Q3 2025 Lucid Diagnostics Inc Earnings Call and Business Update

Good morning and welcome to the Lucy Diagnostics. Third quarter 2025 business update conference call. Please note this event is being recorded. I would now like to turn the conference over to Matt Riley director investor relations. Please go ahead sir.

Thank you, operator. Good morning everyone. Thank you for participating. In today's business update, call joining me today. On the call are Dr. Alicia ACOG, chairman and CEO of lucid Diagnostics along with Dennis McGrath CFO. 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 4 looking statements in the press release. The business update, press release, and the conference call all include 4 of these statements, and these 4. Looking statements are subject, and known, and unknown risks, and uncertainties that may cause actual results to differ materially from statements made in

Factors that could cause actual results to differ are described in the disclaimer and in our filings with the SEC for our list and description of these and other important risks and uncertainties that may affect future operations. See Part 1, Item 1, entitled Risk Factors, and Lucid's most recent annual report on Form 10-K filed with the SEC, and any subsequent updates filed in quarterly reports on Form 10-Q and subsequent forms 8-K.

except as required by law Lucid, disclaims any intentions or obligations to public update Orvis, any for looking statements to reflect changes, in expectations or an 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 form of looking statements

I would now like to turn the call over to Dr. Lee, chairman of Arlo and Lucid.

Thank you, Matt and uh, good morning everyone. Thank you for joining. Our quarterly update call today. As always, I'd like to thank our long-term shareholders for your ongoing, support and commitment.

Our team is extremely excited and remains singularly focused on driving this enterprise towards its substantial commercial potential and to enhance our long-term shareholder value.

Since our last update of course, the most significant event was the mo MX kher. Contractor advisory committee meeting that was held on September 4th.

Uh, the meeting went extremely well. There was strong consensus among the experts on this live. On the record call that really reinforced our confidence. That we're in the final stages of securing positive Medicare uh positive Medicare coverage policy outcome, and we'll obviously have more on this later. Uh, the meeting led directly to a successful, um, subsequent financing and September that gives us plenty of Runway to successfully navigate these final steps at accelerate. The East regards. Commercialization once Medicare coverage is secured

so, let's as always start with some key highlights related to our commercial execution,

Articulated of approximately 2500 to 3,000 tests per quarter that we need to maintain our ongoing engagements with commercial payers.

We're pleased that the team continues to be successful at maintaining this volume while focusing on transitioning our targeting to include Medicare patients as well as securing event based contraction, guaranteed Revenue opportunities which we'll discuss a bit further later.

Really excited that we've been able to strengthen our Market access leadership team to provide to students to drive pay or engagement and secure broader, uh, commercial insurance coverage and expanded patient access. Uh, we strengthened and scaled our um, Market access infrastructure ahead of these reimbursement, Milestones such as Medicare. Uh, and uh, the team is going to focus on Market access for our commercial payers and Broad, um, reimbursement, as well as governmental Affairs issues, and I'll be highlighting our team, but we really have, um, again, excited to have a best-in-class team, uh, join us.

Uh, we are excited, um, to have our to be holding our very first firefighter, official tangent, prevention, Summit event, um, of next week, um, extremely excited about this as, as many of you know, we, we have a strong partnership with fire departments across the country. That's extended over several years. And um, this developed uh, a really long-standing relationship with leaders in the uh um firefighter leaders across the country in particular, those that are

Focused on cancer prevention in this, um, in these groups it's been really very, um, gratifying opportunity to help firefighters as, um, we've discussed before. Firefighters have an increased, um, risk of esophageal cancer, 62% of increased risk in an elevated risk of dying as well. We'll talk a little bit more about this on a little bit later.

As we, uh, as we've discussed, uh, we are continuing our momentum to drive Medicare testing. If you recall about up to 50% of our 30 million Target population are. In fact Medicare eligible, patients, uh, We've historically, not focused on this target population. As we've been focused more on maintaining our volume to drive engagement with our commercial pairs as we've discussed repeatedly in the past in anticipation of Medicare. Uh, now implemented measures and incentives. Uh, to our commercial team to start targeting Medicare patients to drive our Medicare volume.

This is also important to get a few if you may recall um once we get Medicare coverage, we'll be able to submit claims going back 1 year. So we're looking to maximize the amount of that. Look back Revenue that we can receive once we have. Um once we secure Medicare coverage

Now, let's discuss some of our recent strategic accomplishments.

Again, um, the most important 1, of course, is the Medicare contract advisory committee that was held in September. Um, the results of that were, uh, extremely positive, uh, the panel of clinical experts, unanimously endorsed the eCard Medicare coverage, and they cited strong clinical evidence guidelines support and Real World experience. As you stated repeatedly, we believe this is the important final step toward security Medicare coverage. And in a moment, we'll provide some additional context on this process. A little bit of update of some additional information. We we we've received, uh, related to the, uh, what we expect to be an upcoming draft LCD.

Finally, as um, we've announced in Dennis, we'll discuss a little bit, a little bit further later. Uh, we were able to strengthen our balance sheet with an underwritten public offering of common stock that netted, uh, approximately 27 million dollars in in proceeds of the significantly, bolstered our balance sheet. Uh, Dennis will discuss in more detail in the end of the quarter with 47 million in Pro in ProForm or cash. And uh, we were encouraged. This is a fully marketed offering that reflected really strong.

