Greetings, and welcome to the MDxHealth Second Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this call is being recorded. 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 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 our filings with the Securities and Exchange Commission, specifically in the company's annual report on Form 20-F. I would now like to turn the call over to Michael McGarrity, CEO. Thank you, Michael. You may begin.

Thanks Paul, and thank you all for joining us for our second quarter 2024 earnings conference call for MDxHealth. With me today is Ron Kalfus, Chief Financial Officer. I am pleased to report that our business continued to generate strong financial performance in the second quarter and first half of 2024, with revenue growth of 32%, and 34%, respectively, over 2023. Our results reflect our continued focus on commercial execution and operating discipline which we believe will drive sustainable growth through 2024 and beyond. On our last call, I noted our strategy of creating multiple sources of growth. That proved to be the case again in Q2. And in a moment, I will provide greater detail on some of the key factors that help drive our strong performance. But first, a few brief highlights from our results that support our view that our growth trajectory is sustainable. We reported second quarter revenue of $22.2 million, an increase of 32% over prior year period. Of note, and as I've consistently stated, we have two levers of revenue growth. The first is with our sales team driving unit adoption from our Urology customer base; and the second is our market access managed care team, driving coverage, which shows up in our average selling price. In Q2, we clearly delivered on both levers with total billable test time of approximately 21,000 tests, representing total test unit growth of 31%. These two important metrics clearly underscore the balance and sustainable execution of our commercial team and the growth opportunity that lies ahead for us as we expand our menu offering in a $5 billion total addressable U.S. market, and build our market-leading precision in precision urology diagnostics. Based on the expansion of our business in test menu, in an effort to continue to provide…

Thank you, Mike. To follow on Mike's remarks, we are very pleased to report strong performance in the second quarter of 2024. Revenues for the second quarter ended June 30, 2024, increased by a robust 32% to $22.2 million versus $16.7 million for the first quarter of 2023. All of this growth was organic and delivered without expansion of our sales organization, which is a testament to the leverage we are generating from our sales channel and reflects greater market penetration of our full line of tests into the $5 billion U.S. addressable market. Revenue from our tissue-based test made up approximately 81% of our Q2 2024 revenue. It should be noted that the recently introduced hereditary germline test did not contribute to our growth for the second quarter, and as stated previously, we expect it to begin to contribute to our revenues in the second half of the year. Moving below the revenue line. Our gross profit for the second quarter of 2024 was $13.3 million, an increase of 33% as compared to $10 million for the second quarter of 2023. Gross margins were 60% for the second quarter of 2024, as compared to 59.7% for the second quarter of 2023. Operating loss for the second quarter was $7.4 million compared to $7.7 million for the second quarter of 2023, representing a reduction of 4%, driven by top line growth, improved gross margins and continued operating discipline. Cash and cash equivalents as of June 30, 2024, were $21.3 million. This concludes my brief overview of the results, and I will now turn the call back to Mike.

Thanks, Ron. Our top line revenue growth of 32% in the second quarter speaks to multiple positive factors that are driving our business and positioning our company for long-term growth. These factors include the strength of our underlying precision diagnostics technology, the incomparable breadth of our menu offering, the extraordinary network of relationships that we have built with healthcare providers, recognized and expanded reimbursement for our tests, and of course, the significant opportunity for growth from the precision diagnostics end markets. Our menu has been custom built to help fundamentally change the confounding and complex diagnosis of prostate cancer and be more effectively navigated for both clinicians and patients. Each year, our technology is enabling a growing number of patients and their physicians to make better informed and personalized treatment decisions. What is clear is that the adoption of precision diagnostics is only accelerating, and we believe we are uncommonly positioned to take advantage of these long-term sustainable trends in the high-growth urology market. I will again comment that our inside mission is that there is a patient and family on the other side of every sample we receive. With that in mind, we pass the friends and family test. That is if you have a friend or family member being worked up for potential prostate cancer, you want them on our menu and pathway, front-to-back, full stop. And as always, we carry a great deal of responsibility to provide value to all of our stakeholders, including patients, customers, payers and shareholders. So thank you for your interest in and support of MDxHealth, and now I'll turn the call back over to Paul for questions.

