Q1 2025 MDxHealth SA Earnings Call

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I would now like to turn the conference over to Mr. John Fernandez, but like I say advisors. Please go ahead.

Speaker Change: Good afternoon, and thank you for joining us for the Mdx Health first quarter 2025 earnings Conference call. Joining me on today's call are Michael Mcgarrity, Chief Executive Officer, and Ron <unk> Chief Financial Officer.

Before we begin I would like to remind everyone that the company will be making 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.

Our report on form 20-F.

I'll now turn the call over to Michael Mcgarrity, Chief Executive Officer.

Thanks, John.

And thank you all for joining us for the first quarter 2025 earnings conference call for <unk>.

With me today is Ron Calpers, Chief Financial Officer.

Our Q1 results reflect continued execution across our organization.

Led by our commercial team.

And we remain well on track to achieve our goal of 20% or greater revenue growth in 2025 and beyond.

As further evidence of our commitment to this growth objective I think it's important to note that this Q1 2025 is our 16th consecutive quarter of 20% or greater revenue growth for Mdx health.

Again, we expect our results every quarter to reflect our unwavering focus.

On operating discipline and commercial execution.

As we look at our progress I would point to a number of defining milestones that reflect the talent commitment and success of the team across our organization.

We achieved Q1 revenue growth of 22%.

And our tissue based tests volume grew 41% for the quarter.

More specifically Q1 total billable volume was approximately 24000 tests.

Representing total test unit growth of 24%.

Volumes for our tissue based tests, which include confirm mdx and G. P. S.

Came in at approximately 12600 for the quarter.

An increase of 41% over the prior year period.

Or a liquid based tests, which include select mdx.

Speaker Change: Resolve mdx in Germline test volumes were almost 12000, an increase of 9% over the prior year period.

It is clear that a number of key factors are driving the continued growth of the tissue based segment of our menu.

Which accounted for 85% of our Q1 revenue.

The diagnostic value of our confirm test is becoming increasingly appreciated by our urology customers.

And our accelerated growth is evidence of the influence our focus on pathology has provided as a key supporting driver of urology adoption.

The confirm test has several unique value attribute that account for this growth trajectory.

Most notably.

It is estimated that 30% of negative initial biopsies are false negatives.

This is not a function of a core biopsy by the urologist.

Sure I missed read I'd pathology.

It is solely due to the limitations of needle biopsy sample less than 1% of the prostate.

Our confirm test addresses this limitation by interrogating each core of the biopsy.

And with a 96% negative predictive value.

Confirm can obviate or defer the need for repeat biopsy.

Which is often a reflex protocol for these patients.

Of equal importance and value of <unk>.

Positive confirm test identifies the specific core or core of the biopsy.

It may indicate a lesion and flooring follow up or intervention for the patient.

Okay.

The value to the patient of avoiding potentially unnecessary repeat biopsies, coupled with the corresponding value of detecting cancer that was missed an initial biopsy carries compelling value from both the healthcare economics and patient care perspective.

Based on this compelling clinical value, we believe the market opportunity for confirm is quite significant and growing with the rate of prostate cancer rising an estimated 5% to 10% annually.

We have demonstrated that confirm is relevant for every negative biopsy.

And with no competitive tissue test to meet this unique and clinically actionable value.

We are confident and confirms continued accelerating growth.

Our ability to capture a significant portion of this $500 million market opportunity.

Our genomic prostate score or GPS test presents a similarly compelling value to both clinician and patient.

Our GPS test measures the expression levels.

Of a group of cancer related genes that are in a patients tumor tissue.

The activity of these genes can provide important information about how a specific cancer might best be treated.

Speaker Change: In 2022, we acquired the GPS test from exact sciences informed by our diligence and based on the thesis that the strength of our channel and access to large urology group practices, coupled with our advanced access to pathology with.

With not only accelerated G. P. S revenue, but also drive gross margin accretion for our overall business.

It was also critical to establishing our partnership with urologists by informing care following biopsy.

We now stand alone as the only company that can.

Can deliver actionable diagnostic answers to both positive and negative patient profiles.

