MDxHealth SA (NASDAQ:MDXH) Q4 2023 Earnings Call Transcript
MDxHealth SA (NASDAQ:MDXH) Q4 2023 Earnings Call Transcript March 6, 2024
MDxHealth SA misses on earnings expectations. Reported EPS is $-0.39 EPS, expectations were $-0.28. MDXH isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good afternoon, ladies and gentlemen and welcome to the MDxHealth Fourth Quarter and Full Year 2023 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Wednesday, March 6, 2024. Before we begin, I would like to remind everyone that the company 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 the company's filings with the Securities and Exchange Commission, specifically in the company's annual report on Form 20-F. I would now like to turn the conference over to Michael McGarrity, Chief Executive Officer. Please go ahead.
Michael McGarrity: Thanks Ludie and thank you all for joining us for our fourth quarter and year-end 2023 earnings conference call for MDxHealth. With me today is Ron Kalfus, Chief Financial Officer. Commercial execution and operating discipline are the two foundational drivers of our business and performance and our fourth quarter and full year results for 2023, demonstrate the continued success of this strategy. It is also becoming clear that our strategy is creating multiple sources of growth for our company, including test-menu augmentation, cross-selling of complementary diagnostic solutions, and expanding payer coverage. With these growth drivers in place, we believe MDxHealth remains well-positioned to continue to deliver sustainable growth that will lead to adjusted EBITDA profitability in the first half of 2025.
I would now like to review a few of the financial and operating highlights from our fourth quarter and full year 2023 results that clearly demonstrate this execution. Fourth quarter revenue was $19.4 million, an increase of 50% over the prior year period. For the full year, revenue increased to $70.2 million an increase of 89% year-over-year. Excluding the impact from GPS, total revenues in 2023 grew 42% year-over-year. In the fourth quarter, gross margin improved to 65.3% versus 56% in the prior year period, which represents a year-over-year improvement of 9.3 percentage points. And for the full year, gross margins were 62.6% compared to 51.9% for the prior year, an improvement of 10.7 percentage points, which reflects continued focus on operating discipline, cost management, and expanded payer coverage for our full menu of precision diagnostics.
So, what these financial metrics speak to is that we are delivering on our mission to become a premier growth company in precision diagnostics focused in the urology. In fact, when we step back and look at the progress from only a few years ago, our growth trajectory has been, I believe, quite compelling. In 2019, MDxHealth reported annual revenue of $11 million. Today, we are now projecting 2024 revenues of $79 million to $81 million, which represents a five-year CAGR or compound annual growth rate of over 50%. Importantly, we have also maintained our operating discipline over this period of extraordinary top line growth. Gross margins have dramatically improved from essentially no gross profit generated by the business in 2019 to over 62% for the full year 2023.
And our focus on sales force productivity, is allowing us to manage and maintain our operating expenses as we go forward. This dynamic is providing clear leverage in our P&L and reinforces our confidence in reaching adjusted EBITDA profitability. Of course, our world-class technology, outstanding clinical lab operations, and improved reimbursement for our tests, are all major factors in our success. But without question, one of the ultimate drivers for sustained execution is the strong and we believe enduring relationships we have built in our urology customer base and key opinion leader community. In my experience, these initiatives and resulting effect on our business underpins the strength of our business model. To that end, we remain relentlessly focused on the customer experience in order to maintain and advance our best-in-class reputation.
Before my closing comments, I will turn the call over to Ron for a review of our financial and operating results. Ron?
Ron Kalfus: Thank you, Mike. As Mike mentioned, we are pleased to report our positive results for the fourth quarter and year end 2023, with strong reported growth in revenues and solid improvements in gross margins. Revenues for the fourth quarter ended December 31st, 2023, increased by 50% to $19.4 million versus $12.9 million for the fourth quarter 2022. Fourth quarter revenues of $19.4 million were comprised of $8.8 million from GPS, $5.9 million from Confirm, $3.2 million from Resolve, and $1.3 million from Select. For the year 2023, our revenues were $70.2 million, representing an increase of 89% over the same period last year. Excluding GPS, full year 2023 revenue increased 42% over the same period last year. Moving below the revenue line.
Our gross profit for the fourth quarter was $12.7 million, an increase of 75% as compared to $7.2 million for the third quarter of 2022. Gross margins were 65.3% for Q4 2023 as compared to 56% for Q4 2022, an improvement of 9.3 percentage points. For the full year 2023, gross profit was $43.9 million, an increase of 129% as compared to $19.2 million for the full year 2022. Gross margins were 62.6% for the full year 2023 as compared to 51.9% in the prior year, an improvement of 10.7 percentage points. Operating loss for the fourth quarter was $6.3 million compared to $8.9 million for the fourth quarter of 2022, representing a reduction of 30%, driven by top line growth and improved gross margin. Full year 2023, operating loss was $27.3 million compared to $37.9 million for the same period last year, a reduction of 28%.
Cash and cash equivalents as of December 31st, 2023 were $22.4 million. Our total use of cash for the fourth quarter was $10.3 million. The increase in cash used in the fourth quarter was driven by non-operating non-recurring cash payments of $2.3 million, primarily attributed to the transition to our sole listing on NASDAQ. This concludes my brief overview of the results and I will now turn the call back to Mike.
Michael McGarrity: Thanks Ron. As I have consistently communicated, MDxHealth is a growth company. Everything we do is based on and in a commitment to growth; growth of our revenue, margins and profitability; growth in our shareholder base, attracting a high-quality institutional investors who understand our business, and who have set high expectations for consistent execution and results. Simply put, we strive to say what we're going to do and then execute and deliver, which we believe will lead to recognition, appreciation, and differentiation of this consistency and associated long-term sustainable growth potential of our business. Growth of our offering is reflected in our progression over the last 18 months from one to four revenue-generating tests with all of our prostate cancer tests covered by Medicare, and included in the NCCN guidelines.
And finally, growth stemming from our proven best-in-class channel, which has catalyzed multiple inbound opportunities, for partnership, M&A, and distribution. In our evaluation of any of these opportunities, we will apply the same diligence and rigor as we have with the GPS acquisition and resolve channel opportunity. And we have found ourselves with the luxury of being very selective with our opportunities and partners. As a final note, I often convey to people in any venue that we pass the friends and family test. This concept implies in my belief that if you have a friend or family member navigating the complex confounding and anxiety-inducing diagnostic pathway of prostate cancer, you would want the clinician and patient to have access to the MDxHealth menu.
No other company offers a precision test at the multiple points along this pathway. We have a clinically actionable diagnostic from elevated PSA to initial biopsy, whether the result is negative or positive, we're ruling out unnecessary intervention and for risk stratification of patients that may need intervention. And we continue our efforts to advance into optimal monitoring of the approximately 1.5 million patients in active surveillance annually with our Monitor project. So, it was particularly powerful at our recent national sales meeting to focus on the patients and the clinicians that we serve and believe we are doing just that and doing it the right way with the right people. To me personally, and all of us connected with the MDxHealth, that was quite compelling.
So, in closing, we at MDxHealth will remain committed to driving sustainable growth, which will service the foundation for value creation for all of our stakeholders, including patients, customers, and shareholders. So, thank you for your interest in, and support of, MDxHealth, and I'll turn the call back over to Ludie for questions.
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