Office
(EU Headquarters)
CAP Business Center
Rue d’Abhooz 31
4040 Hertsal
Office and Laboratory
(US Headquarters)
15279 Alton Parkway
Suite 100
Irvine, CA 92618
Laboratory
7000 Preston Road
Suite. 1500
Plano, TX, 75024
Laboratory
NovioTech Campus
Transistorweg 5
6534 AT Nijmegen
About
Mdxhealth is a commercial-stage precision diagnostics company that provides actionable molecular diagnostic information
to personalize the diagnosis and treatment of prostate cancer and other urologic diseases. The Company’s tests are based on
proprietary genetic, epigenetic and other complex molecular technologies.
Mdxhealth provides highly accurate and clinically actionable urologic solutions to inform patient diagnosis and treatment
while improving healthcare economics for payers and providers.
The Company’s US headquarters and laboratory operations are in Irvine, California.
The European headquarters are located in Herstal, Belgium, with laboratory operations in Nijmegen, The Netherlands.
MDxHealth is listed on the NASDAQ and Euronext Brussels stock exchange under the ticker symbol MDXH.
Visit mdxhealth.com and follow us on social media at: twitter.com/mdxhealth, facebook.com/mdxhealth and
linkedin.com/company/mdxhealth.
For more information:
info@mdxhealth.com
Belgium United States The Netherlands
Providing accurate and
clinically actionable
urologic solutions to
inform patient diagnosis
and treatment
Annual Report 2022
Annual Report 2022 / 4
Part I: Strategy & Business Review Part I: Message from the CEO
Message from the CEO ........................................................................................................................................
4
Part I: Business Review ..................................................................................................................................... 5
Key figures ....................................................................................................................................................... 6
Share facts ...................................................................................................................................................... 7
2021 Business review ....................................................................................................................................... 8
Part II: Corporate Governance ......................................................................................................................... 23
Board of directors .......................................................................................................................................... 26
Executive management .................................................................................................................................. 34
Internal Control and risk management ............................................................................................................. 36
Shareholder information ................................................................................................................................. 40
Statutory auditor ............................................................................................................................................ 60
Remuneration report ...................................................................................................................................... 61
Part III: Principle Risks & Uncertainties ........................................................................................................... 73
Part IV: Financial Statements ........................................................................................................................... 99
Consolidated financial statements................................................................................................................... 99
Auditor’s opinion .......................................................................................................................................... 167
Condensed non-consolidated financial statements ........................................................................................ 167
Dear Shareholders,
2022 was a transformative year for mdxhealth. We came into
the year with one product, our Confirm mdx test, generating
virtually all of the company’s revenue. We exit 2022 with
an expanded menu of 4 tests, all generating or poised
to generate revenue in 2023. This progress reflects our
commitment to be a growth company capable of sustainable
revenue and profit growth.
When I joined mdxhealth in 2019, it was clear that the
company had in place well developed and validated clinical
and scientific validation of our core technologies, as well as
a world class laboratory capable of scale and growth. What
was required though was a complete restructuring of our
operating discipline and commercial execution. Over the last
3 years, we have now in place a best-in-class sales team
and disciplined approach to operating expense management
and have set a clear path to profitability.
It is important to note the following developments for
mdxhealth in 2022, all of which underscore and reflect the
commitment we made to focus and execution, and which
together will serve as the basis for our success and growth
going forward:
• Our initial menu of Confirm mdx and Select mdx
continued to be adopted by our urology customer base in
2022, while recovering from the impact of the pandemic
over the past 3 years, with prostate cancer screenings
estimated to be down 50 percent. Our reported volumes
underscore our performance in driving sustainable
adoption in spite of this market dynamics which we see
reversing over the next number of quarters.
• At the beginning of the year, we launched our Resolve
mdx test for urinary tract infections (UTI) comprised
of a broad panel of organisms and drug resistance
and susceptibility markers. This unique solution allows
for rapid clinically actionable diagnostics for the
approximately two million cases that present with UTI
symptoms annually to our target urology customer base.
This initiative is driven by the unique and focused sales
channel we have into urology. Our strategy here was
validated, with almost $5 million in revenue for 2022.
• We completed a truly transformative acquisition of the
Oncotype Genomic Prostate Score (GPS) test (formerly
Oncotype DX GPS) from Exact Sciences. This acquisition
served to both expand and solidify our sales channel
expanding to 70 representatives in the field and over
50 direct reps, which we believe is a channel that
can continue to deliver on additional strategic growth
initiatives as we go forward. This acquisition also provides
mdxhealth with the most comprehensive menu in prostate
cancer with all of our prostate cancer tests included in
the National Comprehensive Cancer Network (NCCN)
Guidelines.
• We secured support for our growth initiatives from
our February 2023 equity offering which allowed for
strengthening of our balance sheet as well as expansion
of our investor base with high quality institutional investors
in the U.S.
• We expanded our laboratory capabilities with the
acquisition of our mdxhealth Plano Texas facility. This
strategic initiative expands our capabilities and supports
our UTI and additional potential growth opportunities.
We believe that each of these developments, and all of
them collectively, solidify our position as the clear leader in
prostate cancer precision diagnostics with a well established
and focused sales channel into urology in the U.S. In
addition, all of our efforts in 2022 position mdxhealth to
deliver sustainable revenue growth, linear growth in our
gross margin, disciplined and controlled operating expenses
and a clear path to profitability. Finally, as I emphasized last
year, the one aspect of our business that has not changed is
our people. They have all risen to the growth and excellence
challenge and are committed to delivering on our growth
promise and positive path forward.
I would like to close by thanking our shareholders and
employees for your continued support and restating
our unwavering commitment to operating discipline and
delivering value to all our stakeholders including patients,
customers, employees and shareholders.
Respectfully,
Belgium, 24 April, 2023
Michael K. McGarrity
Chief Executive Officer
Contents
Annual Report 2022 / 6
Thousands of $ (except per share amounts)
For the years ended December 31
2022 2021
Services 36,965 21,937
Licenses 25 250
Royalties and other revenues 64 52
Revenues 37,054 22,239
Cost of goods & services sold (17,835) (11,675)
Gross profit 19,219 10,564
Research and development expenses (7,557) (6,673)
Selling and marketing expenses (26,582) (17,744)
General and administrative expenses (23,539) (14,149)
Other operating income, net 559 1,161
Operating Loss (37,900) (26,841)
Financial expenses, net (6,144) (2,161)
Loss before income tax (44,044) (29,002)
Income tax 0 0
Loss for the year (44,044) (29,002)
Earnings per share attributable to parent (EPS)
Basic and Diluted, $ (0.28) (0.24)
47K
+45 %
G
rowth
compared
t
o FY 2021
$ 37.1M
2021: $22.2 M
$ 37.9M
$-
29.3M $ 15.5M
2021: $ 26.8 M M2021: $ -23.8
Patients
tested
total
revenue
Operating
Loss
Adjusted EBITDA Cash and
cash
equivalents
(1)
(1)
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization and one-time transaction expenses related to GPS acquisition
Part I: Business Review Part I: Business Review
Key Figures 2022
Business
Review
Part 1: Strategy & Business Review Part I: Strategy & Business Review
Annual Report 2022 / 8
Stock exchange NASDAQ: MDXH
Euronext (Brussels): MDXH
Total shares outstanding
162,880,936
52 week range € 0.60 - € 0.90
Market cap (as of Dec 31, 2022)
€ 97.4 million
Analyst coverage
Firm Analyst
William Blair Andrew Brackmann
BTIG Mark Massaro
Piper Sandler Jason Bednar
Oppenheimer François Brisebois
KBC Securities Thomas Vranken
Share Facts 2022 Business highlights 2022
2022 Business Review
2022 was a transformational year for mdxhealth as we executed the acquisition of the Genomic Prostate Score (GPS) test
(formerly Oncotype DX GPS) from Exact Sciences, thereby solidifying our leadership in the precision diagnostics urology
market and providing the most comprehensive menu of advanced molecular tests for urology in prostate cancer.
In addition, the introduction of our novel Urinary Tract Infection (UTI) testing services in 2021 began to bear fruit in 2022
with the contribution of approximately $5 million to our topline revenues. As part of our rebranding in 2022, our UTI test was
named Resolve mdx for Urinary Tract Infection.
Highlights for the year ended December 31, 2022
• Acquired Genomic Prostate Score (GPS) test (formerly Oncotype DX GPS) from Exact Sciences in August 2022,
solidifying leadership in the precision diagnostics urology market and providing the most comprehensive menu of
advanced molecular tests for urology in prostate cancer
• The November 2022 released NCCN for Prostate Cancer Guideline (Version 1.2023) expands the indication for use of the
GPS test to include high-risk patients with localized prostate cancer. This expanded criteria to address high-risk patients
provides additional validation for the clinical utility of GPS in making prostate cancer treatment decisions and enables
mdxhealth to more fully serve its targeted patient population
• 2022 full year revenues increased by 67% to $37.1 million versus $22.2 million for 2021; excluding GPS, 2022 revenue
increased 25% to $27.7 million versus 2021. 2022 revenues were comprised of $21.8 million from Confirm mdx,
$9.3 million from GPS, $4.9 million from Resolve mdx, with the remaining revenues from Select mdx and other.
MDxHealth Business Overview
We are a commercial-stage precision diagnostics company committed to providing non-invasive, clinically actionable and
cost-effective urologic solutions to improve patient care. Our novel genomic testing solutions combine advanced clinical
modeling with genomic data to provide each patient with a personalized risk profile, which provides more accurate and
actionable information than traditional clinical risk factors used by clinicians. Our Select mdx and Confirm mdx tests address
men at risk for undetected prostate cancer, providing physicians with a clear clinical pathway to accurately identify clinically
significant prostate cancer while reducing the use of invasive procedures that are prone to complications. Our Genomic
Prostate Score (GPS) test addresses men newly diagnosed with localized prostate cancer, providing physicians with a clear
clinical pathway to make the most informed treatment decision for their individual disease. Our team’s collective decades of
experience in precision diagnostics and our portfolio of novel biomarkers for diagnostic, prognostic and predictive molecular
assays supports our active pipeline of new testing solutions for urologic diseases.
Prostate cancer is presently the most common, and second deadliest, form of cancer in men. The broad adoption of
prostate-specific antigen (PSA) screening in the 1980s created a paradigm shift in men’s health, reducing the incidence
of metastatic prostate cancers by more than 50%. However, widespread PSA testing also significantly increased the pool
of symptomatic men, resulting in overdiagnosis, overtreatment, serious complications, and potential anxiety — triggering
a retreat from standardized PSA screening — culminating with the U.S. Preventative Services Task Force’s (“USPSTF’s”)
decision to recommend against all PSA testing and prostate cancer screening in 2012. Following recommendations from
clinicians and patient advocates together with building evidence of an uptick in metastatic prostate cancer incidence, the
USPSTF softened its position in 2017, upgrading PSA screening for middle aged men. However, the USPSTF’s reversal left
unresolved the clinical dilemma posed by the estimated pool of over ten million men living with an elevated PSA in the
United States. Approximately 25 million PSA tests are performed each year, and over 15% of these reveal heightened PSA
levels — leading to an estimated pool of over three million undiagnosed men informed each year of their heightened risk
for prostate cancer based on elevated PSA test results and/or negative biopsy results. Other than repeated invasive needle
biopsy procedures, these symptomatic men and their clinicians have limited tools to manage their cancer risk.
Our Select mdx and Confirm mdx testing solutions directly address this unmet clinical need. Since the commercial launch of
Confirm mdx in 2012 and Select mdx in 2016, we have performed over 200,000 tests ordered by more than 1,000 urologists
in the United States. Select mdx for Prostate Cancer (a urine test for men being considered for their first prostate biopsy)
and Confirm mdx for prostate cancer (an epigenetic test for men post-prostate biopsy), are designed to (i) improve the earlier
detection of clinically significant prostate cancer in at-risk men and (ii) reduce the unnecessary costs and patient anxiety
associated with the diagnosis and treatment of the disease. Both tests have been included in the National Comprehensive
Cancer Network (NCCN) Guidelines for the Early Prostate Cancer Detection. Both tests have also successfully completed
formal technical assessment review for Medicare reimbursement and have received a positive final local coverage
determination.
While our existing prostate cancer tests, Select mdx and Confirm mdx, improve the decision for biopsy in at-risk patients,
our recently acquired Genomic Prostate Score (GPS) test moves us further into the cancer management pathway, providing
solutions for patients newly diagnosed with localized prostate cancer to make the most informed treatment decision for their
individual disease. Our acquisition of the GPS (formerly Oncotype DX GPS) prostate cancer business in August 2022 from
Genomic Health, Inc., a subsidiary of Exact Sciences Corporation (“Exact Sciences”), has accelerated our plans to build on
our leadership in the urologic diagnostic space.
Currently, most newly diagnosed cases of prostate cancer remain indolent – slow growing and non-lethal. Patients diagnosed
with indolent prostate cancer may be appropriately managed with observation or Active Surveillance (AS), while those with
aggressive cancers may benefit from immediate treatment. Practice-management agencies worldwide have implemented
guidelines stressing the importance of discerning favorable from unfavorable disease features to guide personalized
management for patients diagnosed with low- and high-risk prostate cancer, including among others NCCN, the American
Urology Association (AUA)/American Society for Radiation Oncology (ASTRO)/Society of Urologic Oncology (SUO), the
American Society of Clinical Oncology (ASCO), the National Institute for Health and Care Excellence (NICE), and the
European Association of Urology (EAU). The use of Active Surveillance has increased in recent years, with approximately half
of patients newly diagnosed with localized prostate cancer choosing to avoid immediate intervention or similar treatment.
GPS is a tissue-based, multi-gene test that has been clinically validated to predict aggressive cancer at the time of diagnosis,
helping to identify those men who need immediate surgery or radiation therapy versus those who can confidently choose
Active Surveillance. Since its commercial launch in 2013, over 100,000 GPS tests have been performed, ordered by more
than 3,000 urologists in the United States. GPS is able to provide a more precise and accurate assessment of disease
progression, which helps more men avoid the lifelong complications associated with aggressive treatments. In 2015, the GPS
test successfully completed a formal technical assessment review for Medicare reimbursement and received a positive final
local coverage determination.
Building from the foundation of our complementary marketed products, we are committed to sustained growth, with our core
management principles defined by a commitment to focus, commercial execution and operating discipline throughout our
organization. While MDxHealth is domiciled and listed as a public company in Belgium, our primary commercial focus is the
United States, where over 95% of our tests are performed and revenues are generated. Our leadership change in 2019 and
coincident organizational and operational discipline implemented throughout the MDxHealth group of companies has further
focused our commitment to U.S.-sourced growth, with our entire executive management team and over 90% of staff based in
or reporting to our U.S. headquarters and laboratories.
We have established a systematic approach to commercializing our precision diagnostic solutions in our target markets in the
United States, focusing on active engagement, education and market development directed toward health care professionals
and their patients. Our commercial team is focused on prioritizing large and high-volume community urology centers, and on
building long-standing relationships with key physicians and practice groups who have strong connections to the population
of men who may be eligible for our solutions. Our ultimate goal is to support physicians using our tests through all aspects
of the patient’s journey, starting from initial diagnosis through to advanced prostate cancer management. We also seek to
build on our long-term partnerships with key opinion leaders (“KOLs”) and patient associations that are oriented towards
the needs of our patients and customers. Our sales and marketing organization is focused on building physician awareness
of the clinical and economic benefits provided by our tests through education of urologists and their clinical staff as well
as pathology and laboratory staff, targeted KOL development and training, and development of tools for our customers to
interact with patients and consumers (doctor-to-consumer education).
Our Product Portfolio
Our core commercial tests address a substantial unmet clinical need in the prostate cancer diagnostic and treatment
pathway. According to the American Cancer Society, prostate cancer is the most common, and second deadliest, form
of cancer in males in the United States. Prior to the emergence of precision diagnostic solutions, existing diagnostic tests
were critically flawed, with high false negatives and false positives, leading to costly and invasive diagnostic protocols and
attendant complications.
To screen at-risk men for prostate cancer, approximately 25 million PSA tests are performed each year, and over 15% of
those reveal heightened levels of PSA. An elevated PSA level can be caused by many different sources, the majority of which
are not cancer. Current clinical guidelines suggest that men with an elevated PSA should be considered for a prostate biopsy,
so that a pathologist can visually inspect the sampled tissue to identify any sign of malignancy. However, 60% of biopsies are
negative, not revealing any cancer, and as many as a third of these negative biopsies are false negatives, providing limited
comfort to patients and their physicians that cancer was not missed. The relatively modest sensitivity and specificity of these
current standard-of-care tests and procedures has led to increased patient anxiety, potentially unnecessary, invasive and
costly interventions, and increased complications and hospitalizations.
Our Select mdx test — which is a noninvasive urine test with 95% Negative Predictive Value (NPV) for clinically signficant
prostate cancer — can be used to help physicians determine whether a costly, painful and complication-prone needle-
core biopsy is advisable when a patient presents with an elevated PSA level or an abnormal digital rectal exam (DRE). For
those men who proceed to a biopsy procedure, our Confirm mdx test — which measures biomarker signals in the biopsied
tissue provides additional information to physicians and increases the accuracy of the biopsy, with a 96% NPV for clinically
signficant disease.
Upon an initial diagnosis of localized prostate cancer, our GPS test – which measures the expression of a panel of genes in
prostate cancer tissue to predict the aggressiveness of the disease – can help distinguish between aggressive and indolent
prostate cancer, which informs treatment decisions and helps to identify patients who may avoid unnecessary interventions.
To further supplement our prostate cancer menu, we have developed a novel, advanced urinary tract infection (UTI) test
that delivers patient-specific antimicrobial treatment options within 24-48 hours (standard urine cultures can take up to
5 to 7 days). Developed especially for patients with recurrent, persistent, and complicated UTIs, Resolve mdx combines
precise pathogen identification and resistance gene detection with a proprietary susceptibility methodology that identifies
personalized oral antibiotic options for fast resolution and improved patient outcomes.
Part 1: Strategy & Business Review Part I: Strategy & Business Review
Annual Report 2022 / 10
Part 1: Strategy & Business Review Part I: Strategy & Business Review
Annual Report 2022 / 12
• Robust and Reliable Technology. We possess a proprietary know-how and intellectual property (“IP”) portfolio
capable of advancing our precision diagnostics pathway as well as high quality laboratory operations, including our CAP
accredited, CLIA certified and New York State Department of Health (“NYSDOH”) approved molecular laboratory facilities.
We also have an extensive library of biomarkers which can be applied in additional urology and men’s health diagnostics.
• Proven Leadership with Industry Expertise. Our management team members have proven track records of execution
and value creation across medical devices, diagnostics and biotech. We believe we have built a culture of performance,
responsibility and accountability — from research and development, to sales and marketing, and operations and
management, we are committed to building value for all of our stakeholders, including patients, customers, employees and
shareholders.
Our Strategy
Our ultimate goal with our core testing solutions is to take an at-risk patient from prostate cancer screening all the way
through the diagnostic and therapeutic pathway of prostate cancer. As such, we are focused on continuing to drive adoption
of our Select mdx, Confirm mdx, and GPS tests and expand our product offerings. The key elements of our strategy include:
• Physician and Patient Education. One important component of our efforts to successfully penetrate the urology market
and promote clinical adoption of our Select mdx, Confirm mdx, GPS and Resolve mdx tests is to drive awareness of these
tests. We educate physicians and patients through a variety of channels including by supporting clinical studies for the
publication of peer reviewed journals and abstracts at key scientific conferences, forging relationships with the leading
medical and scientific opinion leaders in urology, developing strategic partnerships with leading pathology laboratories
with large urology client bases and via public relations and advertising campaigns.
• Expand Test Menu. We intend to build on our leadership in the prostate cancer diagnostic space by expanding our
existing menu of tests. We are currently developing a candidate test, Monitor mdx, for the prostate cancer diagnostic and
treatment pathway. Monitor mdx is intended to function as a non-invasive solution that risk stratifies patients for continued
Active Surveillance versus intervention, while also improving patient compliance with Active Surveillance protocols.
• Expand Reimbursement. An important component of our commercial strategy is to expand reimbursement for our tests.
Our Select mdx, Confirm mdx and GPS tests have been covered by a Medicare MoIDX LCD since 2023, 2014 and 2015,
respectively. Our managed care team continues to pursue adoption of positive coverage and reimbursement policies
and contracts by other payors. We believe the clinical utility and actionability of our tests, combined with our experience
and knowledge of the complex coverage and reimbursement landscape in the United States, will enable us to expand
coverage and reimbursement among the commercial payor market. We continue to build upon our successful strategy,
supported by governmental and commercial coverage policies, as a foundation to secure additional contracts from major
payors.
Our Competitive Strengths
We believe we have the following competitive strengths which underpin our commercial execution success and will position
us for sustainable growth:
• Targeted Menu Improving Prostate Cancer Diagnosis and Treatment. We offer a menu of tests that provide clinically
actionable results for men at-risk for, as well as men newly diagnosed with, prostate cancer. Collectively, Select mdx,
Confirm mdx and GPS provide urologists with a clear clinical pathway to accurately identify and appropriately treat
prostate cancer while minimizing the use of aggressive procedures and treatments, improving health outcomes and
significantly lowering costs to the healthcare system.
• Strong Commercial Focus and Presence. We aim to increase adoption of our commercial tests by leveraging our
direct sales force in the United States to continue to market and sell to our urology-focused network. We have significant
experience in building effective commercial teams consisting of sales reps, strategic account managers, and clinical
liaisons led by a management team with a track record of success. In addition, our payor and reimbursement, revenue
cycle management and client services groups provide expert support for our field sales team as well as our patients and
customer base. We believe we can leverage these groups to explore additional opportunities for growth based on this
commercial channel. Outside the United States we will continue to evaluate distribution partners to drive adoption in
markets where our menu is best suited.
• Commercial Channel Advantage. Building from the launch of our first commercial test in 2012, we have established
mdxhealth as an industry leader in precision diagnostics for prostate cancer detection and treatment. We intend to take
advantage of our established urology and pathology relationships to support menu expansion and additional growth
opportunities as appropriate and within our focus.
• Compelling Reimbursement Strategy. Adoption of our Confirm mdx, Select mdx and Genomic Prostate Score tests
has been supported by Medicare local coverage determinations (LCDs) issued via the Palmetto GBA-administered
MolDX Program, their inclusion in NCCN and other US and internationally recognized clinical-practice guidelines, as
well as consistent expansion of coverage by commercial payors. Our Resolve mdx UTI test is currently reimbursed by
Medicare and most private insurance payors, based on nationally recognized Current Procedural Terminology (CPT)
codes.
Part 1: Strategy & Business Review Part I: Strategy & Business Review
Annual Report 2022 / 14
Commercial Products
Select mdx for Prostate Cancer Urine Test
The current standard for prostate cancer screening is the PSA blood test. Unfortunately, the PSA is not specific to clinically
significant prostate cancer — it is more of an indicator of prostate health. There are many factors such as benign prostatic
hyperplasia (“BPH”), inflammation, prostatitis and a naturally occurring enlarged prostate that can cause an elevated PSA.
In men with an elevated PSA level between 3-10 ng/mL, only 25-40% of biopsies reveal cancer — and the majority of these
identified cancers are indolent. Also, following a prostate biopsy procedure, around 18% of men suffer complications (blood
in urine) and around 3% are hospitalized for infection (sepsis). Select mdx helps physicians determine if a patient is at higher
or lower risk for prostate cancer and which men can safely avoid biopsy.
Select mdx is a non-invasive urine test that measures the expression of two mRNA cancer-related biomarkers (HOXC6 and
DLX1) combined with an advanced clinical model incorporating traditional risk factors. The test provides a personalized risk
profile that helps the physician determine whether:
• The patient may benefit from a biopsy and early prostate cancer detection; or
• The patient can avoid a biopsy and return to routine screening.
Men identified by the test as having a high likelihood of clinically significant cancer can, upon biopsy, be diagnosed and
treated sooner, while men identified at very low risk may avoid biopsy.
The following chart depicts the functioning of the Select mdx test:
Guidelines Inclusion
Select mdx has been included in the NCCN Prostate Cancer Early Detection guidelines since 2020. NCCN is a non-
profit alliance of the 31 leading cancer centers in the United States. Select mdx has also been included in the European
Association of Urology (EAU) Prostate Cancer guidelines since 2018.
Clinical Validation Studies
The use of Select mdx as a predictive test to identify men at low risk for aggressive prostate cancer has been well validated
in both scientific and clinical studies.
Results from the clinical validation study for Select mdx confirmed its superior performance compared to other commonly
used biomarker tests and risk calculators. The test’s NPV of 95% in the validation study means that if the test identifies a
Market Opportunity
Among U.S. males, prostate cancer is the most diagnosed cancer and the second leading cause of cancer death. According
to the American Cancer Society, in 2021, over 260,000 men are expected to be diagnosed with prostate cancer in the United
States, with more than 34,000 dying from the disease.
There are currently significant challenges with diagnosing and treating prostate cancer in the United States. Approximately
25million PSA tests are performed each year, and over 15% of those reveal heightened levels of PSA. Current clinical
guidelines suggest that men with an elevated PSA should be considered for a prostate biopsy, However, approximately 60%
of biopsies are negative, not revealing any cancer, and as many as a third of these negative biopsies are false negatives,
providing limited comfort to patients and their physicians that cancer was not missed. For those men whose biopsies are
positive, the majority will harbor indolent cancer, but traditional methods are unable to accuratly identify which of these men
might safely avoid invasive and costly interventions. In addition, for patients diagnosed with localized prostate cancer who
are on Active Surveillance, management of their disease relies on the measurement of prostate-specific antigen (PSA) levels
and digital rectal examination (DRE), which can be unreliable and lead to overdiagnosis and overtreatment.
The relatively modest sensitivity, specificity and prognostic ability of current standard-of-care tests and procedures has led
to increased patient anxiety, potentially unnecessary, invasive and costly interventions, and increased complications and
hospitalizations. Our suite of commercial products addresses these issues, presenting a substantial market opportunity.
The Company has calculated approximate addressable market opportunities for our menu of tests, based on the estimated:
• 3 million men screened for prostate cancer annually
• 500,000 men who undergo prostate biopsies annually
• 268,000 men diagnosed prostate cancers annually
• 2 million UTI cases managed by urologists annually
Our menu addresses a $4.8B U.S. market opportunity
* Resolve mdx test in development.(all figures based on management estimates)
Part 1: Strategy & Business Review Part I: Strategy & Business Review
Annual Report 2022 / 16
Confirm mdx for Prostate Cancer Tissue Test
Approximately 30% of men with a cancer-negative prostate biopsy actually have cancer. Prostate cancer is difficult to
diagnose because it is both heterogenous and multi-focal. The standard of care for diagnosing prostate cancer is a
transrectal ultrasound guided biopsy. However, this procedure samples less than 1% of the entire gland, leaving men at risk
for undetected prostate cancer.
Confirm mdx is a well-validated epigenetic test that guides the detection of occult prostate cancer on a patient’s previously
biopsied negative tissue. The test can help urologists determine a man’s risk for harboring clinically significant prostate
cancer despite having a cancer-negative biopsy result, and it has a number of unique features/advantages.
For patients with an initial negative biopsy, few options are currently available to guide a urologist in determining whether or
when an additional biopsy procedure is warranted. Fear of occult (hidden) prostate cancer leads to additional procedures,
leading many men to receive multiple follow-up biopsy procedures to rule out the presence of cancer.
The Confirm mdx test addresses prostate biopsy sampling concerns, helping urologists to:
• “Rule-out” men from undergoing potentially unnecessary repeat biopsies and screening procedures, helping to reduce
complications, patient anxiety and excessive healthcare expenses associated with these procedures; and
• “Rule-in” high-risk men with a previous negative biopsy result who may be harboring undetected cancer (false negative
biopsy result) and therefore may benefit from a repeat biopsy and potentially treatment.
For men with a negative biopsy, independently published clinical studies have shown that the Confirm mdx test is the most
significant, independent predictor of prostate biopsy outcomes relative to other available clinical factors such as age, PSA
and DRE results. Incorporating Confirm mdx into clinical practice can reduce the number of unnecessary repeat biopsies,
yielding clinical and economic value for healthcare providers, patients and payors. Confirm mdx can aid urologists with
patient management decisions regarding the need for follow-up testing and procedures with the identification of low-risk
patients testing negative for DNA hypermethylation.
The use of Confirm mdx for prostate cancer detection using methylation-specific PCR (MSP) and cancer-associated
epigenetic biomarkers to improve upon histopathology has been well validated in both scientific and clinical studies.
DNA methylation, the most common and useful measure of epigenetic abnormality testing, is responsible for the silencing of
key tumor suppressor genes. DNA methylation biomarkers associated with prostate cancer have been extensively evaluated.
GSTP1 is a widely studied and reported epigenetic biomarker associated with prostate cancer diagnosis, encoding
the glutathione S-transferase Pi 1 (GSTP1) protein involved in detoxification, due to its high sensitivity and specificity.
Complementing GSTP1, methylation of the APC and RASSF1 genes is frequently found in prostate cancer, and these markers
have demonstrated a “field effect” aiding in the identification of biopsies with false-negative histopathological results.
The epigenetic field effect is a molecular mechanism whereby cells adjacent to cancer foci can contain DNA methylation
changes, which may be indistinguishable by histopathology, but detectable by MSP testing. The presence of epigenetic field
effects associated with prostate cancer has been widely published and is the basis of activity for the Confirm mdx assay to
aid in the detection of occult prostate cancer on previously biopsied, histopathologically negative tissue.
very low risk, the physician and patient can be 95% sure that a subsequent biopsy will not detect Gleason score ≥7 prostate
cancer, information that may provide a level of confidence needed to avoid a biopsy. The test has a very high predictive
accuracy (AUC 0.85) for high-grade prostate cancer, which is significantly better than the PCPT risk calculator version 2.
There are twelve published studies assessing the Select mdx test and which together demonstrate its analytical validity,
clinical validity, clinical utility and positive health economic outcomes. These studies, all of which have been published in
peer-reviewed publications, evaluated more than 4,500 patients in the aggregate.
The following is a summary that highlights key findings from some of these studies.
• Analytical validity. A study published in 2017 illustrated, in an independent laboratory, the performance characteristics
and robustness of the Select mdx mRNA assay, covering all aspects of analytical method validation including assay
sensitivity, specificity, linearity, precision, repeatability and reproducibility using pre-specified acceptance criteria.
• Clinical validity. In a study published in 2019, the Select mdx test demonstrated an NPV of 95%. Urine samples were
collected from 1,955 men from The Netherlands, France and Germany prior to an initial prostate biopsy. Select mdx
molecular biomarker results were combined with other risk factors in a clinical model optimized to detect International
Society of Urological Pathology Grade Group 2 or greater prostate cancer in men. Results in the validation cohort were
compared with the independent PCPT risk calculator version 2. The full validation cohort of 916 men including all prostate
specific antigen levels yielded an AUC of 0.85 with 93% sensitivity, 47% specificity and 95% negative predictive value. The
Prostate Cancer Prevention Trial Risk Calculator (“PCPTRC”) AUC was 0.76. In the 715-patient validation cohort, limited to
subjects with PSA less than 10 ng/ml, the AUC was 0.82 with 89% sensitivity, 53% specificity and 95% negative predictive
value. The PCPTRC AUC was 0.70.
• Clinical utility. In a 2019 study, Select mdx had a significant impact on initial prostate biopsy decision-making in a U.S.
community urology setting. Biopsy rates in Select mdx positive men were 5-fold higher than in Select mdx negatives.
• Health economic outcomes. A 2018 study demonstrated that routine use of the Select mdx test to guide biopsy decision
making improved health outcomes and significantly lowered costs in American men at risk for prostate cancer. Compared
to the current standard of care, Select mdx implementation would result in an average of 0.045 quality-adjusted life years
(“QALYs”) gained at a cost savings of $1,694 per patient. Assuming approximately 300,000 men are biopsied each year,
this translates to an incremental 14,000 QALYs gained at cost savings of $500,000 annually.
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Annual Report 2022 / 18
• Health economic outcomes. In a study published in 2013, a budget impact model developed to evaluate the effect of
the Confirm mdx assay on healthcare spending demonstrated significant potential healthcare savings associated with the
reduction of repeat biopsies and complications avoided. Under the study’s model, utilization of Confirm mdx would bring
approximately $500,000 in annual savings per 1 million covered patients.
Genomic Prostate Score (GPS) Tissue Test
Currently, most cases of detected prostate cancer remain indolent and men often die from other causes. Patients who
have indolent prostate cancer may be appropriately managed with observation or Active Surveillance (AS), while those
with aggressive cancers may benefit from immediate treatment . The use of AS has increased in recent years and it is now
estimated that up to 50% of clinically low-risk patients choose AS, while the remainder choose some type of immediate
treatment.
The tissue-based GPS test assesses 17 genes in total – 12 cancer-related genes representing 4 important biologic pathways
(androgen signaling, cellular organization, stromal response, proliferation) together with 5 references genes (to control
for RNA quantity and quality). The test uses reverse transcription polymerase chain reaction (RT-PCR) to measure gene
expression in very small amounts of prostate tumor tissue (requiring as little as 5 ng of RNA). Genetic expression of the 12
cancer-related genes, normalized by the 5 reference genes, is used in an algorithm to generate a GPS result that ranges from
0 to 100, with higher scores associated with more aggressive disease. The GPS test, in conjunction with clinical risk factors,
is predictive of a finding of adverse pathology (AP) upon a radical prostatectomy (RP) and clinical recurrence following RP,
and consequently provides clinicians and patients with information about the likely aggressiveness of their cancper to help
guide initial treatment decisions.
For patients with NCCN very low- to favorable intermediate- prostate cancer, the GPS test provides information on the
risk of AP to help physicians guide personalized treatment for patients at the initial decision point. For the unfavorable
intermediate- and high-risk groups, the GPS test helps inform decisions on the intensity of definitive treatment. The patient
results report gives the risk of a patient developing metastasis within 10 years, risk of PCD within 10 years, and risk of tumor
aggressiveness based on AP result. outlining the clinical characteristics of each NCCN risk group.
The following image depicts how the Confirm mdx test identifies false-negative biopsies:
Confirm mdx Field Effect
Guidelines Inclusion
Confirm mdx has been included in the NCCN Prostate Cancer Early Detection guidelines since 2016. Confirm mdx has also
been included in the EAU Prostate Cancer guidelines since 2018.
Confirm mdx Clinical Validation Studies
The use of Confirm mdx for prostate cancer detection to improve upon histopathology has been well validated in both
scientific and clinical studies.
There are more than 55 published studies on the genes and technology used in the Confirm mdx test. Among these, studies
demonstrating the analytical validity, clinical validity, clinical utility and positive health economic outcomes of the Confirm
MDx test evaluated more than 1,200 patients in the aggregate.
The following is a summary that highlights key findings from some of these studies.
• Analytical validity. A study published in 2012 illustrated the performance characteristics and robustness of the Confirm
mdx multiplex DNA methylation assay, covering the analytical method including assay sensitivity, specificity, linearity,
precision, repeatability and reproducibility using pre-specified acceptance criteria.
• Clinical validity. The clinical validity of the Confirm mdx test has been demonstrated in two large, blinded clinical
validation studies published in 2013 and 2014, yielding a NPV of ~90% for all prostate cancer, which is significantly higher
(p < 0.001) than that afforded by standard histopathology review, as well as a NPV of 96% for clinically significant prostate
cancer. Further, when compared to all pertinent risk factors for prostate cancer detection (patient’s age, serum PSA level,
digital rectal exam (DRE), histopathological findings on the previous cancer- negative biopsy and the epigenetic assay),
Confirm mdx was shown to be the most significant, independent predictor for prostate cancer in a repeat biopsy with an
odds ratio of 3.24 (and a p-value < 0.001). An additional clinical validity study published in 2017 demonstrated that the
Confirm mdx test improved the identification of African American men at risk for aggressive cancer missed by a prostate
biopsy, with accuracy equivalent to prior studies in predominantly Caucasian populations.
• Clinical utility. A 2014 study reported on the real-world use of the Confirm mdx assay, demonstrating that the test
impacts physician behavior. A very low rate of repeat biopsies (4.4%) was observed in the Confirm mdx negative men, as
compared to the expected 43% rate of repeat biopsy reported in a large population-based randomized trial sponsored by
the National Cancer Institute.
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Annual Report 2022 / 20
Resolve mdx for Urinary Tract Infection
Urinary tract infections (UTIs) affect around 10 million people who seek medical attention every year. It is estimated that
2-3 million of these cases lead to emergency department visits. UTIs can be complicated and recurrent, resulting in painful
symptoms such as abdominal and rectal pain, frequent urination, burning or pain during urination, and fatigue. Antibiotic
resistance is a significant issue, observed in up to one-third of UTI infections, causing about 2.8 million infections and 35,000
deaths annually, according to the CDC.
The traditional method of conducting a UTI test, urine culture, can take up to 3 to 5 days to produce results. Unfortunately,
relying solely on culture-based testing may produce equivocal results of "mixed flora" in up to 30% of cases, Often clinicians
will rely on empiric therapy to treat UTIs, which can lead to overuse/misuse of antibiotics. Through the use of Resolve mdx,
we help support antibiotic stewardship initiatives, as our test identifies personalized antibiotic options that would be expected
to be more effective against the patient’s infection.
To address this unmet clinical need, with Resolve mdx we developed an advanced urine test that utilizes Polymerase Chain
Reaction (PCR) technology to detect and quantify both infectious pathogens and resistance genes. Resolve mdx also
includes susceptibility testing to identify the antibiotics which may be best suited to resolve the urinary tract infection. This
approach provides prompt and accurate pathogen identification and personalized antibiotic recommendations. PCR-based
testing offers improved sensitivity and specificity in identifying pathogens, addressing the problem of "mixed flora" results
associated with traditional testing methods. This increased accuracy provides physicians with clinically actionable information
to guide their decision-making for patient care.
Our proprietary Antibiotic Susceptibility Testing method, called ASTX, determines how each pathogen responds to the 26
antibiotics tested. The unique aspect of ASTX is that it tests whole urine samples, ensuring accurate results and identifying
the most effective treatment options for patients.
The GPS test is intended for men with clinically localized prostate cancer who have undergone biopsy within 3 years and have
not yet started treatment. Patients with any NCCN risk category between very low- and high-risk are eligible for GPS testing.
Guidelines Inclusion
GPS has been included in the NCCN Prostate Cancer guidelines since 2019.
Clinical Validation Studies
The use of GPS as a predictive test to identify men at low risk for aggressive prostate cancer has been well validated in both
scientific and clinical studies.
The following is a summary that highlights key findings from clinicial studies regarding the GPS test.
• Clinical validity. In a prospective and retrospective study on 402 patients published in 2015, the GPS test demonstrated
its ability to discriminates prostate cancer aggressiveness in biopsy tissue despite tumor heterogeneity and multifocality.
Further, the test demonstrated its ability to improve prediction of adverse pathology.
• Clinical utility. Numerous clinical studies have shown the impact of GPS on treatment recommendations and have
demonstrated that generally, use of GPS increases the proportion of men for whom AS is recommended, when the
background AS rates are similar to the national average for these risk groups.