And.

Well there are two competitors in the GPS market opportunity, we are confident that our thesis is becoming reality.

As our growth rate indicates we are both converting the market and taking competitive share.

Based on focus execution, and a few key characteristics and dynamics in the clinical practice of prostate cancer.

The quality of data associated with GPS for localized prostate cancer patients, which is estimated to account for approximately 70% of the eligible patient population.

As we believe the most compelling.

With 20 year follow up data for both adverse pathology and prostate specific mortality.

Also of note is the additional benefit that significantly less tumor tissue is needed for GPS and four competing tests.

Speaker Change: Offering a higher valid result rate, serving a larger pool of eligible patients.

Speaker Change: This particular features again compelling do urologist and pathologists.

Speaker Change: It provides a pathway that is best for patients.

Speaker Change: Each of these features of our tissue based tests positions Mdx house as a clear leader in precision diagnostics for prostate cancer.

Speaker Change: Providing the highest quality diagnostic menu for clinicians and patients.

Speaker Change: Based on our proprietary value of this menu coupled with the talent and execution of our sales and support teams.

We remain confident in achieving our committed goal of 20% revenue growth.

As we have now demonstrated consistently.

Over the last 16 quarters.

Of course.

All of this progress and success would not be realized without all of our operating groups dedication to our vision of being the most consistent growth company in the urology diagnostics space.

True excellence as measured by performance over time and.

Speaker Change: And we believe our consistent and strong performance quarter after quarter reflects that commitment to excellence.

Speaker Change: To summarize I believe no other company is better positioned to help improve the patient journey through prostate cancer diagnosis and treatment.

And our results continue to reflect our success in.

And bringing value to this patient population.

Speaker Change: Based on these dynamics, we are confirming our previously announced revenue guidance of $108 million to $110 million for 2025 <unk>.

Speaker Change: Meeting or exceeding our 20% revenue growth goal.

Speaker Change: And delivering positive adjusted EBITDA.

Speaker Change: In this Q2 of 2025.

Speaker Change: I will follow up with closing comments and view forward, but first let me turn the call over to Ron for a review of our financial and operating results for Q1 Ryan.

Ron: Thank you Mike to follow on Mike's remarks, we are very pleased to report strong performance in the first quarter of 2025.

Ron: Revenues for the first quarter ended March 31, 2025 increased by 22% to $24 $3 million versus $19 8 million for the first quarter of 2024.

Ron: Like the prior quarter, our growth was organic and delivered without expansion of our sales organization, reflecting the leverage we continue to generate from our sales channel and the greater market penetration of our tests.

Ron: Moving below the revenue line, our gross profit for the quarter was $15 $5 million, an increase of 29% as compared to $12 $1 million for the first quarter of 2024.

Ron: Gross margins were 63, 8% compared to 68% for Q1 24, an increase of three percentage points, primarily attributed to our test mix.

Ron: Our operating loss for the quarter declined 31% to $4 $6 million compared to $6 $6 million for the first quarter of 2024, primarily.

Ron: Driven by our growth in sales and gross profit, partially offset by growth of 8% and operating expenses.

Ron: Which were primarily related to an increase in clinical studies stock based compensation and scale.

Ron: Our net loss increased 8% to $9 $2 million compared to $8 $5 million for the prior year period, primarily driven by noncash fair value adjustment of $2 $5 million.

Ron: Excluding these noncash fair value adjustments, our net loss would have decreased 17% to $6 $7 million.

Ron: Finally, our fourth quarter adjusted EBITDA was negative $1.3 million, a 71% improvement over the first quarter of 2024, adjusted EBITDA of negative $4 $5 million.

Ron: We believe that we are on track to achieving our goal of positive adjusted EBITDA in the second quarter of this year.

Ron: A reconciliation of <unk> to non <unk> financial measures has been provided in the tables included in this press release.

Ron: Cash and cash equivalents as of March 31, 2025 were $65 $7 million.

Ron: Note that on April 29, we made our 2020 for earn out payment to exact sciences and the amount of $28 million.

