MDxHealth (MDXH) Q3 2025 Earnings Call Transcript

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Date

Wednesday, Nov. 12, 2025 at 4:30 p.m. ET

Call participants

• Chief Executive Officer — Michael McGarrity
• Interim Chief Financial Officer — Scott McMahon

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Takeaways

• Revenue -- $27.4 million, representing 18% growth compared to the prior year quarter, with no material revenue contribution from the ExoDx acquisition in this period.
• Billable test volume -- Approximately 33,000 tests, up 37%, driven by 18% growth in tissue-based volumes and 65% growth in liquid-based volumes.
• Gross profit -- $17.9 million, up 25% from the prior year period.
• Gross margin -- 65.2%, an increase of four percentage points over the prior year quarter, primarily due to favorable test mix and operational efficiencies.
• Operating loss -- $2.6 million, down 57% from the prior year quarter.
• Net loss -- $8 million, a 28% reduction from the prior year period.
• Adjusted EBITDA -- Adjusted EBITDA was $1 million, positive for the second consecutive quarter and a turnaround from negative $3.8 million in the prior year period.
• Operating expenses (OpEx) -- Essentially flat sequentially and year-to-date, with a 1% increase on 20% year-to-date revenue growth, despite absorbing acquisition-related costs.
• Cash and cash equivalents -- $32 million as of September 30, 2025.
• Quarterly cash use -- Less than $1 million, nearly reaching operating cash flow break-even.
• ExoDx acquisition -- Closed at end of the quarter; integration commenced with priority on operational and salesforce alignment, expanding regions covered and sales reps from 50 to 60 across eight geographic regions.
• Product portfolio transition -- SelectMDx to be discontinued by year-end, with customers converting to ExoDx; company exited germline offering for the period, redirecting resources to ExoDx integration.
• Full-year revenue guidance -- Maintained at $108 million to $110 million, with management stating confidence in meeting or exceeding guidance despite portfolio changes and acquisition timing.

Summary

MDxHealth (NASDAQ:MDXH) reported double-digit revenue and billable test volume growth, with gross margin improvements attributed to operational efficiencies and mix shift. Management highlighted the completion and initial integration of the ExoDx acquisition, clarifying that revenue guidance remains unchanged as the company deprioritized its germline offering in favor of a focused integration effort. The expanded salesforce and updated product portfolio represent strategic priorities for the remainder of the year, with resource allocation decisions informed by observed customer trends and operational capabilities. Cash usage was nearly break-even, strengthening liquidity, and adjusted EBITDA was positive for the second consecutive quarter.

• Management stated, "no material contribution from Exo" was incorporated in the quarter's revenue, underscoring the acquisition's impact will be reflected in subsequent periods.
• The tissue-based diagnostic segment, including ConfirmMDx and GPS, accounted for 76% of revenue, while the liquid-based test segment drove most of the unit volume growth.
• Company plans call for full operational integration of ExoDx by end of year and reassessment of the germline market entry in 2026.
• Operating discipline resulted in minimal OpEx growth relative to revenue gains, while expansion to sixty sales reps targets enhanced customer coverage and cross-selling within urology practices.

Industry glossary

• ExoDx: A proprietary liquid biopsy platform acquired by MDxHealth S.A., focused on non-invasive, urine-based urologic cancer diagnostics.
• GPS (Genomic Prostate Score): A genomic tissue-based test used for risk stratification in prostate cancer diagnosis and management.
• Revenue cycle management (RCM): The administrative and clinical process that manages claims processing, payment, and revenue generation for diagnostic laboratories.
• Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, adjusted for non-recurring and acquisition-related expenses, as calculated under IFRS and referenced by management.
• SelectMDx: A urine-based molecular diagnostic test by MDxHealth S.A. for early detection of prostate cancer, being phased out in favor of ExoDx.
• Germline offering: Genetic testing products analyzing inherited mutations, which the company chose to deprioritize for the current fiscal year.