Interest and confidence particularly boosted by the positive uh tack meeting. Um there was broad institutional and meaningful Insight or participation of the offering and it extends our Runway through 2026. Well past um many concrete, uh, reimbursement, milestones, we believe it also mitigates our fin financing overhang and the risk from other external factors. Um, it provides a sufficient resources in addition to accelerate our commercial efforts once we um, uh, receive medicare approval.

Provide some updates related a little bit more detail on reimbursement, and also on our commercial efforts. So let's start with reimbursement.

As we announced, uh, back in September, uh, we, um, have, uh, recruited a world-class, uh, Market access team, uh, led by Daniel shelfo. She brought in 2 of her long-term colleagues, uh, John Lincoln, and Cynthia and together. They provide over 75 years of combined experiences. You can see here at Major Diagnostics companies, with a focus on Precision medicine, as well as pair strategy across some of the more respected, uh, names in the industry, they really bring strong, um um um, relationships in the commercial payer space. Um, and this is going to be extremely important for us to uh, start securing coverage and reimbursement across major Insurance ensures as we, uh, proceed and and, and secure Medicare coverage.

So it couldn't be more excited about having. Um, Danielle John and Suki join our team and their work will really be Central to execute our our national cover strategy uh for for Easter card.

So, um, let's talk a little bit about, um, uh, bit bit of a more detailed update on Medicare. So, uh, we believe the next steps following this CAC meeting is the uh, publication of a draft local coverage determination. Um, that uh, would be a positive response to our request for reconsideration of coverage of Visa guard under the existing local coverage, determination as a

Said repeatedly. We're very confident that we are very close and in the final stages of this, uh, based on the the public, um, uh, CAC meeting as well as our ongoing, uh, conversations, uh, with the moldy X team. Uh, that confidence was strengthened. Um, following a recent, uh, meeting of the California, California Clinical Laboratory Association. If you recall, our laboratory is located in, um, in, in Orange County California where members of the ccla. And there was an important meeting following our tag meeting, a general meeting, uh, where moldex um, uh, uh,

leaders were Pro were present and, um, um, the uh, the meeting

Which is a public meeting a further corroborated, our confidence that a the meeting went. Well, the our tech meeting was a topic of conversation, uh, Dr. B and Wilmer and 1 of his colleagues from nadian were there. Um, and the meeting was extremely positive. It just simply highlighted and reinforced, um, um, the positive feedback that we believe came out of the tech meeting. It was also important to note that the, this is the first time that we heard directly from the, the medical director, 1 of the medical directors that Meridian who shared uh the same positive feedback that the um uh the the leader of multi extent as well. Uh so again very confident that we're heading uh towards and should be expecting a draft uh LCD.

See once that dropped off Ed is published and we believe the following steps from that are fairly um routine. So they'll be a mandatory 45-day public comment period. Um, the following that there'll be a publication of a final local coverage determination. And then from that official notice that you got coverage. And again, to reiterate once you get final LCD coverage, that will allow us to submit claims dating and getting paid for claims uh, dating back for a full year. So again, that's the process, you know, feel like we're in good shape. And we're uh, um, eagerly anticipating the publication of a draft LCD. So,

I could talk a little bit about some of the, um, experiences we've had in our ongoing conversations with commercial payers. If you recall, uh, on our last, on our last call, for those of you who participated, um, we are pushing full steam ahead on Commercial payers. Um, not, uh, we're not just waiting for Medicare coverage, and that activity is really Etc, accelerated substantially with the expansion and and strengthening of our Market access team. Um, 1 thing that that that um uh that we've noticed in addition to just simply uh a series of meetings with a variety of commercial payers, even over the even over the recent weeks that have gone extremely well is that we have an opportunity uh to um link keycard coverage to existing um guidelines for Endoscopy. Now

we, we saw that in the, in the inclusion of

The airrated, with the guideline with the, in the NCC, in the, in the nccn guidelines reiterated, what the GI guidelines say which is that non endoscopic biomarker, testing of, which is regard, is the only 1 is, um, is an acceptable and equivalent alternative to endoscopy. And so, what's interesting is we've seen that now in more aggressive and more, uh, involved conversations with, um, with commercial payers and that actually manifests itself in an update in a guideline to the United, uh, Health Care guidelines that were published this summer, um, on, um, uh, endoscopy guidelines for Endoscopy and particularly guidelines for Endoscopy, as it relates to um, screening for parent esophagus and that died in that guideline there actually is a specific mention of esig guard and its role in identifying patients for EGD and specifically stating that patients who are ecart positive are appropriately indicated for EGD. Um we we believe this is actually a strong.

Um uh gives us a strong advantage in in these conversations with commercial payers in that. Uh, Easter card is not standing alone, but it's linked to guidelines that already cover. It's very endoscopy guidelines that are already covered by payers. So being able to link to those guidelines that are that are already covered really gives us a a great starting point in our conversations. And in fact, the United Healthcare language is um sufficiently strong. And we've had conversations with medical directors there that we we feel confident in proceeding.

Quickly to contract and discussions with United Healthcare. Uh, so lots of activity, on the commercial side, we have a a team that's uh, uh, really operating on all cylinders and we look forward to starting to uh, convert, um, positive policy coverage for, um, commercial payers actually in advance of us, um, securing Medicare coverage. Final Medicare coverage.

