Q3 2023 MDxHealth SA Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the Mdx Health third quarter 2023 earnings call before we begin I would like to remind everyone that we will make forward looking statements during today's call whether in prepared remarks or did you mean to Q&A session. These forward looking statements.
Speaker 1: Good afternoon, ladies and gentlemen, and welcome to the MDX Health, third quarter, 2020 three
Speaker 1: Before we begin, I would like to remind everyone that we will make forward-looking statements during today's call, whether in prepared remarks or just in the coming weeks.
Speaker 1: These forward-looking statements are subject to inherent risks and uncertainties.
Are subject to inherent risks and uncertainties. These risks and uncertainties are detailed in the risk factors section of our filings with the Securities and Exchange Commission specifically in the company's annual report on form 20 dash.
Speaker 1: These risks and uncertainties are detailed in the Risks, Factors section of our filings with the Securities and Exchange Commission.
Speaker 1: Specifically in the company's annual report on form 20-F. At this time, all lines are in a listen only mode. But following the presentation, we will conduct...
At this time all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session.
Speaker 1: If at any time during this call you require immediate assistance, please press star 0 for an op.
Any time during this call you require me did assistance. Please press star zero for an operator.
Speaker 1: Also note that this call is being recorded on Wednesday, November 8, 2023. And I would like to turn the conference over to Michael McGarrity, Chief Executive Officer. Please go ahead, sir.
Note that this call is being recorded on Wednesday November eight 2023, and I would like to turn the conference over to Michael Mcgarrity, Chief Executive Officer. Please go ahead Sir.
Thanks Tobey.
Speaker 2: And thank you all for joining us for our third quarter, 2023 earnings call for MDX Health. With today's Ron Kelfist.
And thank you all for joining us for our third quarter 2023 earnings call for Mdx.
With me today is Brian <unk>, Chief Financial Officer.
Speaker 2: Today's comments will be brief and serve as a supplement to our Q3 pre-release.
Today's comments will be brief and serve as a supplement to our Q3 press release.
Third quarter results demonstrate our continued execution.
Speaker 2: Third quarter results demonstrate our continued execution and commitment to deliver strong and sustainable growth for all of our stakeholders by focusing on commercial execution and operating this.
Just deliver strong sustainable growth for all of our stakeholders by focusing on commercial execution.
And operating discipline.
Based upon the significant improvements made across our business, including our industry, leading diagnostic product menu.
Speaker 2: Based upon the significant improvements made across our business, including our industry leading, diagnostic product menu, focused commercial organization, and overall operating efficiency. We believe MDX Health is now on a path to deliver strong and sustainable growth that will lead to operating profitability in the first half of 2025.
Focused commercial organization and overall operating efficiency.
We believe Mdx Telus is now on a path to deliver strong sustainable growth that will lead to operating profitability in the first half of 2025.
Speaker 2: As the third quarter results demonstrate, this execution is translating into improvements across our entire P&L.
This is the third quarter results demonstrate this execution is translating into improvements across our entire P&L.
Speaker 2: Revenue has increased from $11 million in 2019 to the high end of our $65 million to $70 million guidance for this year of 2023.
Revenue is increased from $11 million in 2019.
So the high end of our $65 million to $70 million guidance for this year 2023.
Speaker 2: and revenue for the first nine months of 2023 is more than doubled versus the prior year period.
And revenue for the first nine months of 2023 has more than doubled versus the prior year period.
Speaker 2: Gross margin has expanded more than 20 percentage points from mid-year last year to 65 percent.
Gross margin has expanded more than 20 percentage points from mid year last year to 65%.
Speaker 2: Operating expenses have been managed and actually declined in Q3 year-to-year.
Operating expenses have been managed and actually declined in Q3 year over year.
Speaker 2: Operating loss has been more than cut in half with a 62% reduction for Q3 year over year.
Operating loss has been more than cut in half with the <unk>.
62% reduction for Q3 year over year.
Speaker 2: cash burn is declined by almost 50% from Q4 2022.