Full Conference Call Transcript

Michael McGarrity: Thanks, John. And thank you all for joining us for our third quarter 2025 earnings conference call for MDxHealth S.A. With me today is Scott McMahon, Interim Chief Financial Officer. We've been very consistent in our message and mission that MDxHealth S.A. is driven by three core operating principles: focus, execution, and growth. We are excited to report results that are consistent with that internal mandate. From a focus perspective, we continue to identify high-value differentiated assets as demonstrated by our recent acquisition of the Exosome Diagnostics business, further positioning MDxHealth S.A. with the most comprehensive industry-leading menu of precision diagnostics in urology.

From an initial elevated PSA to and through each point along the diagnostic pathway of prostate cancer, MDxHealth S.A. can deliver clinically actionable diagnostics for clinicians and patients. With respect to execution, every operating group within our company has supported our growth with an uncommon discipline as evidenced by the following. Our sales organization has delivered a compound annual growth rate of 45% over the last four years while significantly reducing our sales and marketing expenses as a percentage of revenue. This reflects our team's steadfast commitment to building trust and accountability with our urology customers, allowing us to confidently invest in additional growth opportunities.

Our laboratory operations group has also kept pace with the increasing scale of our business while improving our gross margin profile through optimal efficiency and productivity. From a customer experience perspective, our entire team knows that we are only as good as our customers think we are. The emphasis we place on the customer experience has, in fact, become foundational to our culture. There is nothing we do not metric and manage to help improve upon the customer experience. And through these efforts, I believe we are now resetting the industry gold standard for turnaround time from sample to result, which is clearly one of the most important patient and clinician-driven metrics.

And finally, as it relates to growth, we are confident that MDxHealth S.A. will continue to deliver market-leading growth driven by focus and execution, coupled with a very sound and disciplined new product and acquisition strategy. As we go forward, we also expect to achieve sustained top-line growth while advancing operating profitability. Following our first adjusted EBITDA profitable quarter in Q2, delivered again in Q3, as well as achieving positive adjusted EBITDA on a year-to-date basis. I would now like to highlight the results from our third quarter that we believe reflect our focused execution and growth.

Q3 revenue of $27.4 million represents 18% growth over 2024, even with our decision to forego focus on our previously planned germline offering, and adjusted EBITDA came in at $1 million. Our total OpEx is essentially flat for Q3 and year-to-date over 2024, up a mere 1% on 20% year-to-date top-line growth while absorbing material acquisition-related expenses. We successfully closed on the transformative Dx acquisition, and at the end of Q3, we began the integration from an operational Salesforce perspective. And this process will be our highest priority throughout Q4.

We strengthened our laboratory operation with now three labs and will focus on installing and advancing our quality and operating discipline goals with the team from ExoDx in the Massachusetts facility. Finally, our total use of cash for Q3 was less than a million dollars. We are confident in completing the integration of the ExoDx acquisition in this fourth quarter. The integration will be focused on the following key operational areas of the business. For the commercial operation, our diligence of the ExoDx opportunity led us to execute a strategic expansion of our sales organization from 50 direct sales reps among six geographic regions to now 60 direct sales reps across eight regions.

This expansion was informed by a detailed review of the customer base and ordering patterns by urologists and large urology groups and was specifically designed to optimize cross-selling opportunities of our combined customer base. As I noticed when we announced the acquisition, this strategy mirrors the growth thesis of our GPS acquisition, leveraging the potential to drive growth through our now expanded menu and customer base. We are conducting cross-training of sales reps and integrating into the newly formed regions.

Through this acquisition, we are confident that our best-in-class sales team will continue to execute on our growth strategy demonstrated by our track record of consistent and sustainable sales rep productivity and fortified by the high-performing and high-quality sales reps we retain from ExoDx, slotting them opportunistically to further drive growth in customer engagement. Lastly, on the commercial customer front, we will be converting our select customers over to ExoDx throughout Q4 and would expect to discontinue Select by year-end. We are confident, as we have noted, that the ExoDx test provides optimal and clinically actionable results for patients and clinicians while providing additional ease of use.

