Q4 2024 Lucid Diagnostics Inc Earnings Call and Business Update
Speaker Change: Good morning, and welcome to the least shouldn't be domestics for 'twenty 'twenty four business update conference call. At this time all lines are in listen only mode.
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Matt Riley: I would now like to turn the conference over to Matt Riley, Lucid Diagnostics, Senior Director of Investor Relations. Please go ahead. Thank you, Operator, and good morning, everyone. Thank you for participating in today's business update call.
I would now like.
Matt Brady: And the conference over to Matt Brady listen they agnostics senior director of Investor Relations. Please go ahead.
Matt Brady: Thank you operator, and good morning, everyone. Thank you for participating in today's business update call. Joining me today on the call our Doctor Alicia Eclogue, Chairman and Chief Executive Officer of Lucid diagnostics, along with Dennis Mcgrath Chief Financial Officer of what he said at the press release.
Matt Riley: Joining me today on the call are Dr. Lishan Aklog, Chairman and Chief Executive Officer of Lucid Diagnostics, along with Dennis McGrath, Chief Financial Officer. The press release announcing our business update and financial results is available on Lucid's website. Please take a moment to read the disclaimers about forelooking statements in the press release. The Business Update, Press Release, and the Conference Call all 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 the statements made. Factors that could cause actual results to differ are described in the disclaimer and are in our filings of the S.
Matt Brady: I don't think our business update and financial results is available on <unk> website. Please take a moment to read the disclaimers about forward looking statements in the press release, the business update press release and the conference call. All 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 the statements made.
Matt Brady: Actors that could cause actual results to differ are described in the disclaimer and or in our filings with the SEC for a list and a description of these and other important risks and uncertainties that may affect future operations see part one item one a entitled risk factors in loose. Its most recent annual report on forms 10-K filed with the SEC and subsequent.
Matt Riley: For a list and a description of these and other important risks and uncertainties that may affect future operations, see Part 1, Item 1A, entitled Risk Factors and Lucid's most recent annual report on Forms 10-K filed with the SEC, and any subsequent updates filed in quarterly reports on Forms 10-Q and subsequent Forms 8-K. Acceptance is required by law.
Matt Brady: <unk> filed in quarterly reports on forms 10-Q, and subsequent forms 8-K.
Matt Brady: Except as required by law, we used the 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 the expectations maybe base or that may affect the likelihood that actual results will differ from those contained in the forward looking statements.
Matt Riley: Lucid 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 the expectations may be based or that may affect the likelihood that actual results will differ from those contained in the forward-looking I would now like to turn the call over to Dr. Lishan Aklog, Chairman and CEO of Lucid. Take it away, Lishan. Thank you, Matt, and good morning, everyone. Thank you all for joining our quarterly update call today. As always, I'd like to thank our long-term shareholders for your ongoing support and commitment.
Speaker Change: I would now like to turn the call over to Dr. Felicia backlog, chairman and CEO of lucid take it away at least Shawn.
Speaker Change: Thank you, Matt and good morning, everyone and thank you all for joining our quarterly update call today as always I like to thank our long term shareholders for your ongoing support and commitment our team remain singularly focused on driving this lucid enterprise towards its substantial commercial potential and ultimately through enhanced our long term shareholder value.
Lishan Aklog: Our team remains singularly focused on driving this Lucid Enterprise towards its substantial commercial potential and, ultimately, to enhance our long-term shareholders. Lucid finished with a very strong 2024 and we're off to really an exceptional start in 2020.
Speaker Change: We've had finished with a very strong 'twenty 'twenty four and we're off to a really an exceptional start in 2025 have been marked by significant advancements in E cigarettes sales channels reimbursement milestones as well as increases in our clinical evidence base.
Lishan Aklog: Marked by significant advancements in e-cigar sales channels, reimbursement milestones, as well as increases in our clinical The collective progress we'll discuss today really sets the stage for 2025 to be a really pivotal and in our history. We're poised to make our final push towards broader coverage and reimbursement to drive revenue and revenue growth for me. Let's start with some key highlights related to our In the fourth quarter, we generated $1.2 million in revenue. This fourth quarter revenue was in range with our recent quarters and relatively even with our record third quarter. Test volume in the fourth quarter was just over 4,000 tests.
Speaker Change: Quite a progress we'll discuss today really sets the stage for target 25 to be a really pivotal and productive year in our history, we're poised to make our final push towards broader coverage and reimbursement to drive our revenue and revenue growth for visa card.
Speaker Change: Let's start with some key highlights related to our commercial execution.
Speaker Change: The fourth quarter, we generated $1 2 million in revenue I guess.
Speaker Change: Fourth quarter revenue was at a range with our recent quarters that relatively even with our record third quarter test volume in the fourth quarter with just over 4000 tests that that represented a record quarterly test volume.
Lishan Aklog: That represented a record quarterly test volume. and Substantially Greater than our target of 25 to 3000 tests per quarter, which is the amount necessary, the critical mass that's necessary for us to sustain our traditional revenue cycle management processes as well as our efforts to secure medical policy while protecting our overall cash As I'll talk about in more detail later, and as we previewed last time, we've restructured our commercial team and our comp model to focus on revenue-driving Activities. Towards that end, our concierge medicine cash pay program is off to a great start. We've only been at it for a few weeks now, and we've already signed 20 concierge medicine contracts in total.
Speaker Change: And substantially greater than our target of 25 to 3000 tests per quarter, which is the amount necessary. The critical mass that's necessary for us to sustain our traditional revenue cycle management.
Speaker Change: Processes as well as our efforts to secure medical policy, a while protecting our overall cash burn I'll talk about in more detail later and as we previewed last time, we've restructured our commercial team and our comp model to focus on revenue driving.
Speaker Change: Activities towards that end, our concierge medicine cash pay program is off to a great start I was only been added for a few weeks now and we've already signed 20.
Speaker Change: We have some contracts in total again more on this later.
Lishan Aklog: Again, more on this later. Now let's start with our recent strategic As we noted recently, we're really excited to report that Highmark Blue Cross Blue Shield of New York established positive commercial insurance coverage policy for ESAGuard, and this is our first positive insurance coverage policy, and we believe it represents an important precedent for future commercial insurance. and Proofreader engagements with commercial payers. We are also happy to report this week that the NCCN, which is the National Comprehensive Cancer Network Clinical Practice Guidelines, now includes a section on screening for esophageal pre-cancer and that they align with the existing guidelines from the Gastroenterology Association that include Non-Endoscopic Biomarker Testing, such as C-SIGAR, as an acceptable alternative to endoscopy.
Speaker Change: Now, let's start with our recent strategic accomplishments.
Speaker Change: As we noted recently, we're really excited to report that Highmark Blue Cross Blue Shield of New York established positive commercial insurance coverage policy for Easter Guard and this is our first positive insurance coverage policy and we believe it represents an important precedent for future commercial.
Speaker Change: The first is your engagements with commercial payers.
Speaker Change: We're also happy to report this week that the FCC N, which is the national comprehensive cancer network clinical practice guidelines now include a section on screening for esophageal pre cancer and that they align well with the existing guidelines from the Gastroenterology Association that includes.
Speaker Change: We bought into Scopic biomarker testing, such as <unk> as an acceptable alternative to endoscopy.
Lishan Aklog: We also believe this is a very important step. The NCCN is widely regarded as a really key indicator of standards of excellence for cancer care and prevention, and we expect this will help us drive positive policy coverage decisions from commercial patients.
Speaker Change: Also believe this is a very important step to MPC and is widely regarded as a really key indicator of standards of excellence for cancer care and prevention and we expect this will help us drive a positive policy coverage decisions from commercial payers.
Lishan Aklog: Continue to expand our clinical evidence base. Most recently, we had two clinical utility studies, the CLU study and the MVET-BE studies that were accepted for peer-reviewed publication. The CLU study is now published. So that gets us to five peer-reviewed clinical utility studies on top of the clinical validity studies that we've previously announced. And not only the number of clinical utility studies, but this establishes a really solid chain of evidence on the clinical utility of e-cigar. We've demonstrated previously that physicians will use the results of the e-cigar test to appropriately inform their medical decision-making and appropriately triage patients to endoscopy.
Speaker Change: Continue to expand our clinical evidence base.
Speaker Change: Most recently, we had two clinical utility studies to clue study on the <unk> studies that were.
Speaker Change: Except for peer review publication that close studies now published so that gets us to five peer reviewed clinical utility studies on top of the clinical what are the studies that we've that we've previously announced.
Speaker Change: And not only the number of clinical utility studies, but this establishes a really solid chain of evidence on the clinical utility of <unk>.
Speaker Change: Easter Guard, we've demonstrated previously that physicians will use the result of the E cigarette attest to.
Speaker Change: Informed appropriately informed of their medical decision, making and appropriately triage patients to endoscopy. We've also reported that patient compliance with the referral for endoscopy is excellent at 85% and now with the inverse Savi. We've demonstrated very substantial increase in the yield of the more invasive endoscopy test really walking.
Lishan Aklog: We've also reported that patient compliance with the referral for endoscopy is excellent at 85%. And now with the MVET study, we've demonstrated a substantial increase in the yield of the more invasive endoscopy test, really locking down the role of e-cigar as a triage tool to triage patients, at-risk patients to the more invasive endoscopy. Additional strategic accomplishments include that we strengthened our balance sheet with long term debt refinancing and registered direct common stock offering. And now our runway extends well past our upcoming key reimbursement. We're really excited at the award of an $8 million NIH grant to investigators at Case Western and University Hospitals.
Speaker Change: Down the role of Easter Guard as a triage tool to triage patients at risk patients to the more invasive endoscopy test.
Speaker Change: Additional strategic accomplishments include that we strengthened our balance sheet with a long term debt refinancing in a registered direct common stock offering and now have runway extends well past our upcoming key reimbursement milestones. We're really excited at the award of an $8 million NIH grants to investigators at case western.
Speaker Change: Diversity of hospitals and this.
Lishan Aklog: And this grant was to study e-cigar for an expanded indication to include patients without heartburn. The NIH's investment of substantial resources in our technology is a real testament to the great groundbreaking nature. And if this study demonstrates what a pilot study seems to show, we believe that this has the potential to substantially increase the total addressable market of e-cigar to include patients without heartburn. As we've previously noted, our clinical evidence package was submitted and accepted by the Moldy X group for reconsideration of e-cigar for Medicare coverage under the existing LCD.
Speaker Change: Grant was to study east regard for an expanded indication to include patients without heartburn.
Speaker Change: So the NIH the NHS.
