MDxHealth SA (NASDAQ:MDXH) Q4 2023 Earnings Call Transcript

Michael McGarrity: Yes, I got that question a number of times as we went through our process to put our guidance. And I think as we’ve — it’s been difficult over the last few years. I mean, the combination of the pandemic as well as launching additional tests into our menu per my previous comment. I feel like we now have history, right, which is — informs how you predict and project your business more accurately. So, we believe that, that’s indeed a tight band, but we’re confident that we can meet or exceed the expectations that we’ve put out to the street for 2024 for sure.

Thomas Vranken: Okay. Thank you.

Michael McGarrity: Thanks Thomas.

Operator: Your next question comes from the line of Dan Brennan from TD Cowen. Your line is open.

Unidentified Analyst: Hey good afternoon guys. This is Kyle on for Dan. Thanks for taking the questions. I just wanted to ask on the quarter, if there’s any granularity you can provide on maybe the volume from Confirm and Select/Resolve to? Is there anything you can share there?

Michael McGarrity: Hey Kyle. I’m not sure I understand the question. So, we’ve seen as reflected in the revenue and the growth per test, we’ve seen consistent growth with each of those from a unit perspective. We have seen ASP accretion. That was the point I made as far as our revenue drivers are twofold, right, unit adoption and then our coverage, which shows up in our ASP. And so we’ve seen — we’re confident that we have seen that with each of our tests individually and the menu collectively. We don’t put out a press release on every coverage — positive coverage decision we get, but we have noted a couple of key ones in the past few quarters with United on GPS and Select with Cigna. So, we’re confident we can see consistent growth that’s driving our guidance of mid-teens. We believe that’s very sustainable.

Unidentified Analyst: Got it. And so on the volume side, though, in the fourth quarter, was there anything you’ve disclosed there across the different tests?

Michael McGarrity: Just what we disclosed, Kyle.

Unidentified Analyst: Got it. Okay. And just one more on the adjusted EBITDA profitability in the first half of 2025 can you just remind us of your confidence there? You reiterated that you’ll get there in the first half of 2025, but if you found a target that was the right asset for the portfolio that might push this target out a bit, what are your thoughts on that?

Michael McGarrity: Well, if I understand your question, you’re asking would an additional opportunity that we’re not currently offering be the catalyst for that? My answer is no. Yes. No, we’re confident that we’re not basing that on additional opportunities that will come in. So, we’re confident we can get there with our current menu very clearly.

Unidentified Analyst: Got it. Thank you.

Michael McGarrity: Thanks Kyle.

Operator: Your next question comes from the line of Jason Bednar from Piper Sandler. Your line is open.

Jason Bednar: Hey, good afternoon guys. I’ll pack a few in here just to start. Look at the performance in the quarter, Resolve was really the big upside driver in the quarter, at least for all the [Indiscernible] model. So, really just a few questions here that come to mind. I mean, at first, how much more room for growth is there from this specific test? When do those trends start to normalize? I think Mike, you kind of alluded to that maybe happening at some point in 2024, but any other clarity there would be helpful? And then second, given its size, it’s probably becoming increasingly relevant from a margin standpoint. So, can you remind us where margins on Resolve fit versus your other tests? And then just maybe to come back to one of the questions earlier, but as you think about commercializing other tests, you’ve obviously validated your ability to commercialize something with Resolve.

Are you exclusively looking in urology — male urology? Is that where you’re — as you evaluate partnerships or M&A?

Michael McGarrity: Hey Jason, thank you. Yes, with Resolve, candidly, that’s exceeded. We set our expectation internally, but it’s exceeded our expectations. And I think it’s based on the diligence that we did. And one aspect of our diligence, I should note is that we — which may not be customary, but we really involve our sales team and our smart reps who have access and understand how our customers adopt. And so all of that, our thesis is held with that. Now, the growth rate that we’ve had, clearly, that will normalize. But what I would say is that, that market to the second part of your question related to Resolve is — of the 10 million cases that present annually with UTI in the U.S., 20% of them present to urology. So, we have room to grow, yes, I would expect that to normalize as we go forward.