Q4 2022 PAVmed Inc Earnings Call

Speaker 2: Welcome to the PavMed Business Update and Fourth Quarter 2022 Financial Results Conference call.

Speaker 2: At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

Speaker 2: I would now like to turn the call over to your host Michael Parks, Vice President Investor Relations. Mr. Parks, you may begin.

Speaker 3: Thank you, Jen, and good morning, everyone. Thank you for participating in today's fourth quarter 2022 business update call. The press release announcing this business update and the fourth quarter 2022 financials is available on the PubMed website. Please take a moment to read the disclaimer about forward-looking statements in the press release.

Speaker 3: The business update press release and the conference call both include forward-looking statements. And these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from statements made.

Speaker 3: Factors that could cause results to differ are described in the disclaimer and in our filings with the U.S. Securities and Exchange Commission. For a list and description of these and other important risks and uncertainties that may affect future operations, see Part 1. Section 1A entitled Risk Factors in Pathmeds Most Recent Annual Report on Form 10Q.

Speaker 3: filed with the SEC and subsequent updates filed in the quarterly reports on Form 10Q and any subsequent Form 8K filing.

Speaker 3: Except as required by law, PADMED disclaims any intentions or obligations to publicly update or revise any forward-looking statements to reflect changes in expectations or in events, conditions, or circumstances on which those expectations may be based or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements.

Speaker 3: I would now like to turn the call over to Dr. Leeshan Akhlaub, Chairman and CEO of Padme. Dr. Akhlaub.

Speaker 4: Thanks Mike and good morning everyone. It's great to have you on today and welcome to our quarterly update call.

Speaker 4: It's great to have you on today and welcome to our quarterly update call.

Speaker 4: I'd like to first start by reminding you that we did do a LUCID conference call yesterday and that the webcast of that is available online. We'll cover LUCID today, but in a limited fashion so we have time to talk about the other aspects of the Padme business. I would encourage everyone to review the webcast for the LUCID call yesterday.

Speaker 4: So I'd like to start with a bit of an overview on our strategic restructuring and then some recent highlights with Baris and Lucid.

Speaker 4: In early part of January 2022, we initiated a strategic restructuring plan initiative that was designed to really maximize cash flow and protect our shareholders' interests over the long term in what were and still remain challenging market conditions.

Speaker 4: We made substantial adjustments to our near-term strategic priorities and the associated resource allocations. In summary, we shifted substantially all of our resources and efforts on accelerating commercialization of the lucid and various products. We had a meaningful reduction in our workforce by 20% and in our...

Speaker 4: impact, a positive impact, consolidated cash runway has been extended and our balance sheet is now stronger and that's been further enhanced by just under $25 million financing that we announced in SoLucid that we announced yesterday.

Speaker 4: So, some highlights I'll start with the Harris and again have limited comments about listed here various help as you know, is our digital health subsidiary.

Speaker 4: that is seeking to enhance personalized cancer care. Some major highlights over the last couple of months and.

Speaker 4: We launched the Verus Cancer Care Platform, Verus CCP, and executed our first commercial contract with a practice in New Jersey. The platform went live last month with patients now transmitting their physiologic data using our Verus Box devices.

Speaker 4: to the cloud-based clinician portal, and patients now reporting their symptoms and quality of life parameters through the smartphone app, which is now available on the Apple App Store and Google Play.

Speaker 4: the ecology practice and the care team are now reviewing the physiologic clinical data that the, that that is coming from the patient on the portal. And the key is they're doing so in a way that allows them to bill for remote patient monitoring services, which is the key aspect of the business model. We are receiving subscription payments under.

Speaker 4: the contract within the Software as a Service recurring revenue model.

Speaker 4: So lots of great progress. We're really excited about being off to the races with Varys.

Speaker 4: On the lucid side, also really strong steady strides along focused on e-cigar commercialization. Our test volume growth remained strong. We secured a very important in-network contract with the largest secondary PPO multi-plan which has access to approximately 50 million consumers.

Speaker 4: Overall, our commercial payer and network engagements are accelerating and our contracts are now averaging over $2,000 per test. All of our PPO contracts are at or above Medicare. So in summary, the price is holding. We had a successful launch of a new PPO contract.

Speaker 4: just under $25 million financing, which extends our cash runway well into 2024.

Speaker 4: Just a couple of, just two slides to summarize the structure of Padme. For those of you who are just learning about us, Padme is a diversified commercial stage medical technology company. We operate in medical devices and diagnostics as well as in digital health.

Speaker 4: And we operate under a shared services model where business units and subsidiaries share services at the administrative level and really at all other aspects of regulatory and product development, clinical affairs, clinical research, and so forth, which provides us with economies of scale, overall risk mitigation, and other advantages.

