MDxHealth's Q3 2025 Earnings Call: Contradictions Emerge on Germline Focus, ExoDx Revenue, and Sales Strategy

Date of Call: November 12, 2025

Financials Results

• Revenue: $27.4M, up 18% YOY (vs $23.3M in Q3 2024)
• Gross Margin: 65.2%, compared to 61.2% in Q3 2024 (up 4 percentage points)
• Operating Margin: Operating loss $2.6M (approx -9.5% of revenue); operating loss declined 57% vs $6.1M in Q3 2024

Guidance:

• Maintaining 2025 revenue guidance of $108M–$110M.
• Expect to complete ExoDx integration in Q4, prioritizing sales, lab, client services and RCM integration.
• Expect Exo to be neutral-to-accretive to gross margins; will confirm after 1–2 quarters of post-close results.
• Paused Germline commercialization for now; will reevaluate entering 2026.
• Plan to provide formal 2026 guidance at the beginning of next year informed by integration outcomes.

Business Commentary:

* Revenue and Growth: - MDxHealth reported Q3 revenue of $27.4 million, representing 18% growth over the previous year. - This growth was driven by the acquisition of Exosome Diagnostics and an increase in test volumes.

• Test Volume Dynamics:
• Total test volumes increased by 37% year-over-year, with a significant 65% increase in liquid-based tests and 18% in tissue-based tests.

• The increase in liquid-based tests was primarily due to the acquisition of ExoDx, while growth in tissue-based tests was attributed to strong performance in GPS and ConfirmMDx products.

• Gross Margin Improvement:

• Gross margin improved to 65.2% compared to 61.2% in the previous year, representing a 4 percentage point increase.

• This was attributed to a favorable test mix and improved operational efficiencies.

• Germline and ExoDx Strategy:

• MDxHealth maintained its 2025 revenue guidance despite the Germline test's delayed contribution and the ExoDx acquisition.
• The decision to phase out Germline was to focus resources on integrating ExoDx and expanding its sales organization.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 18% revenue growth, positive adjusted EBITDA of $1M in Q3 and YTD, and said they "are confident" in continued market-leading growth and in meeting 2025 guidance of $108M–$110M. They repeatedly emphasized successful ExoDx acquisition and disciplined integration to drive future growth (all paraphrased).

Q&A:

• Question from Daniel Brennan (TD Cowen): Can you quantify ExoDx's contribution in Q3 and explain conservatism in maintaining guidance given Germline exit and Select/Exo shifts?
  Response: ExoDx contributed minimally in Q3 (closed end of Sept); management forgone expected Germline revenue to focus on integration but still maintains FY2025 guidance and believes the combined business can meet or exceed it.

• Question from Daniel Brennan (TD Cowen): Any color on GPS performance this quarter — price, volume, environment and assumptions for Q4?
  Response: Tissue (Confirm+GPS) volumes grew ~18% YOY with no material change to economics; team saw a slight biopsy seasonality but margins held (~65%), and management is confident in tissue performance.

• Question from Daniel Brennan (TD Cowen): Is the assumed Exo contribution roughly replacing the Germline/Select contribution in your model, or have underlying assumptions changed?
  Response: The company assumes Exo replaces the expected Germline contribution; underlying assumptions remain unchanged.

• Question from Andrew Brackmann (William Blair): What did your customer-base analysis show that justified expanding the sales team and how should we think about total opportunity size?
  Response: They analyzed historical ordering trends, crossover potential and rep talent to identify cross-sell opportunities; expansion (50→60 reps) targets those crossover opportunities to drive productivity.

• Question from Andrew Brackmann (William Blair): On integrating client service and RCM, why now and what downstream effects should we expect?
  Response: Integrating lab operations, client services and RCM standardizes processes, improves collections and P&L predictability; Q4 integration will inform 2026 guidance.

• Question from William Bonello (Craig-Hallum): Our math implies tissue ASP down ~7% sequentially — is that mix-driven or something else?
  Response: Management does not disclose ASP by test, attributes variability quarter-to-quarter, and sees no material change in payer mix or economics.

• Question from William Bonello (Craig-Hallum): At the time of acquisition you suggested Exo could add at least ~$20M next year — has that view changed?
  Response: No change — management's view that Exo could contribute ~$20M+ in 2026 stands (not formal guidance).

• Question from William Bonello (Craig-Hallum): Should we think net add from Exo after lost Germline is ~+$10M or another framing?
  Response: Management reiterated the view that Exo could accelerate growth (toward ~30%) and contribute $20M+ in 2026, but will provide formal guidance at the start of 2026.

• Question from Mark Massaro (BTIG): Why are you setting the Germline test aside now?
  Response: They paused Germline to prioritize Exo integration and sales focus; Germline remains a market opportunity but was less differentiated and will be re-evaluated in 2026.