Our cash burn declined by almost 50% from Q4 2022.
Speaker 2: These across the board improvements to our P&L give us visibility to operating profitability in the first half of 2025, and demonstrate why MDX Health is a unique outlier compared to many other small-cap growth companies in the life sciences, diagnostics, etc.
These across the board improvements to our P&L.
This ability to operating profitability in the first half of 2025.
Demonstrate wide mdx toe.
It's a unique outlier compared to many other small cap growth companies in the life Sciences diagnostics sector.
Speaker 2: Over time, we expect investors will appreciate this distinction and increasingly view MDX Health as a premier hydroelectric leader in precision diagnostics with operating profitability targeted in the coming quarters not years.
Over time, we expect investors will appreciate this distinction and.
And increasingly view mdx.
As a premier high growth leader in precision diagnostics with operating profitability targeted in the coming quarters not years.
Further building upon this expectation we are very pleased to have garnered virtually unanimous.
Speaker 2: Further building upon this expectation, we are very pleased to have garnered virtually unanimous shareholder support for a divesting from Euronex.
Shareholder support or divesting from Euronext.
Speaker 2: solidation of our trading to NASDAQ has approved on November 3rd.
<unk> of our trading to NASDAQ is approved on November 3rd.
Speaker 2: We expect to consolidate in the trading of our common stock and our single exchange will improve trading liquidity and reduce our administrative costs going forward. Before discussing.
We expect the consolidated and the trading of our common stock under a single exchange will improve trading liquidity and reduce our administrative costs going forward.
Before discussing our quarterly results in more detail.
Speaker 2: I think it is important to step back and comment on the last four years of our transformation of MDX Health.
I think it is important to step back and comment on the last four years of our transformation of Mdx.
First.
Speaker 2: We made significant changes in our leadership and sales team to ensure commercial execution and operating discipline.
We made significant changes in our leadership and sales team to ensure commercial execution and operating discipline.
Speaker 2: As I have commented, we now have 70 people in our field sales organization.
As I have commented we now have 70 people in our field sales organization.
Speaker 2: It's only five of them remaining from 2019.
Only five of them remaining from 2019.
Speaker 2: reflecting the full scale restructuring of that team, as we prioritize talent, focus, incentive compensation, and performance expectations.
Selecting the full scale restructuring of that team as we prioritize talent focus.
Set of compensation and performance expectations.
Speaker 2: Second, we now get it through the pandemic without compromising on this progress.
Second we navigated through the pandemic without compromising on this progress.
Speaker 2: by occurring additional operating expenses over this challenging period. It is now clear that our teams progress in advancing our initiatives laid the foundation for the improving growth and financial metrics that we have experienced over the last number of quarters.
Site occurring additional operating expenses over this challenging period.
It is now clear that our team's progress advancing our initiatives.
The foundation for the improving growth and financial metrics that we have experienced over the last number of quarters.
Speaker 2: We also resisted the poll of the Pimment to COVID testing, which while tempting, we thought would be deluded to our strategic focus.
We also resisted the pull of the pivot to Covid testing.
Which while attempting we felt would be dilutive to our strategic focus.
Speaker 2: Third, we execute a transformational acquisition of the GPS test, which has solidified our comprehensive menu and established MDX health is the only provider of a clinically actionable test at each point in the diagnostic pathway of prostate cancer.
Third we executed a transformational acquisition of the GPS test, which has solidified our comprehensive menu and.
And establish mdx as the only provider.
Clinically actionable test at each point in the diagnostic pathway with prostate cancer.
Speaker 2: Importantly, GPS, along with our select and confirm tests, are all covered by Medicare and included in the NCCN guidelines.
Accordingly.
So along with our select and confirmed tests are all covered by Medicare.
And included in the NCC guidelines.
Speaker 2: And finally, we validated the strength of our restructured sales team by introducing our first channel opportunity with the launch in 2022 of our Resolve MDX test.
And finally, we validated the strength of our restructured sales team by introducing our first channel opportunity with the launch in 2022.