- In a prospective decision impact study by Badani et al. (2015) of 158 patients with NCCN very low-, low- and low
intermediate-risk disease, the GPS test resulted in a 26% change in recommended treatment modality or intensity and
patients who received GPS testing had a 24% relative increase in AS recommendations.
- In a chart review study by Dall’Era et al. (2015) of 211 patients with NCCN very low- or low risk-disease, biological risk
predicted by GPS differed from NCCN clinical risk alone in 62 men (39%). AS use increased by 24% in patients who
received the GPS test versus patients who did not receive the GPS test.
- In a study by Eure et al. (2017) of 297 patients, 23% of patients’ risk was restratified. In the NCCN low-risk group, the
change in the management plan between AS and immediate treatment was 28%; 51% of the men who were initially
recommended immediate treatment pre-GPS testing switched to AS post-GPS testing, while 14% of those initially
recommended AS switched to immediate treatment post-GPS testing. Among the men who elected AS, their one-year
AS persistence rates remained high at 89%.
- A fourth study by Lynch et al. (2017) demonstrated utility in a US Department of Veterans Affairs population, an equal-
access healthcare system with high baseline AS rates without testing. The study compared management patterns for
men with NCCN very low-, low-, and intermediate-risk PCa with and without molecular profiling. Overall, use of AS was
12% higher (absolute; relative increase 19%) in GPS-tested versus untested men, with the biggest increases observed
in low-risk patients (90% versus 72% for tested versus untested, respectively) and patients under the age of 60 (75%
versus 42% for tested versus untested, respectively).
• Health economic outcomes.
A 2016 publication in Reviews in Urology presented a comprehensive economic analysis
of the GPS test in low-risk prostate cancer patients. Results showed that use of the GPS test results in a net savings of
$2,286 USD per patient — including the cost of the test — by decreasing unnecessary immediate invasive treatments. The
study demonstrated that incorporation of the GPS test as part of the treatment decision algorithm for patients with NCCN
very low- and low-risk disease (64% of the study population) led to a 21% net increase in the use of AS. Of these, treatment
patterns and cost for 80 men tested with GPS were compared to 100 patients in the same practice without genomic
testing. Based on a real-world practice setting in the US Northeast with a contemporary patient population and using
current treatment cost averages, these results demonstrated that the use of the GPS test represented a reduction in cost of
unnecessary intermediate interventions (by more than 50%) over a 6-month period. Additional savings can also be expected
by removing the cost of management of associated side effects of treatment such as impotence and incontinence.
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Annual Report 2022 / 22
Our goal is to help pinpoint not only the offending organisms, regardless of how many are identified, but also the most likely
oral antibiotics capable of clearing the entire infection. We estimate the addressable market in the United States for UTI
testing at approximately 2 million cases annually, or $1 billion.
Resolve mdx Pathogens Tested, Resistance Genes and Antibiotics
Pipeline
We intend to build on our leadership in the urologic diagnostic space by expanding our menu of tests beyond Select mdx,
Confirm mdx, GPS and Resolve mdx. We are currently developing an additional product for the prostate cancer diagnostic
and treatment pathway. Active surveillance is a management approach for prostate cancer that involves closely monitoring
the cancer's progression through regular tests and imaging, without immediately initiating active treatment such as surgery
or radiation therapy. Since not all prostate cancers progress the same manner, there is a signficant unmet clinical need to
help physcians identify which patients may benefit from AS, distinguishing those at risk for disease progression.
Monitor mdx for Men being considered for a Surveillance Biopsy
Men on Active Surveillance are monitored using PSA, MRI and periodic biopsies to determine if their prostate cancer has
progressed and whether definitive treatment is necessary. We are actively analyzing urine and blood biomarker panels with
the goal of developing a non-invasive test for monitoring these patients. A testing solution that allows a physician to forego or
delay their patient’s surveillance biopsy would represent a significant business opportunity with little or no direct competition.
If our development efforts are successful, MDxHealth would have a full offering of biomarker-based prostate cancer tests
from early detection to treatment and management. Select mdx and Confirm mdx help determine which patients should
(orshould not) undergo a prostate biopsy, while our GPS test guides the decisoin to enter into Active Surveillance upon an
initial diagnosis of prostate cancer. In the AS setting, Monitor mdx would provide methods to identify and monitor patients
who could remain on Active Surveillance as a treatment option.
Annual Report 2022 / 24
This section summarizes the main rules and principles of
Mdxhealth’s Corporate Governance Charter. The complete
Corporate Governance Charter is available on the mdxhealth
website, at http://www.mdxhealth.com/shareholder-information
Introduction
This Corporate Governance Statement is included in the Company's report of the Board of Directors on the statutory
accounts for the financial year ended on 31 December 2022 in accordance with article 3:6, §2 of the Belgian Companies
and Associations Code of 23 March 2019 (as amended) (the "Belgian Companies and Associations Code").
On 14 April 2021, in accordance with the Belgian Royal Decree of 12 May 2019 designating the corporate governance
code to be complied with by listed companies, the Company designated the new 2020 Belgian Corporate Governance
Code (the "2020 Code") as reference code within the meaning of article 3:6, §2 of the Belgian Companies and
Associations Code. At the same occasion, the Company's corporate governance charter was adopted in accordance
with the recommendations set out in the 2020 Code, which replaces the previous 2009 Belgian Corporate Governance
Code.
For the financial year ended on 31 December 2022, the Company complied to a large extent with the provisions of the
2020 Code, except for the following deviations which the Company believed were justified in view of the Company’s
specific situation. Notably, in line with the “comply-or-explain” principle of said 2020 Code, mdxHealth does not fully
comply with the following provisions:
• Given the size of the Company, no internal audit function is in place. In line with provision 4.14 of the 2020 Code,
the need for an internal audit function will be reviewed annually.
• Following the modification of the Directors' remuneration on 30 July 2020, effective as from 1 July 2020, the
Non-Executive Directors that are not Independent Directors shall not be entitled to a remuneration in cash, but shall
each year be entitled to receive share options for a maximum of 10,000 shares of the Company. This is contrary to
provision 7.6 of the 2020 Code, which provides that no share options should be granted to Non-Executive Directors.
The Company believes that this provision of the 2020 Code is not appropriate and adapted to take into account the
realities of companies in the biotech and life sciences industry. Notably, the ability to remunerate Non-Executive
Directors with share options allows the Company to limit the portion of remuneration in cash that the Company
would otherwise need to pay to attract or retain renowned experts with the most relevant skills, knowledge and
expertise. The Company is of the opinion that granting Non-Independent Non-Executive Directors the opportunity to
be remunerated in part in share-based incentives rather than all in cash enables the Non-Independent Non-Executive
Directors to link their effective remuneration to the performance of the Company and to strengthen the alignment of
their interests with the interests of the Company’s shareholders. The Company believes that this is in the interest of
the Company and its stakeholders. Furthermore, the Company believes that this is customary for Directors active in
companies in the life sciences industry.
• In accordance with provision 7.6 of the 2020 Code, Non-Executive Directors should receive a part of their
remuneration in the form of shares of the Company. The Company has however no distributable reserves and therefore
does not meet the legal requirements to proceed to a share buy-back. As a result, the Company does not own any
treasury shares and is unable to grant existing shares to Non-Executive Directors as part of their remuneration.
Part II: Corporate Governance Part II: Corporate Governance
Corporate
Governance
Part II: Corporate Governance Part II: Corporate Governance
Annual Report 2022 / 26
Board of Directors
The Company has opted for a "one tier" governance structure whereby the Board of Directors is the ultimate decision-
making body, with the overall responsibility for the management and control of the Company, and is authorized to carry out
all actions that are considered necessary or useful to achieve the Company's object. The Board of Directors has all powers
except for those reserved to the general shareholders' meeting by law or the Company's articles of association. The Board of
Directors acts as a collegiate body.
The Board of Directors’ role is to pursue sustainable value creation by the Company, by determining the Company’s strategy,
putting in place effective, responsible and ethical leadership, and monitoring the Company’s performance. TheBoard
of Directors acts as a collegiate body. Pursuant to the Belgian Companies and Associations Code and the articles of
association of the Company, the Board of Directors should be composed of at least three Directors. In accordance with the
2020 Code, the Board of Directors should have a composition appropriate to the company’s purpose, its operations, phase
of development, structure of ownership and other specifics. The Board of Directors shall be composed of at least three
Independent Directors and a majority of the Board shall consist of Non-Executive Directors. Currently, the Board of Directors
comprises 8 Directors, of which 5 are Independent Non-Executive Directors and 2 are Non-Independent Non-Executive
Directors. The Directors of the Company are appointed by the general shareholders’ meeting.
The Company’s Board of Directors strives to maintain a well-balanced general diversity at the Board of Directors. Currently,
there are 3 female Directors among a total of 8 Board members (representing a ratio of 37.50% female Directors against
62.50% male Directors). The Belgian Companies and Associations Code requires that at least one third of the members of
the Board of Directors should be of the opposite gender. In order to calculate the required number of directors of a different
gender, fractions must be rounded to the nearest whole number, which means that the Company's Board in its current
composition must include at least 3 female Directors. The Company has met the one-third gender diversity requirement since
1 January 2018 and continues to comply with such requirement at the date of this Annual Report.
The Board of Directors is a collegial body, and deliberates and makes decisions as such. Excluding the Board committee
meetings, the Board of Directors met 16 times throughout 2022. All Directors were present or represented at these
16meetings, except that Hilde Windels BV, represented by its permanent representative, Ms. Hilde Windels, did not
participate to 2 meetings during this period and Regine Slagmulder BV, represented by its permanent representative,
Dr.Regine Slagmulder, did not participate to 1 meeting during this period. In addition, in accordance with article 7:95 of the
Belgian Companies and Associations Code and article 23 of the Company's articles of association, the Board of Directors
passed resolutions with unanimous and written consent of all Directors at 1 occasion.
The Board of Directors meets at least once, and usually several times per year, without any executive board members or
other executives in attendance, including when executive remuneration matters are considered and approved.
Chair
The chair of the Board of Directors is responsible for the leadership of the Board of Directors. The chair takes the necessary
measures to develop a climate of trust within the Board of Directors, contributing to open discussion, constructive dissent
and support for the decisions of the Board of Directors. The chair promotes effective interaction between the Board and the
executive management. The chair establishes a close relationship with the CEO, providing support and advice, while fully
respecting the executive responsibilities of the CEO.
The Board of Directors appoints a chair amongst the Non-Executive Directors. Currently, Ahok BV, with Mr. Koen Hoffman as
permanent representative, is the chair of the Board of Directors. Mr. Hoffman assumed the role of Board chair in 2022.
The interests of the Non-Independent Non-Executive Directors are currently considered to be sufficiently oriented to the
creation of long-term value for the Company. Finally, the Board will propose to remunerate the Independent Directors in
cash, but leaving it at the own initiative of the Independent Directors whether or not they wish to use such funds (in whole
or in part) to acquire existing shares of the Company.
• In accordance with provision 7.9 of the 2020 Code, the Board should set a minimum threshold of shares to be held by the
executive management. A part of the remuneration of the executive management consists of options to subscribe for the
Company’s shares, which should allow the executive management over time to acquire shares of the Company, in line with
the objectives of the option plans.
• Pursuant to article 7:91 of the Belgian Companies and Associations Code and provision 7.11 of the 2020 Code, shares
should not vest and share options should not be exercisable within three years as of their granting. It has been expressly
provided by the Company's general shareholders' meeting that the Board of Directors is explicitly authorized to deviate
from the provisions of 7:91 of the Belgian Companies and Associations Code, for all persons who fall within the scope
of these provisions (whether directly or pursuant to articles 7:108 and 7:121 of the Belgian Companies and Associations
Code, or otherwise). The Company is of the opinion that this allows for more flexibility when structuring share-based
awards. For example, it is customary for option plans to provide for a vesting in several instalments over a well-defined
period of time, instead of vesting after three years only. This seems to be more in line with prevailing practice.
• In accordance with provision 7.12 of the 2020 Code, the Board of Directors should include provisions that would enable
the Company to recover variable remuneration paid, or withhold the payment of variable remuneration, and specify the
circumstances in which it would be appropriate to do so, insofar as enforceable by law. The Company believes that this
provision of the 2020 Code is not appropriate and adapted to take into account the realities of companies in the biotech
and life sciences industry, including, notably, for management teams located in the United States. The share option plans
set up by the Company do however contain bad leaver provisions that can result in the share options, whether vested or
not, automatically and immediately becoming null and void. Notwithstanding the company's position that share options
are not to be qualified as variable remuneration, the Board of Directors is of the opinion that such bad leaver provisions
sufficiently protect the Company's interests and that it is therefore currently no necessary to provide for additional
contractual provisions that give the company a contractual right to reclaim any (variable) remuneration from the members
of the executive management. For that reason, there are no contractual provisions in place between the Company and
the members of the executive management that give the Company a contractual right to reclaim from said executives any
variable remuneration that would be awarded.
The performance and functioning of the Board of Directors, its committees, and the executive management team are
summarized below.
On 8 November 2021, following the Company's initial public offering in the United States of 3,750,000 American Depositary
Shares (each, an "ADS", and each ADS representing 10 ordinary shares of the Company with no nominal value per
share) and the listing of the ADSs on the Nasdaq Capital Market, the Board of Directors approved a revised version of
the Company's corporate governance charter to reflect the fact that, under United States securities law, the Company is
currently eligible for treatment as a “foreign private issuer” and "emerging growth company". As a foreign private issuer
and emerging growth company, the Company may take advantage of specified reduced disclosure and other requirements
that are otherwise applicable generally to U.S. public companies. For further details on the qualification of the Company
as “foreign private issuer” and "emerging growth company", reference is made to section 1.9 of the Company's corporate
governance charter.
The articles of association and the corporate governance charter are available on the Company's website
(https://mdxhealth.com/) and can be obtained free of charge at the Company's registered office.
The 2020 Code can be accessed on the following website: www.corporategovernancecommittee.be/
Part II: Corporate Governance Part II: Corporate Governance
Annual Report 2022 / 28
Composition of the Board of Directors
The table below describes the composition of the Board of Directors as of the date of this Annual Report.
Name Age on
24 Apr 2023
Position Term Start Term End
(1) (2)
Professional
Address
Ahok BV,
represented by
Mr. Koen Hoffman
53 Chair, Independent
Non-Executive
Director
2021 2024 CAP Business Center,
Rue d’Abhooz 31,
B-4040 Herstal, Belgium
Dr. Eric Bednarski 50 Non-Executive
Director
2020 2023 CAP Business Center,
Rue d’Abhooz 31,
B-4040 Herstal, Belgium
Mr. Michael K. McGarrity 60 Executive
Director
2019 2023 CAP Business Center,
Rue d’Abhooz 31,
B-4040 Herstal, Belgium
Regine Slagmulder BV,
represented by
Dr. Regine Slagmulder
55 Independent
Non-Executive
Director
2020 2023 CAP Business Center,
Rue d’Abhooz 31,
B-4040 Herstal, Belgium
Mr. Donnie M. Hardison Jr. 71 Independent
Non-Executive
Director
2021 2023 CAP Business Center,
Rue d’Abhooz 31,
B-4040 Herstal, Belgium
Valiance Advisors LLP,
represented by
Mr. Jan Pensaert
50 Non-Executive
Director
2021 2024 CAP Business Center,
Rue d’Abhooz 31,
B-4040 Herstal, Belgium
Qaly-Co BV,
represented by
Dr.Lieve Verplancke
62 Independent
Non-Executive
Director
2021 2024 CAP Business Center,
Rue d’Abhooz 31,
B-4040 Herstal, Belgium
Hilde Windels BV,
represented by
Ms. Hilde Windels
56 Independent
Non-Executive
Director
2020 2023 CAP Business Center,
Rue d’Abhooz 31,
B-4040 Herstal, Belgium
Notes:
(1)
The term of the mandates of each Director will expire immediately after the ordinary general shareholders’ meeting held on
the last Thursday (or the Wednesday immediately preceding, if the last Thursday is a recognized holiday) of the month of May in
the calendar year indicated.
(2)
In 2022, Mr. Rudi Mariën, as permanent representative of RR-Invest S.à.r.l., was Non-Executive Director (until his resignation
effective as of 26 May 2022).
Independent Directors
The Company has currently five Independent (Non-Executive) Directors.
A Director in a listed company is considered to be independent if he or she does not have a relationship with that company
or with a major shareholder of the Company that compromises his or her independence. If the Director is a legal entity, his or
her independence must be assessed on the basis of both the legal entity and his or her permanent representative. A Director
will be presumed to qualify as an Independent Director if he or she meets at least the criteria set out in article 7:87 of the
Belgian Companies and Associations Code and Clause 3.5 of the 2020 Code, which can be summarized as follows:
1. Not being an executive, or exercising a function as a person entrusted with the daily management of the company or an
affiliated company or person, and not have been in such a position for the previous three years before their appointment.
Alternatively, no longer enjoying share options of the company related to this position.
2. Not having served for a total term of more than twelve years as a Non-Executive Board member.
3. Not being an employee of the senior management (as defined in article 19,2° of the law of 20 September 1948 regarding
the organization of the business industry) of the company or an affiliated company or person, and not have been in such
a position for the previous three years before their appointment. Alternatively, no longer enjoying share options of the
company related to this position.
4. Not receiving, or having received during their mandate or for a period of three years prior to their appointment, any
significant remuneration or any other significant advantage of a patrimonial nature from the company or an affiliated
company or person, apart from any fee they receive or have received as a Non-Executive Board member.
5. Not holding shares, either directly or indirectly, either alone or in concert, representing globally one tenth or more of the
company’s capital or one tenth or more of the voting rights in the company at the moment of appointment.
6. Not having been nominated, in any circumstances, by a shareholder fulfilling the conditions covered under point 5.
7. Not having, nor having had in the past year before their appointment, a significant business relationship with the
company or an affiliated company or person, either directly or as partner, shareholder, Board member, member of
the senior management (as defined in article 19,2° of the law of 20 September 1948 regarding the organization of the
business industry) of a company or person who maintains such a relationship.
8. Not being or having been within the last three years before their appointment, a partner or member of the audit team of
the company or person who is, or has been within the last three years before their appointment, the external auditor of
the company or an affiliated company or person.
9.
Not being an executive of another company in which an executive of the company is a Non-Executive Board member, and not
have other significant links with executive Board members of the company through involvement in other companies or bodies.
10. Not having, in the company or an affiliated company or person, a spouse, legal partner or close family member to the
second degree, exercising a function as Board member or executive or person entrusted with the daily management
or employee of the senior management (as defined in article 19,2° of the law of 20 September 1948 regarding the
organization of the business industry), or falling in one of the other cases referred to in 1 to 9 above, and as far as point 2
is concerned, up to three years after the date on which the relevant relative has terminated their last term.
If the Board of Directors submits the nomination of an Independent Director who does not meet the abovementioned criteria
to the general meeting, it shall explain the reasons why it assumes that the candidate is in fact independent.
The Company is of the view that the Independent Directors comply with each of the criteria of the Belgian Companies and
Associations Code and the 2020 Code.
An Independent Director who ceases to satisfy the requirements of independence must immediately inform the chair of the
Board of Directors thereof.
Part II: Corporate Governance
Annual Report 2022 / 30
Part II: Corporate Governance
Mr. Koen Hoffman obtained a Master in Applied Economics and an MBA at Vlerick Business
School. Between 1992 and July 2016, he was active at KBC Group in which he started his
career in the corporate finance department and later became the CEO of KBC Securities as
from October 2012. Since August 2016, he is the CEO of Value Square asset management.
Mr Koen Hoffman serves also as board member at Fagron (Chair), Greenyard (chair), Mithra
Pharmaceuticals and SnowWorld.
Dr. Eric Bednarski currently serves as a Partner of MVM Partners LLP. Before joining MVM in
2008, he was a Partner at Advent Healthcare Ventures and a Principal at Advent International
Corporation. Prior to Advent, he was a Director in the Corporate Finance Group of Silicon Valley
Bank. Dr. Bednarski has a B.S. degree in Neural Science from Brown University and a Ph.D. in
Biological Sciences from the University of California, Irvine.
Mr. Michael K. McGarrity has more than 25 years of experience in the healthcare industry
with a unique combination of device, diagnostics and biotechnology experience. Michael was
most recently the CEO of Sterilis Medical. Prior to Sterilis Michael was the CEO of Nanosphere
(NASDAQ: NSPH), a nanotechnology-based molecular diagnostics company, where he
engineered an operational and strategic turnaround that resulted in its successful sale to Luminex
(NASDAQ: LMNX) in 2016. Prior to Nanosphere, McGarrity spent 13 years at Stryker Corporation
(NYSE: SYK).
Mr. Donnie M. Hardison Jr.
currently is the sole proprietor of DMH Consulting, a management
consulting firm that he founded and previously operated from April 2016 to January 2017. He was
most recently the President and Chief Executive Officer, and served on the board of directors, of
Biotheranostics, Inc., a molecular diagnostic company focused on oncology, from February 2017
until it was acquired by Hologic, Inc. in February 2021. From April 2010 to March 2016, Mr. Hardison
was the President and Chief Executive Officer of Good Start Genetics, a molecular genetic testing
and information company. For more than 20 years prior to that, Mr. Hardison held various executive
and senior management positions at companies including Laboratory Corporation of America
(LabCorp) a clinical laboratory company, Exact Sciences Corporation, a molecular diagnostics
company, OnTarget, Inc., a sales and marketing consulting company, Quest Diagnostics Inc., a
clinical laboratory company, SmithKline Beecham Corporation, a pharmaceutical company, and
others. He served on the board of directors of Exact Sciences Corporation (Nasdaq: EXAS) from May
2000, through its initial public offering in February 2001, until August 2007. Mr. Hardison received his
Bachelor of Arts degree, in political science, from the University of North Carolina, Chapel Hill.
Mr. Jan Pensaert is the Founding Managing Partner of Valiance. He brings over 20 years of
experience in growth investing. He leads the Investment Committee for the Valiance Funds and
is responsible for all aspects of the Funds’ investment processes. Jan currently serves on the
Board of several Valiance entities funds and portfolio companies including MDxHealth, JenaValve,
NeoSync and 4Tech. Prior to founding Valiance, Jan was CEO of La Fayette, where during his
tenure the La Fayette Funds increased in AUM from USD 750 million to USD 5.5 billion. Before
that, he was responsible for the Permal Group’s European-based investment management and
research activities, and prior to that he worked at Lazard in Corporate Finance M&A. Jan holds a
BA in Business Economics from Gent University in Belgium, and a Masters in Banking & Finance
from the University of Aix-Marseille, France.
Dr. Lieve Verplancke MD, a Belgian national, began her career in 1984 with The Beecham
Group (now part of GlaxoSmithKline), and has since held key management positions with Merck
& Co., as well as Bristol-Myers Squibb, where she served as Managing Director, leading their
Belgian/GDL subsidiary, until 2012. Ms. Verplancke also serves as a Board Member for Brussels-
based Europe Hospitals; the Imelda Hospital in Bonheiden; and the Euronext fund, Quest for
Growth and Materialise. She is also the Founder and Managing Director of Qaly@Beersel, an
elderly care center in Belgium. In addition to being a medical doctor (MD–KULeuven University),
Ms. Verplancke holds a postgraduate degree in Economics and an MBA from the University of
Antwerp. She has also completed courses at INSEAD, CEDEP, Columbia University and the Vlerick
Business School, and is a certified Executive Coach (PCC).
Ms. Hilde Windels is the CEO of immunodiagnostic company Antelope Dx BV and has 20
years of experience in the biotechnology sector with a track record of building and structuring
organizations, fundraising, M&A, public capital markets and corporate strategies. At Biocartis,
she was CEO ad interim and Deputy CEO from September 2015 until September 2017 and
CFO from 2011 until September 2015. Previously, Mrs. Windels worked as independent CFO for
several private biotech companies and from 1999 to 2008 she was CFO of Devgen. Currently,
Mrs. Windels serves as a board member at Erytech and Celyad. In the past, she also served on
the boards of Devgen, Biocartis, Ablynx, VIB and FlandersBio. Mrs. Windels holds a Masters in
Economics (commercial engineer) from the University of Leuven, Belgium.
Dr. Regine Slagmulder is a partner and full professor in management accounting & control at
Vlerick Business School and a visiting professor of accounting & control at INSEAD. Previously, she
worked as a strategy practice consultant at McKinsey & Company. She also previously worked as a
professor of management accounting at INSEAD and at the University of Tilburg. She serves as an
independent director and member of the audit committee on the board of the investment company
Quest for Growth (since 2011) and as an independent director and chair of the audit committee
of Ekopak (since 2021), both listed on Euronext. Dr. Slagmulder graduated in civil electrotechnical
engineering and industrial management from the University of Gent, after which she received a
management doctorate at Vlerick Business School. As part of her research activities, she was
a research fellow attached to INSEAD, Boston University (USA) and the P. Drucker Graduate
Management Center at Claremont University (USA). She is an INSEAD certified director (IDP-C).
Part II: Corporate Governance Part II: Corporate Governance
Annual Report 2022 / 32
Committees of the Board of Directors
The Board of Directors of MDxHealth has set up two permanent Board committees which are responsible for assisting the
Board of Directors and making recommendations in specific fields: the audit committee (in accordance with article 7:99 of
the Belgian Companies and Associations Code and provision 4.10 of the 2020 Code) and the nomination and remuneration
committee (in accordance with article 7:100 of the Belgian Companies and Associations Code and provision 4.17 and 4.19 of
the 2020 Code). The terms of reference of these Board committees are primarily set out in the corporate governance charter.
Audit committee
MDxHealth has had an audit committee in place since the Company’s inception. According to article 7:99 §3 of the Belgian
Companies and Associations Code, MDxHealth would meet the size criteria in order to operate without a separate audit
committee, but the Company has chosen to continue operating with a separate audit committee.
The audit committee of the Company consists of three Directors, all of whom are currently Independent Non-Executive
Directors. According to the Belgian Companies and Associations Code, all members of the audit committee must be
Non-Executive Directors, and at least one member must be independent within the meaning of article 7:87 of the Belgian
Companies and Associations Code. Furthermore, each member of the committee must meet the criteria for independence
set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended. The chairperson of the audit committee is to
be appointed by the members of the audit committee. The composition of the audit committee complies with the 2020 Code,
which requires that a majority of the members of the audit committee are independent.
The members of the audit committee must have a collective competence in the business activities of the Company as
well as in accounting, auditing and finance, and at least one member of the audit committee must have the necessary
competence in accounting and auditing. According to the Board of Directors, the members of the audit committee satisfy this
requirement, as evidenced by the different senior management and Director mandates that they have held in the past and
currently hold.
The role of the audit committee is to assist the Board of Directors in fulfilling its financial, legal and regulatory monitoring
responsibilities. The committee reports regularly to the Board of Directors on the exercise of its duties, identifying any
matters in respect of which it considers that action or improvement is needed, and making recommendations as to the steps
to be taken. The audit review and the reporting on that review cover the Company and its subsidiaries as a whole.
The specific tasks of the audit committee are outlined in the Company’s governance charter and include the following:
• to inform the Board of Directors of the result of the audit of the financial statements and the manner in which the audit has
contributed to the integrity of the financial reporting and the role that the audit committee has played in that process;
• to monitor the financial reporting process, and to make recommendations or proposals to ensure the integrity of the process;
• to monitor the effectiveness of the Company’s internal control and risk management systems, and the Company’s internal
audit process and its effectiveness;
• to monitor the audit of the annual statutory and consolidated financial statements, including the follow-up questions
and recommendations by the statutory auditor and, as the case may be, the auditor responsible for the audit of the
consolidated financial statements;
• to assess and monitor the independence of the statutory auditor, in particular with respect to the appropriateness of
the provision of additional services to the Company. More specifically, the audit committee analyses, together with the
statutory auditor, the threats for the statutory auditor's independence and the security measures taken to limit these
threats, when the total amount of fees exceeds the criteria specified in article 4 §3 of Regulation (EU) No 537/2014; and
• to make recommendations to the Board of Directors on the selection, appointment and remuneration of the Company’s
statutory auditor in accordance with article 16 § 2 of Regulation (EU) No 537/2014.
On the date of this report, the following Non-Executive Independent Directors are members of the audit committee: Regine
Slagmulder BV, represented by its permanent representative, Dr. Regine Slagmulder (chair); Qaly-Co BV, represented by its
permanent representative; Dr. Lieve Verplancke; and Hilde Windels BV, represented by its permanent representative, Ms.
Hilde Windels. As required by Belgian law, the chair of the audit committee is competent in accounting and auditing, as is
evidenced by her role as partner and full professor in management accounting and control at Vlerick Business School, as
well as serving as chair of the audit committee of multiple publicly listed companies.
The audit committee is a collegial body and deliberates and makes decisions as such. The audit committee met three times
in 2022. All members of the audit committee were present or represented at all meetings.
Nomination and remuneration committee
According to article 7:100 §4 of the Belgian Companies and Associations Code, MDxHealth would meet the size criteria in
order to operate without a separate remuneration committee, but the Company has chosen to continue operating with a
separate remuneration committee.
MDxHealth’s nomination and remuneration committee must be composed of at least three members and must be composed
exclusively of Non-Executive Directors who have the necessary competence in terms of remuneration policy. A majority of its
members must be Independent Directors. The nomination and remuneration committee is chaired by the chair of the Board
of Directors or another Non-Executive Director appointed by the committee. The chair of the Board of Directors should not
chair the committee when dealing with the designation of his successor. The CEO should participate in an advisory capacity
in the meetings of the committee when it deals with the remuneration of other executive managers.
The Board of Directors has determined that three members of its nomination and remuneration committee are independent
under, the applicable rules of the Belgian Companies and Association Code and the Belgian Corporate Governance Code.
Pursuant to the Belgian Companies and Associations Code, a remuneration committee must have the necessary expertise in
terms of remuneration policy. The Board of Directors has determined that the members of the nomination and remuneration
committee satisfy this requirement.
The role of the nomination and remuneration committee is to make recommendations to the Board of Directors with regard to
the appointment and remuneration of Directors and members of the executive management and, in particular, to:
• identify, recommend and nominate, for the approval of the Board of Directors, candidates to fill vacancies in the Board of
Directors and executive management positions as they arise. In this respect, the nomination and remuneration committee
must consider and advise on proposals made by relevant parties, including management and shareholders;
• advise the Board of Directors on any proposal for the appointment of the chief executive officer and on the chief executive
officer’s proposals for the appointment of other members of the executive management;
• draft appointment procedures for members of the Board of Directors and the chief executive officer;
• ensure that the appointment and re-election process is organized objectively and professionally;
• periodically assess the size and composition of the Board of Directors and make recommendations to the Board of
Directors with regard to any changes;
• consider issues related to succession planning;
• make proposals to the Board of Directors on the remuneration policy for Directors and members of the executive
management and the persons responsible for the day-to-day management of the Company, as well as, where appropriate,
on the resulting proposals to be submitted by the Board of Directors to the shareholders’ meeting;
Part II: Corporate Governance Part II: Corporate Governance
Annual Report 2022 / 34
Executive management
Executive management
The Board of Directors has appointed the executive management of the Company. The terms of reference of the executive
management have been determined by the Board of Directors in close consultation with the CEO.
Chief Executive Officer
The CEO is appointed, and can be removed, by the Board of Directors of the Company.
The CEO is charged by the Board of Directors with the day-to-day management of the Company and is therefore also
managing Director of the Company. In this function, the CEO has the following general responsibilities:
• the implementation of the decisions of the Board of Directors, within the strategy, planning, values and budgets approved
by the Board of Directors,
• overseeing the different central departments and business units of the Company, and reporting to the Board of Directors
on their activities,
• the development of proposals for the Board of Directors relating to strategy, planning, finances, operations, human
resources and budgets, and other matters that are to be dealt with at the level of the Board of Directors.
The specific tasks of the CEO are further described in the Company's corporate governance charter.
Other members of the executive management team
The other members of the executive management team, being the heads of the main activities and central departments (and
their divisions) of MDxHealth, are appointed and removed by the CEO in close consultation with the Board of Directors of the
Company. The main tasks of the executive management are to organize their department in accordance with the guidelines
determined by the CEO and to report to the CEO on the operation and activities of their department.
Composition of the executive management team
The composition of the Management Team is set out below and reflects the situation at the date of this Annual Report:
Name Age on 24 Apr 2023 Position Permanent Address
Mr. Michael K. McGarrity 60 Chief Executive Officer 15279 Alton Parkway Ste 100,
Irvine, CA 92618
USA
Mr. John Bellano 54 Chief Commercial Officer 15279 Alton Parkway Ste 100,
Irvine, CA 92618
USA
Mr. Ron Kalfus 48 Chief Financial Officer 15279 Alton Parkway Ste 100,
Irvine, CA 92618
USA
Mr. Joseph Sollee 58 Executive Vice President of
Corporate Development &
General Counsel
15279 Alton Parkway Ste 100,
Irvine, CA 92618
USA
• make proposals to the Board of Directors on the individual remuneration of Directors and members of the executive
management, and the persons responsible for the day-to-day management of the Company, including variable
remuneration and long-term incentives, whether or not share-related, in the form of share options or other financial
instruments, and arrangements on early termination, and where applicable, on the resulting proposals to be submitted by
the Board of Directors to the shareholders’ meeting;
• prepare a remuneration report to be included by the Board of Directors in the annual corporate governance statement;
• present and provide explanations in relation to the remuneration report at the ordinary general shareholders’ meeting; and
• report regularly to the Board of Directors on the exercise of its duties.
On the date of this report, the following Non-Executive Directors are members of the nomination and remuneration
committee: Mr. Donnie M. Hardison Jr. (chair); Dr. Eric Bednarski; Qaly-Co BV, represented by its permanent representative,
Dr. Lieve Verplancke; Ahok BV, represented by its permanent representative, Mr. Koen Hoffman; and Valiance Advisors LLP,
represented by its permanent representative, Mr. Jan Pensaert.
The nomination and remuneration committee is a collegial body and deliberates and makes decisions as such.
The nomination and remuneration committee met four times in 2022. All of the committee members with the were present or
represented at all of the committee meetings.
Process for evaluating the Board, its committees, and its individual
Directors
The Board should assess at least every three years its own performance and its interaction with the executive management,
as well as its size, composition, functioning and that of its committees. The evaluation should be carried out through a formal
process, whether or not externally facilitated, in accordance with a methodology approved by the Board.
At the end of each Board member’s term, the nomination and remuneration committee should evaluate this Board member’s
presence at the Board or committee meetings, their commitment and their constructive involvement in discussions and
decision-making in accordance with a pre-established and transparent procedure. The nomination and remuneration
committee should also assess whether the contribution of each Board member is adapted to changing circumstances.
The Board will act on the results of the performance evaluation. Where appropriate, this will involve proposing new Board
members for appointment, proposing not to re-appoint existing Board members or taking any measure deemed appropriate
for the effective operation of the Board.
Part II: Corporate Governance Part II: Corporate Governance
Annual Report 2022 / 36
Internal control and
risk management
The rules and procedures that apply when Board members and
executive managers deal in MDxHealth securities are defined in the
Company’s Dealing Code. The code prohibits Board members and
executive managers from dealing with MDxHealth securities during
periods prohibited by applicable laws and regulation or during specific
closed periods announced by the Company. The dealing code is
available in its entirety on the Company’s website (www.mdxhealth.com).
Introduction
The Company operates a risk management and control framework in accordance with the Belgian Companies and
Associations Code and the 2020 Code. MDxHealth is exposed to a wide variety of risks within the context of its business
operations that can result in its objectives being affected or not achieved. Controlling those risks is a core task of the Board of
Directors (including the audit committee), the executive management and all other employees with managerial responsibilities.
The risk management and control system has been set up to reach the following goals:
• achievement of the Company's objectives;
• achieving operational excellence;
• ensuring correct and timely financial reporting; and
• compliance with all applicable laws and regulations.
Control environment
Three lines of defense
The Company applies the 'three lines of defense model' to clarify roles, responsibilities and accountabilities, and to enhance
communication within the area of risk and control. Within this model, the lines of defense to respond to risks are:
• First line of defense: line management is responsible for assessing risks on a day-to-day basis and implementing controls
in response to these risks.
• Second line of defense: the oversight functions like Finance and Controlling and Quality and Regulatory oversee and
challenge risk management as executed by the first line of defense. The second line of defense functions provide guidance
and direction and develop a risk management framework.
• Third line of defense: independent assurance providers such as external accounting and external audit challenge the risk
management processes as executed by the first and second line of defense.
In 2022 the Management Team consisted of Mr. Michael McGarrity, as Chief Executive Officer, Mr. Ron Kalfus, as
Chief Financial Officer, Mr. John Bellano, as Chief Commercial Officer, and Mr. Joseph Sollee, as Executive Vice President of
Corporate Development and General Counsel.
Following are biographies of the executive management team members (also referred to as executives) as of the date of this
Annual Report:
Mr. Michael K. McGarrity, Chief Executive Officer
See “Board of Directors - Composition of the Board of Directors”.
Mr. John Bellano, Chief Commercial Officer
Mr. Bellano joined MDxHealth in June 2019. He has more than 25 years of experience in the healthcare Industry. Mr. Bellano
started his career in pharmaceuticals and transitioned to molecular diagnostics where he has spent the past 20 years of his
career, most recently as Chief Commercial Officer of Sterilis Solutions Prior to Sterilis Solutions he served as the commercial
leader for pharmacogenomic companies Assurex Health and AltheaDx. While at Assurex Health (Myriad Genetics) revenue
grew from USD 700 thousand to a run rate of USD 100 Million during his 5-year span with the organization.
Mr. Ron Kalfus, Chief Financial Officer
Mr. Kalfus joined MDxHealth in July 2019. He has over 20 years of leadership experience in both public and private
companies within diagnostics/biotech and other sectors, and brings extensive knowledge in financial operations and
management. Mr. Kalfus joined MDxHealth from Rosetta Genomics, where he helped lead efforts to reposition the company
for commercial success with its oncology diagnostic products, and raised over USD 60 million in capital to fund these efforts.
Prior to Rosetta, Mr. Kalfus served as the CFO and Treasurer of MabCure, a Belgium-based publicly-traded biotechnology
startup in the field of early cancer detection using antibodies.
Mr. Joseph Sollee, Executive Vice President, General Counsel & Chief Compliance Officer
Mr. Sollee has provided legal counsel to MDxHealth since its inception in 2003, and in April 2008 joined our management
team. Prior to joining the Company, Mr. Sollee served as Special Counsel with the law firm of Kennedy Covington (now K&L
Gates), where he led the Life Sciences Practice Group. Mr. Sollee has more than 20 years of experience in the life sciences
industry, and has held senior legal and management positions at Triangle Pharmaceuticals and TherapyEdge. In addition,
he has practiced as a corporate attorney in the Washington D.C. legal firm Swidler & Berlin and in investment banking
at Smith Barney in New York. Mr. Sollee received a Juris Doctorate in Law (JD) and a Master’s degree in International &
Comparative Law (LLM) from Duke University, a BA degree from Harvard University, and has been certified into the legal bars
of New York, Washington D.C. and North Carolina.