We will strive for seamless integration and provide an update at the beginning of the year on our progress and what we expect to be a successful transition. We are also focused on our laboratory operational integration. With our expanded laboratories operations in California, Texas, and now Massachusetts, we will focus on efficiencies designed to advance our continuously improving gross margin, as well as advancing our information systems to drive additional operational efficiency, all while maintaining our relentless focus on performance metrics that achieve operating excellence and improve customer experience. Finally, we are integrating our client service and revenue cycle management teams to best serve our patients, customers, and payers as we strive for world-class service standards within the industry.

Based on prioritizing the successful integration and customer engagement, as well as conversion of Select to ExoDx, we have set aside our entry into the germline market. While we had expected material revenue from germline in the 2025 revenue guidance of $108 million to $110 million, we will revisit and reevaluate the germline opportunity as we enter 2026. Finally, as part of the ExoDx acquisition, we commented on the broad IP and clinical scientific data in multiple cancers, including prostate. We will be actively evaluating strategic opportunities from this platform both within MDxHealth S.A. as they apply to our urology focus and through partnering opportunities as they may present themselves.

We now believe and are confident that no other company is better positioned to improve the patient journey through prostate cancer diagnosis and treatment and that our results continue to reflect our success in bringing value to this patient population. I will follow up with closing comments and a view forward, but first, let me turn the call over to Scott McMahon for a review of our financial and operating results for our third quarter. Scott?

Scott McMahon: Thank you, Mike. To follow on Mike's remarks, we are very pleased to report strong performance in 2025. Q3 total billable volume was approximately 33,000 tests, of which approximately 13,000 were tissue-based and 20,000 were liquid-based tests, representing total unit growth of 37% versus the prior year quarter. Volumes for our tissue-based tests, which include ConfirmMDx and GPS, increased approximately 18% over the prior year period. Volumes for our liquid-based tests, which include SelectMDx, ResolveMDx, Germline, and the newly acquired ExoDx, increased approximately 65% over the prior year quarter. Revenues for the third quarter ended 09/30/2025, increased by 18% to $27.4 million versus $23.3 million for the prior year quarter. Tissue-based tests made up 76% of revenues for Q3.

Moving below the revenue line, our gross profit for the quarter was $17.9 million, an increase of 25% as compared to $14.3 million for 2024. Gross margins were 65.2% compared to 61.2% for Q3 2024, an increase of four percentage points primarily attributed to our test mix and improved efficiencies in our operations. Our operating loss for the quarter declined 57% to $2.6 million compared to $6.1 million for 2024, primarily driven by our growth in sales and gross profit. Our net loss decreased 28% to $8 million compared to $11.2 million for the prior year. Adjusted EBITDA for the quarter was a positive $1 million compared to a negative $3.8 million for 2024.

Note that a reconciliation of IFRS to non-IFRS financial measures has been provided in the tables included in this press release. Cash and cash equivalents as of 09/30/2025, were $32 million. This concludes my overview of the results. I will now turn the call back to Mike.

Michael McGarrity: Thanks, Scott. We believe our Q3 results reflect the reputation we are building for excellence in focus, execution, and growth. And so as we look forward, we are committed to excellence in the following operating principles. Discipline in our capital allocation is reflected in the linear decline in cash used in operations, with Q3 almost breaking even with respect to total use of cash. Absolute dedication to the patient and customer experience by every single part of our organization. The highest expectations for continued growth driven by our sales channel to meet or exceed expectations, defined by performance over time. With a culture of recognizing execution through an incentive compensation plan that rewards sustainable growth.