Our resolve mdx test.
Speaker 2: Resolve MDX is marketed to our Eurology Specialist customer base for complex and often multi-organism urinary tract infections with specific susceptibility profile.
Resolve mdx.
It's marketed to our urology specialist customer base.
Complex and often multi organism urinary tract infections.
Specific susceptibility profiles.
Speaker 2: in the first few quarters of sales is on a $10 million annualized run.
Which in the first few quarters of sales.
That a $10 million annualized run rate.
Speaker 3: I will provide a further view forward. The first let me turn the call over to Ron for a review of our financial and I'll rate him results for Q3. Thank you, Mike. As Mike mentioned, we are pleased to report our positive results for the third quarter of 2023.
I will provide a further view forward, but first let me turn the call over to Ron for a review of our financial and operating results for Q3.
Thank you Mike as Mike mentioned, we are pleased to report positive results for the third quarter of 2023.
Speaker 3: Revenues from the third quarter and the September 30, 2023, increased by 73% to $19.3 million. Versus $11.2 million for the third quarter of 2022.
Revenues from the third quarter ended September 32023 increased by 73% to $19 3 million versus $11 2 million for the third quarter of 2022.
Excluding GPS third quarter revenue increased by 45% versus last year.
Speaker 3: Third quarter revenues of $19.3 million were comprised of $8.1 million from GPS $6.6 million.
Third quarter revenues of $19 $3 million were comprised of $8 1 million from GPS.
$6 $6 million from confirm.
Speaker 3: $2.7 million from Resolve and $1.9 million from Select.
$2 $7 million from resolve and $1 $9 million from select.
Speaker 3: For the nine months ended September 30, 2023, our revenues were $50.8 million, representing an increase of 110% over the same period last year.
For the nine months ended September 32023.
Our revenues were $50 $8 million.
Presenting an increase of 110% over the same period last year.
Speaker 3: including GPS, nine months revenue, increased 38% over the same period last year.
Excluding GPS nine months revenue increased 38% over the same period last year.
Speaker 3: Moving below the revenue line, our gross profit for the third quarter was $12.6 million, an increase of 102 percent as compared to $6.2 million for the third quarter of 2022.
Moving below the revenue line, our gross profit for the third quarter was $12 6 million.
An increase of 102% as compared to $6 2 million for.
For the third quarter of 2022.
Speaker 3: Growth margins were 64.9% for Q3 2023, as compared to 55.8% for Q3 2022, an improvement of 908 basis points.
Gross margins were 64 64, 9%.
Q3 2023.
As compared to 55, 8% for Q3 2022, an improvement of 908 basis points.
For the three months ended September excuse me for the nine months ended September 32023, gross profit was $31 3 million.
Speaker 3: For the three months ended, excuse me, for the nine months ended September 30, 2023, gross profit was $31.3 million, an increase of 161% as compared to $12 million for the first nine months of 2022.
An increase of 161% as compared to $12 million.
For the first nine months of 2022.
Speaker 3: Gross margins were 61.5% for the first nine months of 2023 as compared to 49.6% for the first nine months of 2022, an improvement of 1,190, basically.
Gross margins were 61, 5% for the first nine months of 2023.
As compared to 49, 6% for the first nine months of 2022, an improvement of 1190 basis points.
Speaker 3: Operating loss for the third quarter was $4.6 million, compared to $11.9 million for the third quarter of 2022, representing a reduction of 62%, driven by improved margin and a 6% reduction in operating expenses.
Operating loss for the third quarter was $4 6 million.
Compared to $11 9 million for the third quarter of 2022, representing a reduction of 62%.
Driven by improved margin and a 6% reduction in operating expenses.
For the nine months period operating loss was $21 million compared to $29 million for the same period last year, a reduction of 27% driven.
Speaker 3: For the nine-month period, operating loss was $21 million, compared to $29 million for the same period last year, a reduction of 27%.
