MXDHF MDXHealth SA (CE)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

 

For the month of August 2023

 

Commission File Number 001-40996

 

MDXHEALTH SA

(Translation of registrant’s name into English)

 

CAP Business Center

Zone Industrielle des Hauts-Sarts

4040 Herstal, Belgium

+32 4 257 70 21

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ☒ Form 40-F ☐

 

 

 

MDXHEALTH SA

 

This Report of Foreign Private Issuer on Form 6-K (the “Form 6-K”) consists of (i) the 2023 Interim Report of MDxHealth SA (the “Company”), which is attached hereto as Exhibit 99.1, and (ii) a press release issued by the Company on August 23, 2023, a copy of which is attached hereto as Exhibit 99.2.

 

This Form 6-K (other than Exhibit 99.2 furnished herewith) is incorporated by reference into the Company’s Registration Statement on Form F-3 (File No. 333-268885), filed with the Securities and Exchange Commission, to be a part thereof from the date on which this Form 6-K is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.

 

Exhibit No.		Description of Exhibit
99.1		2023 Interim Report
99.2		Press Release, dated August 23, 2023

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	MDXHEALTH SA
Date: August 23, 2023	By:	/s/ Michael McGarrity
		Name:	Michael McGarrity
		Title:	Chief Executive Officer

 

 

2

 

Exhibit 99.1

 

 

 

2023 INTERIM REPORT

 

TABLE OF CONTENTS

 

I.  INTERIM MANAGEMENT REPORT				2
II. INTERIM CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS MDXHEALTH SA				4
	1.	CONDENSED UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME		4
	2.	CONDENSED UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION		5
	3.	CONDENSED UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY		6
	4.	CONDENSED UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS		7
	5.	EXPLANATORY NOTES		8
III. CORPORATE INFORMATION				19

 

This Interim Report contains forward-looking statements and estimates with respect to the anticipated future performance of MDxHealth SA and its wholly-owned subsidiaries (hereinafter “MDxHealth” or the “Company”) and the market in which it operates. Such statements and estimates are based on assumptions and assessments of known and unknown risks, uncertainties and other factors, which were deemed reasonable but may not prove to be correct. Actual events are difficult to predict, may depend upon factors that are beyond the company’s control, and may turn out to be materially different. Important factors that could cause actual results, conditions and events to differ materially from those indicated in the forward-looking statements include, among others, the following: uncertainties associated with the coronavirus (COVID-19) pandemic, including its possible effects on our operations, and the demand for the Company’s products; the Company’s ability to successfully and profitably market its products; the acceptance of its products and services by healthcare providers; the willingness of health insurance companies and other payers to cover its products and services and adequately reimburse us for such products and services; and the amount and nature of competition for its products and services. MDxHealth expressly disclaims any obligation to update any such forward-looking statements in this Interim Report to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based unless required by law or regulation. This Interim Report does not constitute an offer or invitation for the sale or purchase of securities or assets of MDxHealth in any jurisdiction. No securities of MDxHealth may be offered or sold within the United States without registration under the U.S. Securities Act of 1933, as amended, or in compliance with an exemption therefrom, and in accordance with any applicable U.S. securities laws.

 

 

I. INTERIM MANAGEMENT REPORT

 

Highlights

 

Key non-audited financials, as of June 30, 2023

 

Key unaudited consolidated figures for the six months ended June 30, 2023 (thousands of U.S. dollars, except per share data):

 

		Jan-June 2023				Jan-June 2022				Change				% Change
Revenue			31,445				13,009				18,436				142	%
Gross Profit			18,705				5,772				12,933				224	%
Operating expenses			(35,165	)			(22,795	)			(12,370	)			54	%
Operating loss			(16,460	)			(17,023	)			563				(3	)%
Net loss			(22,335	)			(18,104	)			(4,231	)			23	%
Basic and diluted loss per share			(0.08	)			(0.12	)			0.04				(33	)%

 

Total revenue for the first half of 2023 was $31.4 million, an increase of 142% as compared to total revenue of $13.0 million for the first half of 2022. Excluding the GPS revenues, total revenues for the first half were $17.4 million, an increase of 34% compared to the first half of 2022. H1-2023 revenues of $31.4 million were comprised of $14.0 million from GPS, $12.4 million from Confirm mdx, $3.7 million from Resolve mdx, with the remaining revenues from Select mdx and other.

 

Gross profit for H1-2023 was $18.7 million as compared to $5.8 million for H1-2022. Gross margins were 59.5% for H1-2023 as compared to 44.4% for H1-2022, representing a gross margin improvement of 1,510 basis points, primarily related to our product mix and the addition of GPS to our product menu.

 

Operating expenses for the first half of 2023 were $35.2 million, up 54% from $22.8 million for H1-2022, primarily related to the additional field sales personnel associated with the GPS business.

 

Operating loss for H1-2023 was $16.5 million, a decrease of 3% over H1-2022, helped by our increased revenues and improved gross margin.

 

Net loss for H1-2023 of $22.3 million increased by $4.2 million versus $18.1 million for the prior year period, primarily due to an increase in financial expenses, of which $3.9 million was non-cash and relates to the fair value adjustment of the GPS contingent consideration, and the remainder was primarily related to an increase in interest expense from our debt facility.

 

Justification to continue using the accounting rules on the basis of going concern

 

The Company has experienced net losses and significant cash used in operating activities since its inception in 2003, and as of, and for the period ended, June 30, 2023, had an accumulated deficit of $310.7 million, a net loss of $22.3 million, and net cash used in operating activities of $9.9 million. Management expects the Company to continue to incur net losses and have significant cash outflows for at least the next twelve months.

 

 

While these conditions, among others, could raise doubt about its ability to continue as a going concern, these consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of its assets and the satisfaction of liabilities in the normal course of business. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support the Company’s cost structure.

 

As of June 30, 2023, the Company had cash and cash equivalents of $39.5 million. Taking into account the above financial situation and on the basis of the most recent business plan, the Company believes that it has sufficient cash to be able to continue its operations for at least the next twelve months from the date of issuance of these financial statements, and accordingly has prepared the consolidated financial statements assuming that it will continue as a going concern. This assessment is based on forecasts and projections within management’s most recent business plan, including recent developments related to the Exact Sciences earnout (as detailed in Note 15 “Subsequent events”), as well as the Company’s expected ability to realize cost reductions should these forecasts and projections not be met.

 

Principal risks related to the business activities

 

The principal risks related to MDxHealth’s business activities have been outlined in the 2022 Annual Report, which is available on the Company’s website at www.mdxhealth.com/investors/financials.

 

Declaration of responsible persons

 

The Board of Directors of MDxHealth SA, represented by all its members, declares that, as far as it is aware, the financial statements in this Interim Report, made up according to the applicable standards for financial statements, give a true and fair view of the equity, financial position and the results of the Company and its consolidated subsidiaries. The Board of Directors of MDxHealth SA, represented by all its members, further declares that this Interim Report gives a true and fair view on the information that has to be contained herein. The condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34 (Interim Financial Reporting) as issued by the International Accounting Standards Board, or IASB, and as adopted by the EU.