Speaker 4: We currently have two subsidiaries, Lucid Diagnostics, which is publicly traded on the NASDAQ, and Verus Health, which is privately held, and we'll do updates about both. I'll start with Verus.

Speaker 4: We currently have two subsidiaries, Lucid Diagnostics, which is publicly traded on the NASDAQ, and Veris Health, which is privately held, and we'll do updates about both. I'll start with Veris.

Speaker 4: Excuse me, so various in the commercial stage, digital health company that's focused on and ants personalized cancer care. We know that cancer patients face high rates of complications which drive poor patient outcomes at health care costs a couple of ways to quantify it or the average cost of a hospitalization for cancer patients during the treatment course is about $70,000.

Speaker 4: and up to 50% of hospitalizations during a course of therapy for cancer are avoidable. So our mission with VARIS is to improve outcomes utilizing modern remote patient monitoring or RPM tools.

Speaker 4: Sorry, I screwed up the slides here. I apologize.

Speaker 4: Let me just make sure that.

Speaker 5: Just like

Speaker 4: I apologize, I didn't advance the slides.

Speaker 4: Okay, so what are various health solutions? There are two aspects of it. One is a software platform on the left and a physiologic device, a physiologic monitor.

Speaker 4: which are on the right. The VARIS Cancer Care Platform consists of a smartphone app as well as a cloud-based portal for the physicians and a quote unquote VARIS box that contains a phone.

Speaker 4: Bluetooth connected devices for measuring various physiologic parameters such as blood pressure, weight, oxygen saturation, etc. We're developing and are making excellent progress on a continuous remote patient monitoring implantable physiologic monitor that is designed to be implanted at the same time as a

Speaker 4: chemotherapy port. You can see the purple the purple structure there which is the port that makes into the monitoring device.

Speaker 4: So, this system and the platform in particular facilitates early detection of complications, provides longitudinal trends and risk management tools for the clinician so they can provide it here.

Speaker 4: personalized cancer care. The patient experience is really robust. We're very proud of the patient interface of the software application. And patients now are reporting their symptoms. This includes general health and quality of life parameters that go directly to their cancer team through the smartphone app there. You can see on the left there, the ability to report symptoms, the chat feature.

Speaker 4: The clinician portal is also good. We're proud of the human factors aspects of the design and the interface. It's a cloud-based, fully cloud-based portal that's integrated into the oncology practices, IT system and electronic health records. It allows the team to review physiologic and clinical data that's delivered.

Speaker 4: that's transmitted to ED from the patient, both from the physiologic monitors as well as from the patient reporting. You can see here it shows nice trends with the physiologic parameters. It has calendaring features. It has telehealth features. It pulls in laboratory results. And our goal is to make this really the front end for their practice as opposed to their traditional.

Speaker 4: From a business practice, business point of view, the practice can now bill for remote patient monitoring services on a monthly basis as long as the data is being transmitted at least 16 days a month and I'll show you that the codes are well established.

Speaker 1: that the

Speaker 4: The business model is very attractive and it's one of the reasons why we decided to pursue this. Attractive on both ends, both as a revenue opportunity for Verus as well as a value proposition for our customers. As I mentioned, the business model is software as a service. It's recurring revenue. We charge a subscription fee for the practice.

Speaker 4: per head, per patient. It leverages existing established codes. It does not require us to seek any further reimbursement from third-party payers or from the state.

Speaker 4: head, for patients, had it leverages existing established codes. It does not require us to seek any further reimbursement from third-party payers or from Medicare.

Speaker 4: There are also additional revenue opportunities for enhanced technical support, providing off-hours and even during the day clinical support, as well as when the implantable device is ready, I'm being able to charge for that.

Speaker 4: A brief summary on the right there of how RPM billing works. Again, these CPT codes on the left are well established, and you can see how it's provided, and it really ends up for fully utilizing the system providing the full data of about just under $200.

Speaker 4: $200 per month of billings, and about $100 of that is marched into the practice. It also facilitates participation in value-based payment models that are offered by CMS. The most recent one is called the Enhanced Oncology Model, EOM, and other value-based payment models.

Speaker 4: and overall decreases the administrative workload on the practice. The total address of a monthly opportunity is approximately $2 billion based on 2 million patients being diagnosed with cancer every year.

Speaker 4: Here's some highlights of our commercial strategy. The estimated number of oncologists in the U.S. last year is 12,500 operating about 2,200 people, and just under 2,000 new cancer diagnosis.