Speaker 3: driven by improved margins partially offset by an increase in operating expenses related to the additional field sales personnel associated with the GPS acquisition.
Driven by improved margins, partially offset by an increase in operating expenses related to the additional field sales personnel associated with the GPS acquisition.
Speaker 3: Cash and cash equivalents as of September 30, 2023 was $32.7 million. Our total use of cash for the third quarter was $6.8 million, down 23% sequentially from $8.8 million in the second quarter.
Cash and cash equivalents as of September 32023 were $32 7 million.
Our total use of cash for the third quarter was $6 8 million down 23% sequentially from $8 8 million in the second quarter.
This concludes my brief overview of the results and I will now turn the call back to Mike.
Thanks, Brian.
Speaker 2: Since joining MDXL as the CEO four years ago, I have consistently maintained that our primary strategic objective
Since joining <unk> as CEO four years ago.
We've consistently maintained that our primary strategic objectives.
Speaker 2: to create a world-class precision diagnostics company capable of delivering strong, sustainable growth with a clear path to profitability.
It was to create a world class precision diagnostics company capable of delivering strong sustainable growth with a clear path to profitability.
Speaker 2: I can say without reservation that we are delivering on that commitment.
I can say without reservation that we are delivering on that commitment.
Speaker 2: Our menu and revenue growth opportunities look very different today than they did in 2019, and even at the beginning of 2022.
Our menu and revenue growth opportunities look very different today than they did in 2019 and even at the beginning of 2022.
Speaker 2: Leveraging the strength of our sales channel, we remain focused on identifying new opportunities that will continue to drive growth.
Leveraging the strength of our sales channel, we remain focused on identifying new opportunities that will continue to drive growth.
Speaker 2: In short, while our menu looks quite different today than it did just 18 months ago, we would expect it will look different 18 months from now.
In short, while our menu looks quite different today than it did just 18 months ago. We would expect it will look different 18 months from now.
Are you considering any additional growth opportunities, we will always apply the same discipline as we did with resolve mdx.
Speaker 2: When considering any additional growth opportunities, we will always apply the same discipline as we did with Resolve MDX.
Speaker 2: involves conducting a rigorous due diligence process, analyzing market access,
Which involves conducting a rigorous due diligence process analyzing market access.
Speaker 2: confirming complementary focus to our existing menu, and assessing the accretive impact to our gross margin and P&L dynamics.
Permian complementary focus to our existing menu.
Assessing the accretive impact to our gross margin and P&L dynamics.
Speaker 2: As we successfully execute on our business development strategy, we also expect to attract a growing number of prospective investors and partners who will increasingly recognize MDX Health's leadership position in urological life science diagnostics.
As we successfully execute on our business development strategy. We also expect to attract a growing number of prospective investors and partners will increasingly recognize <unk> leadership position in euro logical life science diagnostics.
Speaker 2: and the significant growth opportunities that lie ahead for the country.
And the significant growth opportunities that lie ahead for the company.
Speaker 2: So as we look forward, MDX Health is committed to driving sustainable growth, which will serve as the foundation for value creation for all of our stakeholders.
So as we look forward.
<unk> is committed to driving sustainable growth, which will service the foundation for value creation for all of our stakeholders, including patients customers and shareholders.
Speaker 2: including patients, customers, and shareholders.
Speaker 2: Thank you for your interest in and support of MDXHealth. And now I'll turn the call back over to Sylvie for questions.
Thank you for your interest in and support of Mdx Health and now ill turn the call back over to Sylvia for questions.
Speaker 1: Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your touchtone phone. You will then hear a three-tone prompt acknowledging your request. And if you would like to withdraw from the question queue, you will need to please press star followed by.
Thank you, Sir ladies and gentlemen, if you would like to ask a question. Please press star followed by one on you touched on from you will then hear a sweet home prompt acknowledging your request and if you would like to withdraw from the question queue. You will need to please press star followed by two.
Speaker 1: If you are using a speakerphone, please lift the handset before pressing any keys. Please go ahead and press star 1 now.
