MDxHealth SA(MDXH) - 2025 Q1 - Quarterly Report

Report of the board of directors Developments, results, risks and uncertainties This section reviews the company's 2024 financial performance under statutory and consolidated statements, detailing a statutory profit turnaround, narrowed consolidated net loss, and major financial, operational, and regulatory risks Management's discussion and analysis of the statutory financial statements of 2024 and 2023 MDxHealth SA's statutory statements show a turnaround to a €7.0 million net profit in 2024 from a €28.4 million loss in 2023, driven by increased financial income and improved cash to €42.8 million Statutory Financial Performance (EUR) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | €3,979,160 | €3,233,610 | +23.1% | | Operating Result | (€5,865,643) | (€7,493,015) | Loss reduced | | Net Financial Result | €13,265,152 | (€20,876,289) | Positive swing | | Net Profit / (Loss) | €7,031,447 | (€28,370,081) | Turnaround to profit | - The primary driver for the shift to net profit was a non-recurring financial gain of €14.1 million from the valuation of intercompany current accounts, a reversal from a €20.2 million charge in 2023[7] - Cash and cash equivalents increased to €42.8 million from €18.9 million, boosted by a capital increase and a new $100 million loan facility obtained by the U.S. subsidiary, which was used to repay an existing $35 million debt[10] - Despite the profit in 2024, the company has an accumulated deficit of €196.5 million Management justifies the going concern basis on its ability to continue operations for at least the next twelve months[13] Management's discussion and analysis of the consolidated financial statements of 2024 and 2023 Consolidated IFRS statements show a 28% revenue increase to $90.0 million in 2024, narrowing the net loss by 12% to $38.1 million, supported by a new $100 million credit facility and $40.7 million from a public offering Consolidated Financial Highlights (USD) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $90.0 million | $70.2 million | +28% | | Cost of Sales | $34.9 million | $26.3 million | +32.7% | | Operating Expenses | $79.9 million | $71.3 million | +12% | | Net Loss | ($38.1 million) | ($43.1 million) | -12% | - Medicare was the only payer generating over 10% of revenue, totaling $37.1 million in 2024, up from $27.7 million in 2023[19] - The company secured a new five-year, $100 million senior secured credit facility with OrbiMed, drawing down an initial $55 million to repay its previous $35 million debt with Innovatus[32][33] Balance Sheet Ratios | Ratio | 2024 | 2023 | | :--- | :--- | :--- | | Cash & cash equivalents as a % of total assets | 30% | 17% | | Solvency ratio (equity/total assets) | 9% | 6% | | Gearing ratio (Financial debt/equity) | 346% | 502% | Information regarding major risks and uncertainties The company faces major financial, operational, intellectual property, and regulatory risks, including a history of losses, dependence on key tests, intense competition, and potential changes in FDA oversight of laboratory-developed tests - Financial Risks: The company has a history of losses, may never achieve profitability, and may require substantial additional funding[47] - Operational Risks: Financial results are largely dependent on sales of two tests (Confirm mdx and GPS) The company also faces risks from industry competition, reliance on a limited number of suppliers, and potential IT system failures[51] - Commercial & IP Risks: The company faces uncertainties over reimbursement by third-party payors and must protect its intellectual property for its key tests to maintain its competitive position[51] - Regulatory Risks: The FDA may change its regulation of laboratory-developed tests, which could cause substantial costs and delays Failure to comply with various federal, state, and foreign regulations could lead to sanctions[54] Information about important events after the closing of the financial year The only significant post-year-end event was the March 10, 2025, drawdown of a $25 million second tranche from the OrbiMed credit facility, following the satisfaction of revenue and cash conditions - On March 10, 2025, the company's U.S. subsidiary drew down an additional $25 million in gross proceeds from its credit agreement with OrbiMed, representing the second tranche of the facility[55] Research and development In 2024, MDxHealth's R&D focused on developing its clinical diagnostic product pipeline, with extensive work dedicated to solutions for prostate and bladder cancers - The company's 2024 R&D activities centered on product development projects for its clinical diagnostic pipeline[57] - Extensive development work was performed on clinical solutions specifically for prostate and bladder cancers[57] Use of financial instruments The company's primary financial risks include Euro currency exposure, interest rate risk from its variable-rate OrbiMed credit facility, and credit risk on its $46.8 million cash deposits, for which it does not currently use hedging instruments - The company's currency risk is concentrated on its European operations and the Euro, for which it does not currently use hedging instruments[58] - The company is exposed to interest rate risk through its OrbiMed credit facility, which accrues interest at a variable rate equal to the greater of the SOFR rate or 2.50%, plus 8.50%[59] - Credit risk on cash and cash equivalents of $46.8 million is considered limited as the counterparties are banks with high credit scores[60] Public takeover bids No public takeover bids were made in 2024, and the company's de-listing from Euronext Brussels on December 18, 2023, changed its status under Belgian law regarding takeover regulations - The board of directors confirmed that no takeover bid was instigated by third parties in respect of the Company's equity during the financial year 2024[63] - As a result of the de-listing from Euronext Brussels on December 18, 2023, the Company no longer qualifies as a listed company or public-interest entity under the Belgian Companies and Associations Code[62] Branch offices While MDxHealth SA has no branches, the group operates a second U.S. laboratory in Plano, Texas, known as MDxHealth Central - The Company does not have any branches[64] - MDxHealth operates a second U.S. laboratory, Delta Laboratories LLC (d/b/a MDxHealth Central), located in Plano, Texas[64] Justification of valuation rules on the basis of going concern Despite a history of net losses and an accumulated deficit of $369.5 million, management justifies the going concern basis on $46.8 million in cash and expected access to additional funding for at least the next twelve months - The company has a history of net losses and an accumulated deficit of $369.5 million as of December 31, 2024, which could raise doubt about its ability to continue as a going concern[65] - Management justifies the going concern assumption based on its cash and cash equivalents of $46.8 million and its expected ability to access additional cash through debt, equity, or other means to fund operations for at least the next twelve months[66] Conflicts of interests and related party transactions Two conflicts of interest involving CEO Mr. McGarrity regarding executive remuneration were reported in 2024, with Mr. McGarrity recusing himself and the board approving committee recommendations - Conflicts of interest were reported for CEO Mr. McGarrity at board meetings on February 20, 2024, and October 24, 2024[70][71][73] - The conflicts pertained to discussions and resolutions regarding executive remuneration and compensation matters In both cases, Mr. McGarrity did not take part in the deliberation or voting on these items[71][73] - The board approved the recommendations of the Nomination and Remuneration Committee regarding executive compensation, severance, and success bonus programs to better align with US market practice for a Nasdaq-only listed company[72][75][77] Acquisition of own shares The company confirms that neither it nor any person acting on its behalf acquired any of the company's own shares during the 2024 financial year - Neither the Company nor any person acting on its behalf acquired shares of the Company during the financial year 2024[79] Transactions under the authorised capital In 2024, the company established a $50 million ATM facility and completed a public offering, issuing 22,209,241 shares for approximately $44.1 million in gross proceeds - On April 30, 2024, the company established an "at the market offering" (ATM) facility with TD Cowen to sell up to $50 million in new shares[80] - In September and October 2024, the company completed a registered public offering, issuing a total of 22,209,241 new ordinary shares[82][84][85] 2024 Registered Public Offering Details | Date | Shares Issued | Gross Proceeds (USD) | | :--- | :--- | :--- | | September 2024 | 20,000,000 | $40.0 million | | October 2024 (Overallotment) | 2,209,241 | ~$4.1 million (based on share count and initial price) | | Total | 22,209,241 | ~$44.1 million |