 

 

II. INTERIM CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF MDXHEALTH SA

For the six months ended June 30, 2023

 

1. CONDENSED UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

 

Thousands of $ (except per share data)

 

Condensed unaudited consolidated statement of profit or loss

 

		Note				Jan-June 2023				Jan-June 2022
Services			5			$	31,345			$	12,975
Royalties and other revenues			5				100				34
Revenues							31,445				13,009
Cost of goods & services sold							(12,740	)			(7,237	)
Gross Profit							18,705				5,772
Research and development expenses			6				(4,560	)			(3,585	)
Selling and marketing expenses			6				(19,029	)			(9,848	)
General and administrative expenses			6				(10,910	)			(9,636	)
Other operating income, net							(666	)			274
Operating loss							(16,460	)			(17,023	)
Financial expenses, net:			10
Contingent consideration fair value adjustments							(3,882	)			(197	)
Other financial expenses, net							(1,993	)			(883	)
Loss before income tax							(22,335	)			(18,103	)
Income tax							-				(1	)
Loss for the period							(22,335	)			(18,104	)
Loss for the period attributable to the parent						$	(22,335	)		$	(18,104	)
Loss per share attributable to parent
Basic and diluted							(0.08	)			(0.12	)
Condensed unaudited consolidated statement of other comprehensive income
Loss for the period						$	(22,335	)		$	(18,104	)
Other comprehensive income
Items that will be reclassified to profit or loss:
Exchange differences arising from translation of foreign operations							(199	)			588
Total other comprehensive income							(199	)			588
Total comprehensive loss for the period (net of tax)						$	(22,534	)		$	(17,516	)

 

 

2. CONDENSED UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

Thousands of $
		Note				as of June 30, 2023				as of December 31, 2022
ASSETS
Goodwill						$	35,926			$	35,926
Intangible assets			7				44,907				46,166
Property, plant and equipment			8				5,247				3,791
Right-of-use assets							4,733				4,103
Non-current assets							90,813				89,986
Inventories							2,674				2,327
Trade receivables			11				8,098				9,357
Prepaid expenses and other current assets							1,488				1,962
Cash and cash equivalents							39,472				15,503
Current assets							51,732				29,149
Total assets						$	142,545			$	119,135
EQUITY
Share capital						$	173,053			$	133,454
Issuance premium							153,177				153,177
Accumulated deficit							(310,681	)			(288,346	)
Share-based compensation							11,752				11,474
Translation reserve							(643	)			(444	)
Total equity			14			$	26,658			$	9,315
LIABILITIES
Loans and borrowings			9			$	35,177			$	34,914
Lease liabilities			9				3,445				3,091
Other non-current financial liabilities			9				35,899				53,537
Non-current liabilities							74,521				91,542
Loans and borrowings			9				640				616
Lease liabilities			9				1,327				1,172
Trade payables							10,681				10,178
Other current liabilities							4,609				3,985
Other current financial liabilities			9				24,109				2,327
Current liabilities							41,366				18,278
Total liabilities							115,887				109,820
Total equity and liabilities						$	142,545			$	119,135

 

 

3. CONDENSED UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

Attributable to owners of MDxHealth SA

 

Thousands of $, except number of shares		Number of shares				Share capital and issuance premium				Accumulated Deficit				Share-based compensation				Translation reserves				Total equity
						Note 14								Note 13
Balance at January 1, 2022			155,969,226			$	281,631			$	(244,302	)		$	10,607			$	(1,037	)		$	46,899
Loss for the period											(18,104	)											(18,104	)
Other comprehensive income																			588				588
Total comprehensive income for the period											(18,104	)							588				(17,516	)
Transactions with owners in their capacity as owners:
Share-based compensation															379								379
Balance at June 30, 2022			155,969,226			$	281,631			$	(262,406	)		$	10,986			$	(449	)		$	29,762
Balance at January 1, 2023			162,880,936			$	286,631			$	(288,346	)		$	11,474			$	(444	)		$	9,315
Loss for the period											(22,335	)											(22,335	)
Other comprehensive income																			(199	)			(199	)
Total comprehensive income for the period											(22,335	)							(199	)			(22,534	)
Transactions with owners in their capacity as owners:
Issuance of shares, net of transaction costs			107,500,000				39,599																39,599
Share-based compensation															278								278
Balance at June 30, 2023			270,380,936			$	326,230			$	(310,681	)		$	11,752			$	(643	)		$	26,658

 

 

4. CONDENSED UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

 

Thousands of $
		Note				Jan-June 2023				Jan-June 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Operating loss						$	(16,460	)		$	(17,023	)
Depreciation and amortization							3,412				1,576
Share-based compensation							278				379
Other non-cash transactions							696				10
Cash used in operations before working capital changes							(12,074	)			(15,058	)
Changes in operating assets and liabilities
Increase in inventories							(347	)			(178	)
Increase in receivables							1,733				(1,563	)
Increase in payables							827				1,708
Net cash outflow from operating activities							(9,861	)			(15,091	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment							(2,153	)			(925	)
Interest received							317				27
Acquisition and generation of intangible assets							(980	)			(451	)
Net cash outflow from investing activities							(2,816	)			(1,349	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of shares, net of transaction costs							39,599				-
Payment of loan obligation			9				(318	)			(439	)
Payment of lease liability			9				(712	)			(663	)
Payment of interest							(1,731	)			(511	)
Net cash inflow from financing activities							36,838				(1,613	)
Net increase in cash and cash equivalents							24,161				(18,053	)
Cash and cash equivalents at beginning of the period							15,503				58,498
Effect of exchange rates							(192	)			(420	)
Cash and cash equivalents at end of the period						$	39,472			$	40,025

 

 

5. EXPLANATORY NOTES

 

Accounting policies

 

1. Basis of preparation

 

MDxHealth, SA together with its subsidiaries are herein referred to as “MDxHealth” or the “Company”. MDxHealth is a company domiciled in Belgium, with offices and labs in the United States and The Netherlands. The reporting and functional currency of the Company is the U.S. Dollar.

 

The condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34 – Interim Financial Reporting, as issued by the International Accounting Standards Board, or IASB, and as adopted by the EU.

 

For translation of Euro amounts as of June 30, 2023 into U.S. dollars, the official exchange rate quoted as of June 30, 2023 by the European Central Bank of €1 to $1.087 was used.

 

These interim consolidated financial statements do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Company as of, and for the year ended, December 31, 2022.