Our culture of quality first and customers always will ensure our building reputation for excellence in operating discipline, commercial execution, and most importantly, the patient and customer experience will continue to fuel our growth in a sustainable way. We are very proud of our growing reputation for meeting or exceeding expectations and delivering on our commitments to patients, customers, and the market. Whether in the sales force, laboratory operations, revenue cycle management, client services, patient advocacy, quality and regulatory, our entire MDxHealth S.A. team operates under the mission that there is a patient and family on the other side of every sample we receive.

That is what drives our customer base to trust MDxHealth S.A. as their laboratory partner for critical diagnostic tests that inform patient pathways. We will continue to strive to deliver on our commitments, growth, and value while positioning MDxHealth S.A. as the leading growth precision diagnostics company focused solely on our high-growth target urology market. And as always, carry a great deal of responsibility to provide value to all of our stakeholders, including patients, customers, payers, and shareholders. Thank you for your interest in and support of MDxHealth S.A. Now I'll turn the call back over to the operator for questions.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star and then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then 2. At this time, we'll pause momentarily to assemble our roster. We have the first question from the line of Dan Brennan from TD Cowen. Please go ahead.

Dan Brennan: Great. Thank you. Thanks for the questions. Maybe just the first one, just on Exo in the quarter, it looks like, you know, given the liquid volumes, really had a strong liquid quarter. Just wondering if you can give us any color on the contribution of Exo in the quarter. And then, b, related to that, there's some moving pieces, obviously, with your product portfolio as we move as we exit the year, you're exiting germline. You're deemphasizing Select, but now you have Exo in there. We would net those all out to still be a positive contributor such that, like, you should see upside to revenues. You guys aren't baking anything in right now, maintaining the guide.

Is there conservatism in that? Or anything you can help on that would be really great.

Michael McGarrity: Yeah, Dan. I got the question. So just to be clear, to take a step back, we had as we had discussed, not expected material contribution from germline in the first half of this year. We did, however, signal and expect material contribution from germline in Q3 and Q4. As we entered into the process on the ExoDx acquisition, it became clear that would likely lead to a successful outcome. We adjusted that focus knowing that we would need to require all of our resources, focus, and attention. The closing of the deal, which happened at the end of Q3, so part of your question is, no material contribution from Exo. And that is an offset.

So without any contribution from what we expected from germline, and a Q4 contribution from Exo, we're confident that we can meet or exceed our revenue guidance. That informs our view there and hopefully answers your question, which I understand. So we are very clear that the transition, the liquid growth in Q3 was candidly driven by our germline. I'm sorry. Our resolve business continues to accelerate. And, you know, we did see we announced the deal in August, didn't close till September. So we really were focused on managing.

I communicated when we announced the acquisition that I wasn't going to comment on our strategy for Select and Exo in the market out of respect for our customers and sales reps that we're working that. And confident that we navigated through that, you know, weird period for lack of a better term, with a lot of competitors running around and making assumptions. That we held off. So we believe that our results for the year in Q4 will reflect our original thesis on the opportunity ahead of us with the Exo acquisition.

And the offset of germline, we believe, is the right strategy to ensure very, very successful integration of an expanded sales organization with territory adjustments, cross-training, and maintaining the customer base while we move customers away from Select and onto Exo. So hopefully, that answered your question. And, yeah, we think it's a we think we made the right decisions there, and obviously, we'll look forward to reporting support for those.

Dan Brennan: Okay. And then maybe any color just on GPS. Obviously, such a big driver of revenue for the company just given the reliance on that. Just wondering how you know, what you could characterize how GPS did in the quarter, you know, we were tracking volumes up significantly over the last couple of quarters. Just any color on how it came in? Any color on price or volume or just what the environment's like? And then, you know, what do you have kinda baked in as we think about GPS for the, you know, for the fourth quarter?