Speaker Change: Investment is substantial resources and our technology is a real testament to the great groundbreaking nature and if this study demonstrates what a pilot study seems to show that we believe that this has the potential to substantially increase the total addressable market of Isa guard to include patients without heartburn.
Speaker Change: As we've previously noted our clinical evidence package was submitted.
Speaker Change: And accepted by the Mol Dx group for reconsideration of Isa Guard for Medicare coverage under the existing LCD that submission was announced in late October in late November and we are expecting.
Lishan Aklog: That submission was announced in late October and late November, and we are expecting to hear back from the Moldy X group within the first half of Before diving into some of the business details, just a reminder, where we stand as a company, Lucid is a commercial stage cancer prevention company offering a solution that includes two technologies, EtherCheck and EtherGuard, which together offer a comprehensive Solutions, and our mission is to prevent esophageal cancer death in So, this slide shows the steady growth in both our test volume and our revenue. We've done 30,000 cumulative tests since the launch of eSoGuard, and this represents just the early stages of our efforts to tackle what's a very large $60 billion total addressable market that's based on the fact that there are 30 million patients who are already recommended for testing by existing guidelines at an average price right around the Medicare price of $1,900.
Speaker Change: Do you hear back from the multiyear group within the first half of this year.
Speaker Change: Yes.
Speaker Change: Before diving into some of the business details just a reminder of where we stand as a company lucid is a commercial stage cancer prevention company offering a solution that includes two technologies ether checking Easter guard, which together offer a comprehensive cancer screening solution and our mission is to prevent esophageal cancer deaths in at risk patients.
Speaker Change: So this slide shows the steady.
Speaker Change: Growth in both our test volume and our revenue.
Speaker Change: 30000, 30000 cumulative tests since the launch of Easter Guard.
Speaker Change: And this represents just the early very early stages of our efforts to tackle what's a very large 60 billion dollar total addressable market. That's based on the fact that there are 30 million patients who are already recommended for testing by existing guidelines at an average.
Speaker Change: Price right around the Medicare price of about $1900.
Lishan Aklog: Let's move on to an update of our business. With our runway now secure, we're going to focus on two areas of our business, reimbursement, as well as how we're seeking to drive revenue through our So, on the reimbursement side, as I mentioned in our highlights, we are very excited to have secured our first commercial policy with Highmark. This really represents a, we believe, will be a precedent for other commercial payers now that we have our first one secured under belt. We remain deeply engaged with payers across the country. And as we've talked about before, we are seeking to leverage biomarker legislation to secure coverage, and we've actually had some success in doing so with the Rhode Island Blue Cross Blue Shield plan, which is now covering our test as well.
Speaker Change: Let's move onto an update of our business with the without runway now secure so we're going to focus on two areas of our business reimbursement as well as how we're seeking to drive revenue through our expanded sales channels.
Speaker Change: So on the reimbursement side as I mentioned in the highlights we were very excited to have secured our first commercial policy with Highmark. This really represents a we believe will be a precedent for other commercial payers now that we have our first one secured under your belt.
Speaker Change: We remain deeply engaged with payers across the country.
Speaker Change: And as we've talked about before we are seeking to leverage biomarker legislation to secure coverage and we've actually had some success in doing so with them the Rhode Island Blue Cross Blue Shield.
Speaker Change: Plan, which is now covering our tests as well.
Lishan Aklog: As I've hinted earlier, the NCCN updated guidelines are extremely important. The NCCN is utilized by commercial payers as a marker of standards of excellence in cancer prevention and cancer care, and we look forward to highlighting these guidelines in our discussions with the commercial payers. On the Medicare side, we continue to view a decision for the Maldi X to be a first half event this year, and could happen tomorrow, could happen next week. However, we're confident it will be sometime in the first half of this year, and we remain optimistic about the outcome.
Speaker Change: The as I stated earlier the FCC an updated guidelines are extremely important in the CCM is utilized by commercial payers as a marker of standards of excellence in cancer prevention and cancer care and we look forward to highlighting these guidelines and our discussions with the commercial payers on the <unk>.
Speaker Change: Care side, we continue to view a decision for the multi X to be a first half event this year.
Speaker Change: It could happen tomorrow it could happen next week, however were.
Speaker Change: Confidence it will be sometime in the first half of this year and we remain optimistic about the outcome.
Lishan Aklog: So let's talk a little bit about some of the updates we've had to our sales channel. As we've talked about earlier, we made some adjustments to our commercial team, our sales structure and our compensation. to help drive Easter Guard revenue. So we see really three separate channels. The first channel is our traditional channel, so one we've been doing since we first commercialized this, targeting primary care physicians and specialists and having them submit traditional claims. to the payers using our Revenue Cycle Management process. And this process, as we said before, is important for us to remain engaged with the payers, to seek out, to secure positive medical policy as we've done, for example, with Highmark.
Speaker Change: So I'll talk a little bit about some of the updates we've had to our sales or sales sales channel as we've talked about earlier, we've made some adjustments to our commercial team our sales structure in our compensation plans to drive to help drive.
Speaker Change: With regard to revenue so we see really three separate channels. The first channel is our traditional channel. So when we've been doing since we first commercialized this targeting primary care physicians and specialists and having them submit traditional claims.
Speaker Change: To our to the Payors are using our revenue cycle management process and this process is as we've said before is important for us to remain engaged with the payers to seek.
Speaker Change: To secure a positive medical policy as we've done for example, with Highmark and of course, a part of this process as well as our efforts within within the Medicare community. However, we've really decided to push hard on two additional sales channels that are focused on driving revenue are one of those is direct contracting with employers and other.
Lishan Aklog: And of course, a part of this process as well as our efforts within the Medicare community. However, we've really decided to push hard on two additional sales channels that are focused on driving revenue. One of those is direct contracting with employers and other self-insured entities. And of course, with fire departments, with whom we've had a strong engagement now going on for several years. Fifty percent of employers are self-insured, and this gives us the opportunity to offer the e-cigar test, either as a benefit amendment to their existing health and wellness plans, or just through contracted events.
Speaker Change: We're self insured entities and of course with fire departments, with whom we've had a strong engagement now going on for several years.
Speaker Change: 50% of employers are self insured and this gives us the opportunity to offer.
Speaker Change: The Isa Guard test.
Speaker Change: Either as a benefit amendment to their hearts to their existing health and wellness plans or just through contracted events in our pipeline is actually quite robust.
Lishan Aklog: And our pipeline is actually quite robust with these, including Small and Medium-Sized Employers, and we look forward to documenting revenue for that in the coming quarter. And finally, we're really making great progress with our cash pay program that focuses on the concierge medicine sector. Off to a great start. We've only been a few weeks into this. We've allocated resources appropriately, and it's paying dividends. We've signed more than 20 contracts with concierge medicine practices over the past few weeks, and we're in active discussions with the major national aggregators in this sector.
Speaker Change: With these including.
Speaker Change: Small and medium size employers and we look forward, we look forward to.
Speaker Change: Documenting our revenue for that in the coming in the coming quarters.
Speaker Change: And finally, we're really making great progress with our cash pay program that focuses on the concierge medicine sector. After a great start we've only been a few weeks into this we've allocated resources appropriately and it's paying dividends, we've signed more than 20 contracts with concierge medicine practice practices over the past few weeks and we're in active discussions with.
Speaker Change: Major national Aggregators in this sector. So our expectation really with regard to these last two programs that direct contracting and particularly the cash pay program is that they will start making impact on our revenue.
Lishan Aklog: So our expectation really with regard to these last two programs, the direct contracting and particularly the cash pay program, is that they will start making an impact on our revenue starting in the second half.
Speaker Change: Starting in the second half of this year.
Lishan Aklog: So to summarize, before handing it over to Dennis, we're really excited with our recent progress on the reimbursement side and the commercial progress. This new structure on our commercial team that has a substantial portion of our team focused on revenue generating programs such as concierge medicine and contracting. It's really working well and we expect that to ramp up in the near future. Our whole program remains very scalable. So when we receive Medicare coverage and as the revenue efforts also start to scale up, we are in great position to scale up our laboratory operations, our manufacturing operations, and otherwise.
Speaker Change: So to summarize before handing it over to Dennis we really excited with our recent.
Speaker Change: Progress on the reimbursement side on the commercial progress this new structure on a commercial team that is that has a substantial portion of our team focused on revenue generating programs, such as conservation medicine, and contracting it's really working well and we expect that to ramp up.
Speaker Change: In the near future our whole program remains very scalable. So when we received Medicare coverage and as the revenue efforts also start to scale up we are in great position to scale up our laboratory operations manufacturing operations and otherwise and we really are setting yourself up we believe for significant growth in.
Lishan Aklog: And we really are setting ourselves up, we believe, for significant growth in our test volume and our revenue growth for the second.
Speaker Change: Test volume and our revenue growth for the second half.
Dennis McGrath: So with that, let's pass the call on to Dennis. Thanks, Lishan. And good morning, everyone. The summary financial results for the fourth quarter and the year were reported in our press release that has been distributed. On the next three slides, I'll emphasize a few key financial highlights from the fourth quarter.
Speaker Change: That looks that pass the call on to Dennis.
Dennis McGrath: Thanks, Lee and good morning, everyone. The summary financial results for the fourth quarter and the year were reported in our press release that has been distributed.
Dennis McGrath: On the next three slides I will emphasize a few key financial highlights from the fourth quarter, but.
Dennis McGrath: I'd encourage you to consider these remarks in the context of the full disclosures covered in our annual report on the forum. with regard to the balance. Cash at year-end December 31st, 2024 was $22.4 million. Obviously, this does not include the recent $15 million RDO financing completed on March 5, which when added to the $22.4 million gives us pro forma cash of about $37 million as we enter into the new year. Importantly, this financing together with the rising stock price have now lifted the baby shelf restrictions as of the filing of our annual report on Form 10-K.
Dennis McGrath: I encourage you to consider these remarks in the context of the full disclosures covenant of our annual report on Form 10-K.
Dennis McGrath: With regard to the balance sheet cash.
Dennis McGrath: Cash at year end December 31, 2024 was $22 4 million.
Dennis McGrath: Obviously this does not include the recent $15 million RVO financing completed on March 5th, which when added to the $22 4 million gives us pro forma cash of about $37 million as we enter into the new year.
Dennis McGrath: Importantly, this financing together with the rising stock price I'm now lifted the baby shelf restrictions as of the filing of our annual report on Form 10-K.
