MDX Health (MDXH) Q3 2025: Liquid-Based Test Volume Surges 65% as ExoDx Integration Reshapes Growth Path
MDX Health’s third quarter marked a pivotal transition, with a strategic pivot away from germline testing and a decisive bet on the ExoDx acquisition, fueling a 65% surge in liquid-based test volumes. The company’s operational discipline, margin expansion, and salesforce restructuring set the stage for a more focused, scalable urology diagnostics platform. Investors should watch for integration execution and ExoDx’s revenue ramp as key levers for 2026 acceleration.
Summary
- Test Mix Transformation: Liquid-based diagnostics outpaced tissue growth, signaling a shift in portfolio focus.
- Salesforce Expansion: Integration of ExoDx triggered a 20% increase in direct reps and territory realignment.
- Margin Discipline: Gross margin improvement reflects operating leverage and early ExoDx synergies.
Performance Analysis
MDX Health delivered 18% revenue growth for Q3 2025, driven by a 37% increase in total billable test volume, with liquid-based volumes (Select, Resolve, Germline, ExoDx) up 65% and tissue-based tests (Confirm, GPS) up 18% year-over-year. The liquid-based segment’s outperformance marks a notable shift in business mix, as tissue-based tests contributed 76% of revenue but liquid volumes are rapidly gaining share. Management attributed the robust liquid growth to the acceleration of the Resolve test and the initial integration of ExoDx, though ExoDx’s direct revenue contribution in Q3 was not yet material.
Gross margin expanded to 65.2%, up 4 percentage points from the prior year, reflecting improved operational efficiency and favorable test mix. Operating loss narrowed significantly, and adjusted EBITDA turned positive for the second consecutive quarter, underscoring the impact of disciplined OpEx management. Notably, total operating expenses remained essentially flat year-over-year despite absorbing acquisition-related costs, highlighting cost control even as the business scaled and restructured.
- Liquid-Based Acceleration: Liquid test volume growth outpaced tissue, reshaping revenue composition and future opportunity set.
- Margin Expansion: Gross margin gains stemmed from operational efficiency and favorable mix, with upside potential from ExoDx integration.
- OpEx Leverage: Minimal operating expense growth on 20% higher revenue demonstrates scalable cost structure.
Cash burn remained tightly controlled, with less than $1 million used in Q3, further supporting the company’s drive toward sustained profitability and integration capacity as it absorbs the ExoDx business.
Executive Commentary
"Our sales organization has delivered a compound annual growth rate of 45% over the last four years while significantly reducing our sales and marketing expenses as a percentage of revenue. This reflects our team's steadfast commitment to building trust and accountability with our urology customers, allowing us to confidently invest in additional growth opportunities."
Michael McGarrity, Chief Executive Officer
"Q3 total billable volume was approximately 33,000 tests, of which approximately 13,000 were tissue-based, and 20,000 were liquid-based tests, representing total unit growth of 37% versus the prior year quarter. Gross margins were 65.2% compared to 61.2% for Q3-24, an increase of 4 percentage points primarily attributed to our test mix and improved efficiencies in our operations."
Scott McMahon, Interim Chief Financial Officer
Strategic Positioning
1. ExoDx Acquisition and Integration
MDX Health’s acquisition of ExoDx, exosome-based diagnostics, is a cornerstone of its strategy to build the most comprehensive urology diagnostics menu. Integration efforts are now the company’s top operational priority, spanning laboratory operations, salesforce expansion, and client services. The addition of ExoDx expands the commercial footprint from 50 to 60 direct sales reps, increases geographic coverage, and enables cross-selling across a broader customer base, aiming to drive incremental growth through both product and customer portfolio synergies.
2. Portfolio Rationalization and Focus
The company made a deliberate decision to set aside its germline testing initiative, reallocating resources to ensure the successful integration of ExoDx and the conversion of Select test customers to ExoDx. This move reflects a disciplined approach to capital allocation and prioritization of high-value, differentiated assets over commoditized offerings, with management signaling a willingness to revisit germline only after integration milestones are achieved and evaluated in 2026.