Michael McGarrity: Yeah. So we you know, our tissue reported 18% growth. You know, we feel that's significantly ahead of the market growth, and we're very confident that our performance continues there. With no material change to the economics. And remember, that is Confirm and GPS. In Q3, we did you know, I usually don't comment on seasonality. We did in our customer channel checks throughout the quarter see a little bit of a patient flow directed slowdown in the number of biopsies. But again, we wouldn't tend to apologize for 18% growth on the tissue side. So business is going as we anticipated, and feel confident in both.

I think the comment I would make is the mix shift that you saw with tissue and liquid we view as very encouraging. In other words, our tissue is awaiting a revenue. We've been running about 80%. The last two quarters, it was up to about 85% of revenue. And what you saw in Q3 was a little bit of a flip of that really driven by the strength of the resolved growth. And yet the margin held at the 65%, which is I've said on the last couple of calls, is ahead of our expectations.

I've been reluctant to set that as the view forward, but obviously, it shows confidence that we're seeing really good execution efficiencies in our COGS and gross margin profile across our menu, both liquid and tissue. So we believe that's sustainable as well.

Dan Brennan: Great. And maybe just a final one just back to, like, the first point. So presumably, whatever the Exo contribution is, given the fact you're holding the guide, is the assumption that contribution is around the same level, you know, is around the same level as the germline test and the Select test, or has something changed in your assumptions for the rest of the business?

Michael McGarrity: The former, not the latter. We are still very, very confident in not only the core Exo business that we acquired. It's early. And as we go forward over the next, you know, two or three quarters, we'll comment on what we see as a real opportunity there. With the expanded sales organization. And a renewed focus on that part of our market opportunity because I don't want to say we had walked away from it, but we were clearly challenged. And as I've commented, our focus for the first half of the year was really leading toward the tissue.

I think our result business is just really going based on, you know, our sales rep focus, but also a little bit of peer-to-peer. You know? Help there. We're probably on our fifth generation of that test. It's the best test, we believe, on the market unequivocally. So we really see balanced growth throughout the menu with just an adjustment in our strategy that lines us up where we expected to be for the year.

Dan Brennan: Okay. Great. Thank you.

Michael McGarrity: Thanks, Dan.

Operator: Thank you. We have the next question from the line of Andrew Brackmann from William Blair. Please go ahead.

Andrew Brackmann: Hey, good afternoon. Thanks for taking the questions. Mike, you mentioned the analysis that you did of your customer base and that's informing some of the sales team expansion here. Any additional color you can maybe give on that analysis, how you're viewing the opportunity across the combined customer bases here, and how we should be thinking about the total opportunity size? Thanks.

Michael McGarrity: Yeah, Andrew. So probably what you would expect. Right? I mean, we try not to overcomplicate it, but what we did was we looked at their customer base, and we had pretty good information. I'll just say a little bit different than the GPS. That was a carve-out asset acquisition. This was an acquisition of the business. So between signing and closing, we got a lot of work. And the customer base, the crossover. And what we really looked at was growth trends within an area of the business. The view of a sales town, historical ordering trends, and then crossover mix of our menu within our target customer base.

And that informed the expansion, which we think was the right number, prudent. It strengthens our focus. So we expect to drive that same productivity now over a little bit larger sales organization while still being able to carry our P&L forward all the progress we've made the full P&L. From an OpEx absorption and productivity across the sales organization.

Andrew Brackmann: That's great color. And then just on the integrating client service and RCM initiatives here, on the operations front. Can you maybe just sort of talk to us about the opportunity that's there? On the RCM, why'd you choose to do this now, and how we should sort of think about the potential downstream effects? Thanks.

Michael McGarrity: Yeah. I guess I called that out just because, you know, what we retained and crossed over from the business were the key operating parts of the business. Right? Salesforce set aside, we were, you know, we saw we'll recognize synergies there based on the size of the sales organization they were carrying and what we elected to take over. And we ran a really high quality, which was important to us, to me. Really looking at each rep, each territory, each customer base. My comment there is just the three key parts of the business that we have to be and plan to be very successful integrating into our operating business.

