Greetings. Welcome to the MDxHealth First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference 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. It is now my pleasure to introduce your host, Michael McGarrity, Chief Executive Officer. Thank you sir. You may begin.

Thanks Kyle and thank you all for joining us for our first quarter 2023 release of results for MDxHealth. With me today is Ron Kalfus, Chief Financial Officer. 2022 was a transformative year for MDxHealth, and we are confident that our first quarter 2023 results reflect this transformation as well as our continued commitment to operating discipline and commercial execution. When I joined MDxHealth in 2019, we set out to build the leading growth company exclusively focused on precision diagnostics and urology. To accomplish this, we have been thoughtfully putting in place the fundamental pieces needed to generate long-term sustainable growth and value creation. And now we are confident that we have an uncommon set of drivers to consistently deliver this growth over time based on our recent receipt of coverage from Medicare for our select test, which now allows for a full menu of revenue-generating tests with Select, Confirm, and GPS all included in the Gold Standard National Comprehensive Cancer Network or NCCN guidelines. Our sales channel fortified by the acquisition of the GPS test we believe is best-in-class and capable of additional growth opportunities in evidence with our Resolve MDX test introduced in 2022. Our gross margin is beginning the expected trend of growth and allows for the corresponding reduction in cash used from operations. And finally, we have clear visibility to operating profitability. Before I turn the call over to Ron for a review of our operating results, let me first comment on our business focus and progress. Our Q1 2023 revenue grew by 141% over Q1 2022. And when excluding the acquisition of GPS, our revenue increased 39%. We continue to execute on our integration of the GPS Test acquisition specifically, we have completed the restructuring of our sales team with additional reps from Exact Sciences, including territory realignment, alignment of performance-based incentive compensation, and cross-training of product offerings. We are confident that these efforts will provide for a high-performing sales team in 2023 and beyond. We have also been intensely focused on the customer experience, including transferring customers to our MDxHealth physician portal, streamlining our sample procurement process and market access and payer management, all of which are critical in the laboratory model to efficiently receive, process and report, within the turnaround time expectations of our customers. Finally, our focus on operating discipline is evident in our anticipated improvement in gross margin, as well as a 34% reduction of $4 million of cash burn from Q4 2022 to Q1 2023. I will provide a further view forward for 2023. But first, let me turn the call over to Ron for a review of our financial and operating results for Q1. Ron?

Thank you, Mike. As Mike mentioned, we are pleased to report our positive results for the first quarter of 2023. Revenues for the first quarter ended March 31, 2023, increased by 141% to $14.7 million versus $6.1 million for the same period last year. Excluding GPS, Q1 2023 revenue increased by 39% versus last year. Our Q1 2023 revenues of $14.7 million were comprised of $6.2 million from GPS, $5.7 million from Confirm, $2.2 million from Resolve with the remaining revenues from Select and other. Gross profit for Q1, 2023 was $8.7 million as compared to $2.8 million for Q1 2022. Gross margins were 59.3% for Q1 2023 as compared to 46.6% for Q1 2022, representing a gross margin improvement of 1,270 basis points, primarily related to our product mix and the addition of GPS to our product menu. Operating loss for Q1 2023 was $8.7 million, an increase of 11% over Q1 2022, primarily related to the additional field sales personnel associated with the GPS acquisition. Net loss for Q1 2023 was $11.7 million, an increase of $3.4 million versus $8.3 million for the same period last year, primarily from an increase in financial expenses, of which $1.9 million was a non-cash fair value adjustment to the GPS contingent consideration and the remainder was primarily related to an increase in interest expense from our debt facility. Cash and cash equivalents, as of March 31, 2023, were $48.3 million. This amount reflects the receipt of approximately $40 million in net proceeds from our recent equity offering in February 2023. Our total cash burn for the quarter was $7.9 million, down 34% from a cash burn of $11.9 million for Q4 2022. This concludes my brief overview of the results, and I will now turn the call back to Mike.

