MDxHealth S.A. (MDXH)

Executive Summary / Key Takeaways

• MDxHealth is a commercial-stage precision diagnostics company specializing in urologic solutions, particularly for prostate cancer, and has demonstrated consistent, organic revenue growth exceeding 20% for 16 consecutive quarters.
• The company's core investment thesis is built on its differentiated, comprehensive menu of tissue and liquid-based tests (Confirm mdx, GPS, Select mdx, Resolve mdx), which uniquely provide actionable diagnostic answers for both positive and negative initial prostate biopsies.
• MDxHealth is on track to achieve positive adjusted EBITDA in the second quarter of 2025, supported by strong revenue growth, disciplined operating expense management, and improving gross margins.
• The acquisition of the ExoDx business from Bio-Techne (BIO), completed in September 2025, is expected to further strengthen its precision diagnostics portfolio and contribute over $20 million in revenue in 2026.
• The company faces competition from larger diagnostic players but leverages its specialized technology, strong sales channel, and deep engagement with both urologists and pathologists to gain market share and drive sustainable adoption.

The Foundation of Precision: MDxHealth's Strategic Ascent in Urology Diagnostics

MDxHealth SA, a company rooted in its 2003 incorporation as OncoMethylome Sciences SA and rebranded in 2010, has strategically positioned itself as a leader in urologic precision diagnostics. Under the leadership of CEO Michael McGarrity since 2019, the company embarked on a mission to build the highest quality growth vertical in this specialized field. This strategic focus has culminated in a comprehensive menu of diagnostic tests designed to address the complexities of prostate cancer diagnosis and treatment, as well as urinary tract infections. The company's journey reflects a deliberate expansion of its offerings and a deep understanding of the clinical pathways in urology.

The market for prostate cancer diagnostics is experiencing significant tailwinds, with the incidence of prostate cancer estimated to be rising 5% to 10% annually. This growth is driven by an aging population and a rebound from pandemic-related screening delays, which saw prostate cancer screenings decline by an estimated 50% over a two-to-three-year period. MDxHealth's strategy is to capitalize on this expanding market by providing clinically actionable information that improves patient outcomes and healthcare economics.

Technological Edge: Precision in Prostate Cancer Diagnostics

MDxHealth's competitive advantage is fundamentally rooted in its differentiated diagnostic technologies, which span both tissue and liquid-based testing. The company's portfolio is designed to provide a complete diagnostic pathway for prostate cancer, uniquely offering actionable results whether an initial biopsy is positive or negative.

The Confirm mdx test is a cornerstone of this offering, addressing the critical challenge of false-negative initial biopsies. It is estimated that 30% of negative initial biopsies are false negatives, not due to pathologist error but due to the inherent limitation of needle biopsies sampling less than 1% of the prostate. Confirm mdx utilizes proprietary methylation technology to analyze each core of a previously negative biopsy, delivering a 96% negative predictive value. This high accuracy can obviate or defer the need for repeat biopsies, a significant benefit for patients and healthcare systems. Furthermore, a positive Confirm mdx test can identify specific biopsy cores indicating a missed lesion, guiding subsequent intervention. No other competitive tissue test offers this unique and clinically actionable value.

For patients with a positive initial biopsy, the Genomic Prostate Score (GPS) test provides crucial risk stratification. Acquired from Exact Sciences (EXAS) in 2022, the GPS test measures the expression levels of cancer-related genes in tumor tissue to inform treatment decisions, including whether a patient is suitable for active surveillance or requires immediate intervention. A key differentiator for GPS is its robust 20-year follow-up data for both adverse pathology and prostate-specific mortality. Moreover, the GPS test requires materially less tissue than competing tests, a compelling advantage for pathologists focused on tissue preservation from limited biopsy samples.

In the liquid-based segment, Select mdx is a non-invasive urine test used after an elevated PSA or abnormal digital rectal exam. It boasts a 95% negative predictive value, helping patients potentially avoid unnecessary biopsies. The Resolve mdx test, a urine-based solution for urinary tract infections, identifies pathogens and provides a comprehensive susceptibility profile to guide targeted antibiotic treatment.