Is the laboratory operation, which is with us now. The client services group, and the revenue cycle management group. So my comment stands to be integrating those so that we're all working the same process focus and execution and expectations that we can predict and protect the business as well as we have over the last number of quarters and years. And that'll be the sole focus in Q4. So when we come back at the beginning of the year and provide guidance for 2026, it will be informed across all of the aspects that drive the P&L. Right?

The top-line unit growth, our coverage and cash collections, and then how we support our customers through our client service group, with a menu that is more advanced than some of our competitors. With, you know, four tests being ordered in a different mix set by certain customers as well. So all that is what we're focused on for Q4. And that constitutes the new people and parts of the organization that are coming over that we expect in a quarter or two to be fully integrated. Just as we've made progress over the last couple of years, our group that I hope I pointed to, with the growth not being linearly offset by our spend on the OpEx side.

And that's what we anticipated over the last number of quarters. And we've had 1% OpEx expansion over the last year on 20% top-line growth. That we expect to continue. And those are the groups that we gotta make sure that we integrate so they're operating at the same efficiency levels that we have.

Andrew Brackmann: Okay. All helpful. Thanks, guys.

Michael McGarrity: Thanks, Andrew.

Operator: We have the next question from the line of Bill Bonello from Craig Hallum. Please go ahead.

Bill Bonello: Hey, guys. Thanks a lot. Few follow-up questions here. So first of all, if we're doing our math right, it looks like maybe on the tissue side that the ASP was down about 7%. Or so sequentially. I guess, does that sound about right? And, you know, if so, is that a function of mix between the tests? And if it's not a function of mix, sort of what's driving that move?

Michael McGarrity: Yeah. I mean, Bill, we don't report our ASP by test. And we see variability each quarter. So as we go forward, we don't see a material change in our view of really, you know, our entire menu consolidated or how we think about our payer mix and we'll continue to report on that each quarter. But I don't view that as anything notable.

Bill Bonello: Okay. Because, Mike, even if I, you know, just look at the total, you know, total tests and total revenue, you know, the ASP was down, you know, quite a bit year over year and sequentially as well. And so it's just it's a little confusing. There's that much fluctuation from quarter to quarter?

Michael McGarrity: Yeah, Bill. We are very, very conservative on our revenue cycle management estimates. You know, as you run in the lab model. So we just we don't I don't have any additional comment on that.

Bill Bonello: Okay. And then, I guess, it just sort of wanna come back to the guidance again because I'm much like Dan, I think we had, you know, we had sort of assumed that the guidance would go up when you close the acquisition and, you know, shame on us for not realizing you had that much germline baked into the initial guidance. But at the time you announced the ExoDx acquisition, you talked about assuming it would add, you know, at least $20 million of revenue next year. Has anything changed on that front thus far?

Michael McGarrity: Nothing has changed. And if you view that offset as that we expected $5 million or a little bit more in germline in the second half, that would be a good assumption. As we don't guide to products, but we wouldn't have communicated. We saw an opportunity there if we didn't intend to focus on it and execute and deliver. Yep. We don't feel that's the right use of our focus particularly over the next couple quarters. So you're reading it right and absolutely zero change on our view of the opportunity of the contribution from Exo as we go forward.

Bill Bonello: That's helpful. And I know you're not gonna give 2026 guidance and, you know, you might not even answer this, but I'll ask it anyway. You know, when we when you first sort of put that out there, the way we had thought about this was, gosh, you're sort of a 20% grower, and we tag, you know, $20 million or whatever, you know, the actual number is on top of that from the acquisition.

It sounds like maybe that's the wrong way to be thinking about it, and we should sort of be thinking $20 million and we net out $10 million of kind of lost germline and so net maybe the real add is sort of $10 million to whatever the basic growth rate is? Or how are you kind of thinking about that?

