MDxHealth Q1 Earnings Call Highlights

Key Points

• MDxHealth is exiting its Resolve UTI business and plans to close its Plano, Texas lab, citing reimbursement uncertainty and a dispute with Medicare administrator Novitas, which has sought up to $10.4 million in recoupments. Management said the move will let the company focus on its core prostate cancer diagnostics franchise.
• For Q1 2026, the company reported $27.4 million in revenue as reported, while pro forma revenue for the ongoing prostate cancer business was $23.9 million, up 11%. It also ended the quarter with $43.2 million in cash and equivalents, before a $15 million earn-out payment made in April.
• MDxHealth reset its full-year outlook for the core cancer business to $110 million to $115 million, implying 20% to 26% growth, and said it will concentrate sales and investment on Confirm, GPS and ExoDx. Management also highlighted AI-focused initiatives and expects tissue volumes to accelerate later in the year.

MDxHealth NASDAQ: MDXH reported first-quarter 2026 revenue of $27.4 million while announcing a strategic exit from its Resolve UTI testing business and the planned closure of its Plano, Texas, laboratory facility, a move executives said will sharpen the company’s focus on prostate cancer diagnostics.

Chief Executive Officer Michael McGarrity said the company’s growth strategy has helped transform MDxHealth into a urology-focused precision diagnostics business, with revenue increasing from $11 million in 2019 to $108 million in 2025. However, he said reimbursement uncertainty around Resolve made the business line unsustainable.

“As we prioritize the ongoing integration of ExoDx and the growth of our core prostate cancer business, we have made the strategic decision to discontinue our Resolve UTI offering and to cease operations at our laboratory facility in Plano, Texas,” McGarrity said.

Resolve Exit Tied to Reimbursement Uncertainty

McGarrity said the Resolve test was designed for urology customers to help diagnose and treat patients with complex, multi-organism infections. But he attributed the decision to exit the business to “the increasingly uncertain reimbursement landscape,” specifically citing what he described as a recent policy reversal by Novitas, the company’s Texas Medicare administrator.

MDxHealth said it recently received communication from Novitas seeking up to $10.4 million in recoupments tied to historical Resolve testing claims. McGarrity said the company believes the action is “without merit” and is defending its position through the Medicare appeals process.

During the question-and-answer session, McGarrity told TD Cowen analyst Dan Brennan that the matter may not be resolved for “a significant period of time” unless it is quickly decided in MDxHealth’s favor. He said the company does not anticipate liability or recoupment, but added that if there were any minimal recoupment, the company understands it would be amortized over five years.

McGarrity also defended the clinical value of the test, saying the company marketed Resolve specifically to urology customers and a defined patient population rather than for routine urinary tract infections. He said MDxHealth has “absolute certainty” in the medical necessity and clinical validity of its testing services.

Core Prostate Cancer Business Grew on Pro Forma Basis

Interim Chief Financial Officer Ron Kalfus said that because the board’s decision to exit Resolve occurred in April, the Plano lab and Resolve business remain included in MDxHealth’s reported first-quarter continuing operations. The company also provided pro forma figures excluding Resolve to show the trajectory of its ongoing prostate cancer operations.

For the quarter ended March 31, 2026, MDxHealth reported:

• Revenue of $27.4 million on an as-reported basis.
• Pro forma revenue of $23.9 million for its core prostate cancer operations, excluding Resolve, up 11%.
• As-reported gross profit of $16.6 million.
• Pro forma gross profit of $15 million, representing a 62.9% pro forma gross margin, compared with 68% in the first quarter of 2025.
• As-reported operating expenses of $23.9 million and an as-reported operating loss of $7.3 million.
• Pro forma operating expenses of $22.9 million and a pro forma operating loss of $7.9 million, compared with a pro forma operating loss of $4.7 million in the prior-year period.
• As-reported net loss of $8.9 million and a pro forma net loss of $9.4 million, compared with a pro forma net loss of $9.3 million in the first quarter of 2025.

Kalfus said the year-over-year increase in pro forma operating loss was primarily related to the addition of the ExoDx business. He also said the difference in gross margin was primarily related to the mix between tissue and liquid tests.

The company ended the quarter with $43.2 million in cash and cash equivalents. Kalfus said MDxHealth made a $15 million 2025 earn-out payment to Exact Sciences on April 15, which would bring pro forma cash as of March 31 to $28.2 million after accounting for that payment.

Guidance Reset Around Cancer Diagnostics

MDxHealth established updated 2026 revenue guidance for its core cancer business, excluding Resolve, of $110 million to $115 million. McGarrity said that represents 20% to 26% year-over-year growth for the core cancer business.

He said exiting Resolve allows the company to focus its sales organization on Confirm, GPS and ExoDx, its prostate cancer diagnostic menu. McGarrity said the company had completed strategic mapping and cross-training of its expanded sales force during the first quarter and met an internal goal of transitioning SelectMDx customers to ExoDx.

“By streamlining our operations and removing the reimbursement noise associated with the UTI business, we are effectively resetting our growth trajectory,” McGarrity said.

Asked by Craig-Hallum analyst Bill Bonello about cash costs related to the restructuring, McGarrity said the company expects the Plano operation to cease by the end of June. He said MDxHealth expects costs associated with shutting down the operation to be materially offset by efficiencies across the organization, though he stopped short of saying they would be completely offset.

Management Addresses Tissue Volumes and AI Strategy

Analysts also questioned management about tissue test volumes. McGarrity acknowledged multiple factors affecting the tissue business, including the integration of ExoDx and the need for continued customer engagement around Confirm and GPS. He said the company expects sequential acceleration in tissue volumes through the remainder of the year, beginning in the second and third quarters.

McGarrity said there has been no material change in the competitive landscape from the two competitors on the GPS side, but he noted increased discussion around artificial intelligence in the company’s market, particularly as it relates to GPS.

Earlier in the call, McGarrity said MDxHealth had initiated an AI-focused strategic initiative to build a data platform across the company. He said the company aims to use its large base of biopsy tissue specimens to improve operating efficiency, clinical value and customer experience. He also cited the ProtecT Trial collaboration with the University of Oxford, saying the study protocol now includes AI-enhanced endpoints intended to improve the prognostic value of the GPS test.

McGarrity said the company has also started a collaboration with a customer-facing digital innovation company to develop AI-enhanced offerings tied to its tissue tests. In response to a follow-up question from Brennan, he said MDxHealth had evaluated AI technology options in the space and believes its internal efforts and partnerships will support the GPS and Confirm businesses.

About MDxHealth NASDAQ: MDXH

MDxHealth, headquartered in Mechelen, Belgium, with a U.S. presence in Newton, Massachusetts, is a molecular diagnostics company focused on improving the accuracy of cancer diagnosis and treatment decision making through epigenetic biomarker assays. The company specializes in developing and commercializing tests that detect DNA methylation changes associated with urological cancers, enabling more precise risk stratification and patient management.

MDxHealth's lead product portfolio includes ConfirmMDx and SelectMDx.

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