Ron: After taking into account this earn out payment our pro forma cash balance as of March 31, 2025 would have been $37 $7 million.

Ron: As a final comment we have not seen and we do not expect to see a material impact on our financial operations from the recent developments related to tariffs.

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

Mike: Thanks, Ron.

Speaker Change: To be successful in the dynamic market of precision diagnostics companies must have in place the resources to access high growth market opportunities with a comprehensive commercial channel a disciplined operating team informed by experience.

Mike: And a differentiated menu that brings a high level of clinically actionable value to the physician and patient.

Speaker Change: Over the last five years Mdx health has built a strategy to put these resources into place.

Speaker Change: And our consistent financial performance reflects the successful execution of this strategy.

Speaker Change: We believe our leadership position within the high growth urology markets. We serve is highly sustainable.

Speaker Change: Just on the following.

Speaker Change: Our most valuable asset is our people across the organization.

Speaker Change: In every operating discipline.

Speaker Change: While mdx health has amassed a high quality portfolio of IP trade secrets, Knowhow and World Class Laboratory operations.

Speaker Change: I firmly believe it is our best in class sales channel that has significantly driven our performance.

Speaker Change: As many of you may know my experience with World class commercial organizations includes Stryker.

Speaker Change: Where I was part of a team that defined excellence for 13 years.

Speaker Change: I can say with confidence that our company's sales and marketing teams are functioning at that same level of excellence.

Speaker Change: Our business became sticky and sustainable when we locked our sales channel post the G. P S acquisition.

Speaker Change: And it should be noted we have not expanded.

Speaker Change: Nor do we see the need to materially expand our sales and marketing investment to meet our growth objectives.

Speaker Change: Our demonstrated sales force productivity has allowed us to meet or exceed our growth goals.

Speaker Change: And double our revenue over the past three years without material additional investment.

Speaker Change: And we expect that productivity to continue in a very sustainable way.

Speaker Change: Additionally.

Speaker Change: Our willingness and ability to access capital from high quality investors over the past 15 months.

Speaker Change: Enables us to meet all of our financial obligations.

Speaker Change: Which is further supported by increasing leverage in our business model as we turn to operating profitability.

Speaker Change: Finally.

Speaker Change: We have demonstrated experience and identifying and capitalizing on growth opportunities, which has served as the foundation of our menu expansion in gross margin accretion over the past few years.

Speaker Change: Whether in the sales force laboratory operations revenue cycle management client services patient advocacy quality or regulatory.

Speaker Change: Our entire Mdx team operates under the mission that Theres, a patient and family on the other side of every sample we receive.

Speaker Change: This is what drives our customer base to trust Mdx health as their laboratory partner for these critical diagnostic test that informed patient pathways.

Speaker Change: We will continue to strive to deliver on our commitments of growth and value while positioning Mdx house is the leading growth precision diagnostics company focused solely into our high growth target urology market.

Speaker Change: And as always we carry a great deal of responsibility to provide value to all of our stakeholders, including patients customers payers and shareholders.

Speaker Change: So thank you for your interest in and support of Mdx House.

Speaker Change: And now I'll turn the call back over to the operator for questions.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question you May press Star then one on your telephone keypad.

Speaker Change: If youre using a speakerphone please pick up your handset before pressing decades, if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Andrew Brachman: The first question comes from Andrew Brachman with William Blair. Please go ahead.

Andrew Brachman: Good afternoon, and thanks for taking the question Mike in your remarks, you sort of mentioned the importance of pathology at something you've done for the last several quarters or probably over over a year now and tissues, clearly now performing quite well versus sort of where it was a year ago. So anything in particular that you'd sort of say is resonating.

Speaker Change: Now with that group of pathologists versus say a year ago, where the growth rates were lower than where they are at today.

Mike: Yeah Andrew.

Andrew: To be clear.

Andrew: I think maybe we were operating under a little bit of a false premise.

Andrew: Apology, we would be reluctant.

Andrew: To adopt or advance confirm because the implication was that there was a miss.

Andrew: Reed.

Andrew: Biopsy.