So mentioned earlier we've uh continued our momentum uh and that we are focused on driving Medicare as well as our event based contracted testing. So let's flush out some of those details as well.

Uh, as I mentioned, we are, uh, really excited to host our very first um, uh, firefighter esophageal cancer, prevention site. Um, this is, um, the culmination of a, as I mentioned, a long, um, history and a, a strengthening our relationships with uh, with fire departments across the country and testing the firefighters for this deadly cancer. That has an increase in incidence in this population. Uh, this this event that we're hosting, we'll have 60 attendees over 60 attendees. And these include a variety of, um, members of the firefighter Community, uh, including fire service leaders. And those that are directly involved in decision-making, about hosting a contract with firefighting firefighter testing events, as well as, um, survivors widows families and Physicians who are, uh, within the space. And it's really focused on shaping and advancing the future.

Prevention through early detection in the in the fire service that highlighting Easter guard's role for, uh, protected for preventing the second. Most deadly cancer that these, uh, firefighters, uh, face, uh, from a business impact. Point of view, we we we are confident that this will help us continue to bolster, what's already a very strong pipeline of contracted um check your food to prevent targeting fire departments. Um,

We have, um, steadily been able to increase the number and the, the the size of the pipeline of our contracted event based, uh, testing, uh, throughout 2025, and we continue that momentum to continue, um, and expand and accelerate through events like this.

So with that, I'm going to pass it on to Dennis for our financial update.

Thanks Lisa and good morning everyone. The summary Financial results for the third quarter were reported in our press release that has been distributed.

On the next 3 slides. I'll emphasize a few key financial highlights from the third quarter, but I encourage you to consider these remarks in the context of the full disclosures covered in our quarterly report on form 10 Q.

With regard to the balance.

Cash at quarter end, September 30th was 47.3 Million.

during the quarter is Leon mentioned, we completed a cmpo with proceeds just under 27 million

The quarterly burn rate was 10.3 million, which is slightly better than the average burn rate for the 4 Pro quarters of 10 and a half million.

And exactly the same as the prior quarter.

the burn in a third quarter included, 7.2 million from ongoing operations and 3.1 million from the quarterly MSA with padnet

Which is held by long-term shareholders.

The fair value of the convertible notes in the amount of 22.3 million at quarter end is really the only other substantive change from the previously reported balances of at the end of the second quarter.

The fair value, decrease of 3 million, reflects a mark-to-market quarterly adjustment in parallel with the common stock price changes between the periods.

The fair value, decrease.

Also drives a corresponding income pickup of 2.3 million reflected, in other income, in the p&l.

Shares outstanding, including unvested rsas. As of last week, our approximately 138 million.

The Gap outstanding shares as of September 30th of 1:30 9 million, our reflected on the slide as well as on the face of the balance sheet and the 10 Q.

Gap shares. Do not reflect on invested, uh, restricted stock orders.

At present, have it continues to be the single largest common shareholder of lucid Diagnostics with ownership of approximately. 23% of the common shares outstanding.

Although pad no longer has voting control of lucid have met together with the board and management still have significant influence over Lucid with approximately 28% voting interest.

Lucid has convertible Preferred Securities whereby the preferred shareholders are incentivized delay conversion of the preferred shares and the common shares until 2026. Namely the second anniversary from closing.

If all of the preferred shares outstanding were converted into common shares as of today,

There would be an additional 49.6 million. Common shares outstanding.

Next, slide with regard to the p&l.

This slide Compares this year's third quarter to last year's third quarter and year-over-year on certain key items. I trust you'll review the information on my comments, light of the cautionary disclosure on the bottom of the slide about supplemental information, particularly 9 Gap information.

1 additional high level summary comment, if you were to place the sequential second and third quarters side by side, you would see their nearly identical on a gap and a non-gaap basis. Relatively the same test, volume the same recognized Revenue, the same Opex levels, both, gaap and non-gaap, the same Burden rate.

With that. Uh and for consistency, a few comments on the normal things that I do touch upon.

With over 2,800 tests for the third quarter, we invoiced over 7 million dollars and recognize revenue of 1.2 million.

Reflecting a 4% sequential Revenue increase in a 3% year-over-year. Increase

With new investors. Once again joining us for this call, it's worth repeating. What we've communicated in past quarters about Revenue recognition. A key determinant 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 this transitional stage of our reimbursement process means Revenue recognition for the majority of our claims submitted.

To both traditional government, or Private health insurance, or insurers will be recognized when the claim is actually collected versus when the patient report is delivered invoice and submitted for reimbursement.

As you will see in our 10-Q, it was called variable consideration in the jargon of GAAP's ASC 606 revenue recognition guidelines. Presently, there is insufficient predictive data to reflect revenue from all of our quarterly test volume. At the point where the test report is delivered to the referring physician,

For billable amounts contracted directly with employers through concierge medicine, these are fixed and terminable and will be recognized as revenue when our contracted service is delivered, generally when the report is delivered to the referring physician.

It's important to note that uh pending Medicare approval decision, impacts about 40 to 50% of our addressable patient population and therefore will have a significant impact on our future Revenue recognition analysis.

Furthermore for tests perform on Medicare patients with dates of service within 12 months of the final positive Medicare policy.

We'll also get paid within a reasonable time frame after the final policy is issued.