These technological differentiators translate into tangible benefits for investors by enhancing MDxHealth's competitive moat. The unique capabilities of Confirm mdx and the robust data supporting GPS allow for higher average selling prices (ASPs) and improved gross margins, as evidenced by the tissue-based segment accounting for 85% of Q1 2025 revenue and contributing to a gross margin of 63.8% for the quarter. The company's focus on pathology engagement, driven by the practical advantages of its tests like reduced tissue requirements for GPS, further solidifies its market position and drives sustainable adoption.

Competitive Landscape and Strategic Positioning

MDxHealth operates in a competitive diagnostics market, facing both direct and indirect rivals. Direct competitors include larger players like Exact Sciences, Myriad Genetics (MYGN), and NeoGenomics (NEO), all with significant presences in cancer diagnostics. However, MDxHealth has carved out a distinct and defensible niche through its specialized focus on urologic precision diagnostics.

MDxHealth's primary competitive advantage lies in its comprehensive "if-then" diagnostic pathway for prostate cancer, making it the only company capable of providing actionable results for both positive and negative initial biopsies. While Exact Sciences offers a broader oncology portfolio, MDxHealth's tests are specifically tailored to urologic applications, offering potentially greater efficiency in targeted scenarios. Myriad Genetics specializes in genetic testing for hereditary cancers, but MDxHealth's epigenetic technology in Confirm mdx provides a non-invasive approach that can offer notably easier implementation and potentially greater accuracy in early detection for specific urologic cancers. NeoGenomics provides extensive oncology-focused diagnostic services, yet MDxHealth's non-invasive urine-based tests offer significantly greater accessibility for patients.

MDxHealth's strategy emphasizes deep engagement with both urologists and pathologists. The company has successfully dispelled the "false premise" that pathologists would be reluctant to adopt Confirm mdx due to implications of missed reads. Instead, pathologists now appreciate that false negatives stem from biopsy limitations, not misinterpretation. This understanding, coupled with the GPS test's lower tissue requirement, has fostered strong partnerships, particularly with large urology group practices that often have in-house pathology labs or work with pathology groups serving multiple practices. This integrated approach creates significant leverage for MDxHealth's sales team, driving what management refers to as "sticky and sustainable" adoption.

Financially, while larger competitors may exhibit greater scale and diversified revenue streams, MDxHealth's focused approach has yielded impressive organic growth. The company's ability to achieve consistent revenue growth without expanding its sales force demonstrates superior sales force productivity and efficient market penetration. This contrasts with the broader market strategies of its larger rivals, allowing MDxHealth to maintain agility and a strong, specialized market presence.

Financial Performance: A Trajectory of Growth and Approaching Profitability

MDxHealth has demonstrated a robust financial performance trajectory, marked by consistent top-line growth and significant strides toward profitability. The company achieved its 16th consecutive quarter of 20% or greater revenue growth in Q1 2025.

In the first quarter of 2025, MDxHealth reported revenues of $24.3 million, a 22% increase over Q1 2024. This growth was driven by a 24% increase in total billable test volume to approximately 24,000 tests. Tissue-based tests (Confirm mdx and GPS) were particularly strong, with volumes growing 41% to approximately 12,600 tests, and accounting for 85% of Q1 2025 revenue. Liquid-based test volumes (Select mdx, Resolve mdx, and Germline) increased 9% to almost 12,000 tests.

Gross profit for Q1 2025 rose 29% to $15.5 million, with gross margins expanding to 63.8% from 60.8% in Q1 2024, primarily due to a favorable test mix. The operating loss declined 31% to $4.6 million, a significant improvement from $6.6 million in Q1 2024, reflecting growth in sales and gross profit. Adjusted EBITDA for Q1 2025 was negative $1.3 million, a 71% improvement over the negative $4.5 million reported in Q1 2024.

Looking back at 2024, the company's full-year revenue reached $90.05 million, a 28.29% increase from $70.19 million in 2023. Q4 2024 revenues were $24.7 million, up 28% year-over-year, with tissue-based test volumes surging 50% and liquid-based tests growing 10%. The company's five-year revenue compound annual growth rate (CAGR) has exceeded 50%, underscoring its sustained growth trajectory.