Andrew: You know that has clearly been dismissed as factually inaccurate right. It's the limitations of the biopsy that can miss Alicia when pathology became clear.

I'm working closely with urology, you know, what we know and what we've seen is a little.

A number of these large urology group practices have the wrong anthology lab.

Andrew: And a number of the pathology labs that we work with serve multiple urology practices. So when they understand.

Really the two part value of our tissue based test confirm if they report out negative biopsy recommend confirm you can imagine the leverage that we see there.

And secondly that feature that I know it sounds a little trivial, but it's not two pathologists with the tissue requirement of the GPS tests being materially lower than that two competing to us.

It aligns us well with pathologists desire to preserve as much tissue as possible. So what we've seen is that push or support from pathology.

To confirm and GPS for the reasons Ive stated.

It's just drive the drip and a real partnership and our reps.

Found the opportunity and taken advantage of connecting those two.

In that process, because it's really a two.

A twofold process with urologists doing the biopsy and are relying on pathology to report back.

That's the clear adjustment that we made to our strategy.

Andrew: And it is really.

Probably exceeded our expectations of the impact how quickly that's happened and how well it's working.

But we think that's really sustainable and again.

Bed understanding of acceptance of and belief in the value of those clearly catalyzed start growth.

That's great color and then maybe just as a related follow up there.

Andrew: You also mentioned that you are taking share and converting market for the GPS test. When you are taking share what are your customers telling you I just sort of the key reason for that is that the portfolio all of the sort of the benefits that you've talked about Java script in reply to the last question or is there anything sort of in particular that a common thread that you can get through.

Thanks.

Yeah, I would say, yes, it's really the entire story I think it starts with the excellent sales rep right. So.

Andrew: My my comments I don't want to overstate, but we're really.

What we're seeing is the talent the focus the execution.

Andrew: And the access and influence we have with our customer base.

Andrew: But it's really reflective of.

Andrew: Super High quality rock, who has consulted two two years and one mouth and I was able to identify how to best position.

G P S and confirm within a practice and then.

The support of the data and the features I noted you.

Speaker Change: You know candidly, we think we have a better chance.

Confirm is the only test so having an understanding of the value proposition there.

<unk> unique value to the practice of prostate cancer and the real patient benefit.

Speaker Change: Avoiding repeat biopsy.

I've stated this before but.

I think the traditional protocols on a negative biopsy as well the good news is you biopsy snuggled up we'd like you to come back in nine to 12 months for a repeat biopsy and patient compliance becomes a significant issue there so.

It's it's what we believe to be a best in class sales channel.

Standing on the other side of that biopsy with an answer for both I think.

Speaker Change: I would say we become their laboratory partner, it's our support team also plays a key role in there so.

We're very confident that we are doing both.

We're in the market and taking share for those reasons.

Okay, well, that's great color I'll leave it there thanks guys. Thanks.

Thanks, Andrew.

Thank you.

Question comes from Mark Massaro with BT AG. Please go ahead.

Hey, guys. Thanks for taking the questions congrats on a strong quarter.

You know other labs in the space this quarter talked about one less day and weather impacts now you you put up a nice beat and.

You know, 20% plus revenue and volume growth, despite the weather and despite the fewer the less day. So can you just speak to what or if any.

Impacts you saw in the weather and if that means perhaps that Q2 might I know that Q2 is usually seasonally stronger than Q1, but any thoughts as we think about Q2 relative to Q1.

Well I think I would probably lean towards your second part of your your view that.

We do occasionally see seasonality.

I I don't normally point to weather or sales pace is important right. When we think about that in Q4 and Q1.

But we feel like our performance.

I don't know it was normalized or overcame that I guess for lack of better terms, so I'm not pointing to anything that that really mitigated our performance in Q1.

And as we go through Q2 and report.

We'd expect to see continued execution without providing you our Q2 guide March.

Understood understood.

The the volume growth was well in excess of our modeling I.

Of course.

You did talk about G. P S gaining share so.

My inclination is that GPS was very strong in the quarter would you be able to also comment on con firm in and maybe just talk about the synergies of selling both.