On a non-gaap, uh, our, our non-gaap loss for the third quarter of 10.3 million, It's relatively flat sequentially and slightly better than the trailing fourth quarter of 10.5 million.

The non-gaap net loss per share of 10 cents. It's flat sequentially, as well as better than the trailing 4 quarter average loss of 16 cents per share.

On a gap basis, net loss and EPS.

Are just about the same as the non-gaap metrics, namely 10.3 million loss, and our net loss of uh per share of 10 cents.

Next slide.

With regard to our operating expenses. This slide is a graphic illustration of our operating expenses after eliminating non-cash expenses for the period, She reflected.

Millions are modestly lower than the average 11.6 million for the last four quarters.

Let me close with a few reimbursement highlights for the third quarter.

in the, the most recently completed quarter third quarter, we build

Uh, 2,841 tests reflecting about $7.1 million in pro forma revenue.

During the third quarter, we recognize revenue of about 17% of that amount or 1.2 million.

Of that amount about 49% was from claims submitted in Prior quarters with the longest date at item from 24 months ago.

of the claims submitted in the third quarter about 76% have been adjudicated, 24% are pending

Out of the 76% that have been adjudicated about 38% resulted in an allowable amount by the insurance company with an average of around $600 per test.

Which bumps up against the Medicare rate? Obviously, we're majority of tests are out of network.

Of those denied, most fit into one of three buckets: A. Medically not necessary or deemed medically not necessary; B. Require a prior authorization; or C. Require additional medical records.

The balance is deemed to be non-coed.

With that operator. Let's open it up for questions.

Thank you.

Ladies and gentlemen, we will now begin the question and answer session. Should you have a question please? Press star. Followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process? Please press the star followed by the number 2 and if you are using a speaker-phone, please leave the handset before pressing any keys.

1 moment, please for your first question.

Your first question comes from Mark Mazaro with BTIG. Please go ahead.

Morning, Mark. Hey, hey, good morning, guys. Uh, thanks for taking the questions. Um, so yeah, it's super interesting that, um, you guys mentioned the, the ccla meeting recently, um, because I just wanted to get a sense, you know, obviously there are a couple significant, um, leaders of, uh, Medicare contractors present. I'm just curious if you could share, um, a little bit more about any dialogue, you might have had and then, uh, related to that. Assuming you get a positive draft LCD. Um, is it your opinion that the final which would likely happen thereafter? I would think would be, uh, probably a formality or, or, or should, or at least consistent with the

Draft.

Yeah, great, thanks, Mark. Um yeah, let's talk about the California meeting. Just to be clear, this is a regular meeting that's held by the California, uh, Clinical Laboratory Association ccla. We attend this meeting actually Danielle. Our new, um, uh, head of Market access attends, this meeting, and it was General meeting. It's basically an opportunity for the leaders of, um, moldy x, uh, contractors to engage in an open conversation. And, um, so everything that was stated was stated in public that were it wasn't private 1-on-1 conversations and that's frankly why we founded uh, very to be very positive in that uh, significant amount of time. Uh, was actually spent based on audience questions on us and our tech meeting as 20 or 30 minutes of a, of, a 2-hour meeting was, uh, dedicated to that. And, uh, the responses from, um, the head of multiax were, uh, very direct, uh, very consistent.

With the internal conversations that we've had, um, and, uh, very positive. He, you know, there were all sort of reaffirming of our general, um, perspective on how things are going and sort of the Paradigm, under which he's operating. I mean, he, he explicitly, uh, upon questioning by, by Third parties, um, described the meeting describe describe the purpose of the meeting. Um, said, the meeting went well conversations flowed nicely.

Very, um, paid in between the LCDs and existing guidelines. Um, and he Al talked about the whole history. We've talked about this in previous meetings about, uh, how he wrote this policy, um, to be non-covered. But still was explicit as to what would be required for coverage. Um, and so that would allow the reconsideration process, which is what we're in right now to occur more quickly. Um, and that, um, the um, companies like us could understand while in advance what the expectations are with regard to, um, uh, to converting a non- coverage policy to a coverage policy. He said, you know, if we, if we ask him to do this and we we won't come back and just say it's not just kidding and require more evidence. Um, so, uh, so that was really great. Uh, what was frankly, again, most of that was just reaffirmation. Although, there was some level of specificity particularly in a public in public comments that were extremely encouraging.

what was rather knew was that um 1 of the medical directors at Meridian which is 1 of the other um multi expert participating uh Medicare contractors was also present and also commented and um

And, um, she uh, really corroborated, uh, very similar sentiment with regard to the meeting and with regard to, um, the entire process. So, that's a very good sign. As as, as we've discussed before, uh, the multiax process is designed to bring the 4, um, the 4 Medicare contracts are together. We believe that 1 of the purposes of the meeting, uh, the public meeting was, in fact to, uh, provide, um, The Moldy X director with, um, the, uh,

Uh, information on the public records that the other Mac leaders could use to, uh, to come to a consensus on on proceeding with the draft policy. Meridian is the most important of the others, because, uh, our laboratory is located in a n jurisdiction. Um, so yeah, we were, it was a bit unexpected. It was just a regularly scheduled meeting. Um, and it was frankly, other people who were asking um, people under, you know, the industry stakeholders and others who initiated the conversation. It was great to see, uh, that spontaneously both medical directors were, um, you know, just extremely positive about where things are. So it really puts us, um, makes us feel confident about where this is heading. Um, so yeah, the the, um, the second question mark was around, um, once the draft gets issued, the process between a draft and a final, and yeah, we really do feel that that that's a formality and for a variety of reasons, um, the draft policy was has already. Uh, is basically a