And if you're using a speaker phone please lift the handset before pressing any keys. Please go ahead and press Star one now if you do have any questions.
Speaker 1: And your first question will be from Dan Brennan at TD Tawan. Please go ahead.
And your first question will be from Dan Brennan at PB Cowen. Please go ahead.
Hi, Michael Enron.
Speaker 4: Hi, Michael and Ron. Good evening. Thanks for taking questions tonight. This is Dan Samarco for Dan Brennan. Would you mind providing us with any detail on thoughts about commercial coverage timelines for Select?
Good evening. Thanks for taking my question. This is Dan smart, calling for Dan Brennan.
Would you mind, providing us with any detail on thoughts about.
Commercial coverage timelines for select.
Okay.
Speaker 2: Yeah, Dan, so we, we obviously communicated coverage of our select test by Medicare in Q2 of last year of 2020. I'm sorry. Yeah, 2022. and as I've noted, that is usually traditionally the catalyst for broader commercial coverage and subsequent to that, we also announced coverage for our
Yes, Dan so.
We obviously communicated coverage of our flight test by Medicare in Q2 of last year of 2020, I'm sorry 2022.
As I've noted that is usually traditionally the catalyst for a broader commercial coverage.
Subsequent to that we also announced.
Average for our select test by Cigna.
Speaker 2: And, you know, we don't put out a release or communicate publicly every contract that we pick up, but that was clearly a meaningful and material accomplishment following our Medicare coverage and our market access managed care team. You know, we really have two drivers of growth.
And we don't put out a release or communicate publicly every contract that we pick up but that was clearly a meaningful or material.
Accomplishments following our Medicare coverage and our market access managed care teams really have two drivers of growth for our top line of the business. The first is our sales team, which drives adoption of units into our customer base.
Speaker 2: for our top line of the business. The first is our sales team, which drives adoption of units into our customer base.
Speaker 2: And then our market access managed care team, which is part of our commercial team as well, that drives coverage, which shows up in our, our ASP most, you know, most notably is where that would appear. So we've seen progress in both fronts. And we.
And then our market access managed care team, which is part of our commercial team as well that drives coverage, which shows up in our RSP. Most most notably is where that would appear so we've seen progress in both fronts.
And we expect that to continue.
Alright, great. Thank you and then in terms of coming in at the top end of your guide.
Speaker 4: All right, great. Thank you. And then in terms of coming in at the top end of your guide.
Speaker 4: for 23 could you go to any initial thoughts on
423 could you give us any initial thoughts on.
Speaker 4: What you're saying for 2024 and maybe touch a little bit more on the specific factors driving strength and resolve.
What are you seeing for 2024.
And maybe touch a little bit more on specific factors driving strength and resolve.
Speaker 2: Yeah. So I'll start with the second part. I mean, as I've noted, you know, I think, I think what we're seeing is candidly what we expected. And that was based on the work we did prior and the validation of all the aspects from an opportunity fit access and viability of, you know, that we're providing a real solution. It's really important to know that our test that we offer to our urology customer base.
Yes, so I'll start with the second part I mean as I've noted.
I think I think what we're seeing is candidly what we expected and that was based on the work we did pryor and the validation of all the aspects from an opportunities fit access.
And viability of that were providing a real solution. That's really important to note that our test that we offer to our urology customer base.
Speaker 2: is, you know, a highly complex test of both organisms.
Yes.
Highly complex test the bulk organisms and specific susceptibility profiles for those organisms. So the patient population.
Speaker 2: and specific susceptibility profiles for those organisms. So the patient population that presents to urology is
<unk> two urology is very different than.
Speaker 2: very different than, you know, an immediate care setting or some other settings where UTI presents. These are patients that have comorbidities, whether it be enlarged prostate or BPH, which can lead to not only complex multi-organism infections, but serial infections, and hence the referral to a urologist. So, we're confident that everything we work to discover and validate in the diligence process is coming through.