• Question from Mark Massaro (BTIG): Will Exo be accretive to gross margins and is ~65% a sustainable level next year?
  Response: Expect Exo to be neutral-to-accretive to gross margin; current ~65% is ahead of expectations but management will confirm after 1–2 quarters of integrated mix and collections.

• Question from Mark Massaro (BTIG): Did you simply add 10 Exo reps to your 50, and what can you say about their tenure/early indicators?
  Response: Net addition was 10 direct reps; company vetted incoming reps through its hiring process and it's too early to assess their performance.

• Question from Thomas Flaten (Lake Street): Were the 10 new reps deployed into white space or via territory realignment/subsegmenting?
  Response: No white space — reps strengthen existing coverage and required territory adjustments to bolster underperforming areas (50→60 reps prompted realignment).

• Question from Thomas Flaten (Lake Street): Any negative feedback from physicians switching from Select to Exo during the conversion?
  Response: Too early to assess, but management is confident the Select→Exo conversion will not create customer friction and believes Exo is the better test.

Contradiction Point 1

Germline Test Focus and Revenue Expectations

It involves changes in the company's strategy regarding the focus on the Germline test, which affects revenue expectations and market positioning.

Have the $20 million revenue expectations from the ExoDx acquisition for next year changed? - William Bonello (Craig-Hallum Capital Group LLC, Research Division)

2025Q3: We expect Exo to make a significant contribution, potentially adding $20 million or more to 2026 revenue, with the potential to accelerate growth from 20% to nearly 30%. - Michael McGarrity(CEO)

Could you elaborate on the underlying assumptions related to gross margin and OpEx? - Kate (William Blair and Co.)

2025Q2: We're confident that the ExoDx acquisition will provide favorable margin accretion and sustain our positive adjusted EBITDA, supported by our operational discipline and effective team integration post-closing. - Michael McGarrity(CEO)

Contradiction Point 2

Sales Team Expansion and Strategy

It involves changes in the company's approach to expanding its sales team and strategic focus, which impacts its growth and market penetration.

How were the new commercial team roles filled, and what is the experience and tenure of the new Exo reps? - Mark Massaro (BTIG, LLC, Research Division)

2025Q3: We added 10 reps through a thorough analysis of strengths and opportunities. We went through a rigorous process to ensure the new reps align with our organization's goals. - Michael McGarrity(CEO)

Could you elaborate on the customer base overlap with ExoDx? - John Francis (LifeSci Advisors)

2025Q2: We see significant opportunity for cross utilization and growth acceleration with ExoDx, similar to our approach with the GPS acquisition. - Michael McGarrity(CEO)

Contradiction Point 3

Germline Test Status

It highlights a discrepancy in the company's strategy and focus on the Germline test, which could impact revenue projections and product development priorities.

Why is the Germline test being set aside? - Mark Massaro(BTIG, LLC, Research Division)

2025Q3: We see Germline as a market opportunity, but we chose not to focus on it due to its non-differentiated nature compared to our other offerings. - Michael McGarrity(CEO)

What is the size of the Germline opportunity and when is revenue expected? - Mark Massaro(BTIG)

2025Q1: We have a lot of interest in the Germline test. It's obvious when you look at the future of medicine and how that's going to be addressed. And so we see, obviously, Germline as a much more related product line that we can speak to. - Michael McGarrity(CEO)

Contradiction Point 4

Germline Test Revenue Impact

It involves differing expectations on the revenue impact of the Germline test, which could affect financial forecasting and investor confidence.

What was the contribution of Exo in the quarter? - Daniel Brennan(TD Cowen, Research Division)

2025Q3: We adjusted our focus due to the ExoDx acquisition. The liquid growth was driven by Resolve, not Exo. - Michael McGarrity(CEO)

What's the size of the Germline opportunity and when could it generate revenue? - Mark Massaro(BTIG)

2025Q1: We expect potentially $10 million to $15 million from Germline this year, and we think it could be more. So we think we can exceed that. - Michael McGarrity(CEO)

Contradiction Point 5

ExoDx Acquisition and Revenue Expectations

It involves changes in financial forecasts, specifically regarding the expected revenue contributions from the ExoDx acquisition, which are critical indicators for investors.

Has the expected $20 million in revenue from ExoDx changed since the acquisition? - William Bonello (Craig-Hallum Capital Group LLC, Research Division)

2025Q3: Exo has significant contributions, potentially adding $20 million or more to 2026 revenue, with the potential to accelerate growth from 20% to nearly 30%. - Michael McGarrity(CEO)

When will the ExoDx acquisition start contributing $20 million in revenue next year? - Jason Bednar (Piper Sandler)

2024Q4: We expect Exo to make a significant contribution potentially adding $20 million or more to 2026 revenue. - Michael McGarrity(CEO)