A reconsideration of an existing final policy. So the vetting of the...

of the body of the coverage, determination, the specific criteria and and other other language in there. We've everybody's already signed off on that that already went through a public comment period and that we are happy with the, uh, with the language of the final. So this reconsideration is just simply to flip it from non coverage to coverage. Um, I think I might have mentioned in previous meetings. That part of our submission from reconsideration is a literally, a red line of the old of the existing final LCD and are the the proposed red lines just simply uh, removed the term non-covered and it it it maintains everything else. Um, it obviously adds additional data but our data in the summary of The Evidence, but the actual policy itself is identical. And uh, so, uh, because the, because we're not asking for a reconsideration of the substance of the policy, just to flip it. Um, we believe that the public comment period, um, will will, will will be a formality that

Their strong support for this. Not just obviously from us, but from other other stakeholders, um, we expect, uh, there will be support from um, trade associations and from from from others. Uh, patient associations and so forth. Just like there was the last time. Um, and so, uh, so we really do view that the process, the public comment period. The process of converting the draft to a fun.

To, in fact, be a formality. It's 1 that has a, you know, certain time window and to take some time to to move from A to B, uh, but it's um, uh, so we we I think that's the right word. Marcus for finality.

Okay, great. Uh, that's very helpful and good to hear. Um, I I know you you guys indicated just today that you feel confident that you're getting uh, very close. Um, I I recognize I don't think there's any clock per se, um, but would it be reasonable to think that, um, you know, perhaps by year end 2025, if we might see a draft, I mean, what's your latest thinking on timing,

Projected that um, we take that to, you know, reasonable estimate. It's really about workload. Uh, there were some uh thought and concern that the shutdown could have influenced, um, that process. And, you know, and, and, and, um, slow down the process of issuing LCDs. Uh, we have no reason to believe that that was actually the case. Um, the uh, um, LCDs continue to get issued. Uh, it's important for people to remember that moldy X, and Paul Meadow, the, the underlying Mac or product contractor. So, there was no, um, and I believe, they explicitly stated at this, even at the CLA meeting that, um, the shutdown did not slow them down at all, there was a period of a few weeks when the coverage Advisory Group. Um, at at MediCare at CMS proper was furled, but they were brought back rather quickly, um, and they were issuing ncds and LCDs along the way. So this is just sort of a pipeline workflow issue. We think there's a, this is a fairly straightforward.

Forward uh reconsideration because um the day it has been in their hands now coming on a year. Uh, the CAC meeting uh, was universally positive. And so this is just a um yeah just a workflow issue and we think that that's a reasonable timeline.

All right, and then maybe just 1 more for me. Um, since the, you know, since it's the last call and the cat meeting, uh, I'd be curious if you could, uh, perhaps expand on any dialogue, you've had with any commercial payers, you know, are you seeing any anything move there or do you think it's more of a wait and see on the, uh, decision? Yeah, definitely, yes. So, um, I think I, I, um, made the point during our last call that prior to I, I would say in the first like sort of in the first quarter or second quarter of this year, we were of the thought that, um, for the most part with, you know, the occasional High Mark, you know, we got a high Mark policy, uh, issued in the second quarter, that for the most part commercial payers would wait, until Medicare, um, our thinking on that has changed quite a bit over the last couple of quarters. Um, the the fact is that, for example, the high Mark policy,

Was you move forward quickly because we had the data and it's important to remind people that the package of data that we submitted for the reconsideration, for Medicare was and, uh, completed until the fourth quarter of last year. So we weren't really out there. Talking to commercial payers, um, uh, with a full data set until the first half of this year. So the answer to your direct question is, yes, we have a lot of meetings going on, a lot of activity. We're fully engaged with larger payers and smaller payers. Um, and we are

Seeing positive movements of the meetings regarding well, uh, the the the the specific, uh, points of discussion around the clinical evidence, both CV and CU as well as Healthcare economics which does come into play on the commercial side. Um, uh are positive. Those conversations are very much strengthened by the uh published guidelines. Uh particularly not just the GI guidelines but being an nccn is an important factor for commercial payers. And so, um, yeah, so they're moving forward. Well, and now we have a our our team is really uh, Beast up um, and um, as pursuing these aggressively, so I would not

I would expect frankly that we'll be, uh, we'll start seeing positive coverage policies, uh, from payers, um, small and, and hopefully, sooner rather than later, large, um, even as we await the Medicare process, uh, to come to conclusion. Um, you know, maybe a good time to to emphasize 1 of the points I made during my prepared comments, which is that 1 of the things that we're learning. Uh, as we navigate, the commercial side is um, is we have to remind ourselves that payers are ready? You know this, let me just back up that that Esther guard fits within a paradigm. It's not a test that's done in isolation, that fits in a paradigm of screening for Bear to suffocate for pre-cancer that obviously includes endoscopy. It includes confirmatory.