Speaker 4: We're targeting a large market opportunity with a focus on initially on independent oncology practices, although we are encased with larger institutions and cancer centers, and innovative risk-bearing health systems and value-based model participants, practices that are already familiar with the Medicare EOM and prior versions of the value-based model of Medicare.

Speaker 4: or adjustments of medication because of the ability to follow patients' blood pressure and a whole host of other concrete examples of how the system is enhancing care. The RPM billing opportunity is immediate and the practice is doing so and the subscription revenue again is immediate and doesn't require any further sign off with regard to reimbursement.

Speaker 4: So, as I mentioned, a key part of our long term plan here is not to just use the external Bluetooth connected devices, but to have an implantable device that implanted typically at the time of the insertion of a chemotherapy port.

Speaker 4: About 50% of patients undergoing cancer therapy get a port and so we've designed a monitoring system, a physiologic monitor that can be implanted at the same time. You can see there again the purple device is the chemotherapy port and it snaps onto our physiologic monitor, which is a solar.

Speaker 4: and an enclosed device. So this, we expect this product to be available next year and it extends the power of the system because it guarantees 100% patient compliance with the remote patient monitoring billing requirements. As I mentioned, in order for the physicians to bill, they have to have 16 days a month.

Speaker 4: of data received and that depends, without an implantable device, that depends on patients remembering to check their blood pressure, check their heart rate, etc. This will provide 100% compliance.

Speaker 4: data received and that depends without an implantable device that depends on patients remembering to check their blood pressure, check their heart rate, etc. And this will provide 100% compliance right off the bat.

Speaker 4: It's designed to measure cardiac, to monitor the cardiac system, both our rating and the rhythm. Activity as a patient triggered a band monitor at a bachelor's temperature, a respiratory rate, and has Bluetooth connectivity to the smart phone.

We're making excellent progress on this. We just had a recent success in Animal Lab and we're targeting FDA 510 case submission in the second half of this year. The regulatory path for this, we've had multiple pre-submission meetings with FDA that have gone well and put us in a good path towards the 510 case.

So, in the last 10 years, we have a lot of progress on this. We just had a recent success in my animal lab, and we're targeting FDA 510, a submission in the second half of this year. with FDA that has gone well, and are put us in a good path towards this 510. So, we're going to start with FDA 510.

So that's it with Veris. I'm going to move on to Lucid. Again, very limited comments on Lucid. I encourage you to look at the... just some highlights, and I encourage you to look at the full presentation from yesterday. Just focusing on the key elements here, our test volume growth continues to make...

steady growth about 200% per year on an annualized basis. We estimate about approximately 1,600 tests for this quarter which represents 136% growth sequentially from the previous quarter.

As I mentioned, a big event this past quarter is that we launched our Check Your Food Tube pre-cancer testing events and the initial event was done in partnership with the San Antonio Fire Department. The goal here is in parallel with our traditional efforts of calling on primary care physicians and specialties and others to provide testing directly to adverse patients at higher volume events that are already.

with entities like fire departments. You can see our nurse practitioners and the rest of our team simply went to San Antonio and tested 391 firefighters over two weekends. Really proud of how they were able to handle that volume as well as the laboratory receiving 200 tests a day.

So we're going to continue to do this. It's going to be a major area of focus for us in conjunction with a broader direct contracting strategic initiative. And we have a robust near-term pipeline for future such high-volume testing events initially focusing on theseMI theseMI team

I mentioned another big highlight is our network contract that we signed with MultiPlan, the largest secondary PPO, 60 million consumers under their umbrella. They also partnered with 700 payers. They have relationships with all of the top 10 payers and over a million healthcare providers. They processed that bringing together support for medicalugh.com.

Excuse me again, I messed up the slide here. Sorry. They processed about 74 billion dollars worth of claims of charges, excuse me, in 2022. So we're really looking forward to this engagement and being able to offer ISAGUARD to a much larger target population.

On the contracting and payment side, again, just a real quick summary here, more details in the presentation yesterday. The key message here is that our engagement with the commercial payers is accelerating. That's key because about just under 90% of our

patients that are undergoing testing are in fact commercial pay, just around 10 to 12 percent are Medicare. And the key lesson really from the last couple of quarters is the price is holding. We have Medicare price of $1,938, a list price of $2,500, our average contracted price is $2,000. So all of that indicates that the price range between $1,900 and $2,500 is.

is being respected and it's even being respected generally for out-of-network benefits where the payer pays usually about 50 to 60% of the charges consistent with the benefit well within the plan and our average payment of about $1400 is consistent with.

the out-of-network benefit payments being, respecting our general, generally respecting our pricing.