Thanks, Ron. I'd like to finish our prepared remarks by going to layer beneath the numbers to provide perspective on what we believe will be the most important aspect of delivering clear and straightforward growth and progress. Recently, we brought our entire field sales team together, as well as marketing and market access managed care together for a sales meeting to reaffirm our goals, culture and commitment to be a growth company. In my experience, I have been fortunate to be part of some of the best sales teams in both the device and diagnostics industry. And what I saw in our newly formed and integrated team represents the same standard of excellence. One, single, united and supportive group of highly responsible sales professionals, comfortable with expectations and accountability. Clearly, it will all come down to execution by each and every one of them, and we focus on instilling that. They all have to be great. Illustrative of our restructuring and refocusing of our culture, of the 70 people in our field sales team, only five of them were here when I started in 2019. We, as a team, deem these changes critical to setting a new sales culture of commercial excellence in talent, focus, incentives and accountability, all of which are required to commit to growth. Our results going forward will confirm my view, but we believe our Q1 results set a basis for our promising outlook. I believe we can narrow our focus down to three simple and straightforward driving principles. First, patience and quality first. Second, customers always; and third, take care of the sales force, which is and should be the rule for all of us on the inside, as they are the face and voice of MDxHealth to our customers. Candidly, each of these principles has been tested with the challenges and opportunities related to our acquisition integration, all while striving for and preserving best-in-class service levels that will meet and exceed our customer expectations. And we are in a good position to do just that. So as we look forward, MDxHealth is committed to driving sustainable growth, which will serve as the foundation for value creation for all of our stakeholders, including patients, customers, and shareholders. Thank you for your interest in and support of MDxHealth. And now I'll turn the call back over to Kyle for questions.

Thank you. We will now be conducting a question-and-answer session. Our first question comes from Andrew Brackmann with William Blair. Please go ahead.

Good afternoon and thanks for taking the question. Maybe to start here, I may have missed it, but how should we be thinking about the balance of the year here? I think previously, you had talked about a guidance range of $65 million to $70 million. Is that still intact, or any moving pieces here that we should be considering?

Andrew, we're committed to the $65 million to $70 million and very confident at this point that that's the right guidance to have in place. So we're reaffirming that.

Okay. Great. And then maybe if I could, just as a follow-up there. You sort of talked about some of the things that you're doing on the integration side with the sales team. But maybe can you provide a bit more color on those efforts, sort of what else are we waiting for before we sort of unleash the entire power of that acquisition? And I guess, how should we also be thinking about contribution from cross-selling here moving in the balance of the year?

Yeah. Andrew, so we feel like our integration of the sales team is complete, through Q4 and Q1. And we expect to leverage our menu, which we think, again, is an uncommon offering in our space. So our expectation is that our reps will be able to drive adoption of all of our products. We will look to report probably more color on that as we go through towards the second half of this year. But yes, that is the plan. They have been cross-trained. And we think of our menu as Select upfront on the diagnostic path, we obviously confirming GPS will be where the focus is post-biopsy. And then our UTI test, we're confident has really validated our view, that we can take advantage of additional growth opportunities that primarily our criteria that I've spoken to is clearly established, right? It can't be dilutive to our focus on prostate cancer. And it's got to read directly on our call point. And we believe that the UTI progress we've made in the first five quarters demonstrates that.

Okay. Thanks. You took my all questions. So I'll leave it there. Thanks.

All right. Thanks, Andrew.

Our next question comes from Thomas Vranken with KBC Securities. Please go ahead.

Hi. Thanks for taking my question and congratulations on the strong results, especially for the revenue growth and gross margin improvement. Two questions from my side. First one is, on the results test. Just wanted to check as a launch or the ramp-up seems to be going really well. Could you provide some more granularity on the prescriber base and overall commercial dynamics? Do you see a strong overlap in those prescribers today, or are you also already successfully targeting additional physicians there?

Thank you, Thomas, for your continued support. As I mentioned earlier, we have established strict criteria for introducing new products into our channel because we value it highly. We're not interested in simply adding more products for our customers. Our criteria involve several considerations. First, any new product must align with our focus on prostate cancer and our existing customer relationships. It must also be relevant to that focus. Additionally, reimbursement needs to be in place, and the product should enhance our gross margin from day one. We believe we've done our homework, spending about a year preparing for this introduction to our sales team, and the results over the first five quarters have confirmed that our approach was sound. Regarding your second question about focus, we are instructing our sales team to concentrate our UTI efforts on our established customer base. We believe it’s important not to pursue new customers indiscriminately but to leverage our existing relationships for promoting UTI. We think this strategy has shown to be effective, allowing us to present and support additional growth opportunities successfully.

Okay. Very clear. Thank you. Could you provide some insight or overall thoughts on when we might start seeing an impact from the recent Medicare reimbursement approval for Select in the numbers?