[Operator Instructions] Our first question is from Andrew Brackmann with William Blair. Please proceed with your question.

Hi guys, good afternoon. Thanks for taking the questions. Maybe to start here, you're obviously seeing some nice pickups in volume on both sides of the business and the tissue and the liquid side of things. But can you maybe just sort of talk about the drivers of this on the account level? What are sort of -- what are you sort of seeing in terms of compliance towards the overall menu? And I guess, how do you sort of think about furthering that along in the back half of this year into '25? Thanks.

Well, thanks, Andrew. Yes, I think we feel two things. One, our urology customer base, we really advanced the pathway, right? It was previously in a number of years ago, it was a lot of docs were trying tests and reps having a follow-up. We've really driven compliance to the term you use to our pathway where it really becomes if this then. And -- but probably a more material change, I would note is our embracing our engagement with and network of pathology, right? Because what we are seeing and what's showing up in our numbers that we believe is sustainable. I would say that our relationships, access, influence, and our pathology customers is becoming as strong as our urology. And some of these pathology groups serve multiple urology group practices. So we're generating real leverage there. And I think the understanding by pathology of the value of confirmed that it's not a misread by the pathologists, right? It's the limitations of the finite sampling of tissue from a biopsy, which samples less than 1% of the prostate. And I think that understanding and engagement between urology and pathology has made all the difference, candidly. And we're really confident that both ways, both confirming GPS and GPS and I pointed to some of the futures, but that tissue requirement is a big deal for pathologists, right? Preserving the limited tissue that they have from the biopsy is a very important characteristics of the GPS Test. So it all kind of holds together in our sales team has got a strong -- building a strong hold with both urology and pathology. When you have it coming from both ways, we're seeing that be a really compelling driver to why we see this growth rate continuing.

Perfect. And then maybe just on the pricing side of things. You obviously called out market access and your efforts there. But can you maybe just give us a little bit more color around how much room do you think is left to move ASPs higher for the portfolio, be that from further market access and coverage decisions or even just improved revenue cycle management? Thanks.

Yes, Andrew, it's both, right? So we -- and we've seen both, right? Our -- we have room, right? So our Medicare rates for Confirm and GPS, and then our ASP associated with broader commercial private payer coverage as well as our revenue cycle management's ability to drive compliance to the contracts we have, even if they're out of network has made a big difference. And we have a lot of room to go there with coverage. And in fact, they often we'll get a coverage decision, but not medical policies. So there can be a 2-step process to coverage by certain payers, and that shows up in the acceleration of the ASP even by payer. So a contract payer, we make it a rate and then when we get in policy, that rate becomes more favorable. So we believe we have room there. And we're seeing it across each of our tests. So when I speak to the value of the sales team, but also our managed care team, all the levers are working.

Thanks guys.

Thanks Andrew.

Thank you. Our next question is from Mark Massaro with BTIG. Please proceed with your question.

Hi guys, this is Vidyun on for Mark. Thanks for taking the question. I guess the volume breakout for just a little bit different than the buckets we had. Can you just give us any qualitative color on relative areas of strength in the quarter? I understand that resolve volumes, in particular, have been beating us for a while. So just curious if you had anything to call out there. Thanks.

Yes, Vidyun, so we would clearly move from unit revenue by Test for, which we've discussed, probably more for competitive market reasons. But we feel like this is really good way to provide better visibility into our menu builds, and it's driven by a couple of things. One is when you look at the pricing of the tissue base versus the liquid-based test, it's materially different, right? So we think that gives you better visibility. As far as our unit growth rate, again, I would point to the comp of Q2 over Q2 last year. So we think these growth rates and the acceleration of revenue are very, very sustainable across our menu. So from a tissue perspective, the Medicare rates for GPS and Confirm and correspondingly our ASPs are significantly higher than Select and Resolve. So we are seeing continued growth across our menu for the most part in Resolve. And we have a lot of room in each of those markets. So we're confident that this gives better visibility for comparison purposes as we go forward in better detail on how the menu as we've expanded it, which I think is somewhat uncommon, contributes and builds up to our reported revenue and just as importantly, our view forward from a guidance perspective.