So, how we're going to drive future in-network commercial payer contracts, there's really two aspects of this. One is generating claims history in order to be on the radar, to be able to have conversations with payers, and to enter into discussions around in-network coverage or not set pricing. You have to generate sufficient claims history. That's what happened with multi-plan. We started generating claims within multi-plan and that led to a conversation which led to a full-time game. Awesome.

with the commercial payers is demonstrating clinical utility. I'll talk about that a bit in the next slide as well. So we're working on that as well.

And finally, we've launched a parallel path along with the traditional payer model called our direct contracting strategic initiative. Other electrodiagnostic companies have done this where you go directly to self-employed entities such as unions and...

employers and others that are operating under an ASO model called Administrative Services Only model and directly contract with them separate from the traditional insurer or payer model.

We're excited to see if we can replicate some of the successes that other diagnostic companies have had. So to close out on the clinical utility, this is very critical for our commercial payer, as well as our future Medicare coverage prospects. We have a very robust pipeline of...

of studies that will be generating meaningful clinical utility data over the coming quarters. Our goal is to have a substantial number by mid-year. We can see here that they include collecting clinical utility data from the firefighter event, but clinical utility data is, in this case, is just demonstrating that our test isoo.

has an impact on medical decision-making that a positive or negative test will affect the physician's care of the patient and specifically and that if a physician receives a positive test That they will in fact refer the patient for endoscopy We just have to document this they make a referral and that if the test is negative that they did that they do not refer The patient for endoscopy unless there's some other indication of it

them for screening. So we have a retrospective study from NYU that's well on its way to completing its analysis of several hundred patients. We have two perspective studies, our own registry of our own patients passing through our test centers as well as the satellite test centers and the CLU study which is a multi-center.

a study that is now begin that is not began to enroll a few hundred patients in each of those by mid-year. We also are performing a prospective virtual patient study which is really a survey of physicians that are done in a controlled IRB way. That's a type of data that has been accepted and been useful in conversations.

to provide clinical utility in conversations with commercial payers. So with that, I'll pass the baton on to Dennis and he'll be talking about our financial results.

Good morning everyone. Thank you, Leeshan. Summary financial results for the fourth quarter and year were reported in our press release that was published last night.

On the next three slides.

We will emphasize a few key highlights from the quarter and the year, but I encourage you to consider those remarks in the context of full disclosures covered in our annual report on Form 10-K that was filed with the SEC Monday afternoon and is available on our PathMed website.

So with regard to our balance sheet cash of $39.4 million reflects a $17.1 million sequential decrease in $37.5 million for the year. For vendor payables, there was no significant change either sequentially or year over year when considering accounts payable and other recurring accrued expenses..

The convertible note had a net decrease of approximately $2 million sequentially. The other long-term liabilities are from capitalized leases related to our lab and our office space.

shares outstanding including unvested restricted stock awards as of today is 98.4 million shares

The gap outstanding shares are reflected on the slide as well as the face of the balance sheet at 10k.

It's reported on our Lucid call yesterday the Lucid board authorized a $20 million preferred offering and $11 million senior secured convertible debt.

We completed the initial closing of the loose preferred in the amount of 14 million dollars and it happens till the end of May to complete the remaining 6 million.

The financing was priced in accordance with NASDAQ's at the market closing bid price rules.

The accredited investors were led by a family office near to our IR firm and some long-term high net worth shareholders. Four participants in total.

to share a long-term vision for the company. After exploring a variety of alternatives, this preferred structure created a mutual win for the company and the investors. It also matched an attractive dividend with the strong incentive to hold stock for more than two years.

Additionally, Monday we entered into a Lucid Securities Purchase Agreement to issue $11 million in convertible debt securities with an accredited investor that has provided the same type of structures for Padme over the years and currently holds Padme's existing debt with similar terms.

We expect to close the funding in the next coming days.

The Lucid note is interest only for six months and it has a $5 voluntary conversion price and a 7.9% interest rate.

Amortization on the convertible note does not begin until the six-month anniversary.

Both structures keep LucidStock out of the market for long periods of time, likely two years in the case of Fird, which allows the company to complete its work on clinical utility studies and improving reimbursement.

Our consolidated runway is elongated into 2024.

on a pro forma basis when combined with our cash at the beginning of the year and combining the remaining draw under the security purchase agreement from last March of approximately 10 million.

results in pro forma cash of approximately 73.3 million dollars.

We expect our burn rate to be between 53 million and 56 million for 2023 without tapping into our available ATM.

That would reflect a 25 to 30 percent lower burn than in 2022.

So I'll refer you to the two form 8Ks that were published Monday evening for additional details on both of the Lucid Finances.

On the next slide, slide 22 compares this year's score quarter and annual results to the same periods last year on certain key items.