Part II: Corporate Governance Part II: Corporate Governance
Annual Report 2022 / 38
In addition, the legal department of MDxHealth, under supervision of the CEO and together with the management team, has
set up internal procedures to ensure that acts performed within or by the Company are in compliance with the existing laws
and external regulations. The management is also responsible to comply with internal regulations and the Board of Directors
is ensuring that the management is respecting the general policies and the corporate plans.
The Board of Directors has established a Code of Business Conduct and Ethics to aid MDxHealth’s Directors, officers and
employees in making ethical and legal decisions when conducting Company business and performing their day-to-day duties.
The Code of Business Conduct and Ethics is available in its entirety on the Company’s website (www.mdxhealth.com).
Inaddition, the Board has appointed a Chief Compliance Officer to oversee ongoing compliance with the Code of Business
Conduct and Ethics and existing laws and external regulations, and to report regularly to the Board of Directors and the Audit
Committee on compliance matters.
Risk management and internal control with regard to the process of
financial reporting
The accurate and consistent application of accounting rules throughout the Company is assured by means of set of control
procedures, including:
• The audit committee reviews all financial information before it is released
• The Board of Directors reviews internal monthly financial information
• The financial auditors not only audit the year-end financial statements, but at the request of the Company they also
perform a limited review of the Interim half-year financial statements
• The Company managers and finance department personnel explain all material variances in historical figures and between
the budget and actual figures
• The Board of Directors, the Company managers and finance department personnel perform reviews and controls of the
key financial figures at each reporting period, some of which are described below
• At the Board of Directors level, there is a periodic review and approval of the following main topics:
- Overall strategy and strategic options;
- Multi-year business plan and company goals;
- Ensuing year budget and targets;
- Comparison of actual results and budgeted figures;
- Hiring, motivation, and retention of key talent;
- Remuneration and benefits;
- Financial statements; and
- Internal controls.
Management of the Company is organized on the basis of plans, departments, projects, and corresponding budgets and
targets. Progress on the core projects, budgets, and plans are reviewed on a periodic basis. The management has clearly
aligned responsibilities as described in the job descriptions which are prepared for all employees of the Company.
A set of measures has been taken to assure the quality of the financial and management information, amongst others:
• The appointment of qualified personnel in key positions with all entities of the Company;
• The definition of a set of standard procedures for key activities such as steps for the approval, purchasing and payment of
services and goods;
• The request for the external auditors to pay special attention to areas with specific company and industry risk;
• The request for specialized consultants to assist in designing and/or reviewing key procedures, systems, or reports;
• The audit committee or individual Directors periodically review and are consulted on key matters and procedures and
when needed external specialist assistance is sought.
Policies, procedures and processes
The Company fosters an environment in which its business objectives and strategy are pursued in a controlled manner.
This environment is created through the implementation of different Company-wide policies, procedures and processes such
as the Company's values, the Quality Management System and the Delegation of Authorities rule set.
The employees are regularly informed and trained on these subjects in order to develop sufficient risk management and
control at all levels and in all areas of the organization.
Risk management
Sound risk management starts with identifying and assessing the risks associated with the Company's business and
external factors. Once the relevant risks are identified, the Company strives to prudently manage and minimize such risks,
acknowledging that certain calculated risks are necessary to ensure that the Company achieves its objectives and continues
to create value for its stakeholders. All employees of the Company are accountable for the timely identification and qualitative
assessment of the risks within their area of responsibility.
Control activities
Control measures are in place to minimize the effect of risks on the Company's ability to achieve its objectives. These control
activities are embedded in the Company's key processes and systems to assure that the risk responses and the Company's
overall objectives are carried out as designed. Control activities are conducted throughout the organization, at all levels and
within all departments.
Information and communication
The Company recognizes the importance of timely, complete and accurate communication and information both top down as
well as bottom-up. The Company therefore put several measures in place to assure amongst others:
• security of confidential information;
• clear communication about roles and responsibilities; and
• timely communication to all stakeholders about external and internal changes impacting their areas of responsibility.
Monitoring of control mechanisms
Monitoring helps to ensure that internal control systems operate effectively. The quality of the Company's risk management
and control framework is assessed by the following functions:
• Quality and Regulatory: All employees of the Company are instructed on the rules and policies of the Company via a
booklet of work rules, the terms of their employment arrangements, standard operating procedures defined by task/
area, and by numerous documents (such as the Code of Business Conduct and Ethics and the Dealing Code) that are
distributed and explained to the personnel.
• External Audit: In the Company's review of the annual accounts, the statutory auditor focuses on the design and
effectiveness of internal controls and systems relevant for the preparation of the financial statements. The outcome of the
audits, including work on internal controls, is reported to management and the audit committee.
• Audit Committee: The Board of Directors and the audit committee have the ultimate responsibility with respect to internal
control and risk management.
Part II: Corporate Governance Part II: Corporate Governance
Annual Report 2022 / 40
Shareholder information
Principal shareholders
The Company has an international shareholder base with both large and smaller specialised shareholders focused on the
healthcare and life sciences sectors, and a number of more local retail investors. Based on the number of shares on the date
of this report, transparency notifications received by the Company until that date, and statements of acquisition of beneficial
ownership filed with the SEC under U.S. securities law until that date, the shareholder base of the Company is as set out in
the table below. It is possible that the information below in relation to a shareholder is not or no longer up-to-date.
All notifications and declarations are available on the Company's website (https://mdxhealth.com/).
Date of
notification
On a non-diluted basis
% of the voting rights
attached to shares
(1)
On a fully diluted basis
% of the voting rights
attached to shares
(2)
MVM Partners LLP
(3)
28 February 2023 17.31% 9.40%
Bleichroeder LP
(4)
3 February 2023 14.75% 8.01%
Valiance Asset Management Limited
(5)
12 April 2023 7.74% 4.22%
Biovest NV
(6)
17 March 2023 4.41% 2.39%
Notes:
(1)
The percentage of voting rights is calculated on the basis of the number of outstanding shares at the date of the notification. On the
date of this report, the share capital of the Company amounts to EUR 163,471,629.58. It is divided into 270,380,936 shares of no
nominal value, each representing the same fraction of the share capital.
(2)
The percentage of voting rights is calculated on the basis of a total of 497,890,952 shares, consisting of 270,380,936 shares outstanding
on the date of this report and the issuance 227,510,016 additional shares, assuming that (i) 512,000 new shares were issued upon the
exercise of 512,000 share options, issued under the form of subscription rights on 23 June 2014 (of which 68,500 share options have
not yet been granted), (ii) 1,936,155 new shares were issued upon the exercise of 1,936,155 share options, issued under the form of
subscription rights on 19 June 2017, (iii) 2,848,687 new shares were issued upon the exercise of 2,848,687 share options, issued under
the form of subscription rights on 21 June 2019 (of which 26,500 share options have not yet been granted), (iv) 3,538,750 new shares
were issued upon the exercise of 3,538,750 share options, issued under the form of subscription rights on 27 May 2021 (of which 5,000
share options have not yet been granted), (v) 3,685,000 new shares were issued upon the exercise of 3,685,000 share options, issued
under the form of subscription rights on 25 May 2022 (of which 1,232,500 share options have not yet been granted), (vi) 204,881,266
new shares were issued to the benefit of Exact Sciences (as defined below) by settlement through a contribution in kind of receivables
due by the Company to Exact Sciences up to the Earn-Out Consideration (i.e., USD 70,000,000.00), assuming an issue price per new
share equal to EUR 0.309 (i.e., the closing price on 14 April 2023) , (vii) 9,366,982 new shares were issued to the benefit of Innovatus
(as defined below) upon exercise of the Innovatus Conversion Right (as defined below), assuming that the full amount of USD
70,000,000.00 is drawn by the Company under the loan and security agreement with Innovatus before 2 August 2025 and the applicable
exchange rate is EUR 1.00 for USD 1.1057 (as published by the ECB on 14 April 2023), and (viii) 741,176 new shares were issued to the
benefit of Kreos Capital (as defined below) upon the contribution in kind of the Kreos Convertible Loan Payable (as defined below).
(3)
The Company was notified that the number of shares with respect to which MVM Partners, LLC can exercise voting rights passively
crossed below the threshold of 20% of the outstanding shares and voting rights of the Company on 7 February 2023. Notably, it follows
from the notification by MVM Partners, LLC, who notified alone, that an aggregate of 45,504,584 shares of the Company, representing
17.31% of the 262,880,936 outstanding shares and voting rights of the Company at the time of the notification, is held through the
following entities: MVM V LP (which owns 1,877,945 ADSs and 25,805,845 shares of the Company) and MVM GP (No. 5) LP (which owns
38,721 ADSs and 532,079 shares of the Company). The notification also stated that MVM Partners, LLC is not a controlled entity, acts
as fund manager of the aforementioned two entities, and can exercise the voting rights attached to the securities at its own discretion,
without specific instruction. Furthermore, it is stated that the fund management of MVM V LP and MVM GP (No.5) LP was previously
done by MVM Partners LLP, but, on July 1, 2022, MVM Partners LLC replaced MVM Partners, LLP as fund manager of MVM V LP and
The Board periodically reviews and provides instructions to the management team on how to manage credit risks,
interest risks, exchange risks, and liquidity risks. As an example, the Board has given instructions on what type of financial
instruments the Company can place its cash and on which it is not allowed to do so. The management also seeks external
specialized advice on managing such risks.
1
For the purpose of the full-dilution scenario, the maximum 5% shareholding cap (as described below) is not taken into account in the simulation.
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Annual Report 2022 / 42
Share capital and shares
On the date of this report, the share capital of the Company amounts to EUR 163,471,629.58 and is fully paid-up. It is
represented by 270,380,936 ordinary shares, each representing a fractional value of (rounded) EUR 0.6046 and representing
one 270,380,936th of the share capital. The Company's shares do not have a nominal value.
In addition to the outstanding shares, on March 31, 2023, the Company has a number of outstanding options that are
exercisable into ordinary shares, consisting of:
• 512,000 outstanding share options issued under the form of subscription rights on 23 June 2014 ("2014 Share Options")
(of which 68,500 share options have not yet been granted);
• 1,936,155 outstanding share options issued under the form of subscription rights on 19 June 2017 ("2017 Share Options");
• 2,848,687 outstanding share options issued under the form of subscription rights on 21 June 2019 ("2019 Share Options")
(of which 26,500 share options have not yet been granted);
• 3,538,750 outstanding share options issued under the form of subscription rights on 27 May 2021 ("2021 Share Options")
(of which 5,000 share options have not yet been granted); and
• 3,685,000 outstanding share options issued under the form of subscription rights on 25 May 2022 ("2022 Share Options")
(of which 1,232,500 share options have not yet been granted).
On 23 September 2019, the Company entered into loan agreements with Kreos Capital VI (UK) Limited ("Kreos Capital")
with respect to a loan facility of up to EUR 9,000,000, which was fully drawn on 1 November 2019. The Company and Kreos
Capital agreed that a drawdown fee equal to 7% of the amounts drawn down under the loan agreements (being EUR 630,000
in aggregate) would remain outstanding as a payable (without accruing interest), and would be convertible into ordinary
shares by means of a contribution in kind to the share capital of the Company at a price of EUR 0.85 per share (the "Kreos
Convertible Loan Payable"). As part of the loan and security agreement entered into with Innovatus Life Sciences Lending
Fund I, LP ("Innovatus"), the Company’s loan facility with Kreos Capital was repaid in cash, except that the Kreos Convertible
Loan Payable was not repaid, but remains outstanding in accordance with its terms. Should the full amount of the Kreos
Convertible Loan Payable be converted into new shares of the Company, by means of a contribution in kind, 741,176 new
shares would have to be issued by the Company to the benefit of Kreos Capital.
On 2 August 2022, the Company entered into a USD 70 million loan and security agreement with Innovatus, which also
replaced the Company’s EUR 9 million debt facility with Kreos Capital. At closing, an amount of USD 35 million was drawn,
with an additional USD 35 million remaining available as a USD 20 million term B loan and a USD 15 million term C loan that
can be drawn in 2024 and 2025 respectively, subject to certain conditions. The loans are secured by assets of MDxHealth
including intellectual property rights. Remaining proceeds of the loans will be used for working capital purposes and to fund
general business requirements. The loans accrue interest at a floating per annum rate equal to the sum of (a) the greater of
(i) the prime rate published in The Wall Street Journal in the “Money Rates” section or (ii) 4.00%, plus (b) 4.25%, and require
interest-only payments for the initial four years. At the election of the Company, a portion of the interest may be payable in-
kind by adding an amount equal to 2.25% of the outstanding principal amount to the then outstanding principal balance on
a monthly basis until 2 August 2025. The loans mature on 2 August 2027. Under the loan and security agreement, Innovatus
has the right to convert (through contribution in kind of the relevant underlying receivables due by the Company), prior to
2August 2025, up to 15% of the outstanding principal amount of the loans into ADSs of the Company at a 45% premium to
the relevant volume-weighted average price before entering into the loan and security agreement, yielding at a conversion
price per ADS equal to USD 11.21 (i.e., USD 1.121 by shares on the basis of the ratio of 1 ADS per 10 shares), prior to 2
August 2025 (the "Innovatus Conversion Right"). Amounts converted into ADSs of the Company will be reduced from the
principal amount outstanding of the loan. The Innovatus debt facility has been accounted for as a hybrid financial instrument
which includes a host financial liability as well as an embedded derivative financial instrument being an equity conversion call
option at a fixed rate of up to 15% of the aggregate outstanding principal amount through 2 August 2025.
MVM GP (No.5) LP.MVM Partners LLC provides investment advisory services to MVM V LP and MVM GP (No.5) LP, which directly hold the
shares reflected as being beneficially owned by such entities, and in such capacity MVM Partners LLC has voting and dispositive power
over such shares. Investment decisions for MVM V LP and MVM GP (No.5) LP are made by an investment committee at MVM Partners
LLC which consists of two individuals. No single individual member of the investment committee, or any other individual, has the power to
unilaterally make investment decisions for MVM Partners LLC or the entities or to direct the voting or disposition of the shares.
(4)
The Company was notified that the number of shares with respect to which Bleichroeder LP can exercise voting rights crossed below
the threshold of 15% of the outstanding shares and voting rights of the Company on 3 February 2023. Notably, it follows from the
notification that an aggregate of 38,783,335 shares of the Company, representing 14.75% of the 262,880,936 outstanding shares and
voting rights of the Company at the time of the notification, is held through the following entities: 21 April Fund LP (8,024,518 shares),
21 April Fund LTD (20,342,162 shares), Hill Family Alternative Investments LLC (10,000,000 shares), and White Clover SA (416,670
shares) (the “Funds“). The notification also stated that the voting rights attached to the shares are exercised on behalf of the Funds by
the investment adviser Bleichroeder LP, a Delaware limited partnership, at its discretion, in the absence of specific instructions, that
Bleichroeder Holdings LLC, a Delaware limited liability company, is the general partner of Bleichroeder LP, that, as the general partner,
Bleichroeder Holdings LLC holds control over voting rights of Bleichroeder LP, and that Bleichroeder Holdings LLC is not a controlled
entity. The Company has been informed that voting and investment power over the shares held by the Bleichroeder entities is exercised
jointly by three or more natural persons and voting and disposition decisions require the approval of a majority of such persons.
Accordingly, no single natural person has voting or dispositive power over such shares.
(5)
Valiance Asset Management Limited ("Valiance Management"), TopMDx Ltd. ("TopMDx"), Valiance Life Sciences Growth Investments SICAV-
SIF ("LSGI Fund") and Valiance Life Sciences Growth Investments GP S.à r.l. ("LSGI GP") (collectively, the "Valiance Entities") jointly filed with
the SEC a statement on Schedule 13D/A according to which the aggregate number of shares beneficially owned by the Valiance Entities
represents 7.74% of the outstanding shares and voting rights of the Company at the time of statement on Schedule 13D/A. Notably, it follows
from the statement on Schedule 13D/A that an aggregate of 20,931,094 ordinary shares are beneficially owned by Valiance Management,
which consist of (i) 8,834,387 ordinary shares, and 350,491 ADSs (representing 3,504,910 ordinary shares) held by TopMDx, an exempted
closed-ended fund registered in British Virgin Islands of which Valiance Asset Management is the investment manager, and (ii) 8,591,797
ordinary shares held by LSGI Fund, a Luxembourg investment fund of which LSGI GP serves as investment manager. The statement on
Schedule 13D/A also specifies that (i) Jan Pensaert, the Founding Managing Partner of Valiance Asset Management, which is affiliated with
the Valiance Entities, serves as a member of the Company's board of directors and, in such capacity, may have influence over the corporate
activities of the the Company; and (ii) Valiance Management serves as the investment manager of LSGI GP, which is the investment manager
of LSGI Fund; however, no agreement exists between Valiance Management and LSGI GP for the purposes of acquiring, holding, voting,
or disposing of the equity securities of the Company and, accordingly, the Valiance Entities disclaim the existence of, or membership in, a
“group” for purposes of the statement on Schedule 13D/A. The shareholding on a fully diluted basis takes into account the exercise of 80,000
share options for new shares of the Company, held by Valiance Advisors LLP, a Director of the Company and a related person to Valiance
Asset Management Limited, TopMDx Limited and Valiance Life Sciences Growth Investments SICAV-SIF.
(6)
Biovest NV and RMM, S.A. (collectively, the "Biovest Entities") jointly filed with the SEC a statement on Schedule 13G according to which
the aggregate number of shares beneficially owned by the Biovest Entities represents 4.41% of the outstanding shares and voting rights
of the Company at the time of statement on Schedule 13G. Notably, it follows from the statement on Schedule 13G that 11,923,587
ordinary shares are held by Biovest NV, which consist of 11,090,257 ordinary shares and 83,333 ADSs. The statement on Schedule 13G
also specifies that (i) RMM, S.A. is the sole owner of Biovest NV and pursuant to an understanding with Biovest NV, decisions relating
to the voting and dispositive power of the shares are shared between Biovest NV and the board of directors of RMM, S.A., and (ii)
voting and investment power over the shares managed by the board of directors is exercised jointly by more than three natural persons
and voting and disposition decisions require the approval of a majority of such persons. Accordingly, no single natural person has a
controlling decision and no individual director of RMM, S.A. should be deemed to be a beneficial owner of the shares.
No other shareholders, acting alone or in concert with other shareholders, notified the Company of a participation or
an agreement to act in concert in relation to 3% or more of the current total existing voting rights attached to the voting
securities of the Company.
Each shareholder of the Company is entitled to one vote per share.
Part II: Corporate Governance Part II: Corporate Governance
Annual Report 2022 / 44
History of share capital
At the end of 2022, the issued capital of MDxHealth amounted to EUR 123,539,165.19 represented by 162,880,936 common
shares without nominal value.
The table below provides an overview of the history of the Company’s share capital since its incorporation in 2003 through
31 December 2022. The overview should be read together with the notes set out below the table.
Date
Transaction
Number of shares
issued
Issue price per
share (EUR)
Issue price per share
post stock-split (EUR)
Capital increase (EUR)
Share capital after
transaction (EUR)
Share Issuance Premium
after transaction (EUR)
Aggregate # of shares
after capital increase
Incorporation
Jan. 10, 2003 Incorporation 202,975 0.30 0.06 61,500.00 61,500.00 0 202,975
Phase I Financing Round December 20, 2002 (Preferred A Shares)
Feb. 7, 2003
Capital increase
in cash
197,025 20.00 4.00 3,940,500.00 4,002,000.00 0 400,000
Jun. 30, 2003
Capital increase
in cash
33,333 20.00 4.00 666,660.00 4,668,660.00 0 433,333
Sep. 30, 2003
Capital increase
in cash
218,139 22.31 4.46 4,866,681.09 9,535,341.09 0 651,472
Jun. 20, 2004
Capital increase
in cash
195,504 23.87 4.77 4,666,680.48 14,202,021.57 0 846,976
Phase II Financing Round October 19, 2005 (Preferred B Shares)
Oct. 28, 2005
Capital increase
in cash
375,000 24.00
(7)
4.80
(7)
9,000,000.00 23,202,021.57 0 1,221,976
Mar. 31, 2006
Capital increase
in cash
193,548 31.00 6.20 5,999,988.00 29,202,009.57 0 1,415,524
Stock Split
May 23, 2006 Stock split 5/1 / / / / / 0 7,077,620
Initial Public Offering and Exercise of Over-Allotment Warrants
Jun. 30, 2006
Capital increase
in cash
2,933,334 7.50 7.50 22,000,005.00 51,202,014.57 0 10,010,954
Jun. 30, 2006 Capital decrease / / / -10,217,809.00 40,984,205.57 0 10,010,954
Jun. 30, 2006 Capital increase
through exercise
of warrants
440,000 7.50 7.50 1,817,200.00 42,801,405.57 1,482,800.00 10,450,954
Exercise of Warrants
Apr. 18, 2007 Capital increase
through exercise
of warrants
182,560 4.70 4.70 747,666.16 43,549,071.73 1,593,731.31 10,633,514
Private Placement
Oct. 19, 2007
Capital increase
in cash
1,063,351 10.00 10.00 4,354,954.02 47,904,025.75 7,872,287.29 11,696,865
Should the Innovatus Conversion Right be exercised, assuming that the full amount of USD 70,000,000.00 is drawn by the
Company under the loan and security agreement with Innovatus before 2 August 2025 and the applicable exchange rate is
EUR 1.00 for USD 1.1057 (as published by the ECB on 14 April 2023), 9,366,982 new shares would have to be issued by the
Company to the benefit of Innovatus.
On 2 August 2022, the Company entered into an agreement with Genomic Health, Inc. (a subsidiary of Exact Sciences
Corporation referred to herein as ("Exact Sciences"), to acquire the GPS test from Exact Sciences. MDxHealth acquired GPS
in order to expand its menu of tests targeted into urology and prostate cancer and in order to position the Company as one
of the leaders in the urology and prostate cancer space with one of the most comprehensive menus of precision diagnostics.
Under the terms of the agreement, the Company acquired the GPS prostate cancer business of Exact Sciences for an
aggregate purchase price of up to USD 100 million, of which an amount of USD 25 million was paid in cash and an amount
of USD 5 million was settled through the delivery of 691,171 ADSs of the Company, at a price per ADS of USD 7.23. Following
the closing, which took place on 2 August 2022, an additional aggregate earn-out amount of up to USD 70,000,000.00
is to be paid by the Company to Exact Sciences upon achievement of certain revenue milestones related to fiscal years
2023 through 2025, with the maximum earn-out payable in relation to 2023 and 2024 not to exceed USD 30,000,000.00
and USD 40,000,000.00, respectively (the "Exact Sciences Earn-Out Consideration"). At the option of the Company,
amounts reflecting the Exact Sciences Earn-Out Consideration can be settled in cash or through the issuance of additional
shares of the Company by contribution in kind of the relevant receivables due by the Company (at an issue price per share
valued in function of a volume weighted average trading price of the Company's Shares at the end of the relevant earn-out
period), to be delivered in the form of ADSs to Exact Sciences, provided that the aggregate number of shares representing
the ADSs held by Exact Sciences shall not exceed more than 5% of the outstanding Shares of the Company. Should the
Exact Sciences Earn-Out Consideration be converted into new shares of the Company, by means of a contribution in kind of
receivables due by the Company to Exact Sciences up to the Earn-Out Consideration (i.e., USD 70,000,000.00), assuming an
issue price per new share equal to EUR 0.309 (i.e., the closing price on 14 April 2023), 204,881,266 new shares would have
to be issued by the Company to the benefit of Exact Sciences.
Part II: Corporate Governance Part II: Corporate Governance
Annual Report 2022 / 46
Exercise of Warrants
Nov. 10,2016 Capital increase
through exercise
of warrants
49,000 1.69 1.69 39,087.30 39,761,328.75 83,410,887.35 49,845,595
Exercise of Warrants
May 5, 2017 Capital increase
through exercise
of warrants
103,813 1.94 1.94 82,811.63 39,844,140.38 83,529,614.08 49,949,408
Private Placement
Mar. 26, 2018
Capital increase
in cash
9,989,881 3.60 3.60 7,968,928.07 47,813,068.45 111,524,257.61 59,939,289
Private Placement
Oct. 1, 2019
Capital increase
in cash
10,589,236 0.85 0.85 8,447,033.56 56,260,102.01 112,078,074.65 70,528,525
Private Placement
May 15, 2020
Capital increase
in cash
20,162,924 0.63 0.63 12,738,632.94 68,998,734.95 112,078,074.65 90,691,449
Private Placement
Jan. 26, 2021
Capital increase
in cash
27,777,777 0.90 0.90 21,133,332.74 90,132,067.69 115,944,741.21 118,469,226
Initial Public Offering Nasdaq
Nov. 8, 2021 Capital increase 37,500,000 1.04 1.04 28,530,000.00 118,662,067.69 126,480,632.34 155,969,226
Business Combination
Aug. 11,2022 Capital increase
through issuance
of shares
6,911,710 0.71 0.71 4,877,097.50 123,539,165.19 126,480,632.34 162,880,936
Per statutory accounts 123,539,165.19 126,480,632.34 162,880,936
Per IFRS consolidated accounts 110,975,364.56 126,480,632.34 162,880,936
(1)
represented by 3,750,000 American Depositary Shares
(2)
represented by 691,171 American Depositary Shares
Authorized capital
Description of the authorized capital
By virtue of the resolution of the extraordinary general shareholders' meeting of the Company held on 27 May 2021, as
published by excerpt in the Annexes to the Belgian Official Gazette of 1 June 2021 under number 21333389, the Board of
Directors of the Company has been granted certain powers to increase the Company's share capital in the framework of
the authorized capital. The powers under the authorized capital have been set out in Article 6 of the Company's articles of
association.
In the framework of this authorization granted by the extraordinary general shareholders' meeting, the Board of Directors is
authorized to increase the share capital of the Company on one or several occasions by a maximum aggregate amount of
EUR 90,132,067.69 (excluding issue premium, as the case may be), for a period of five years as from 1 June 2021.
The Board of Directors may increase the share capital by contributions in cash or in kind, by capitalization of reserves,
whether available or unavailable for distribution, and capitalization of issue premiums, with or without the issuance of new
shares, with or without voting rights, that will have the rights as will be determined by the Board of Directors. The Board of
Exercise of Warrants
Oct. 25, 2007 Capital increase
through exercise
of warrants
50,837 4.73 4.73 208,202.93 48,112,228.68 7,904,487.77 11,747,702
Exercise of Warrants
Apr. 24, 2008 Capital increase
through exercise
of warrants
61,120 4.59 4.59 250,316.96 48,362,545.64 7,934,871.81 11,808,822
Nov.5 , 2008 Capital increase
through exercise
of warrants
19,375 4.73 4.73 79,350.31 48,441,895.95 7,947,140.25 11,828,197
Private Placement
Dec. 18, 2008
Capital increase
in cash
1,332,877 6.29 6.29 5,458,797.75 53,900,693.70 10,872,138.83 13,161,074
Exercise of Warrants
Apr. 17, 2009 Capital increase
through exercise
of warrants
24,540 4.49 4.49 100,503.57 54,001,197.27 10,881,808.74 13,185,614
Reduction of Share Capital
Jun. 21, 2010
Share Capital
reduction
/ / / / 10,517,661.90 10,881,808.74 13,185,614
Private Placement
Apr. 8, 2011
Capital increase
in cash
5,436,713 1.50 1.50 4,336,865.96 14,854,527.86 14,700,012.24 18,622,327
Private Placement
Jul. 4, 2012
Capital increase
in cash
6,891,113 1,45 1,45 5,497,040.84 20,351,568.70 19,202,971.61 25,513,440
Private Placement
Jun. 25, 2013
Capital increase
in cash
8,737,863 2,05 2,05 6,970,193.32 27,321,762.02 30,232,776.07 34,251,303
Private Placement
Nov. 7, 2014
Capital increase
in cash
3,425,000 3,60 3,60 2,732,122.50 30,053,884.52 39,830,653.57 37,676,303
Exercise of Warrants
Apr. 30, 2015 Capital increase
through exercise
of warrants
172,187 2.01 2.01 137,353.57 30,191,238.09 40,039,189.53 37,848,490
Private Placement
Jun. 26, 2015
Capital increase
in cash
6,150,000 4.50 4.50 4,905,855.00 35,097,093.09 62,808,334.53 43,998,490
Private Placement
Sep. 18, 2015
Capital increase
in cash
1,086,956 4.14 4.14 867,064.80 35,964,157.89 66,441,267.57 45,085,446
Exercise of Warrants
Nov. 27, 2015 Capital increase
through exercise
of warrants
68,187 1.70 1.70 54,392.77 36,018,550.66 66,502,756.44 45,153,633
Exercise of Warrants
May 9, 2016 Capital increase
through exercise
of warrants
116,000 1.70 1.70 92,533.20 36,111,083.86 66,607,143.24 45,269,633
Private Placement
Nov. 7, 2016
Capital increase
in cash
4,526,962 4.50 4.50 3,611,157.59 39,722,241.45 83,367,314.65 49,796,595
(1)
(2)
Part II: Corporate Governance Part II: Corporate Governance
Annual Report 2022 / 48
be determined). The new shares, represented by ADSs, were to be offered (i) via a public offering to retail and institutional
investors in the United States, and (ii) via private placements with qualified, professional, institutional and other investors, as
the case may be, in countries and jurisdictions outside of the United States in accordance with applicable securities laws
and regulations. On that basis, the Company decided to instruct investment banks to organize, launch and close the public
offering of new shares represented by ADSs in the United States. The transaction was launched on 1 February 2023 and,
on 3 February 2023, the Company announced the pricing of its public offering in the United States of 10,000,000 ADSs
(representing 100,000,000 new shares) at a price of USD 4.00 per ADS for total gross proceeds of USD 40.0 million before
deducting underwriting discounts and commissions and estimated offering expenses. The offered shares represented by
the ADSs were issued by the Company on 7 February 2023 in the framework of the Offering and were issued pursuant to a
capital increase that was decided by the Company's board of directors within the framework of the authorised capital with
dis-application of the preferential subscription rights of existing shareholders of the Company and, in so far as required, of
existing holders of subscription rights (share options) or ADSs issued by the Company. All of the ADSs were placed at a price
of USD 4.00 per ADS, which represents an issue price of USD 0.40 per new share (or EUR 0.37 (rounded) per offered Share
based on a conversion rate of USD 1.0776 per EUR).
In the context of the offering, the Company granted the underwriters an option to purchase up to 1,500,000 additional ADSs
from the Company for a period ending on the date falling 30 days after 3 February 2023. On 6 March 2023, the Company
announced that the Underwriters exercised the Option, on the same terms and conditions as in the offering, in the amount
of 7,500,000 shares represented by 750,000 ADSs at a price of USD 4.00 per ADS for gross proceeds of USD 3.0 million.
These "option" shares represented by the ADSs were issued by the Company on 8 March 2023 in the framework of the
Offering and were issued pursuant to a capital increase that was decided by the Company's board of directors within the
framework of the authorised capital with dis-application of the preferential subscription rights of existing shareholders of
the Company and, in so far as required, of existing holders of subscription rights (share options) or ADSs issued by the
Company. All of the ADSs were placed at a price of USD 4.00 per ADS, which represents an issue price of USD 0.40 per new
share (or EUR 0.37 (rounded) per share based on a conversion rate of USD 1.0665 per EUR).
Of the 270,380,936 outstanding shares of the Company, 162,880,936.00 shares have been admitted to listing and trading
on the regulated market of Euronext Brussels, while 107,500,000 shares issued in February and March 2023 are still to be
admitted to listing and trading on the regulated market of Euronext Brussels pursuant to a listing prospectus.
Currency
The Company's shares do not have a nominal value, but each reflect the same fraction of the Company's share capital,
which is denominated in euro.
Rights attached to shares
Dividend and dividend policy
All of the shares of the Company entitle the holder thereof to an equal right to participate in dividends in respect of the
financial year ending 31 December 2022 and future years. All of the shares participate equally in the Company's profits (if
any). Pursuant to the Belgian Companies and Associations Code, the shareholders can in principle decide on the distribution
of profits with a simple majority vote at the occasion of the ordinary general shareholders' meeting, based on the most recent
statutory audited financial statements, prepared in accordance with Belgian GAAP and based on a (non-binding) proposal
of the Company's Board of Directors. The Belgian Companies and Associations Code and the Company's articles of
association also authorize the Board of Directors to declare interim dividends without shareholder approval. The right to pay
such interim dividends is, however, subject to certain legal restrictions.
Directors is also authorized to use this authorization for the issuance of convertible bonds or subscription rights, bonds with
subscription rights or other securities.
In the event of a capital increase decided by the Board of Directors within the framework of the authorized capital, all issue
premiums booked, if any, will be accounted for in accordance with the provisions of the Company's articles of association.
The Board of Directors is authorized, when exercising its powers within the framework of the authorized capital, to restrict or
cancel, in the interest of the Company, the preferential subscription rights of the shareholders. This restriction or cancellation
of the preferential subscription rights can also be done in favor of members of the personnel of the Company or of its
subsidiaries, or in favor of one or more persons other than members of the personnel of the Company or of its subsidiaries.
The Board of Directors is authorized, with the right of substitution, to amend the articles of association, after each capital
increase that has occurred within the framework of the authorized capital, in order to bring them in conformity with the new
situation of the share capital and the shares.
Available amount in the framework of the authorized capital
As of the date of this report, the Board of Directors has used its powers under the authorized capital on (i) 8 November
2021, by issuing 37,500,000 new shares (3,750,000 ADSs) for an aggregate amount of EUR 28,530,000.00 (excluding issue
premium), (ii) 11 August 2022 by issuing 6,911,710 new shares (691,171 ADSs) for an aggregate amount of EUR 4,877,097.50,
and (iii) 7 February 2023 and 8 March 2023 by issuing 107,500,000 new shares (10,750,000 ADSs) for an aggregate amount
of EUR 39,932,464.39.
As a result, the Board of Directors still has the authority under the authorized capital to increase the share capital of the
Company with an aggregate amount of EUR 16,792,505.80 (excluding issue premium, as the case may be).]
Form and transferability of the shares
The shares of the Company can take the form of registered and dematerialized shares. All the Company's shares are fully
paid-up and are freely transferable.
On 2 August 2022, the Company and Exact Sciences entered into an asset purchase agreement (the "Asset Purchase
Agreement") pursuant to which, among other things and subject to the terms and conditions included in the Asset Purchase
Agreement, Exact Sciences agreed to sell and assign, and the Company agreed to purchase and assume, the business
of developing, marketing and performing the Oncotype DX Genomic Prostate Score test (the "GPS Test Business"). On
11 August 2022, in the framework of the Asset Purchase Agreement, the Board of Directors decided to increase the share
capital of the Company within the framework of the authorized capital, with an amount of EUR 4,877,097.50, against the
issuance by the Company of 6,911,710 new ordinary shares, to be delivered to Exact Sciences in the form of 691,171 ADSs
(on the basis of a ratio of 1 ADS per 10 New Shares), at an issue price per new share of EUR 0.7056, as contemplated by the
Asset Purchase Agreement, for the purpose of the settlement of a portion of the purchase price for the GPS Test Business in
shares of the Company to be delivered in ADSs, by means of a contribution in kind.
On 27 January 2023, the Board of Directors decided to increase the share capital of the Company within the framework of
the authorized capital through the issuance of new shares, the maximum number and the issue price of which still had to
be determined, with dis-application of the preferential subscription right of the existing shareholders of the Company and,
in so far as required, of the existing holders of subscription rights (share options) of the Company, all or part of the new
shares being represented by ADSs, which were to be registered under the United States Securities Act of 1933, as amended
and were to be listed on the Nasdaq Capital Market (the number of new shares to be represented by one ADS was still to
Part II: Corporate Governance Part II: Corporate Governance
Annual Report 2022 / 50
voting materials to ADS holders if the Company asks it to in a timely fashion. Those materials will describe the matters to be
voted on and explain how the ADS holder may instruct the depositary how to vote. For instructions to be valid, they must
reach the depositary by a date set by the depositary.
The depositary will try, as far as practical, and subject to the laws of Belgium and the provisions of the Company's articles of
association or similar documents, to vote or to have its agents vote the shares or other deposited securities as instructed by
ADS holders.
Preferential Subscription Rights
In the event of a capital increase for cash with the issue of new shares of the Company, or in the event of an issue of
convertible bonds or subscription rights, the existing shareholders have a preferential right to subscribe, pro rata, to the
new shares of the Company, convertible bonds or subscription rights. These preferential subscription rights are transferable
during the subscription period.
The general shareholders' meeting may decide to limit or cancel this preferential subscription right, subject to special
reporting requirements. Such decision by the general shareholders' meeting needs to satisfy the same quorum and majority
requirements as the decision to increase the Company's share capital.
The shareholders may also decide to authorize the Board of Directors to limit or cancel the preferential subscription right
within the framework of the authorized capital, subject to the terms and conditions set forth in the Belgian Companies
and Associations Code. As mentioned above, the Board of Directors of the Company has been granted certain powers to
increase the Company's share capital in the framework of the authorized capital and to cancel the statutory preferential
subscription rights of the shareholders (within the meaning of articles 7:191 and 7:193 of the Belgian Companies and
Associations Code). The powers under the authorized capital have been set out in article 6 of the Company's articles of
association.
Generally, unless expressly authorized in advance by the general shareholders' meeting, the authorization of the Board of
Directors to increase the share capital of the Company through contributions in cash with cancellation or limitation of the
preferential subscription right of the existing shareholders is suspended as of the notification to the Company by the FSMA
of a public takeover bid on the financial instruments of the Company. The Company's general shareholders' meeting did not
grant such express authorization to the Board of Directors.
Voting Rights
Each shareholder of the Company is entitled to one vote per share. Shareholders may vote by proxy, subject to the rules
described in the Company's articles of association.
Voting rights can be mainly suspended in relation to shares:
• which are not fully paid up, notwithstanding the request thereto of the Board of Directors of the Company;
• to which more than one person is entitled or on which more than one person has rights in rem (droits réels) on, except in
the event a single representative is appointed for the exercise of the voting right vis-à-vis the Company;
• which entitle their holder to voting rights above the threshold of 3%, 5%, 10%, 15%, 20% and any further multiple of 5%
of the total number of voting rights attached to the outstanding financial instruments of the Company on the date of the
relevant general shareholders' meeting, in the event that the relevant shareholder has not notified the Company and the
FSMA at least 20 calendar days prior to the date of the general shareholders' meeting in accordance with the applicable
rules on disclosure of major shareholdings; and
• of which the voting right was suspended by a competent court or the FSMA.
The Company has never declared or paid any cash dividends on its shares. The Company does not anticipate paying cash
dividends on its equity securities in the foreseeable future and intends to retain all available funds and any future earnings for
use in the operation and expansion of its business.
The Company's ability to distribute dividends is subject to availability of sufficient distributable profits as defined under
Belgian law on the basis of the Company's stand-alone statutory accounts prepared in accordance with Belgian GAAP. In
particular, dividends can only be distributed if following the declaration and issuance of the dividends the amount of the
Company's net assets on the date of the closing of the last financial year as follows from the statutory non-consolidated
financial statements (i.e. summarized, the amount of the assets as shown in the balance sheet, decreased with provisions
and liabilities, all in accordance with Belgian accounting rules), decreased with, except in exceptional cases, to be disclosed
and justified in the notes to the annual accounts, the non-amortized costs of incorporation and extension and the non-
amortized costs for research and development, does not fall below the amount of the paid-up capital (or, if higher, the issued
capital), increased with the amount of non-distributable reserves.