3. Commercial Execution and Salesforce Productivity
MDX Health’s salesforce productivity remains a key growth lever, with a track record of consistent performance and a newly expanded team post-acquisition. The company’s approach—evaluating every rep and territory for optimal fit—draws from lessons learned in prior acquisitions and is designed to minimize disruption while maximizing cross-sell potential and coverage efficiency.
4. Operational Efficiency and Margin Expansion
Continuous improvement in laboratory operations and revenue cycle management is driving margin gains. The integration of three laboratory sites (California, Texas, Massachusetts) and harmonization of client services and billing functions are expected to unlock further efficiencies, supporting both gross margin stability and service quality as the business scales.
Key Considerations
This quarter’s results underscore MDX Health’s transition from a diversified diagnostics player to a focused, scale-driven urology platform, with execution risk now concentrated on ExoDx integration and commercial leverage.
Key Considerations:
- Integration Complexity: The simultaneous integration of ExoDx’s labs, salesforce, and client service functions requires flawless execution to avoid disruption and realize expected synergies.
- Revenue Mix Shift: Rapid growth in liquid-based testing could alter margin profiles and working capital needs, especially as legacy Select is sunset and ExoDx ramps up.
- Salesforce Expansion Risk: Realigning territories and onboarding new reps may temporarily impact productivity, though management’s process-driven approach aims to mitigate this.
- Portfolio Discipline: The decision to pause germline testing highlights a focus on high-ROI assets but leaves some growth optionality untapped in the near term.
Risks
Execution risk around ExoDx integration is the dominant near-term challenge, with potential for operational disruption if laboratory or salesforce harmonization falters. Revenue recognition and ASP variability—highlighted by analyst questions—add uncertainty to near-term forecasting, while competitive dynamics in urology diagnostics remain intense. Management’s conservative guidance approach and focus on integration over new launches may limit upside surprises in the next two quarters.
Forward Outlook
For Q4, MDX Health guided to:
- Continued focus on ExoDx integration and Select-to-ExoDx customer conversion
- Stable to improving gross margins, pending full ExoDx operational absorption
For full-year 2025, management maintained guidance:
- $108 to $110 million in revenue, unchanged despite portfolio shifts
Management highlighted several factors that frame the outlook:
- ExoDx is expected to offset the foregone germline contribution, supporting guidance confidence
- Full integration updates and 2026 guidance will be provided after observing several quarters of post-acquisition performance
Takeaways
MDX Health’s Q3 marks a critical inflection, with the ExoDx acquisition and liquid-based test growth reshaping its revenue and margin trajectory.
- Liquid-Based Growth: The 65% surge in liquid-based test volumes signals a structural shift in the revenue base and future growth drivers.
- Operational Discipline: Flat OpEx on 20% higher sales and expanding gross margins demonstrate scalable execution and integration capacity.
- Integration Watchpoint: Successful ExoDx integration and salesforce optimization will determine whether MDX Health can accelerate toward 30%+ growth in 2026 as management aspires.
Conclusion
MDX Health’s third quarter delivered a clear message: disciplined focus and strategic portfolio management are driving profitable growth, but the path to outsized returns now hinges on seamless ExoDx integration and the ability to sustain commercial momentum in a more streamlined, urology-centric business model.
Industry Read-Through
MDX Health’s experience offers a lens into broader precision diagnostics trends, where scale, operational discipline, and focused portfolios are increasingly favored over diversified, undifferentiated test menus. The rapid pivot away from germline and toward exosome-based diagnostics underscores the premium on proprietary, actionable tests in specialty markets like urology. Competitors should note the importance of salesforce optimization and integration discipline in realizing acquisition value, while payers and providers will closely watch margin trends as test mix evolves. Expect further consolidation and portfolio rationalization across diagnostics as companies seek efficiency and clinical relevance in a crowded landscape.