Trust you'll review the information in my comments and light of the cautionary disclosure to bottom of the slide about supplemental information, particularly non-GAAP information. The SEC makes me say that.

Revenue for the current quarter reflects approximately 90 Lucid tests. The prior year reflects the fixed monthly fee received from the third-party lab that Lucid used before setting up its own lab earlier this last year.

Lucid revenue recognition. We go through this every quarter but it's important. A key determinant is the probability of collection. For the vast majority of Lucid patient out-of-network claim submission means revenue recognition occurs when the claim is actually collected versus when the patient report is invoiced and submitted for reimbursement.

As you'll see in our 10-K, this is called variable consideration in the jargon of GAAP's ASC 606 revenue recognition guidelines.

presently there is insufficient predictive data to recognize revenue when enforced.

As for the Verus revenue, we just started billing our first customer in first quarter 23. They expect to recognize revenue as inputs, subject to the normal GAAP revenue recognition rules.

Our OpEx and gap loss is higher sequentially by 1.2 million and 1.7 million respectively. However, our non-gap loss is exactly the same in both quarters at 13.8 million. Hence, no change sequentially.

as higher non-cash charges impacted the OPEX line for fourth quarter 22. And lastly our non-GAAP loss per share is 15 cents for both fourth quarter and the third quarter.

Slide 23 is a graphic illustration of our operating expenses as presented in detail in our press release. Total GAAP and non-GAAP operating expenses were relatively flat sequentially.

The cost of revenue primarily consists of ESO check devices, lab supplies, and fixed lab facility costs.

is now being presented in our 10k as operating expense consistent with the practices of other diagnostic companies. Sales and marketing was higher by about 25% sequentially. It was substantially offset by lower G&A expenses.

So with that operator we can open it up for questions. Thank you. If you would like to ask a question please press star 1 on your telephone keypad now. You will be placed into the queue in the order received. Please be prepared to ask your question when prompted.

Once again if you have a question please press star 1 on your phone now. And our first question today will come from Ross Osborne with Cantor Fitzgerald.

Good morning, Ross. Hi. Good morning. Congrats on the progress of BARIS. So, starting off, are you able to disclose how many cancer patients were onboarded in February ?

Not yet. It's a continuous process. It doesn't happen in chunks. So once we get a little bit more traction, we will. But I can just say that they have a pipeline that they've offered us in terms of the number of patients that they expect to onboard in, that the single practice expects to onboard in the coming quarters.

It is substantial. Okay, fair enough. And then I guess ahead of the compliance will device, you know, any ideas and maybe too early, but just on the relative compliance rate for those users that have been onboarded so far. We don't have, we don't have data on that yet. It's a little bit early, but we, you know, the bar with regard to, it's a good opportunity to talk a little bit about patient compliance.

The bar sort of in the industry is relatively low that other companies have had only modest success with getting patient compliance up to sort of 50% or so. And that means that 50% of the time they do sufficient data is transmitted in order to be able to fill. Our aspirations are much, much higher than that. We have.

already put in customer support folks, that will contact patients, make sure they're sending the data. So we're not gonna be satisfied with 30 to 50%. The entire business model is predicated on getting high compliance. That's also one of the things that's unique about our approach to this that is compared to software only.

attention to this every day. Okay and then one more for me we're thinking about the Verisat model in terms of revenue per patient. The telemedicine billing rate I believe is at $46 to $110 per 30 minutes per month.

So at this point, how many minutes per month would you expect the average patient to use the platform? Okay, I'm glad you brought that up because I'm going to actually pull up that slide because it's important to make a distinction between remote patient monitoring and telehealth. Okay, so remote patient monitoring is a separate process. I pulled up the slide here. There are separate codes for billing for that.

that do not require actual telehealth interactions between the physician and the patient. And so they bill simply by the recording and transmission of the data and the physician documenting in the record that they reviewed the data. And our system actually, just as opportunity mentioned, does facilitate the process of billing and gives them the...

and give them the appropriate codes to do for it do so however and so our our ability to as you can see there the total dollar amount that they can expect is up to $200 per per per patient per month and our we expect to build them about

roughly $80 to $100 per month. So that's essentially we're splitting that $200 between us and the practice. Now, I'm glad you mentioned this because I forgot to mention one other revenue opportunity for the practice. Because our system facilitates telehealth, they can also bill for telehealth visits in addition to the remote patient monitoring. So if the patient has some illness or they have...