 

The Company ended the period with $39.5 million in cash and cash equivalents as of June 30, 2023, and continued to incur losses. The Company is expecting continued losses and negative operating cash flows in the coming twelve months. Taking into account the above financial situation and on the basis of the most recent business plan, the Company believes that it has sufficient cash to be able to continue its operations for at least the next twelve months from the date of issuance of these condensed interim financial statements, and accordingly has prepared the consolidated condensed interim financial statements assuming that it will continue as a going concern. This assessment is based on forecasts and projections within management’s most recent business plan, including recent developments related to the Exact Sciences earnout (as detailed in Note 15 “Subsequent events”), as well as the Company’s expected ability to realize cost reductions should these forecasts and projections not be met.

 

2. Significant accounting policies, use of judgments and estimates

 

The Company applies the International Financial Reporting Standards (IFRS) as issued by the IASB and as adopted by the EU. The same accounting policies, presentation and methods of computation have been followed in these condensed financial statements as were applied in the preparation of the Company’s financial statements for the year ended December 31, 2022. No amendments to existing standards that became applicable as from January 1, 2023, have a material impact on the consolidated financial statements or accounting policies.

 

The preparation of the interim condensed financial statements in compliance with IAS 34 requires the use of certain critical accounting estimates. It also requires the Company’s management to exercise judgment in applying the Company’s accounting policies. The Company has applied the same accounting policies and there have been no material revisions to the nature and amount of estimates and judgments in its interim condensed financial statements.

 

As detailed in Note 2.7 of the Company’s 2022 yearend financial statements, a large portion of the Company’s revenues are derived from Medicare, which reimburses the Company for tests performed on its insured patients once a Local Coverage Determination or “LCD” has been established. On April 19, 2023, the Company announced that Select mdx for Prostate Cancer test has successfully completed a rigorous technical assessment process with the Molecular Diagnostics Services (MolDX) Program developed by Palmetto GBA and that Select mdx will be reimbursed throughout the U.S. for Medicare patients who meet coverage conditions under the foundational Local Coverage Determination (LCD) for Molecular Biomarkers to Risk-Stratify Patients at Increased Risk for Prostate Cancer.

 

As of June 30, 2023, no payments have been received from Noridian (the Company’s Medicare Administrative Contractor) and the Company is unable to reliably estimate the amount that will be paid, and as such, the Company considers this revenue as variable consideration and has not recognized Medicare revenues related to its Select mdx test for the period ended June 30, 2023.

 

 

3. Business combinations

 

Acquisition of Genomic Prostate Score® (GPS) test from Exact Sciences

 

On August 2, 2022, the Company acquired the Genomic Prostate Score® (GPS) test from Genomic Health, Inc., a subsidiary of Exact Sciences Corporation (“Exact Sciences”) for up to $100 million, of which $30 million was paid at closing ($25 million in cash and $5 million settled through the delivery of 691,171 American Depositary Shares (“ADSs”) of the Company).

 

Following the closing, an additional aggregate earn-out amount of up to $70 million was to be paid by MDxHealth to Exact Sciences upon achievement of certain revenue milestones related to fiscal years 2023 through 2025. The liability recognized reflects a probability-weighted estimate at the current net present value at the date of acquisition, which is expected to become payable. Fair value adjustments to this contingent consideration liability are recognized in the statement of profit or loss.

 

As of June 30, 2023, the contingent consideration has been assessed at $57.6 million, of which $22.5 million has been recorded under “Other current financial liabilities” for the part that was estimated to become payable in the first half of 2024. The remaining $35.1 million has been recorded under “Other non-current financial liabilities” for part of liabilities expected to become payable in 2025 and 2026. As of December 31, 2022, the contingent consideration was assessed at $52.9 million and fully recorded under “Other non-current financial liabilities”.

 

Refer to Note 15, “Subsequent events” for information on the amended terms of the earnout that were agreed to with Exact Sciences in August 2023.

 

4. Significant events and transactions

 

Refer to Note 14 – Share capital, for further information on the Company’s offering of new ordinary shares in February – March 2023 resulting in gross proceeds of $43.0 million.

 

5. Segment information

 

The Company does not distinguish different business segments since most revenues are generated from clinical laboratory service testing, or the out-licensing of the Company’s patented DNA methylation platform and biomarkers. However, the Company does distinguish different geographical operating segments based on revenue since the revenues are generated both in the United States of America and in Europe.

 

Total product revenue and non-current assets are shown below as a percentage by geography:

 

 

 

Segment revenues

 

For the period ended June 30, 2023, the Company earned 100% of its revenue from external customers from its clinical laboratory testing services and out-licensing of intellectual property. For the period ended June 30, 2023, the clinical laboratory testing in the U.S. CLIA laboratory represented 99.2% of the Company’s revenue (first six months of 2022: 98.5%), while the out-licensing of intellectual property revenue and grant income in Europe represented less than 1% (first six months of 2022: less than 1%).

 

The amount of its revenue from external customers broken down by location from the customers is shown in the table below:

 

Thousands of $		Jan-June 2023				Jan-June 2022
United States of America		$	31,198			$	12,850
Europe			243				155
Rest of the world			4				4
Total segment revenue		$	31,445			$	13,009

 

As of June 30, 2023, 92% of the non-current assets were located in the U.S. (June 30, 2022: 46%) and the remaining 8% were located in Europe (June 30, 2022: 54%). The increase in non-current assets located in the U.S. is mainly due to acquired intangible assets in the GPS business combination.

 

6. Operating expenses

 

Research & development expenses

 

Research and development expenses consist of costs incurred for the development and improvement of our products. These expenses consist primarily of labor costs (including salaries, bonuses, benefits, and stock-based compensation), reagents and supplies, clinical studies, outside services, patent expenses, depreciation of laboratory equipment, facility occupancy and information technology costs. Research and development expenses also include costs associated with assay improvements and automation workflow for our current suite of products. The Company recognizes its research and development expenses in the period in which they are incurred, except for those development expenses that qualify for capitalization. For the six months ended June 30, 2023, research and development expenses increased by $1.0 million, or 27%, over the same period last year, primarily due to the amortization expenses related to the acquired intellectual property (IP) and brand for the GPS business, as well as an increase in lab consumables.

 

Sales and marketing expenses

 

The Company’s sales and marketing expenses are expensed as incurred and include costs associated with its sales organization, including its direct clinical sales force and sales management, medical affairs, client services, marketing and managed care, as well as technical lab support and administration. These expenses consist primarily of labor costs (including salaries, bonuses, benefits, and stock-based compensation), customer education and promotional expenses, market analysis expenses, conference fees, travel expenses and allocated overhead costs. For the six months ended June 30, 2023, selling and marketing expenses increased by $9.2 million, or 93%, over the same period last year, primarily due to an increase in personnel costs and marketing expenses related to the GPS business as well as an increase in amortization expense related to customer lists as part of the GPS intangible asset.

 

General and administrative expenses

 

General and administrative expenses include costs for certain executives, accounting and finance, legal, revenue cycle management, information technology, human resources, and administrative functions. These expenses consist primarily of labor costs (including salaries, bonuses, benefits, and stock-based compensation), professional service fees such as consulting, accounting, legal, general corporate costs, and public-company costs associated with the Company’s listing, as well as allocated overhead costs (rent, utilities, insurance, etc.) For the six months ended June 30, 2023, general and administrative expenses increased by $1.3 million, or 13%, over the same period last year, primarily related to higher labor costs, insurance and professional fees.

