MDxHealth SA

Good afternoon, ladies and gentlemen, and welcome to the MDX Health third quarter 2023 earnings call. 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 the Q&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 our filings with the Securities and Exchange Commission, specifically in the company's annual report on Form 20-F. At this time, all lines are in the listen-only mode, but following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for an operator. Also note that this call is being recorded on Wednesday, November 8, 2023. And I would like to turn the conference over to Michael McGarrity, Chief Executive Officer. Please go ahead, sir.

Thanks, Sylvie. And thank you all for joining us for our third quarter 2023 earnings call for MDX Health. With me today is Ron Kalfas, Chief Financial Officer. Today's comments will be brief and serve as a supplement to our Q3 pre-release. Third quarter results demonstrate our continued execution commitment to deliver strong and sustainable growth for all of our stakeholders by focusing on commercial execution and operating discipline. Based upon the significant improvements made across our business, including our industry-leading diagnostic product menu, focused commercial organization, and overall operating efficiency, we believe MDX Health is now on a path to deliver strong and sustainable growth that will lead to operating profitability in the first half of 2025. As the third quarter results demonstrate, this execution is translating into improvements across our entire P&L. Revenue has increased from $11 million in 2019 to the high end of our $65 to $70 million guidance for this year, 2023. and revenue for the first nine months of 2023 is more than doubled versus the prior year period. Gross margin has expanded more than 20 percentage points from mid-year last year to 65%. Operating expenses have been managed and actually declined in Q3 year over year. Operating loss has been more than cut year-over-year, and cash burn has declined by almost 50 percent from Q4 2022. These across-the-board improvements to our P&L give us visibility to operating profitability in the first half of 2025 and demonstrate why MDX Health is a unique outlier compared to many other small-cap growth companies in the life sciences diagnostic sector. Over time, we expect investors will appreciate this distinction and increasingly view MDX Health as a premier high growth leader in precision diagnostics with operating profitability targeted in the coming quarters, not years. Further building upon this expectation, we are very pleased to have garnered virtually unanimous shareholder support for our D-listing from Euronext and consolidation of our trading to NASDAQ as approved on November 3rd. We expect that consolidating the trading of our common stock onto a single exchange will improve trading liquidity and reduce our administrative costs going forward. Before discussing our quarterly results in more detail, I think it is important to step back and comment on the last four years of our transformation of MDX Health. First, we made significant changes in our leadership and sales team to ensure commercial execution and operating discipline. As I have commented, we now have 70 people in our field sales organization, with only five of them remaining from 2019, reflecting the full-scale restructuring of that team as we prioritize talent, focus, incentive compensation, and performance expectations. Second, we navigated through the pandemic without compromising on this progress. Despite occurring additional operating expenses over this challenging period, it is now clear that our team's progress in advancing our initiatives laid the foundation for the improving growth and financial metrics that we have experienced over the last number of quarters. We also resisted the pull of the pivot to COVID testing which while tempting, we felt would be dilutive to our strategic focus. Third, we executed a transformational acquisition of the GPS test, which has solidified our comprehensive menu and established MDX Health as the only provider of a clinically actionable test at each point in the diagnostic pathway of prostate cancer. Importantly, GPS, along with our select and confirm tests, are all covered by Medicare and included in the NCCN guidelines. And finally, we validated the strength of our restructured sales team by introducing our first channel opportunity with the launch in 2022 of our Resolve MDX test. Resolve MDX is marketed to our urology specialist customer base complex and often multi-organism urinary tract infections with specific susceptibility profiles, which in the first few quarters of sales is on a $10 million annualized run rate. I will provide our further view forward, but first let me turn the call over to Ron for a review of our financial and operating results for Q3. Ron?

Thank you, Mike. As Mike mentioned, we are pleased to report our positive results for the third quarter of 2023. Revenues from the third quarter ended September 30, 2023, increased by 73% and $19.3 million versus $11.2 million for the third quarter of 2022. Excluding GPS, third quarter revenue increased by 45% versus last year. Third quarter revenues of $19.3 million were comprised of $8.1 million from GPS, $6.6 million from Confirm, $2.7 million from Resolve, and $1.9 million from Select. For the nine months ended September 30, 2023, our revenues were $50.8 million, representing an increase of 110% over the same period last year. Excluding GPS, nine-month revenue increased 38% over the same period last year. Moving below the revenue line, our gross profit for the third quarter was $12.6 million, an increase of 102% as compared to $6.2 million for the third quarter of 2022. Growth margins were 64.9% for Q3 2023 as compared to 55.8% for Q3 2022, an improvement of 908 basis points. For the three months ended, excuse me, for the nine months ended September 30, 2023, gross profit was $31.3 million, an increase of 161% as compared to $12 million for the first nine months of 2022. Gross margins were 61.5% for the first nine months of 2023 as compared to 49.6% for the first nine months of 2022, an improvement of 1,190 basis points. Operating loss for the third quarter was $4.6 million compared to 11.9 million for the third quarter of 2022, representing a reduction of 62% driven by improved margin and a 6% reduction in operating expenses. For the nine-month period, operating loss was $21 million compared to $29 million for the same period last year, a reduction of 27%, driven by improved margins, partially offset by an increase in operating expenses related to the additional field sales personnel associated with the GPS acquisition. Cash and cash equivalents as of September 30, 2023, were $32.7 million. Our total use of cash for the third quarter was $6.8 million, down 23% sequentially from $8.8 million in the second quarter. This concludes my brief overview of the results, and I will now turn the call back to Mike.