In addition, pursuant to Belgian law and the Company's articles of association, the Company must allocate an amount of 5%
of its Belgian GAAP annual net profit (nettowinst/bénéfices nets) to a legal reserve in its stand-alone statutory accounts, until
the legal reserve amounts to 10% of the Company's share capital. The Company's legal reserve currently does not meet this
requirement. Accordingly, 5% of its Belgian GAAP annual net profit during future years will need to be allocated to the legal
reserve, limiting the Company's ability to pay out dividends to its shareholders.
Under the senior secured loan agreement entered into between with Innovatus and the Company on 2 August 2022, no
distributions can be declared or made without consent of Innovatus.
Finally, additional financial restrictions and other limitations may be contained in future credit agreements.
American Depositary Shares
Following the initial public offering in the United States of 37,500,000 new shares represented by 3,750,000 ADSs closed by
the Company on 8 November 2021.
The Bank of New York Mellon, as depositary, registers and delivers the ADSs. Each ADS represents the right to receive 10
shares. ING Belgium SA/NV acts as custodian for the depositary in Belgium. The depositary’s principal office is located at
240 Greenwich Street, New York, New York 10286.
An ADS holder is not be treated as one of the Company's shareholders and does not have any shareholder rights. The
depositary will be the holder of the shares represented by the ADSs. A holder of ADSs will have ADS holder rights. A deposit
agreement among the Company, the depositary and all persons directly and indirectly holding ADSs sets out ADS holder
rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADSs.
The depositary has agreed to pay ADS holders the cash dividends or other distributions it or the custodian receives on
shares or other deposited securities, after deducting its fees and expenses.
An ADS holder may surrender its ADSs for the purpose of withdrawal of shares. Upon payment of the depository's fees and
expenses and of any taxes or charges, such as stamp taxes or share transfer taxes or fees, the depositary will deliver the
shares and any other deposited securities represented by the ADSs to the ADS holder or a person designated by it at the
office of the custodian or through a book-entry delivery.
The ADS holder may instruct the depositary to vote the number of whole deposited shares its ADSs represent. The
depositary will notify the ADS holder of shareholders' meetings or other solicitations of consents and arrange to deliver its
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Annual Report 2022 / 52
subsequent financial year how it took into account the advisory vote of the general shareholders' meeting of the previous
financial year), of the remuneration policy (as the case may be), and, when applicable, the (re-)appointment or dismissal of
the statutory auditor and/or of all or certain directors. In addition, as relevant, the general shareholders' meeting must also
decide on the approval of the remuneration of the directors and statutory auditor for the exercise of their mandate, and
on the approval of provisions of service agreements to be entered into with executive directors, members of the executive
management and other executives providing (as the case may be) for severance payments exceeding twelve months'
remuneration (or, subject to a motivated opinion by the remuneration and nomination committee, 18 months' remuneration).
SPECIAL AND EXTRAORDINARY GENERAL SHAREHOLDERS’ MEETINGS
The Board of Directors or the statutory auditor (or the liquidators, if appropriate) may, whenever the interest of the Company
so requires, convene a special or extraordinary general shareholders' meeting. Such general shareholders' meeting must
also be convened every time one or more shareholders holding, alone or together, at least 10% of the Company's share
capital so request. Shareholders that do not hold at least 10% of the Company's share capital do not have the right to have
the general shareholders' meeting convened.
RIGHT TO PUT ITEMS ON THE AGENDA OF THE GENERAL MEETING AND TO TABLE DRAFT RESOLUTIONS
Shareholders who hold alone or together with other shareholders at least 3% of the Company's share capital have the
right to put additional items on the agenda of a general shareholders' meeting that has been convened and to table draft
resolutions in relation to items that have been or are to be included in the agenda. This right does not apply to general
shareholders' meetings that are being convened on the grounds that the quorum was not met at the first duly convened
meeting. Shareholders wishing to exercise this right must prove on the date of their request that they own at least 3% of the
outstanding share capital. The ownership must be based, for dematerialised shares, on a certificate issued by the applicable
settlement institution for the shares concerned, or by a certified account holder, confirming the number of shares that have
been registered in the name of the relevant shareholders and, for registered shares, on a certificate of registration of the
relevant shares in the share register book of the Company. In addition, the shareholder concerned must register for the
meeting concerned with at least 3% of the outstanding share capital. A request to put additional items on the agenda and/
or to table draft resolutions must be submitted in writing, and must contain, in the event of an additional agenda item, the
text of the agenda item concerned and, in the event of a new draft resolution, the text of the draft resolution. The request
must reach the Company at the latest on the twenty-second calendar day preceding the date of the general shareholders'
meeting concerned. If the Company receives a request, it will have to publish at the latest on the fifteenth calendar day
preceding the general shareholders' meeting an update of the agenda of the meeting with the additional agenda items and
draft resolutions.
NOTICES CONVENING THE GENERAL MEETING
The notice convening the general shareholders' meeting must state the place, date and hour of the meeting and must
include an agenda indicating the items to be discussed and the proposed resolutions. The notice must, as the case may
be, include the proposal of the audit committee to nominate a statutory auditor responsible for auditing the consolidated
financial statements. The notice also needs to contain a description of the formalities that security holders must fulfil in order
to be admitted to the general shareholders' meeting and (as the case may be) exercise their voting right, information on the
manner in which shareholders can put additional items on the agenda and table draft resolutions, information on the manner
in which security holders can ask questions during the general shareholders' meeting and prior to the meeting via the
Company's email address or a specific email address mentioned in this notice, information on the procedure to participate
to the general shareholders' meeting by means of a proxy or to vote by means of a remote vote, and, as applicable, the
registration date for the general shareholders' meeting. The notice must also mention where shareholders can obtain a copy
of the documentation that will be submitted to the general shareholders' meeting, the agenda with the proposed resolutions
Pursuant to the Belgian Companies and Associations Code, the voting rights attached to shares owned by the Company, or
a person acting in its own name but on behalf of the Company, or acquired by a subsidiary of the Company, as the case may
be, are suspended. Generally, the general shareholders' meeting has sole authority with respect to:
• the approval of the annual financial statements of the Company;
• the distribution of profits (except interim dividends);
• the appointment (at the proposal of the Board of Directors and upon recommendation by the remuneration and nomination
committee) and dismissal of Directors of the Company;
• the appointment (at the proposal of the Board of Directors and upon recommendation by the audit committee) and
dismissal of the statutory auditor of the Company;
• the granting of release from liability to the Directors and the statutory auditor of the Company;
• the determination of the remuneration of the Directors and of the statutory auditor for the exercise of their mandate;
• the advisory vote on the remuneration report included in the annual report of the Board of Directors, the binding vote
on the remuneration policy (which was approved for the first time by the general shareholders’ meeting held on 27 May
2021), and subsequently upon every material change to the remuneration policy and in any case at least every four
years, and the determination of the following features of the remuneration or compensation of Directors, members of the
executive management and certain other executives (as the case may be): (i) in relation to the remuneration of Executive
and Non-Executive Directors, members of the executive management and other executives, an exemption from the rule
that share based awards can only vest after a period of at least three years as of the grant of the awards, (ii) in relation
to the remuneration of Executive Directors, members of the executive management and other executives, an exemption
from the rule that (unless the variable remuneration is less than a quarter of the annual remuneration) at least one quarter
of the variable remuneration must be based on performance criteria that have been determined in advance and that can
be measured objectively over a period of at least two years and that at least another quarter of the variable remuneration
must be based on performance criteria that have been determined in advance and that can be measured objectively over
a period of at least three years, (iii) in relation to the remuneration of Non-Executive Directors, any variable part of the
remuneration (provided, however that no variable remuneration can be granted to Independent Non-Executive Directors),
and (iv) any service agreements to be entered into with Executive Directors, members of the executive management and
other executives providing for severance payments exceeding twelve months’ remuneration (or, subject to a motivated
opinion by the remuneration and nomination committee, eighteen (18) months' remuneration);
• the filing of a claim for liability against Directors;
• the decisions relating to the dissolution, merger and certain other reorganisations of the Company; and
• the approval of amendments to the articles of association.
Right to attend and vote at general shareholders' meetings
ORDINARY GENERAL SHAREHOLDERS’ MEETING
The ordinary general shareholders' meeting is held at the registered office of the Company or at the place determined in
the notice convening the general shareholders' meeting. The meeting is held every year on the last Thursday of May at 3:00
p.m. If this day would be a Belgian public holiday, the ordinary general shareholders' meeting shall be held on the previous
business day. At the ordinary general shareholders' meeting, the Board of Directors submits to the shareholders the audited
non-consolidated and consolidated annual financial statements and the reports of the Board of Directors and of the statutory
auditor with respect thereto.
The general shareholders' meeting then decides on the approval of the statutory annual financial statements, the proposed
allocation of the Company's profit or loss, the release from liability of the directors and the statutory auditor, the approval
of the remuneration report included in the annual report of the Board of Directors (it being understood that the vote on
the remuneration report is only an advisory vote and that the Company must explain in the remuneration report of the
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Annual Report 2022 / 54
• Secondly, in order to be admitted to the general shareholders' meeting, securities holders must notify the Company at
the latest on the sixth calendar day prior to the general shareholders' meeting whether they intend to attend the meeting
and indicate the number of shares in respect of which they intend to do so. For the holders of dematerialized securities or
securities in book-entry form, the notice should include a certificate confirming the number of securities that have been
registered in their name on the record date. The certificate can be obtained by the holder of the dematerialized securities
or securities in book-entry form with the certified account holder or the applicable settlement institution for the securities
concerned.
The formalities for the registration of securities holders, and the notification of the Company must be further described in the
notice convening the general shareholders' meeting.
Electronic participation
The Board of Directors has the possibility to organize the general shareholders' meeting by means of electronic
communication which must (i) allow the Company to verify the capacity and identity of the shareholders using it; (ii) at least
enable (a) the securities holders to directly, simultaneously and continuously follow the discussions during the meeting and
(b) the shareholders to exercise their voting rights on all points on which the general shareholders' meeting is required to take
a decision; and (iii) allow the securities holders to actively participate to the deliberations and to ask questions during the
meeting.
Voting by proxy or remote voting
Each shareholder has, the right to attend a general shareholders' meeting and to vote at the general shareholders' meeting
in person or through a proxy holder, who need not be a shareholder. A shareholder may designate, for a given meeting, only
one person as proxy holder, except in circumstances where Belgian law allows the designation of multiple proxy holders.
The appointment of a proxy holder may take place in paper form or electronically (in which case the form shall be signed by
means of an electronic signature in accordance with applicable Belgian law), through a form which shall be made available
by the Company. The signed original paper (handwritten) or electronic form must be received by the Company at the latest
on the sixth calendar day preceding the meeting. The appointment of a proxy holder must be made in accordance with the
applicable rules of Belgian law, including in relation to conflicts of interest, the keeping of a register and other transparency
requirements.
The notice convening the meeting may allow shareholders to vote remotely in relation to the general shareholders' meeting,
by sending a paper form or, if specifically allowed in the notice convening the meeting, by sending a form electronically (in
which case the form shall be signed by means of an electronic signature in accordance with applicable Belgian law). These
forms shall be made available by the Company. The original signed paper form must be received by the Company at the
latest on the sixth calendar day preceding the date of the meeting. Voting through the signed electronic form may occur until
the last calendar day before the meeting.
The Company may also organize a remote vote in relation to the general shareholders' meeting through other electronic
communication methods, such as, among others, through one or several websites. The Company shall specify the practical
terms of any such remote vote in the convening notice.
When votes are cast electronically, an electronic confirmation of receipt of the votes is sent to the relevant shareholders that
cast the vote. After the general shareholders' meeting, shareholders can obtain, at least upon request (which must be made
no later than three months after the vote), the confirmation that their votes have been validly recorded and taken into account
by the Company, unless that information is already available to them. If an intermediary receives such confirmation, it must
transmit it without delay to the shareholder.
or, if no resolutions are proposed, a commentary by the Board of Directors, updates of the agenda if shareholders have put
additional items or draft resolutions on the agenda, the forms to vote by proxy or by means of a remote vote, and the address of
the webpage on which the documentation and information relating to the general shareholders' meeting will be made available.
This documentation and information, together with the notice and the total number of outstanding voting rights, must also be
made available on the Company's website at the same time as the publication of the notice convening the meeting, for a period
of five years after the relevant general shareholders' meeting. If shares are held by an intermediary on behalf of a shareholder
of the Company, the relevant intermediary is required to transmit the following information, without delay, from the Company
to the shareholder: (a) the information which the Company is required to provide to the shareholder, to enable the shareholder
to exercise rights attached to its shares, and which is directed to all shareholders in shares of that class; or (b) where the
information referred to in point (a) is available to shareholders on the website of the Company, a notice indicating where on the
website that information can be found, unless the Company provides this information directly to the shareholder.
The notice convening the general shareholders' meeting has to be published at least 30 calendar days prior to the general
shareholders' meeting in the Belgian Official Gazette, in a newspaper that is published nation-wide in Belgium, in paper or
electronically, in media that can be reasonably relied upon for the dissemination of information within the EEA in a manner
ensuring fast access to such information on a non-discriminatory basis, and on the Company's website. A publication in a
nation-wide newspaper is not needed for ordinary general shareholders' meetings taking place on the date, hour and place
indicated in the articles of association of the Company if the agenda is limited to the treatment and approval of the financial
statements, the annual report of the Board of Directors, the report of the statutory auditor, the remuneration report, the
severance pay for executive directors, and the discharge from liability of the directors and statutory auditor. In addition to this
publication, the notice has to be distributed at least 30 calendar days prior to the meeting via the normal publication means
that the Company uses for the publication of press releases and regulated information. The term of 30 calendar days prior to
the general shareholders' meeting for the publication and distribution of the convening notice can be reduced to 17 calendar
days for a second meeting if, as the case may be, the applicable quorum for the meeting is not reached at the first meeting,
the date of the second meeting was mentioned in the notice for the first meeting and no new item is put on the agenda of the
second meeting.
At the same time as its publication, the convening notice must also be sent to the holders of registered shares, holders of
registered convertible bonds, holders of registered subscription rights, holders of registered certificates issued with the
co-operation of the Company (if any), and, as the case may be, to the directors and statutory auditor of the Company. This
communication needs to be made by e-mail unless the addressee has informed the Company that it wishes to receive the
relevant documentation by another equivalent means of communication. If the relevant addressee does not have an e-mail
address or if it did not inform the Company thereof, the relevant documentation will be sent by ordinary mail.
FORMALITIES TO ATTEND THE MEETING
All holders of shares, profit-sharing certificates, non-voting shares, convertible bonds, subscription rights or other securities
issued by the Company, as the case may be, and all holders of certificates issued with the co-operation of the Company (if
any) can attend the general shareholders' meetings insofar as the law or the articles of association entitles them to do so
and, as the case may be, gives them the right to participate in voting.
In order to be able to attend a general shareholders' meeting, a holder of securities issued by the Company must satisfy two
criteria: being registered as holder of securities on the registration date for the meeting, and notify the Company:
• Firstly, the right to attend general shareholders' meetings applies only to persons who are registered as owning securities on the
fourteenth calendar day prior to the general shareholders' meeting at midnight (Belgian time) via registration, in the applicable
register book for the securities concerned (for registered securities) or in the accounts of a certified account holder or relevant
settlement institution for the securities concerned (for dematerialized securities or securities in book-entry form).
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Annual Report 2022 / 56
Information that has an impact in case of public takeover bids
The Company provides the following information in accordance with article 34 of the Belgian Royal Decree dated
14 November 2007:
(i) The share capital of the Company amounts to EUR 163,471,629.58 and is fully paid-up. It is represented by 270,380,936
ordinary shares, each representing a fractional value of (rounded) EUR 0.6046 and representing one 270,380,936th of
the share capital. The Company's shares do not have a nominal value.
(ii) Other than the applicable legislations on the disclosure of significant shareholdings and the Company's articles of
association, there are no restrictions on the transfer of shares.
(iii) There are no holders of any shares with special control rights.
(iv) There are no share option plans for members of the personnel other than the share option plans disclosed elsewhere in
this report. These share option plans contain provisions on accelerated vesting in case of change of control.
(v) Each shareholder of the Company is entitled to one vote per share. Voting rights may be suspended as provided in the
Company's articles of association and the applicable laws and articles.
(vi) There are no agreements between shareholders which are known by the Company that may result in restrictions on the
transfer of securities and/or the exercise of voting rights.
(vii) The rules governing appointment and replacement of Board members and amendment to articles of association are set
out in the Company's articles of association and the Company's Corporate Governance Charter.
(viii) The powers of the Board of Directors, more specifically with regard to the power to issue or redeem shares are set
out in the Company's articles of association. The Board of Directors was not granted the authorization to purchase its
own shares "to avoid imminent and serious danger to the Company" (i.e., to defend against public takeover bids). The
Company's articles of association of association do not provide for any other specific protective mechanisms against
public takeover bids.
(ix) At the date of this report, the Company is a party to the following significant agreements which, upon a change of
control of the Company or following a takeover bid can enter into force or, subject to certain conditions, as the case
may be, can be amended, be terminated by the other parties thereto or give the other parties thereto a right to an
accelerated repayment of outstanding debt obligations of the Company under such agreements:
• The loan and security agreement that was entered into by the Company and Innovatus on 2 August 2022 provides
that in case of change of control, without prior approval by Innovatus, the loan facility will immediately terminate and
cease to be available for further use and all loans, accrued interest and other amounts owed by the Company under
the loan agreement will become immediately due and payable;
• The trademark license agreement that was entered into by the Company, Genomic Health, Inc. and Exact Sciences
Corporation on 2 August 2022, in the framework of the Asset Purchase Agreement entered into by the Company and
Exact Sciences on 2 August 2022, which provides that in case of change of control, Genomic Health, Inc. and Exact
Sciences Corporation may terminate the license agreement immediately on written notice to the Company;
• In addition, the Company's share option plans provide for an accelerated vesting of the subscription rights in case of
a change of control event.
No takeover bid has been instigated by third parties in respect of the Company's equity during the current financial year.
Holders of securities who wish to be represented by proxy or vote remotely must, in any case comply with the formalities
to attend the meeting. Holders of shares without voting rights, profit-sharing certificates without voting rights, convertible
bonds, warrants or certificates issued with the cooperation of the Company may attend the general shareholders' meeting
but only with an advisory vote.
Quorum and majorities
In general, there is no attendance quorum requirement for a general shareholders' meeting and decisions are generally
passed with a simple majority of the votes of the shares present or represented. However, capital increases (other than those
decided by the Board of Directors pursuant to the authorized capital), decisions with respect to the Company's dissolution,
mergers, de-mergers and certain other reorganizations of the Company, amendments to the articles of association (other
than an amendment of the corporate purpose), and certain other matters referred to in the Belgian Companies and
Associations Code do not only require the presence or representation of at least 50% of the share capital of the Company
but also a majority of at least 75% of the votes cast. An amendment of the Company's corporate purpose requires the
approval of at least 80% of the votes cast at a general shareholders' meeting, which can only validly pass such resolution if
at least 50% of the share capital of the Company and at least 50% of the profit certificates, if any, are present or represented.
In the event where the required quorum is not present or represented at the first meeting, a second meeting needs to be
convened through a new notice. The second general shareholders' meeting may validly deliberate and decide regardless of
the number of shares present or represented. The special majority requirements, however, remain applicable.
Right to ask questions
Within the limits of article 7:139 of the Belgian Companies and Associations Code, security holders have a right to ask
questions to the directors in connection with the report of the Board of Directors or the items on the agenda of such general
shareholders' meeting. However, directors may, in the interest of the Company, refuse to answer questions when the
communication of certain information or facts is likely to cause prejudice to the Company or is contrary to the obligations of
confidentiality entered into by them or by the Company.
Shareholders can also ask questions to the statutory auditor in connection with its report. Such questions can be submitted
in writing prior to the meeting or can be asked at the meeting. Written questions to the statutory auditor must be submitted
to the Company at the same time. The statutory auditor may, in the interest of the Company, refuse to answer questions
when the communication of certain information or facts is likely to cause prejudice to the Company or is contrary to its
professional secrecy or to obligations of confidentiality entered into by the Company. The statutory auditor has the right to
speak at the general meeting in connection with the performance of its duties.
Written and oral questions will be answered during the meeting concerned in accordance with applicable law. In addition, in
order for written questions to be considered, the shareholders who submitted the written questions concerned must comply
with the formalities to attend the meeting.
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Annual Report 2022 / 58
In accordance with U.S. federal securities laws, holders of shares and holders of ADSs will be required to comply with
disclosure requirements relating to their ownership of the Company's securities. Any person that, after acquiring beneficial
ownership of shares or ADSs, is the beneficial owners of more than 5% of shares or shares underlying ADSs must file with
the SEC a Schedule 13D or Schedule 13G, as applicable, disclosing the information required by such schedules, including
the number of shares or shares underlying ADSs that such person has acquired (whether alone or jointly with one or more
other persons). In addition, if any material change occurs in the facts set forth in the report filed on Schedule 13D (including
a more than 1% increase or decrease in the percentage of the total shares beneficially owned), the beneficial owner must
promptly file an amendment disclosing such change.
Notification of significant shareholdings
Pursuant to the Belgian Act of 2 May 2007 on the disclosure of significant shareholdings in issuers whose securities are
admitted to trading on a regulated market and containing various provisions, as amended from time to time (the "Belgian
Transparency Act"), a notification to the Company and to the FSMA is required by all natural persons and legal entities
(i.e. legal person, enterprise without legal personality, or trust), in the following circumstances:
• an acquisition or disposal of voting securities, voting rights or financial instruments that are treated as voting securities;
• the reaching of a threshold by persons or legal entities acting in concert;
• the conclusion, modification or termination of an agreement to act in concert;
• the downward reaching of the lowest threshold;
• the passive reaching of a threshold;
• the holding of voting securities in the Company upon first admission thereof to trading on a regulated market;
• where a previous notification concerning the financial instruments treated as equivalent to voting securities is updated;
• the acquisition or disposal of the control of an entity that holds voting securities in the Company; and
• where the Company introduces additional notification thresholds in the articles of association,
in each case where the percentage of voting rights attached to the securities held by such persons reaches, exceeds or falls
below the legal threshold, set at 5% of the total voting rights, and 10%, 15%, 20% and so on in increments of 5% or, as the
case may be, the additional thresholds provided in the articles of association. The Company has provided for an additional
threshold of 3% in its articles of association.
The notification must be made promptly and at the latest within four trading days following the moment on which the
person who is subject to the notification obligation received knowledge or could be deemed to have received knowledge
of the acquisition or disposal of the voting rights triggering the reaching of the threshold. Where the Company receives a
notification of information regarding the reaching of a threshold, it has to publish such information within three trading days
following receipt of the notification. Subject to certain exceptions, no shareholder may, pursuant to article 25/1 of the Belgian
Transparency Act, cast a greater number of votes at a general shareholders' meeting of the Company than those attached to
the rights and securities that it has notified in accordance with the aforementioned disclosure rules at least 20 calendar days
prior to the date of the general shareholders' meeting.
The forms on which such notifications must be made, as well as further explanations, can be found on the website of the
FSMA (www.fsma.be). Violation of the disclosure requirements may result in the suspension of voting rights, a court order to
sell the securities to a third party and/or criminal liability. The FSMA may also impose administrative sanctions. The Company
is required to publicly disclose any notifications received regarding increases or decreases in a shareholder's ownership of
the Company's securities, and must mention these notifications in the notes to its financial statements. A list as well as a
copy of such notifications will be accessible on the Company's website (www.mdxhealth.com).
The obligation to disclose significant shareholdings as well as certain other provisions of Belgian law (e.g. merger control,
authorized capital and the requirement to have certain change of control clauses approved by an extraordinary shareholders'
meeting) that may apply to the Company, may make an unsolicited tender offer, merger, change in management or other
change in control, more difficult. Such provisions could discourage potential takeover attempts that third parties may
consider and that other shareholders may consider to be in their best interest and could adversely affect the market price of
the shares and ADSs. These provisions may also deprive shareholders of the opportunity to sell their shares and ADSs at a
premium (which is typically offered in the context of a takeover bid).
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Statutory auditor
Services performed by the auditor and performance of exceptional
activities or execution of special instructions (article 3:65 Belgian
Companies and Associations Code)
BDO Réviseurs d’Entreprises. SRL, a limited liability company (société à responsabilité limitée/besloten vennootschap)
organized and existing under the laws of Belgium, with registered office at Da Vincilaan 9, 1930 Zaventem, Belgium, was re-
appointed on 27 May 2020 as the statutory auditor of the Company for a term of 3 years ending immediately after the closing
of the ordinary general shareholders’ meeting to be held in 2024. Mr. Bert Kegels is the permanent representative of the
statutory auditor of the Company.
The statutory auditor and the auditor responsible for the audit of the consolidated financial statements, confirms annually in
writing to the audit committee his or her independence from the Company, discloses annually to the audit committee any
additional services provided to the Company, and discusses with the audit committee the threats to his or her independence
and the safeguards applied to mitigate those threats as documented by him or her.
During the past fiscal year, in addition to their usual activity, the statutory auditor performed additional activities on behalf of
the Company mainly for the issuance of special reports related to warrant plans, grant report certification, for participation to
the audit committees and for participation to special projects.
The Company expensed $471,766 (€444,475) in fees to the auditor in 2022. The fees are broken down as follows:
• Audit fee for statutory and consolidated financials of $238,500 (€225,775)
• Other audit fees: $191,455 (€179,500)
• Audit related and other services $41,181 (€39,200)
Part II: Corporate Governance Part II: Corporate Governance
Annual Report 2022 / 62
In accordance with article 7:89/1 of the Belgian Companies and Associations Code, listed companies must establish
a remuneration policy with respect to Directors, other officers and delegates for day-to-day management. This article
details the objectives of, as well as the information that needs to be included in, the remuneration policy. The remuneration
policy must be approved by a binding vote of the general shareholders' meeting and must be submitted to the general
shareholders' meeting for approval whenever there is a material change and in any case at least every four years. In view
hereof, in accordance with article 7:89/1 of the Belgian Companies and Associations Code, the shareholders approved a
new remuneration policy that the Board of Directors submitted to the ordinary general shareholders' meeting held on 27 May
2021.
No significant change to the remuneration policy is envisaged for 2023 or the following accounting years. However, the
Company will continuously review the remuneration of Directors and executive managers against market practice. The
Company’s current remuneration policy is based on meritocracy and a sense of ownership and is designed to reward
performance in order to motivate members of the board of directors and the executive management of the Company in order
to deliver increased shareholder value through superior business results.
This remuneration report will be submitted to a vote by the ordinary general shareholders' meeting.
Procedure adopted in 2022 to determine the level of remuneration
Directors
Annually, the nomination and remuneration committee reviews the fee levels paid to Directors and compares them to fee
levels paid at other comparable companies.
Grants of subscription rights to Non-Independent Non-Executive Directors were recommended by the non-conflicted
members of the nomination and remuneration committee, reviewed by the Board of Directors and submitted to the general
shareholders’ meeting for approval. The number of subscription rights granted in the past to Non-Executive Directors
(including Independent Directors) has remained low compared to the number of total outstanding security instruments.
Non-Executive Directors (including Independent Directors) are not entitled to bonuses, fringe benefits or pension benefits.
Non-Executive Board members who provide services to the Company outside of the formal Board meetings or Board
committee meetings, must have their work and fees pre-approved by the non-conflicted members of the nomination and
remuneration committee. These fees are then submitted for approval at the ensuing ordinary general shareholders’ meeting.
For the executive Director position, the nomination and remuneration committee proposes remuneration changes and
bonuses, if any to the Board of Directors for approval.
CEO and executive managers
The remuneration of the executive management is designed to attract, retain and motivate executive managers. The level and
structure of the remuneration are subject to an annual review by the nomination and remuneration committee to take into
account market practice. The annual review does not provide mechanisms for automatic adjustments, except for changes
that are legally required.
The fixed remuneration level, the variable bonus, and the objectives of the CEO are reviewed by the nomination and
remuneration committee, compared to industry and market levels, and confirmed by the Board of Directors. The Board of
Directors sets the Company objectives and the personal objectives of the CEO.
Remuneration report
The following remuneration report has been prepared by the
nomination and remuneration committee and approved by the
Board of Directors of MDxHealth on 24 April 2023. This remuneration
report is part of the Corporate Governance Statement, which is
part of the Company's annual report of the Board of Directors on
the statutory accounts for the financial year ended on 31 December
2022 in accordance to in article 3:6, §3 of the Belgian Companies
and Associations Code (the “Remuneration Report”). The Company
has reviewed the remuneration policy of its management,
Executive and Non-Executive Directors in light of article 3:6 of the
Belgian Companies and Associations Code, as supplemented
by the relevant provisions of the 2020 Code, and has prepared
this Remuneration Report in accordance with the requirements
contained therein.
Introduction
In accordance with article 3:6, §3 of the Belgian Companies and Associations Code, the Company prepared this
remuneration report in order to provide an overview of the remuneration, including all benefits granted or due during the
financial year ended on 31 December 2022 to each of the Directors and members of the executive management team,
including newly recruited officers and former officers, in accordance with the Company's remuneration policy.
The remuneration for Non-Executive Directors was modified at a special general shareholders’ meeting of 30 July 2020.
In addition, the ordinary general shareholders' meeting held on 27 May 2021 approved an increase of the the additional
maximum annual fixed remuneration of the chair of the Board of Directors from EUR 31,000.00 (ca. USD 36,673) to EUR
59,500.00 (ca. USD 70,388) (all amounts being exclusive of VAT and similar charges), effective as from 1 July 2021. In
conformity with the applicable legislation, the nomination and remuneration committee of the Board of Directors, composed
of Non-Executive members of the Board, has the tasks (i) to formulate proposals on the remuneration policy applicable to
Directors, managers and other executives, as well as on the determination of their remuneration on an individual basis, and
(ii) to prepare the remuneration report to be inserted in the corporate governance statement of the annual report.
Part II: Corporate Governance Part II: Corporate Governance
Annual Report 2022 / 64
realities of companies in the biotech and life sciences industry. Notably, the ability to remunerate Non-Executive Directors
with share options allows the Company to limit the portion of remuneration in cash that the Company would otherwise need
to pay to attract or retain renowned experts with the most relevant skills, knowledge and expertise. The Company is of the
opinion that granting Non-Independent Non-Executive Directors the opportunity to be remunerated in part in share-based
incentives rather than all in cash enables the Non-Independent Non-Executive Directors to link their effective remuneration
to the performance of the Company and to strengthen the alignment of their interests with the interests of the Company’s
shareholders. The Company believes that this is in the interest of the Company and its stakeholders. Furthermore, the
Company believes that this is customary for Directors active in companies in the life sciences industry.
Furthermore, as the Company currently does not hold any of its own shares as treasury stock and does not have the ability
to acquire its own shares, in 2022, Non-Executive Directors did not receive a part of their remuneration in the form of
shares of the Company. Even though this deviates from provision 7.6 of the 2020 Code, the Company's Board of Directors
considers that this remuneration contributes to aligning the interests of the Non-Independent Non-Executive Directors
with those of MDxHealth, amongst other things, by involving them in the risks and prospects of its activities in a long-term
perspective. Their remuneration contributes to MDxHealth's long-term performance.
Non-Executive Directors
Apart from the above remuneration, Non-Executive Directors are entitled to a reimbursement of out-of-pocket expenses
actually incurred to participate to Board meetings.
The mandate of Non-Executive Directors can be terminated at any time without any compensation. Non-Executive Directors
do not receive any form of pension plan benefits from the Company. The Company has not made any loans to the members
of the Board of Directors.
Executive Directors
Executive Directors do not receive any remuneration for their position as a Director. Executive Directors are only remunerated
for their role as executive managers. These individuals receive a fixed remuneration plus a variable bonus that is linked to
their personal achievements and the achievements of the Company. They do not receive any additional remuneration for
the exercise of their Board mandate. The mandate of executive Directors may be terminated at any time without any form of
compensation. Their remuneration package is approved by the general shareholders’ meeting. The CEO is the only executive
Director of the Board of Directors of the Company and he does not earn any remuneration in respect of his executive Director
position.
All Directors
• Relative importance of the components of remuneration: The relative importance of the various components of
remuneration of the Directors as referred to in article 3:6, §3, indent. 3, 1°, b) of the Belgian Companies and Associations
Code, is provided below under the “Remuneration earned by the Directors for the reported year“ section of this
remuneration report.
• No deviation from the remuneration, as decided by the general shareholders' meetings held on 30 July 2020 and
27 May 2021: During the course of 2022, the Company has not deviated from its remuneration for Directors. The total
remuneration of the Board of Directors (excluding the Executive Director who is only remunerated for his role as CEO)
in 2022 and 2021 was of EUR 313,000 (USD 333,000) and EUR 261,000 (USD 302,000) respectively (excluding VAT,
share-based compensation and expenses reimbursement).
The CEO sets the personal objectives of the other executive managers. He recommends grants of subscription rights,
bonuses and changes, if any, in the fixed remuneration of executive managers to the nomination and remuneration committee.
The nomination and remuneration committee reviews these recommendations and compares them to industry and market
practices. It then proposes the subscription rights grants, bonuses and remuneration changes, if any, to the Board of
Directors, and to the extent required by applicable law, to the general shareholders’ meeting, for approval.
Directors' remuneration in 2022
A record of Board attendance is maintained by the secretary to the Board of Directors. This record is then reviewed by the
Board of Directors and confirmed by the approval of the Board minutes. Regular attendance at scheduled meetings of the
Board of Directors, including committee meetings, is expected. In the event that a Director fails to attend at least 75% of the
scheduled meeting of the Board of Directors during a calendar year, the Board may reduce such Director’s applicable annual
retainer fee by a pro rata amount to reflect actual attendance.
The Directors' remuneration was last modified at the ordinary general shareholders’ meeting of 27 May 2021.
Independent Non-Executive Directors
Following the modification of the Directors' remuneration on 30 July 2020, effective as from 1 July 2020, and the modification
of the remuneration of the chair of the Board of Directors on 27 May 2021, effective as from 1 July 2021, the Independent
Non-Executive Directors are remunerated on the basis of a pre-defined fixed annual retainer fee as follows:
• EUR 35,000.00 (USD 36,872.50)
1
base fee for each Non-Executive Director;
• In addition to the base fee, the following fees apply:
o EUR 59,500.00 (USD 62,683.25) for the chair of the Board of Directors;
o EUR 17,500.00 (USD 18,436.25) for the chair of the audit committee;
o EUR 9,000.00 (USD 9,481.50) for the members of the audit committee (other than the chair of the committee);
o EUR 17,500.00 (USD 18,436.25) for the chair of the nomination and remuneration committee; and
o EUR 5,500.00 (USD 5,794.25) for the members of the nomination and remuneration committee
(other than the chair of the committee).
The foregoing additional remuneration amounts are in addition to the base fee and can be combined, depending on whether
the applicable eligibility criteria have been met. The remuneration can be reduced pro rata temporis depending on the duration
of the mandate, chairpersonship or membership of a Director during a given year.
This fee structure was proposed by the nomination and remuneration committee on the basis of a bench-mark study that was
carried out in 2020 and is in line the existing market practices. The Company's Board of Directors considers that it contributes
to the long-term performance of the company.
Non-Independent Non-Executive Directors
Following the modification of the Directors' remuneration on 30 July 2020, effective as from 1 July 2020, the Non-Executive
Directors that are not Independent Directors shall not be entitled to a remuneration in cash, but shall each year be entitled to
receive share options for a maximum of 10,000 shares of the Company.
This is contrary to provision 7.6 of the 2020 Code, which provides that no share options should be granted to Non-Executive
Directors. The Company believes that this provision of the 2020 Code is not appropriate and adapted to take into account the
1
exchange rate EUR 1 = USD 1.0535 (historical rate 2022)
Part II: Corporate Governance Part II: Corporate Governance
Annual Report 2022 / 66
Executive management's remuneration in 2022
Each member of executive management is entitled to a basic fixed remuneration designed to fit responsibilities, relevant
experience and competences, in line with market rates for equivalent positions. The majority of the annual remuneration is a
fixed compensation amount. There is no minimum or maximum variable bonus.
The CEO and each of the other members of executive management has a fixed remuneration and a variable bonus linked
to the performance of the Company. Bonuses, if any, are linked to identifiable objectives and to special projects and are set
and measured on a calendar-year basis. Non-performers are not retained by the Company. The performance objectives of
executive management, including the CEO, are primarily evaluated with regard to objective criteria established each year
by nomination and remuneration committee of the Board of Directors. The various objectives and their weighting may differ
for the individual managers. The nomination and remuneration committee meets annually to review the performance of
the managers, to compare the actual measurable results to the objectives that were pre-defined by the committee, and to
establish the measurable objectives for the ensuing calendar year. In addition, members of executive management may also
be granted subscription rights. This policy contributes to aligning the interests of the members of executive management
with those of MDxHealth, amongst other things, by involving them in the risks and prospects of its activities in a long-term
perspective. Their remuneration contributes to MDxHealth's long-term performance.
Each member of executive management who is a salaried employee may be entitled to a number of fringe benefits, which
may include participating in a defined contribution pension or retirement scheme, disability insurance, a company car, a
mobile telephone, internet access and/or a laptop computer according to general Company policy, and other collective
benefits (such as hospitalization insurance and meal vouchers).
In 2022, all the members of executive management were engaged on the basis of an employment contract. The employment
contracts are generally for an indefinite term. The employment contracts may be terminated at any time by the Company,
subject to a severance notice or payment in line with market standards (see also below). The employment contracts include,
where appropriate, non-competition undertakings, as well as confidentiality and IP transfer undertakings (that will try to seek
maximum protection of the Company’s interests, under applicable laws and subject to the employee’s agreement).
Executive managers who are engaged on the basis of a services contract do not receive fringe benefits, except that they
may be provided with a mobile phone and laptop computer according to general Company policy, and they qualify for
reimbursement of expenses incurred while carrying out their professional responsibilities.
Executive managers of the Company that are employed under employee contracts are entitled to enroll in defined-
contribution type pension plans (such as 401K plans in the United States). The assets of these pension plans are held and
managed by third-party organizations and the Company only makes contributions to these plans during the term of service of
the employee. Executive managers of the Company that are engaged on the basis of a service agreement are not entitled to
any pension plans or pension plan contributions from the Company.
The relative importance of the various components of remuneration of the members of executive management as referred
to in article 3:6, §3, indent. 3, 1°, b) of the Belgian Companies and Associations Code, is provided below under the
“Remuneration earned by the CEO for the reported year“, "Remuneration earned by other executive managers for the
reported year" sections of this remuneration report.
During the course of 2022, the Company has not deviated from its executive management's remuneration policy.
• Insurances: On 23 May 2006, the Board of Directors decided, with application of the old article 523 of the Belgian
Company Code (article 7:96 of the Belgian Companies and Associations Code), that the Company would indemnify the
Directors against any claim by a third party based on Directors’ liability, except in the event of gross negligence and willful
misconduct. Therefore, the Company has taken out Directors’ liability insurance.