So something that needs to be worked out to decide whether they need to come to the hospital or something like that and they engage in the telehealth visit they can bill in addition to that. But hopefully it's clear now that there's a just the distinction between telehealth billing and remote patient monitoring. By the way just one other thing since you got me in the weeds on this Ross which is that

The remote patient monitoring codes are well established prior to COVID. They're not subject to extraordinary statutory statutes that were enacted during COVID. The telehealth, although it has been updated and renewed, is a little bit on less firm ground because much of that was escalated as a result of COVID. I mean, the expectations are a little...

it'll remain but that still will require governmental action. Okay that's very helpful. Thank you. Yeah thanks Russ. Our next question today comes from Frank Tecton with Lake Street Capital.

but that still will require governmental action. Okay, that's very helpful. Thank you. Yeah, thanks, Russ. And our next question today comes from Frank Tecton with Lake Street Capital. Frank, good morning. I'm Eric.

Good morning. Thanks for taking the questions. Congrats on all the progress. I wanted to start with one on Veris and specifically the commercialization efforts. Maybe kind of lay the playing field for how you guys expect to commercialize that platform throughout 2023. And then how does that change once the implantable approaching FDA 510K clearance order actually receives the clearance?

That's a great question. So let's start with the the software platform in the VerisBox connected devices. So our model is fairly straightforward. We have a commercial team that calls on that builds a pipeline and calls on oncology practices. Our Chief Commercial Officer has a long history of

calling on such practices, we're focusing initially as I mentioned on practices that have already demonstrated that they sort of get it and they participate in a value based model such as the current EOM model in the prior.

OCM model. And so that's where we're starting. And however, we have engagements with larger entities, large medical centers, and we look forward to starting the process with large cancer centers, although as is always the case, those are much longer lead times. So we look forward to that.

It starts with an engagement, typically at the clinician level and getting clinician buy-in. The response has been positive and one of the things that we've learned in our early experience, which is a bit of a surprise relative to what our expectations were when we first acquired the prior company Oncodisc.

is that the conversations quickly move to RPM. We thought that the conversations would focus initially on the clinical benefit and be able to pick up early complications and so forth. And what we're finding is that, likely as a result of the pandemic and other technologies, that the practices are very focused. I mean, it's sort of typically.

they'll come in and say, they'll just say, hey, is this an RPM thing, thingamajig? My practice manager told me, we need to look into this, right? And so that's been great. So both the clinical benefit and the practice economics benefit are front and center in those conversations. And then after we get buy-in, there are demos, the onsite demos that are done.

and the process by which patients are onboarded. So that's the grand process. Again, we're in the early stages, but it's working well. We're continuing to fine tune it, to streamline it, to make it more efficient and more cost effective over time.

which patients that are onboarded. So that's the current process. Again, we're in the early stages, but it's working well. We're continuing to fine tune it, to streamline it, to make it more efficient and more cost effective over time.

once we get the implantable device, it won't change the fundamentals dramatically in that it'll remain heavily focused on enhancing care as well as on remote patient monitoring and the impact of that on the practice. But it'll obviously supercharge that in some way because the...

the implantable provides more sophisticated data as well as guaranteed 100% patient compliance. We will need at that point to start engaging with the folks who implant these devices, typically interventional radiologists or mass resurgence, to train them and to get them to bring them into the loop and that something will happen.

we'll start doing as we get closer to a commercial and product device.

Okay, that's helpful. And then maybe just a follow-up. I think you actually answered it in the previous question, but I want to confirm I heard it correct. The rev-share portion that VARIS receives was 80 to 100 per patient per month? Correct. And the two, does the, okay, and then does the model change once you have the implantable? Is there any...

Up front we haven't finalized of the implantable. Yeah, great question. We haven't finalized how we're going to do that There is an opportunity You know, generally the implantable port of business is fairly commoditized with regard to pricing but there are going to be opportunities to you know, because of the because of its impact on the broader business model to craft, you know, customized strategies.

around that. We're not likely to provide it for free, you know, and we think we'll be able to make additional revenue on that. But we, because it is part of a value-added system that we'll be able to really, you know, we like to say actually that, you know, we have the opportunity here to shake up not just the cancer care part of this, but actually the balance report aspect of it.

as well, which has been decades of essentially the same technology without any smart features and being able to provide that with appropriate economics because of the value-added aspects of it. It's going to be exciting, but we haven't finalized that yet.

decades of essentially the same technology without any smart features and being able to provide that with appropriate economics because of the value-added aspects of it is going to be exciting. But we haven't finalized that yet, Frank. That's a great question.

Okay. Got it. And then this last one, and I think this was, like, was covered on the call yesterday, but I think it might be worth mentioning again. Test volume growth in Lucid continues to be really solid. Sounds like you're doing some retroactive billing now. Maybe just talk to any reparative experienced in 2023 at those higher reimbursement levels.

so far and expectations going forward for RevRec now you're starting to get those contracts in place. Yeah, so Frank the the collections are much more regular now daily. They tend to be chunky at times. You know some days with bigger volumes.