 

 

7. Intangible assets

 

Thousands of $		Patents and software licenses				Internally -developed intangible assets				Externally acquired intellectual property				Customers				Total
Gross Value at January 1, 2023		$	5,134			$	10,372			$	41,375			$	8,007			$	64,888
Additions							980												980
Gross Value at June 30, 2023			5,134				11,352				41,375				8,007				65,868
Accumulated amortization and   impairment at January 1, 2023			(5,134	)			(8,722	)			(4,353	)			(513	)			(18,722	)
Additions							(171	)			(1,452	)			(616	)			(2,239	)
Accumulated amortization and impairment at June 30, 2023			(5,134	)			(8,893	)			(5,805	)			(1,129	)			(20,961	)
Net value at June 30, 2023		$	-			$	2,459			$	35,570			$	6,878			$	44,907

 

Amortization of intangible assets is included in research & development expenses and in selling and marketing expenses in the statement of profit and loss.

 

The externally-acquired intangible asset includes technology acquired in the business combination with NovioGendix in 2015 and with the acquisition of the GPS test in August 2022. The estimated remaining amortization period amounts to 2.1 years for the NovioGendix IP and to 14.1 years for the GPS IP.

 

Customer relationships includes customers acquired in the GPS acquisition. The GPS Customer relationships are amortized over 6.5 years, the estimated remaining amortization period amounts to 5.5 years.

 

The internally-developed intangible assets relate to the capitalized development expenses for Confirm mdx and Select mdx over the past years as well as for the development of the GPS assay in-house and our Resolve mdx assay. The estimated remaining amortization period amounts to 0.7 years for Confirm mdx and Select mdx and 4.5 years for GPS and 3.8 years for Resolve mdx. As of June 30, 2023, the Company capitalized $2.1 million (2022: $0) in GPS and Resolve mdx development expenses.

 

8. Property, plant & equipment

 

As of June 30, 2023, the Company acquired $2.0 million of fixed assets which consisted of $1.1 million of laboratory equipment, $0.5 million of leasehold improvements, $0.2 million of IT equipment and $0.2 million of furniture. The primary purpose of these acquisitions was to add testing capacity for its new GPS and Resolve assays. As of June 30, 2022, the company acquired $0.9 million of fixed assets which consisted of $0.4 million of laboratory equipment, $0.4 million of leasehold improvements, and $0.1 million of IT equipment.

 

 

9. Loans, borrowings, lease obligations and other financial liabilities

 

		Loans and borrowings												Other financial liabilities
Thousands of $ Balance at the closing date of		June 30, 2023				December 31, 2022				June 30, 2022				June 30, 2023				December 31, 2022				June 30, 2022
Beginning balance		$	35,530			$	12,092			$	12,092			$	55,864			$	2,427			$	2,427
Cash movements
Loans and borrowings repaid1 (Kreos / PPP)			(318	)			(10,805	)			(439	)
Loans and borrowings received (Innovatus)							34,291
Non-cash movements
GPS contingent consideration																			50,483
Recognition of Innovatus embedded derivative convertible call option							(1,026	)											1,026
Kreos effective interest rate adjustment and extinguishment costs							1,328				131
Innovatus - effective interest rate adjustment			605				660																170
Foreign exchange rate impact / other							(1,010	)			(818	)							(35	)
Fair value changes through profit and loss											85				4,144				1,963				(251	)
Balance at the closing date		$	35,817			$	35,530			$	11,051			$	60,008			$	55,864			$	2,346

 

1	The amount includes interest paid on loans and borrowings

 

		Lease liabilities
Thousands of $ Balance at the closing date of		June 30, 2023				December 31, 2022				June 30, 2022
Beginning balance		$	4,263			$	3,464			$	3,464
Cash movements
Repayment of lease liabilities			(712	)			(1,358	)			(663	)
Non-cash movements
Interest accretion			162				314				156
New leases1			1,059				1,843				367
Balance at the closing date		$	4,772			$	4,263			$	3,324

 

1	Includes $43,000 lease transferred out to third party.

 

Innovatus debt facility

 

On August 2, 2022, the Company entered into a $70 million loan and security agreement with Innovatus Life Sciences Lending Fund I, LP (“Innovatus”). At closing, an amount of $35 million was drawn, with an additional $35 million remaining available as a $20 million term B loan and a $15 million term C loan that can be drawn in 2024 and 2025 respectively, subject to certain conditions (including a condition that places a ceiling on the Company’s debt to market capitalization ratio, the satisfaction of which condition is beyond the direct control of the Company). The loans are secured by assets of the Company including intellectual property rights.

 

The loans accrue interest at a floating per annum rate equal to the sum of (a) the greater of (i) the prime rate published in The Wall Street Journal in the “Money Rates” section or (ii) 4.00%, plus (b) 4.25%, and require interest-only payments for the initial four years. As contractually agreed, and at the election of the Company, a portion of the interest is payable in-kind by adding an amount equal to 2.25% of the outstanding principal amount to the then outstanding principal balance on a monthly basis until August 2, 2025. The loans mature on August 2, 2027. The lenders have the right to convert, prior to August 2, 2025, up to 15% of the outstanding principal amount of the loans into ADSs of the Company at a price per ADS equal to $11.21. Amounts converted into ADSs of the Company will be reduced from the principal amount outstanding under the loan.

 

Notable fees payable to Innovatus consist of a facility fee equal to 1% of the total loan commitment, due on the funding date of the relevant loans, and an end-of-loan fee equal to 5% of the amount drawn, payable upon final repayment of the relevant loans.

 

 

Security has been granted over all assets (including IP rights) owned by the Company and MDxHealth, Inc. The loan agreement contains customary financial covenants and general affirmative and negative covenants, including limitations on our ability to transfer or dispose of assets, change our business, merge with or acquire other companies, incur additional indebtedness and liens, make investments, pay dividends and conduct transactions with affiliates.

 

The Innovatus debt facility has been accounted for as a hybrid financial instrument which includes a host financial liability as well as an embedded derivative financial instrument being an equity conversion call option at a fixed rate of up to 15% of the aggregate outstanding principal amount through August 2, 2025.

 

The embedded derivative is not considered to be closely related to the host financial liability given the differences in economics and risks, and as such both are accounted for separately:

 

●

The host financial liability is recognized at amortized cost applying the effective interest rate method;

 

●

The embedded derivative convertible (American) call option is recognized at fair value using a binomial tree option pricing model whereby the fair value is based on the actual stock price and the estimated volatility of the Company’s ADS on Nasdaq since the Company’s IPO on November 4, 2021, and through the valuation date. The volatility measured at August 2, 2022, which was the closing date of the Innovatus debt facility, was 62.85% and at June 30, 2023 was 72.80%. Any changes to the fair value of the embedded derivative are recognized through the statement of profit or loss.