The insurance policy was renewed in 2022. Additionally, the Company’s US subsidiary, MDxHealth, Inc., has entered into
indemnification agreements directly with each of its Directors, as well as each Director of the Company, to indemnify each
such person for liabilities to the extent that they may arise from, or claims therefor which are based on, US-associated
activities of the US subsidiary or of the Company, including any claims based on a theory of derivative liability in the right
of the US subsidiary.
• No possibility to recover variable remuneration: Once paid, the Company does not have the ability to recover the variable
part of the remuneration of the Directors.
Remuneration earned by the Directors for the reported year
The following table provides the 2022 compensation of the Directors in function during 2022:
Name
1
Position
2
Pro-rata of
annual retainer
fee (€K)
Other
services
(€K)
Total (€K)
Mr. Koen Hoffman INED – Board Chair, Member NRC 100 2 102
Dr. Eric Bednarski NED – Member NRC 0 0 0
Mr. Michael K. McGarrity ED – CEO 0
3
0
3
0
3
Dr. Regine Slagmulder INED – Chair AC 53 6 59
Mr. Jan Pensaert NED – member NRC 0 10 10
Dr. Lieve Verplancke
INED – member AC and NRC
50 2 52
Ms. Hilde Windels
INED – member AC
44 2 47
Mr. Donnie M. Hardison Jr. INED – Chair NRC 67 4 71
Notes:
1 :
Mr. Koen Hoffman serves on the Board as a permanent representative of Ahok BV. Mr. Jan Pensaert serves on the Board as a permanent
representative of Valiance Advisors LLP. Dr. Lieve Verplancke serves on the Board as a permanent representative of
Qaly-Co BV. Ms. Hilde Windels serves on the Board as a permanent representative of Hilde Windels BV. Dr. Regine Slagmulder serves on
the Board as a permanent representative of Regine Slagmulder BV.
2 :
“NED” = Non-Executive Director, “AC” = Audit Committee, “NRC” = Nomination & Remuneration Committee, "INED" = Independent
Non-Executive Director, "ED" = Executive Director.
3 :
As CEO and Executive Director, Mr. McGarrity did not receive any remuneration for his position as a Director in 2022. Executive Directors
are only remunerated for their role as executive managers. The remuneration of Mr. McGarrity as CEO is further described in the section
"Executive management's remuneration in 2022" of this remuneration report.
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Annual Report 2022 / 68
The total remuneration and benefits paid to the executive management team members (including the CEO) in 2022 and 2021 was
EUR 1,723,606 (USD 1,815,819) and EUR 1,526,037 (USD 1,814,834) (gross amount, excluding VAT and share based compensation).
The primary performance objectives for the bonuses of the above executive managers in 2022 were set as a team, applicable
equally to each member of the team, and based on the performance of the Company, as follows:
• respect of the Board-approved annual budget, with a focus on cash-flow management
• meeting measurable operational targets, including total revenues, unit volumes for the Confirm mdx test, revenues
attributable to the Company’s UTI testing solution, and achievement of Medicare reimbursement for the Select mdx test.
Each of these foregoing targets was based on minimum percentage attainment of defined, objective outcomes for the
full calendar year, with the revenue, cash flow and unit volume targets tied to items that are reviewed by the Company’s
independent auditors in the ordinary course. Additionally, each performance target was assigned a pre-defined weighting
as a percentage of the bonus eligibility applicable to each member of executive management, with the CEO being treated
consistently with other members of the executive management team. In its assessment of executive management’s
performance against these established objectives for 2022, the nomination and remuneration committee of the Board of
Directors did not deviate from the targets as established in advance for the calendar year – with the Board determining that
certain targets were not met, while others were partially obtained in accordance with their terms.
Special provisions of the contractual relationship with the executive management
Each of the executive managers has a contractual employment agreement.
The Company hired Mr. Michael K. McGarrity, acting in the role of Chief Executive Officer, effective as of 18 February
2019. The executive employment agreement with Mr. McGarrity provides that if the Company terminates the employment
agreement without cause or if Mr. McGarrity resigns for good reason, Mr. McGarrity shall be eligible to receive as severance
an amount equal to twelve (12) months of base salary in effect at the time of the separation. In addition, the Company has the
right, exercisable at any time, to terminate the executive employment agreement with immediate effect, for cause (as defined
in the employment agreement) or without cause at its discretion (subject to a severance notice or payment in line with market
standards), by providing written notice.
Acting under the direction of the Board, the Company hired Mr. Ron Kalfus, acting in the role of Chief Financial Officer,
effective as of 22 July 2019. The employment agreement with Mr. Kalfus provides that if the Company terminates the
employment agreement without cause or if Mr. Kalfus resigns for good reason, Mr. Kalfus shall be eligible to receive
as severance an amount equal to six months of base salary in effect at the time of the separation, which amount was
automatically increased to twelve (12) months of base salary after 22 July 2020. In addition, the Company has the right,
exercisable at any time, to terminate the executive employment agreement with immediate effect, for cause (as defined in
the employment agreement) or without cause at its discretion (subject to a severance notice or payment in line with market
standards), by providing written notice.
Acting under the direction of Board, the Company hired Mr. John Bellano, acting in the role of Chief Commercial Officer,
effective as of 19 June 2019. The employment agreement with Mr. Bellano provides that if the Company terminates the
employment agreement without cause or if Mr. Bellano resigns for good reason, Mr. Bellano shall be eligible to receive
as severance an amount equal to six months of base salary in effect at the time of the separation, which amount was
automatically increased to twelve (12) months of base salary after 19 June 2020. In addition, the Company has the right,
exercisable at any time, to terminate the executive employment agreement with immediate effect, for cause (as defined in
the employment agreement) or without cause at its discretion (subject to a severance notice or payment in line with market
standards), by providing written notice.
Remuneration earned by the CEO for the reported year
Mr. McGarrity is remunerated on the basis of his executive management position. As CEO, as of December 31, 2022,
Mr.McGarrity was entitled to a gross annual base salary of USD 535,000, which will be reviewed by the Board of Directors
(or the nomination and remuneration committee) on an annual basis, and an annual bonus of up to 60% of the then
applicable base salary. Furthermore, Mr.McGarrity is entitled to a reimbursement of expenses, and he and his dependents
are eligible to participate in all group health, medical, dental, disability and insurance plans, incentive, savings and retirement
plans, and other employee benefits that are established by the Company for its executives.
Excluding the value of subscription rights, the remuneration and benefits provided to the CEO in 2022 were composed
as follows:
Euro (€) $ equivalent Relative
importance (%)
Fixed gross remuneration
1
€420,102 $442,576 78.76%
Bonuses paid and awarded
2
(gross) €47,461 $50,000 8.90%
Pension benefits €15,577 $16,411 2.92%
Other benefits
3
€50,256 $52,945 9.42%
Total €533,396 $561,932 100%
Notes:
1
: Total cost to the Company, including employer social security contributions and vacation pay accrual.
2
: Excludes value of 1,000,000 subscription rights already created, issued, and accepted in 2022 under the Company’s 2022
Share Option Plan.
3
: Includes Company-paid and other similar benefits, such as the employer’s payroll taxes, meal tickets and health insurances.
Excludes reimbursement of normal professional expenses such as telephone and Company travel expenses.
Remuneration earned by other executive managers for the reported year
The 2022 combined remuneration package of the other executive management team members in office in 2022
(excluding the CEO) - i.e. John Bellano, Joseph Sollee and Ron Kalfus - including employer taxes, was EUR 1,190,210.
Euro (€) $ equivalent Relative
importance (%)
Fixed gross remuneration
1
€931,897 $981,754 77.9%
Bonuses paid and awarded
2
(gross) €71,653 $75,486 6.0%
Pension benefits €35,439 $37,336 3.0%
Other benefits
3
€157,456 $165,880 13.2%
Total €1,196,445 $1,260,456 100%
Notes:
1
: Includes employer taxes and vacation pay accrual. Excludes VAT.
2
: Excludes value of subscription rights already created, issued, and accepted in 2022 by certain other executive managers under the
Company’s 2022 Share Option Plan.
3
: Includes for some individuals a Company car, meal vouchers, and other similar benefits. Excludes reimbursement of normal professional
expenses such as telephone and Company travel expenses.
Part II: Corporate Governance Part II: Corporate Governance
Annual Report 2022 / 70
2022 Share-based compensation of Directors and executive managers
During the course of 2022, the following share-based compensation was awarded to Directors and executive managers of
MDxHealth:
• On 4 August 2022, each Non-Independent Non-Executive Director serving on the Board as of 25 May 2022
(at the occasion of the ordinary general shareholders meeting), were granted 10,000 new subscription rights with
the following characteristics:
o Exercise price of EUR 0.797 (one share option (subscription right) gives right to buy one share);
o Cliff vesting over 1 year for all beneficiaries; and
o Duration of options: 10 years.
Mr. Eric Bednarski, a Non-Independent Non-Executive Director serving on the Board, declined to accept any of the new
subscription rights upon his receipt of notice of the grant.
• On 4 August 2022, a total of 2,200,000 subscription rights were granted to members of the executive management team.
o Of these 2,200,000 granted subscription rights, 1,100,000 vest in accordance with a straight-line vesting schedule
over three years for all beneficiaries, with the following additional characteristics:
• Exercise price of EUR 0.684 (one subscription rights gives right to buy one share);
• Vesting Period: the subscription rights vest in equal annual installments over a three-year period from the
date of grant;
• Duration of the subscription right: 10 years.
The 1,100,000 subscription rights were granted as follows:
• Mr. McGarrity received 500,000 subscription rights;
• Mr. Bellano received 200,000 subscription rights;
• Mr. Kalfus received 200,000 subscription rights;
• Mr. Sollee received 200,000 subscription rights.
o Of these 2,200,000 granted subscription rights, 1,100,000 were granted with the following characteristics:
• Exercise price of EUR 0.684 (one subscription rights gives right to buy one share);
• Cliff vesting in the first calendar quarter of 2024, if the Company attains specified corporate goals for the full fiscal
year 2023 approved by the Board of Directors;
• Duration of the subscription right: 10 years.
The 1,100,000 subscription rights were granted as follows:
• Mr. McGarrity received 500,000 subscription rights;
• Mr. Bellano received 200,000 subscription rights;
• Mr. Kalfus received 200,000 subscription rights;
• Mr. Sollee received 200,000 subscription rights.
The employment contract with Mr. Joe Sollee dates from before the entry into force of the law of 6 April 2010 on corporate
governance in public and listed companies and is in conformity with common employment law. The contract with Mr. Sollee
provides that if his employment is terminated for a reason other than serious misconduct or if Mr. Sollee resigns for good
reason, he will be entitled to a severance pay of nine (9) months gross remuneration and benefits. In addition, the Company
has the right, exercisable at any time, to terminate the executive employment agreement with immediate effect, for cause
(as defined in the employment agreement) or without cause at its discretion (subject to a severance notice or payment in line
with market standards), by providing written notice.
The contracts with the executive managers and the Executive Director do not include any provision stating that the variable
part of the remuneration based upon faulty financial information will be recovered by the Company.
Subscription rights
Share options granted by the Company generally take the form of subscription rights in the sense of article 7:67 and seq.
of the Belgian Companies and Associations Code. Subscription rights can periodically be awarded to members of the
personnel as defined under article 1:27 of the Belgian Companies and Associations code (with the exception of Non-
Independent Directors), or even certain consultants, primarily as a retention and motivation tool. Subscription rights typically
vest over time (subject to the beneficiary remaining with the Company) and can only be exercised after a specific period of
time, except where the Company decides otherwise. During 2020, the Company modified its remuneration policy to provide
that the Company will no longer grant share options to Independent Directors.
In the course of 2022, no subscription rights were exercised by Directors and executive managers.
Part II: Corporate Governance Part II: Corporate Governance
Annual Report 2022 / 72
Ratio between the highest and the lowest remuneration
For the financial year 2022, the ratio, by country, between the highest and the lowest remuneration, expressed on a full-time
equivalent basis is:
Country
1
Ratio over
2020
2
Ratio over
2021
2
Ratio over
2022
2
Belgium 2.52 4.19 4.28
The Netherlands 2.14 2.24 2.21
United States of America 10.68 12.58 12.72
Notes:
(1)
The CEO's remuneration is accounted for in the United States of America.
(2)
A comparison is made between the lower and the higher yearly gross salary of each employee of the Company, by country
(Highest salary/Lowest salary).
Done on 24 April 2023
On behalf of the Board of Directors
Annual evolution in remuneration, performance and average annual
remuneration of employees
Evolution of the remuneration of the Directors and executive managers
1
FY 2018 vs FY 2017 FY 2019 vs FY 2018 FY 2020 vs FY 2019 FY 2021 vs FY 2020 FY 2022 vs FY 2021
USD (‘000) % USD (‘000) % USD (‘000) % USD (‘000) % USD (‘000) %
Directors
and executive
managers
1,769 5% 1,236 (30)% 1,766 43% 1,847 5% 1,822 (1)%
The decrease in average remuneration in 2019 relates to changes in management during the year which caused certain
vacancies throughout 2019, with those vacancies filled in 2020, which brought the average remuneration back to normal
levels.
Evolution of the remuneration of the average remuneration on a full-time equivalent basis of employees other than
Directors and members of the executive management
2
FY 2018 vs FY 2017 FY 2019 vs FY 2018 FY 2020 vs FY 2019 FY 2021 vs FY 2020 FY 2022 vs FY 2021
USD (‘000) % USD (‘000) % USD (‘000) % USD (‘000) % USD (‘000) %
Employees 107.1 2% 91.3 (15)% 91.5 0% 86.1 (6.2)% 87.0 1%
The decrease in average remuneration year-over-year primarily relates to the decrease in commissions paid to sales
representatives.
Evolution of the performances of the Company
Performance
Criteria
FY 2018 vs FY 2017 FY 2019 vs FY 2018 FY 2020 vs FY 2019 FY 2021 vs FY 2020
FY 2022 vs FY 2021
USD (‘000) % USD (‘000) % USD (‘000) % USD (‘000) % USD (‘000) %
Net result
(32,450) 164% (43,100) 33% (28,662) (33)% (29,002) 1% (44,044) 51%
Net equity 52,117 20% 19,724 (62)% 5,849 (70)% 46,899 702% 9,315 (80%)
Paid dividends 0 0% 0 0% 0 0% 0 0% 0 0%
Market
capitalization
126,966 (34)% 82,401 (35)% 97,835 19% 155,806 59% 103,890 (33%)
Notes:
(1)
Includes the gross salary and bonuses paid to the executive management.
(2)
Includes the gross salary and bonuses paid to full-time equivalent employees. The average employee remuneration is calculated on the
basis of the ratio between the gross salary, excluding other components of the salary (such as benefits and pension plans), and the FTE
number.
Annual Report 2022 / 74
Our business and our industry are subject to significant risks.
You should carefully consider the risks and uncertainties described
below, together with all of the other information in this annual report,
including our audited consolidated financial statements and related
notes. This annual report also includes forward-looking statements
that involve risks and uncertainties. See “Special Note Regarding
Forward-Looking Statements.” If any of the following risks are
realized, our business, financial condition, operating results and
prospects could be materially and adversely affected.
Summary of Risk Factors
• We have a history of losses, and expect to incur net losses in the future and may never achieve profitability.
• We might require substantial additional funding to continue our operations and to respond to business needs or take
advantage of new business opportunities, which may not be available on acceptable terms, or at all.
• Our commercial success will depend on the market acceptance and adoption of our current and future tests.
• Our financial results are largely dependent on sales of one test, and we will need to generate sufficient revenues from this
and other future solutions to grow our business.
• We face uncertainties over the reimbursement of our tests by third party payors.
• Billing and collections processing for our tests is complex and time-consuming, and any delay in transmitting and
collecting claims could have an adverse effect on revenue.
• Our business and reputation will suffer if we are unable to establish and comply with, stringent quality standards to assure
that the highest level of quality is observed in the performance of our tests.
• We expect to make significant investments to research and develop new tests, which may not be successful.
• Failure to comply with governmental payor regulations could result in us being excluded from participation in Medicare,
Medicaid or other governmental payor programs, which would adversely affect our business.
• We conduct business in a heavily regulated industry, and changes in regulations or violations of regulations may, directly
or indirectly, adversely affect our results of operations and financial condition and harm our business.
Part III: Principle Risks & UncertaintiesPart III: Principle Risks & Uncertainties
Principle Risks
& Uncertainties
Part III: Principle Risks & Uncertainties Part III: Principle Risks & Uncertainties
Annual Report 2022 / 76
time to time in case of a shortfall in cash inflows from operations or to respond to business needs or take advantage of new
business opportunities, which may not be available at acceptable terms, or at all. For example, mdxhealth has previously
raised capital in connection with its initial public offering in the United States as well as in March/February 2023, January
2021 and May 2020.
If additional funds are raised through the sale of equity, convertible debt or other equity-linked securities, security holders'
ownership will be diluted. Any equity securities issued also may provide for rights, preferences or privileges senior to those
of holders of ordinary shares. If additional funds are raised by issuing debt securities, these debt securities would have
rights, preferences and privileges senior to those of shareholders, and the terms of the debt securities issued could impose
significant restrictions on the Company's operations.
If adequate funds are not available, mdxhealth may have to scale back its operations or limit its research and development
activities, which may cause the Company to grow at a slower pace, or not at all, and the business could be adversely
affected.
Mdxhealth's term loan contains restrictions that limit its flexibility in operating its business, and if the Company fails
to comply with the covenants and other obligations under its loan agreement, the lenders may be able to accelerate
amounts owed under the facility and may foreclose upon the assets securing its obligations.
On 2 August 2022, the Company entered into a USD 70 million loan and security agreement with Innovatus Life Sciences
Lending Fund I, LP ("Innovatus"). This loan was to finance the acquisition of Genomic Prostate Score® (GPS) test (formerly
Oncotype DX GPS) ("GPS") from Genomic Health, Inc., a subsidiary of Exact Sciences Corporation ("Exact Sciences").
At closing, an amount of USD 35 million was drawn, with an additional USD 35 million remaining available as a USD 20 million
term B loan and a USD 15 million term C loan that can be drawn in 2024 and 2025 respectively, subject to certain conditions.
The remaining proceeds of the loans will be used for working capital purposes and to fund general business requirements.
The loans accrue interest at a floating per annum rate equal to the sum of (a) the greater of (i) the prime rate published in
The Wall Street Journal in the “Money Rates” section or (ii) 4.00%, plus (b) 4.25%, and require interest-only payments for the
initial four years. At the election of the Company, a portion of the interest may be payable in-kind by adding an amount equal
to 2.25% of the outstanding principal amount to the then outstanding principal balance on a monthly basis until 2 August
2025. The loans mature on 2 August 2027. The lenders shall have the right to convert, prior to 2 August 2025, up to 15%
of the outstanding principal amount of the loans into ADSs of the Company at a price per ADS equal to USD 11.21. As part of
the new debt facility with Innovatus, the Company’s debt facility with Kreos for an outstanding principal amount of
EUR 9 million was fully repaid in cash as of 30 September 2022 for a total amount of USD 10.8 million.
The loan agreement with Innovatus is collateralised by substantially all of the Company's assets, including intellectual
property related to its Confirm mdx and Select mdx tests. The loan agreement also subjects the Company to certain
affirmative and negative covenants, including limitations on the Company's ability to transfer or dispose of assets, merge
with or acquire other companies, make investments, pay dividends, incur additional indebtedness and liens and conduct
transactions with affiliates. As a result of these covenants, the Company has certain limitations on the manner in which it can
conduct its business, and it may be restricted from engaging in favourable business activities or financing future operations
or capital needs until its current debt obligations are paid in full or it obtains the consent of Innovatus, which it may not
be able to obtain. Mdxhealth cannot be certain that it will be able to generate sufficient cash flow or revenue to meet the
financial covenants or pay the principal and accrued interest on the debt.
In addition, upon the occurrence of an event of default, Innovatus, among other things, can declare all indebtedness due
and payable immediately, which would adversely impact liquidity and reduce the availability of cash flows to fund working
capital needs, capital expenditures and other general corporate purposes. An event of default includes, but is not limited to,
the Company's failure to pay any amount due and payable under the loan agreement, the breach of any representation or
• If the FDA were to begin requiring approval or clearance of our tests, we could incur substantial costs and time delays
associated with meeting requirements for premarket clearance or approval. The dual listing of our ordinary shares and
ADSs following the U.S. offering may adversely affect the liquidity and value of the ADSs.
• We are incurring significant increased costs as a result of operating as a company that is publicly listed on both NASDAQ
in the U.S. and Euronext Brussels in Belgium, and our management is required to devote substantial time to compliance
initiatives.
• As a result of being a U.S. public company, we are subject to additional regulatory compliance requirements, including
Section 404, and if the Company fails to maintain an effective system of internal controls, it may not be able to accurately
report its financial results or prevent fraud.
• Certain of our significant shareholders may have different interests from the Company and may be able to control the
Company, including the outcome of shareholder votes.
Risks Related to Our Business and Industry
Mdxhealth has a history of losses and expects to incur net losses in the future and may never achieve profitability.
Mdxhealth has incurred substantial net losses since its inception and it may never achieve profitability. As of 31 December
2022, the Company had an accumulated deficit of USD 288.3 million and for the year ended 31 December 2022, the
Company had a net loss of USD 44.0 million and net cash used in operating activities of USD 34.1 million, respectively.
Mdxhealth expects its losses to continue as a result of costs relating to ongoing research and development and for increased
sales and marketing costs for existing and planned solutions. These losses have had, and will continue to have, an adverse
effect on the Company's working capital, total assets, and stockholders' equity. Even if the Company achieves significant
revenues, it may not become profitable, and even if it achieves profitability, it may not be able to sustain or increase
profitability on a quarterly or annual basis. Failure to become and remain consistently profitable could adversely affect the
market price of mdxhealth's common stock and could significantly impair its ability to raise capital or expand its business in
accordance with its growth strategy. Historically, the Company has been able to raise capital at regular occasions, including
most recently via the capital increase it completed on 7 February 2023. If it is unable to continue to do this, its ability to
operate as a going concern could be seriously compromised.
Mdxhealth may require substantial additional funding to continue its operations and to respond to business needs
or take advantage of new business opportunities, which may not be available on acceptable terms, or at all.
On the date of this report, the Company is of the opinion that, taking into account its available cash and cash equivalents,
ithas sufficient working capital to meet its present requirements and cover the working capital needs for a period of at least
12 months as of the date of this report. Notwithstanding the foregoing, over the next several years, mdxhealth's capital
outlays and operating expenditures are expected to increase as it commercialises its expanded menu of testing solutions.
Additionally, under the terms of the asset purchase agreement in relation to the acquisition of the Oncotype DX GPS prostate
cancer business of Exact Sciences, following the closing, an additional aggregate earn-out amount of up to USD 70 million
is to be paid by mdxhealth to Exact Sciences over the course of 2024, 2025 and 2026, in an amount equal to a portion
of the prior calendar year’s reported revenues attributable to the Oncotype DX GPS prostate cancer business, with the
maximum earn-out payable in 2024 and 2025 not to exceed USD 30 million and USD 40 million, respectively. At the option of
mdxhealth, the earn-out amounts can be settled in cash or through the issuance of additional ADSs of the Company (valued
in function of a volume weighted average trading price of the Company’s shares at the end of the relevant earn-out period)
to Exact Sciences, provided that the aggregate number of Shares representing the ADSs held by Exact Sciences shall not
exceed more than 5% of the outstanding Shares of mdxhealth. Mdxhealth may require additional equity or debt funding from
Part III: Principle Risks & Uncertainties Part III: Principle Risks & Uncertainties
Annual Report 2022 / 78
in connection with any future forgiveness application (if the Company chooses to apply for forgiveness) or claims under
the False Claims Act could consume significant financial and management resources. Any of these events could harm its
business, results of operations and financial condition.
The molecular diagnostics industry is highly competitive and characterised by rapid technological changes and the
Company may be unable to keep pace with its competitors.
The molecular diagnostics field is characterised by rapid technological changes, frequent new product introductions,
changing customer preferences, emerging competition, evolving industry and regulatory compliance standards,
reimbursement uncertainty and price competition. Moreover, the molecular diagnostics field is intensely competitive both in
terms of service and price, and continues to undergo significant consolidation, permitting larger clinical laboratory service
providers to increase cost efficiencies and service levels, resulting in more intense competition.
The market for assessing men at risk for prostate cancer diagnosis or aggressiveness is large. As a result, this market has
attracted competitors, some of which possess substantially greater financial, selling, logistical and laboratory resources,
more experience in dealing with third-party payors, and greater market penetration, purchasing power and marketing
budgets, as well as more experience in providing diagnostic services. Some companies and institutions are developing
serum-based tests and diagnostic tests based on the detection of proteins, nucleic acids or the presence of fragments of
mutated genes in the blood that are associated with prostate cancer. These competitors could have technological, financial,
reputational, and market access advantages over mdxhealth.
Regarding the Company's Confirm mdx for Prostate Cancer tissue-based test, several directly competitive products are
currently commercially available. In 2014, OPKO Health, Inc., a NYSE listed company, launched the 4Kscore test, a blood
based 4-plex test which combines the results of the blood test with clinical information in an algorithm that calculates a
patient's percent risk for aggressive prostate cancer prior to a biopsy. OPKO is the third largest clinical laboratory in the
United States, with a significantly larger sales and marketing team than the Company. The 4Kscore test obtained FDA
marketing approval in December 2021. Offered at a lower price point, the 4Kscore test offers a competitive price advantage
over the Confirm mdx test. The PCA-3 test from Hologic, a urine-based test, is on the U.S. market as an FDA approved
test, which may be perceived as providing a competitive advantage since the Confirm mdx for Prostate Cancer test is not
FDA approved. The PCA-3 test is intended for the same patient population as Confirm mdx for Prostate Cancer, but its
performance has only been established in men who were already recommended by urologists for repeat biopsy.
Regarding the Company's Select mdx for Prostate Cancer urine-based test, several directly competitive products are
currently commercially available. In 2016, ExosomeDx launched the ExoDx (Intelliscore), a urine-based test designed to
assess whether a patient presenting for an initial or repeat biopsy is at greater risk for high-grade prostate cancer.
The ExoDx test competes directly with Select mdx. In 2018, Bio-Techne Corporation, a large U.S.-based, diversified life
sciences company, acquired the ExoDx test. Bio-Techne has greater resources and a significantly larger sales and marketing
team than the Company. For instance, based on recent SEC filings, Bio-Techne had total assets in excess of USD 1 billion
and of the latest practicable date prior to the date of this report, it had a market capitalisation of over USD 10 billion.
Inaddition, the ExoDx test may also provide a competitive advantage since, unlike the Select mdx test, it does not require a
prostate massage as part of its specimen collection procedures. In addition to ExoDx, the 4Kscore test offered by OPKO and
the Prostate Health Index test, or the "phi score", offered by Beckman Coulter, both compete directly with the Select mdx test.
Regarding the Company’s GPS tissue-based test, acquired in August 2022 from Exact Sciences, several directly competitive
products are currently commercially available. Myriad Genetics offers the Prolaris test, a tissue-based genetic test to help
identify those men who need treatment versus those who can choose active surveillance, which is directly competitive with
the GPS test. Additionally, Veracyte offers the Decipher test, a tissue-based genetic test to help identify those men who
need treatment versus those who can choose active surveillance, which is directly competitive with the GPS test.
warranty in the loan agreement, the breach of any covenant in the loan agreement (subject to a cure period in some cases),
a change in control as defined in the loan agreement, the default on any debt payments to a third party or any voluntary or
involuntary insolvency proceeding. If an event of default occurs and the Company is unable to repay amounts due under
the loan agreement, Innovatus could foreclose on substantially all of the Company's assets, including secured intellectual
property. Mdxhealth cannot be certain that future working capital, borrowings or equity financings will be available to repay
or refinance its debt to Innovatus or any other debt it may incur in the future.
Furthermore, mdxhealth must meet certain covenants in order to draw down an additional USD 20 million term B loan and a
USD 15 million term C loan that remain available under the USD 70 million Innovatus facility in 2024 and 2025, respectively.
The availability of the USD 20 million term B loan and a USD 15 million term C loans are intended to coincide with the
anticipated contingent earn-out payment obligations due under the terms of the asset purchase agreement in relation to
the acquisition of the Oncotype DX GPS prostate cancer business of Exact Sciences. If mdxhealth does not have sufficient
working capital to fund its earn-out payment obligations to Exact Sciences if and when they become due, and is also
unable to meet loan covenants necessary to draw down one or more of the additional Innovatus term loans, mdxhealth may
be unable to satisfy its contractual obligations to Exact Sciences, resulting in a material breach under the asset purchase
agreement with Exact Sciences as well as an event of default under the loan agreement with Innovatus, and the business
could be adversely affected.
Mdxhealth may engage in acquisitions that could disrupt its business, cause dilution to its stockholders and reduce
its financial resources.
In addition to the acquisition of the GPS test from a subsidiary of Exact Sciences in August 2022, and the acquisition of
NovioGendix, a privately held company based in Nijmegen (The Netherlands), in September 2015, the Company may enter
into other transactions in the future to acquire other businesses, products or technologies. The Company may be unable
to realize the anticipated benefits of the acquisitions or do so within the anticipated timeframe. Any acquisitions may not
strengthen the Company's competitive position, and these transactions may be viewed negatively by customers or investors.
The Company could incur losses resulting from undiscovered liabilities of the acquired business that are not covered by the
indemnification the Company may obtain from the seller. In addition, the Company may not be able to successfully integrate
the acquired personnel, technologies and operations into its existing business in an effective, timely and non-disruptive
manner. If the Company is unable to do so, the disruption to its operations could result in additional costs or could distract
management’s attention from other initiatives.
Mdxhealth's federal loan subjects the Company to a variety of federal regulations and although the Company may
apply for forgiveness of this loan it may not be forgiven.
In April 2020, mdxhealth qualified for a USD 2.3 million loan through the Paycheck Protection Program (the "PPP") of the
U.S. Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), under a loan agreement administered by the U.S.
Small Business Administration. The maturity of the PPP loan is on 30 June, 2025. By participating in a federal loan program,
the Company becomes subject to increased governmental oversight and federal regulatory compliance obligations, including
potential civil and criminal liability for making false claims or statements under the U.S. False Claims Act, 31 U.S.C. § 3729
et seq. (the "FCA"). Liability under the FCA and similar federal statutes can carry significant potential monetary penalties and
potential jail time, and can arise from both "knowing" and "wilful" misstatements. FCA violations will result in a civil penalty
per false claim, of not less than USD 13,508 and not more than USD 27,018, plus treble the government's actual damages.
A person who violates § 3729 will also be held liable for the government's costs for bringing a civil action to recover any
penalty or damages. If, despite the Company's good faith belief that the Company satisfied all eligibility requirements for
the PPP loan, the Company is found to have been ineligible to receive the PPP loan or in violation of any of the laws or
regulations that apply to the Company in connection with the PPP loan, it may be subject to penalties, including under the
FCA, and could be required to repay the PPP loan. Additionally, a review or audit by the SBA or other government entity
Part III: Principle Risks & Uncertainties Part III: Principle Risks & Uncertainties
Annual Report 2022 / 80
If mdxhealth's tests or the technology underlying its current or future tests do not receive sufficient favourable exposure
in peer-reviewed publications, the rate of clinician adoption of its tests and positive reimbursement coverage decisions for
its tests could be negatively affected. See also "mdxhealth faces uncertainties over the reimbursement of its tests by third
party payors". The publication of clinical data in peer-reviewed journals is a crucial step in commercialising and obtaining
reimbursement for diagnostic tests, and the Company's inability to control when, if ever, its results are published may delay
or limit its ability to derive sufficient revenue from any product that is the subject of a study.
While the Company is unable to quantify the impact of its clinical studies being unsuccessful or producing adverse
outcomes, any of these events could severely harm its ability to market or sell its tests.
Mdxhealth faces uncertainties concerning the coverage and reimbursement of its tests by third-party payors.
Successful commercialisation of the Company's tests depends, in large part, on the availability of coverage and adequate
reimbursement from government and private payors. Favourable third-party payor coverage and reimbursement are essential
to meeting the Company's immediate objectives and long-term commercial goals. In the United States, for new diagnostic
solutions, each private and government payor decides whether to cover the test, the amount it will reimburse clinical
laboratories or other providers for a covered test, and any specific conditions for coverage and reimbursement. Healthcare
providers may be unlikely to order a specific diagnostic test unless an applicable third-party payor offers meaningful
reimbursement for the test. Therefore, adequate coverage and reimbursement is critical to the commercial success of
a diagnostic product, and if the Company is unable to secure and maintain favourable coverage determinations and
reimbursement, this will undermine its ability to earn revenue from its products.
Medicare
Reimbursement for diagnostic tests furnished to Medicare beneficiaries (typically patients aged 65 or older) is usually based
on a fee schedule set by the U.S. Centers for Medicare & Medicaid Services ("CMS"), a division of the U.S. Department of
Health and Human Services ("HHS"). As a Medicare-enrolled provider with its primary laboratory based in California, the
Company bills Noridian Healthcare Solutions ("Noridian"), the Medicare Administrative Contractor ("MAC") for California,
and the Company’s Select mdx, Confirm mdx, and GPS tests are subject to Noridian's local coverage and reimbursement
policies. Noridian participates in the Molecular Diagnostic Services Program ("MolDX"), administered by Palmetto GBA,
which handles technical assessments for U.S. laboratories that perform molecular diagnostic testing. The Confirm mdx test
obtained a positive Medicare local coverage determination ("LCD") under the MolDX program in 2014, the GPS test obtained
a positive Medicare coverage LCD in 2015, and the Select mdx test obtained a positive Medicare coverage LCD in April,
2023, each of which provides coverage for Medicare patients throughout the United States.
Medicare accounted for approximately 43% of mdxhealth’s revenues in 2022, compared to 38% in 2021. See Note 4
"Revenue and Cost of goods & services" to the 2022 Annual Report for further detail.
Commercial payors
Obtaining coverage and reimbursement by commercial payors is a time-consuming and costly process, without a guaranteed
outcome, since each commercial payor makes its own decision with respect to whether to cover a particular test and,
if so, at what rate to reimburse providers for that test. In addition, several payors and other entities conduct technology
assessments of new medical tests and devices and provide the results of these assessments for informational purposes
to other parties. These assessments may be used by third-party payors and healthcare providers as grounds to deny
coverage for a particular test, or to refuse to use or order a particular test or procedure. The Company's tests have received
initial negative technology assessments from several of these entities and are likely to receive more negative technology
assessments. The Company continues to work with third-party payors to obtain coverage and reimbursement for its tests
and to appeal coverage denial decisions based on existing and ongoing studies, peer reviewed publications, and support
from physician and patient groups. Commercial payors may not continue to issue positive coverage and reimbursement
In addition to directly competitive genomic tests, traditional methods used by pathologists and clinicians to estimate risk for
disease progression also pose competitive threats. Companies combining these traditional methods with artificial intelligence
could potentially emerge as competitors, though most of these technologies are currently in the research stage.
Each of OPKO, Beckman Coulter and Myriad Genetics have greater resources and a significantly larger sales and marketing
team than mdxhealth. Beckman Coulter is owned by Danaher Corporation, which had total assets in excess of USD 50
billion based on recent SEC filings and a market capitalisation in excess of USD 150 billion. Myriad Genetics had total assets
in excess of USD 1 billion based on recent SEC filings and a market capitalisation in excess of USD 1.5 billion. As a result
of these significantly greater resources, these competitors are able to make larger investments into the tests they produce
and the sales and marketing of these tests, which may cause the Company to lose market share. In addition to competitive
products, the Confirm mdx, Select mdx and GPS tests also face competition from multiparametric MRI ("mpMRI"),
a clinical diagnostic imaging procedure available to and used by physicians for many years, which focuses on visual tissue
analysis. The mpMRI procedure can visually reveal potential locations of abnormal and potentially cancerous prostate
tissue characteristics that distinguish tumours from healthy tissue. The visual aspect of diagnostic imaging may feel more
accessible and be considered preferable by some physicians over molecular analysis, and there likely is an economic
incentive for some physicians to earn a professional fee from the performance of mpMRI procedures. It may be difficult
to change the methods or behaviour of physicians to incorporate the Company's testing solutions into their practices in
conjunction with, or instead of, mpMRI clinical diagnostic imaging procedures. In addition, companies developing or offering
capital equipment or point-of-care kits to physicians represent another source of potential competition. These devices are
used directly by the physicians or their institutions, which can facilitate adoption.
If mdxhealth is unable to compete effectively with the abovementioned competitors and with new technologies and
procedures such as mpMRI, it may lose market share, which could in turn adversely affect its revenues.
The commercial success of mdxhealth will depend on the market acceptance and adoption of its current and future
tests.
Healthcare providers typically take a long time to adopt new products, testing practices and clinical treatments, partly
because of perceived liability risks and the uncertainty of third-party coverage and reimbursement. It is critical to the success
of the Company's sales efforts that it educates enough patients, clinicians and administrators about molecular diagnostics
testing, in general, as well as about its Confirm mdx, Select mdx and GPS tests, and demonstrate their clinical benefits. It is
likely that clinicians may not adopt, and third-party payors may not cover or adequately reimburse for, the Company's tests
unless they determine, based on published peer-reviewed journal articles and the experience of other clinicians, that they
provide accurate, reliable and cost-effective information.
As the healthcare reimbursement system in the United States evolves to place greater emphasis on comparative
effectiveness and outcomes data, mdxhealth cannot predict whether it will have sufficient data, or whether the data it has will
be presented to the satisfaction of any payors seeking such data, in the process of determining and maintaining coverage for
its diagnostic tests. The administration of clinical and economic utility studies is expensive and demands significant attention
from the management team. The Company's largest ongoing study, a multicenter U.S. observational study of Confirm mdx
and Select mdx entitled a Prospective Validation of Prostate Biomarkers for Repeat Biopsy ("PRIORITY"), encountered
delays in enrolment and completion as a result of the COVID-19 pandemic. Additionally, the Company has several smaller
post-marketing clinical studies ongoing or planned that are primarily intended to support expanded indications for its Confirm
mdx, Select mdx, and GPS tests. The PRIORITY study or the Company's other clinical studies may not be successfully
initiated, enrolled or completed. Also, data collected from these studies may not be positive or consistent with the
Company's existing data or may not be statistically significant or compelling to the medical community. If the results obtained
from ongoing or future studies are inconsistent with certain results obtained from previous studies, adoption of diagnostic
services would suffer, and mdxhealth's business would be harmed.
Part III: Principle Risks & Uncertainties Part III: Principle Risks & Uncertainties
Annual Report 2022 / 82
patient access to clinicians, began to decline in March 2020 due to the COVID-19 pandemic and . This affected both Confirm
mdx and Select mdx volumes and had a negative effect on revenues and cash flows. Overall, Confirm mdx and Select mdx
billed volumes declined by 18% and 39% for the full year 2020, respectively, compared to 2019 pre-pandemic volumes.