Dennis McGrath: What this means is that we now have approximately $70 million of financing optionality under our shelf risk. To put this in perspective, at the beginning of the year, we were limited to just over $6 million, and just prior to the March financing, limited to about $17 million. You will recall that during the fourth quarter, we also refinanced our convertible debt, which is now a five-year note, interest only at 12%, with a dollar conversion price, and it's held by long-term shareholders. The fair value of the convertible notes at $18.6 million at year-end is really the only other substantive change from the previous third quarter reported balance.
Dennis McGrath: This means is that we now have approximately $70 million of financing optionality under our shelf registration.
Dennis McGrath: To put this in perspective at the beginning of the year, we were limited to just over $6 million and just prior to the March financing limited to about $17 million.
Dennis McGrath: You will recall that during the fourth quarter. We also refinanced our convertible debt, which is now a five year note interest only at 12% with a dollar conversion price and it's held by long term shareholders.
Dennis McGrath: The fair value of the convertible notes at $18 6 million at year end is really the only other substantive change from the previous third quarter reported balances.
Dennis McGrath: The quarterly burn rate was 10.1 million, which is lower than the average burn rate for the four preceding quarters, averaging around 11. The burn in the fourth quarter included $7 million from ongoing operations and $3.1 million from the quarterly MSA payable tip. Shares outstanding, including unvested RSAs as of last week, are approximately 90.7 million shares. The GAAP outstanding shares as of December 31st of 63.1 million are reflected on the slide as well as on the face of the balance sheet in the 10-page. Capshares do not reflect unvested RSA.
Dennis McGrath: The quarterly burn rate was $10 1 million, which is lower than the average burn rate for the four preceding quarters, averaging around $11 million.
Dennis McGrath: The burn in the fourth quarter included $7 million from ongoing operations and $3 1 million from the quarterly MSA payable to pass it.
Dennis McGrath: Shares outstanding, including Unvested RSA has as of last week are approximately 97 million shares the gap outstanding shares as of December 31 of $63 1 million are reflected on the slide as well as on the face of the balance sheet in the 10-K.
Dennis McGrath: GAAP shares do not reflect unvested RSA amounts.
Dennis McGrath: at present. PadBed continues to be the single largest shareholder of Lucid Diagnostics, with approximately 35% ownership of the common shares of. Although PAVMED no longer has voting control of Lucid. PathMed with its board and management still have significant influence over Lucid with more than 32% voting in. As you are aware, Lucid's financing last year included the issuance of a series of voting convertible preferred securities, whereby the preferred shareholders are significantly incentivized to delay conversion of the preferred shares into common shares until 2026, namely a second anniversary from closing. If all of the preferred shares outstanding were converted to common shares as of today, there would be an additional 49.6 million common shares.
Dennis McGrath: At present.
Dennis McGrath: <unk> continues to be the single largest shareholder of lucid diagnostics with approximately 35% ownership of the common shares outstanding.
Dennis McGrath: Although patent had no longer has voting control of lucid.
Dennis McGrath: Meg.
Dennis McGrath: With its board and management still have significant influence over lucid with more than 32% voting interest.
Dennis McGrath: As you are aware lucid financings last year included the issuance of series a series of voting convertible preferred securities whereby the preferred shareholders are significantly incentivize to delay conversion of the preferred shares into common shares until 2026, namely second anniversary from closing.
Dennis McGrath: If all of the preferred shares outstanding were converted to common shares as of today.
Dennis McGrath: There would be an additional $49 6 million common shares outstanding.
Dennis McGrath: with regard to the panel. This slide, as you can see, is this year's fourth quarter compared to last year's fourth quarter on certain key items together with full year-over-year comparisons. Trust you will review the information in my comments in light of the cautionary disclosure on the bottom of the slide about supplemental information, particularly the non-GAAP information. Revenue of approximately $1.2 million for the fourth quarter is about even sequentially, reflects a 15% increase over the prior year fourth quarter. This amount reflects actual cash collections for the quarter. Test volume at over 4,000 tests for the quarter represent almost $10 million in submitted claims that are 2499 AFP.
Dennis McGrath: With regard to the P&L.
Dennis McGrath: This slide as you can see as this year's fourth quarter.
Dennis McGrath: Compared to last year's fourth quarter on certain key items together with full year over year comparisons.
Dennis McGrath: The trustee will review the information in my comments in light of the cautionary disclosure on the bottom of the slide about supplemental information, particularly the non-GAAP information.
Dennis McGrath: Revenue of approximately $1 2 million for the fourth quarter is about even sequentially reflects a 15% increase over the prior year fourth quarter.
Dennis McGrath: This amount reflects actual cash collections for the quarter.
Dennis McGrath: Test volume at over 4000 tests for the quarter represents almost $10 million in submitted claims that are $24 99 ASP.
Dennis McGrath: Given there is a number of new investors joining us for this call, it's worth repeating what we've communicated in past quarters about revenue. Key determinants in how revenue is recognized at this point in our reimbursement journey is the probability of collection. And therefore, due to the fact that we are in the early stages of our reimbursement process, means revenue recognition for claims submitted to traditional government or private health insurers will be recognized when the claim is actually collected versus when the patient report is delivered, invoiced, and submitted for reimbursement. As you'll see in our 10-K, this is called Variable Consideration and Jargon of GAPS ASC-606 Revenue Recognition Guidelines, and presently there is insufficient predictive data to reflect revenue when the test report is delivered to the referring physician.
Dennis McGrath: Given there is a number of new investors joining us for this call its worth repeating what we've communicated in past quarters about revenue recognition.
Dennis McGrath: Key determinant and how revenue is recognized at this point in our reimbursement journey is the probability of collection.
Dennis McGrath: And therefore due to the fact that we are in the early stages of our reimbursement process means revenue recognition for claims submitted to traditional government or private health insurers will be recognized when the claim is actually collected versus when the patient report is delivered invoiced and submitted for reimbursement.
Dennis McGrath: As Youll see in our 10-K. This is called variable consideration of jargon of gaps ASC 606 revenue recognition guidelines and presently there is insufficient predictive data to reflect revenue when the test report is delivered to the referring physician.
Dennis McGrath: For billable amounts, however, that are contracted directly with employers and that are fixed and determinable will be recognized as revenue when our contracted service is delivered. Generally, that means when the report is delivered to the referring. Our non-GAAP loss for the fourth quarter of $10.9 million is slightly higher than the trailing four quarters average of $10 million even, with most of that increase driven by lab costs associated with the record fourth quarter test volume and one-time financing costs related to the fourth quarter debt flow. The non-GAAP net loss per share of $0.19 is flat sequentially and is in line for each of the last four quarters, plus or minus a penny between each of the last four quarters with an average of $0.20 per share.
Dennis McGrath: For billable amounts, however that our contracted directly with employers and that are fixed and determinable will be recognized as revenue when our contracted services delivered generally that means when that report is delivered to the referring physician.
Dennis McGrath: Our non-GAAP loss for the fourth quarter of $10 9 million is slightly higher than the trailing four quarters average of $10 million, even with most of that increase driven by lab cost associated with our record fourth quarter test volume and onetime financing costs related to the fourth quarter debt financing.
Dennis McGrath: The non-GAAP net loss per share of <unk> 19 is flat.
Dennis McGrath: <unk> and is in line for each of the last four quarters, plus or minus a penny between each of the last four quarters with an average of <unk> 20 per share.
Dennis McGrath: On a GAAP EPS basis, the fourth quarter non-cash charges accounted for approximately one cent per share.
Dennis McGrath: On a GAAP EPS basis, the fourth quarter non cash charges accounted for approximately <unk> <unk> per share.
Dennis McGrath: with regard to our operating This slide is a graphic illustration of our operating expenses after eliminating the non-cash expenses for the periods of flex. Total non-GAAP OPEX is $12.1 million for the fourth quarter of 2024 and reflects an $800,000 increase sequentially, which includes approximately $500,000 for increased lab costs directly related to the record test volume in the fourth quarter, and the remaining increase is largely related to one-time financing costs for the day.
Dennis McGrath: With regard to our operating expenses.
This slide is a graphic illustration of our operating expenses after eliminating the noncash expenses for the periods reflect it.
Dennis McGrath: Total non-GAAP Opex was $12 1 million for the fourth quarter of 2004 and reflects an 800000 hour increase sequentially, which includes approximately 500000 for increased lab cost directly related to the record test volume in the fourth quarter and the remaining increase was largely related to onetime financing costs for the debt refinancing.
Dennis McGrath: Let me close with a few reimbursement highlights for the fourth. In the fourth quarter, we build about 4,000 tests reflecting just over 10 million in pro forma revenue. During the fourth quarter, we collected approximately $1.2 million from traditional reimbursement plans. of that amount collected, about 60% was from claims submitted in the fourth quarter. About 23% from claims submitted in the previous quarter. and the balance from claims submitted more than six months ago with the longest dated item from 18 months. We've submitted reimbursement claims for more than 4000 claims during the fourth quarter representing just over 10 million in pro forma revenue.
Dennis McGrath: Let me close with a few reimbursement highlights for the fourth quarter.
Dennis McGrath: In the fourth quarter, we build about 4000 tests, reflecting just over $10 million in pro forma revenue.
Dennis McGrath: During the fourth quarter, we collected approximately $1 2 million from traditional reimbursement claims.
Dennis McGrath: Of that amount collected about 60% was from claims submitted in the fourth quarter.
Dennis McGrath: About 23% from claims submitted in the previous quarter and.
Dennis McGrath: And the balance from claims submitted more than six months ago with the longest dated items from 18 months ago.
Dennis McGrath: We submitted reimbursement claims for more than 4000 claims during the fourth quarter, representing just over 10 million in pro forma revenue about 80% have been adjudicated.
Dennis McGrath: About 80% have been adjudicated. 20% are pending. Out of the 80% that have been adjudicated, about 35% resulted in an allowable amount by the insurance company with an average of about $1,600 per test. of those denied. About 30% are either A, deemed not medically necessary or B, require a prior authorization. Additionally, about 27% were deemed to be non-covered.
Dennis McGrath: 20% are pending.
Dennis McGrath: Out of the 80% that had been adjudicated about 35% resulted in an allowable amount by the insurance company with an average of about <unk>.
<unk> hundred dollars per test.
Dennis McGrath: Of those denied.
Dennis McGrath: 30% are either a deemed not medically necessary.
Dennis McGrath: <unk> require a prior authorization.
Dennis McGrath: Additionally, about 27% were deemed to be non covered.
Operator: With that, operator, let's open it up for questions. Thank you and ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by the number two. Once again, please press star one to ask a question. One moment please for your first question.
Dennis McGrath: With that operator, let's open it up for questions.
Dennis McGrath: Okay.
Speaker Change: Thank you and ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question you Press star followed by the number one I guess telephone keypad. If you would like to withdraw your question. Please press star followed by the number two once again the spread has started wanted to.