It's still fairly unpredictable. We think that this year's growth rate will certainly have a higher percentage of collections than we've experienced both in the fourth quarter and even so far this quarter. Our internal models, given what we expect the

improving landscape for reimbursement. We're on target in the first quarter. And we'll report on that as we move forward. But we are seeing

more regularity of deposits on this and

the payment rates are holding both on a contracting basis that are north of the Medicare rate and those payments we're getting from places like United are at the 60% of the list price at the perfunctory out-of-network kind of amounts That will improve as clinical utility data comes on board

and we start to engage the chief medical officers with that discussion early on with retrospective data and then follow it up with prospective data to get in-network contracts for the big companies. I think I'll use your question, Frank, just to highlight some other thing that we discussed yesterday, but just to highlight it for the current group here, which is that

It'll be we're going to very carefully monitor how the sort of new horizons as I like to describe them, the non-traditional horizons of use of these high volume testing day events as well as direct contracting will play out with regard to the proportion of of tests that we do that get reimbursed today as opposed to sometime in there.

in the future. And the reason why we have some optimism in that, although we don't have the data yet, we'll track that closely, is that unlike with a traditional payer where the first interaction we have with them is really them seeing 50, 75, 100.

claims show up on their radar and then saying, you know, what is this test? I've never heard of it and then having the conversation to bring them in the loop and get them to understand the clinical the clinical value and the clinical utility. So, you know, that's a different type of conversation than these testing events where generally like for example with regard to the firefighters and future firefighter events that we're doing.

who are now looking to set up, we are engaged with the leadership of the fire department and the unions. These are typically self-insured entities operating under an ASO structure where these are being set up as a partnership so they know who we are. So it's not a surprise when these tests come through them.

the billing process. So, you know, we have to see and we're going to monitor it, but we have some optimism that those events as well as the direct contracting will enhance the overall collection rates in the near future. We've submitted claims to almost 200 insurers.

each one's a little bit different. So trying to aggregate general statement in terms of where we're at total becomes a little bit of a challenge still yet but that data is it is improving and that data will become more relevant as we continue to move through this process.

All very helpful, Color. Thanks for taking the questions. Great. Thanks, Ray. Our next question comes from Anthony Vendetti with Maximum Group.

Anthony, good morning. Hi, Anthony. Good morning, Leeshan. Good morning, Dennis. Thanks. Just a couple questions on the various cancer care platforms.

I know the

it might be a little bit lumpy, but is the expectation that the enrollment of patients will ramp every month or could it vary throughout the quarter?

Is the expectation that the enrollment of patients will ramp every month, or could it vary throughout the quarter? And then is there an expected...

range of patient enrollment by the end of 2023? Or is it too early to try to gauge that? So Anthony, first off, combine that with the question that Ross asked earlier. Since we have one boarded our first customer, we don't have permission from New Jersey Cancer Care to reveal their client and patient.

as we onboard additional customers. That will be blinded in terms of the size of their practice, their expectation, the amount of patients we have on there. I will tell you, they're very enthusiastic about the initial tranche of patients that have been onboarded. They have a fairly robust practice. Call it hundreds. How does it match?

patients that are opportunities. These all represent revenue to the practice so they're aspirational as well. As we onboard the additional clients that are in the pipeline that will become clearer in terms of what

the likely predictive amount of the patient population versus those that get on our platform. As LeShawn indicated, we model this at $80 per month per patient. It could be higher than that for a variety of reasons, but conservatively that's what it represents. So if you have a practice with a thousand patients that are targeted at $80 a month, you're talking about collection rates or love mems or wellness.

that customers are extremely pleased with it. The data that's being reported is affecting patient care. And we know that the reimbursement's already in place and unlikely to change, so we don't have that battle to fight. So there's lots of reasons to be optimistic about what the prospects here are.

but to draw a picture of exactly what that might be like throughout 2023 is a little bit challenging this early in the game. You know, I'll add just one generic kind of qualitative comment to that, which is it is interesting, like, unlike, you know, other commercialization of other products, where you may have up months, you may have down months, and so forth. The mechanics here...

do argue for the likelihood of having sort of escalating numbers within a given practice because the way they generally approach it, and again I'm making this as a generic comment not for the specific practice that we launched, is that you start with your highest risk patients and you get comfortable with, you know, 50 patients or 100 patients or so forth that you think would be most likely to benefit and then expand it out to a greater and greater portion of...

the cancer patients within your practice. And so because it's recurring revenue, because of that dynamic of starting with a core group and expanding it out, we have, you know, reason to believe that this will reflect the business model as we've described it. That once you have a practice on board that you that we would see escalating numbers of patients at some trajectory.

being onboarded on the system, them staying on the system for their duration of care which is you know typically a minimum of six months usually a year sometimes as long as two years and and so that's kind of a dynamic we expect which which could very well be which we think will be different than sort of just a traditional you know medical device commercialization prospect where just one you know one off

volumes up, volumes down, overall trends and so forth. So hopefully that has a bit of color there, Vanthick. That was great, Lucian. Yeah, that's the trajectory I thought, but I just want to make sure that made sense. And then, yeah, perfect. And you have some large practices in the pipeline in addition to the one you're working with.