Michael McGarrity: Well, I think I had a really smart analyst once telling me, don't guide to the following year until it's time to guide the following year. But I think what I said was we expected we expected been Dan. That's I think I think I stand by our view. That we made, that we expected the Exo business could contribute $20 million or more in 2026. That was a view, not guidance not intended to be guidance, I should say. And that view is unchanged. And I also said that I expected it to accelerate our revenue growth from 20% to close to 30%. Again, that was our view. It wasn't intended to be guidance.

When we provide guidance at the beginning of 2026, I think our view from today is that those are reasonable in the ballpark assumptions of how our business builds.

Bill Bonello: That is particularly helpful. I appreciate that. And as always, we appreciate your prudence.

Michael McGarrity: Thank you, Bill.

Operator: We have the next question from the line of Mark Massaro from BTIG. Please go ahead.

Mark Massaro: Thanks, guys. I enjoyed that discourse in the last round of questions. But I think, you know, I'd like to maybe ask this one, which is, you know, Mike, I understand that the Exo test is certainly an attractive test. You've got many other attractive tests in your bag. And, you know, I wanted to just get your temperature on the germline test. I recognize that you'll reevaluate that next year. But my sense is that you saw something in the marketplace, whether it was the competitive environment or just demand. But yeah, I mean, can you just maybe give us a little more why are you sort of setting this test aside?

Michael McGarrity: Yeah. I got the question for sure, Mark. So just to be clear, we see that as a market opportunity that makes sense for our business, our offering. Right? We have competitors, noncompetitors, partners. If you look at, you know, you can name them probably better than I, but everybody from Exact Sciences to a couple of our competitors offer that. So having that but candidly, you know, in a non-materially differentiated way, the way we anticipated which we have I think, a good track record for, is when we have our sales organizations. Our sales organization, and I'll speak to it individually, our sales reps that I think have built access, influence, and sway.

Please take that as a respectful term, but that's how you build. And everything I say about our organization being focused on the customer experience, that's how we've built that. So our assumption and thesis on that was it's an offering that makes sense. If you look at our resolve test, I mean, everybody's got a resolve or I'm sorry. The UTI test is not unique. What we've been able to do with that business is driven by, yes, we think the best test for complex infections in our patient population within urology. We've continued to innovate that test. I think we're on our fourth or fifth generation.

But when that started to go was when we really pushed it to our sales organization. We elected not to push that into our sales organization. So our view of what we could accomplish and achieve in that was somewhat extrapolated by our experience. And the way we see customer adoption go from zero to material contribution and growth of a product that is not maybe as proprietary as Confirm, GPS, and Exo. So that was our view. We just chose not to have our reps spend time on that in the first half as I noted. For the reasons I stated.

And we made a late decision to forego it in the second half, but per the math, the implied math question, if you made the assumption that we expected it to contribute the delta between where you might thought we'd be with $5 million and Exo in Q4. And not taking up guidance. To be clear, that's the question. I get it. Yeah. That's a good assumption that we feel like if we roll that out at the beginning of Q3 to our sales team, that we'd be able to drive that type of adoption. We just you have to remember we have sales reps now that need to be cross-trained, adjusted to modest.

But every time you adjust territories, as a former sales rep, they're always viewed as material. Not like with the GPS when we doubled our sales organization, but we deemed that was the appropriate way to cement our investment in this asset. And we don't see the germline market as going away. And as I noted, we'll revisit that. So that's a fair answer to your question.

Mark Massaro: Yeah. Yep. That's great. So, yeah, gross margins were really strong, over 65%, up about 400 bps in the quarter. I wanted to ask if we take Exo and just sort of, like, annualize it out, do you expect Exo to be accretive to gross margins in 2026? And then another way to think about it is 65% a level that you feel comfortable with executing against, or are there some mix factors that we should be thinking about for next year?