Advantages to endoscopy both in terms of cost and in terms of invasiveness to the to the patient. So we're not starting from Ground Zero, we're starting from that Baseline and the fact that that United included in its latest, um, update of its guidelines for, uh, endoscopy for various esophagus screening. The fact that they, that 1 of the considerations with regard to covering and endoscopy is that the patient has a positive Easter card test, um, really uh with an eye opener for us, and is is giving us um confidence of pushing those dialogues a bit more bit, more aggressively and in that case, just going straight to a, um, seeing if we can, um, secure a contract.

That's all great to hear. Thanks guys, I'll hop back in the queue.

Yeah, great. Thanks Mark.

Thank you.

The next question comes from Kyle, mixing with Kukra in January. Please go ahead.

Good morning, Kyle. Hey guys, thanks for the questions.

Hey, good morning. Um, so just on your point there, Leon about the, the shutdown, you know.

Slowing down LCDs draft LCDs. I'm just curious with it potentially ending here. Do you think there could be an acceleration or like this rubber band effect to maybe complete the draft now?

Just curious what you have to say about that. Uh, perhaps I, you know, I I think the fact is, I don't think it was slow down by it. Um, the, the sort of the, the cad group was out for a couple of weeks. And so uh, the reason that's relevant is that although these policies are finalized by the um contractors, there is a um sort of a rubber stamp I believe. I'll even just call it an administrative process that has to happen at CMS proper um to get these things published and so forth. And so sure I I think I think the fact that the shutdown is wrapping up will, you know, make sure that things are operating at Full Steam at CMS when it comes time to actually process. Um yeah, before I finalize, the administrative processes that are necessary to post a post a draft LCD.

Okay, that's great. And then, you know, maybe in mid 26, let's say when you let's let's assume you have coverage from Medicare. Um, what should the commercial

Channel, mix kind of look like, um, you know, you

You get test centers, you have like a different files, or they're just curious how that's going to change from this point to the end, basically, right? So we've been operating, uh, anticipation of that and uh, we, we describe in a little bit more detail on our, on our last call about the fact that, um,

That, um, we are making a concerted and, uh, in perspective, push to drive the portion of our population that are that have Medicare. Um, um, that are Medicare that are Medicare eligible patients. And so that process is already started. Um, uh, the, the, the goal is at least 50% which is about approximately what the target population. Um,

What what the what the target population is in terms of Medicare? And um, and that process is, is going well where we're trying. It's it's we're you know, we're turning the boat. Our our, our reps have been focused. Primarily on just getting just getting volume and, and focusing on these other channels. As you said, I'm here as employers and fire departments, and things like that. And all that is, is that all of that is continuing. But um, there's been a concerted Push by our commercial team to start the process of driving, the portion of patients that are Medicare from where we are right now, which is about, uh, 10 10, 10 to 15%. Uh, ultimately towards at least, at least, where it is based on the epidemiology of the targets of the target population. And, uh, we're certainly hopeful that by by mid year next year, in addition to that transition happening with regard to the Target population that will start seeing, uh, the fruits of our efforts on the commercial, um, site as well.

Medicare is is a barrier um has been a barrier to many Health Systems. You just can't initiate a conversation of coming in. We've had some successes where that hasn't been the case but the anticipation of Medicare coverage has actually um uh um

Um, agreed to the skids, in terms of us being able to uh, engage with with Health Systems. So we're expanding that. So we've made some adjustments to our team. We've actually brought in some more experience. Um, uh,

Uh, director level folks who have experienced calling on health systems with regard to GI Technologies and uh we're looking to see the, you know, bear the fruits of that of the fact that Medicare We Believe Medicare coverage is um is imminent has helped uh, drive those conversations.

Perfect. And then just quick, housekeeping question and be for Dennis. Um, the cost of goods per test increased to like 600 dollars per. So that's a 5% increase quarter per quarter, um, you know, anything in the quarter that would have elevated cogs or actually, we kind of think about that going forward. Is that gonna? I feel like you kind of thought that was going to decrease over time?

Uh the the variable cost has remained unchanged the cost of uh ESO check is in the $50 range and the cost of processed through the lab. The variable cost process. Uh test through the lab is still unchanged in the 120 to 125. So less than 200 the rest, the rest are fixed costs. They could

Uh, adjust up or down a little bit, but nothing significant, uh, on a gap basis. You'll also got, um, some non-cash charges to flow through there based upon, uh, stock-based comp that goes through some of the employees. But on a cash basis, it's pretty consistent quarter to quarter,

Perfect. Thanks, guys. I appreciate it. Congrats. Great. Thanks, Kyle. Have a good day.

Thank you. The next question comes from. Anthony vendetti with Maxim group. Please go ahead.

Morning Anthony.

Morning, Dennis. Good morning Leon. Um,

Just just as a reminder. How many commercial payers right now? Cover ISO guard?

And, um, we have and then maybe go ahead and then I have to follow. Yeah. We have 1 positive policy, which is, uh, hi Marc, New York. Um, that policy was issued in the second quarter, we're in the process of engaging. With them on Contracting. Um, we build, you know, 400 plus. Uh, and I would say our pipeline of conversations, uh, active conversations with commercial payers, small and large is in the order of dozens.

Okay. Great. Okay. And and you've built 400 of them now. So so they're they're aware. Um, it's just it's just I know it's it's a process.