 

Other financial liabilities

 

GPS Contingent consideration

 

As part of the acquisition of the GPS business from Exact Sciences in August 2022, an aggregate earn-out amount of up to $70 million was to be paid by MDxHealth to Exact Sciences upon achievement of certain revenue milestones related to fiscal years 2023 through 2025, with the maximum earn-out payable in relation to 2023 and 2024 not to exceed $30 million and $40 million, respectively. The liability recognized reflects a probability-weighted estimate at the current net present value which is expected to become payable. Future fair value adjustments to this contingent consideration will be recognized in the statement of profit or loss.

 

As of June 30, 2023, the contingent consideration has been assessed at $57.6 million, of which $22.5 million has been recorded under “Other current financial liabilities” and the remaining $35.1 million has been recorded under “Other non-current financial liabilities”. As of December 31, 2022, the contingent consideration had been assessed at $52.9 million and recorded under “Other non-current financial liabilities”.

 

Refer to Note 15, “Subsequent events” for information on the amended terms of the earnout that were agreed to with Exact Sciences in August 2023.

 

Innovatus embedded derivative convertible call option

 

The embedded derivative convertible (American) call option is recognized at fair value within the other non-current financial liabilities and amounted to $221,015 and $910,000 as of June 30, 2023, and December 31, 2022, respectively.

 

Kreos derivative financial instrument (“initial drawdown fee”)

 

In June 2023, Kreos provided notice to the Company of the cancelation of the convertible loan associated with the initial drawdown fee and requested repayment in cash.

 

As such, Kreos is entitled to a cash repayment of €945,000 ($1.0 million) which is equal to 150% of the initial drawdown fee of €630,000. The Company has paid €472,500 ($513,419) in July 2023, with the remaining €472,500 ($513,419) expected to be paid in 2023.

 

Accordingly, as of June 30, 2023, the fair value of the financial derivative related to the initial drawdown fee has been recorded at its fair value being equal to the actual aggregate payments to be made in 2023.

 

Other financial liabilities

 

Other financial liabilities include the contingent consideration related to the acquisition of NovioGendix in 2015 and amounted to $1.2 million as of June 30, 2023 and December 31, 2022, of which $550,000 and $526,000 was considered current as of June 30, 2023 and December 31, 2022, respectively. The contingent consideration is valued at fair value through the statement of profit or loss. The fair value of this contingent consideration is reviewed on a periodic basis. The fair value is based on risk-adjusted future cash flows of different scenarios discounted using an interest rate of 14.94% as of June 30, 2023.

 

 

10. Financial expenses, net

 

Thousands of $ Balance at the closing date of		Jan-Jun 2023				Jan-Jun 2022
Contingent consideration fair value adjustments:
GPS contingent consideration		$	(3,854	)		$	-
NovioGendix contingent consideration			(28	)			(197	)
Total contingent consideration fair value adjustments			(3,882	)			(197	)
Other financial expenses, net:
Interest income			317				27
Interest on Innovatus loan			(2,628	)			-
Innovatus derivative instrument			689				-
Interest on Kreos loan			-				(686	)
Kreos derivative instrument			(136	)			-
Interest on other loans & leases			(169	)			(170	)
Other financial expenses			(66	)			(54	)
Total other financial expenses, net			(1,993	)			(883	)
Financial expenses, net		$	(5,875	)		$	(1,080	)

 

Financial expenses for the period ended June 30, 2023, were primarily related to the fair value adjustment of $3.9 million for the GPS contingent consideration as well as interest charges of $2.6 million on the Innovatus loan, partially offset by the positive fair value adjustment of $0.7 million related to the Innovatus derivative instrument.

 

11. Financial instruments and fair value

 

The table shows the Company’s significant financial assets and liabilities. All financial assets and liabilities are carried at amortized cost with the exception of the contingent considerations in relation to acquisitions and derivative financial instruments reported at fair value through profit and loss.

 

All financial assets and liabilities are considered to have carrying amounts that do not materially differ from their fair value.

 

The carrying value and fair value of the financial instruments as of June 30, 2023 and December 31, 2022 can be presented as follows:

 

Thousands of  $		As of June 30, 2023				As of December 31, 2022				Hierarchy
Assets
At amortized cost
Trade receivables		$	8,098			$	9,357
Cash and cash equivalents			39,472				15,503
Total financial assets			47,570				24,860
Liabilities
At fair value
Other financial liabilities
-GPS contingent consideration			57,550				52,881			Level 3
-NovioGendix contingent consideration			1,210				1,182			Level 3
-Innovatus derivative instrument			221				910			Level 3
-Kreos derivative instrument*			1,027				891			Level 1/3
Subtotal financial liabilities at fair value			60,008				55,864
At amortized cost:
Loans and borrowings			35,817				35,530			Level 2
Lease liabilities			4,772				4,263
Trade payables			10,681				10,178
Subtotal financial liabilities at amortized cost			51,270				49,971
Total financial liabilities		$	111,278			$	105,835

 

*	Fair-value hierarchy changed from level 3 to level 1 during the six months ended June 30, 2023

 

 

The fair value of the financial instruments has been determined on the basis of the following methods and assumptions:

 

●

The carrying value of the cash and cash equivalents, the trade receivables, other current assets and the trade payables approximate their fair value due to their short-term character;

 

●

The fair value of loans and borrowings applying the effective interest rate method approximates their carrying value (level 2).

 

o

Innovatus debt facility: the host financial liability was obtained with a variable interest rate based upon the Prime Rate (with a floor of 4% and a margin of 4.25%).

 

o

Paycheck Protection Program (PPP): applying a market rate would not result in a materially different fair value which carries an interest rate of 1% and was obtained as part of the U.S Coronavirus Aid, Relief, and Economic Security (CARES) Act.

 

●

Leases are measured at the present value of the remaining lease payments, using a discount rate based on the incremental borrowing rate at the commencement date of these leases. Their fair value approximates their carrying value.

 

●

The fair value of contingent consideration payable to NovioGendix (presented in the statement of financial position under “other non-current financial liabilities” and “other current financial liabilities”) and Exact Sciences is based on an estimated outcome of the conditional purchase price/contingent payments arising from contractual obligations (level 3). These are initially recognized as part of the purchase price and subsequently fair valued with changes recorded through other operating income in the statement of profit or loss.

  

o

NovioGendix: the Company used a discount rate of 14.94%. The effect of the fair value measurement is $28,000 in the condensed consolidated financial statements of which all is in operating expense.

 

o

GPS: The fair value of the contingent consideration payable to Exact Sciences is based on a probability-weighted average estimate based on multiple scenarios varying in timing and amount of earn-out payment. This probability-weighted estimate is then discounted to its net present value, taking into account the expected time when the earn-out would become payable in 2024, 2025 and 2026. Fair-value adjustments resulting in a financial charge of $3.9 million and a charge to other operating expenses of $0.8 million have been recorded as of June 30, 2023. The Company used a discount rate of 14.94%. As of June 30, 2023 an amount of $22.5 million is considered to be short term debt expected to become payable in May 2024.

