MDxHealth S.A. Q1 FY2026 earnings call

Core Strategic Direction

• The company maintains three core operating principles: focus, execution, and growth, with a commitment to transparency and operating discipline for all stakeholders.
• MDX Health has grown from $11 million in 2019 revenue to $108 million in 2025 revenue, expanded gross margins from the 20% range to the mid-60% range, and achieved adjusted EBITDA profitability in 2025 prior to the ExoDx acquisition, establishing itself as a leader in urology-focused precision diagnostics.
• The company made the strategic decision to discontinue the Resolve UTI offering and cease operations at its Plano, Texas laboratory, to refocus all resources on its core high-growth prostate cancer diagnostics business.

Rationale for Resolve Exit

• While Resolve addresses an unmet clinical need for urology patients with complex serial multi-organism UTIs, and has delivered clinical benefit to thousands of patients, an unexpected policy reversal from Texas Medicare administrator Novitas created unsustainable long-term reimbursement uncertainty.
• Novitas is seeking up to $10.4 million in recoupments of historical Resolve testing claims; management believes this action is without merit and is vigorously defending the company's position through the formal Medicare appeals process, and remains confident in the clinical validity of Resolve.

Operational Progress on Core Business

• The ExoDriven strategic integration mapping and cross-training of the expanded sales force was completed in Q1 2026, and the internal goal of transitioning select MDX customers to ExoDx was met, driving accelerated operating efficiencies.
• The entire sales force is now fully focused on the core prostate cancer test menu (Confirm, GPS, ExoDx), which covers every point of the prostate cancer care pathway, strengthening the company's market position.

AI Strategic Initiative

• MDX Health has launched a dedicated AI strategic initiative to build a company-wide AI data platform, leveraging the company's hundreds of thousands of unique biopsy tissue specimens to improve operating efficiency, maximize clinical value, and optimize the customer experience.
• The landmark PROTECT trial in collaboration with the University of Oxford now includes AI-enhanced endpoints to improve the prognostic value of the GPS test.
• The company has entered a collaboration with a customer-facing digital innovation company to develop AI-enhanced offerings built on its evidence-based tissue test portfolio.

MDX Health reports two core segments, with the Resolve UTI testing segment discontinued after the end of Q1 2026. For Q1 2026:

1. Core Prostate Cancer Precision Diagnostics (includes Confirm, GPS, and newly acquired ExoDx): On a pro forma basis (excluding the exited Resolve business), revenue was $23.9 million, representing an 11% year-over-year increase. Pro forma gross profit was $15 million, with a pro forma gross margin of 62.9% (down from 68% in Q1 2025, driven by a shift in tissue vs liquid test product mix). Pro forma operating expenses were $22.9 million, resulting in a pro forma operating loss of $7.9 million, up from a $4.7 million pro forma operating loss in Q1 2025, primarily due to the addition of the ExoDx business. Pro forma net loss was $9.4 million, compared to a $9.3 million pro forma net loss in Q1 2025. This segment contributes 100% of ongoing revenue post-exit.
2. Discontinued Resolve UTI Testing: Included in statutory Q1 2026 results, contributing $3.5 million in as-reported revenue (total statutory company revenue was $27.4 million). The segment was discontinued due to unsustainable reimbursement uncertainty.

MDX Health has updated its 2026 full-year guidance to reflect the exit from the Resolve UTI business, providing guidance only for the ongoing core prostate cancer business:

• Updated 2026 full-year revenue guidance is set at $110 million to $115 million, which represents a 20% to 26% year-over-year growth rate for the core prostate cancer business.
• Management expects sequential acceleration in tissue-based test volume (Confirm and GPS) starting in Q2 2026, after choppy performance in Q1 tied to integration and transition distractions, and this expected acceleration is incorporated into the updated guidance.

• Reimbursement uncertainty from Medicare administrative contractors (including Novitas' unexpected policy reversal for Resolve testing) created unsustainable business risk for the Resolve UTI segment, ultimately leading to its discontinuation.
• The ongoing Novitas recoupment claim for up to $10.4 million in historical payments creates contingent liability for MDX Health, though management expects a ruling in the company's favor. If any minimal liability is assessed, it would be amortized over a five-year period.
• Tissue-based test volumes have declined sequentially, and integration and transition distractions could continue to impact core business performance in the near term if acceleration initiatives do not meet expectations.
• Restructuring costs associated with the closure of the Plano laboratory (including severance and lease charges) create near-term cash outlay that may not be fully offset by operational efficiencies.
• The integration of the newly acquired ExoDx business has increased operating losses relative to the prior year, and integration risks could continue to pressure profitability in 2026.

Q: Dan Brennan (TD Cowen) asked for additional context on the Novitas $10.4 million recoupment claim, including timeline, potential liability, the nature of Novitas' concerns, and the clinical validity of Resolve. / A: Management stated the adjudication process will take a significant amount of time, likely extending beyond the end of 2026, and expects a ruling in the company's favor. If any minimal liability is issued, it would be amortized over five years. The claim is tied to broader industry scrutiny of infectious disease testing, but Resolve is targeted to a specific high-need urology patient population, and management maintains that its clinical validity and medical necessity are unquestionable. The test follows all relevant AMA guidelines, so management is confident in its appellate position.

Q: Bill Bonello (Craig Hallum) asked about the magnitude of cash restructuring costs for closing the Plano lab, and whether these costs will be fully offset by operational efficiencies elsewhere in the business. / A: Management confirmed the Plano lab closure will be completed by the end of June 2026, and most of the lab's costs are carried in cost of goods sold. While there will be some cash outlay for severance and lease charges, management expects these costs to be materially offset by operational efficiencies across shared service and sales teams that previously supported the Resolve business. Most of the direct Resolve-related operating expenses eliminated are sales incentive compensation.

Q: Bill Bonello (Craig Hallum) asked why tissue-based test volumes have been steadily declining, and whether MDX is losing customers for the Confirm and GPS tests. / A: Management attributed the recent Q1 decline to multiple factors, primarily integration distractions from the ExoDx acquisition and Resolve transition that pulled sales focus away from tissue test customer engagement. The Q1 2026 quarter also faced difficult year-over-year comparisons. Management expects tissue volume to accelerate sequentially starting in Q2, and this expectation is baked into the 2026 guidance, noting that existing customer adoption of tissue tests remains sticky.

Q: Mark Massaro (BTIG) asked whether Novitas issued a formal non-coverage determination for Resolve, and whether MDX evaluated moving Resolve testing to another lab in a jurisdiction with clear coverage policy. / A: Management confirmed Novitas does not have a formal coverage policy for UTI testing, and the recent change is an ambiguous shift in posture away from historical payment patterns. California's Medicare MAC has a formal non-coverage policy, so moving testing to that jurisdiction was not viable. Management declined to comment further on other strategic alternatives evaluated, noting the exit decision was the most prudent choice for all stakeholders given the reimbursement uncertainty.

Q: Dan Brennan (TD Cowen) asked what initiatives support management's confidence in upcoming tissue test volume acceleration, and what competitive changes are impacting the space. / A: Management noted growing industry interest in AI applications for urology diagnostics relevant to GPS testing, and MDX has completed a rigorous evaluation of AI options, pursuing a prudent collaborative path with a partner that already serves shared urology pathology customers. Internal AI initiatives and the external partnership, combined with the full refocus of the sales force on core prostate cancer products after the Resolve exit, give management confidence in accelerating tissue volume. Management noted no material competitive changes for GPS testing other than the growing AI focus.