Sure, Thomas. So we communicated that we expected coverage to come over midyear, and to begin to drive revenue in the second half of the year. Thomas, we don't really think that's materially changed. We'll go through the process to go through the administrative process to begin building and collecting will be conservative with our revenue cycle management as we always are. But we think what this does is provide us with a really running start as we make that turn at midyear, where we've got established payment history, average sell price assumptions payment, and that gives us clarity on the second half of the year. So we would update on our visibility to and communicate that we’re through that entire process when we get together after Q2.

Okay. Thank you.

Our next question comes from Francois Brisebois with Oppenheimer. Please go ahead.

Hi. This is Dan on for Frank. Thanks for taking my question. I just want to say congrats on the quarter and congrats on the positive LCD; is there any other payers that you're focusing on those ads to UnitedHealthcare that happened in February and now Medicare. Any other payers that you're currently focusing on? Any color there?

Yeah, Dan. So we believe it's not just for us, but in our space, that Medicare is really the catalyst for additional commercial and private payer coverage. So our team, our market access team has been active across our menu and driving continued coverage through the payers as evidenced with the United coverage. So we expect that to continue with our Confirm and GPS tests and we expect it to now begin with our Select based on the Medicare coverage. So as we go through the back half of the year, we would expect to continue to drive that. That's been our model here with Confirm and obviously with GPS coming over. So we're confident that we’ll follow the same path.

Thanks for taking my questions.

Our next question comes from Mark Massaro with BTIG. Please go ahead.

Hey guys. Thanks for the questions and congrats on an excellent quarter.

Hi, Mark.

Hey, how is it going? So I certainly appreciate the commentary about expecting Select to kick in around mid-2023. So we got the good news that you completed your technical assessment with Palmetto MolDX in April. When we're updating our model, I guess, can you help us just a little bit with Q2? I'm trying to understand when you think Select revenue can build, whether or not it's, I would think we might see some in Q2. So any clarity as to whether or not you've been submitting claims to MolDX and potentially getting paid yet?

Yes, we agree with your assumption. Regarding the details of our claims submission process, we have not begun that yet, but we are following the standard procedure. However, I believe that when we report Q2, we will be able to share that we are confident it will contribute to Q2. We just want to make sure that everything is established, and as I mentioned, we are being cautious on the revenue cycle management side. Therefore, we want to ensure we get the payments in place and then present our outlook moving forward.

Okay. And maybe just to confirm, I think you guys obtained a positive coverage determination from UnitedHealthcare on the GPS test. It was nice to see the GPS test contribute here of $6.2 million, certainly above my expectations. Is it right that we should expect to go live? I think in my notes, I have April 1. So is it fair to expect maybe a step-up from GPS in Q2 from United?

Yes. Regarding our average selling prices, you'll notice the trends in the upcoming numbers. I don't anticipate significant increases at this point, but that would be the area to look at, especially in relation to GPS. We aim to understand how this evolves based on our product mix. Additionally, expanding our coverage to more payers is part of our strategy, supported by our dedicated team. Over time, our average selling prices have clearly shown that this approach boosts both our ASP and gross margin.

Perfect. And then maybe last one on the gross margin side, really incredible lift on a year-over-year basis, coming in at 59%. I think with GPS expansion as well as Select reimbursement on the CMS side, is it reasonable to think that we can get into the low 60s for the rest of the year, or how should we think about any puts and takes around the Q1 level and how that might trend later this year?

Yes, that's a reasonable expectation. We view our business development in a way that anticipates a steady increase in our gross margin, followed by a gradual reduction in our cash burn. This pattern was evident in Q1, and we expect Q2 to follow a similar trend. As Select comes into play, we believe it will enhance contributions and lead to improved growth rates, which should further accelerate the reduction in our cash burn. So, when I mention our clear visibility to operating profitability, I mean we have a strong outlook for achieving that goal.

Okay. And then also the OpEx came in about $3 million below our estimate. I'm curious if that $17 million to $18 million range is reasonable run rate, or were there some one-timers in Q1? How should this trend throughout the course of the year?

Hi, Mark, it's Ron. Yes, I think it is a reasonable run rate. Obviously, we did mention some non-cash portions of that, but as a total expense, you can expect more or less this level of OpEx throughout the year on average.

And as far as the burn mark, like I said, we would expect Q2 to probably transition like Q1 and then continued decrease as we go into the second half of the year, Q3 and Q4, and we expect that to again be a pretty linear decline.

Excellent. That's it for me. Thank you.

Okay, Mark. Thank you.

There are no further questions at this time. So this concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.