MDxHealth (MDXH-BR): Back on track in Q1

Free to access research and investor meetings in a post-MiFID2 world

MDxHealth (MDXH-BR): Back on track in Q1
Recommendation: OUTPERFORM
Target Price: EUR9.00
Current Price: EUR3.75 (COB on 24^th April 2018)

KEY TAKEAWAY

Strong growth in both test volumes and revenues reported in Q1 indicates that MDxHealth is back on track after the disappointments of 2017. Following a successful $44m fundraising, topline growth at current levels promises to exceed our previous estimates. The company remains attractive at current levels. We reiterate our OUTPERFORM recommendation and EUR9 / share target price.

Sustained ConfirmMDx volumes drive revenues - Growth in test volumes evident in Q4/2017 has been sustained and translating into sales. We anticipate sustained adoption by physicians as private health providers such as Kaiser and other health groups implement the test into their clinical protocols. Only a little more than 50% of tests billed are currently booked. This should increase substantially as the CPT (Current Procedural Terminology) code applied in January 2018 begins to facilitate and speed test reimbursement; improving test margins, revenues and net cash flows. The company expects to add significantly to the approaching 70 signed up payers further extending access to the 1m men that are referred for biopsy every year.

SelectMDx a growing opportunity - A lower price more convenient urine test, SelectMDx is showing growing potential in early prostate cancer diagnosis of the around 10m men with elevated PSA. Already part of the European urological guidelines, upcoming data is expected to highlight the utility of the test in disease monitoring and support the adoption of the tests into the US guidelines. Use in monitoring of men with slow growing or potentially indolent disease could at least double the addressable market.

Now adequately funded - The successful completion of the $44m fundraising means that the company is now adequately funded to execute its business plan. Although operational costs for Q1 somewhat exceed our expectations, better than expected topline growth should compensate, leaving our bottom line estimates for 2018 largely unchanged.

A substantial opportunity at current levels - Although MDxH has yet to issue explicit guidance, we are confident that accelerating volume growth will translate into substantial revenue growth in 2018 and 2019. With data supporting the increasing opportunity for the SelectMDx liquid biopsy, this should drive the share price over the next 12 months and longer term. Our estimates suggest a fair value of EUR6.50 rising towards EUR12 with data supporting wider use of SelectMDx.

Kind regards,

Dr. Chris Redhead | Analyst
goetzpartners Healthcare Research Team | Research Team

goetzpartners securities Limited

The Stanley Building, 7 Pancras Square, London, N1C 4AG, England, UK.

T +44 (0) 203 859 7725 | healthcareresearch@goetzpartners.com / chris.redhead@goetzpartners.com

www.goetzpartnerssecurities.com

Registered in England No. 04684144.

Managing Directors: Dr Stephan Goetz, Martin Brunninger and Ulrich Kinzel.

GPSL publishes and distributes "Investment" Research and "Corporate Sponsored" Research. Our Corporate Sponsored Research and investor meetings (e.g. NDRs, 1 to 1 meetings) are free to access and attend and is not classified as an inducement in a post-MiFID2 world. GPSL does not offer any execution or market making services. This is a marketing communication as defined by the Financial Conduct Authority ("FCA"). The information herein is considered to be an acceptable minor non-monetary benefit as defined under FCA COBS 2.3A19(5).

To be added, or to change your subscriptions or be removed / unsubscribed entirely from our CRM, please e-mail: ResearchProduction@goetzpartners.com

About GPSL: goetzpartners securities Limited is a member of the goetzpartners group and a leading true pan European investment bank and research firm. We bring together a wide range of expertise, insights and innovations to advance the interests of our clients around the world. The fast changing environment brings challenges for businesses and investors. Research innovation, digital transformation and disruptive business ideas reshuffle the corporate world in a yet unexperienced pace. Our sector knowledge and our global footprint bring together deep understanding of the industry, corporate intelligence and a wide network of top decision makers.

This research report is intended for use only by persons who qualify as professional investors or eligible counterparties (institutional investors) in the applicable jurisdiction, and not by any private individuals or other persons who qualify as retail clients.

This e-mail (including any attachments) from goetzpartners securities Limited ("GPSL") is confidential and may contain information which is proprietary, privileged or otherwise legally protected against unauthorised use or disclosure. If you receive this e-mail in error or are not the intended recipient of this e-mail, please delete and destroy all copies in your possession, notify the sender that you have received this e-mail, and note that any review or dissemination of, or the taking of any action in reliance on this e-mail is expressly prohibited. GPSL shall not be liable for the improper or incomplete transmission of the information contained in this e-mail nor for any delay in its receipt or damage to your system. GPSL does not guarantee that the integrity of this e-mail has been maintained nor that this e-mail is free of viruses, interceptions or interference and makes no warranties in relation to these matters. This is not an offer or a solicitation to buy or sell securities or investment products, or an official confirmation. GPSL record electronic and phone communications in accordance with FCA and MiFID2 regulations, they will be monitored for regulatory and training purposes. GPSL is authorised and regulated by the Financial Conduct Authority of the United Kingdom (Firm Reference Number: 225563).

GPSL Equity Research publications are available on the following aggregators and via news distribution circuits (For Institutional Use Only): AlphaSense, Bloomberg (GOET), Capital IQ, EQS, FACTSET,
RNS Reach and Thomson Reuters.

If you cannot click on the above hyperlink please copy the below link and paste it into your browser for the full pdf version of the equity research report:

https://gp.bluematrix.com/sellside/EmailDocViewer?encrypt=15673ab2-470c-4267-87f1-c0b812bb3366&mime=pdf&co=gp&id=paul.dunne@goetzpartners.com&source=libraryView