To the extent COVID-19 conditions improve, the duration and sustainability of any such improvements will be uncertain and
continuing adverse impacts and/or the degree of improvement may vary dramatically by geography and by product. In 2021
and 2022, compared to 2019 pre-pandemic volumes, Confirm mdx billed volumes were lower by 16% and 6%, respectively,
and Select mdx billed volumes were lower by 37% and 42%. The actions we take in response to any improvements in
conditions, such as our return-to-office plans, may also vary widely by geography and by business and will likely be made
with incomplete information; pose the risk that such actions may prove to be premature, incorrect or insufficient and could
have a material, adverse impact on our business and results of operations.
Despite the Company’s efforts, the ultimate impact of COVID-19, or any future pandemic, depends on factors beyond the
Company’s knowledge or control, including the duration and severity of the outbreak, third-party actions taken to contain its
spread and mitigate its public health effects, and short- and long-term changes in the behaviors of medical professionals and
patients resulting from the pandemic.
Risks Related to Our Intellectual Property
If mdxhealth is unable to retain intellectual property protection in relation to its Confirm mdx, Select mdx and GPS
tests or if it is required to expend significant resources to protect its intellectual property position, its competitive
position could be undercut.
Mdxhealth's ability to protect its discoveries, know-how and technologies affects its ability to compete and to achieve
profitability. Mdxhealth relies on a combination of U.S. and foreign patents and patent applications, copyrights, trademarks
and trademark applications, confidentiality or non-disclosure agreements, material transfer agreements, licenses and
consulting agreements to protect its intellectual property rights. Mdxhealth also maintains certain company know-how,
algorithms, and technological innovations designed to provide it with a competitive advantage in the marketplace as trade
secrets. As of 31 December 2022, the Company owns or has exclusive rights to more than 17 patent families related to its
molecular technology and cancer-specific biomarkers. Specifically, there are 116 granted or pending patent applications
in this group comprised of 16 issued or allowed U.S. patents, 7 pending U.S. provisional or non-provisional applications,
19 pending international patent applications filed under the Patent Cooperation Treaty ("PCT") and 74 granted patents in
jurisdictions outside the United States, including Japan, Canada, Israel and the major European countries. The Company's
issued U.S. patents expire at various times between 2024 and 2038. Of these issued patents, one covers intellectual property
used in the Company's Confirm mdx test, which expires in 2024, seven cover intellectual property used in the Company's
Select mdx test, the last of which expires in 2036, and 52 cover intellectual property used in the Company's GPS test, the
last of which expires in 2038. Please see also chapter "Business overview", section "Material Agreements", paragraph three
of the section "Intellectual property in-licensing agreements" of this report. While mdxhealth intends to pursue additional and
future patent applications, it is possible that pending patent applications and any future applications may not result in issued
patents. Even if patents are issued, third parties may independently develop similar or competing technology that avoids
its patents. Third parties may also assert infringement or other intellectual property claims against mdxhealth or against its
licensors, licensees, suppliers or strategic partners. Any actions regarding patents could be costly and time-consuming and
could divert the attention of management and key personnel from other areas of the Company's business. Further, it cannot
be certain that the steps mdxhealth has taken will prevent the misappropriation of its trade secrets and other confidential
information as well as the misuse of mdxhealth's patents and other intellectual property, particularly in foreign countries with
no patent protection.
policies and/or contracts and, if they do issue positive coverage or policies, they may not be maintained in the future. If the
Company's tests are considered on a policy-wide level by major third-party payors, whether at its request or on the payor's
own initiative, and the payor determines that such tests are ineligible for coverage and reimbursement, its revenue potential
could be adversely impacted.
On 13 February 2023, mdxhealth announced that UnitedHealthcare would cover the GPS test under UnitedHealthcare’s
commercial policies to assist with treatment decisions for individuals newly diagnosed with localised prostate cancer and
meeting coverage criteria. UnitedHealthcare is the largest healthcare providers in the United States.
As of the date of this report, mdxhealth had approximately 129 and 62 commercial payors for its Confirm mdx and Select
mdx tests, respectively. See Note 4 "Revenue and Cost of goods & services sold" to the 2022 Annual Report for further
detail.
Outside the United States
Outside of the United States, various coverage, pricing and reimbursement approvals are required, including through
coverage determinations made at the national level under public benefit programs. The Company expects that it will take
several years to establish broad coverage and reimbursement for its tests with payors in countries outside of the United
States where the Company commercialises its solutions, and its efforts may not be successful. Even if public or private
reimbursement is obtained, it may cover competing tests, the reimbursement may be conditioned upon local performance
of the tests or other requirements mdxhealth may encounter difficulties in satisfying. Reimbursement levels outside of
the United States may vary considerably from the reimbursement amounts the Company receives in the United States. In
addition, because mdxhealth plans in many circumstances to rely on distributors to obtain reimbursement for its tests, to the
extent the distributor does not have direct reimbursement arrangements with payors, the Company may not be able to retain
reimbursement coverage in certain countries with a particular payor; further, if its agreement with a particular distributor is
terminated or expires or a distributor fails to pay for other reasons, mdxhealth could lose reimbursement coverage in that
jurisdiction.
Currently, the Company relies significantly on the sale of Confirm mdx tests in the United States for its revenues, with this
test accounting for 59%, 93% and 96% of service revenue in 2022, 2021 and 2020, respectively. The Company has materially
diversified its revenue through the acquisition of the GPS test, and has been further diversifying its revenue through the
launch of an additional precision diagnostic test offering and the attainment of clinical guideline inclusion for Select mdx,
which facilitates reimbursement. If reimbursement for the Company’s tests were to be revoked either by CMS or any of the
commercial payors, this could have an immediate impact on the Company's revenues. While mdxhealth does not believe that
revocation of Medicare reimbursement for its Select mdx, Confirm mdx or GPS tests is likely, if this were to occur, the impact
on the Company could be severe.
For further details on segmental revenue, see Note 4 "Revenue and Cost of goods & services sold" to the 2022 Annual
Report.
The ongoing outbreak of COVID-19, or any future pandemic, could impact the Company’s sales volumes, and the
Company’s business may experience other adverse effects as a result of COVID-19 or future pandemics.
The broad and extensive impact of the COVID-19 pandemic on virtually all aspects of the Company’s business and society
exacerbated many pre-existing risks to its business by making them more likely to occur or more impactful when they do
occur. Accordingly, the risks described in this risk factor whould be considered in addition to, and not in lieu of, the risks
described elsewhere throughout these risk factors.
The level and nature of the disruption caused by COVID-19, or any future pandemic, is unpredictable, may be cyclical and
long-lasting and may vary from location to location. The Company’s sales representatives’ contact with clinicians, as well as
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Annual Report 2022 / 84
Mdxhealth faces an inherent risk of product liability claims.
The marketing, sale and use of mdxhealth's tests could lead to product or professional liability claims against it if someone
were to allege that its tests failed to perform as they were designed, or if someone were to misinterpret test results or
improperly rely on them for clinical decisions. Although mdxhealth maintains product and professional liability insurance
which is deemed to be appropriate and adequate, it may not fully protect mdxhealth from the financial impact of defending
against product liability or professional liability claims or any judgments, fines or settlement costs arising out of any such
claims. Furthermore, any product liability lawsuit, with or without merit, could increase its insurance rates or prevent
mdxhealth from securing insurance coverage in the future. Additionally, any product liability lawsuit could harm its reputation,
which could impact its results of operations, or cause collaboration partners to terminate existing agreements and potential
partners to seek alternate partners, any of which could negatively impact its results of operations.
While the impact of any product liability claim on mdxhealth is inherently impossible to quantify given the unknown scope of
any such claim, the impact could potentially be material depending on the quantum of damages sought and the merit of the
claim.
Mdxhealth's laboratory facilities may become inoperable due to natural or man-made disasters or regulatory
sanctions.
Mdxhealth currently performs its testing services in its laboratory facilities located in Irvine, California, Plano, Texas, and
Nijmegen, The Netherlands. Its laboratory facilities could become inoperable due to circumstances that may be beyond
its control, and such inoperability could adversely affect its business and operations. The facilities, equipment and other
business process systems would be costly to replace and could require substantial time to repair or replace.
The facilities may be damaged or destroyed by natural or man-made disasters, including earthquakes, wildfires, floods,
outbreak of disease (such as the ongoing COVID-19 pandemic), acts of terrorism or other criminal activities and power
outages, which may render it difficult or impossible for mdxhealth to perform its tests for some period.
The U.S. federal Clinical Laboratory Improvement Amendments ("CLIA") and the laws of California and certain other states,
impose certification requirements for clinical laboratories, and establishes standards for quality assurance and quality
control, among other things. See chapter "Business overview", section "Regulatory environment", subsection "Certification
Requirements for Clinical Laboratories". Clinical laboratories are subject to inspection by regulators, and to sanctions for
failing to comply with applicable requirements. Sanctions available under CLIA include prohibiting a laboratory from running
tests, requiring a laboratory to implement a corrective action plan, and imposing civil monetary penalties. The Company’s
U.S. laboratory facilities in Irvine, California and Plano, Texas hold certificates of accreditation from CMS to perform high-
complexity testing. To renew this certificate, the facilities are subject to survey and inspection every two years. Mdxhealth
also holds a certificate of accreditation from the College of American Pathologists ("CAP"), which sets standards that are
higher than those contained in the CLIA regulations. CAP is an independent, non-governmental organisation of board-
certified pathologists that accredits laboratories nationwide on a voluntary basis. Sanctions for failure to comply with CAP or
CLIA requirements, including proficiency testing violations, may include suspension, revocation, or limitation of a laboratory's
CLIA certificate, which is necessary to conduct business, as well as the imposition of significant fines or criminal penalties.
In addition, its U.S. facilities are subject to regulation under state laws and regulations governing laboratory licensure. Two
states, one of which is New York, have enacted state licensure laws that are more stringent than the CLIA. Failure to maintain
CLIA certification, CAP accreditation, or required state licenses could have a material adverse effect on the sales of its tests
and results of operations.
Although mdxhealth has licensed and owns issued patents in the United States and foreign countries, it cannot be certain
the claims will continue to be considered patentable by the United States Patent and Trademark Office (the "USPTO"), U.S.
courts patent offices and courts in other jurisdictions. The U.S. Supreme Court, other federal courts and/or the USPTO, may
change the standards of patentability and any such changes could have a negative impact on the Company's business.
For instance, the Federal Circuit has recently ruled on several patent cases - such as Univ. of Utah Research Found. v. Ambry
Genetics Corp., 774 F.3d 755 (Fed. Cir. 2014), Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015),
Genetic Tech. Ltd. v. Merial LLC, 818 F.3d 1369 (Fed. Cir. 2016), and Cleveland Clinic Found. v. True Health Diagnostics, 859
F.3d 1352 (Fed. Cir. 2017) - that some diagnostic method claims are patent ineligible. These decisions have narrowed the
scope of patent protection available in certain circumstances or weakened the rights of patent owners in certain situations.
Some aspects of the Company's technology involve processes that may be subject to this evolving standard and the
Company cannot guarantee that any of its pending process claims will be patentable as a result of such evolving standards.
In addition, this combination of decisions has created uncertainty as to the value of certain issued patents, in particular in the
detection of prostate cancer and other cancers.
Also, patents and patent applications owned by mdxhealth may become the subject of post grant challenges or interference
proceedings in the USPTO to determine validity and the priority of invention, which could result in substantial cost as well as a
possible adverse decision as to the validity or priority of invention of the patent or patent application involved. An adverse decision
in an interference proceeding may result in the loss of rights under a patent or patent application subject to such a proceeding.
Ultimately, the potential weakening of mdxhealth's intellectual property position as a result of the evolution of case law or
otherwise may make it more vulnerable to competition. While mdxhealth is unable to quantify the impact of this risk, given
that its patents remain untested in the courts, the impact could be severe if its competitors are able to take advantage of any
weakening of its intellectual property position.
Risks Related to Our Operations
Billing and collections processing for the Company's tests is complex and time-consuming, and any delay in
transmitting and collecting for claims could adversely impact revenue.
A significant portion of mdxhealth's current revenue is derived from the use of its Confirm mdx test, which is billed on a fee-
for-service basis and paid, for example by hospitals and direct payments from individual patients, and may be reimbursed
by third-party payors, including Medicare and other governmental payor programs, private insurance plans and managed
care organisations. Billing for molecular diagnostics testing services is complex, time-consuming, and expensive. Mdxhealth
is often obligated to services bill in the specific manner required by each particular third-party payor. Failure to comply
with these complex billing requirements (including complex federal and state regulations related to billing government
health care programs, e.g., Medicare and Medicaid) may significantly hinder its collection and retention efforts, including
not only potential write-offs of doubtful accounts and long collection cycles for accounts receivable, but also the potential
disgorgement of previously paid claims based on third-party payor program integrity investigations into billing discrepancies,
fraud, waste and abuse. With CMS' recent implementation of a comprehensive oversight regime that consolidates program
integrity powers into a single Unified Program Integrity Contractor ("UPIC"), audit and investigatory activity into billing fraud,
waste and abuse in the industry has significantly increased.
During the fourth quarter of 2019, and based on recent and historical collections data, mdxhealth updated certain
assumptions to its estimates which affected its revenues. These included a revision to the period that a vast majority
of collections would occur (from 24 months to 12 months); an updated lookback period for historical collection experience
in order to use more recent and relevant collection data; and recognition on a cash basis if no historical payment experience
is available. Updating these revenue recognition estimates negatively affected its revenues in 2019 in the amount of
USD 10.1 million.
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Annual Report 2022 / 86
Furthermore, mdxhealth is subject to privacy and data security laws and regulations at the state, federal and international
level. In the United States, numerous federal and state laws and regulations, including state data breach notification laws,
state health information privacy laws, and federal and state consumer protection laws (e.g., section 5 of the Federal Trade
Commission Act), govern the collection, use, disclosure, and protection of health-related and other personal information.
Failure to comply with data protection laws and regulations could result in (1) government enforcement actions and potential
liability thereunder (potentially including civil and/or criminal penalties), (2) private litigation, and/or (3) adverse publicity that
could negatively affect its operations and/or business. In addition, mdxhealth obtains health information from third parties
(e.g., healthcare providers) and is subject to privacy and security requirements under the Health Insurance Portability and
Accountability Act ("HIPAA"), as amended by the Health Information Technology for Economic and Clinical Health Act
("HITECH"). These laws contain significant fines and other penalties for wrongful use or disclosure of protected data. For
example, HIPAA violations can result in civil and criminal penalties. For example, HIPAA violations can result in civil and
criminal penalties, as described below under " — Regulatory risks — mdxhealth conducts business in a heavily regulated
industry, and changes in regulations or violations of regulations may, directly or indirectly, adversely affect its results of
operations and financial condition and harm its business".
Risks Related to Regulation of Our Business
Failure to comply with governmental payor regulations could result in mdxhealth being excluded from participation
in Medicare, Medicaid or other governmental payor programs, which would adversely affect mdxhealth's revenues,
given the importance of reimbursement to its revenue base.
Failure to comply with applicable Medicare, Medicaid and other governmental payor rules could result in mdxhealth being
excluded from participation in one or more governmental payor programs, returning funds already paid, civil monetary
penalties, criminal penalties and/or limitations on the operational function of its laboratories. Additionally, with the recent
implementation by CMS of a comprehensive oversight regime that consolidates program integrity powers into a single UPIC,
audit and investigatory activity into potential billing fraud, waste and abuse in the industry has increased. These changes
have adversely affected and may in the future adversely affect coverage and reimbursement for laboratory services, including
the molecular diagnostics testing services mdxhealth provides. If mdxhealth was unable to receive reimbursement under
a governmental payor program, this would have a severe impact on its revenues, given the importance of reimbursement
under these programs in its revenue base. See also " — Mdxhealth faces uncertainties concerning the coverage and
reimbursement of its tests by third-party payors".
Mdxhealth conducts business in a heavily regulated industry, and changes in, or violations of, applicable regulations
may, directly or indirectly, adversely affect its operational results and financial condition, which could harm its
business.
Mdxhealth's business operations and activities may be subject to a range of local, state, federal, and international healthcare
laws and regulations, including investigatory and program integrity audits and other oversight federal and state health care
programs. For a summary of the most important laws and regulations, see chapter "Business overview", section "Regulatory
environment" of this report.
Mdxhealth's business practices, in operating a U.S. clinical laboratory, may face heightened scrutiny from U.S. government
enforcement agencies such as the U.S. Department of Justice ("DOJ"), the HHS Office of Inspector General ("OIG"), and
CMS. The OIG has issued fraud alerts in recent years that identify certain arrangements between clinical laboratories and
referring physicians as implicating the federal Anti-Kickback Statute. The OIG has stated that it is particularly concerned
about these types of arrangements because the choice of laboratory, as well as the decision to order laboratory tests,
typically are made or strongly influenced by the physician, with little or no input from the patient. Moreover, the provision of
payments or other items of value by a clinical laboratory to a referring physician could be prohibited under the Stark Law,
CMS has primary responsibility for the enforcement of CLIA and may suspend, limit or revoke the certificate of the relevant
clinical laboratory for non-compliance. If the Company's certificate were to be suspended, limited or revoked, whether under
CLIA or under relevant state law, this would have an immediate impact on revenues which would be material.
Mdxhealth relies on a limited number of third-party suppliers for services and items used in the production
and operation of its testing solutions, and some of those services and items are supplied from a single source.
Disruption of the supply chain, unavailability of third-party services required for the performance of the tests,
modifications of certain items or failure to achieve economies of scale could result in a reduction in revenues, which
could be material depending on the length of the supply disruption.
To provide its testing services, mdxhealth is required to obtain customised components and services that are currently
available from a limited number of sources. Most of these components and services are sourced externally from more
than 40 external suppliers. Many of the consumable supplies and reagents used as raw materials in its testing process are
procured from a limited number of suppliers, some of which are single source. In addition, mdxhealth relies on a limited
number of suppliers, or in some cases a single supplier (for example, for the automation of its deparaffination steps for
its Confirm mdx test), for certain equipment and services with which mdxhealth provides testing services. If mdxhealth
has to switch to a replacement supplier for any of these items that are sub-components or for certain services required
for the performance of its tests, or if mdxhealth has to commence its own manufacturing or services to satisfy market
demand, mdxhealth may face additional delays. For example, in the past, a supplier has delivered critical non-conforming
components that failed its acceptance testing, requiring mdxhealth to audit the supplier and assist the supplier in improving
its internal quality processes. In addition, third party suppliers may be subject to circumstances which impact their ability to
supply, including enforcement action by regulatory authorities, natural disasters (e.g., hurricanes, earthquakes, disease and
terrorism), epidemics (e.g., the COVID-19 pandemic), industrial action (e.g., strikes), financial difficulties including insolvency,
among a variety of other internal or external factors. Any such supply disruptions could in turn result in service disruptions
for an extended period of time, which could delay completion of its clinical studies or commercialisation activities and
prevent mdxhealth from achieving or maintaining profitability. While mdxhealth was able to qualify alternative suppliers to
address COVID-19 related disruptions, in the future alternative suppliers may be unavailable, may be unwilling to supply,
may not have the necessary regulatory approvals, or may not have in place adequate quality management systems.
Furthermore, modifications to a service or items or inclusions of certain services or items made by a third-party supplier
could require new approvals from the relevant regulatory authorities before the modified service or item may be used, for
example any modifications to the assembly and packaging of items for its testing services supplied to healthcare providers.
While mdxhealth has not experienced any material supply chain disruptions to date, if mdxhealth were to experience such
disruptions, this could have an immediate impact on revenues, and the impact could be material depending on the length of
the supply disruption.
Security breaches or loss of data may harm mdxhealth's reputation and expose it to liability.
If mdxhealth experiences any security breaches or loss of data or if mdxhealth fails to comply with data protection laws and
regulations, mdxhealth could be subject to government enforcement actions (which could include civil or criminal penalties),
private litigation and/or adverse publicity, which could negatively affect its results of operations and business.
Mdxhealth faces four primary risks relative to protecting sensitive and critical personally identifiable information, intellectual
property or other proprietary business information about its customers, payors, recipients and collaboration partners,
including test results: (1) loss of access risk, (2) inappropriate disclosure or access risk, (3) inappropriate modification risk,
and (4) the risk of being unable to identify and audit controls over the first three risks. While mdxhealth devotes significant
resources to protecting such information, the measures mdxhealth introduces may not be sufficient to guard against security
breaches, the loss or misappropriation of data, privacy violations or the failure to implement satisfactory remedial measures,
which could in turn disrupt operations and lead to reputational damage, regulatory penalties and other material financial losses.
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Annual Report 2022 / 88
If the FDA begins to enforce its medical device requirements for LDTs, or if the FDA disagrees with mdxhealth's assessment
that its tests are LDTs, mdxhealth and these tests could for the first time be subject to a variety of regulatory requirements,
including registration and listing, medical device reporting, and adherence to good manufacturing practices under the quality
system regulations, and mdxhealth could be required to obtain premarket clearance or approval for these existing tests and
any new tests mdxhealth may develop, which may force mdxhealth to cease or delay marketing its tests until the required
clearance or approval are obtained. The premarket review process for diagnostic products can be lengthy, expensive,
time-consuming, and unpredictable. Further, obtaining premarket clearance or approval may involve, among other things,
successfully completing clinical trials. Clinical trials require significant time and cash resources and are subject to a high
degree of risk, including risks of experiencing delays, failing to complete the trial or obtaining unexpected or negative results.
If mdxhealth is required to obtain premarket clearance or approval and/or conduct premarket clinical trials, development
costs could significantly increase, the introduction of any new tests under development may be delayed, and sales of the
Company’s existing tests could be interrupted or stopped. If it were required to cease sales of the Confirm mdx test, this
would have an immediate and severe impact on its revenues, given that 59% of service revenue in 2022 was attributable to
the Confirm mdx test.
Any of these outcomes could reduce revenues or increase costs and materially adversely affect its business, prospects,
results of operations, or financial condition. Moreover, any cleared or approved labelling claims may not be consistent with
current claims or be adequate to support continued adoption of and reimbursement for its tests. For instance, if FDA requires
that any of the Company's tests be labelled as investigational, or if the labelling claims the FDA allows are limited, order levels
may decline and reimbursement may be adversely affected. If after commercialisation under the LDT framework its tests are
allowed to remain on the market but there is uncertainty about the regulatory status of its tests, including questions that may
be raised if competitors object to its regulatory positioning as an LDT, mdxhealth may encounter ongoing regulatory and legal
challenges and related costs. Such challenges or related developments (for example if the labelling claims the FDA allows
mdxhealth to make are more limited than the claims mdxhealth currently plans to make) may impact its commercialisation
efforts as orders or reimbursement may be less than anticipated. As a result, mdxhealth could experience significantly
increased development costs and a delay in generating additional revenue. Until the FDA finalises its regulatory position
regarding LDTs, or federal legislation is passed concerning regulation of LDTs, it is unknown how the FDA may regulate its
tests in the future and what testing and data may be required to support any required clearance or approval as an medical
device or an "in vitro clinical test" (as that category is being defined in the VALID Act, as introduced).
The requirement of premarket review could negatively affect its business until such review is completed and regulatory
clearance or approval is obtained. The FDA could require that sales of one or more of the Company’s tests be halted
pending premarket clearance or approval. In December 2018 the FDA Commissioner and the Director of the Center for
Devices and Radiological Health (the "CDRH") expressed significant concerns regarding disparities between some LDTs
and in vitro diagnostics that have been reviewed and cleared or approved by FDA. If the FDA were to determine that its tests
are not within the policy for LDTs for any reason, including new rules, policies, or guidance, or due to changes in statute,
mdxhealth's tests may become subject to FDA requirements, including premarket review. If required, the regulatory marketing
authorisation process may involve, among other things, successfully completing additional clinical trials and submitting a
premarket clearance (510(k)) submission or filing a de novo or premarket approval application with the FDA. If premarket
review and authorisation is required by the FDA, mdxhealth may need to incur additional expenses or require additional
time to seek it, or mdxhealth may be unable to satisfy FDA standards, and its tests may not be cleared or approved on a
timely basis, if at all, and the labeling claims permitted by the FDA may not be consistent with its currently planned claims
or adequate to support adoption of and reimbursement for its tests. If the FDA requires any form of premarket review, the
Company’s tests may not be cleared or approved on a timely basis, if at all. Mdxhealth may also decide voluntarily to pursue
FDA premarket review and authorisation of its tests if it appears that doing so would be appropriate.
In addition, mdxhealth believes that the sample collection kits provided by mdxhealth for collection and transport of
specimens from a health care provider to its clinical laboratories are considered a Class I medical devices subject to the
FDA's general device controls but exempt from premarket review. However, the FDA could assert the specimen collection kits
unless the arrangement meets all criteria of an applicable exception. The government has actively enforced these laws
against clinical laboratories in recent years.
These U.S. laws and regulations are complex and are subject to interpretation by the U.S. courts and government agencies.
Mdxhealth's failure to comply with such laws and regulations could lead to significant civil or criminal penalties, exclusion
from participation in state and federal health care programs, individual imprisonment, disgorgement of profits, contractual
damages, reputational harm, diminished profits and future earnings, additional reporting or oversight obligations if mdxhealth
becomes subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with
the law, curtailment or restructuring of its operations, or prohibitions or restrictions on its laboratories' ability to provide or
receive payment for its services, any of which could adversely affect its ability to operate its business and pursue its strategy.
Even where mdxhealth is able to successfully defend against any such claims, any potential audit, enforcement action, or
litigation would involve substantial internal and external resources, detract from its executives' day to day responsibilities, and
result in legal expenditures, all of which could materially adversely affect its results of operations. While mdxhealth believes
that it is in material compliance with all applicable laws and regulations, there remains a risk that one or more government
agencies could take a contrary position, or that a private party could file suit under the qui tam provisions of the federal False
Claims Act or a similar state law. Such occurrences, regardless of their outcome, could damage its reputation and adversely affect
important business relationships with third parties, including managed care organisations, and other private third-party payors.
If the FDA were to begin requiring approval or clearance of the Company's tests, the Company could incur
substantial costs and time delays associated with meeting requirements for premarket clearance or approval.
Although mdxhealth believes it is within the scope of the FDA's policy on enforcement discretion for laboratory-developed
tests, commercial availability of laboratory developed tests ("LDTs") is subject to uncertainty given the FDA's latitude in
interpreting and applying its laws and policies. For example, although the FDA has historically exercised enforcement
discretion over most LDTs, it does not consider tests to be subject to this enforcement discretion if they were or are designed
or manufactured completely, or partly, outside of the laboratory that offers and uses them, or if they are offered "over-the-
counter" (as opposed to being available to patients only when prescribed by a health care provider). Even for tests that
appear to fall within FDA's previously stated policy on enforcement discretion, the FDA may decide to regulate certain LDTs
on a case-by-case basis at any time.
Furthermore, the laws and regulations governing the marketing of diagnostic products are evolving, extremely complex and
in many instances, there are no significant regulatory or judicial interpretations of these laws and regulations. Pursuant to
its authority under the federal Food, Drug, and Cosmetic Act (the "FDCA"), the FDA has jurisdiction over medical devices,
including in vitro diagnostics and, therefore, potentially mdxhealth's clinical laboratory tests. Among other things, pursuant to
the FDCA and its implementing regulations, the FDA regulates the research, testing, manufacturing, safety, labeling, storage,
recordkeeping, premarket clearance or approval, marketing and promotion, and sales and distribution of medical devices
in the United States to ensure that medical products distributed domestically are safe and effective for their intended uses.
Although the FDA has asserted that it has authority to regulate the development and use of LDTs, such as mdxhealth's and
many other laboratories' tests, as medical devices, it has generally exercised enforcement discretion and is not otherwise
regulating most tests developed and performed within a single high complexity CLIA-certified laboratory.
Even though the Company's tests are commercialised in the United States as LDTs, they may in the future become subject
to more onerous regulation by the FDA. For example, the FDA may disagree with the assessment that the tests fall within the
definition of an LDT and seek to regulate them as medical devices. The FDA has, for over the past decade, been introducing
proposals to end enforcement discretion and to bring LDTs clearly under existing FDA regulatory frameworks and the U.S.
Congress has recently been working on legislation to create an LDT and in vitro diagnostic regulatory framework that would
be separate and distinct from the existing medical device regulatory framework. For further detail, see chapter "Business
overview", section "Regulatory environment" of this report.
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Annual Report 2022 / 90
may compete with mdxhealth for access. Additionally, the process of negotiating access to samples can be lengthy and
it may involve numerous parties and approval levels to resolve complex issues such as usage rights, institutional review
board approval and patient informed consent, privacy rights, publication rights, intellectual property ownership and
research parameters. If mdxhealth is not able to negotiate access to clinical samples with research institutions, hospitals,
clinical partners, pharmaceutical companies, or companies developing therapeutics on a timely basis, or at all, or if other
laboratories or its competitors secure access to these samples before mdxhealth, its ability to research, develop and
commercialise future products will be limited or delayed. Finally, mdxhealth may not be able to conduct or complete clinical
trials on a timely basis if mdxhealth is not able to enroll sufficient numbers of patients in such trials, and its failure to do so
could have an adverse effect on its research and development and product commercialisation efforts.
Mdxhealth's expansion of its business beyond the United States has resulted in additional regulatory requirements
with which it must comply.
Mdxhealth's expansion of its business outside of the United States increases the potential of violating foreign laws similar to
those described above under " — mdxhealth conducts business in a heavily regulated industry, and changes in regulations
or violations of regulations may, directly or indirectly, adversely affect its results of operations and financial condition and
harm its business". In order to market its tests in other countries, mdxhealth may be required to obtain regulatory approvals
and comply with extensive safety and quality regulations in other countries. The time required to obtain approval by a foreign
country may be longer or shorter than that required for FDA clearance or approval, and the requirements may differ. The
European Union/European Economic Area (the "EU/EEA"), requires a CE conformity mark in order to market medical devices.
Many other countries accept CE or FDA clearance or approval, although others, require separate regulatory filings. Further,
the advertising and promotion of its products in the EEA is subject to the laws of individual EEA Member States implementing
the EU Medical Devices Directives including Directive 98/79/EC on Invitro Diagnostic Medical Devices, Directive 2006/114/
EC concerning misleading and comparative advertising, and Directive 2005/29/EC on unfair commercial practices, as well
as other EEA Member State laws governing the advertising and promotion of medical devices. Going forward, CE marking
will be pursuant to Regulation 2017/745 (the "Medical Devices Regulation" or "MDR") and Regulation 2017/746 (the "Invitro
Diagnostic Medical Devices Regulation" or "IVDR"), which were passed by the European Parliament on 5 April 2017 and
became applicable from 26 May 2021 (previously 26 May 2020) for the MDR and from 26 May 2022 for the IVDR. The Medical
Devices Regulation and the Invitro Diagnostic Medical Devices Regulation contain further obligations for medical devices and
invitro diagnostic medical devices with which mdxhealth will be required to comply as applicable. These new laws are generally
stricter than the requirements previously in place and contain increased evidence requirements for CE marking. They may limit
or restrict the advertising and promotion of its tests to the general public and may impose limitations on promotional activities
with healthcare professionals. The risk of being found in violation of these or other laws and regulations is further increased
by the fact that many have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open
to a variety of interpretations. Any action brought against mdxhealth for violation of these or other laws or regulations, even in
case of successful defence against it, could result in significant legal expenses and divert management's attention from the
operation of its business. Since its business is primarily based in the United States, these laws or regulations would not have
an immediate material impact on its revenues. However, in the longer term, its prospects could be seriously harmed.
Mdxhealth's operating results could be materially adversely affected by unanticipated changes in tax laws and
regulations, adjustments to its tax provisions, exposure to additional tax liabilities, or forfeiture of its tax assets.
Mdxhealth is subject to laws and regulations on tax levies and other charges or contributions in different countries, including
transfer pricing and tax regulations for the compensation of personnel and third parties. Mdxhealth's tax structure involves
several transfers and transfer price determinations between its parent company and its subsidiaries or other affiliates. Its
effective tax rates could be adversely affected by changes in tax laws, treaties and regulations, both internationally and
domestically. An increase of the effective tax rates could have an adverse effect on its business, financial position, results of
operations and cash flows.
are non-exempt or Class II devices, which would subject them to premarket clearance or approval processes, which could
be time-consuming and expensive.
Failure to comply with any applicable FDA requirements could trigger a range of enforcement actions by the FDA, including
warning letters, civil monetary penalties, injunctions, criminal prosecution, recall or seizure, operating restrictions, partial
suspension or total shutdown of operations and denial of or challenges to applications for clearance or approval, as well as
significant adverse publicity. These impacts could be material for the Company, particularly given the broad enforcement
powers of the FDA.
Mdxhealth expects to make significant investments to research and develop new tests, which may not be successful.
Mdxhealth is seeking to improve the performance of certain of its tests and to develop a pipeline for future products and
services. For example, in August 2022, it announced that it had entered into an agreement to acquire the GPS test from
Exact Sciences. In addition, it is currently developing an additional product for the prostate cancer diagnostic and treatment
pathway. Not all men diagnosed with localized prostate cancer benefit from intervention as some tumors are slow growing
and non-life threatening. Mdxhealth's Monitor mdx product, which is being developed as a non-invasive alternative that
risk stratifies patients for continued active surveillance versus intervention, may also improve patient compliance with
active surveillance protocols. Mdxhealth estimates the addressable market in the United States for the Monitor mdx test at
approximately 1.5 million men annually, or U.S.$1.5 billion. It is also recently developed and launched non-invasive urine test
that identifies and quantifies infectious bacteria and their antibiotics susceptibility to help ensure patients receive the correct
diagnosis and treatment as quickly as possible. Mdxhealth estimates the addressable market in the United States for UTI
testing at approximately 2 million men annually, or U.S.$1 billion. See also chapter "Business Overview, section "Principal
activities", sub-section "Pipeline" of this report.
Developing new or improved diagnostic tests is a speculative and risky endeavour. Candidate products and services that
may initially show promise, may fail to achieve the desired results in larger clinical validation studies, or may not achieve
acceptable levels of clinical accuracy. Results from early studies or trials are not necessarily predictive of future clinical
validation or clinical trial results, and interim results of a validation study or trial are not necessarily indicative of final results.
From time to time, mdxhealth may publicly disclose then-available data from clinical validation studies before completion,
and the results and related findings and conclusions may be subject to change following the final analysis of the data related
to the particular study. As a result, such data should be viewed with caution until the final data are available. Additionally,
such data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as
patient enrolment and/or follow-up continues and more patient data become available. Significant differences between initial
or interim data and final data from either its clinical validation studies or clinical trials could significantly alter its plans to
proceed with additional studies or trials, and harm its reputation and business prospects. If mdxhealth determines that any
of its current or future development programs is unlikely to succeed, mdxhealth may abandon it without any return on its
investment into the program. Mdxhealth may need to raise additional capital to bring any new products or services to market,
which may not be available on acceptable terms, if at all. See also " — Mdxhealth might require substantial additional funding
to continue its operations and to respond to business needs or take advantage of new business opportunities, which may not
be available on acceptable terms, or at all".
Mdxhealth's research and development efforts will be hindered if it is not able to obtain samples, contract with third
parties for access to samples or complete timely enrollment in future clinical trials.
Access to human sample types, such as blood, tissue, stool, or urine is necessary for its research and product development.
Acquiring samples from individuals with clinical diagnoses or associated clinical outcomes through purchase or clinical
studies is necessary. Lack of available samples can delay development timelines and increase costs of development.
Generally, the agreements under which mdxhealth gains access to human samples are non-exclusive. Other companies
Part III: Principle Risks & Uncertainties Part III: Principle Risks & Uncertainties
Annual Report 2022 / 92
Risks Related to the ADSs and Ordinary Shares.
The Company may lose its foreign private issuer status in the future, which could result in significant additional
costs and expenses.
As a foreign private issuer for U.S. purposes, the Company is not required to comply with all the periodic disclosure and
current reporting requirements of the Exchange Act (as defined below) and related rules and regulations in the U.S. The
determination of foreign private issuer status will be made annually on the last business day of the Company's most recently
completed second fiscal quarter. Accordingly, the Company will next make a determination with respect to its foreign private
issuer status on 30 June 2023. There is a risk that the Company will lose its foreign private issuer status in the future.
The Company would lose its foreign private issuer status if, for instance more than 50% of its ordinary shares are owned by
U.S. residents or persons and more than 50% of its assets are located in the United States and the Company continues to
fail to meet additional requirements necessary to maintain its foreign private issuer status. The regulatory and compliance
costs to the Company under U.S. securities laws as a U.S. domestic issuer may be significantly greater than the costs the
Company incurs as a foreign private issuer. If the Company is not a foreign private issuer, it will be required to file periodic
reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive in
certain respects than the forms available to a foreign private issuer. For instance, it would be required to commence quarterly
reporting on Form 10-Q, whereas it currently reports on a semi-annual basis. The Company would also be required under
current SEC rules to prepare its financial statements in accordance with U.S. GAAP and modify certain of its policies to
comply with corporate governance practices associated with U.S. domestic issuers. Such conversion and modifications
would involve significant additional costs. In addition, the Company may lose its ability to rely upon exemptions from certain
corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers, which could also
increase the Company's costs, for example in relation to internal controls requirements.
The Company is incurring significant increased costs as a result of operating as a company that is publicly listed on
both NASDAQ in the U.S. and Euronext Brussels in Belgium, and the Company's management is required to devote
substantial time to compliance initiatives.
As a U.S. public company listed on the NASDAQ Capital Market, the Company is incurring legal, accounting, and other
expenses that it would not incur if it were only listed on Euronext Brussels. As a result of its listing on the NASDAQ Capital
Market in the U.S., the Company is subject to the reporting requirements of the Securities Exchange Act of 1934, or the
Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the NASDAQ
listing requirements and other applicable securities rules and regulations in the U.S. Compliance with these rules and
regulations increase the Company's legal and financial compliance costs, make some activities more difficult, time
consuming or costly and increase demand on its systems and resources, particularly after the Company would no longer be
an “emerging growth company” and/or a foreign private issuer. The Exchange Act would require that, as a public company,
the Company files annual, semi-annual and current reports with respect to its business, financial condition and result of
operations. However, as a foreign private issuer, the Company is not required to file quarterly and current reports with
respect to the mdxhealth's business and results. The Company currently makes annual and semi-annual reporting with
respect to its listing on Euronext Brussels.
Moreover, these rules and regulations have increased the Company's legal and financial compliance costs and have made
some activities more time-consuming and costly.
However, these rules and regulations are often subject to varying interpretations, in many cases due to their lack of
specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and
governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by
ongoing revisions to disclosure and governance practices.
The net operating loss ("NOL") carry forwards of the Company's corporate subsidiaries may be unavailable to offset future
taxable income because of restrictions under U.S. tax law. As of 31 December 2022, consolidated net tax loss carried
forward amounted to USD 285.3 million. The Company's NOLs generated in tax years ending on or prior to 31 December
2017 are only permitted to be carried forward for 20 taxable years under applicable U.S. federal tax law, and therefore
could expire unused. The Company considers that it is highly likely that it will be unable to use at least a portion of these
NOLs, in light of its continued losses. Under tax legislation commonly referred to as the Tax Cuts and Jobs Act ("TCJA"), as
modified by the CARES Act, its federal NOLs generated in tax years ending after 31 December 2017 may be carried forward
indefinitely and NOLs arising in taxable years beginning after 31 December 2017 and before 1 January 2021 may be carried
back to each of the five taxable years preceding the tax year of such loss, but NOLs arising in taxable years beginning after
31 December 2020 may not be carried back. In addition, under the TCJA, as modified by the CARES Act, for taxable years
beginning after 31 December 2020, the deductibility of federal NOLs generated in taxable years beginning after 31 December
2017 is limited to 80% of current year taxable income. It is uncertain if and to what extent various states will conform to the
TCJA, as modified by the CARES Act.