Dennis McGrath: Asked a question one moment please for your first question.
Kyle Mixson: And your first question comes from the line of Kyle Mixon with Canaccord Genuity. Please go ahead.
Speaker Change: And your first question comes from the line of Kyle Nixon with Canaccord Genuity. Please go ahead.
Kyle Mixson: Morning, Kyle. Good morning, Kyle. Hey guys, thanks for the questions. Congrats on a great end to the year. Just starting with the record volume, it's great to see.
Dennis McGrath: Good morning, good morning.
Speaker Change: Hey, guys. Thanks for the questions Congrats on great end to the year.
Speaker Change: Just starting with the record volume.
Speaker Change: Great to see.
Kyle Mixson: Now, just given some of these tailwinds from either reimbursement or I guess the progress on the concierge front and other things, you know, could we, how should we think about the volume metric going forward?
Speaker Change: Just given some of these tailwind from either reimbursement or I.
Speaker Change: I guess the progress on the concierge fronts and other things.
Speaker Change: Could we how should we think about the volumetric going forward like could should we just.
Kyle Mixson: Like, should we just, you know, can we assume like a 4,000 times 4, kind of a level 4 2025 or, you know, should we expect something like, you know, expand upon that?
Speaker Change: Can we assume like 4000 times for kind of a.
Speaker Change: Level, four 225 or should we expect something like.
Speaker Change: Expanded upon that.
Lishan Aklog: Yeah, I think I'll let Dennis chime in a little bit further, but I would, on the test volume side, I'd remain a bit conservative where we had a record quarter, we had a couple of really good, some of our pipeline CYFT events kicked in, but our focus as we've been transitioning, as we talked about the commercial team, is really on flipping the revenue side of the equation more so than driving test volume. These new, the progress we've made on the reimbursement side, whether it's Highmark or Blue Cross Blue Shield of Rhode Island, are certainly, you know, are setting a good precedent for us in terms of being able to expand our commercial coverage, but I wouldn't, and we are, and we will when we get Medicare, seek to allocate resources consistent with where we have coverage to the extent that it's possible, but I would really focus on the revenue number in the next couple of quarters, and we'll see how the volume follows perhaps a little bit later.
Speaker Change: Yes, I think I'll, let Dennis I'm, a little bit further, but I would I would.
Speaker Change: The test volume side, I remain a bit conservative where we had a record quarter. We had a couple of really good.
Speaker Change: Some of our pipeline cys events kicked in but our focus is as we've been transitioning as we talked about the commercial team is really on flipping the revenue side of the equation more so than driving test volume.
Speaker Change: These new.
Speaker Change: The progress we've made on the reimbursement side, whether it's high Mark or Blue Cross with shell of Rhode Island are certainly.
Speaker Change: Setting a good precedent for us in terms of being able to expand our commercial coverage, but I wouldn't.
Speaker Change: And we are we are and we will when we get Medicare.
Speaker Change: Peak to allocate resources, consistent with where we have coverage to the extent that it's possible, but I would I would.
Speaker Change: Really focus on the revenue number in a couple of in the next couple of quarters, and we will see how the volume.
Speaker Change: Follows perhaps a little bit later, yes, Kyle way to think about this is.
Dennis McGrath: Yeah, Kyle, a way to think about this is at a 2,500 to 3,000 tests per quarter, we deliver and drive on the traditional reimbursement process. to put additional resources to drive that. Now, obviously, that can increase based upon these health fair events, but that drives the mission of being relevant to the chief medical officers and the insurance companies as we drive this process from out of network to in network. You saw a couple of those examples. The way to think about the concierge medicine, as Lishan indicated, is focusing on the cash pay side of this to balance out our sales channels between what we collect on a cash basis versus what ultimately will drive the traditional reimbursement process.
Speaker Change: At a 2500 to 3000 tests per quarter, we deliver and drive on the traditional reimbursement process.
Speaker Change: Put additional resources to drive that now obviously that that can increase based upon these.
Speaker Change: These.
Speaker Change: <unk> fair events, but that drives the mission of being relevant to the chief medical officers and the insurance companies as we drive this process from outer network to in network you saw a couple of those examples.
Speaker Change: Way to think about the concierge medicine as Lisa indicated is focusing on the cash pay side of this to balance out our sales channels between what we collect on a cash basis versus what ultimately will drive the traditional reimbursement process. So I don't think.
Dennis McGrath: So I don't think it is fair to just take 4000 tests and multiply it by four, and that is the the the equation for the year. What we're driving is in the second half of the year with cash pay, we're looking at cutting our burn rate, you know, could that be as much as 50%? That possibility? And so cutting the burn rate while we're continuing the journey through the reimbursement process is really what we're focused on. And that dealt with the compensation plans and how we've structured the sales teams to focus on this additional initiative now that we are driving critical mass on traditional claims. Hopefully that made sense.
Speaker Change: It is fair to just take 4000 tests and multiply it by four and that is the.
Speaker Change: The the equation for the year.
Speaker Change: We're driving is in the second half of the year with cash pay we're looking at cutting our burn rates could that be as much as 50% that possibility exists and still cutting the burn rate while we are.
Speaker Change: Assuming the journey through the reimbursement process is really what we're focused on.
Speaker Change: That dealt with the compensation plans and how we've structured the sales teams to focus on this additional initiative now that we are driving critical mass on traditional claims hopefully that made sense.
Lishan Aklog: Yeah, and just a reminder that the volume as it relates to the Health Fair CYFT event can be very lumpy, right? As I said, in the fourth quarter, we happened to hit a few high volume events that drove that number.
Speaker Change: Just a reminder that the volume.
Speaker Change: As it relates to the healthcare cys events can be very lumpy right as I said in the fourth quarter, we happened to have a few.
Speaker Change: High volume event that drove that number one other thing which is not directly related to your question, but I thought I'd take the opportunity to highlight we've talked theoretically in the past about how our efforts with regard to sort of this low to mid throttle effort to make sure as Dennis mentioned that we are submitting sufficient claims to drive.
Kyle Mixson: One other thing, which is not directly related to your question, but I thought I'd take the opportunity to highlight. We've talked theoretically in the past about how our efforts with regard to sort of this low to mid-throttle effort to make sure, as Dennis mentioned, that we are submitting sufficient claims to drive our engagements with payers. Well, you know, now we actually have concrete examples of that, right, with both Highmark and with Blue Cross. Okay, that was great, guys. Thanks so much. Just on the revenue side, looking at like kind of the effective ASP, that's the lowest mark, it seems like, you know, around $300 per test, like, you know, since definitely the last two years.
Speaker Change: Our engagements with.
Speaker Change: With payers well now we actually have concrete examples of that right with with both high market with with Blue Cross Blue Shield of right now.
Speaker Change: Okay. That's great guys. Thanks, so much.
Speaker Change: Just on the revenue side looking at like kind of the effective ASP.
Speaker Change: That's the lowest market seems like around $300 per test.
Speaker Change: Like since you definitely last two years so.
Kyle Mixson: So, you know, I maybe would have expected that to have been higher, maybe the highest of the year, given deductible kind of dynamic, things like that. So could you maybe walk through why the ASP, like an effective ASP was so low? Was that affected by any of these? You know, it sounds like the concierge medicine, you know, efforts are sort of just taking off now, but maybe that had an impact or something with the larger testing events, anything there that would have dragged down ASP, and how we should sort of think about it going forward, like, in some ways, Unknown Speaker 41.44.
Speaker Change: Maybe we would have expected that to have been higher maybe the highest of the year given deductible kind of dynamics things like that so could you maybe walk through by the ISP like an effective AFC was so low is that affected by any of these.
Speaker Change: Is that about the concierge medicine.
Speaker Change: Efforts on a sort of just taking off now, but maybe that had an impact or something with the.
Speaker Change: Larger testing events anything there that would have dragged on ISP and how we should sort of think about it going forward or at least.
Dennis McGrath: I think the answer is centered in timing of payments rather than a direct reflection on payment. One of the stats I gave on the reimbursement side is the allowable amount has been pretty consistent where insurance companies have approved payment. That allowable amount bumps up against the Medicare rate at $1,600 or so. And that's more of an indicator to us in terms of the stability of that process, the balance of its timing. That's why I gave the stats in terms of collections during the quarter are still pretty elongated. When you're still collecting in the current quarter from previous periods that are 18 months out, it's significant.
Speaker Change: I think the answer is centered in timing of payments.
Speaker Change: Rather than a direct reflection on table one of the stats I gave on the reimbursement side of the allowable amount has been pretty consistent where insurance companies have approved payment that allowable amount bumps up against the Medicare rate at <unk> $500 or so.
Speaker Change: And thats more of an indicator to us in terms of the stability of that process. The balance of its timing. That's why I gave the stats in terms of.
Speaker Change: Collections during the quarter are still pretty elongated when youre still collecting in the current quarter from <unk>.
Speaker Change: Previous periods.
Speaker Change: Our 18 months out its significant another indicator would be the growing backlog of claims that were working on that.
Lishan Aklog: Another indicator would be the growing backlog of claims that we're working on that exceed $15 million. So when we're in this constrained environment of recognizing revenue only upon what collections are recorded in the quarter, not including contracted revenue, but just traditional claims, you're going to have lumpiness. And calculating an ASP by dividing 1.2 million of collections by 4,000 tests, you know, doesn't reveal much. It's really the underlying data that gives us comfort that the allowable amount is consistent, the collections are still choppy, a lot of it is still out of network, in network speeds up the payment and makes that more consistent.
Speaker Change: <unk> 15 million so when we're in this constrained environment of recognizing revenue only upon what collections are recorded in the quarter not including contracted revenue, but the traditional claims youre going to have lumpiness and.
Speaker Change: Calculating an ASP by dividing $1 2 million of collections by 4000 tests.
Speaker Change: You know it doesn't reveal much it's really the underlying data that gives us comfort.
Speaker Change: We allow the amounts consistent.
Speaker Change: The collections are still choppy a lot of it still out of network in network speeds up the payment and makes that more consistent yes.
Lishan Aklog: Yeah. And, you know, just to emphasize one thing, the ASP, you know, it's not a bad finger in the wind number. I think we should view it as sort of stable given that we've been in this kind of traditional claims environment. But our great hope is in the coming quarters as we start seeing the fruits of the cash pay side of things and we start seeing patients coming through these contracts, through these concierge medicine contracts, that we'll start seeing some significant increase in that ASP because it's going to be driven by, you know, higher guaranteed, contractually guaranteed payments and actually a lower threshold from an accounting point of view for us to be able to recognize those upon delivery of the report.
