Q4 2021 MDxHealth SA Earnings Call

Related to our future product pipeline.

Turning to payer coverage, we are waiting a final local coverage determination or LCD for our select Mdx test, which we expect to be issued by Palmetto by midyear.

As you May recall, a draft LCD for Biomarkers for prostate cancer published by Palmetto GBA under its multi X program, citing evidence of the clinical utility of select Mdx was issued in may of 2021.

Finally, we ended the year with $58 $5 million in cash strengthened by gross proceeds from our January equity raise of 25 million euros, approximately $30 million and the November initial public offering on the NASDAQ of $45 million.

This concludes my brief overview of the results I will now turn the call back to Mike Mike.

Thanks, Ron.

I hope it is clear that even amidst the challenges presented by this environment.

And our entire team across all of our operating functions remain committed to and believe in our focus on execution and our clear path to drive growth.

We are very excited that all the fundamentals are in place and that our turnaround of key operating areas and sales talent is complete.

All of these factors provide visibility to and confidence in the following guidance for 2022.

We expect revenue of between 25, and $27 million, which would equate to revenue growth of between 13 and 21% over our 2021 revenue of $22 2 million.

We expect our select Mdx test to be issued a final Medicare coverage decision and contribute to revenue and gross margin accretion in the second half of the year.

We expect UTI testing, which services we introduced in late 2021 to also begin to contribute to revenue and gross margin accretion in the second half of the year.

And we will provide more clarity of that contribution at the mid year release.

We expect to advance our menu expansion and the active surveillance to provide additional growth opportunity and we will update on our progress and timelines again at the mid year.

Finally.

We believe that our current and expanded offerings will drive our growth based on our earned reputation for laboratory service accuracy turnaround time and menu.

That will drive standardization to Mdx Hal.

In fact, we know that we're only as good as our customers think we are.

And we like that expectation.

So as we look forward Mdx health is committed to being a growth company as defined by my experience with Stryker.

Which means that we will deliver sustainable growth based on our commitment to focus and execution.

That will serve as the foundation for value creation for all of our stakeholders, including patients customers employees and shareholders.

Thank you for your interest in and support of Mdx health.

And now I'll turn the call back over to Kevin for questions.

Ladies and gentlemen, if you'd like to ask a question. Please signal by pressing star one on your telephone keypad.

Please ensure that the mute function of your telephone is switched off to allow your signal to reach our equipment.

Again star one to ask a question.

Our first question today comes from Jason Bednar of Piper Sandler.

Hey, good afternoon, thanks for taking the questions here a few from us today.

First the test volumes were a little lighter than what we were thinking but I guess I'm curious if you could quantify at all the headwinds you've made that you're seeing out there from a crime.

And then as to how you'd characterize patient flow into practices, resulting test volumes here just the last few months has really moved through the worst of Yana Kron wage maybe talk about exit velocity that you're seeing maybe from January to February .

Yeah, Hey, Jason.

We think that I.

I think not unlike a number of the diagnostics companies and I think thats, where I pointed to a little bit of the difference between our patient population and associated flow pre diagnosis.

Versus cancer diagnosis, but we are beginning to see those patients will come back I think that there was a little bit of a carryover.

From the end of the year into Q1 with Choppiness on.

On the opening and sales rep access and particularly at least what we've seen with staffing and capacity within practices.

We expect those to.

To turn and we will be reporting on that turn here as we come out of Q1 and into Q2.

Okay, Alright thats helpful. Thanks, Mike.

Maybe as we think about menu expansion for the business with the active surveillance program.

I guess, how should we be handicapping, the timing of a potential launch of introduction here I mean, you would have given some thoughts later this year is that updating timing later this year or is that truly something where we could expect.

Actually absolutely on the market later this year just to clarify that.

Yes, I think the reason why I am pointing to mid year is for two or three reasons, Jason that I think we're noting right as we expect really good visibility on a couple of the key drivers number one.

Average of our select test.

Two really good.

Visibility to our UTI introduction.

Introduction uptake and view forward on volume payer coverage and adoption through our customer base.

Our active surveillance, so we would expect to give pretty pretty key.

Clear expectations of potential launch dates, but we would not.

Expect or anticipate any contribution to revenue or P&L for those in 2022.

Alright, alright, that's helpful. Looking forward to that later this year.

And then I guess final one for me.

I totally appreciate the deep all the details around guidance for the year very helpful.

Is there any way to disaggregate, maybe what youre, assuming internally with respect to volumes versus price gains for selecting confirm.

Inflection in revenue, maybe you might be baking in.

Once that final LCD is received by mid year as we're all expecting it to.

To occur.

And then any other additional detail you would be willing to provide on like what.