In addition, under sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation
undergoes an "ownership change" (generally defined as a cumulative change in ownership by "5-percent shareholders" that
exceeds 50 percentage points over a rolling three-year period), the corporation's ability to use its pre-change NOLs and
certain other pre-change tax attributes to offset post-change income and taxes may be limited. Similar rules may apply under
state tax laws. Its existing NOLs and other certain tax attributes may be subject to limitations arising from previous ownership
changes, and if mdxhealth undergoes an ownership change in connection with, or mdxhealth undergoes an ownership
change following, this offering, its ability to utilise NOLs and such other tax attributes could be further limited by Sections
382 and 383 of the Code. In addition, future changes in its stock ownership, many of which are outside of its control, could
result in an ownership change under Sections 382 and 383 of the Code. Mdxhealth has not conducted any studies to
determine annual limitations, if any, that could result from such changes in the ownership. Its ability to utilise those NOLs
and certain other tax attributes could be limited by an "ownership change" as described above and consequently, mdxhealth
may not be able to utilise a material portion of its NOLs and certain other tax attributes, which could have a material adverse
effect on its cash flows and results of operations by effectively increasing its future tax obligations.
Also under Belgian tax law, certain restrictions regarding the use of Belgian tax losses carried forward apply and these
losses may also be forfeited upon certain changes of control over Belgian corporate taxpayors. As a Coronavirus measure,
some limited tax loss carried back mechanism was introduced in Belgian tax law.
Given that mdxhealth has historically generated operating losses, any change in its ability to use NOLs could have a severe
impact on mdxhealth if and when mdxhealth becomes profitable. As of 31 December 2022, mdxhealth had an accumulated
deficit of USD 288.3 million and for the year ended 31 December 2022, mdxhealth had a net loss of USD 44.0 million.
Part III: Principle Risks & Uncertainties Part III: Principle Risks & Uncertainties
Annual Report 2022 / 94
The Company will likely not be in a position to pay dividends in the near future and intends to retain all earnings.
The Company has not declared or paid dividends on the Shares in the past. Any declaration of dividends will be based upon the
Company's earnings, financial condition, capital requirements and other factors considered important by the board of directors.
Belgian law and the Company's articles of association do not require the Company to declare dividends. Currently, the
board of directors of the Company expects to retain all earnings, if any, generated by the Company's operations for the
development and growth of its business and does not anticipate paying any dividends to the shareholders in the near
future as the Company expects losses to continue as a result of costs relating to ongoing R&D and for increased sales and
marketing costs for existing and planned solutions.
Under the senior secured loan agreement entered into between with Innovatus and the Company, no distributions can be
declared or made without consent of Innovatus. Furthermore, additional financial restrictions and other limitations may be
contained in future credit agreements.
Certain significant shareholders of the Company may have different interests from the Company and may be able to
control the Company, including the outcome of shareholder votes.
The Company has a number of significant shareholders. For an overview of the shareholders that notified the Company
pursuant to applicable transparency disclosure rules and the articles of association of the Company, up to the date of this
report, reference is made to chapter "Principal shareholders", section "Overview of the Company's shareholder structure".
These shareholders are MVM Partners LLC, Bleichroeder LP, Valiance Asset Management and Biovest NV.
As part of the subscription for new Shares completed on 15 May 2020, the Company entered into a subscription agreement
dated 24 April 2020 with MVM V LP and MVM GP (No. 5) LP, funds managed by MVM Partners, LLC (collectively, "MVM")
(the "Subscription Agreement"). Pursuant to the Subscription Agreement, MVM is entitled to have one observer at the
board of directors of the Company for as long as MVM holds in aggregate 5% of the Company's outstanding Shares. At the
date of this report, the observer of MVM to the Company's board of directors is Mr. Kyle Dempsey. In addition, the Company
agreed that it would propose to the Company's general shareholders' meeting to appoint Dr. Eric Bednarski as director of
the Company. The general shareholders' meeting held on 30 July 2020 approved the appointment of Dr. Eric Bednarski as a
director of the Company for a term of three years, up to and including the closing of the annual general shareholders' meeting
to be held in 2023 which will have decided upon the financial statements for the financial year ended on 31
December 2022.
On the basis of the transparency notifications received by the Company as of the date of this report, the four main
shareholders of the Company hold the following percentages of the voting rights attached to the Shares: MVM Partners, LLC
holds an aggregate of 17.31%; Bleichroeder LP holds an aggregate of 14.75%; Valiance Asset Management Limited holds
an aggregate of 7.74%; and Biovest NV holds 4.41%. As a consequence, the four main shareholders of the Company hold
together 44.21% of the voting rights attached to the Shares.
The Company is not aware of shareholders of the Company that have entered into a shareholders' agreement or have agreed
to act in concert. Nevertheless, they could, alone or together, have the ability to elect or dismiss directors, and, depending
on how widely the Company's Shares are held, take certain shareholders' decisions that require at least 50%, 75% or 80%
of the votes of the shareholders that are present or represented at general shareholders' meetings where such items are
submitted to voting by the shareholders. Alternatively, to the extent that these shareholders have insufficient votes to impose
certain shareholders' decisions, they could still have the ability to block proposed shareholders' resolutions that require at
Further, being a U.S. listed company and a Belgian public company with shares admitted to trading on Euronext Brussels
impacts the disclosure of information and requires compliance with two sets of applicable rules. From time to time, this may
result in uncertainty regarding compliance matters and result in higher costs necessitated by legal analysis of dual legal
regimes, ongoing revisions to disclosure and adherence to heightened governance practices. As a result of the enhanced
disclosure requirements of the U.S. securities laws, business and financial information that the Company reports is broadly
disseminated and highly visible to investors, which the Company believes may increase the likelihood of threatened or actual
litigation, including by competitors and other third parties, which could, even if unsuccessful, divert financial resources and
the attention of the Company's management from its operations. See also " — The Company may lose its foreign private
issuer status in the future, which could result in significant additional costs and expenses".
As a result of being a U.S. public company, the Company is subject to additional regulatory compliance
requirements, including Section 404, and if the Company fails to maintain an effective system of internal controls, it
may not be able to accurately report its financial results or prevent fraud.
Pursuant to Section 404, the Company's management is required to assess and attest to the effectiveness of its internal
control over financial reporting in connection with issuing its consolidated financial statements as of and for the year ending
on 31 December 2022. Section 404 also requires an attestation report on the effectiveness of internal control over financial
reporting be provided by the Company's independent registered public accounting firm beginning with its annual report
following the date on which the Company is no longer an “emerging growth company”, which may be up to five fiscal years
from the date of the Offering.
The cost of complying with Section 404 may significantly increase and management’s attention may be diverted from other
business concerns, which could adversely affect the Company's results. The Company may need to hire more employees
in the future or engage outside consultants to comply with these requirements, which will further increase expenses. If the
Company fails to comply with the requirements of Section 404 in the required timeframe, it may be subject to sanctions or
investigations by regulatory authorities, including the SEC and NASDAQ. Furthermore, if the Company is unable to attest
to the effectiveness of its internal control over financial reporting, it could lose investor confidence in the accuracy and
completeness of its financial reports, and the market price of its ADSs could decline, which could also have an impact
on the trading of the Company's Shares on Euronext Brussels. Failure to implement or maintain effective internal control
over financial reporting could also restrict the Company's future access to the capital markets and subject the Company,
its directors and its officers to both significant monetary and criminal liability. In addition, changing laws, regulations
and standards relating to corporate governance and public disclosure are creating uncertainty for public companies,
increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations
and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their
application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could
result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to
disclosure and governance practices. The Company intends to invest resources to comply with evolving laws, regulations
and standards, and this investment may result in increased general and administrative expense and a diversion of the
Company's management’s time and attention from revenue generating activities to compliance activities. If the Company's
efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing
bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings
against the Company and its business, financial position, results and prospects may be materially adversely affected. See
also " — The Company may lose its foreign private issuer status in the future, which could result in significant additional
costs and expenses".
Part III: Principle Risks & Uncertainties Part III: Principle Risks & Uncertainties
Annual Report 2022 / 96
TheCompany cannot make any predictions as to the sale or perception thereof on the market price of the Shares.
Within the framework of the Offering, the Company entered into a standstill undertaking for a period ending on the date
falling 90 days after 3 February 2023. Notably, the Company undertook that during this period it will not, without the prior
written consent of Cowen and Company, LLC and William Blair & Company, L.L.C., (1) offer, pledge, announce the intention
to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, make any short sale or otherwise transfer or dispose of, directly or indirectly, any ADSs,
Shares or any securities convertible into, exercisable or exchangeable for or that represent the right to receive ADSs or
Shares (including without limitation, ADSs or Shares which may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the SEC and securities which may be issued upon exercise of a share option
or warrant) whether now owned or hereafter acquired; (2) enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences of ownership of the securities described in clause (1), whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of ADSs or Shares or such other securities, in
cash or otherwise; (3) make any demand for or exercise any right with respect to, the registration of any ADSs, Shares or any
security convertible into or exercisable or exchangeable for ADSs or Shares; or (4) publicly disclose the intention to do any of
the foregoing.
In the framework of the Offering, each of mdxhealth's executive officers, directors and certain of its existing shareholders
have also agreed, subject to limited exceptions, not to offer, pledge, announce the intention to sell, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell, grant any option, right or subscription rights
(warrant) to purchase or otherwise dispose of, directly or indirectly, or enter into any swap or other agreement that transfers,
in whole or in part, any of the economic consequences of ownership of the ADSs, Shares or such securities convertible or
exercisable into ADS or Shares for a period of 90 days after 3 February 2023, or publicly disclose the intention to do any of
the foregoing, without the prior written consent of the Underwriters.
Any future capital increases by the Company could have a negative impact on the price of the Shares and could
dilute the interests of existing shareholders.
The Company announced on 3 February 2023 that it had successfully raised an amount of USD 40.0 million (or
approximatively EUR 37.1 million, on the basis of the exchange rate of EUR 1.00 for USD 1.0776 as published by the
European Central bank ("ECB") on 6 February 2023) in gross proceeds by means of a public offering in the United States
of Offered Shares represented by 10,000,000 ADSs at an issue price of USD 4.00 per ADS. The Company then announced
on 6 March that Cowen and Company, LLC, William Blair & Company, L.L.C., BTIG, LLC and KBC Securities USA, LLC
(the "Underwriters") exercised the Option (as defined below), on the same terms and conditions as in the Offering, in the
amount of 750,000 ADSs at a price of USD 4.00 per ADS for gross proceeds of USD 3.0 million (or approximatively EUR 2.8
million, on the basis of the exchange rate of EUR 1.00 for USD 1.0665 as published by the ECB on 7 March 2023). TheNew
Shares represent approximately 66.00% of the Company's outstanding Shares before the Offering. The completion of the
Offering resulted in a dilution of 39.76% of the then existing shareholders of the Company and of the relative voting power
of each share in the Company at that time. For more information about the consequences of the Offering for the financial
and shareholder rights of the shareholders of the Company, reference is made to the report of the board of directors in
accordance with article 7:198 juncto articles 7:179, 7:191 and, insofar as needed and applicable, 7:197 of the Belgian
Companies and Associations Code. This board report must be read together with the report in accordance with article 7:198
juncto articles 7:179 and 7:191 of the Belgian Companies and Associations Code and, insofar as needed and applicable, the
report in accordance with article 7:198 juncto articles 7:179 and 7:197 of the Belgian Companies and Associations Code,
both of which reports were prepared by the Company's statutory auditor, BDO Réviseurs d'Entreprises SRL, represented
by Mr.Bert Kegels, auditor. The aforementioned reports are available on the Company's website and are incorporated by
reference in this report.
least 50%, 75% or 80% of the votes of the shareholders that are present or represented at general shareholders' meetings
where such decisions are submitted to voting by the shareholders. Any such voting by the shareholders may not be in
accordance with the interests of the Company or the other shareholders of the Company.
The market price of the Shares may fluctuate widely in response to various factors.
Publicly traded securities from time to time experience significant price and volume fluctuations that may be unrelated to the
results of operations or the financial condition of the companies that have issued them. In addition, the market price of the
Shares has historically been volatile, ranging during the last 12 months prior the date of this report from a high of EUR0.97
on20 May 2022 and a low of EUR 0.25 on 14 March 2023. The market price of the Shares and ADSs may continue to fluctuate
significantly in response to a number of factors, many of which are beyond mdxhealth's control, including fluctuations in the
Company's results of operations, changes in estimates by securities analysts and potential or actual sales of the Shares.
In addition, stock markets have in the recent past experienced extreme declines and price and volume fluctuations. These
fluctuations have not always been related to the performance of the specific companies whose shares are traded. These
and other market and industry factors may cause the market price and demand for the Shares and ADSs to fluctuate
substantially, regardless of the Company's actual operating performance, which may limit or prevent investors from readily
selling their Shares or ADSs and may otherwise negatively affect the liquidity of the trading of the Shares and ADSs.
The Company's securities are traded on more than one market and this may result in price variations; in addition,
investors may not be able to easily move securities for trading between such markets.
The Company's ordinary shares have traded on the Euronext Brussels since 2006 and the Company had its ADSs
(representing part of the Shares) approved for listing on the NASDAQ Capital Market in November 2021. Trading in its ADSs
or Shares on these markets take place in different currencies (USD on the NASDAQ Capital Market and EUR on Euronext
Brussels), and at different times (resulting from different time zones, different trading days and different public holidays in the
United States and Belgium). The trading prices of its Shares and its ADSs on these two markets may differ due to these and
other factors. Any decrease in the price of the Company's ADSs on the NASDAQ Capital Market could cause a decrease in
the trading price of its Shares on the Euronext Brussels, and vice versa. Investors could seek to sell or buy the Shares to take
advantage of any price differences between the markets through a practice referred to as arbitrage. Any arbitrage activity
could create unexpected volatility in both the trading prices on one exchange, and the securities available for trading on
the other exchange. In addition, holders of ADSs are immediately able to surrender their ADSs and withdraw the underlying
ordinary shares for trading on the other market without effecting necessary procedures with the depositary. This could result
in time delays and additional cost for holders of ADSs. Furthermore, the listing of the Shares on Euronext Brussels and the
ADSs on the NASDAQ Capital Market may reduce the liquidity of these securities in one or both markets, and may adversely
affect the development of an active trading market for the New Shares or ADSs.
Future sales of substantial amounts of the Shares, or the perception that such sales could occur, could adversely
affect the market value of the Shares.
Any sale of a significant number of the Shares on the public markets, notably by one of its major shareholders (such as
MVM Partners, LLC (who notified the Company on 28 February 2023 that it held 17.31% of the outstanding shares of the
Company (on a non-diluted basis)), Bleichroeder LP (who notified the Company on 3 February 2023 that it held 14.75% of
the outstanding shares of the Company (on a non-diluted basis)), Valiance Asset Management Limited (who notified the
Company on 12 April 2023 that it held 7.74% of the outstanding shares of the Company (on a non-diluted basis)), and Biovest
NV (who notified the Company on 17 March 2023 that it held 4.41% of the outstanding shares of the Company (on a non-
diluted basis)), or the perception that such sales could or will occur, may adversely affect the market price of the Shares.
Part III: Principle Risks & Uncertainties Part III: Principle Risks & Uncertainties
Annual Report 2022 / 98
The Company may in the future increase its share capital against cash or contributions in kind to finance any future
acquisition or other investment or to strengthen its balance sheet. The Company may also issue subscription rights that are
exercisable for new shares, or raise capital through public or private offerings of convertible debt or equity securities, or
rights to acquire these securities. In connection with such transactions, the Company may, subject to certain conditions,
limit or dis-apply preferential subscription rights of existing shareholders otherwise applicable to capital increases through
contributions in cash. In addition, preferential subscription rights do not apply to capital increases through contributions in
kind. Such transactions could therefore dilute the stakes in the Company's share capital held by shareholders and could have
a negative impact on the price of the Shares (including the New Shares).
Annual Report 2022 / 100
Consolidated financial statements
MDxHealth SA’s consolidated financial statements have been prepared
in accordance with the International Financial Reporting Standards
(IFRS) and interpretations issued by the IFRS Interpretation Committee
(IFRS-IC) applicable to companies reported under IFRS. The financial
statements comply with IFRS as issued by the International Accounting
Standards Board (IASB), collectively “IFRS”. Additionally, the financial
statements are also prepared in accordance with IFRS as endorsed
by the European Union (“EU-IFRS”). The accounting policies and notes
are an integral part of these consolidated financial statements. The
following consolidated accounts differ from the non-consolidated
statutory annual accounts of the Company, which have been prepared
in accordance with Belgian GAAP.
The annual financial statements have been prepared in accordance with applicable accounting standards, and present a true
and fair view of the various activities conducted by the Company during the past financial year. Mr. Mike McGarrity, the CEO
and Managing Director, declares, on behalf of the Board of Directors that, to the best of the Board’s knowledge, the annual
financial statements, prepared in accordance with applicable accounting standards, present a true and fair view of the assets
and liabilities of the Company, as well as the financial situation and operating results of the Company.
The financial statements in this section of the Annual Report have been approved and authorized for issue by the Board of
Directors at its meeting of April 24, 2023. The financial statements have been signed by Mr. Michael McGarrity, Executive
Director, on behalf of the Board of Directors. The financial statements will be submitted to the shareholders for their final
approval at the annual general shareholders’ meeting of May 25, 2023.
The official version of the annual financial report is the ESEF version.
Part IV: Financial Statements Part IV: Financial Statements
Financial
Statements
Consolidated statement of profit and loss
| Thousands of $ (except per share amounts) | Notes | 2022 | 2021 |
| For the years ended December 31 | |||
Services | 4 | ||
Licenses | 4 | ||
Royalties and other revenues | 4 | ||
Revenues | |||
| Cost of goods & services sold | 4 | ( | ( |
Gross profit | |||
Research and development expenses | 5 | ( | ( |
| Selling and marketing expenses | 5 | ( | ( |
| General and administrative expenses | 5 | ( | ( |
| Other operating income, net | 7 | ||
Operating loss | ( | ( | |
| Financial expenses, net | 8 | ( | ( |
Loss before income tax | ( | ( | |
| Income tax | 9 | ||
Loss for the year | ( | ( | |
| Loss per share attributable to parent | |||
Basic and diluted, $ | 20 | ( | ( |
Consolidated statement of comprehensive income
| Thousands of $ | Notes | 2022 | 2021 |
| For the years ended December 31 | |||
Loss for the year | ( | ( | |
| Other comprehensive income (loss) | |||
| Items that will be reclassified to profit or loss: | |||
Exchange differences arising from translation of foreign operations | |||
Total other comprehensive income (loss) | |||
Total comprehensive loss for the year (net of tax) | ( | ( |
Part IV: Financial Statements Part IV: Financial Statements
Annual Report 2022 / 102
Consolidated statement of financial position
| Thousands of $ | Notes | 2022 | 2021 |
| For the years ended December 31 | |||
| ASSETS | |||
| Non-current assets | |||
Goodwill | 3/10 | ||
Intangible assets | 11 | ||
| Property, plant and equipment | 12 | ||
Right-of-use assets | 12 | ||
Total non-current assets | |||
| Current assets | |||
| Inventories | 13 | ||
| Trade receivables | 14/19 | ||
| Prepaid expenses and other current assets | 14 | ||
| Cash and cash equivalents | 15/19 | ||
Total current assets | |||
TOTAL ASSETS | |||
| EQUITY | |||
Share capital | 22 | ||
Issuance premium | 22 | ||
Accumulated deficit | ( | ( | |
Share-based compensation | 24 | ||
Translation reserve | ( | ( | |
Total equity | |||
| LIABILITIES | |||
| Non-current liabilities | |||
Loans and borrowings | 16/19 | ||
Lease liabilities | 16 | ||
Other non-current financial liabilities | 16/19 | ||
Total non-current liabilities | |||
| Current liabilities | |||
Loans and borrowings | 16/19 | ||
Lease liabilities | 16 | ||
Trade payables | 18/19 | ||
Other current liabilities | 18 | ||
Other current financial liabilities | 16/19 | ||
Total current liabilities | |||
Total liabilities | |||
TOTAL EQUITY AND LIABILITIES |
Consolidated statement of changes in equity
| Thousands of $ | Number of | Share capital | Accumulated | Share-based | Translation | Total equity |
| (except number of shares) | shares | & issuance | Deficit | compensation | reserve | |
| premium | ||||||
Notes | 22 | 24 | ||||
Balance at January 1, 2021 | ( | ( | ||||
Loss for the year | ( | ( | ||||
Other comprehensive income | ||||||
| Total comprehensive income | ( | ( | ||||
| for the year | ||||||
Transactions with owners in their capacity as owners: | ||||||
Issuance of shares | ||||||
Deduction of transaction costs | ( | ( | ||||
Share-based compensation costs | ||||||
Balance at December 31, 2021 | ( | ( | ||||
Balance at January 1, 2022 | ( | ( | ||||
Loss for the year | ( | ( | ||||
Other comprehensive income | ||||||
| Total comprehensive income | ( | ( | ||||
| for the year | ||||||
Transactions with owners in their capacity as owners: | ||||||
Issuance of shares as part of GPS acquisition | ||||||
Share-based compensation costs | ||||||
Balance at December 31, 2022 | ( | ( |
Attributable to owners of mdxhealth sa
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Annual Report 2022 / 104
Consolidated statement of cash flow
| Thousands of $ | Notes | 2022 | 2021 |
| For the years ended December 31 | |||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
Operating loss | ( | ( | |
Depreciation and amortization | 11/12 | ||
| Impairment | 11 | ||
Share-based compensation | 24 | ||
Other non-cash transactions | ( | ( | |
Cash used in operations before working capital changes | ( | ( | |
| Increase (-) / Decrease (+) in inventories | 13 | ( | |
| Increase (-) in receivables | 14 | ( | ( |
| Increase (+) in payables | 18/19 | ||
Net cash outflow from operating activities | ( | ( | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
Purchase of property, plant and equipment | 12 | ( | ( |
Acquisition and generation of intangible assets | 11 | ( | |
Acquisition of Genomic Prostate Score Business | 11 | ( | |
Net cash outflow from investing activities | ( | ( | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from issuance of shares (net of transaction costs) | 22 | ||
Proceeds from loan obligation | 16 | ||
Repayment of loan obligation and debt extinguishment costs | ( | ||
Payment of lease liability | 16 | ( | ( |
Payment of interest | ( | ( | |
Interests received | 8 | ||
Net cash inflow from financing activities | |||
Net Decrease (-) / increase (+) in cash and cash equivalents | ( | ||
Cash and cash equivalents at beginning of the financial year | |||
Effect on exchange rate changes | ( | ( | |
Cash and cash equivalents at end of the financial year | 14/18 |
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Notes
Notes to consolidated financial statements
NOTE 1: Status and principal activity
NOTE 2: Summary of Significant Accounting policies
NOTE 3: Business combination
NOTE 4: Revenue and Cost of goods & services sold
NOTE 5: Nature of expenses
NOTE 6: Personnel costs
NOTE 7: Other operating income, net
NOTE 8: Financial expenses, net
NOTE 9: Income Tax
NOTE 10: Goodwill
NOTE 11: Intangible assets
NOTE 12: Property, plant and equipment and right of-use assets
NOTE 13: Inventories
NOTE 14: Trade and other receivables
NOTE 15: Cash and cash equivalents
NOTE 16: Loans, borrowings, lease obligations and other financial liabilities
NOTE 17: Contractual obligations
NOTE 18: Trade and other payables
NOTE 19: Financial instruments and fair value
NOTE 20: Loss per share
NOTE 21: Financial risk management
NOTE 22: Share capital and reserves
NOTE 23: Retirement benefit plans
NOTE 24: Share-based payments
NOTE 25: Related parties
NOTE 26: Significant agreements, commitments and contingencies
NOTE 27: Subsequent events
NOTE 28: Subsidiaries
NOTE 29: Principal audit fees and services
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Cash | $ | 25,000 |
Stock | 5,000 | |
GPS Contingent consideration | 50,483 | |
Total acquisition consideration | $ | 80,483 |
| Thousands of $ | Carrying value at | Fair value | Fair value at |
| As of December 31, 2022 | acquisition date | adjustments | acquisition date |
Intangible assets IP / Brand | - | 36,550 | 36,550 |
Intangible assets Customer relationships | - | 8,007 | 8,007 |
Total identified assets | - | 44,557 | 44,557 |
Goodwill | - | 35,926 | 35,926 |
Acquisition price | - | - | 80,483 |
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| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
Services | 36,965 | 21,937 |
Licenses | 25 | 250 |
Royalties and other revenues | 64 | 52 |
Total revenue | 37,054 | 22,239 |
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| Thousands of $ | Notes | 2022 | 2021 |
| For the years ended December 31 | |||
Personnel costs | 6 | 2,453 | 1,949 |
Depreciation and amortization | 11/12 | 2,272 | 1,360 |
Impairment | 11 | 44 | 0 |
Lab consumables | 713 | 793 | |
Patent expenses | 430 | 577 | |
External collaborator fees | 783 | 1,020 | |
Clinical validation | 584 | 842 | |
Other expenses | 278 | 132 | |
Total research and development expenses | 7,557 | 6,673 |
| Thousands of $ | Notes | 2022 | 2021 |
| For the years ended December 31 | |||
Personnel costs | 6 | 19,070 | 13,402 |
Depreciation and amortization | 11/12 | 1,628 | 796 |
Professional fees | 1,259 | 523 | |
Marketing expenses | 2,843 | 1,761 | |
Travel expenses | 789 | 340 | |
Offices & facilities expenses | 356 | 436 | |
Other expenses | 637 | 486 | |
Total selling and marketing expenses | 26,582 | 17,744 |
| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
United States of America | 36,768 | 21,785 |
Europe | 277 | 441 |
Rest of the world | 9 | 13 |
Total segment revenue | 37,054 | 22,239 |
| Thousands of $ | Notes | 2022 | 2021 |
| For the years ended December 31 | |||
Cost of goods & services sold | 17,835 | 11,675 | |
Total cost of goods & services sold | 17,835 | 11,675 |
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| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
| The number of employees at the end of the year was: | ||
Laboratory operations | 67 | 42 |
R&D staff | 19 | 14 |
S&M staff | 101 | 71 |
G&A staff | 71 | 64 |
Total number of employees | 258 | 191 |
| Their aggregate remuneration comprised: | ||
Wages and salaries | 23,066 | 18,150 |
Social security costs | 1,684 | 1,257 |
Pension costs | 724 | 594 |
Health insurance expenses | 3,167 | 2,324 |
Share-based compensation | 867 | 1,222 |
Other costs | 1,010 | 813 |
Total personnel costs | 30,518 | 24,360 |
| Thousands of $ | Notes | 2022 | 2021 |
| For the years ended December 31 | |||
Personnel costs | 6 | 8,995 | 9,009 |
Depreciation and amortization | 11/12 | 965 | 880 |
Professional fees | 7,762 | 1,678 | |
Public company expenses | 4,025 | 1,108 | |
Offices & facilities expenses | 1,142 | 845 | |
Royalties to third parties | 47 | 152 | |
Other expenses | 603 | 477 | |
Total general and administrative expenses | 23,539 | 14,149 |
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| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
Interest income | 125 | 11 |
Interest on Kreos loan | (660) | (1,566) |
Interest on Innovatus loan | (1,615) | 0 |
Interest on other loans and leases | (361) | (309) |
Fair value adjustments | (2,479) | (290) |
Kreos loan extinguishment | (1,047) | 0 |
Other financial expenses | (107) | (7) |
Financial expenses, net | (6,144) | (2,161) |
| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
Grant subsidies – The Netherlands | 5 | 382 |
Grant subsidies – USA | 0 | 659 |
Fair value adjustments | 515 | 176 |
Other operating income | 39 | 53 |
Other operating expenses | 0 | (109) |
Total other operating income, net | 559 | 1,161 |
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Thousands of $ | Goodwill |
At January 1, 2021 | - |
Additions through business combination | - |
Impairment | - |
Currency translation adjustments | - |
Carrying value at December 31, 2021 | - |
At January 1, 2022 | - |
Additions through business combination | 35,926 |
Impairment | - |
Currency translation adjustments | - |
Carrying value at December 31, 2022 | 35,926 |
Assumptions used | December 31, 2022 |
Discount rate (post-tax) | 14.95% |
Terminal growth rate | 2% |
| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
Loss for the year | (44,044) | (29,002) |
Income tax expense | 0 | 0 |
Loss before income tax | (44,044) | (29,002) |
Tax using the MDxHealth’s domestic tax rate (25.00% in 2022 and 2021) | 11,011 | 7,251 |
Effect of unused tax losses not recognized as deferred tax assets | (11,011) | (7,251 |
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Thousands of $ | Patents and | Internally | Externally | Customers | Total |
| software | developed | acquired | |||
| licenses | intangible | intellectual | |||
| assets | property | ||||
| Gross value | |||||
At January 1, 2021 | 5,134 | 9,323 | 4,500 | - | 18,957 |
Gross value at December 31, 2021 | 5,134 | 9,323 | 4,500 | - | 18,957 |
| Accumulated amortization and impairment | |||||
At January 1, 2021 | (4,676) | (6,810) | (2,413) | - | (13,899) |
Additions | (234) | (926) | (450) | (1,610) | |
| Accumulated amortization | (4,910) | (7,736) | (2,863) | - | (15,509) |
| and impairment at December 31, 2021 | |||||
Net value at December 31, 2021 | 224 | 1,587 | 1,637 | - | 3,448 |
| Gross value | |||||
At January 1, 2022 | 5,134 | 9,323 | 4,500 | - | 18,957 |
Additions | 1,049 | 325 | 1,374 | ||
Additions through business combination (Note 3) | 36,550 | 8,007 | 44,557 | ||
| Currency translation adjustments | |||||
Gross value at December 31, 2022 | 5,134 | 10,372 | 41,375 | 8,007 | 64,888 |
| Accumulated amortization and impairment | |||||
At January 1, 2022 | (4,910) | (7,736) | (2,863) | - | (15,509) |
Additions | (224) | (942) | (1,490) | (513) | (3,169) |
Impairment | (44) | (44) | |||
| Currency translation adjustments | |||||
| Accumulated amortization and impairment | (5,134) | (8,722) | (4,353) | (513) | (18,722) |
| at December 31, 2022 | |||||
Net value at December 31, 2022 | 0 | 1,650 | 37,022 | 7,494 | 46,166 |
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Thousands of $ | 2022 | 2021 |
Depreciation expense | 1,067 | 905 |
Interest expense on lease liabilities | 314 | 229 |
| Thousands of $ | Buildings | Vehicles | Materials | Total |
| Gross value | ||||
Balance at January 1, 2021 | 3,612 | 218 | 897 | 4,727 |
Additions | 1,518 | 1,518 | ||
| Disposals | ||||
Gross value at December 31, 2021 | 5,130 | 218 | 897 | 6,245 |
| Accumulated depreciation | ||||
Balance at January 1, 2021 | (1,177) | (87) | (729) | (1,993) |
Additions | (752) | (42) | (111) | (905) |
Accumulated amortization on December 31, 2021 | (1,929) | (129) | (840) | (2,898) |
Net value at December 31, 2021 | 3,201 | 89 | 57 | 3,347 |
| Gross value | ||||
Balance at January 1, 2022 | 5,130 | 218 | 897 | 6,245 |
Additions | 1,435 | 58 | 334 | 1,827 |
Exchange rate differences | (1) | (1) | ||
Gross value on December 31, 2022 | 6,565 | 276 | 1,230 | 8,071 |
Accumulated depreciation | (1) | (1) | ||
Balance at January 1, 2022 | (1,929) | (129) | (840) | (2,898) |
Additions | (945) | (51) | (71) | (1,067) |
Exchange rate differences | (3) | (3) | ||
Accumulated amortization on December 31, 2022 | (2,874) | (180) | (914) | (3,968) |
Net value at December 31, 2022 | 3,691 | 96 | 316 | 4,103 |
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| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
Trade receivables | 9,357 | 4,582 |
Total trade receivables | 9,357 | 4,582 |
| A/R by claim date | Months | ||||
| Thousands of $ | |||||
For the years ended December 31, 2022 | 1-3 months | 4-6 months | 7-12 months | Not due | Total |
Confirm mdx | 1,865 | 821 | 765 | 3,451 | |
Select mdx | 134 | 101 | 78 | 25 | 338 |
Resolve mdx | 1,966 | 458 | 158 | 2,582 | |
GPS | 1,907 | 895 | 2,802 | ||
Other | 163 | 21 | 184 | ||
Total Trade Receivables | 6,035 | 2,275 | 1,001 | 46 | 9,357 |
| A/R by claim date | Months | ||||
| Thousands of $ | |||||
For the years ended December 31, 2021 | 1-3 months | 4-6 months | 7-12 months | Not due | Total |
Confirm mdx | 1,644 | 746 | 1,256 | 3,646 | |
Select mdx | 151 | 203 | 206 | 33 | 593 |
Other | 321 | 22 | 343 | ||
Total Trade Receivables | 2,116 | 949 | 1,462 | 55 | 4,582 |
| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
Prepayments | 1,710 | 1,022 |
Deposits | 101 | 89 |
Recoverable VAT | 97 | 246 |
Grants to be received | 54 | 235 |
Other | 0 | 23 |
Total prepaid expenses and other current assets | 1,962 | 1,615 |
| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
Raw materials and consumables | 2,327 | 1,911 |
Total Inventories | 2,327 | 1,911 |
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| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
| Non-current loans and borrowings | ||
Loans | 34,914 | 7,651 |
Lease liabilities (*) | 3,091 | 2,624 |
Total non-current loans and borrowings | 38,005 | 10,275 |
| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
| Current loans and borrowings | ||
Loans | 616 | 4,441 |
Lease liabilities | 1,172 | 840 |
Total current loans and borrowings | 1,788 | 5,281 |
| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
Cash and cash equivalents | 15,503 | 58,498 |
Total cash and cash equivalents | 15,503 | 58,498 |
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| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
| Loans | ||
Within one year | 630 | 4,780 |
Years two to five | 38,439 | 9,283 |
| Leases | ||
Within one year | 1,551 | 1,127 |
Years two to five | 2,330 | 3,094 |
| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
| Other financial liabilities | ||
Other non-current financial liabilities | 53,537 | 1,466 |
Other current financial liabilities | 2,327 | 961 |
Total other financial liabilities | 55,864 | 2,427 |
LiabilitiesLoans and borrowings
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| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
Trade accounts payable | 5,061 | 3,192 |
Accruals for invoices to be received | 5,117 | 4,263 |
Total trade accounts payable | 10,178 | 7,455 |
| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
Payroll | 3,932 | 2,703 |
Other accruals | 53 | 32 |
Total other current liabilities | 3,985 | 2,735 |
| Thousands of $ | 2022 | 2021 |
| For the years ended December 31 | ||
| Outstanding commitments for future minimum rent | ||
| payments, which fall due as follows: | ||
Less than one year | 156 | 215 |
Years 2-5 | 60 | 39 |
Total contractual obligations | 216 | 254 |
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| Thousands of $ | 2022 | 2021 | Fair value |
| For the years ended December 31 | hierarchy | ||
| Assets | |||
| At amortized cost | |||
Trade receivables | 9,357 | 4,582 | |
Cash and cash equivalents | 15,503 | 58,498 | |
Total financial assets | 24,860 | 63,080 | |
| Liabilities | |||
| At fair value: | |||
| Other financial liabilities | |||
- GPS contingent consideration | 52,881 | Level 3 | |
- NovioGendix contingent consideration | 1,182 | 1,617 | Level 3 |
- Innovatus derivative instrument | 910 | Level 3 | |
- Kreos derivative instrument | 891 | 810 | Level 3 |
Subtotal financial liabilities at fair value | 55,864 | 2,427 | |
| At amortized cost: | |||
Loans and borrowings | 35,530 | 12,092 | Level 2 |
Lease liabilities | 4,263 | 3,464 | |
Trade payables | 10,178 | 7,455 | |
Subtotal financial liabilities at amortized cost | 49,971 | 23,011 | |
Total financial liabilities | 105,835 | 25,438 |
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Years ended December 31 | 2022 | 2021 |
Loss for the year, in thousands of $ | (44,044) | (29,002) |
Basic and diluted loss per share, in $ | (0.28) | (0.24) |
Weighted average number of shares | 2022 | 2021 |
Weighted average number of shares for basic and diluted loss per share | 158,658,165 | 121,935,741 |
| Financial derivative instruments | Contingent consideration | |||
| (Kreos and Innovatus) | (NovioGendix and GPS) | |||
| Thousands of $ | 2022 | 2021 | 2022 | 2021 |
| For the years ended December 31 | ||||
Beginning balance | 810 | 0 | 1,617 | 1,599 |
| Cash movements | ||||
| Loans and borrowings repaid | ||||
| Non-cash movements | ||||
GPS contingent consideration | 50,483 | |||
Innovatus embedded derivative convertible call option | 1,026 | |||
| Reclassification | 773 | |||
| Effective interest rate adjustment | ||||
Foreign exchange rate impact / other movements | (35) | (59) | ||
Fair value changes through profit and loss | 96 | 1,963 | 18 | |
Ending balance | 1,801 | 810 | 54,063 | 1,617 |
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| For the years ended December 31, 2022 | Less than | Between | Between | Total | Carrying |
| Thousands of $ | 1 year | 1 and 2 years | 3 and 5 years | contract ual | amount |
| cash flows | |||||
| Non derivatives | |||||
Trade payables | 10,178 | 1,256 | 10,178 | 10,178 | |
Loans | 630 | 630 | 37,809 | 39,069 | 35,530 |
Lease liabilities | 1,324 | 915 | 2,179 | 4,418 | 4,263 |
Total | 12,132 | 1,545 | 39,988 | 53,665 | 49,971 |
| For the years ended December 31, 2021 | Less than | Between | Between | Total | Carrying |
| Thousands of $ | 1 year | 1 and 2 years | 3 and 5 years | contract ual | amount |
| cash flows | |||||
| Non derivatives | |||||
Trade payables | 7,455 | 7,455 | 7,455 | ||
Loans | 4,780 | 8,200 | 1,083 | 14,063 | 12,092 |
Lease liabilities | 1,127 | 915 | 2,179 | 4,221 | 3,464 |
Total | 13,362 | 9,115 | 3,262 | 25,739 | 23,011 |
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For the years ended december 31 | 2022 | 2021 |
Common shares | 162,880,936 | 155,969,226 |
Total outstanding shares | 162,880,936 | 155,969,226 |
For the years ended december 31 | Share | Issuance | Share | Issuance |
| Capital | Premium | Capital | Premium | |
As of January 1, 2021 | 76,716 | 136,349 | 62,214 | 112,078 |
January 2021 – Issuance of 27,777,777 shares (*) | 23,632 | 4,693 | 19,473 | 3,867 |
November 2021 – Issuance of 37,500,000 shares (*) | 28,106 | 12,135 | 24,412 | 10,536 |
As of December 31, 2021 | 128,454 | 153,177 | 106,099 | 126,481 |
August 2022 – Issuance of 6,911,710 shares (*) | 5,000 | 4,876 | ||
As of December 31, 2022 | 133,454 | 153,177 | 110,975 | 126,481 |
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Category | 2022 | 2021 |
Executive Director | 3,950,000 | 2,950,000 |
Non-Executive Directors | 248,000 | 272,000 |
Management team (excluding the Executive Director) | 4,083,000 | 2,938,000 |
Other employees, consultants, and former service providers | 3,976,780 | 2,757,625 |
Total outstanding at December 31 | 12,257,780 | 8,917,625 |
| Thousands of $ | 2022 | 2021 |
| Years ended December 31 | ||
Share-based compensation | 867 | 1,222 |
Cumulated Share-based compensation | 11,474 | 10,607 |
Number of potential shares from outstanding warrants | 2022 | 2021 |
As of January 1 | 8,917,625 | 5,766,093 |
Number of warrants cancelled/forfeited during the year | (590,345) | (304,968) |
Number of warrants granted during the year | 3,930,500 | 3,456,500 |
As of December 31 | 12,257,780 | 8,917,625 |
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24-Nov-21 | - | 40,000 | € 1.05 | - | 60.78% | 0.14% | 49.25 | 37.25 |
03-Jul-21 | - | 2,570,000 | € 1.38 | - | 63.10% | 0.04% | 44.91 | 26.93 |
07-Jul-21 | - | 600,000 | € 1.39 | - | 63.11% | 0.00% | 44.78 | 26.79 |
06-May-22 | - | 5,000 | € 0.75 | - | 53.16% | 1.64% | 58.85 | 52.87 |
04-Aug-22 | - | 38,000 | € 0.80 | - | 55.63% | 1.41% | 55.89 | 49.91 |
03-Aug-22 | - | 425,000 | € 0.68 | - | 57.05% | 1.50% | 67.96 | 55.92 |
03-Aug-22 | - | 3,125,000 | € 0.68 | - | 57.05% | 1.50% | 73.97 | 61.94 |
04-Aug-22 | - | 10,000 | € 0.80 | - | 55.63% | 1.41% | 73.94 | 61.91 |
01-Oct-22 | - | 312,500 | € 0.74 | - | 57.26% | 2.77% | 72.03 | 60.00 |
12-Dec-22 | - | 15,000 | € 0.74 | - | 58.30% | 2.40% | 69.67 | 63.65 |
| Number of | Expected duration | ||||||||
| warrants granted | (months) | ||||||||
| Expected | Expected | Risk-free | |||||||
| To Belgian | To other | Exercise | dividend | stock price | interest | To Belgian | To other | ||
| Dates | benef. | benef. | price (€) | Yield | volatility | rate | benef. | benef. | |
23-Jun-14 | 12,000 | 12,000 | € 4.13 | - | 48.12% | 1.78% | 75.32 | 63.29 | |
9-Feb-15 | 60,000 | 95,000 | € 4.49 | - | 46.75% | 0.62% | 79.73 | 61.71 | |
29-May-15 | 20,000 | 30,000 | € 4.91 | - | 46.52% | 0.81% | 64.14 | 52.11 | |
1-Oct-15 | - | 83,000 | € 4.20 | - | 48.99% | 0.90% | 72.03 | 54.02 | |
1-Dec-15 | - | 18,000 | € 3.89 | - | 51.18% | 0.85% | 70.03 | 52.01 | |
1-Feb-16 | - | 10,000 | € 4.13 | - | 51.18% | 0.85% | 67.99 | 49.97 | |
4-Feb-16 | 50,000 | 134,000 | € 3.78 | - | 52.49% | 0.72% | 67.89 | 49.87 | |
2-Apr-16 | - | 52,000 | € 3.62 | - | 53.40% | 0.58% | 65.33 | 53.33 | |
29-May-16 | 30,000 | 40,000 | € 4.13 | - | 51.85% | 0.54% | 64.11 | 52.11 | |
22-Jan-16 | - | 20,000 | € 3.83 | - | 52.81% | 0.86% | 68.32 | 56.32 | |
1-Dec-16 | - | 22,000 | € 4.65 | - | 54.16% | 0.75% | 57.99 | 39.98 | |
1-Jan-17 | - | 19,000 | € 4.56 | - | 53.84% | 0.73% | 56.98 | 50.96 | |
1-Apr-17 | - | 18,000 | € 5.41 | - | 51.80% | 0.81% | 54.02 | 48.00 | |
11-Apr-17 | 20,000 | 200,000 | € 5.35 | - | 51.83% | 0.72% | 65.68 | 47.67 | |
29-Jul-17 | - | 10,000 | € 4.72 | - | 50.95% | 0.87% | 50.10 | 44.05 | |
1-Sep-17 | - | 34,000 | € 4.92 | - | 48.08% | 0.71% | 60.99 | 42.97 | |
2-Nov-17 | - | 99,000 | € 4.61 | - | 45.23% | 0.66% | 52.93 | 40.90 | |
20-Jun-17 | 30,000 | 30,000 | € 4.97 | - | 51,57% | 0.59% | 81.40 | 63.39 | |
01-Apr-18 | - | 42,000 | € 3,77 | - | 46.08% | 0.76% | 54.02 | 42.02 | |
01-Jun-18 | 50,000 | 30,000 | € 4,97 | - | 46.15% | 0.77% | 52.01 | 40.01 | |
05-Dec-18 | - | 20,000 | €1,73 | - | 57.56% | 0.79% | 45.86 | 33.86 | |
24-Jan-19 | - | 191,000 | € 1,64 | - | 67.56% | 0.77% | 62.24 | 50.20 | |
16-May-19 | - | 1,508,000 | € 1,49 | - | 75.78% | 0.38% | 58.55 | 46.52 | |
01-Nov-19 | - | 8,000 | € 1,01 | - | 82.15% | 0.00% | 64.99 | 46.98 | |
01-Dec-19 | - | 12,000 | € 1,02 | - | 81.95% | 0.00% | 64.01 | 45.99 | |
01-Feb-20 | - | 2,000 | € 0,98 | - | 80.26% | 0.00% | 61.97 | 49.67 | |
01-Jun-20 | - | 6,000 | € 0,85 | - | 86.64% | 0.00% | 57.99 | 45.99 | |
01-Oct-20 | - | 2,000 | € 0,80 | - | 85.20% | 0.00% | 53.95 | 35.97 | |
15-Jul-20 | - | 225,000 | € 0,80 | - | 85.89% | 0.00% | 56.51 | 38.53 | |
01-Jul-19 | 60,000 | 20,000 | € 1,28 | - | 78.70% | 0.07% | 69.01 | 51.02 | |
24-Jul-19 | - | 980,000 | € 1,24 | - | 78.64% | 0.00% | 68.25 | 50.27 | |
15-Jul-20 | - | 1,598,000 | € 0,80 | - | 85.89% | 0.00% | 56.52 | 38.53 | |
30-Jul-20 | 20,000 | - | € 1,28 | - | 87.02% | 0.00% | 56.02 | 38.04 | |
01-Oct-20 | - | 10,000 | € 1,28 | - | 85.20% | 0.00% | 53.95 | 35.97 | |
01-Mar-21 | - | 2,000 | € 1.08 | - | 65.06% | 0.00% | 48.99 | 31.00 | |
03-May-21 | - | 8,000 | € 1.16 | - | 64.59% | 0.01% | 46.92 | 28.93 | |
01-Jun-21 | - | 4,000 | € 1.18 | - | 65.82% | 0.01% | 45.96 | 27.98 | |
27-Jul-21 | - | 30,000 | € 1.36 | - | 63.36% | 0.00% | 44.12 | 26.14 | |
27-Jul-21 | - | 202,500 | € 1.36 | - | 63.36% | 0.00% | 44.12 | 26.14 |
Part IV: Financial Statements Part IV: Financial Statements
Annual Report 2022 / 160
| Thousands of $ | 2022 | 2021 |
| except per personnel, warrants & share amounts | ||
| For the years ended December 31 | ||
Number of management members and Executive Directors | 4 | 4 |
Short-term employee benefits | 1,550 | 1,545 |
Post-employment benefits | 54 | 52 |
Other employment costs | 219 | 207 |
Total benefits | 1,822 | 1,804 |
IFRS share-based compensation expense | 863 | 982 |
Number of warrants offered | 2,200,000 | 2,200,000 |
Cumulative outstanding warrants | 8,088,000 | 5,888,000 |
Exercisable warrants | 3,618,642 | 1,282,238 |
Part IV: Financial Statements Part IV: Financial Statements
Annual Report 2022 / 162
Part IV: Financial Statements Part IV: Financial Statements
Annual Report 2022 / 164
Part IV: Financial Statements Part IV: Financial Statements
Annual Report 2022 / 166
In thousands of $ | In thousands of € | |||
For the years ended December 31 | 2022 | 2021 | 2022 | 2021 |
Audit fee for statutory and consolidated financials | 239 | 182 | 226 | 155 |
Other audit fees | 191 | 183 | 180 | 156 |
Audit related and other services | 42 | 17 | 39 | 14 |
Total | 472 | 382 | 445 | 325 |
Part IV: Financial Statements Part IV: Financial Statements
Annual Report 2022 / 168
REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
Unqualified opinion
We have performed the statutory audit of the Group’s consolidated financial statements, which comprise the consolidated
statement of financial position as at December 31, 2022, and the consolidated statement of profit or loss and other
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for
the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies and other explanatory information, and which is characterized by a consolidated statement of financial position total
of $ 119,135 (000) and for which the consolidated income statement and other comprehensive income shows a loss for the
year of $ 44,044 (000).