Speaker Change: Just to emphasize one thing the asps.
Speaker Change: Not a bad thing or in the wind number I think we should view it as sort of stable given that we've been in this kind of traditional claims environment, but our great hope.
Speaker Change: In the coming quarters, as we start seeing the fruits of the cash pay side of things.
Speaker Change: We start seeing patients coming through through these through these contract through these.
Speaker Change: Concierge medicine contracts that we'll start seeing some some significant.
Speaker Change: The increase in that ASP, because it's going to be driven by by.
Speaker Change: Higher.
Speaker Change: Guaranteed contractual guaranteed payments and actually a lower threshold.
Speaker Change: Accounting point of view for us to be able to recognize that was upon.
Speaker Change: Upon.
Speaker Change: Delivery of.
Speaker Change: The reports.
Kyle Mixson: Great, that makes sense.
Speaker Change: Great that makes sense and then final one on this $8 million NIH Grant to study East Garden mix indication patients without guard.
Lishan Aklog: And then final one on this $8 million NIH grant to study eSIGARD and the expanded indication of patients without GERD. Could you maybe just size that opportunity for you guys and also talk about number one, if there's been testing, kind of off-label testing, I suppose, in that indication to date and how, you know, how that's progressed and if that's like a positive case. Addressable Market. Oh, the Addressable Market. Yeah, no, it's actually quite significant. It's estimated that about 40% of patients who are at risk for self-treatment cancer fall out of the ACG more strict guidelines based on lack of CURT symptoms. And so that would be a substantial increase, you know, as many as an additional 20 million patients who would be ultimately recommended for screening.
Speaker Change: Could you maybe just size that opportunity.
Speaker Change: For you guys and also talk about number one if.
Speaker Change: Theres been testing kind of off label testing I suppose in that indication to date and how we have it.
Speaker Change: And if that's okay can you repeat the first part of your question.
Speaker Change: This trial will market the addressable market, yes, actually quite significant so so about.
Speaker Change: <unk>.
Speaker Change: It's estimated that about 40% of.
Speaker Change: Patients who are at risk for software pre cancer.
Speaker Change: Cancer.
Speaker Change: Fallout of guidelines based on the fallout of the ACG more strict guidelines based on lack of GERD symptoms and so.
Speaker Change: That would be a substantial.
Speaker Change: As many as an additional 20 million patients who would be ultimately recommended for screening I'll note that the American.
Lishan Aklog: I'll note that the American, it's a good opportunity to remind you that of the two major guidelines, the ACG and the AGA, the AGA already recommends testing for patients without symptomatic CURT. CURT is just simply a risk factor amongst seven, so you have to have three out of seven. So that's already in place. And that actually gets to your next question, which is that, yes, I wouldn't call it off-label because this is not really sort of an FDA paradigm that we're operating within in terms of on-label and off-label. But in our registry and in other clinical utility real-world evidence data, there are a significant number of patients who are referred based on AGA guidelines on the more liberal guidelines than on ACG guidelines.
Speaker Change: There's good opportunity to remind you that of the two major guidelines the ACG in the HVA DHEA already recommended testing for patients with asymptomatic or GERD is just simply a risk factor.
Speaker Change: Amongst <unk> $307. So that's that's already in place and that actually gets to your to your next question, which is bad.
Speaker Change: Yes, I wouldn't call it off label because this is not really sort of an FDA.
Speaker Change: Yes.
Speaker Change: Paradigm that we're operating within our label and off label, but.
Speaker Change: Our registry and in other clinical utility of real world evidence data.
Speaker Change: There.
Speaker Change: A significant number of patients who are.
Speaker Change: Who are referred based on Eva guidelines on the more on the more.
Speaker Change: Liberal guidelines ACG.
Lishan Aklog: Some of those have CURT. I don't mean to imply that a large percentage don't have CURT, but we do think it'll be an opportunity for us to grow the overall market opportunity. I hinted at a pilot study. So there is data, unpublished data so far. It'll be presented hopefully at the upcoming big GI meeting in May, which suggests, and this is what drove the grant, that the prevalence in this non-CURT population is pretty significant. It's only a couple of ticks below what it is in the symptomatic population at around 7 to 8 percent versus, you know, 9 to 10 percent.
Speaker Change: ACG guidelines some of those <unk> I don't mean to imply that that a large percentage don't have guard but.
Speaker Change: We do think it'll be.
Speaker Change: An opportunity for us to grow the overall overall market opportunity I hinted at a pilot study.
Speaker Change: So there is data on published data so far it's it'll be presented hopefully would be.
Speaker Change: At the upcoming <unk> Gi meeting in May suggest and this is what drove the grant that the.
Speaker Change: The prevalence in this non GERD population is pretty significant and it's only a couple of ticks below what it is in the symptomatic patient population at around 7% to 8% versus.
Lishan Aklog: So I think the data is real. I think this has some very long-term implications for the size of...
Speaker Change: 9%, 10%. So I think the data is real and I think this is.
Speaker Change: This has been very long term implications for the size of the market.
Lishan Aklog: Yeah, and one thing I wanted to kind of follow up with that was that, you know, in terms of Medicare, so there's a pilot study, would the roadmap basically be like, you conduct this pilot study, and then you, you know, send that data to Medicare, and they just add on this indication, or do you have to do another, like, maybe larger study at some point, over, you know, stricter ACG guidelines, which is what the Medicare LCD, as well as the NCCN guidelines align with, right? So we're perfectly happy tackling the 30 million patients who are covered by that for the time being.
Speaker Change: One thing I want to.
Speaker Change: Follow up follow up with that was that.
Speaker Change: In terms of Medicare. So there's a pilot study would would the roadmap basically be like you've conducted a pilot study and then you.
Speaker Change: Send that data to Medicare and they just add on this indication or do you have to do another like maybe larger study at some point over the pilot is yes. So the big study is the one that the grant will fund a look we're not going to be greeted here, we're perfectly comfortable with the more of the stricter ACG guidelines, which is what the Medicare LCD.
Speaker Change: As well as the CCN.
Speaker Change: Guidelines alignment right. So we're perfectly happy tackling the 30 million patients who are covered by that for the time being I think the timing will be good as we're starting to really start to penetrate that market that when the data from the NIH. The full blood NIH study, which is intended to rollout.
Lishan Aklog: I think the timing will be good as we're starting to really start to penetrate that market, that when the data from the NIH, the full-blown NIH study, which is intense to roll 800 patients, will come out, you know, just in the timing of that will be good to give us that expanded opportunity. But for the coming years, we're, we have plenty, plenty of opportunity within the more, The ACG guidelines, which is what the Medicare LC do. Got it. Okay. Super helpful. Thanks, guys. Appreciate it. Yeah. Thanks, Kyle.
Speaker Change: Patients.
Speaker Change: We'll come out.
Speaker Change: The timing of that will be good.
Speaker Change: To give us that expanded opportunity, but for the coming years, where we have plenty plenty of opportunity within that some more.
Speaker Change: The ACG guidelines, which is about the Medicare LCD nicely.
Speaker Change: Got it Okay Super helpful. Thanks, guys I appreciate it.
Speaker Change: Yes, Thanks Scott.
Mark Massaro: Your next question comes from Mark Massaro of BTAG. Please go ahead. Hi, Mark. Good morning. Hey guys, congrats on the strong quarter. And thanks for taking my question. I guess the first one for me, you know, you guys have been doing the low to mid throttle strategy for some time now.
Mark Massaro: Your next question comes from Mark Massaro DB AG.
Speaker Change: Please go ahead, Hey, Mark Mark Good morning.
Mark Massaro: Hey, guys congrats on the strong quarter and thanks for taking my question.
Speaker Change: The first one for me.
Speaker Change: You guys have been doing the low to mid throttle strategy for some time now and.
Lishan Aklog: And, you know, I wanted to start and say, if you get the Medicare coverage flipped by Palmetto, I'm trying to figure out how quickly that low to mid throttle strategy might switch into the next gear. So, yes, sticking with that metaphor, the CARB metaphor, yes, the plan and expectation is upon Medicare approval that we will put our foot to the metal, at least with regard to that subset of the population. So, let me give you an example of that.
Speaker Change: I wanted to start and say if you get the Medicare coverage flipped by Palmetto.
Speaker Change: I'm trying to figure out how quickly that low to mid throttle strategy might switch into the next gear.
Speaker Change: So sticking with that metaphor the car metaphor.
Speaker Change: Yeah, They expect that plan and expectation is upon upon Medicare approval that we will.
Speaker Change: Put our put our foot to the metal and.
Speaker Change: At least with regard to that subset of the population. So let me give you an example of that.
Lishan Aklog: Sorry, before I give you an example of what that might look like, a reminder that, as I mentioned in my prepared comments, that we can scale. We have plenty of capacity within our laboratory, we have plenty of capacity on the manufacturing side, and so our ability to scale that up is not limited in any way except for just simply adding sales and marketing resources to that. We also have the ability to do more targeting of patients in the Medicare population. Right now, the proportion of patients that are Medicare has been flat to actually down a little bit because some of these firefighter events and other CYFT events tend to have a younger patient population.
Speaker Change: Sorry, before I give you. An example of what that might look like a reminder, that debt as I mentioned in my prepared comments that we can scale.
Speaker Change: We have plenty of capacity within our laboratory with plenty of capacity on the manufacturing side.
Speaker Change: Our ability to scale that up is not is not limited in any way, except for just simply adding adding sales and marketing resources.
Speaker Change: To that we also have the ability to.
Speaker Change: Two more targeting of patients in the Medicare population right now are.
Speaker Change: The proportion of patients that are Medicare has been flat to actually down a little bit because some of these firefighter events and other cys events tend to have a younger patient population.
Lishan Aklog: Many of them are working firefighters. So, we have the opportunity to target geographies and communities that have a higher Medicare population. We've said this before, haven't reiterated it in a while, but based on our understanding of the epidemiology of pre-cancer and cancer, the expectation is that somewhere between 40, 45, even as high as 50% of the target population will be of Medicare age. We just haven't, our current approach to the market just hasn't tapped into that.
Many of them are working working firefighters.
Speaker Change: So we have the opportunity to target.
Speaker Change: Geographies and communities that have a higher Medicare population.
Speaker Change: We've said this before having to reiterate it in a while but based on our understanding of the epidemiology of esophageal pre cancer and cancer.
Speaker Change: The expectation is that somewhere between 40 to 45, even as high as 50% of the target population will be a Medicare age we just haven't.
Speaker Change: Our current.
Speaker Change: <unk> approach to the market just hasnt packed into that so.