Assumed for UTI any of those points there would be helpful. Thank you.

Yes, Jason So we think our unit volume for both confirm in select will begin and continue to accelerate from here into the mid year and that's part of the.

The view that will provide there as far as coverage will have much better visibility to our select.

We've made real progress on.

On the confirm side with.

Kind of three factors right, our revenue cycle management, our cash collections and our coverage and are driving additional payer coverage. So when we look to select we expect the same.

To really provide.

I think if you look at our inclusion in the NCC guidelines, we expect that two plus our focus on driving of the pathway to take the unit volume and then from a.

Revenue perspective.

We will get visibility to our coverage from Medicare and that would begin to contribute to our revenue in the back half of the year. So we expect that to start in Q3.

And we just want but we just don't want to get ahead of any expectations there.

As far as what contribution and the timing, but we're confident in our coverage.

And the contribution beginning and we will give you good visibility to that for the back half of the year at the mid year.

Alright, perfect. Thanks, so much.

Thanks, guys.

Our next question comes from Kevin <unk> of Oppenheimer.

Hey, guys. Thanks for taking our questions.

Maybe I just wanted to UTI can you just comment on the.

Early experience on.

Reimbursement kind of.

Some of your car.

Customers are thinking about the ability to receive reimbursement under existing codes versus miscellaneous and just kind of where you are.

Maybe an updated perspective on how we might be thinking about asps for that product.

Yes so.

Kevin we like what we see on a couple of different clients from from UTI perspective, and I will highlight them again, because I think it's important to note that were.

We're really looking forward to providing some good number guidance what we like to do is confirm a couple of things number one.

The fit with our call point and our sales reps focused on our current urology customer base that's been confirmed.

Number two that we can drive adoption into that base.

A unit volume perspective, and adoption of our test that's been confirmed.

Number three that if we look at the market, we kind of segmented as.

Those customers that are using traditional culture methods.

And those customers that are using one of the other main competitors in those customers that are using one of the other main competitors and I would say that we were.

We want to be able to to confirm that we can position ourselves well either due to better turnaround.

Better tests or better standardization focus overlapping rapid laboratory.

That's been confirmed as far as the reimbursement and payer mix, we have good visibility to payer coverage, what we want to get is a little bit more data as we have with confirm and select with regard to our particular mix.

The reimbursement rates from those both Medicare commercial and private Payors.

And then be able to give you a view of the average sell price, but I would say we haven't seen anything in our experience to date that would change any of our view as to our.

Hey.

Launch of fit into our test and B.

The growth that can provide our business.

Terrific and then just maybe one more from us and that's just on the sales force and particularly the U S commercial organization.

Current thinking.

Opportunities to.

Perhaps expand and extend that network in 2022 and.

Specifically as we think about.

That LCD update.

Is that a potential.

Inflection point for more investment more aggressive investment into the commercial infrastructure I'm, just trying to kind of put that in the context of the revenue guide.

Yeah, Kevin I get that we are not our revenue guidance does not imply.

Any additional sales spend heads or add to our sales force we think.

At this point.

Based on our our 2022 projections.

And guidance were right sized we also.

If we if we feel that we can accelerate growth.

As patient flow returns in all of these factors flip as we know they will then we'll do that but it's not it's not incorporated are factored into our 2022 view at this point.

Extremely helpful. I appreciate the update.

Thanks, Kevin.

And we can now go to Mark Massaro of BTG.

Hey, guys. Thank you very much for the questions.

Recognizing that select mdx as a urine based test pre biopsy.

And confirm mdx as a tissue based tests post biopsy.

Is there any reason to think that.

Select is likely to perhaps outpace con firm just recognizing the sample type and where it is where it sits in the workflow and then a second part to that question are you seeing urologists holding back ordering select mdx because the Medicare decision is.

Not finalized or are they ordering regardless of the reimbursement status.

Yes, thanks Mark.

Okay, a couple of things couple of points to make number one with regard to the.

The adoption, we kind of like the mix and profile of the two tests in our menu because the select market from a unit perspective is significantly larger than the confirm negative biopsy market and yet the confirm.

Reimbursement in ASP is likely meaningfully higher than select so what we think that does is if we derived unit growth, which our sales team.

We'll be doing then we like the way that just drives revenue right. So if our if our select vol.

Volume goes where we know it will go and our confirmed volume continues to grow we like that mix for providing really sustainable growth.

As far as the the Medicare coverage driving adoption, if you look at our adoption to date.

And our units our units for 2021.

It's clear that we've been able to drive adoption of our UTI Im sorry, our select test into urology from a unit perspective.

And.

It's candidly.