Yeah, exactly. That that goes back to the, basically the the, uh, the pattern. The the The Stance we've had for the last, you know, a couple years which is that we need to do enough volume so that we can engage, we can submit claims, we can get denials, we can fuel denials and and make the case for, um, you know, for a transitioning now that we have the data to, uh, formal positive policies, so they're not, um, we're not stuck in out of network sort of a nuisance strategy.

okay, and then and then can you can you talk about the, uh,

The ordering behavior from from the Physicians that, that use Issa guard. And for the ones that are, you're, you're, let's say hi, hi, higher, volume users. Um, what what's the repeat ordering? Kind of rate, uh, do you, if you track that? Yeah, uh, we don't track that sufficiently to report it, but we know what's going on in the field clearly, and there is just no issue with that when we engage with, uh, a physician that's able to order the tests that um, buys into the Paradigm that understands the guidelines and understands the opportunity to have an impact on, uh, on their patients, uh, uh, there. It's, it's a sticky business. And so, um, um, so really, we don't spend a lot of time focused on that because ultimately, we're, uh, we know that when we put our foot in the gas and we go out and try to drive, um, when we have sufficient coverage to, to justify, um, um, throwing more

But also at physician practices. If you recall we do these things, we call satellite Lucid test centers where our nurses will show up on a regular basis at a physician's office. And do do tests. We actually had 1 recurring tests and and when I said that, theoretically, uh, it's actually, it actually is happening in real life and 1 of the things that we've done from a, an account maintenance, point of view and relationship point of view is to actually take our nurses, who are obviously clinical experts and are able are very conversant in the, in the underlying clinical medicine to, um, be much more directly engaged with these Accounts at the beginning, um, and also on an ongoing basis so that, um, that role has expanded its been really quite quite gratifying.

okay, and then last question is, um,

When you actually get a referral for a Nisha card test, if they don't offer it...

At the site. But do you actually get a referral? What's the conversion rate from referral to to actually uh, getting the test done?

Oh, just to be clear. These are not really 1-off referrals. Uh, let me just, let me just clarify that first, um, that, you know, when we enter, uh, when we, when we, um, partner with a practice or, or with a health system and those are slightly different. Um, I'll talk about both, uh, it's really programmatic, it's establishing a a uh, an esophageal pre-cancer detection, okay?

Super prevention program within your practice, or within your health system, and we work together with them, to help them, find the patients to, to interrogate their electronic health records to do events, uh, with, um, if it's a GI practice with their local primary physicians, if it's a primary care practice. Again, we do patient events and so forth, so it's really a partnership. It's not sort of 1-off if a, a physician is sort of, um, thinking. Um, oh, do you know, should I test this patient or not? It's much more programmatic and as you might imagine especially at the health system level that, uh, that's quite um, uh, yeah. Even even more, even more involved than it can be quite sophisticated. I mean, it's, you know, the whole whole health system. For example, is 200, primary care, physicians that work with, um, uh, a Cadre of gastrin neurologist and working, you know, you know, the system that we're building, there is designed to, um, to, um, bring all of those folks, uh, in the mix and, um, the, you know, so what drives these fun,

Folks is the, is the negative predictive value, the fact that they know that if if a test is negative, they can rule it out and if it does, it's positive. Um, that those patients will get referred for Endoscopy. Now, the health systems are very motivated, um, in particular and the Gees are motivated because it drives patients for 2 end. The ones who, um, come to endoscopy of a higher yield. I think your narrower question is actually much more straightforward, which is, um, that you know, what is the

The older, the patient who gets referred in terms of making it its way through the process. It's extremely high. Uh, patients, who get referred for ESO for these are checks all collection and, and, and the eso test, uh, that number is well over 90% in terms of people who actually follow through and get there and get their cell collection, whether it's us, or whether it's someone we've trained within the practice or the health systems, we do both, um, and or at a at 1 of our health events. Um, we've also reported previously and this is actually the central to our um, to our clinical utility portion of our clinical evidence that patients who get who are positive. So remember, isar negative patients don't need anything further done, uh, because they have a high negative predictive value. The positive patients are referred for confirmatory endoscopy and uh, our the patient compliance with that is 85%, which is double the compliance of patients who get referred for Endoscopy without.

So guard. So the, the patient knowing that they have a positive biomarker test is a very strong, uh, impetus. Um, provides them a very strong impetus to go and complete the process and get their endoscopy, so they can be put in the appropriate, follow-up plan, whether they're surveillance or treatment.

Okay, great.

Thank you so much. I appreciate all the color I'll hop back in with you. Yeah, thanks Anthony.

Thank you.

The next question comes from Mike Matson with nidh helmet Company. Please go ahead.

