Mdxhealth (MDXH) Q3 2026 earnings review
Mdxhealth sales stall after staff turnover, and losses widen
High turnover on the sales team stalled Mdxhealth's prostate cancer test business and widened its losses. Third-quarter revenue from continuing operations stayed flat from a year ago at $22.7 million and dropped 17% from the second quarter as both tissue and liquid test volumes fell. Chief executive Michael K. McGarrity eliminated the chief commercial officer post, took direct control of sales and marketing, and aims to finish rebuilding the sales team by year-end to return to growth in 2027.
| Continuing revenue | $22.7M 0% from a year ago; -17% from last quarter |
|---|---|
| Tissue test volume | 11,232 -11% from a year ago; -10% from last quarter |
| Adjusted EBITDA | -$6.3M -$0.9M a year ago |
| Growth outlook | Pushed to 2027 prior 2026 plan of $110–115M omitted |
⚖️ Verdict: 🔴🔴 Very Bearish
The story got worse because the second-quarter volume rebound reversed and the company pushed its growth timeline into 2027. The release dropped all mention of the earlier $110 million to $115 million full-year revenue plan and the year-end profit target, while operating losses nearly doubled to $8.1 million. One bright spot: Mdxhealth raised $20 million in net share proceeds in August to lift cash to $31.7 million, and revenue per tissue test held near $1,600 by our math.
The question now is whether the third-quarter volume drop was a one-off hit from sales staff departures or a sign that rival prostate tests are taking market share. If the problem was staffing alone, hiring replacement reps in the fourth quarter will restore volume growth next year; if doctors are switching to competing tests, a full sales team will still struggle to grow. First-quarter 2027 test volumes will settle it.
🐂 Bull Case
Clinical Studies and AI Rollout Stay on Schedule
Mdxhealth now operates solely in prostate cancer diagnostics after shutting down its Resolve urinary tract infection business in the second quarter. Chief executive Michael K. McGarrity said the group will "continue to advance our landmark PROTECT study with the University of Oxford and prepare to roll out our strategic AI initiatives in the first half of 2027".
These clinical and software programmes aim to win stronger medical guideline backing and make its prostate biopsy tests more useful to urologists. Research and development spending rose 20% from a year ago to $2.4 million, or 10.6% of sales, showing that the company kept funding its clinical trials despite the sales disruption.
What to watch: the launch of the artificial intelligence tools in the first half of 2027. A timely rollout would give the rebuilt sales force a new product feature to pitch to doctors.
Positives this quarter didn't test
Two operational metrics held steady inside the third-quarter report even as overall test volumes dropped.
- Revenue per tissue test: about $1,598 by our math, compared with $1,586 in the second quarter, showing that insurance reimbursement per test did not drive the revenue drop.
- Core prostate focus: historical and current figures now exclude the closed Plano, Texas laboratory, removing urinary tract infection operating losses from continuing operations.
What to watch: fourth-quarter revenue per tissue test, derived from the revenue mix percentage. Holding near $1,600 would confirm that pricing remains intact while the sales team rebuilds.
🐻 Bear Case
Sales Departures Reverse the Test Volume Recovery
One quarter after tissue test volumes bounced back 13% from the first quarter, volume fell back to its earlier trough. McGarrity said "our third quarter results reflect a temporary disruption in our commercial execution due to accelerated turnover within our sales organization". Both tissue tests (Confirm mdx and GPS mdx, which analyse prostate biopsy tissue) and liquid tests (Exo mdx, a urine-based prostate test) dropped from the second quarter.
- Tissue-based test volume: 11,232 tests, down 11% from a year ago and down 10.3% from the second quarter by our math.
- Liquid-based (Exo mdx) test volume: 11,792 tests, down 13.2% from the second quarter by our math.
- Tissue-based revenue: about $17.9 million by our math (79% of total sales), down 14.2% from a year ago.
- Liquid-based revenue: about $4.8 million by our math (21% of total sales), down 35.1% from the second quarter.
This reversal matters because the second-quarter rebound now looks like a brief catch-up rather than a lasting recovery. Because new diagnostic sales representatives take months to train and build relationships with urologists, the volume slump will weigh on fourth-quarter collections as well.
What to watch: first-quarter 2027 test volumes for both tissue and liquid tests. Since management expects to finish staffing the sales team by year-end, the first quarter of 2027 is the first period that will show whether the new team can grow unit volumes.
Full-Year Targets Go Unmentioned as Growth Pushes to 2027
In the first and second quarters, Mdxhealth maintained a full-year 2026 core revenue plan of $110 million to $115 million and aimed to reach positive earnings before interest, taxes, depreciation, amortisation and one-offs as it exited 2026. The third-quarter release includes no 2026 financial outlook table and does not mention either full-year target.