Lishan Aklog: So, how quickly can we do that? Well, it's not going to happen overnight, but we will benefit from a backlog of Medicare claims. Just as a reminder, Dennis can elaborate on this if you'd like, that we have the ability upon a final and effective Medicare LCD covering our test that we have the ability to submit up to a one year backlog of claims. But we'll, you know, at least with regard to the Medicare population, we'll be pedal to the metal.
Speaker Change: How quickly can we do that well, it's not going to happen, it's not going to happen overnight.
Dennis McGrath: We believe we will benefit from a backlog of Medicare claims just as a reminder, Dennis can elaborate on that if you'd like that we have.
Speaker Change: Alrighty upon a final.
Speaker Change: <unk> Medicare LCD covering every test that we have the ability to submit up to a one year backlog of claims.
Speaker Change: But we'll at least with regard to the Medicare population will be pedal to the metal.
Lishan Aklog: The other aspect of our kind of low to mid-throttle here has to do to the extent to which we're able to see traction in terms of generating revenue on the contracted revenue, the new sales channels around contracting and concierge medicine. Because if we start seeing some good traction on that, which we expect to in the coming quarters, actually independent of Medicare, we expect to, a second pathway to put our foot on the gas. Yep, that all makes sense. Great.
Speaker Change: Their aspect of our kind of low to mid throttle here has to do with to the extent to which we're able to see traction.
Speaker Change: Terms of generating revenue on the <unk>.
Speaker Change: Contracted revenue.
Speaker Change: New sales channels around contracting and countries of medicine, because if we start seeing some good traction on that which we expect to in the coming quarters.
Speaker Change: Actually independent of Medicare, we expect too.
Speaker Change: A second pathway to put our foot on the gas so to speak.
Speaker Change: Yes that all makes sense.
Mark Massaro: And so I think you had some positive comments about the Moldex process. And I think you said that you expect to hear back from them in the first half of this year, and that you're optimistic about the outcome. I'm just trying to make sure I understand, do you expect a positive coverage in the first half of this year? Or do you expect just to kind of hear back a response? And then, is it your view that the response back could be in draft form, or do you think it could be in final form? Yeah, great.
Speaker Change: And so.
I think you had some positive comments about the <unk> process.
Speaker Change: And I think you said that you expect to hear back from them in the first half of this year and that Youre optimistic about the outcome.
Speaker Change: I'm just trying to.
Speaker Change: Make sure I understand do you expect a positive coverage in the first half of this year or do you expect just to kind of hear back a response and then is it your view that the response back could be in draft form or do you think it could be in final form.
Lishan Aklog: Thanks for that opportunity to provide a little bit of clarification on that, because there are some nuances to that. But the overall answer is that it's consistent with the positive sentiment. So just a reminder, to take the opportunity of your question to remind folks, there is a final and effective local coverage determination that aligns with the American College of Gastroenterology guidelines that says that Medicare will cover this test in patients who fulfill the ACG criteria. But at the time it was published, there was no test that had sufficient CVCU and AV data to be covered.
Speaker Change: Great. Thanks for that opportunity to provide a little more clarification on that because it's a.
Speaker Change: There are some some nuances to that but the overall answer is sort of is consistent with the positive sentiment.
Speaker Change: So just a reminder.
Speaker Change: So ill take the opportunity great question to remind folks we have there is a.
Speaker Change: Hi final and effective local coverage determination that aligns with the American college of Gastroenterology.
Speaker Change: <unk> said says that Medicare will cover.
Speaker Change: This test in patients who fulfill the ACG.
Speaker Change: Yes.
Speaker Change: But at the time it was published there was no tax that had sufficient.
Speaker Change: <unk> and Avi data too.
Speaker Change: To be covered so it was a non coverage LCD, but but written as a coverage LCD.
Lishan Aklog: So it's a non-coverage LCD, but written as a coverage LCD. What we did is we submitted in mid-November, after multiple in-person meetings with the leadership at MoldeX, we submitted our now robust clinical evidence package. in support of a request for reconsideration of the LCD. And the only thing we requested was simply to flip the non-coverage to coverage based on our data. So just to get it really into the weeds, the draft edited version of the LCD that we submitted as part of that reconsideration is essentially identical to the current LCD except it switches non-coverage to coverage and it includes a summary of our data that we submitted as part of that package.
Speaker Change: What we did is we submitted.
Speaker Change: In mid November.
Speaker Change: After multiple.
Speaker Change: In person meetings with the leadership at <unk>, we submitted our now robust clinical evidence package.
Speaker Change: In support of a request for reconsideration of the LCD and the only thing we requested was simply to flip the.
Speaker Change: Non coverage to coverage based on our data so the just to get it really into the weeds the draft.
Speaker Change: The draft edited version of the LCD that we submitted as part of that reconsideration is essentially identical to the current LCD accepted switches dawn coverage to coverage and it includes a summary of our data.
Speaker Change: That will be submitted as part of that package.
Lishan Aklog: So to your specific question of what do we expect within the first half of this year is a draft LCD that accepts our request for reconsideration that incorporates our data in the body and flips it from a non-coverage to a coverage.
Speaker Change: So.
Speaker Change: To your specific question of what do we expect within the within the first half of this year.
Speaker Change: <unk> is a draft.
Speaker Change: A draft health.
Speaker Change: LCD that accept our request for reconsideration that incorporates our data in the body and.
Speaker Change: And flipped it from a non coverage to a coverage LCD.
Lishan Aklog: That's really the milestone, right? Our expectation, yes, there are some bureaucratic sort of hoops you have to jump through after that before we can actually start submitting under that. There's a public comment period that remains mandatory and some other steps along the way before you get to a final coverage. But we view those latter steps as a formality that we expect to move forward with expeditiously. For us, the milestone is that they complete what they're doing right now, which is reviewing our data and come to the conclusion that our data meets the criteria that they had already outlined in the previously published LCD, and the draft flips it from a non-coverage to coverage-based.
Speaker Change: That's really the milestone right our expectation, yes, there is some bureaucratic sort of hoops you have to jump through after that before we can actually can start submitting under that theres been public common period that remains mandatory.
Speaker Change: And.
Speaker Change: <unk>.
Speaker Change: And some other steps along the way before you get to a final.
Speaker Change: Coverage, but we view those latter steps for.
Speaker Change: <unk> that we expect to move forward with expeditiously for us the milestone is that they complete what they're doing right now which is reviewing our data and comes to conclusion that our data.
Speaker Change: Meets the criteria that they had already outlined in the in the previously published LCD and the draft and flipped it from a non coverage the coverage based on our data.
Mark Massaro: Okay, perfect.
Speaker Change: Okay perfect one more for me.
Mark Massaro: One more for me, you know, congratulations on the NCCN catalyst. I think in my experience, we've largely seen NCCN be perhaps more of a catalyst for companies that are treating cancer, or you know, cancer patients, as opposed to screening, even the at risk. So I guess I'm trying to understand how you think the NCCN catalyst can help you going forward. I think in your press release, you talked about commercial payers might recognize this as a stamp of approval. Maybe can you just help us think about how practically the being included in NCCN guidelines will help you in the coming years?
Speaker Change: Congratulations on the CCN.
Speaker Change: The catalyst.
Speaker Change: Yes, I think in my experience, we've largely seen ncnb.
Speaker Change: Perhaps more of a catalyst for companies that are treating cancer.
Speaker Change: Cancer patients.
Speaker Change: As opposed to screening even the at risk. So I guess I'm trying to understand how you think the end CCN catalysts can help you going forward I think in your press release, you talked about commercial payers might recognize this as a stamp of approval.
Speaker Change: Maybe can you just help us think about.
Speaker Change: How practically the being included in NCC and guidelines will help you in the coming years.
Lishan Aklog: Yeah. I mean, you're right. If you read one of these NCCN guidelines, like the one for esophageal cancer, it's dominated by therapy, treatment and other aspects as you But it has been our experience in our conversations with commercial payers that NCCN does matter in this regard. It is actually quite helpful, and we get asked that. In early conversations, let's say we have a payer that we've submitted some hundreds of claims to, and we're starting to get into a dialogue with them about about securing positive policy, it comes up, they ask us, you know, what does the NCCN say about this?
Speaker Change: Yes, I mean youre right. If you read one of these LTC on guidelines.
Speaker Change: One for esophageal cancer.
Speaker Change: Dominated by therapy treatment and other other other other aspects such as <unk>.
Speaker Change: You highlighted but it has been our experience and our conversations with with.
Speaker Change: With commercial Payors that MCC and doesn't matter in this in this regard it as it is actually quite helpful.
Speaker Change: And.
Speaker Change: We get asked that.
Speaker Change: Early conversations, let's say, we have a payer that we've submitted.
Speaker Change: <unk> disclaims too and we're starting to get into a dialogue with them about about.
Speaker Change: About securing positive policy. It comes out they ask is do you have what does the NCC I am saying that though so.
Lishan Aklog: So we believe quite firmly that for the first time, the NCCN, including even any statement with regard to the value of esophageal pre-cancer screening and then reiterating the guidelines from both the AGA and the ACG, and including in that reiteration the fact that the guidelines recommend non-endoscopic testing, of which we're the only-non-endoscopic biomarker testing, of which we're the only that are available as an equivalent, acceptable alternative to endoscopy with equivalent level of evidence, that is a powerful tool for us. So that's been our experience. Great, thanks for the time. Yeah, thanks.
Speaker Change: We believe <unk>.
Speaker Change: Firmly that the.
Speaker Change: For the first time, the CCN, including even any statement with regard to the value of.
Speaker Change: Softgel pre cancer screening and then re reiterating the guidelines from both the <unk> and ACG and including in that reiteration.
Speaker Change: Factset the guidelines recommend not endoscopic testing of which we're the only.
Speaker Change: Describing biomarker testing of which we're the only that are available.
Speaker Change: Is it equivalent to acceptable.
Speaker Change: Alternative to endoscopy with equivalent level of evidence.
Speaker Change: That is a powerful tool for us.
Speaker Change: Yeah.
Speaker Change: It's been our that's been our experience to date.
Speaker Change: Great. Thanks for the time.
Yes, thanks Mark.
Mike Matson: Your next question comes from Mike Matson of Need Home and Company. Please go ahead. Good morning, Mike. Yeah. Hi, Mike. Hey, guys. So just a couple on the Highmark news. So, you know, it's from Blue Cross Blue Shield. So can you just talk about how many covered lives those cover? And then, you know, what's your sales coverage in kind of the regions where they're, where they're, what cover lives are? Yeah, I just emphasize something here. The so this is the Highmark of New York. Highmark has also has policies that we're pursuing and follow up to this in Pennsylvania.