Intermediate care setting or some other settings, where you Jeff is that these are patients that have co morbidities, whether it be enlarged prostate or BPH, which can lead to not only complex multi organism infections infections with cereal.
Actions and hence the referrals are of urologists. So we're confident.
Everything we work to discover and validated in the diligence process is coming through.
Speaker 2: as expected. As far as 2024, at this point we'll report, we'll likely expect to and plan to report a pre-release of our revenue and cash and likely a first visibility to 2024 at the beginning of January in conjunction with the J.P. Morgan Conference.
As expected.
As far as 2024 at this point, we'll report we'll likely.
Expect to and plan to report, our prerelease of our revenue and cash and likely a first visibility to 2024.
Beginning of January in conjunction with the Jpmorgan.
Alright, great I appreciate the color you guys have a good night.
Okay.
Speaker 1: Thank you. Next question will be from Andrew Braquman at William Blair. Please go ahead.
Thank you next question will be from Andrew Brachman at William Blair. Please go ahead.
Speaker 5: Good afternoon, thanks for kicking the questions. Can you maybe give a little bit more color around the recent wins from the cross-selling initiatives between Confirm and GPS? Just trying to better understand how we should think about the durability of growth in both those franchises now that they're in the same bag. Thanks.
Hey, guys. Good afternoon. Thanks for taking the questions can you maybe give a little bit more color around the recent wins from the cross selling initiatives between confirm and GPS just trying to better understand how we should think about the durability of growth in both of those franchises now that they are in the same back. Thanks.
Yes, Andrew.
Speaker 2: Andrew, we feel confident that we're seeing what we expected, you know, the complexity of the integration I've spoken to. So we feel like the first couple quarters of this year, we were still in the process of...
We feel confident that we are seeing what we expected.
Complexity of the integration I've spoken to.
So we feel like the first couple of quarters of this year, we were still in the process of.
Speaker 2: you know, resetting and restructuring every sales territory as we brought over, you know, went from 30 reps to just over 50 reps, create.
Resetting and restructuring every sales territory as we brought over from 30 reps.
Over 50 reps Chris.
Speaker 2: as a former sales route, the significant amount of disruption in each territory and some change over on customer relationships. We feel really positive about the way we navigate and execute it through that. You know, patiently, making sure that our sales team.
As a former sales were up a significant amount of disruption in each territory and some changeover on customer relationships, we feel really positive about the way, we navigate and execute through that.
<unk>.
And ensure that our sales team.
Speaker 2: was held together and that all of our change in our programs in incentive comp.
It's held together and that are.
All of our change in our programs and incentive comp provided a good foundation for execution of growth I think as we look over the last couple of quarters.
Speaker 2: provided a good foundation for execution growth. I think as we look over the last couple of quarters.
Speaker 2: That's beginning to show up in our, you know, particularly with confirmed select post initial bias. See my comment about being the only company that can.
And that's beginning to show up in our particularly with confirmed select post initial biopsy my comment about being the only company that can provide.
Clinically actionable diagnostic result at each point in the pathway, we think thats very important and we expect.
Speaker 2: and we expect execution and growth to continue for both of those. As we go forward, we'll provide visibility to some metrics that we track here internally that we measure to and manage that program.
Execution of growth to continue for both of those.
As we go forward, we'll provide visibility.
The metrics that we track here internally.
That we measure to manage that progress.
Speaker 5: Okay, that's perfect. And then I just want to sort of follow up on some of your comments about changes in the organization historically and how you sort of see it evolving over time. You maybe just talk a little bit more about what categories within yourology might seem to fit better than others as you sort of think about adding to the bag here over the next handful of quarters and years. Thanks.
Okay that's perfect.
And then I just wanted to sort of follow up on some of your comments about changes in the organization historically and how you sort of see it evolving over time, you, maybe just talk a little bit more about what categories within urology might seem to fit better than others. As you sort of think about adding to the bag here over the next handful of quarters and years.
Speaker 2: Karen, I think you've made a couple of points that are important to know. So our goal, and it was, you know, with result, was no exception and going forward will be no exception, is that we're not just looking to put more value and maybe our sales reps back, but it's not.
