MDxHealth SA

Greetings and welcome to MDX Health 2023 Q2 and Mid-Year Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. Before we begin, I would like to remind everyone that we will make forward-looking statements during today's call. Whether in prepared remarks or during a Q&A session, these forward-looking statements are subjects to inherit risks and uncertainties. These risks and uncertainties are detailed in the risk factors section of our filings with the Securities and Exchange Commission, specifically in the company's annual report on Form 20F. It is now my pleasure to introduce Michael McGarity, Chief Executive Officer. Thank you. You may begin.

Thanks, Doug. And thank you all for joining us for our 2023 Q2 and Mid-Year Earnings Conference Call for MDX Health. With me today is Ron Kalfas, Chief Financial Officer. Following our strong first quarter results, our second quarter results further reflect our commitment to all stakeholders to delivering strong and sustainable growth. Our results and commitment, as always, are rooted in a consistent and unwavering focus on operating discipline and commercial execution. Our efforts to drive growth are reflected in our expanded menu that now consists of three tests for prostate cancer at the three key decision points in the diagnostic pathway for urologists and patients, all of which are now covered by Medicare and included in the NCCN guidelines. In addition, we are seeing increasing demand for our Resolve MDX test for urinary tract infections, which was launched in 2022. As we anticipated, Resolve MDX is providing another source of consistent growth and expanding adoption based on its clinically actionable diagnostic results and the strength of our sales channel into urology. We believe our results also reflect a unique balance of menu and excellence in laboratory service, as well as significant leverage in our P&L to take the company to operating profitability and value creation for, again, all of our stakeholders. Evidence of our belief is based in the following. Our Q2 2023 revenue grew by 143% over Q2 2022. And when excluding the acquisition of GPS, our revenue increased 29%. We continue to execute on our integration of the GPS business. Specifically, we have completed the restructuring and integration of our sales team and are confident that this acquisition will make a significant contribution to our revenue growth, gross margin accretion, and path to profitability, which is consistent with our original thesis on the test fit within our business. Finally, our focus on operating discipline is evident in our anticipated progress and accelerated our gross margin from approximately 42% in Q2 last year to almost 60% in this quarter. As I have noted, We expect this trend in gross margin to continue and drive a corresponding linear decline in our cash burn as reflected in our reported 48% or $8 million decline in total cash burn from second half 2022 to first half 2023. With our operating fundamentals in place and our menu and sales team poised to deliver sustainable growth, We now believe that we will turn adjusted EBITDA positive in the first half of 2025. We are confident in our ability to execute on this view based on our top line growth, improving margins, and breadth of our menu, all of which have positioned MDX Health as an uncommon company profile within the precision diagnostic space. I will provide a further update and view forward for 2023, but first let me turn the call over to Ron for a review of our financial and operating results for Q2.

Ron? Thank you, Mike. As Mike mentioned, we are pleased to report our positive results for the first half of 2023. Revenues for the first half and the June 30, 2023 increased by 142% to $31.4 million versus $13 million for the first half of 2022. Excluding GPS, first half 23 revenues increased by 34% versus last year. Our first half revenues of $31.4 million were comprised of $14 million from GPS, $12.4 million from Confirm, $3.7 million from Results, with the remaining revenues from Select and Other. In the second quarter, our revenues were $16.7 million, representing an increase of 143% over second quarter 22. Excluding GPS, Q2 23 revenues increased 29% over Q2 2022. Second quarter 23 revenues of $16.7 million were comprised of $7.8 million from GPS, $6.7 million from Confirm, $1.6 million from Results, with the remaining revenues from select and other. Moving below the revenue line, our gross profit for the first half of 2023 was $18.7 million as compared to $5.8 million for the first half of 2022. Our gross margins were 59.5% for the first half of 2023 as compared to 44.4% for the same period last year, representing a gross margin improvement of 1,510 basis points primarily related to our product mix and the addition of GPS to our product menu. Operating loss for the first half of 2023 was $16.5 million, a decrease of 3% over the same period last year, helped by our increased revenues and improved growth margin. Net loss for the first half of 2023 of $22.3 million increased by $4.2 million versus $18.1 million for the prior period, primarily from an increase in financial expenses, of which $3.9 million was a non-cash fair value adjustment to the GPS contingent consideration, and the remainder was primarily related to an increase in interest expense from our desk facility. Cash and cash equivalents as of June 30, 2023, were $39.5 million. Our total cash burn for the first half of 2023 was $16.5 million, down 48% sequentially from $24.5 million in the second half of 2022. We expect continued declines in operating burn in the second half of this year. This concludes my brief overview of the results, and I will now turn the call back to Mike.