility. That's what we're seeing.

Speaker 4

Great. That's helpful color. I'll stop there. Thanks, Dawson.

Operator

This concludes our question and answer session and today's conference. Thank you for your participation. You may now disconnect.

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Key Takeaways

  • MDxHealth achieved its 16th consecutive quarter of at least 20% revenue growth, reporting Q1 2025 revenue of $24.3 million and a 24% increase in total test volumes.
  • Tissue-based tests accounted for 85% of Q1 revenue, with ConfirmMDx volumes up 41%; its 96% negative predictive value helps defer unnecessary repeat biopsies and highlights a $500 million market opportunity.
  • Since acquiring the GPS test in 2022, MDxHealth has seen accelerated adoption and gross margin accretion thanks to compelling 20-year clinical data and lower tissue requirements than competitors.
  • Financially, Q1 gross profit rose 29% to $15.5 million (63.8% margin), operating loss fell 31%, and adjusted EBITDA improved 71% to –$1.3 million, positioning the company for positive adjusted EBITDA in Q2 2025.
  • MDxHealth reaffirmed its full-year 2025 revenue guidance of $108 million to $110 million, ending Q1 with $65.7 million in cash (pro forma $37.7 million post-earnout) and expects no material tariff impact.
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Earnings Conference Call
MDxHealth Q1 2025
00:00 / 00:00