Sure Andrew I think you made a couple of points that are important to note. So our goal and it was with resolved with no exception and going forward will be no exception is that we're not just looking to put more volume into our sales rep's bag that's not all.
Speaker 2: our focus or the basis for the initiative. You know, we only want to do smart things that we think resolve on DX. It was really important to validate that right? Have we can't at least screw that one up? It wouldn't speak to what we think we have in the field. So actually, we think that the same diligence process.
Our focus are the basis for the initiative, we only want to do smart things.
That we think resolve mdx, what's really important to validate that right and we can't really screwed that one up.
Speak to what we think we have in the field.
Actually we think that the same diligence process.
Speaker 2: applies to any growth opportunity, whether it be through license of partnership or distribution or acquisition, that will follow that same discipline as far as do we have access.
<unk> to any growth opportunity, whether it be through the license or partnership with distribution.
Our acquisition that will follow that same discipline as far as do we have access.
Speaker 2: Is it complementary to and not dilute of all of our current focus within prostate cancer and neurology more broadly? And does it provide, is it a creative to our P&L, from a gross margin, respect?
Is it is it.
Complementary to and not dilutive all our current focus.
Within prostate cancer urology more broadly.
And does it provide is it accretive to our to our P&L from a from a gross margin perspective.
Speaker 2: and can we continue to drive execution growth as well as
And so we continue to drive execution growth as well as the two levers that I pointed to previously from our sales team driving units and market access driving.
Speaker 2: two levers that I pointed to previously from a sales team driving units and market access driving coverage. So we're confident to that and you know I've said we had to do two things with our business.
Average so we're confident to that and I've said, we had to do two things with our business over the last four years, we have derisked the business, which we think we are demonstrating with our clear path to.
Speaker 2: For the last four years, we had the risk of business, which we think were demonstrating with our clear path to...
Speaker 2: high revenue, you know, best in class gross margin trajectory and profitability. So we're confident that
High revenue.
Best in class gross margin trajectory and profitability. So we're confident that.
Speaker 2: We're becoming more obvious in that regard. So where we were always focused on growth looking out on, I think we're the people to say, there's more inbound coming, but we will only be.
We're becoming more obvious in that regard so where we were always focused on growth looking outbound I think it'd be.
It's fair to say.
Theres more inbound coming but we will only be.
Speaker 2: very prudent and smart about what we would elect to do with our what I think is our most valuable asset, which is our sales team and child.
Very prudent and smart about what we would like to do with our what I think is our most valuable asset which is our sales team and channel.
Okay. Thanks, guys.
Thanks Sandra.
Speaker 1: Next question will be from Thomas Rackvin at KBC Securities. Please go ahead.
Next question will be from Thomas Wang from KBC Securities. Please go ahead.
Speaker 6: Hi and thanks for taking my questions and by the way congratulations on this area, Solot B&L Improvement. I wanted to zoom in a little bit more about on those croissants, and they have evolved very favorably in this order. Just wanted to have a picture, picture, bring a bit of how you see that evolving into 2024 to which extent should we anticipate an impact of those increasing select volume.
Hi, and thanks for taking my question and by the way congratulations on the very solid the P&L improvement.
Wanted to zoom in a little bit more about.
Those quotes margins then ask Paul very favorably this quarter just wanted to know Hasnt been K. Thank you brain debates on how you see that unfolding into 2024.
To which extent should we anticipate an impact of those increasing select select volumes.
Speaker 2: Your time is thanks for participating, we.
Sure Thomas Thanks for.
Participating we.
Speaker 2: You know, we anticipated this trajectory, and it's actually coming right on or actually ahead of where we anticipated. So, you know, if you look back, as I noted to the mid year of last year, we were running, you know, low 40% gross margins. And that was a function of, we really only had one product generated revenue with confirmed, we've subsequently added.
We anticipated this trajectory and thats actually coming right on or actually ahead of where.