Yeah Mark.

I guess, well, we don't break out individually we've demonstrated over the last number of quarters. I think Q4 was 50% growth Q1, 41% growth.

It can't happen unless it's balanced right or what we're seeing is very balanced growth. Let me say it that way. So it's not like one is growing 60 any other trial, we're seeing very balanced growth there and I think that reflects our view that.

That.

Kind of.

The combined adoption, what we're seeing is that our urology customers.

Using both confirm and GPS has accelerated.

And that was our view that was as I noted the significant part of the thesis on the G. P. S acquisition.

And we're seeing that and I think its very very sustainable so.

With no competition for confirm a better understanding of the real value of confirm and that market opportunity is significant I think my view.

Of the upside I can confirm and the runway we have for continued sustained growth there is significantly higher from a confidence level.

And our positioning of G. P. S. I think has really soon.

Cemented our position and we.

Speaker Change: We.

Our I think our focus to the sales organization that our incentive comp plan is intentional to use that word to drive the behavior. We want from our sales team and I think that's reflected in our results and we believe we have an opportunity to cement our position on the other side of that initial biopsy because of the unique.

And our position we have with an answer for both.

We're pretty okay, great and then.

The performance of the sales team in doing that.

Arkansas.

I apologize for interrupting you.

Alright, yes, I I've got that and then if I can sneak one more in I know in recent earnings calls, Mike you've talked about having visibility to some other opportunities.

In the urology space.

You've talked about not likely being looking to do something transformative, but perhaps adding something to the bag.

<unk> in.

The portfolio or perhaps.

No.

Make a change just kind of a standout.

Standout further in the industry relative to competition.

Recognizing that valuations have had been volatile but in some cases, we've seen some assets go for very small dollar amounts. How are you guys thinking about M&A and if you could just perhaps comment about what your funnel might look like.

Yeah, Mark so.

I wouldn't comment specifically I think what we have is when I noted our experience with taken a badger growth opportunities I think they look to ways right. We did have the G. P S, which was transformative M&A, but if I look at resolve.

That's really a channel growth opportunity that we we also have in front of us. So our growth strategy process that I referred to over time over the last few years, if we run here.

What I would notice that we were always looking outward.

I think that that slips to inbound because of the challenges of putting together what we have in place here after.

A lot of work at a significant period of time.

But our channel leverage and the setup. We have here is conducive to taking advantage of growth opportunities. There are some opportunities that we like.

But we're just.

Very disciplined and as you know and what is clear is the dynamic landscape related to.

Regulatory reimbursement and we just let them do we like to Derisk those pretty significantly so what our menu to what I expect our menu to look different down the road.

That's a reasonable assumption based on how different looks in a couple of years ago.

But nothing specific at this time, we will be opportunistic, but we'll also be very disciplined.

And going to market.

And keep our hopefully our track record of credibility there that we're not just trying things out.

Yep, Okay, great Congrats on all the progress.

Thank you Mark.

Thank you.

The next question comes from Dan Brennan with UBS. Please go ahead.

Great. Thank you. Thanks for the questions guys, maybe just on the same thread since I was going to go with the same question, but maybe a little more color just on the tissue growth, which really has accelerated these last three or four quarters. I know, Mike you just talked about balanced growth and you talked about the combination of cross selling to these doctors, which was part of the strategy can you give us some flavor.

On how many doctors are actually doing it today sits at that is really a driver of the uptake when maybe they order both.

How far into that opportunity are you any any context, you can give there.

Yeah Dan.

Not a specific number.

But with that growth to your point.

It happens two ways I think I would I would say so our sales team.

Plus or minus 11000 urologists in the U S 8000 practice in prostate cancer.

And our penetration is as well represented there are our growth and our you know what our sales reps have been really successful at is twofold first of all that pathology push really matters to my point, if we got the allergies onboard within a urology group practice, that's a multiplier and if a pathology.

<unk> group is onboard with the value and serving multiple urology group practices. That's also a push.

We've seen it with our reps as if they were in a urology group practice large urology group practice just like any.