 

●

Following notice in June 2023 by Kreos of the cancelation of the derivative instrument and request for repayment in cash (which was partially settled in July 2023), the fair value of the liability was recorded at carrying value given the short-term nature of the liability. Accordingly, as of June 30, 2023, the fair-value hierarchy of the Kreos derivative financial instrument changed from level 3 to level 1.

 

●

The fair value of the derivative financial liabilities related to the Innovatus derivative call option (as detailed in Note 7) was performed using a binomial pricing model which takes into account several factors including the expected evolution in price of an ADS and are considered as level 3 input. The fair value of the liability is estimated at $0.2 million as of June 30, 2023.

 

 

Fair value hierarchy:

 

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

 

	●	Level 1: quoted prices in active markets for identical assets and liabilities;

	●	Level 2: other techniques for which all inputs have a significant effect on the recorded fair value are observable, either directly or indirectly; and

●

Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

 

No financial assets or financial liabilities have been reclassified between the valuation categories during the year, other than the Kreos derivative financial instrument which changed from level 3 to level 1.

 

A reconciliation of cash and non-cash movements of level 3 financial liabilities is presented below:

 

		Financial Derivative Instruments (Kreos* and Innovatus)								Contingent consideration (NovioGendix and GPS)
Thousands of $ Balance at the closing date of		June 30, 2023				December 31, 2022				June 30, 2023				December 31, 2022
Beginning balance		$	1,801			$	810			$	54,063			$	1,617
Cash movements
Innovatus embedded derivative convertible call option							1,026
Non-cash movements
GPS Contingent Consideration															50,483
Foreign exchange rate impact / other movements							(35	)
Fair value changes through profit and loss			(689	)							4,697				1,963
Change to level 1 fair value hierarchy			136
Ending balance		$	1,248			$	1,801			$	58,760			$	54,063

 

*	Fair-value hierarchy changed from level 3 to level 1 during the first half of 2023 for Kreos derivative financial instrument

 

12. Related party transactions

 

There were no transactions to key management other than remuneration, warrants, and bonus, all of which are detailed in the Company’s 2022 Annual Report. For the six months ended June 30, 2023, total remuneration for key management and Directors was $1.3 million, with 2.2 million warrants being granted.

 

There were no other related party transactions.

 

 

13. Warrant plans

 

On June 30, 2023, the shareholders approved the creation of 5,000,000 “2023 Share Options” of which 2,550,000 have been granted as of June 30, 2023.

 

As of June 30, 2023, the Company granted a total of 10,706,000 of the respectively “2019, 2021, and 2022 Share Options” to employees of the Company (respectively 2,983,500, 3,595,000, and 4,127,500 warrants).

 

During 2023, the Company granted a total of 675,000 of the respectively “2019, 2021 and 2022 Share Options” to employees of the Company (respectively 10,000, zero, and 665,000 warrants). The warrants have been granted free of charge. Each warrant entitles its holder to subscribe to one common share of the Company at a subscription price determined by the board of directors, within the limits decided upon at the time of their issuance.

 

The warrants issued generally have a term of ten years as of issuance. Upon expiration of their term, the warrants become null and void. In general, the warrants vest in cumulative tranches of 25% per year, provided that the beneficiary has been employed for at least one year.

 

The fair value of each warrant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

 

●

The dividend return is estimated by reference to the historical dividend payment of the Company; currently, this is estimated to be zero as no dividends have been paid since inception

 

●

The expected volatility was determined using the Euronext average volatility of the stock over the last two years at the date of grant

 

●

Risk-free interest rate from Euronext is based on the interest rate applicable for the 10-year Belgian government bond at the grant date

 

The model inputs for warrants granted during the period ended June 30, 2023 included:

 

Grant date		25 March, 2023				27 April, 2023				May 3, 2023				June 22, 2023				June 30, 2023
Plan			2022 Share Options				2022 Share Options				2022 Share Options				2019 Share Options				2023 Share Options
Number of Shares			305,000				250,000				110,000				10,000				2,550,000
Exercise price		€	0.32			€	0.32			€	0.33			€	0.36			€	0.29
Expiry date			31/03/2032				31/03/2032				31/03/2032				31/03/2033				31/03/2033
Share price at grant date		€	0.27			€	0.35			€	0.34			€	0.31			€	0.31
Expected price volatility			71.42	%			73.60	%			73.64	%			72.54	%			72.62	%
Risk-free interest rate			2.75	%			3.10	%			2.92	%			3.11	%			3.09	%

 

The total fair value of the granted warrant is estimated at $465,000 following the underlying assumptions of the model. This amount represents the full fair value of the warrants granted that will vest over time.

 

14. Share capital

 

In March 2023, the Company completed a registered public offering of 10.75 million American Depositary Shares (“ADSs”) (each representing 10 ordinary shares of the Company without nominal value) at a price to the public of $4 per ADS for total gross proceeds of $43.0 million before deducting commissions and offering expenses of $3.4 million.

 

In the context of the aforementioned capital increase, the number of issued and outstanding shares has increased from 162,880,936 to 270,380,936 ordinary shares, through the issuance of a total of 107,500,000 new shares.

 

 

15. Subsequent events

 

On August 23, 2023, MDxHealth and Exact Sciences Corporation amended their existing Oncotype DX GPS prostate cancer business asset purchase agreement, deferring the Company’s initial earnout payment by 3 years, from 2024 to 2027, in consideration for an amendment fee of $250,000 in cash and 250,000 of the Company’s ADSs, a 5-year subscription right (warrant) to acquire up to 1,000,000 of the Company’s ADSs at an exercise price of $5.265 per ADS (representing a 50% premium to the market price of the ADSs as of August 18, 2023), and an increase in the potential aggregate earnout amount from $70 million to $82.5 million. The Company agreed to convene a general shareholders’ meeting to approve the subscription right. Under the terms of the amended asset purchase agreement, MDxHealth has agreed to make earn-out payments to Exact Sciences in each of fiscal years 2025, 2026 and 2027, based upon certain revenues related to fiscal years 2024, 2025 and 2023, respectively. At the option of MDxHealth, the earn-out amounts can be settled in cash or through the issuance of additional ADSs of the Company (valued in function of a volume weighted average trading price of the Company’s shares at the end of the relevant earnout period) to Exact Sciences, provided that the aggregate number of shares representing the ADSs held by Exact Sciences shall not exceed more than 7.5% (increased from 5% in the initial agreement) of the outstanding shares of the Company.

