MDxHealth SA shares plunged 48% early this month after the company announced it would discontinue its Resolve mdx diagnostic test for urinary tract infections and close lab operations in Plano, Texas, due to reimbursement challenges.
Continued operation of the test was deemed “unsustainable” following a policy reversal by its lab’s Medicare administrator, Novitas Solutions, according to the company. Additionally, Chief Executive Michael McGarrity said discontinuing the test will allow the company to focus fully on its core prostate cancer menu of liquid- and tissue-based tests.
“While stepping away from Resolve is unfortunate for the thousands of patients who have benefited from the test, we view this proactive exit as a powerful catalyst for our company,” McGarrity told analysts during the company’s May 13 earnings call.
The company said that it’s contesting a $10.4 million recoupment decision from Novitas related to historical Resolve claims.
“We believe this action by Novitas is without merit and we are vigorously defending our position through the formal Medicare appeals process,” McGarrity said. “We remain fully confident in our appellate strategy and in the clinical validity of our testing services.”
Founded in 2003, MDxHealth has a portfolio of five noninvasive tests for prostate cancer.
It has dual headquarters in Belgium and Irvine and is the fifth largest diagnostics company in Orange County with 160 local employees.
MDxHealth’s stock has dropped more than 75% since the start of the year. At press time, shares were at 85 cents and a $43.7 million market cap (Nasdaq: MDXH).
MDxHealth to Stop Resolve Operations in June
MDxHealth launched Resolve in 2021.
The test uses PCR (polymerase chain reaction) technology to identify organisms in a urine sample and helps recommend targeted antibiotic treatment options to clear up the infection with results available within 24 to 48 hours, according to the company’s website.
Resolve operations are expected to cease by the end of June.
MDxHealth has also been focused on the integration of the Exosome Diagnostics business it acquired from Minneapolis-based Bio-Techne Ltd. for $15 million last September.
The acquisition added the unit’s ExoDx Prostate test to its portfolio.
The urine test helps assess whether patients with a high amount of prostate-specific antigen need a biopsy or can return to regular annual screenings and replaced MDxHealth’s similar urine-based test called Select mdx.
“It is important to highlight that we have already completed the Exo-driven strategic mapping and cross training of our expanded sales force in Q1,” McGarrity said.
Revenue Guidance Cut as Focus Shifts to Core Cancer Business
With the discontinuation of Resolve, MDxHealth lowered its 2026 revenue guidance to a range of $110 million to $115 million, down from $137 million to $140 million.
“Our guidance clearly reflects confidence in our core cancer business, both tissue and Exo,” McGarrity said.
MDxHealth reported first-quarter revenue rose 13% to $27.4 million, with tissue-based tests Confirm mdx and GPS mdx accounting for 66% of sales.
Operating expenses increased 19% to $23.9 million, while net loss narrowed 4% to $8.9 million, due in part to higher expenses related to the ExoDx acquisition.
The company reported cash and cash equivalents of $43.2 million as of March 31.
Despite shares falling 48% following the earnings announcement, analyst firms Lake Street, TD Cowen and BTIG maintained Strong Buy ratings for the company.
Last August, MDxHealth reached a milestone, achieving its first profitable quarter in the second quarter.
