IRVINE, CA, and HERSTAL, BELGIUM– August 29, 2019 – MDxHealth SA (Euronext: MDXH.BR), a commercial-stage innovative molecular diagnostics company, today announced its financial results for the half year ended June 30, 2019, and an update on its corporate strategy, vision and outlook.
Strategic Review Update
Michael McGarrity appointed as Chief Executive Officer in February 2019.
Key strategic areas of focus and execution:
ConfirmMDx®– refocus and engage the sales organization in driving ConfirmMDx utilization into established customer base of urologists
SelectMDx®– advance U.S. coverage for Medicare and commercial payors based on already validated market opportunity and clinical utility
Drive focus on operating discipline with regards to P&L and operating expenses
Evaluate deep product pipeline of previous R&D efforts and additional applications of licensed and proprietary biomarkers for additional value creation
Progress to date against these focus areas includes:
Leadership team significantly strengthened with appointments of John Bellano as Chief Commercial Officer and Ron Kalfus as Chief Financial Officer
Measures implemented to stabilize and return ConfirmMDx to growth through renewed focus on established customer base
Management encouraged by adoption rate of SelectMDx liquid biopsy test, and confident in visibility to CMS coverage – evidenced by recent positive draft Local Coverage Determination (LCD) issued August 22, 2019
Entered into an agreement with a global diagnostics company to commence a joint development program for SelectMDx on the partner’s decentralized point-of-care system with business and commercial terms to be further determined
Continued focus on operational execution and P&L discipline
Michael McGarrity, CEO of MDxHealth, said:“Since joining MDxHealth in February 2019, we have undertaken a comprehensive assessment of the business, with a specific focus on operating and commercial execution. I have been impressed with the significant growth potential of ConfirmMDx and SelectMDx. While we view 2019 as a year of transition associated with the impact of non-recurring volume and revenue, as well as instability in the commercial organization and execution, we are encouraged by our sequential quarterly progress. We now have a clear strategy to stabilise and return ConfirmMDx to growth and unlock the potential of SelectMDx.
“As part of our focus on building out market opportunity for our test menu, we are excited to announce that we have entered into an agreement with a global diagnostic company to commence a joint development program for SelectMDx on the partner’s decentralized point-of-care system. This agreement is illustrative of the opportunity for the Company to build out SelectMDx as a standard of care in prostate cancer, utilizing our proprietary capabilities to advance the promise of liquid biopsy to aid in the diagnosis and rule-out of prostate cancer. We believe this opportunity preserves SelectMDx’s growth in the Urology setting, while opening significant opportunities in the point-of-care setting and the primary care market.
“I would also like to comment on the strength of our management team, now fortified by the additions of John Bellano as Chief Commercial Officer and Ron Kalfus as Chief Financial Officer. John is a world class commercial leader with deep and broad experience in the molecular diagnostics space. John has a strong track record of building highly productive teams and bringing value to shareholders. John and I have experience working together and I am certain he will drive accountability, performance and results in our commercial operations.
“Ron Kalfus brings extensive expertise in financial operation in both the public and private settings. Ron has extensive experience in the CLIA laboratory business model and will apply this to our best-in-class laboratory operation to drive operating and P&L leverage. I am confident that the value of these important additions to our team will be evident in the very near term.”
Financial Highlights for the period ended 30 June 2019
Product revenue of $10.6 million, down 36% from $16.6 million in H1 2018, impacted by instability in the commercial organization in the latter part of 2018, as well as non-recurring revenue in H1 2018 from utility studies and out-licensed products
Sequentially, quarter-over-quarter, product revenue was up 37% from $4.5 million in Q1 2019 to $6.1 million in Q2 2019
Gross profit (excluding royalties and patent income) was $4.7 million or 44% of product revenue for H1 2019 compared to $10.0 million or 60% of product revenue for H1 2018. The reduction in gross profit percent is primarily due to the declines in net revenues, impacted by variances in volume, accounts receivable adjustments, and payor mix
Operating loss of $13.9 million, an improvement of $1.1 million over the same period last year
EBITDA loss of $12.2 million, an improvement of $1.3 million over the same period last year, as a result of optimization and focus-driven reductions in operating expenditures
Cash collections on products of $11.6 million, down 21% compared to H1 2018
Cash and cash equivalents of $12.2 million
Operational highlights for the first half of 2019
Billable test volume down 20%, to 8,732 in H1 2019 versus 10,864 in H1 2018. Excluding utility study testing, which increased non-recurring volume last year, our normalized patient billable test volume was down 8%
Sequentially, quarter-over-quarter billable test volume was stable at 4,379 in Q1 2019 compared to 4,353 in Q2 2019
Global billable test volume of 12,528, up 98% compared to 6,313 in H1 2018. Sequentially, quarter-over-quarter, global billable test volume is up 5% from 6,106 in Q1 2019 to 6,422 in Q2 2019
US billable test volume of 10,218, up 107% compared to 4,935 in H1 2018
Summary of billable test volume by product
Territory Products H1 2019 H1 2018 H1 YoY
Volume Volume % Change
U.S. ConfirmMDx 8,732 10,864 (20)%
SelectMDx 10,218 4,935 107%
EU SelectMDx 2,310 1,378 68%
Outlook and Value Creation
Management has identified several clear value drivers to realize the Company’s growth potential. Management is confident that clear strategic focus, continued disciplined operating expense management and experience-based execution in these areas of focus will drive revenue growth.
The following areas have been identified as key drivers:
Proven reliability of MDxHealth’s technology, with a clear validated value proposition and clinical utility, established through both peer reviewed publication and reference-based adoption
Experienced management team in place to lead focus and execution of initiatives
Opportunity to drive utilization of ConfirmMDx into the Company’s current customer base with a well-trained and high-performance sales culture
Visibility to broad coverage of SelectMDx based on the well characterized adoption and demonstrated clinical utility, further evidenced by recently issued draft LCD from Medicare in the U.S.
Opportunity to drive significant additional adoption of SelectMDx into the alternate site point-of-care and primary care settings
Explore focused opportunities to monetize and further build value through the Company’s additional menu and biomarker capabilities with strategic partnerships or carve outs