 

16. Statutory auditor’s report to the Board of Directors of MDxHealth SA on the review of consolidated interim financial information for the six-month period ended 30 June 2023

 

Introduction

 

We have reviewed the accompanying interim consolidated statement of financial position of MDxHealth SA as of 30 June 2023 and the related interim consolidated statements of comprehensive income, cash flows and changes in equity for the six-month period then ended, as well as the explanatory notes. The Board of Directors is responsible for the preparation and presentation of this consolidated interim financial information in accordance with IAS 34 “Interim Financial Reporting”, as adopted by the European Union. Our responsibility is to express a conclusion on this consolidated interim financial information based on our review.

 

Scope of review

 

We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

 

Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial information is not prepared, in all material respects, in accordance with IAS 34 “Interim Financial Reporting”, as adopted by the European Union.

 

Zaventem, 23 August 2023

 

BDO Bedrijfsrevisoren BV / BDO Réviseurs d’Entreprises SRL

Statutory auditor

Represented by Bert Kegels

 

 

III. CORPORATE INFORMATION

 

Registered office

 

MDxHealth SA has the legal form of a public limited liability company (société anonyme - SA / naamloze vennootschap - NV) organized and existing under the laws of Belgium. The company’s registered office is located at CAP Business Center, Rue d’Abhooz 31, B-4040 Herstal, Belgium.

 

The company is registered with the Registry of Legal Persons (registre des personnes morales - RPM / rechtspersonenregister – RPR) under company number RPM/RPR 0479.292.440 (Liège).

 

Listings

 

Euronext Brussels: MDXH

NASDAQ: MDXH

 

Financial calendar

 

November 8, 2023 – Q3 business update

 

Financial year

 

The financial year starts on 1 January and ends on 31 December.

 

Statutory auditor

 

BDO Bedrijfsrevisoren / Réviseurs d’entreprises BV/SRL

Da Vincilaan 9

1935 Zaventem

Belgium

 

Availability of the Interim Report

 

This document is available to the public free of charge and upon request:

MDxHealth SA - Investor Relations

CAP Business Center - Rue d’Abhooz, 31 – 4040 Herstal - Belgium

Tel: +32 4 257 70 21

E-mail: ir@mdxhealth.com

 

For informational purposes, an electronic version of the Interim Report 2022 is available on the website of mdxhealth at www.mdxhealth.com/investors/financials

 

 

19

 

Exhibit 99.2

 

 

NEWS RELEASE – REGULATED INFORMATION

23 AUGUST 2023, 4:00PM EDT / 22:00 CET

 

MDxHealth Reports Q2 and Half Year 2023 Results

 

●

Year-over-year Q2 revenues increase by 143% to $16.7 million; excluding GPS, revenues up 29%

 

●

Q2 gross margin expanded to 59.7% up from 42.4% in the prior year period

 

●

Amended GPS purchase agreement with Exact Sciences defers Company’s earn-out payment period from 2024-2026 to now 2025-2027

 

●

Company reaffirms full year 2023 revenue guidance of $65-70 million

 

IRVINE, CA, and HERSTAL, BELGIUM – August 23, 2023 – MDxHealth SA (NASDAQ/Euronext: MDXH), a commercial-stage precision diagnostics company, today announced its financial results for the second quarter and half year ended June 30, 2023.

 

Michael K. McGarrity, CEO of mdxhealth, commented: “We are pleased to report another strong quarter of operating results for mdxhealth. Our focus on operating discipline, commercial execution and expansion of our menu continues to drive robust revenue growth, margin expansion, and advance us on our clear path to operating profitability.

 

“As we look forward, our Company is exceptionally well positioned to drive strong top-line growth. We have in place the most comprehensive menu of personal diagnostic solutions in prostate cancer, more favorable reimbursement for our tests, and a world-class sales and marketing team. Based on these positive dynamics, we believe the fundamentals are now in place to drive significant operating leverage that will lead to profitability on an adjusted EBITDA basis in the first half of 2025.”

 

Highlights for the second quarter and half year ended June 30, 2023

 

●

Q2-2023 revenue of $16.7 million, representing an increase of 143% over Q2-2022; excluding GPS, Q2-2023 revenue increased 29% over Q2-2022

 

●

Q2-2023 revenues of $16.7 million were comprised of $7.8 million from GPS (up from $6.2 million in Q1), $6.7 million from Confirm mdx, $1.6 million from Resolve mdx, with the remaining revenues from Select mdx and other

 

●

H1-2023 revenue of $31.4 million, representing an increase of 142% over H1-2022; excluding GPS, H1-2023 revenue increased 34% over H1-2022

 

●

Q2-2023 gross margin expansion of 1,723 basis points to 59.7% versus Q2-2022 gross margin of 42.4%

 

●

Billable test volume for the second quarter ended June 30, 2023, for Confirm mdx increased by 25% year-over-year and 22% sequentially to 5,318, while Select mdx increased by 4% year-over-year and 6% sequentially

 

●

Cash and cash equivalents of $39.5 million as of June 30, 2023

 

 

Financial review for the half year ended June 30, 2023

 

		Half Year Ended June 30,
USD in thousands (except per share data) Unaudited		2023				2022					% Change
Revenue			31,445				13,009				142	%
Cost of goods			(12,740	)			(7,237	)			76	%
Gross Profit			18,705				5,772				224	%
Operating expenses			(35,165	)			(22,795	)			54	%
Operating loss			(16,460	)			(17,023	)			(3	)%
Net loss			(22,335	)			(18,104	)			23	%
Basic and diluted loss per share			(0.08	)			(0.12	)			(33	)%

 

Total revenue for the first half of 2023 was $31.4 million, an increase of 142% as compared to total revenue of $13.0 million for the first half of 2022. Excluding the GPS revenues, total revenues for the first half were $17.4 million, an increase of 34% compared to the first half of 2022. H1-2023 revenues of $31.4 million were comprised of $14.0 million from GPS, $12.4 million from Confirm mdx, $3.7 million from Resolve mdx, with the remaining revenues from Select mdx and other.

 

Gross profit for H1-2023 was $18.7 million as compared to $5.8 million for H1-2022. Gross margins were 59.5% for H1-2023 as compared to 44.4% for H1-2022, representing a gross margin improvement of 1,510 basis points, primarily related to product mix and the addition of GPS to the product menu.

 

Operating expenses for the first half of 2023 were $35.2 million, up 54% from $22.8 million for H1-2022, primarily related to the additional field sales personnel associated with the GPS business.

 

Operating loss for H1-2023 was $16.5 million, a decrease of 3% over H1-2022, driven by increased revenues and improved gross margin.

 

Net loss for H1-2023 of $22.3 million increased by $4.2 million versus $18.1 million for the prior year period, primarily due to an increase in financial expenses, of which $3.9 million was non-cash and relates to the fair value adjustment of the GPS contingent consideration, and the remainder was primarily related to an increase in interest expense from our debt facility.

 

Total cash use for H1-2023 declined to $16.5 million compared to $24.5 million for H2-2022, representing a 48% sequential decrease, bringing cash and cash equivalents as of June 30, 2023 to $39.5 million. The Company expects use of cash to continue to decline going forward.