It has to happen right because we have to we have to demonstrate market appetite market opportunity clinical utility clinical validity. The first thing payers are going to do is is it being used so we've demonstrated all of that I think thats been reflected in both the draft LCD and inclusion in the NCC guidelines from a clinical utility perspective, so we kind of.

Expect all of that body of work to begin to drive both volume and clearly now.

The revenue because that's been a.

Cost carrier for the business over the last.

Three years since I've been here.

And we're very much looking forward to the accretion to the gross margin the revenue coming over that volume provides.

And the same with UTI.

Hopefully that answered your kind of two to three points of that question.

Yes, yes, that's super helpful.

So I guess.

You did generate a nice.

Did generate a beat on Q4 revenue you.

You did come in a little bit lighter than us on volume.

I know you talked about improved revenue cycle management.

Can you just give us a sense for whether or not you had any one time catch up payments from prior quarters, and then should we expect any of those if any.

Later in 2022.

Yes, no is the answer to that second part of your question.

So so we acknowledge that predicting the units over the last few months and a couple of quarters has been that has been challenging alright and.

But we're we feel very positive about is the predictability on project ability of our business.

Based on our driving them units, which we know will begin to become evident and obvious this year and then the real improvement progress we've made on on coverage and collection. So no is the answer to.

We.

Are there any timing aspects to our a and if you look at <unk>.

Storage, Ron we made some some real changes to the way that we operate from a disciplined perspective from a revenue cycle management perspective, and from a payer collection perspective, and Thats what youre seeing.

Our.

The revenue growth getting a little bit ahead of the units we like that.

Uh huh.

That difference, but we know that the other catches up and then it goes from there. So we don't expect any contraction.

Our average sell prices are collection patterns over the last couple of quarters.

And we expect accretion on obviously on the select volume.

And the UTI volume.

Okay, Great and then my final question.

Did you have any.

Volumes for Utis in in Q4, I had I had a small number I understand you soft launch it I'm really just asking how does this has <unk> been broadly commercialized across your commercial channel nationwide and.

I guess it.

I'd be curious if you could just speak to your confidence on understanding how reimbursement will play out for this test.

I think it was asked earlier if these are existing or miscellaneous codes, but have you started billing for this test as well.

Yes, so we did.

Did have.

Unit volume in Q4, not material to report we have now entered into a full launch with our our sales force and will begin to report our volume and revenue associated with UTI, We do expect it to contribute to revenue and we have had reimburse.

<unk> experience with a variety of our payers, but I would tell you that Ron and I are.

Ill give Ron credit for this we just want to make sure that we have enough data and experience to be able to give you a good view forward of how we view that contributing to our revenue so.

We have a clear understanding of the.

Of the reimbursement landscape.

And we have good visibility to that contributing to our 2022.

Our revenue growth.

Okay, Great. That's it for me thank you.

Thanks Mark.

Our next question comes from Thomas <unk> of KBC Securities.

Hi, Thanks for taking my question two.

Two from my side.

First question is with regards to the select test and the implications.

Potential LCD coverage.

Or the.

Anticipate the dusky coverage that youre looking at in the <unk>.

Coming months to which extent would you see this as a catalyst for driving further.

Coverage or reimbursement coverage on the private insurers as well.

Yes, Thomas first of all thank you for staying up late in joining us we appreciate it.

Yes, we kind of view that model as our experience with confirm where and I think most.

Comp tests in the space, where Medicare tends to be the catalyst.

For broad commercial private payer coverage and I will tell you that's our expectation and we in advance of that are.

Our coverage reimbursement team has already been very focused on getting payers up to speed on the clinical utility of the clinical value and the.

Update on the NCC guidelines, such that we would expect that too to.

To be the case again as it did with confirm.

Okay. Thank you and secondly on the UTI too.

We already talked a bit on how you look at reimbursement moving forward. There I was also wondering how you look at potential guidelines inclusion. There is this also a relevant aspects for UTI.

How do you look at that.

So.

Different.

Patient segments, there with NCC unemployment to our cancer menu UTI.

Being on the infectious disease side, but I would say that one of the key criteria for us entering the market was that the market itself.

The clinical utility or clinical adoption.

And need for a more rapid highly multiplexed organism of drug susceptibility test versus traditional culture methods is clear we believe.

And that was part of the again the criteria for us entering so.

We believe that.

Again, it's a different it's.

It's driven by different.

Value propositions, but we think we have a good understanding and visibility to that and the most important thing Thomas I think we feel very good about the fit.

With our.

Our sales team, our reach our customer base and not being dilutive to our focus with our prostate cancer menu, we think theyre very.

They go together very well and presenting our value proposition to the urologist.

Alright, Thank you very much.

Thomas Thank you.

As there are no further questions.

This concludes today's conference call. We thank you for your participation and you may now disconnect.

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