Okay. Perfect. Understood. Thanks for the color. And just a follow-up. This one is a little bit nitpicky, but it was a bigger quarter revenue-wise, but it didn't seem to drop down the gross margins as well as it has historically. I assume that would just be driven by the test mix, but just any other variables to call out on the gross margin? Thanks.

No other variables. Strictly the timing and mix and its mix of not only again as our menus expanded the mix becomes more relevant as far as the quarter-by-quarter gross margin, but also the payer mix that comes across. So it's a permutation of expanded menu and payer mix by quarter, but no material change there.

Great. Thanks for taking the questions.

Thanks Vidyun.

Thank you. Our next question is from Thomas Vranken with KBC Securities. Please proceed with your question.

Hi, thanks for taking my question and congrats on the nice growth rates again. Maybe two questions from my side. The first one is whether you could give us a bit more insight and exactly where you stand with the integration of that germline testing? What are the steps that are needed or need to be taken to reach that revenue contribution as of H2? And then secondly, I also wanted to pick back up on a comment that you made a couple of months ago with regards to potentially adding or looking at additional opportunities to expand the testing menu, given the fact that the test has been added, what is now your current outlook into, let's say, the rest of the year and maybe next year with regards to evaluating additional opportunities? Thank you.

Thanks, Thomas. Yes, as far as the germline, we communicated, which is the way we take these new opportunities where we engage in a limited launch, and that's really twofold. I want to confirm our diligence and to get some experience with our sales organization and a limited launch to be able to roll out. So we're in that phase now in Q3. We have received samples. We also like to get, as you know, Thomas, about a quarter of history of payer mix coverage and historical get some history of payments. Even with Medicare, we did the same thing with Select last year. So we, again, feel like we'll begin to report revenue contribution in the second half of this year and probably then be able to give you a better visibility as to how it contributes to our overall view forward. But we like to fit for sure, with our menu offering. And again, I would point to the fact that concept, not unlike Resolve, came to us from our customers, right? All the good ideas come from the people in the field, whether it be our reps or customers, and that's a good example of that. As far as the second part of your question, growth opportunities. I'm careful there, but we have them, right? So I'll provide the detail, right? As I think I've commented before, I mean we run a growth strategy process here. We have over the last two years, and we are always looking out as to what's out there that we think is interesting. It's also candidly an unintended consequence exercise to make sure we don't miss something. Both from our current menu offering competitively and where the direction of the market goes, but for new opportunities. And I think the strength…

Yes, very clear. Thank you very much, Mike. Much appreciated.

Thanks, Thomas.

Thank you. Our next question is from Jason Bednar with Piper Sandler. Please proceed with your question.

Hi, guys. Can you hear me okay?

Yes, Jason.

Great. So I just wanted to ask two questions. I'll ask both up the front here, and sorry for any background noise. But just want to ask on pace of volume activity during the quarter, just how that informs your view in the second half of the year. Obviously doing very well here in the first half. And just kind of wanted to see if there's any strengthening or weakening or things are pretty stable across the quarter? And just remind us if you could have and where we're at with respect to getting back to normal testing volumes across the industry? And then the second question, a separate question. Now that we fully consolidated the GPS operations, are there efficiency benefits that we can expect to see in the second half of the year? Thank you.

Thanks, Jason. Yes. I'll comment on the second part first. So we modeled the GPS, obviously, Exact was running the test for us. So there were some economics associated with that. We believe that it's -- they solve for each other as we staffed our laboratory to go live with the GPS test. So we don't see any material favorable or unfavorable impact to the P&L. And as far as the view for the second half of the year, yes, we view it as very sustainable. Q3 is always a little bit of a wild card. I mean you a little cautious without Q3 with even post pandemic more, I guess, I would say, seasonality with regard to patient for staffing vacations, but I would not expect any material downturn or change in our trajectory from a growth perspective, probably even with absent any material change in Q2 from a seasonality perspective. So that's the message we're delivering. I think it's reflected in our guidance and our view that I made the comment that internally, we believe that we can drive 20% or greater revenue growth in a very, very sustainable way.

Okay. Thank you.

Thanks, Jason.

Thank you. There are no further questions at this time. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.