Correct. Yeah, we have a good solid pipeline. You know, we don't have yet a sense as to what the sort of the life cycle of customer acquisition is. We don't expect it to be too long, but we'll start getting some color on that. But we do have a very – we're happy with the pipeline and the diversity of practices and practice sizes within it. Okay, great. And then just one question on the Lucid test center. In-depth overview of new

I think I'm going to take advantage of your question to clarify something that I think comes up quite frequently. A couple of things. One is that these other initiatives, whether it's incorporating the satellite test center model, where our nurses go to the physician practices and do the E. regard days at their practice as opposed to whatever physical location.

just drive business across multiple, you know, through multiple channels. So I do encourage folks to think not in terms of sort of physical lucid test centers translating into specific volume targets. Just really the overall volume is now coming increasingly from a diverse...

diverse pathways to get patients in the door. What we did describe back in our update.

In conjunction with the strategic update earlier in January is that we are going to pause the number of physical test centers for now.

at 13 and drive test volume growth at sort of a mid-growth level while we're garnering improved coverage and reimbursement through enhanced activity with our current Salesforce, through increasing tenure of our Salesforce and being able and driving their progress.

increasing number now about a third of our overall volume and about half the volume of what our nurse practitioners are.

performing are in the context of a satellite center where they go to a physician's office. So we're focused, that's one of the reasons why we're being cautious about adding physical centers because it's become a bit more fluid in a dynamic situation. We think there are opportunities for growth that come from the expanded geographic outlook.

geographic reach of our nurse practitioners. So I would encourage you to think more in terms of the bodies, you know, how many nurse practitioners, how many sales reps, and how is that personnel driving test volume growth as opposed to the physical centers.

Does that make sense? Great. That was helpful. Yeah, absolutely. Thank you so much. I'll hop back to Nick. Appreciate it. Great. Thanks for having me.

And our next question comes from Ed Woo with the Cindy and Capital. Ed, good morning. Good morning, Ed. Good morning, Ed.

Yeah, congratulations on the progress. I know you guys are focusing your resources on the more immediate projects, but have you guys thought about international opportunities for either Lucid or Verus?

Yeah, you know, we have had limited. We did at one point have a fairly extensive inquiry and engaged with consultants about European commercialization for ESOGUARD. What we discovered is that Europe has a pretty robust reimbursement for precision oncology tests.

but that the screening side is difficult, that payments for screening tests, I mean, others have encountered this Colaguard and others as well, just historically in Europe , there's just not parity with the US. That makes sense for us, given our resource constraints now to seek to...

We do have CE mark, we do have the ability to do so. There are potentially some opportunities in the UK that might be different, but those are relatively just inquiries at this point without a clear plan. There are other parts of the world that we've had inquiries from where we've had local diagnostic groups that have asked about doing that. And those are conversations that continue and they may bear fruit.

to do so there are potentially some opportunities in the UK that might be different but we're those are relatively just you know just inquiries at this point without a clear plan. There are other parts of the world that we've that we've had inquiries from where we've had local diagnostic groups that have asked about doing that and those are conversations that continue and they made their fruit.

in the coming quarters and years. No such conversations with regard to VARIS on the, I think for the international aspect of the VARIS business really will have to wait for the implantable device that some of the service aspects of this and some of the business model frankly around remote patient monitoring is very different in other parts of the country. So,

it may make the business model more difficult, but once we have the value added, smart ports, functionality, then there'll be a potential opportunity. And there, the playing field in Europe should be relatively level, and we should have some prospects there. Great, well, thank you, and I wish you guys good luck. Okay, thanks a lot.

And that's all the time we have for questions. I'd like to turn the call back to Mr. Parks for closing remarks. I'll take I'll take that operator. So, uh, Dr. Eclogues. So thank you again, everyone, for taking the time and the attention. Thank you for the

The other questions really great discussion we look forward to continue to update you on our progress as we always do. For more information please feel free to go to our website, the padme.com, the lucidx.com and the various health app website which is under construction but we look forward to having that up and running.