Instead, McGarrity said the company expects to "exit the fourth quarter with a fully staffed and well-trained sales organization positioned to return to growth in 2027". With $73.8 million of continuing revenue through nine months, hitting the bottom of the earlier $110 million plan would require $36.2 million in the fourth quarter by our math, a 59% jump from the third quarter while the sales force is still being rebuilt.
What to watch: formal 2027 revenue and profit targets when fourth-quarter results arrive. That outlook will establish the new baseline after the commercial restructuring.
Acquired Costs and Liquid Test Mix Widen Operating Loss
Operating losses nearly doubled from a year ago to $8.1 million because Mdxhealth carried a full quarter of operating costs from Exosome Diagnostics, which it bought in September 2025, without gaining total revenue. Selling and marketing expenses rose 24% to $11.7 million, climbing 9.9 percentage points of revenue to 51.5% by our math, while general and administrative overhead rose 1.2 points to 33.0%.
Gross margin also fell 3.2 percentage points from a year ago to 61.8%, which the company said was "primarily attributed to test mix". Liquid tests carry a higher cost of goods than tissue tests, and their share of revenue rose from 8% a year ago to 21%.
What to watch: quarterly selling and marketing spend in the fourth quarter. If sales force rebuilding costs push quarterly operating expenses above $22.2 million while revenue lags, operating losses will widen further.
Share Issuance and New Debt Fund Ongoing Cash Drain
Mdxhealth ended September with $31.7 million in cash, up from $19.2 million in June, only because it raised $20.0 million in net share proceeds during the third quarter and drew $19.4 million in loan proceeds over the first nine months. By our math, free cash flow in the third quarter was an outflow of $3.5 million, bringing nine-month operating cash burn plus capital spending to $11.3 million.
On top of operating burn, the diagnostics group paid $14.0 million in acquisition earnouts to Exact Sciences during the first nine months and $8.6 million in cash interest. Total loans and lease liabilities now stand at $105.6 million against negative shareholders' equity of $24.5 million, with another $39.6 million in current and non-current financial liabilities for future acquisition payments.
What to watch: year-end cash balance against the $18.0 million earnout payment due to Exact Sciences in April 2027. Delayed profit break-even lowers the cash cushion available to meet scheduled debt and earnout obligations.
👓 Other Themes
Management Splits Sales and Marketing After Staff Turnover
To fix the commercial disruption, McGarrity restructured the commercial division by "eliminating the Chief Commercial Officer role and effectively splitting our sales and marketing functions". Both groups now report directly to McGarrity to separate product strategy from daily sales management. The company has begun hiring replacement representatives and plans to finish staffing and training the team before the end of the fourth quarter.
💲 Other KPIs
Loss widened from -$0.91 million a year ago and -$2.29 million in the second quarter. Adjusted EBITDA — operating profit before interest, tax, depreciation, amortisation and non-cash items — fell to -27.7% of revenue by our math as sales dropped 16.5% from the prior quarter while operating expenses grew.
Trade receivables — money owed by customers and insurers for delivered tests — fell 19.0% from $14.68 million at the end of 2025. Collecting older bills generated a $1.43 million cash inflow over the first nine months and helped trim operating cash burn.
Up 57.4% from 48.7 million a year ago by our math, derived from the continuing net loss and loss per share. The August stock sale issued 44.1 million new shares, which caused per-share loss from continuing operations to shrink 20% even as net loss grew 26%.
🔮 Guidance
Cut. The release omits the previous $110 million to $115 million 2026 revenue outlook and states that the sales team is being rebuilt in the fourth quarter to return to growth in 2027. Nine-month revenue reached $73.8 million, up 9% from a year ago, leaving the prior full-year range out of reach during the fourth-quarter sales reset.
❓ Key Questions
What is the updated full-year 2026 revenue and EBITDA outlook?
Management previously guided to $110–115 million in 2026 core revenue and positive adjusted EBITDA exiting 2026. Neither target appears in the third-quarter release after revenue dropped to $22.7 million.
How many sales representatives left, and how many remain?
The group expanded its sales force from 50 to 60 representatives in late 2025 after buying Exosome Diagnostics. Knowing the exact turnover rate shows how much hiring remains before year-end.
Why did Exo mdx liquid revenue fall faster than volume?
By our math from the reported mix percentages, liquid test revenue dropped 35% from the second quarter while liquid test volume fell 13%, pointing to a drop in average collection per liquid test.
Does the debt covenant require new waivers after the Q3 loss?
Operating cash burn and a -$6.3 million adjusted EBITDA loss reduce headroom under lender covenants, while an $18.0 million earnout payment to Exact Sciences arrives in April 2027.