In our opinion, the consolidated financial statements give a true and fair view of the Group’s net equity and financial position
as at December 31, 2022, as well as of its consolidated financial performance and its consolidated cash flows for the year
then ended, in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and
with the legal and regulatory requirements applicable in Belgium.
Basis for unqualified opinion
We conducted our audit in accordance with International Standards on Auditing (ISA) as applicable in Belgium. Our
responsibilities under those standards are further described in the 'Statutory auditor's responsibilities for the audit of the
consolidated financial statements' section in this report. We have complied with all the ethical requirements that are relevant
to the audit of consolidated financial statements in Belgium, including those concerning independence.
We have obtained from the administrative body and company officials the explanations and information necessary for
performing our audit.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current year. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
Revenue recognition
Discussion of the matter
As described in notes 2.7 and 4 of the financial statements, the majority of the Group’s revenue is derived from laboratory
services with revenue recognized at a point in time when control of the services has transferred to the customer. This is
generally when the test results are delivered to the customer. Other Group’s revenue is derived from license fees, royalties
and other revenues.
Auditor’s opinion
Statutory auditor’s report to the general meeting of the
Company for the year ended 31 December 2022
STATUTORY AUDITOR’S REPORT TO THE GENERAL MEETING OF MDXHEALTH SA FOR
THE YEAR ENDED DECEMBER 31, 2022 (CONSOLIDATED FINANCIAL STATEMENTS)
In the context of the statutory audit of the consolidated financial statements of MDxHealth SA (‘the Company’) and its
subsidiaries (together referred to as 'the Group'), we hereby present our statutory auditor’s report. It includes our report of
the consolidated financial statements and the other legal and regulatory requirements. This report is an integrated whole and
is indivisible.
We have been appointed as statutory auditor by the general meeting of May 28, 2020, following the proposal formulated by
the board of directors issued upon recommendation of the Audit Committee. Our statutory auditor’s mandate expires on the
date of the General Meeting deliberating on the financial statements closed on December 31, 2022. We have performed the
statutory audit of the consolidated financial statements of MDxHealth SA for seventeen consecutive years.
Part IV: Financial Statements Part IV: Financial Statements
Annual Report 2022 / 170
• We tested whether the accounting treatments of the business combinations are consistent with the requirements of IFRS 3.
• We assessed the reasonableness of management’s key estimates and assumptions used in the valuation models. We met
with key individuals from the finance team and the Group’s external financial advisors involved to discuss and evaluate
management’s evidence to support the relevant assumptions.
• With the assistance of our valuation specialists, we evaluated the reasonableness of the valuation methodologies
used to determine the value of the acquired intellectual property and brand, the customer relations and the contingent
consideration, including testing the mathematical accuracy of the calculations, the discount rate, and company specific
risks.
• Additionally, we reviewed the appropriateness and adequacy of disclosures of these business combinations to the
consolidated financial statements.
Impairment of goodwill and intangible assets
Discussion of the matter
The Company’s evaluation of goodwill and intangible assets for impairment, involves the comparison of the recoverable
amount of the cash generating unit to its carrying value. The Company uses the expected discounted cash flow model to
estimate the recoverable amount of the cash generating unit, which requires management to make significant estimates and
assumptions related to forecasts of future revenue, gross margins, discount rate and perpetual growth rates. Changes in
these assumptions could have a significant impact on the recoverable amount and potentially the amount of any goodwill
impairment. Given the significant judgments made by management to estimate the recoverable amount contributed to
the cash generating unit, performing audit procedures to evaluate the reasonableness of management’s estimates and
assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve
our valuation specialists. Further disclosure regarding the Company’s impairment analysis and allocation of newly acquired
goodwill to the cash generating unit can be found in Note 10.
Procedures performed
Our audit procedures related to the determination of forecasts of future revenues and gross margins used by management to
estimate the recoverable amount of the cash generating unit, include the following:
• We evaluated the reasonableness of the valuation methodology and tested the mathematical accuracy of the calculations.
• We evaluated management’s determination of cash generating units used for impairment testing.
• We evaluated management’s ability to accurately forecast future revenue and gross margin by comparing actual results to
management’s historical forecasts.
• We also evaluated the reasonableness of management’s revenue and operating margin forecasts by comparing the
forecasts to the historical operating results of the Group and appropriate internal and external evidence of growth.
• We reviewed the sensitivity analysis prepared by management to understand the effect of a change in assumptions.
The group’s revenue recognition model includes critical accounting estimates based on management judgment. These
estimates and underlying judgments are continuously revisited based on updated historical experience and the expected
evolution of collections from third party payers.
Revenue recognition was significant to our audit procedures, because of its financial impact on the consolidated annual
accounts, and the significant level of management judgment required in making the accounting estimates.
Procedures performed
Our audit procedures included, amongst others:
• We tested the Group’s internal control procedures on revenues and evaluated the Group’s assumptions and estimates
used in assessing revenue recognition, in particular with respect to completeness, existence and accuracy.
• We tested the existence of persuasive evidence of underlying agreements and contracts and we substantively tested and
challenged the underlying calculations, key assumptions and estimates used in the revenue model.
• We evaluated the reasonableness of the calculations of the ratio of claims collected in relation to claims billed, and of the
trend of such ratio.
• We considered the historical accuracy of accrued amounts of revenue and used the information obtained as evidence
for evaluating the appropriateness of the assumptions made in the current year including how these compare to the
experience in previous years.
• We reviewed the adequacy of the Group’s disclosures in notes 2.7 and 4 in respect of the use of estimates and judgments
in the revenue recognition model.
Accounting for Business Combinations
Discussion of the matter
As described in note 3 of the financial statements, the Group entered into an agreement with Genomic Health, Inc.,
asubsidiary of Exact Sciences Corporation, to acquire the Oncotype DX® GPS business;
We identified the accounting treatment of this acquisition as a key audit matter because of the significant management
assumptions and judgments used to estimate the fair value of the acquired intellectual property and brand, the customer
relations as well as the contingent consideration including discount rates, as well as certain other business-related
assumptions that form the basis of forecasted financial results, including probability of success factors and revenue
forecasts. Given the complexity of these assumptions, this matter required a high degree of auditor judgment, and
increased extent of effort including involvement of valuation specialists..
Procedures performed
Our audit procedures related to the group’s accounting for the intellectual property and brand, the customer relations and the
contingent consideration recognized in connection with the GPS test acquisition, included the following, among others:
Part IV: Financial Statements Part IV: Financial Statements
Annual Report 2022 / 172
we are required to draw attention in our statutory auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our statutory auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern;
• Evaluate the overall presentation, structure and content of the consolidated financial statements and whether the
consolidated financial statements represent the underlying transactions and events in a manner that achieves fair
presentation;
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within
the Group to express an opinion on the consolidated financial statements. We are responsible for the management, the
supervision and the performance of the Group audit. We assume full responsibility for the auditor’s opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control identified during the audit.
We also provide the Audit Committee with a statement that we respected the relevant ethical requirements relating
to independence, and we communicate with them about all relationships and other issues which may influence our
independence, and, if applicable, about the related measures to guarantee our independence.
From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current year, and are therefore the key audit matters. We describe these
matters in our statutory auditor’s report, unless law or regulation precludes public disclosure about the matter.
OTHER LEGAL AND REGULATORY REQUIREMENTS
Responsibilities of the administrative body
The administrative body is responsible for the preparation and the contents of the director’s report on the consolidated
financial statements and for the other information included in the annual report on the consolidated financial statements.
Responsibilities of the statutory auditor
In the context of our mission and in accordance with the Belgian standard (version revised 2020) which is complementary to
the International Standards on Auditing (ISA) as applicable in Belgium, it is our responsibility to verify, in all material aspects,
the director’s report on the consolidated financial statements and the other information included in the director’s report on
the consolidated financial statements, as well as to report on these elements.
Aspects relating to the director’s report on the consolidated financial
statements and to the other information included in the annual report on the
consolidated financial statements
In our opinion, after having performed specific procedures in relation to the director’s report, this report is consistent with the
consolidated financial statements for the same financial year, and it is prepared in accordance with article 3:32 of the Code
of companies and associations.
Responsibilities of the administrative body for the drafting of the consolidated
financial statements
The administrative body is responsible for the preparation of consolidated financial statements that give a true and fair view
in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union and with the
legal and regulatory provisions applicable in Belgium, and for such internal control as the administrative body determines is
necessary to enable the preparation of consolidated financial statements that are free from material misstatements, whether
due to fraud or error.
In preparing the consolidated financial statements, the administrative body is responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the administrative body either intends to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Statutory auditor’s responsibilities for the audit of the consolidated financial
statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue a statutory auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but it is not a guarantee that an audit conducted in accordance with ISAs
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
When executing our audit, we respect the legal, regulatory and normative framework applicable for the audit of the
consolidated financial statements in Belgium. However, a statutory audit does not guarantee the future viability of the Group,
neither the efficiency and effectiveness of the management of the Group by the administrative body. Our responsibilities
regarding the continuity assumption applied by the administrative body are described below.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control;
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control;
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the administrative body;
• Conclude on the appropriateness of the administrative body’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists,
Part IV: Financial Statements Part IV: Financial Statements
Annual Report 2022 / 174
Other statements
• This report is in compliance with the contents of our additional report to the Audit Committee as referred to
in article 11 of regulation (EU) No 537/2014.
Zaventem, April 25, 2023
BDO Réviseurs d’Entreprises SRL
Statutory auditor
Represented by Bert Kegels*
Auditor
*Acting for a company
In the context of our audit of the consolidated financial statements, we are also responsible for considering, in particular
based on the knowledge we have obtained during the audit, whether the director’s report on the consolidated financial
statements and the other information included in the annual report on the consolidated financial statements, namely:
• Part I: Business Review;
• Part II: Corporate Governance;
• Part III: Principle Risks & Uncertainties
contain a material misstatement, i.e. information which is inadequately disclosed or otherwise misleading.
Based on the procedures we have performed, there are no material misstatements we have to report to you.
Statement concerning independence
• Our audit firm and our network did not provide services which are incompatible with the statutory audit of the consolidated
financial statements and our audit firm remained independent of the Group during the terms of our mandate.
• The fees related to additional services which are compatible with the statutory audit as referred to in article 3:65 of the
Code of companies and associations were duly itemised and valued in the notes to the consolidated financial statements.
European Single Electronic Format (ESEF)
In accordance with the draft standard of the Institute of Réviseurs d’Entreprises concerning the standard on auditing the
conformity of financial statements with the European Single Electronic Format (hereinafter “ESEF”), we are required to verify
whether the ESEF format complies with the regulatory technical standards established by Commission Delegated Regulation
(EU) 2019/815 of 17 December 2018 (hereinafter: “Delegated Regulation”).
The administrative body is responsible for preparing, in accordance with ESEF requirements, the consolidated financial
statements in the form of an electronic file in ESEF format (hereinafter “digital consolidated financial statements”) included in
the annual report on the consolidated financial statements.
It is our responsibility to obtain sufficient and appropriate supporting information to conclude that the format and mark-up
language of the digital consolidated financial statements comply in all material aspects with the ESEF requirements under the
Delegated Regulation.
If, when auditing the digital consolidated financial statements, we conclude that there is a material misstatement, we will be
required to report the matter to the administrative body and ask it to make the necessary changes. Failing that, we will be
required to amend this report to the effect that the format and the mark-up of information in the official French version of the
digital consolidated financial statements included in the annual report on the consolidated financial statements of MDxHealth
SA comply in all material aspects with the ESEF requirements under the Delegated Regulation.
Part IV: Financial Statements Part IV: Financial Statements
Annual Report 2022 / 176
Statutory Income statement
Thousands of €/
For the years ended December 31
2022 2022 in $
Equivalent
1
2021
I. Operating income 2,983 3,141 3,784
A. Turnover 2,940 3,096 3,732
D. Other operating income 43 45 52
II. Operating charges 12,241 12,896 9,303
A. Purchase of goods and materials - - 3
B. Services and other goods 11,041 11,632 8,936
C. Remuneration, social security costs, pensions 378 398 339
D. Depreciation & amounts written off fixed assets 822 866 15
G. Other operating charges - - 10
III. Operating profit/(loss) (9,258) (9,755) (5,519)
I V. Financial income 6,183 6,514 1,467
B. Income from current assets 3,357 3,537 1,103
C. Other 2,826 2,977 364
V. Financial charges 44,747 47,137 3,310
A. Recurring financial charges 2,682 2,824 1,262
C. Non-recurring financial charges 42,065 44,313 2,048
VI. Current profit/(loss) before taxes (47,823) (50,372) (7,362)
IX. Profit/(loss) before taxes (47,823) (50,372) (7,362)
X. Income taxes - - -
XI. Profit/(loss) for the year after taxes (47,823) (50,372) (7,362)
1
Profit and loss items have been translated using the average rate 1.0535 USD/EUR and Balance Sheet items using the closing rate 1.0666 USD/EUR
Appropriation account
Thousands of €
For the years ended December 31
2022 2022 in $
Equivalent
2021
A. Loss/gain to be appropriated
A1. Loss/Gain for the period available for appropriation (47,823) (50,372) (7,362)
A2. Loss brought forward (127,303) (136,025) (119,941)
B. Transfer from capital and reserves
B1. From capital and share premium account
C. Transfer to equity
D. Result to be carried forward
D2.
Loss to be carried forward (175,126) (186,788) (127,303)
Condensed non-consolidated financial statements
The statutory financial statements to be filed with the Belgian National Bank are prepared in accordance with Belgian GAAP.
An unqualified audit opinion will be issued by the statutory auditor.
The information included in this section is an extract from the statutory accounts and does not include all information as
required by articles 3:10 and 3:12 of the Belgian Companies and Associations Code. The full statutory accounts have not yet
been filed with the Belgian National Bank as of the date of this document. Once filed with the Belgian National Bank, the full
statutory accounts will also be made available in the investor section of MDxHealth’s website (www.mdxhealth.com).
Part IV: Financial Statements Part IV: Financial Statements
Annual Report 2022 / 178
Statutory statement of financial position after appropriations
Thousands of €
For the years ended December 31
2022 2022 in $
Equivalent
2021
CAPITAL AND RESERVES 74,894 79,884 117,840
I. Capital 123,539 131,367 118,662
A. Issued capital 123,539 131,367 118,662
II. Share premium account 126,481 134,905 126,481
III. Revaluation surpluses - - -
I V. Reserves - - -
V. Accumulated profit/(loss) (175,126) (186,788) (127,303)
VI. Investment grants - - -
VII. Provisions and postponed taxes - - -
A. Provisions for liabilities and charges - - -
A4. Other liabilities & charges - - -
AMOUNTS PAYABLE 49,790 53,104 18,215
VIII.
Debts payable after 1 year 33,220 35,431 5,712
A. Financial debts 33,220 35,431 5,712
A4. Credit institutions - - -
A5. Other debts 33,220 35,431 5,712
IX. Debts payable within 1 year 2,798 2,984 5,567
A. Current portion of debts after one year - - -
B. Financial debts - - 3,273
B1. Credit institutions - - 3,273
C. Trade debts 2,706 2,886 2,224
C1. Suppliers 2,706 2,886 2,224
D. Advances received on contracts in progress - - -
E. Taxes, remuneration & social security 92 98 70
E1. Taxes - - -
E2. Remuneration & social security 92 98 70
X. Accrued charges and deferred income 13,772 14,689 6,936
TOTAL LIABILITIES 124,684 132,988 136,055
Statutory statement of financial position
Statutory statement of financial position after appropriations
Thousands of €
For the years ended December 31
2022 2022 in $
Equivalent
2021
ASSETS 111,650 119,086 85,762
I. Formation expenses - - -
II. Intangible assets 28,450 30,345 -
III. Tangible fixed assets 2 2 10
B. Plant, machinery and equipment 2 2 10
C. Furniture and vehicles - - -
I V. Financial assets 83,198 88,739 85,752
A. Affiliated enterprises 83,192 88,733 85,746
A1. Investments 3,422 3,650 3,422
A2. Amounts receivable 79,770 85,083 82,324
C. Other financial assets - - -
C1. Investments - - -
C2. Amounts received and cash guarantee 6 6 6
CURRENT ASSETS 13,034 13,902 50,293
V. Amounts receivable after one year - - -
VI. Stocks and contracts in progress - - -
VII. Amounts receivable within one year 103 110 240
A. Trade debtors 49 52 82
B. Other amounts receivable 54 58 158
VIII. Investments 11,836 12,624 49,904
B. Other investments and deposits - - -
IX. Cash at bank and in hand 11,836 12,624 49,904
X. Deferred charges and accrued income 1,095 1,168 149
TOTAL ASSETS 124,684 132,988 136,055
Part IV: Financial Statements Part IV: Financial Statements
Annual Report 2022 / 180
ASSAY A term for a single experiment or a diagnostic test incorporating the required markers to analyze a
clinical specimen.
BIOPSY A procedure where a tumor tissue sample is removed from the body for laboratory examination
to determine whether cancer or some other disease is present. A biopsy can be performed using
a needle to extract a small number of cells or as a surgical procedure to remove a larger piece of
tissue.
BIOTECHNOLOGY Biotechnology is a technology based on or influencing biological processes, especially when used
in agriculture, food science, and medicine.
CANCER Cancer is a type of disease caused by genetic instability and characterized by uncontrolled
division of cells and the ability of these cells to invade other organs.
CAP The College of American Pathologists (CAP) is a US accrediting agency for the US Centers for
Medicare and Medicaid Services (CMS).
CELL The basic unit of a living organism. Each cell is surrounded by a membrane and has a nucleus
containing a set of genes that provide it with the information necessary to operate and divide.
CLIA The US Clinical Laboratory Improvement Amendments (CLIA) establishes quality standards for all
laboratory testing to ensure the accuracy, reliability and timeliness of patient test results.
CLINICAL SAMPLE A sample taken from the body (ex. blood, urine, tissue) and analyzed to gain information about a
person’s medical state.
CLINICAL TRIAL A research study, usually in diseased patients, to test drugs, procedures, or testing technologies to
determine how well they work compared to other practices or the natural course of the disease.
CMS US Centers for Medicare & Medicaid Services
CPT CODES Current Procedural Terminology Codes- numbers assigned to every medical task used by
physicians and or laboratories to determine amount of reimbursement that practitioner will receive
from insurer. CPT codes are assigned by AMA American Medical Association to provide uniform
definition for services and reimbursement.
DIAGNOSIS Identification of a condition or disease (ex. breast cancer), by its signs, symptoms, and the results
of laboratory or histopathological tests.
DNA (DEOXYRIBONUCLEIC
ACID)
DNA is a nucleic acid polymer, usually in the form of a double helix, of which the genes are made
and code for life processes.
DRE Digital rectal examination procedure
EPIGENETICS Refers to heritable changes in gene expression (active versus inactive genes) that does not
involve changes to the underlying DNA sequence (i.e., a change in phenotype without a change
in genotype). This in turn affects how cells read the genes. Epigenetic change is a regular and
natural occurrence but can also be influenced by several factors including age,
the environment/lifestyle, and disease state.
GENE A unit of genetic information. Genes are encoded in a cell’s DNA and the proteins they express
control the physical development and behavior of the cell or the whole organism.
IN-VITRO DIAGNOSTICS
(IVD)
IVDs are tests performed outside the human body on clinical samples such as blood, urine,
or biopsy tissue.
KIT (DIAGNOSTIC KIT) In-vitro diagnostic test, collection device or test component that is packaged in a box which that
can be shipped to end-user laboratories.
LCD Local Coverage Determination – a local healthcare coverage and reimbursement policy issued by
a Medicare Administrative Contractor appointed by CMS.
LDT Laboratory Developed Test-refer to assays developed in a laboratory for use within that laboratory.
While these tests are not currently regulated by FDA Food and Drug Administration, the lab must
validate all aspects of the test to ensure patient safety, reliability, repeatability, accuracy as well as
validating all instruments, reagents and or supplies used in the test.
MARKER A substance native to the organism, whose presence is indicative of a specific medical condition.
MEDICAID Medicaid is a medical assistance program in the US established by Title XIX of the US Social
Security Act. The Medicaid program is a no-cost or low-cost public health insurance program for
US residents that provides needed health care services for low-income and disabled individuals.
MEDICARE Medicare is a national social insurance program, administered by the U.S. federal government,
established in 1966 under Title XVIII of the US Social Security Act. Medicare provides health
insurance for US residents aged 65 and older who have worked and paid into the system. It also
provides health insurance to younger people with certain disabilities and designated diseases.
METHYLATION Control mechanism that regulates gene expression in DNA without causing a permanent genetic
alteration.
METHYLATION-SPECIFIC
PCR (MSP)
A technology for detecting gene methylation.
MOLDX The Molecular Diagnostic Services Program, administered by Palmetto GBA, which handles
technical assessments and coverage and reimbursement policies for U.S. laboratories that
perform molecular diagnostic testing for Medicare patients.
NCCN National Comprehensive Cancer Network, a non- profit alliance of the 31 leading cancer centers in
the United States.
NPV NPV or “Negative Predictive Value” is the probability that subjects with a negative test truly don't
have the disease being tested. It is a numerical value for the proportion of individuals with a
negative test result who are free of the target condition.
PCPTRC The Prostate Cancer Prevention Trial Risk Calculator
PCR The polymerase chain reaction is a technique for the in vitro amplification of specific DNA
sequences by the simultaneous primer extension of complementary strands of DNA.
PHARMACOGENOMICS The study and application of DNA and RNA based biomarkers to predict how an individual's genes
affect the body's response to a therapeutic drug.
PSA Prostate-Specific-Antigen, a widely used but widely criticized blood-based screening test for
prostate cancer.
QALY The quality-adjusted life year is a widely recognized academic standard for measuring how well
medical treatments lengthen and/or improve patients’ lives. The QALY metric has served as a
fundamental component of cost-effectiveness analyses around the world for more than 30 years.
RECURRENCE A return of cancer after treatment.
SCREENING The testing of a population for disease.
SENSITIVITY A measure of a diagnostic test’s accuracy. Sensitivity measures the percentage of people with a
certain medical condition that produces a positive test result. Tests with good sensitivity produce
few false negative results.
SERVICE LABORATORY Laboratory that provides medical testing services.
SPECIFICITY A measure of a diagnostic test’s accuracy. Specificity measures what percentage of people
without a medical condition for whom the test result is negative. Tests with good specificity
produce few false positive results.
TUMOR Tissue growth where the cells that make up the tissue have multiplied uncontrollably.
A tumor can be benign (non-cancerous) or malignant (cancerous).
VALIDATION
(PRODUCT PIPELINE STEP)
A phase within the product development process to evaluate the performance of the newly
developed assay using a defined sample set.
Glossary
BDO Bedrijfsrevisoren BV / BTW BE 0431.088.289 / RPR Brussel
BDO Réviseurs d'Entreprises SRL / TVA BE 0431.088.289 / RPM Bruxelles
BDO Bedrijfsrevisoren - BDO Réviseurs d'Entreprises BV/SRL, a company under Belgian law in the form of a private limited liability company, is a member of BDO International
Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.
BDO is the brand name for the BDO network and for each of the BDO Member Firms.
Phone: +32 (0)2 778 01 00
Fax: +32 (0)2 771 56 56
www.bdo.be
The Corporate Village
Da Vincilaan 9, Box E.6
Elsinore Building
B-1930 Zaventem
MDXHEALTH SA
Auditor’s report to the general meeting of shareholders, in
accordance with Article 4 of the Transparency Directive, on the
compliance of the consolidated financial statements in electronic
format of MDxHealth SA as at December 31, 2022 with the ESEF
(European Single Electronic Format) requirements and taxonomy
under Delegated Regulation (EU) 2019/815
April 28, 2023
BDO Bedrijfsrevisoren BV / BTW BE 0431.088.289 / RPR Brussel
BDO Réviseurs d'Entreprises SRL / TVA BE 0431.088.289 / RPM Bruxelles
BDO Bedrijfsrevisoren - BDO Réviseurs d'Entreprises BV/SRL, a company under Belgian law in the form of a private limited liability company, is a member of BDO International
Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.
BDO is the brand name for the BDO network and for each of the BDO Member Firms.
Phone: +32 (0)2 778 01 00
Fax: +32 (0)2 771 56 56
www.bdo.be
The Corporate Village
Da Vincilaan 9, Box E.6
Elsinore Building
B-1930 Zaventem
AUDITOR’S REPORT TO THE GENERAL MEETING OF SHAREHOLDERS IN
ACCORDANCE WITH ARTICLE 4 OF THE TRANSPARENCY DIRECTIVE ON THE
COMPLIANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS IN
ELECTRONIC FORMAT OF MDXHEALTH SA AS AT DECEMBER 31, 2022 WITH
THE ESEF (EUROPEAN SINGLE ELECTRONIC FORMAT) REQUIREMENTS AND
TAXONOMY UNDER DELEGATED REGULATION (EU) 2019/815
Mission
In accordance with Article 4 of the Transparency Directive, the auditor’s role is to report if
the format and mark up of the consolidated financial statements in electronic format
(hereinafter the “digital consolidated financial statements”) is in accordance with the ESEF
requirements and taxonomy, in particular with the provisions in force as defined in the ESEF
Regulatory Technical Standards (“ESEF RTS”) under the European delegated regulation
2019/815 of 17 December 2018 applicable to the digital consolidated financial statements as
at December 31, 2022.
Responsibilities of the board of directors
The board of directors is responsible for preparation of the digital consolidated financial
statements in accordance with the ESEF requirements and taxonomy (in particular with the
provisions in force as defined in the ESEF Regulatory Technical Standards (“ESEF RTS”)
applicable to the digital consolidated financial statements as at December 31, 2022.
This responsibility includes selecting and applying the most appropriate methods for preparing
the digital consolidated financial statements. In addition, the responsibility of the board of
directors includes the design, implementation and maintenance of relevant systems and
processes relating to the preparation of digital consolidated financial statements that are free
from material misstatement, whether due to fraud or error. The board of directors must verify
that the digital consolidated financial statements correspond to the user-readable
consolidated financial statements.
2.
Responsibility of the auditor
It is our responsibility, based on our work, to express a conclusion that the format and mark
up of the digital consolidated financial statements of MDxHealth SA as at December 31, 2022
are, in all material respects, compliant with the ESEF Regulatory Technical Standards under
the European delegated regulation.
We have carried out our work in accordance with the International Standard on Assurance
Engagements (ISAE) 3000 (Revised), “Assurance Engagements Other than Audits or Reviews of
Historical Financial Information”. This standard requires that we comply with ethical
requirements and plan and carry out the audit so as to obtain reasonable assurance about
whether we have identified anything that causes us to believe that the digital consolidated
financial statements have not been prepared, in all material respects, in accordance with the
ESEF regulatory technical standards to be applied by the Company.
The choice of work performed depends on our judgment and assessment of the risk of material
misstatement in the digital consolidated financial statements and the statements of the board
of directors. The work that we carried out included, among other things, the following
procedures:
• Verify if the digital consolidated financial statements in XHTML-format are prepared in
accordance with article 3 of the European delegated regulation;
• Obtain an understanding of the Company’s processes for tagging its digital consolidated financial
statements and relevant internal controls for certification, with the aim of designing audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of internal controls, which are intended to provide reasonable
assurance that the XBRL tagging of the digital consolidated financial statements is, in all material
respects, compliant with ESEF regulatory technical standards;
• Obtain sufficient appropriate audit evidence on the effectiveness of the operation of relevant
controls for the XBRL tagging of the digital consolidated financial statements of MDxHealth SA as
at December 31, 2022;
• Reconcile the tagged data with the audited consolidated financial statements of MDxHealth SA as
at December 31, 2022;
• Assess the completeness of the tags in the consolidated digital financial statements prepared by
the Company;
• Assess the appropriateness of the Company’s use of the iXBRL elements of the ESEF taxonomy and
assess the creation of the extension taxonomy.
3.
Our independence and quality control
We have complied with the independence and other ethical requirements of the legislation
and regulations in force in Belgium applicable within the context of our mission. These
requirements are based on the fundamental principles of integrity, objectivity, professional
competence and diligence, confidentiality and professional conduct.
Our audit firm applies the International Standard on Quality Control (ISQC) 1 and maintains a
sophisticated system of quality control, including documented policies and procedures
regarding ethical rules, professional standards and applicable legal and regulatory provisions.
Conclusion
Based on the work carried out, we are of the opinion that the format and mark up of the
digital consolidated financial statements, included in the annual financial report, of
MDxHealth SA as at December 31, 2022 is, in all material respects, compliant with the ESEF
requirements and taxonomy under the European delegated regulation.
In this report, we do not express an audit opinion, a review conclusion or any other assurance
conclusion regarding the consolidated financial statements themselves. Our audit opinion on
the consolidated financial statements is presented in the consolidated auditor’s report dated
April 25, 2023.
Other point
The consolidated financial statements of MDxHealth SA were prepared by the board of
directors of the Company on April 24, 2023 and were subject to statutory audit. This report is
no reissue of our statutory auditor’s report. Our auditor’s report (signed on April 25, 2023)
includes an unqualified opinion on the true and fair view of the assets and consolidated
financial position of the Company as at December 31, 2022, together with its consolidated
results and consolidated cash flows for the year then ended, in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union, and with legal and
regulatory requirements applicable in Belgium.
Zaventem, April 28, 2023
BDO Réviseurs d’Entreprises SRL
Statutory auditor
Represented by Bert Kegels*
Auditor
*Acting for a company