<unk> sales were up right you you.

You get some adopters within that practice and then pushing that through the practice is what we've seen I think we've.

That was a good concept and we believe that would happen, it's really beginning to happen so without giving a specific number I think our market penetration is probably in a really good spot right now we've demonstrated.

Derisked the sustainable adoption, you know I pointed to the I used the term sticky.

Because that's what's happened right is the fact that we've been able to see this growth in.

And progress in our Robin over the past three years since the GPS acquisition without really adding a single direct sales rep.

It only happens if.

That adoption is sticky.

Stable and moving through a large urology group practice when I joined here it was very manual.

Perhaps we're going in you know did you have any negative biopsies. This week or this month, the key to our progress without sales force expansion.

As a direct result of.

Compliant adoption, that's an inside term, but but we have a number of tools, where we're able to determine that a urologist or urology practices has adopted our diagnostic pathway.

That's hopefully reflected clearly in the growth with a fixed.

Number of sales reps.

Great I know you tend to really want to focus on the.

The volume side is that you know kind of the success point here, but I'm just wondering if you could shed any insight.

On the pricing side, particularly for GPS anything you can share there.

And kind of the headroom opportunity it sounds like biomarker Bill for most of the group.

Ben you know, maybe incremental small positive, but nothing really being called out but I'm wondering what your success or strategy is in the next call. It 12 to 18 months is there an opportunity to drive like an uptick in realized price.

I think there is I wouldn't point to it I'd, probably join that group with with little evidence to point to I think what we're seeing is the the tissue based test clearly impact.

The gross gross margin what we have seen we have the focus of our market access managed care team has demonstrated the ability to hold or advance asps.

We've also seen a corresponding benefit through our operating team here with driving our Cogs through scale candidly with our growth.

Trajectory, but also we've seen a cost reduction since our transfer of the G. P. S from exact to MD ourselves or our view was that the the.

The cost of them running the tests would be offset by head.

Speaker Change: Head count here to bring it lives.

R R.

Our profile has been.

Better than we anticipated so that comes through clearly in the margin.

But we will continue to focus on both levers right driving.

COO.

Costs down from manufacturing and lab perspective, and driving coverage, which will show up in I S. P. A and we'll continue to update that as we go forward, but we view it as a two part.

P&L impact.

And then maybe last one I know the liquid side is certainly smaller given the pricing, but the volume growth has kind of come down a decent amount from where we were sitting at the beginning of 'twenty four to where we sit today in exiting four Q24, just any color.

In Europe again, some really tough comps, but just what's happening on kind of the liquid side.

Speaker Change: Yeah, I mean, I think that's somewhat of our.

Speaker Change: Somewhat tactical right.

We feel we have an opportunity to really sees.

Our position on the tissue and cement our position there on the other side of that initial biopsy and so by by proxy maybe directing a little bit of our sales force incentive comp and focus.

But we're still confident in.

On the liquid side of the business and again.

No material contribution from Germline likely to come in the second half partly by that focus design that we came into this year when we set our sales team out with their incentive comp plan.

And it's I would suggest that it's working.

And but we're confident that the adults.

It's an important part of our business.

Nearly the the tissue.

I'm curious the day from a from a pricing from a law.

From a margin and from a growth perspective so.

We're confident in the menu, but that's what you're seeing there.

Yeah, Okay, great. Okay. Thanks, guys.

Thank you Dan.

Thank you.

Next question comes from Jason Bednar with Piper Sandler. Please go ahead.

Hey, good afternoon, guys nice start to the year here and thanks for taking the questions.

Speaker Change: Ron I want to pull Paul you and.

Speaker Change: Give you an opportunity here.

Feel free to weigh in as well, but you both sound really confident in delivering against our full year guide flipping to positive EBITDA here in the current second quarter.

It's probably a good signal about what you're seeing here real time, you know halfway through the quarter.

So im just confident in the overall outlook, but I mean, I kind of walk to get to the next milestone and all on EBITDA and I'll ask it this way.

You seem confident in sustaining 20% revenue growth are there any shifts from the recent trend line in Opex spend as.