Speaker Change: Your next question comes from Mike Matson of Needham <unk> Company. Please go ahead.
Mike Matson: Good morning, Mike.
Speaker Change: Hey, guys.
Speaker Change: So just a couple on the high Mark news so.
Speaker Change: Blue Cross Blue Shield. So can you just talk about how many covered lives those cover and then whats your sales coverage and kind of the regions, where there are there.
Covered lives are.
Speaker Change: Yes.
Speaker Change: Emphasize something here.
Speaker Change: So this is a high Mark of New York Highmark has.
Speaker Change: Also has policies that were pursuing in follow up to this in Pennsylvania.
Lishan Aklog: and elsewhere.
Lishan Aklog: And I would really focus this milestone as more of a precedent setter as opposed to sort of the volume that is going to, you know, the number of covered lives relative to the total, you know, potentially 30 million target population. It's a modest-sized regional plan. But it is extreme. So, its value is not so much in the number of patients and sort of the impact it's going to have in the coming weeks and months, but its value is much, much more important as setting a precedent. And that's not just a theoretical thing. When we go and talk to payers and you have a positive conversation with the medical director and we show them the data and it's positive, it is not uncommon for them to say who else is covering this.
Speaker Change: And elsewhere and I would really focus.
Speaker Change: This milestone as more of a precedent better as opposed to sort of the volume that is going to get the number of covered lives relative to the total potentially $30 million target population.
Speaker Change: To size regional plan.
Speaker Change: It is extreme so if the value is not so much on the number of patients in sort of the impact is going to have in the coming weeks and months, but its value is much much more important as a setting a precedent and that's not just a theoretical thing when we when we go and talk to payers and have a positive conversation with the medical director and we show them the data and it's paused.
Speaker Change: It is not uncommon for them to say who else is covering this end.
Lishan Aklog: And to be able to highlight a specific regional plan will be helpful for us in the coming quarters.
Speaker Change: To be able to highlight.
Speaker Change: A specific regional plan.
Speaker Change: Will be helpful for us in the coming in the coming quarters.
Lishan Aklog: The Rhode Island, I'll just take the opportunity to emphasize something that we just are mentioning today, which is on the Blue Cross Blue Shield of Rhode Island. That's actually a different dynamic there. We've talked about this before. There are about 20 states in the country that have passed biomarker legislation that mandate coverage for biomarker tests that fulfill certain criteria, which we believe we fulfill. But that's a bit of a challenge. It's not as straightforward as just, you know, getting the traditional positive policy like with Heimark. So, it's a little bit of a slog, but it's worked in this particular case with Blue Cross Blue Shield of Rhode Island.
Speaker Change: Rhode Island.
Speaker Change: Just take the opportunity to them. So it's something that we just are mentioning today.
Speaker Change: Which is on the Blue Cross Blue Shield of Rhode Island, that's actually a different dynamic there.
Speaker Change: We've talked about this before there are about 20 states in the country that have passed biomarker legislation that mandate coverage.
Speaker Change: Sure biomarker tests.
Speaker Change: Fulfill certain criteria, which we believe we fulfill.
Speaker Change: But that's a bit of a challenge it's not as straightforward as just.
Speaker Change: Getting the deposit traditional positive policy like with high Mark.
Speaker Change: But a little bit of a slog, but but it's but it's worked at in this particular case with Blue Cross Blue Shield of Rhode Island, and again it gives us the opportunity to continue to tackle or attack those other 20 states with regard to their legislation.
Lishan Aklog: And again, it gives us the opportunity to continue to tackle or attack those other 20 states with regard to their legislation. At the end of the day, Blue Cross Blue Shield of Rhode Island agreed to pay us for ESOGARD consistent with the biomarker legislation as long as prior authorization is secured. And we already have experience with that. We submitted dozens of prior authorization claims for tests performed in Rhode Island that would be covered under this and received the positive authorization in nearly all of those patients. So, that bodes well for us. And again, this is more a precedent-setting milestone than one that's, you know, that's going to necessarily drive longer revenue.
Speaker Change: At the end of the day Blue Cross Blue Shield.
Speaker Change: Rhode Island agreed to pay us.
Speaker Change: For E. So guard consistent with the biomarker legislation as long as prior authorization is secured and we already have we already have experienced with abbvie submitted.
Speaker Change: Dozens of prior authorization claims for test performed in Rhode Island.
Speaker Change: That would be covered under this and received.
Speaker Change: Uh huh.
Speaker Change: <unk> authorization and nearly all of those patients so that bodes well for us and again this is more a precedent setting.
Speaker Change: Milestone than one that's that's going to necessarily drive longer revenue in the near term.
Mike Matson: Okay, thanks. That's helpful.
Speaker Change: Okay. Thanks, that's helpful and then just.
Lishan Aklog: And then just with regard to Moldex, let's say you got, you know, they respond tomorrow and you get the coverage. You know, what does that mean in terms of your sales team, sales effort? Are you going to, you know, have to expand that? Are you going to have to, is your cash burned that go up in the shorter term?
Speaker Change: With regard to Mol Dx, let's see you got they respond tomorrow and Youll get the coverage.
Speaker Change: What does that mean in terms of your sales team sells for are you going to.
Speaker Change: Have to expand that or you're going to have to is there a cash burn that go up in the shorter term and then I guess as a follow up.
Dennis McGrath: And then I guess as a follow up, at least with regard to Medicare, would you, at what point would your revenue recognition change from actually, you know, cash collection to being able to, you know, record it when you provide that report to the doctor? Yeah, I'll let Dennis answer the latter. But just to go back to one of the previous questions, if we get an announcement tomorrow, let's say, that announcement will be that we have, will be the draft, the update, the positive update to the draft that reflects a positive update to our request for reconsideration.
At least with regard to Medicare.
Speaker Change: Would you at what point would your revenue recognition change for them actually.
Speaker Change: Cash collection to being able to.
Speaker Change: Record it when you provide that report to the Doctor.
Speaker Change: Yeah, I'll, let Dennis answer that.
Speaker Change: The ladder, but.
Speaker Change: Just to go back to one of the previous questions. If we get an announcement tomorrow, let's say that announcement will be that we have.
Speaker Change: What would be the draft.
Speaker Change: The update the positive update to the draft that reflect the positive update to our request for reconsideration. So that actually gives us a bit of time, because there's a couple of months to gear up.
Lishan Aklog: So that actually gives us a bit of time, gives us a couple of months to gear up with regard to the, between that and a final LCDR, during which we can, through which we can submit claims. So yes, I mean, all of the things that you mentioned are things that we would bring into play. We would start allocating our existing resources in a direction to, toward communities and target markets that we expect that we have a higher, that would have a higher penetration of Medicare, of Medicare patients. We already have started some of that exploratory work with some programs that are looking to help us use publicly available data to do that.
Speaker Change: With regard to the.
Speaker Change: That in the final.
Speaker Change: During which we can through which we can submit claims so yes, I mean all of the things that you mentioned are things that we would bring.
Speaker Change: Bring into play we would.
Speaker Change: Start allocating our existing resources.
Speaker Change: <unk> two toward communities and target markets that we expect that we have a higher that would have a higher penetration of Medicare Medicare patients. We already have started some of that exploratory work with some programs that are looking to to to help us use.
Speaker Change: Publicly available data to do that.
Dennis McGrath: And So the answer is yes, we would proceed fairly aggressively, again, as I mentioned earlier, it's not going to happen overnight, but fairly aggressively to take advantage of Medicare coverage. I'll let Dennis answer questions around the revenue recognition and how it might relate to our burden. Yeah, Mike, with a positive policy, we would then shift that element of the test volume to recognizing that when the report is issued, rather than just waiting for collections, because with that policy, all of the Medicare patients will, in fact, get paid and get paid fairly quickly. As far as the burn rate, the way to think about that, even though people and programs will increase targeting that patient pool, with a 90% margin and a $2,000 price point.
Speaker Change: <unk>.
Speaker Change: So.
Speaker Change: The answer is yes, we would.
Speaker Change: Proceed fairly aggressively if again as I mentioned earlier, it's not going to happen overnight, but fairly aggressively to take advantage of the Medicare coverage I'll, let Dennis answer questions.
Speaker Change: Questions around the revenue recognition and how it might relate to our burn.
Mike Matson: Yes, Mike with.
Speaker Change: A positive policy.
Speaker Change: Then shift that element of the test volume to recognizing that when the report is issued rather than just waiting for collections because with that policy all of the Medicare patients will in fact get paid and get paid fairly quickly as far as the burn rate the way to think about.
Speaker Change: That even though people and programs will increase targeting that patient pool.
Speaker Change: With a 90% margin in $2000 price point.
Mike Matson: The speed of collection added to that really shouldn't change the burn rate significantly just based upon the Medicare approval. Okay, got it. Thank you. Great, thanks.
Speaker Change: The speed of collection.
Speaker Change: Added to that really Shouldnt change the burn rate significantly just based upon the Medicare approval.
Speaker Change: Okay got it thank you.
Speaker Change: Great. Thanks.
Anthony Vendetti: Your next question comes from Anthony Vendetti of Maxim Group. Please go ahead. Good morning. Hey, Lishan. Hey, Dennis. How are you? Good morning, Anthony. Good morning.
Speaker Change: Your next question comes from Anthony Vendetti of Maxim Group.
Speaker Change: Please go ahead Anthony.
Anthony Vendetti: Good morning, Hey.
Speaker Change: Thank you Shawn Hey, Dennis how are you.
Speaker Change: Great Good morning, Nancy.
Anthony Vendetti: I just just just a general maybe question to characterize kind of the pipeline for both the cash pay concierge and and other private health insurers. Maybe just talk generally how that how that pipeline looks. How it looked at the end of 4Q and kind of how it looks now, how would you characterize it? Yeah.
Speaker Change: Good morning, I, just just just.
Just a general maybe question to characterize kind of the pipeline provoked the cash paid tiers and other private health insurers, maybe just talk generally how that how that pipeline looks.
Speaker Change: How it looked at the end of <unk> and kind of how it looks now.
Speaker Change: How would you how would you characterize it yeah. So let's.
Lishan Aklog: So let's start with the commercial payer side first before we get into the new business. So on the commercial side, we have dozens of conversations with payers. We've submitted claims to 400 payers. We have a robust process by which we go through those and figure out who to target. And so we've had, again, many, many dozens of conversations with payers. Those conversations are somewhat modulated because you want to be careful. You have the smaller and regional plans. We believe we can engage with them prior to Medicare and we can have wins as we've shown with Highmark and across Rhode Island.
