MDxHealth SA — FY2023 Form 20-F
Reporting period: Year ended December 31, 2023. This is an annual report, not a standalone Q4 filing; the supplied text does not provide clear fourth-quarter results. Financial statements are prepared under IFRS as issued by the IASB, in U.S. dollars.
Business context
MDxHealth is a commercial-stage precision diagnostics company focused on urologic tests. Its portfolio includes Confirm mdx, Select mdx and GPS for prostate cancer, Resolve mdx for urinary tract infections, and Monitor mdx in development. The company completed a 1-for-10 reverse split, exchanged its ADSs for ordinary shares and moved to a sole Nasdaq listing during 2023. It reported 27.3 million ordinary shares outstanding at year-end.
Financial performance and position
| Metric (USD millions, except per-share data) | 2023 | 2022 | Change |
|---|---|---|---|
| Revenue | $70.2 | $37.1 | +89% |
| Gross profit / margin | $43.9 / 62.6% | $19.2 / 51.9% | Margin +10.7 percentage points |
| Operating loss | $(27.3) | $(37.9) | Loss narrowed $10.6 |
| Net loss | $(43.1) | $(44.0) | Loss narrowed $0.9 |
| Basic and diluted loss per share | $(1.66) | $(2.78) | Improved; split-adjusted |
| Net cash used in operations | $(21.5) | $(34.1) | Outflow reduced $12.6 |
| Net cash used in investing | $(3.9) | $(29.0) | Prior year included GPS acquisition |
| Net cash from financing | $32.3 | $20.7 | Primarily 2023 equity raise |
Revenue growth reflected the GPS acquisition, higher Confirm mdx and Resolve mdx volumes, and Medicare reimbursement for Select mdx. 2023 revenue included GPS $30.9 million, Confirm mdx $24.8 million and Resolve mdx $9.7 million. Excluding GPS, revenue was $39.3 million, up 42%. Confirm mdx and GPS together represented approximately 79% of revenue, versus 84% in 2022.
Cost of sales rose 47% to $26.3 million, below revenue growth. Selling and marketing expense increased 44% to $36.9 million, primarily with GPS-related commercial staffing and higher marketing costs. R&D increased 16% to $6.4 million; general and administrative expense was nearly flat at $23.0 million. Financial expense rose to $18.3 million, including GPS earnout fair-value charges and Innovatus interest. These items materially contributed to the persistent net loss despite improved operating performance.
At year-end, cash and cash equivalents were $22.4 million (2022: $15.5 million); trade receivables were $11.1 million and inventory $2.8 million. Current assets were $38.2 million and current liabilities $19.5 million. Total equity was $7.2 million. Loans and borrowings were $36.2 million, including $35.6 million non-current; lease liabilities were $5.1 million. Other financial liabilities totaled $66.2 million, principally the GPS contingent consideration, valued at $62.6 million. Operating cash outflow remained significant.
Material changes and notable items
- In March 2023, the company issued 10.75 million shares at $4.00 per share, generating $43.0 million gross proceeds and approximately $39.6 million net proceeds. Shares outstanding increased from 16.3 million at 2022 year-end to 27.3 million at 2023 year-end.
- The GPS purchase agreement was amended in August 2023: the initial earnout payment was deferred, potential aggregate earnout increased from $70 million to $82.5 million, and Exact Sciences received $250,000 cash, 250,000 shares and a five-year warrant to purchase up to 1 million shares at $5.265. Earnouts may be paid in cash or shares, subject to a 7.5% ownership cap. The recognized GPS earnout liability was $62.6 million at year-end.
- The $35 million Innovatus loan is secured by substantially all company assets, including intellectual property. It bears floating-rate interest based on the greater of prime or 4%, plus 4.25%; interest-only payments apply initially, and the facility matures in August 2027. Additional $20 million and $15 million tranches may be available in 2024 and 2025, subject to conditions. The lender has specified covenants and a conversion right for up to 15% of principal.
- Medicare coverage for Select mdx was obtained in 2023. The company reported agreements with 140 commercial payors for Confirm mdx, 84 for Select mdx and 62 for GPS at year-end.
- No material legal proceedings were reported. No cash dividends have been paid, and none are anticipated in the foreseeable future.
Outlook, risks and controls
Management expects continuing net losses and significant cash outflows for at least the next 12 months. It says current cash and expected product receipts, together with anticipated access to additional debt, equity or other funding, should support operations for at least that period; however, the assessment depends on forecasts and access to financing. Management and the auditor identify a material uncertainty that raises substantial doubt about the company’s ability to continue as a going concern. The auditor’s opinion on the IFRS financial statements was unmodified and specifically highlighted this uncertainty.
There is no formal numeric revenue or earnings guidance in the provided filing text. Management expects R&D and public-company costs to continue, and views growth as dependent on test adoption, reimbursement, commercial execution and development of future products. Key risks include dependence on Confirm mdx and GPS, payer coverage and collections, competition, continued financing needs, Innovatus covenants and secured collateral, the GPS earnout, and regulatory uncertainty around FDA oversight of laboratory-developed tests. In March 2024, the company announced a hereditary prostate cancer genetic test; Monitor mdx remained in development.
Management concluded that internal control over financial reporting and disclosure controls were ineffective as of December 31, 2023 due to a material weakness in IT logical access and segregation of duties. The deficiencies did not result in a reported financial-statement misstatement, and remediation was reported complete by the filing date; management nevertheless cautioned that similar weaknesses could recur. The auditor did not provide an internal-control attestation.
Investor verification priorities
- Reconcile the Medicare revenue disclosure: the filing states Medicare was approximately 45% of 2023 revenue, while separately reporting $27.7 million of Medicare revenue against $70.2 million total revenue (about 39.5%).
- Review cash runway assumptions, actual subsequent cash use, financing availability and any conditions or covenants governing the undrawn Innovatus tranches.
- Assess GPS earnout revenue milestones, timing, maximum exposure, settlement choice and potential dilution; compare the $82.5 million maximum with the $62.6 million recorded liability.
- Track payer coverage, reimbursement rates, receivable aging and collections, particularly given the reported $11.1 million receivables balance and dependence on a concentrated test portfolio.
- Confirm sustained remediation and testing of access controls and segregation of duties after the year-end material weakness.
- Monitor final FDA rules for laboratory-developed tests and their potential effect on test availability, compliance costs, reimbursement and commercialization.