Liquidity and Capital Allocation

As of March 31, 2025, MDxHealth held $65.7 million in cash and cash equivalents. The company made a significant earn-out payment of $28 million to Exact Sciences on April 29, 2025, for the GPS acquisition, which would have resulted in a pro forma cash balance of $37.7 million as of March 31, 2025. This payment is part of a multi-year obligation, with similar payments expected in Q2 of 2026 and 2027.

In September 2024, MDxHealth successfully raised $40 million in gross proceeds through an equity financing, further bolstered by an additional $4.2 million from an over-allotment option exercised in October 2024, bringing the pro forma cash balance to $53.5 million as of September 30, 2024. These capital raises have been crucial in strengthening the balance sheet, enabling the company to meet its financial obligations and maintain focus on its growth initiatives.

Outlook and Guidance: Sustained Growth and EBITDA Positivity

MDxHealth's management has expressed strong confidence in its forward-looking trajectory. The company is confirming its 2025 revenue guidance of $108 million to $110 million, which represents meeting or exceeding its goal of 20% or greater revenue growth. A significant milestone anticipated for 2025 is achieving positive adjusted EBITDA in the second quarter.

This positive outlook is underpinned by several key assumptions. Management expects operating expenses to remain "fairly flat" for the remainder of 2025, with any increases primarily related to scale. This disciplined approach, combined with continued revenue growth, is projected to allow a greater portion of revenue to flow through to the EBITDA line, enabling the business to become self-funding as it reaches operating profitability. Gross margins are expected to remain in the mid-60s, with the test mix continuing to influence profitability.

The hereditary Germline test, introduced in the second half of 2024, is expected to begin contributing to revenue in the latter half of 2025, although management has indicated that "no material contribution from Germline likely to come in the second half" of 2025, partly due to a focused design in the sales team's incentive compensation plan. The company's overall guidance for 2025 is not contingent on substantial contributions from this new offering.

Furthermore, MDxHealth recently completed the acquisition of Bio-Techne Corporation's ExoDx business, including the ExoDx Prostate test, in September 2025 for $15 million. This acquisition is expected to contribute over $20 million in revenue in 2026 and is part of the company's strategy to further strengthen its precision diagnostics portfolio. The company is projecting revenue growth of over 30% in 2026, with adjusted EBITDA margins approaching 10%.

Risks and Challenges

Despite the strong growth trajectory, MDxHealth faces inherent risks. The dynamic landscape of regulatory reimbursement poses a continuous challenge, requiring ongoing efforts from the market access team to secure and expand coverage with commercial and private payers. While the company has demonstrated success in this area, the "two-step process" of obtaining coverage decisions followed by medical policies can introduce variability in ASPs.

Competition within the diagnostics market remains intense. While MDxHealth holds a unique position with its comprehensive prostate cancer diagnostic pathway, larger competitors with broader portfolios and greater operational scale could exert pressure. The company's reliance on its specialized niche, while a strength, also presents a vulnerability if market dynamics shift rapidly or if new technologies emerge that disrupt its core offerings.

Operational execution, particularly in managing the integration of new acquisitions like ExoDx and optimizing laboratory operations, is critical. Any missteps in these areas could impact financial performance and growth targets.

Conclusion

MDxHealth is a compelling investment story built on a foundation of innovative precision diagnostics, consistent execution, and a clear strategic vision within the high-growth urology market. The company's ability to deliver actionable insights for prostate cancer patients through its differentiated Confirm mdx and GPS tests, coupled with its strong commercial channel and deep engagement with both urologists and pathologists, has fueled 16 consecutive quarters of over 20% revenue growth.

With a confirmed 2025 revenue guidance of $108 million to $110 million and the imminent achievement of positive adjusted EBITDA in Q2 2025, MDxHealth is transitioning to a self-funding growth model. The recent acquisition of the ExoDx business further strengthens its portfolio and provides additional revenue streams for 2026 and beyond. While competitive pressures and regulatory complexities persist, MDxHealth's technological leadership, disciplined operations, and strategic focus position it to continue unlocking significant value in the evolving landscape of precision urology diagnostics.