Speaker Change: Let's start with.
Speaker Change: Well, let's just start with the commercial payer side first before we get into the new the new business. So on the commercial side, we have done.
Speaker Change: <unk>.
Speaker Change: Conversations with payers, we've submitted claims to 400 payers we have.
Speaker Change: A robust.
Speaker Change: Process by which we.
Speaker Change: Go through those and figure out who to target and so we've had.
Speaker Change: Again, many many dozens of conversations with Payors those conversations are somewhat modulate it because we want to be careful.
Speaker Change: Smaller and regional plans, we believe we can engage with them prior to Medicare and we can have wins as we've shown with with high market across that island. The larger plans. Those are more many of those operators are laboratory benefit managers, such as Evercore and others, we have active conversations with them.
Lishan Aklog: The larger plans, those are more, many of those operate through laboratory benefit managers such as Evercore and others. We have active conversations with them. And we believe that those conversations will be catalyzed more directly by a positive Medicare approval.
Speaker Change: <unk>.
Speaker Change: And we believe that those conversations will be catalyzed more directly by a positive Medicare approval.
Lishan Aklog: On the concierge and contracting side, you know, we just got started on this. So there really isn't, no, there really isn't a 2024 pathway. This is all in the last few weeks. And I got to say, on the concierge side, extremely, it's been extremely positive and has moved much more quickly than I might have realized. The team, the adjustments of the comp plan and the processes with the team have borne fruit quite rapidly. We have team members across the country that are calling on concierge medicine and getting these contracts signed at a fairly rapid clip.
Speaker Change: <unk> contracting side.
Speaker Change: We just got started on this so there really isn't there really isn't a 2024 halfway this is all in the last few weeks and I got to say on the <unk> side extremely.
Speaker Change: It's been extremely positive and has moved much more quickly than than I realized the team.
Speaker Change: The adjustments to the comp plan and the and the processes with the team has borne fruit quite rapidly.
Speaker Change: We have.
Speaker Change: Team members across the country that are that are calling on concierge medicine in getting these contracts signed.
Speaker Change: At a fairly rapid clip now.
Lishan Aklog: Now we're still early in the process. We'll see how that translates into revenue. But this is contracted payment. So we expect those physician practices to be incentivized to order the test for their patients and for us to get paid on those. On the contracted side, whether it's with converting our firefighter healthcare event, the CYFT event volume into paying volume through contracts or with the self-insured employers, that's going extremely well as well. We're starting to move up a bit up the food chain to target larger employers than we had in the past. But those, the lead times on those are a little bit longer than what, how it's turning out with regard to the concierge medicine side.
Speaker Change: Still early in the process, we will see how that translates into revenue, but this is contracted payments. So we expect those physician practices to be incentivized to order the test for their patients and for us to get to get paid.
Speaker Change: On those on the contracted side, whether it's with.
Speaker Change: <unk>.
Speaker Change: Inverting our firefighter health care event <unk> event.
Speaker Change: Volume into paying volume through contracts or with.
Speaker Change: The self insured employers.
Speaker Change: Going extremely well as well. We're also we're starting to move up a bit up the food chain to target larger employers than we had in the past, but those the lead times on those are a little bit longer than what we're how it's turning out with regard to the concierge medicine side. The one other thing I'll add on the Concierge medicine side is that there are these sort of larger.
Lishan Aklog: The one other thing I'll add on the concierge medicine side is that there are these sort of larger aggregators. You can call them franchisors. They all have somewhat different models, the MDVIPs and MD Squares of the world. And we have active conversations with them as well as with health systems that have big concierge practices. So you have a larger health system. And those conversations are active and we look to start flipping, to start executing contracts with them. But the, you know, just the more traditional concierge medicine practices in cities across the country that cater to higher, you know, wealthier individuals who pay subscriptions and so forth, that sales cycle has been...
Speaker Change: Aggregators you can call them franchise or is they all have somewhat different models, the <unk> and empty squares of the world and we have active conversations with them as well as with health systems that have big consumers practices.
Speaker Change: <unk> health system.
Speaker Change: And those conversations are active and we look to to start flipping.
Speaker Change: To start executing contracts with them, but.
Speaker Change: But the just the more traditional concierge medicine practices.
Speaker Change: Cities across the country that cater to hire.
Speaker Change: Higher wealthier individuals who paid subscriptions and so forth that sales cycle has been substantially.
Lishan Aklog: is substantially shorter than I am.
Speaker Change: Substantially shorter than I than I had ever.
Speaker Change: As expected.
Dennis McGrath: Anthony, another way to look at this is on the financial side and kind of highlighting or illuminating the important... The longstanding traditional efforts we have clearly have given us standing with the concierge medicine groups, whether they're individual practices or large hospital organizations. and with 37 million of cash entering the year and a historical burn of around 10 million per quarter. made the comment, it wouldn't be unreasonable to think about the burn rate being cut in half as we get towards the end of the year. Concierge medicine certainly can contribute a significant portion of that. Obviously, Medicare will also help in that regard.
Speaker Change: Anthony another way to look at this is on the financial side and kind of highlighting are illuminating the importance of this.
Speaker Change: The long standing traditional efforts, we have clearly given our standing with the concierge medicine groups, whether they're individual practices or large hospital organizations.
Speaker Change: And with the $37 million of cash entering the year and the historical burn of around $10 million quarter.
Speaker Change: I made the comment.
Speaker Change: It wouldn't be unreasonable to think about the burn rate being cut in half as we get towards the end of the year Concierge medicine, certainly can contribute a significant portion of that obviously Medicare will also help in that regard and I think from a financial stability standpoint, the balance between traditional claims.
Dennis McGrath: And I think from a financial stability standpoint, the balance between traditional claims and this reimbursement journey and concierge medicine and contracted revenue where we're getting paid upfront is a good blend to, again, enhance our financial stability. So that's how we think about as we continue to make progress here.
Speaker Change: This reimbursement journey, and concierge medicine, and contracted revenue, where we're getting paid upfront.
Speaker Change: He has a good blend to again enhance our financial stability. So that's how we think about as we continue to make progress here.
Anthony Vendetti: You know, we are pleased that we have 20 contracts so far. And the response from the market and our salespeople gives us great reason to be optimistic about how this moves. Okay, excellent. That's great color. Thanks, guys. Appreciate it. I'll hop back in the queue. Thanks. Appreciate it.
Speaker Change: We are pleased that we have 20 contracts so far.
Speaker Change: And the response from the market and our salespeople.
Speaker Change: It gives us great reason to be optimistic about how this moves forward.
Speaker Change: Okay excellent that's great color. Thanks, guys appreciate it.
Back in the queue. Thanks Anthony.
Speaker Change: Anthony.
Ed Woo: Your next question comes from Ed Woo of Ascendian Capital. Please go ahead. Yes, congratulations on the quarter.
Speaker Change: Your next question comes from Andrew <unk> of <unk> capital. Please go ahead.
Andrew: Yes, congratulations on the quarter.
Dennis McGrath: If Medicare does kick in and your testing volume increases significantly, how much potential operating leverage can there be to increase your already high gross margin? Well, the price point has already been established. It's just under $2,000 in 1938, and that gives us a next patient endure margin of 90%. And operating at that high margin gives you plenty of flexibility to drive programs. So that will also contribute, as I just indicated about our burn rate. When you think about the 30 million patients, the symptomatic portion of the patient pool, you know, as Lishan said, it could be in that 30 to 50% range.
Speaker Change: Medicare does kick in in your testing volume increases significantly how much potential operating leverage tender beta increase your already high gross margins.
Andrew: Well the.
Andrew: The price point has already been established at just under $2000 and 1938 that gives US a next patient endure margin of 90% and operating at that high margin gives you plenty of flexibility to drive programs. So.
That will also contribute as I just indicated.
Andrew: About our burn rates when you think about the 30 million patients with symptomatic portion of the patient pool.
Andrew: As Lisa said it could be in that 30% to 50% range I think about it generally in the 40% range Youre talking about.
Ed Woo: I think about it generally in the 40% range. You're talking about a pretty big patient pool with reliable... and Philadelphia, Dollar General. Great. Well, thanks for answering my questions, and I wish you guys good luck. Thank you. Thanks, Ed. Thanks a lot, Ed.
Andrew: Pretty big patient pool with reliable.
Andrew: Steady price point of reimbursement can change the dynamic pretty quickly it will focus where our sales teams go hunting.
Andrew: Will help us with cash flow in terms of how quickly we will get paid and get paid at a handsome price points can change the dynamics of.
Andrew: All of our financial stability pretty quickly.
Speaker Change: Great well, thanks for answering my questions and I wish you guys. Good luck. Thank you. Thanks.
Speaker Change: Thanks, Ed Thanks, a lot Ed.
Dennis McGrath: There are no further questions at this time. Please continue, Dennis McGrath. Great.
Speaker Change: There are no further questions at this time. This continues there is macro.
Dennis McGrath: Hey, so with that, let me just thank you all for your time and attention this morning. Clearly, there's a lot of progress on multiple fronts to close out 2024 and really what is shaping up to be an exciting and pivotal 2025. We really do believe that broad coverage for e-cigar is coming. And we also believe that this effort to build these new sales channels to drive contractually guaranteed revenue, particularly the early success we've had in securing cash pay at Concierge Medicine. Contracts is really going to start paying dividends soon. So we really believe we're overall very well positioned to start accelerating e-scored revenue growth.
Speaker Change: Great Hey, so with that let me just thank you all for your time and attention. This morning.
Speaker Change: Clearly, there's a lot of progress on multiple fronts close that 2024, and really what is shaping up to be a exciting and pivotal 2025, we really do believe that broad coverage for Easter Guard is coming and we also believe that this effort.
Speaker Change: To build these new sales channels to drive contractually guaranteed revenue, particularly the early success, we've had in securing cash pay concierge medicine.
Speaker Change: Contracts is really going to start paying dividends. Soon so we really believe we're overall very well positioned to start accelerating a skirt revenue growth.
Dennis McGrath: on the second half of this year and capitalize on these regards in massive clinical and market opportunity. So with that, I just encourage you again to make sure you keep abreast of our progress via our news releases, periodic calls, and by signing up for email alerts on the LucidIR website and following us on Twitter and LinkedIn.
Speaker Change: On the second half of this year and capitalize on Houston massive clinical and market opportunity.
Speaker Change: So with that I'd, just encourage you again to make sure you keep abreast of our progress via our news releases periodic calls and by signing up for E Mail alerts on the lucid IR website and following us on Twitter and Linkedin, So with that thank you and have a great day.
Operator: So with that, thank you and have a great day.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.