Where we anticipated. So if you look back as I noted to the mid year of last year, we were running low 40% gross margins.
That was a function of we really only have one product generating revenue with confirm we have subsequently added.
Speaker 2: the TBS test, which carries broad coverage, are resolved on the X test, and coverage coming over select, thank you too.
The GPS test, which carries broad coverage, our resolve mdx test and coverage coming over select.
In Q2.
So we.
Speaker 2: We really feel like each of those as we anticipated is a creative to our gross margin, which obviously has, I've noted, was a...
We really feel like each of those as we anticipated is accretive to our gross margin, which obviously as I have noted was.
Speaker 2: component to the rationale for the GPS acquisition. Any any of the decisions we've made about our product offering. So what we're delivering here on the gross margin is what we expect it. As far as growth from here, do I believe that ultimately are our gross margin can start with the seven that that's a reasonable assumption and we'll continue to build out coverage. And as I noted, you know, potential additional additional.
A key component to the rationale for the Ges acquisition.
And each of the decisions we've made about our product offering so what were delivering here on the gross margin is what we expected as far as growth from here do I believe that ultimately are our gross margin can start with the seven.
A reasonable assumption and we'll continue to build out coverage and as I noted potential additional additional.
Expansion of our menu.
Speaker 6: All right, thank you. And I also wanted to zoom in on the GPS test event. Based on where you stand today, how should we think about those contingent considerations from the common quarters and years? Do you expect all of those urnode payments to be triggers?
Alright. Thank you and then also wanted to zoom in on the GPS test.
And where you stand today, how should we think about it is contingent consideration from the coming quarters and years do you expect all of those earn out payments TD triggers at this point.
Speaker 2: Yeah, Thomas, so as you're aware, you know, we feel like the amendment we made with the exact sciences on the urna was, was very important, positive and favorable, where we, the urna period went from 2023, 24 and 25 to, I'm sorry, from 24, 25 and 26 to 25, 26 and 27.
Yes, Thomas so as Youre aware.
We feel like the amendment, we made with exact sciences on the earn out was very important.
Courtney positive and favorable.
Are we.
The earn out period went from $2023 24, and 'twenty five to I'm, sorry, 24, 25%, 26% to 25 26 and 27.
Speaker 2: And I've said from the beginning, the day of the acquisition.
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I have said from the beginning the day of the acquisition debt.
Speaker 2: that we fully expect to pay the fuller now because it's based on revenue and growth of the GPS product offering and our business is modeled to achieving those milestones as they would reflect positively on our top line, our P&L, and our profitability.
We fully expect to pay the full earn out because it's based on revenue and growth of the GPS product offering.
Our business models to achieving those milestones as it will reflect positively on our top line in our P&L and our profitability.
So yes, my answer we expect to make those payments.
Speaker 2: So yes, is my answer. We expect to make those payments. What we feel positive about is the timing and the partnership with the exact science, which exact sciences, which clearly showed confidence in our ability to execute and deliver.
What we feel positive about is the.
The timing and the partnership with exact science.
Exact sciences, which clearly shows confidence in our ability to execute and deliver.
Okay. Thank you.
Thanks Thomas.
Speaker 1: And at this time, Mr. McGurdy, we have no other questions registered. Please proceed with additional comments.
And at this time Mr. Mcgarrity, we have no other questions registered please proceed with additional comments.
Speaker 1: I don't have any additional comments. Still the other thing to thank everybody for their participation in sport. We'll look forward to reporting the next time and then in time we'll go back to focus and execution. Thank you all. Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at the time we do ask, at your please, this.
I don't have any additional comments Sylvia other than to thank everybody for their participation and support we'll look forward to.
Our reporting.
The next time and in the meantime, we will go back to our focus on execution. Thank you all.
Thank you, Sir ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines.
Speaker 7: this
Yes.
Okay.
Okay.
Okay.
Yes.
Okay.
Okay.
Yes.
Okay.
Okay.
Okay.
Yes.
Thanks.