MDxHealth SA

Greetings and welcome to the MDX Health second quarter 2024 earnings call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. A brief question and answer session will follow the formal presentation. As a reminder, this call 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 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 20F. I would now like to turn the call over to Michael McGarity, CEO. Thank you, Michael. You may begin.

Thanks, Paul. And thank you all for joining us for our second quarter 2024 Earnings Conference Call for MDX Health. With me today is Ron Kalfas, Chief Financial Officer. I am pleased to report that our business continued to generate strong financial performance in the second quarter and first half of 2024, with revenue growth of 32% and 34%, respectively, over 2023. Our results reflect our continued focus on commercial execution and operating discipline, which we believe will drive sustainable growth through 2024 and beyond. On our last call, I noted our strategy of creating multiple sources of growth. That proved to be the case again in Q2. And in a moment, I will provide greater detail on some of the key factors that help drive our strong performance. But first, a few brief highlights from our results that support our view that our growth trajectory is sustainable. We reported second quarter revenue of $22.2 million, an increase of 32% over prior year period. Of note, and as I've consistently stated, we have two levers of revenue growth. The first is with our sales team driving unit adoption from our urology customer base. And the second is our market access managed care team driving coverage, which shows up in our average selling price. In Q2, we clearly delivered on both levers with total billable test time of approximately 21,000 tests representing total test unit growth of 31%. These two important metrics clearly underscore the balance and sustainable execution of our commercial team and the growth opportunity that lies ahead for us as we expand our menu offering in a $5 billion total addressable U.S. market and build our market-leading precision in precision urology diagnostics. Based on the expansion of our business and test menu, in an effort to continue to provide good visibility to the market, we are now disclosing volume and growth rates for our menu by segment. Volume for our tissue-based tests, consisting of confirm and GPS, achieved 15% year-over-year growth in the second quarter, with ASP clearly continuing to accelerate. Our liquid-based tests, consisting of select and resolve, provided 35% unit growth in Q2 over last year, And we expect the recently introduced hereditary germline test to begin to contribute to growth in this segment of our menu. For context and refresh on the value of our expanded menu driving our growth, I think appropriate to characterize the value of each test. Confirm MDX is a tissue-based test performed after a negative biopsy which is the only test that analyzes each core of the biopsy with our proprietary methylation technology and delivers a result with a 96% negative predictive value. Additionally, a positive confirmed test can identify patients harboring undetected clinically significant prostate cancer, which regrettably biopsies miss up to 30% of the time. We are seeing increasing understanding of the importance of this test by our urology customers and by pathologists advocating for the value of confirm after a negative biopsy. Our GPS test is a highly advanced multiplex gene test from tissue following a positive initial biopsy in which we interrogate the tumor for risk stratification directing, again, clinically actionable follow-up by urologists and providing informed decision-making for patients. It should be noted that the GPS test has 20-year follow-up data for adverse pathology and prostate cancer-specific mortality and requires materially less tissue than any other test on the market, which is critical to our pathology stakeholders. To be clear, We are the only company that can provide an actionable diagnostic on the other side of initial biopsy, whether positive or negative. As an additional update, I've commented on the complexity of the integration of the GPS test post-acquisition as a carve-out from Exact Sciences. We completed the integration on the Field Sales Organization mid-year 2023, and importantly, we have now completed the laboratory operations transition from the Xact Redwood City Lab to our RMDX Self Lab here in Irvine. Credit to Xact as our partner and our laboratory and information technology groups for completing this complex transition. We are confident that our diligence and thesis of the value of this acquisition has been realized and will continue to show in our growth trajectory. Cementing our offering is the most comprehensive diagnostic menu for the pathway of prostate cancer. On the liquid-based side, our select MDX test is utilized after elevated PSA and can deliver a 95% negative predictive value. potentially avoiding unnecessary biases and associated risks to patients. Our Resolve MDX is a urine-based test for DNA of organisms that can lead to complex and recurrent infections, with 10 million cases of UTI that present annually, 20% of whom present to urology. It is, again, a highly multiplexed test of pathogens, and importantly, also provides a broad and comprehensive susceptibility profile to treating clinicians, effectively getting to the right drug for the right bug. We believe this additional transparency provides a more consistent and granular view of our growth across our business. In addition, Q2 of last year was the strongest quarter for the business, and we believe this quarter's unit and revenue growth over that comp reflects both customer understanding of our value proposition as well as our sales team's execution. Our core technology provides multiple drivers of growth with our menu covered by Medicare and our prostate cancer test included in the NCCN guidelines. So it is our expanded menu and execution that serve as a basis for our recently raised 2024 revenue guidance to $85 to $87 million from the initial $79 to $81 million provided at the beginning of this year. This new guidance represents greater than 20% year-over-year top line growth, which we view as a long-term sustainable goal. In a moment, I will provide some closing comments on the considerable progress we have made, as well as our view forward. But first, let me turn the call over to Ron for a brief review of our financial and operating results for Q2.

Ron? Thank you, Mike. To follow in Mike's remarks, we are very pleased to report strong performance in the second quarter of 2024. Revenues for the second quarter ended June 30, 2024, increased by a robust 32% to $22.2 million versus $16.7 million for the first quarter of 2023. All of this growth was organic and delivered without expansion of our sales organization, which is a testament to the leverage we are generating from our sales channel and reflects greater market penetration of our full line of tests into the $5 billion U.S. addressable market. Revenue from our tissue-based tests made up approximately 81% of our Q2 2024 revenue. It should be noted that the recently introduced hereditary germline test did not contribute to our growth for the second quarter, and as stated previously, we expected to begin to contribute to our revenues in the second half of the year. Moving below the revenue line, our gross profit for the second quarter of 2024 was $13.3 million, an increase of 33% as compared to $10 million for the second quarter of 2023. Gross margins were 60% for the second quarter of 2024, as compared to 59.7% for the second quarter of 2023. Operating loss for the second quarter was $7.4 million, compared to $7.7 million for the second quarter of 2023, representing a reduction of 4%, driven by top-line growth, improved gross margins, and continued operating discipline. Cash and cash equivalents as of June 30, 2024 were $21.3 million. This concludes my brief overview of the results. I will now turn the call back to Mike.