Michael McGarrity: I anticipated that question coming from you, Mark. And I think we'd like a full quarter of Exo. I had said that our expectation was it would be neutral to accretive to gross margin. We have no reason to change that view. I think we want to see as a quarter or two of mix. And, you know, as I referred, integrating there'll be all the financial integration as well. Right? Working capital, revenue cycle management, you know, as we fully come over in Q4, different payer mix, different collection profiles. We believe that maintaining our guidance reflects confidence that all holds together.

But again, I'd try I'd probably wait till the beginning of the year so that I can give you a clear view, you know, an informed fact-based view of 2026, you know, all that. I'm just saying, give us a quarter and a half or so to get this locked. I've said I did we that the gross margin's running ahead of has run ahead of our expectations. I'm beginning to think that we can see that continue, but we'll lock that at the beginning of the year.

Mark Massaro: Okay. And that's helpful. And then one last one for me. When we think about your new commercial team, you know, was this as simple as you know and just correct me if I'm wrong. Was this as simple as taking your 50 direct reps and adding 10 from Exo? Or was there some other MDxHealth S.A. reps that might have been impacted and perhaps you added more than 10 from Exo, and then can you speak to the experience and tenure of the Exo reps and just, you know, what early indicators are you seeing from those newer folks?

Michael McGarrity: Too early to comment on the last part of your question. But the front part of your question, really no comment on that. We wouldn't comment on specific people within our organization pre-acquisition or post-acquisition. The net acquisition was ten direct reps. And when we look at our sales organization individually and collectively, we, you know, we really went through that process. We analyzed and credit to our commercial team. This I can share, we put every one of their sales reps through our process as if we were hiring a new rep. So I won't speak to them individually out of respect for those that came over, those that didn't. And our sitting sales organization going into the acquisition.

But I will say that we were in a really tight process there. So that gives us confidence. And we learned a lot from the GPS acquisition. I was very open about that. That was more complicated than we anticipated. It took longer than we anticipated. So we're trying to take that experience and apply it here so that we really when we provide our view for the beginning of next year, we'll be informed with granted only a quarter. But we're working on that right now.

Mark Massaro: Great. Thanks very much.

Michael McGarrity: Thank you, Mark.

Operator: Thank you. We have the next question from the line of Thomas Flaten from Lake Street Capital. Please go ahead.

Thomas Flaten: Afternoon. Appreciate you taking the question. Hey, Mike. Just to confirm, so with the new 10 reps coming over, was this a question of adding two new white space territories, or were you splitting and sub-segmenting existing territories or maybe a combination of both?

Michael McGarrity: Yeah. We really don't have white space pre-acquisition. Right? We've designed our number of reps. It's designed to cover the full geography of the US. I would say it was probably more a function of, you know, putting strength on strength, right, from my I wanna wear you out with my striker experience. Right? But add strength to strength. And, so we looked to do that, but we're also opportunistic where we saw as you would expect, strengthen a customer base in a particular territory where maybe we hadn't been performing as well as we expected. So that was all part of our calculus there.

It's not complicated like you wouldn't understand it, but it was complicated to make sure that we went through the exercise. So that we didn't have it. So, yes, the embedded question was did territories change? Yes. When you go from 50 to 60 and you're fully covered without white space, yeah, there were territory adjustments.

Thomas Flaten: Got it. And not as

Michael McGarrity: No. I'm I realized this question is probably a lot early. Given how early it is since the acquisition closed, but any negative feedback or pushback from docs making the switch from Select to Exo? I don't know how you've been messaging that to docs that you're in process of doing that.

Michael McGarrity: Too early to comment, but we're confident that will not create friction or tension on our customer base. And then please take this that way. But if someone informed by the customers that already converted involuntarily from Select to Exo. It's just a better test today.

Thomas Flaten: Got it. Appreciate it. Thanks.

Michael McGarrity: Thank you, Thomas.

Operator: Thank you. Ladies and gentlemen, this concludes our question and answer session. The conference call has now concluded. Thank you for attending today's presentation. You may now disconnect.

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