As we think forward or should we expect a lot of that revenue the.

Growth in revenue dollars can be dropping through to EBITDA dollars as we model forward. This year and then into next year as well.

Hey, Jason.

Speaker Change: So the trends Youre seeing so you know there's two things right there the revenue growth and on the Opex side I think we've said that in our last call as well that we expect to keep opex fairly flat.

And so these two with revenue growing and with Opex remaining fairly flat and only maybe slightly changing based on scale.

That's how we see and have confidence in getting to our adjusted EBITDA in the second quarter.

And sorry to just maybe put a finer point you know beyond the second quarter, Ron or I guess, how do you feel about that outlook is that the right way to think about revenue dollar growth dropping through almost one for one to EBITDA dollar growth and then secondarily the.

Follow up here.

The gross margin was really impressive in the first quarter typically we see your gross margin scale as the year goes on.

Yeah, I mean, I guess is that the right path, we should be thinking about as we as we model gross margins here for a for 2025.

So first of all on the Opex comment so again for the rest of the year, we kind of expect opex to be flat.

And we don't expect that to fluctuate much on the gross margin like you said it depends on the mix.

The more.

The tissue.

The more than makes relies on tissue and the better the margins will be but but as revenue continues to grow.

We will see that go down to the EBITDA line.

Yeah. The only thing I would add Jason is we're not counting on any margin.

Heroics to aid slipped this quarter.

Or.

Take us through the leverage Ron referred to in the P&L.

We couldn't meet our margin as it was running coming into this year is what we expected.

To make the EBITDA John.

So Q1 came in stronger.

We'll work to sustain that but you you would see that kind of.

You got to Ron's point, we're not counting on accretion on the gross margin line, but we aren't counting on continued discipline on the Opex line to Ron's point with the exception of scale.

Okay, Alright makes sense, just one last one a little bit bigger picture, Mike Yeah, Mark earlier was asking about interest in M&A.

I'll ask about interest and just maybe just more broadly bringing in more to the menu through other means that isn't necessarily outright M&A.

Yeah, I guess would you have a preference or interest in it if it would be something like partnering or licensing agreements you know things that maybe are a little more financially palatable for you versus just outright acquiring assets I guess do you have a preference one way or the other or are you just.

Kind of preaching discipline on all fronts.

Probably the the ladder, but I I think I would agree with your assumption right.

Good.

We have examples of both and it could be.

The combination, but we have a dashboard of opportunities that we continue to track them.

I think we.

We have a process of Derisking Madden I don't have anything to add to provide as far as a clear view of additional opportunities.

I mean I'll just go ahead and give you. An example in bladder cancer is something that would be an obvious but for us it would be like a.

We have good visibility to a number of ways to access to that market, but we'd like to.

A number of aspects of the.

That part could be derisked.

And to your point there was a <unk>.

Couple of different ways, we could you could access that with the right setup.

Got it very helpful. Thank you.

Speaker Change: Okay.

Speaker Change: Thank you.

The next question comes from Thomas Franking with KBC Securities. Please go ahead.

Hi, Mike Congrats on the strong results and thanks for taking my questions maybe.

Maybe for first question wanted to zoom in a bit deeper on Ah you mentioned that you are gaining market share with GPS is that something you could quantify a bit more further or gets a bit more grounds on how you see that are waiting to see that market share today compared to let's say when you acquired it test.

Hey, Thomas.

Yeah.

I'd be reluctant to kind of quantify you know what we are our view is that the rate of prostate cancer is growing.

Estimated to be 5% to 10% annually as it would be expected post pandemic still patient catch up there remarkably.

As well as the aging population and I think.

Just the general.

I've made the comment that I think prostate cancers, who have breast cancer was 25 years ago I'm not an authority on that but.

I think the face of prostate cancer the awareness.

Men getting screened earlier.

And all of those I think are set up well for our menu.

We talked that I commented on the fact that we really drive adoption of our pathway, particularly on the tissue side.

And our share gains there are you know both confirm in G. P. S. Theres, a significant amount of opportunity there confirm alone in that $500 million market opportunity.