 

Subsequent Events

 

On August 23, 2023, mdxhealth and Exact Sciences Corporation amended their existing Oncotype DX GPS prostate cancer business asset purchase agreement, deferring mdxhealth’s initial earnout payment by 3 years, from 2024 to 2027, in consideration for an amendment fee of $250,000 in cash and 250,000 of the Company’s ADSs, a 5-year subscription right (warrant) to acquire up to 1,000,000 of the Company’s ADSs at an exercise price of $5.265 per ADS (representing a 50% premium to the market price of the ADSs as of August 18, 2023), and an increase in the potential aggregate earnout amount from $70 million to $82.5 million. The Company agreed to convene a general shareholders’ meeting to approve the subscription right. Under the terms of the amended asset purchase agreement, mdxhealth has agreed to make earn-out payments to Exact Sciences in each of fiscal years 2025, 2026 and 2027, based upon certain revenues related to fiscal years 2024, 2025 and 2023, respectively. At the option of mdxhealth, the earn-out amounts can be settled in cash or through the issuance of additional ADSs of the Company (valued in function of a volume weighted average trading price of the Company’s shares at the end of the relevant earnout period) to Exact Sciences, provided that the aggregate number of shares representing the ADSs held by Exact Sciences shall not exceed more than 7.5% (increased from 5% in the initial agreement) of the outstanding shares of mdxhealth.

 

In addition, on August 9, 2023, mdxhealth announced that Cigna expanded commercial and Medicare Advantage coverage to include the Company’s Select mdx for Prostate Cancer test. With the addition of Select mdx, Cigna will now provide insurance coverage across mdxhealth’s full menu of precision diagnostic cancer tests, including its Confirm mdx and GPS tests. Contracted coverage with Cigna for the Select mdx test is expected to take effect in Q4 of this year.

 

Conference Call

 

Michael K. McGarrity, Chief Executive Officer and Ron Kalfus, Chief Financial Officer, will host a conference call and Q&A session today at 4:30 PM EST / 22:30 CET. The call will be conducted in English and a replay will be available for 30 days.

 

To participate in the conference call, please select your phone number below:

 

United States: 1-877-407-9716

 

Belgium: 0800 73904

 

The Netherlands: 0800 023 4340

 

United Kingdom: 0800 756 3429

 

Conference ID: 13740600

 

Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1628877&tp_key=6fd554d31e

 

To ensure a timely connection, it is recommended that users register at least 10 minutes prior to the scheduled start time.

 

About mdxhealth

 

Mdxhealth is a commercial-stage precision diagnostics company that provides actionable molecular information to personalize patient diagnosis and treatment. The Company’s tests are based on proprietary genomic, epigenetic (methylation) and other molecular technologies and assist physicians with the diagnosis and prognosis of urologic cancers and other urologic diseases. The Company’s U.S. headquarters and laboratory operations are in Irvine, California, with additional laboratory operations in Plano, Texas. European headquarters are in Herstal, Belgium, with laboratory operations in Nijmegen, The Netherlands. For more information, visit mdxhealth.com and follow us on social media at: twitter.com/mdxhealth, facebook.com/mdxhealth and linkedin.com/company/mdxhealth

 

Financial statements and auditor review

 

The Company’s statutory auditor, BDO Bedrijfsrevisoren BV, has confirmed that its review procedures with respect to the Company’s condensed consolidated financial statements as of and for the six-month period ended 30 June 2023, prepared in accordance with the International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB) and as adopted by the EU, have been substantially completed. When completed, the aforementioned condensed consolidated financial statements may be found on the Company’s website at www.mdxhealth.com.

 

For more information:

 

mdxhealth

info@mdxhealth.com

 

LifeSci Advisors (IR & PR)

US: +1 949 271 9223

ir@mdxhealth.com  

 

This press release contains forward-looking statements and estimates with respect to the anticipated future performance of MDxHealth and the market in which it operates, all of which involve certain risks and uncertainties. These statements are often, but are not always, made through the use of words or phrases such as “potential,” “expect,” “will,” “goal,” “next,” “potential,” “aim,” “explore,” “forward,” “future,” and “believes” as well as similar expressions. Forward-looking statements contained in this release include, but are not limited to, statements regarding the acquisition of Oncotype DX® GPS prostate cancer business from Exact Sciences including statements regarding the anticipated benefits of the acquisition; statements regarding expected future operating results; statements regarding product development efforts; and statements regarding our strategies, positioning, resources, capabilities and expectations for future events or performance. Such statements and estimates are based on assumptions and assessments of known and unknown risks, uncertainties and other factors, which were deemed reasonable but may not prove to be correct. Actual events are difficult to predict, may depend upon factors that are beyond the company’s control, and may turn out to be materially different. Examples of forward-looking statements include, among others, statements we make regarding expected future operating results, product development efforts, our strategies, positioning, resources, capabilities and expectations for future events or performance. Important factors that could cause actual results, conditions and events to differ materially from those indicated in the forward-looking statements include, among others, the following: uncertainties associated with the coronavirus (COVID-19) pandemic, including its possible effects on our operations, and the demand for our products; our ability to successfully and profitably market our products; the acceptance of our products and services by healthcare providers; our ability to achieve and maintain adequate levels of coverage or reimbursement for our current and future solutions we commercialize or may seek to commercialize; the willingness of health insurance companies and other payers to cover our products and services and adequately reimburse us for such products and services; our ability to obtain and maintain regulatory approvals and comply with applicable regulations; timing, progress and results of our research and development programs; the period over which we estimate our existing cash will be sufficient to fund our future operating expenses and capital expenditure requirements; the possibility that the anticipated benefits from our business acquisitions like our acquisition of the Oncotype DX® GPS prostate cancer business will not be realized in full or at all or may take longer to realize than expected; and the amount and nature of competition for our products and services. Other important risks and uncertainties are described in the Risk Factors sections of our most recent Annual Report on Form 20-F and in our other reports filed with the Securities and Exchange Commission. MDxHealth expressly disclaims any obligation to update any such forward-looking statements in this release to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based unless required by law or regulation. This press release does not constitute an offer or invitation for the sale or purchase of securities or assets of MDxHealth in any jurisdiction. No securities of MDxHealth may be offered or sold within the United States without registration under the U.S. Securities Act of 1933, as amended, or in compliance with an exemption therefrom, and in accordance with any applicable U.S. securities laws.

 

NOTE: The mdxhealth logo, mdxhealth, Confirm mdx, Select mdx, Resolve mdx, Genomic Prostate Score, GPS and Monitor mdx are trademarks or registered trademarks of MDxHealth SA. The GPS test was formerly known as and is frequently referenced in guidelines, coverage policies, reimbursement decisions, manuscripts and other literature as Oncotype DX Prostate, Oncotype DX GPS, Oncotype DX Genomic Prostate Score, and Oncotype Dx Prostate Cancer Assay, among others. The Oncotype DX trademark, and all other trademarks and service marks, are the property of their respective owners.

 

 

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