But GPS there's two ways, we're driving growth right one is converting the market not using biomarker testing.

And the other is taking share I don't think are growth rates that we've demonstrated here.

It can happen without both of those levers are working with our sales team effectively. So we think we're in a good position, where we've demonstrated our position to my point, where we really think we have an opportunity to cement our position there.

But there's plenty of room and opportunity, which we emphasize rather consistently with our sales organization.

Okay very clear.

Thanks, and I also wanted to ask you what we've been talking about our adjusted EBITDA.

Profitability coming up for a couple of quarters now that seems to be a.

Very seasonal at this point in time I was just wondering and beyond that's I'm looking also may be beyond the full year 2025 columns. What you see is amongst key milestones in the coming months and years for the company going forward.

Well I think.

Speaker Change: Yeah.

Thank you.

Growth right. So we we've worked really hard to put the company in a position to meet all of our obligations.

I think we went out and financed the company at a difficult time.

Maybe at a price.

Nobody liked but I thought it was important to.

Put ourselves in a position, where we can just focus and execute.

And so that's what we'll continue to do now with the backdrop of a couple of the questions earlier, where we consider and potentially take advantage of additional growth opportunities, yes, but we feel like our if we can continue to execute.

Drive our topline growth be very disciplined on our opex to Ron's point.

On the bus business begins to fund itself with what's really clear leverage so.

We want to be the growth vertical.

Urology space.

I think we're demonstrating progress in doing that.

Speaker Change: And.

We'll continue to update on any additional.

Opportunities that we have in front of us.

But otherwise our value creating milestones.

I think our focus and execution.

And that's what our entire organization is.

It's driving toward.

Okay. That's clear thank you.

Thank you Thomas.

Thank you Dean.

The next question comes from Nielsen Cogs with Lake Street Capital markets. Please go ahead.

Great. Thanks for taking the questions I'll kind of ask a two part question here just as one.

And so a lot of my questions already but.

You know what percent of your revenues today are generated from large urology group practice and maybe talk about how that trended and then maybe talk about how penetration has trended at these practices as the age of the account progress since then and as that familiarity deepened.

Yeah Nelson.

<unk>.

Our progress within the law.

Wouldn't quantified.

The number of Brian.

Speaker Change: Our blood plus that we're penetrated and but I would suggest that it's.

Pretty broad.

And then within a larger group practices you know when we did the diligence on the D. G. P. S acquisition, what we found was a number of urologists use.

A number of different channels and candidly I don't know that there was a good.

Rationale for why and I think that our approach has been to really create differentiation differentiation for the y.

With regard to G. P S position in the market.

And when you have confirm alongside it it can come down to a simple if the decision is with our menu you can be sent into four different laboratories.

We also kind of saw the value of our organization is a real partner.

I think our reputation which is really really important and the sales team counts on it.

For our lab operating at a really high level of performance from our turnaround time, which we think we're getting to a best in class on that front, our client services group in patient advocacy and even our RCM support from our billing and reimbursement side those matter.

But I think that makes a difference and I think our sales team has really done a nice job of.

Of differentiating why they choose to use a test and if we which we clearly have.

Our view was that some of these urologists that are using different tests.

Creating a reason.

For understanding that reason was not based on necessarily in some cases anything.

Speaker Change: Specific and once were once we're able to.

Connect.

Our service levels with our menu advantages with the data, particularly associated with GPS.

And then the influence of pathology of coupled with that and the reasons that they have a been toward that.

All of those.

In aggregate to make a big difference and I think that's made the adoption stickier and sustainable.

Speaker Change: And then driving it within a large urology group practices you know if somebody's urology practices can have 10, 15 2025 urologists. So once we get our position.

And that's a sales rep.

Speaker Change: That's really optimal use of of time, where you have access you have influence you have credibility that's what we're seeing.

Great that's helpful color I'll stop there.

Thanks Austin.

This concludes our question and answer session and today's conference. Thank you for your participation you may now disconnect.

Okay.

Speaker Change: [music].