Morning. Good morning. This is Joseph on for Mike today. Um, I just

This potential I guess like 1 year look back period. Um, for claims you know once you get positive um coverage I'm just trying to level set. Um the 1 year, look back period with just now engaging or increasing Medicare patients. Um you know while I don't think it's the case, I think maybe some investors could see that and view maybe Lucid being closer to 1 year for for reimbursement rather than a couple of months. So that I guess that central question. Why engagement Medicare patients now are increased that rate versus maybe starting to do that. Um you know, last quarter or 2 quarters ago,

Let me, let me answer that high level, maybe Dennis has some additional thoughts. I just want to make sure it's clear, um, getting Medicare patients. Now, first of all, their Medicare Advantage patients which, um, which uh, uh, are you can pay because they're could be a private private insurers or are, are, are paying that. And so that's 1 element of it. But, um, the, you know, we now that we, we didn't trigger this until until just before the CAG meeting. Now that we have a, a pretty good, uh, high level of confidence as to when this is going to happen. It's important, you know, that we feel the pipeline and try to maximize as much of that look back as possible. And so, um, I'm not sure that, you know, characterizing it as a delay in reimbursement, really, really is um, yeah, how we would look at it, I don't know, dentist, if you have

I think Joseph Lee you're aiming at is um since the CAC meeting was so um overwhelmingly unanimous among all the clinicians and the receptivity by the moldex leadership was strong. It certainly is a embolden us to be, uh, more aggressive in our pursuit of those areas where our more Medicare Rich population to think of Texas, Florida and North Carolina. And, uh, that's an expression of our, uh, confidence that we're in this zone of Medicare approval. And that zone is the 12 months prior to final. So your question was, uh, if an investor thinks it's more than a year from now, the question would be, why are we pursuing Medicare patients today? As I focus when under that theory, we wouldn't get paid right now. Well, our confidence is just the opposite that we are in the zone of approval. And that what we are now, uh, in

Potentially pursuing in terms of our patient pool is an indication that we are expecting draft. I don't know any day to what the expectations were, right. Uh, set by by many of the analysts out there and that what we are incurring, we will get paid uh based upon the expectation, that's what's driving our behavior. And now that I understand the question next does for clarifying it uh yes, the patients that Medicare patients that were uh bringing

and today we expect to get paid on

Okay. Yep. Crystal Clear, thank you. And then um, I guess just to follow up and then I'll ask my second question. Um, are you now ramping total test volume or just increasing the mix of Medicare patients and and kind of still keeping that total test volume, uh, more or less, you know, moderating and then just, um, on your on your study with the NIH looking at uh, as asymptomatic or patients, can you just remind us? You know how many patients are in that study and you know maybe the expected readout timeline for that and and I guess really the central question. How you expect um results from that study to to drive um, adoption in that asymptomatic population?

Yeah, okay. So um, so the answer to the question is that we are not increasing our Target volume and we're not increasing the headcount of personnel, a few here and there, but for the most part we're keeping our headcount flat but we're changing the nature of our headcount. So the the nature of our sales team, as I mentioned, we're bringing in more experienced directors and that's really designed to be so that we can be scalable at the time. We put our, we put our foot on the gas, so we're trying to maintain our test volume. Um, while shifting the portion that are that are Medicare, um, and that are direct sort of physician practice call points, um, uh, during the

A larger Healthcare vents, which have, which have supported our volume over time. Um, many of those are now being converted to contracted events which um, or we expect to get paid. Uh, but we've, uh, we've taken, um, a portion of our commercial teams and more experienced ones and, um, and um, trained them and, um, have initiated an actual program to have them go, um, to be incentivized to go find, uh, to go engage with practices to drive Medicare. And, as I said, we're seeing those, we saw someone recently, uh, where, um, uh, 1 of our reps, and on the East Coast. So, you know, engage with the practice started, a initiated 1 of these settling testing programs where our nurses will come and on the very first meeting at the very first 1 of those. Uh, there were 30 patients in 28 of them were Medicare. So we know that we can actually get this process can work um that we've um, trained them appropriately. And we're, we're going to shift them.

But not in a way that we're still very cognizant of our burn. We're still maintaining uh, our stance of trying to keep our burn flat. Um, and not get ahead of ourselves, uh, until we know that we have coverage and that we can justify putting additional resources to uh, to drive both volume and revenue and and Medicare Revenue in particular. Um, I think your question just to confirm your question was about the the uh, the NIH study for a is that correct show.

Yes.

Yeah, yeah, so that study is going well, actually, it's enrolling pretty well. Uh, there are actually 2 parallel studies. There's that 1, and there's also 1, um, that's being run by the VA, which is also, um, enrolling extremely well. Um, so, uh, uh, so we, uh, we don't have a Target date for the readout. Um, the the NIH study had, I think it was 600 and 900. Um, was that was the, um, Target, um, um, uh, sample size. It's based a bit on what the positivity rate is, so it could range somewhere around. We think it's actually going to be on the lower on the lower end of that. Uh, I expect the VA, uh, will read out, uh, much more quickly. They just have a an act for, um, you know, for for Rapid enrollment. Um, so I don't have a, I don't have a Target date, but there but those studies are going extremely well. Um, you know, look at the end of the day that we we view the uh, output of those studies as a um as a longer term market experience.

Expansion opportunity that we're not dependent on this, on the results of this data to drive uh, to make you know, substantial uh, inroads into the existing Target population. Remember the 30 million uh Target population that we're pursuing now. Um,

No, that's the core population that includes symptomatic patients and uh, we're driving that based on existing guidelines um ACG and AGA guidelines. And the as our as we articulated in the nccn guidelines, and then all of those, you're referring to typically symptomatic patients. So we're excited about the study. Just to be clear that as an opportunity to expand that 30 million Target population to likely closer to 50 million. Um, for, you know, in terms of the long-term commercial opportunity. But we're not dependent on the, on this, on the read of this study for our near-term. Um, significant commercial opportunity that happens in the near term.

Of course, okay, well I appreciate you taking our questions.

Yeah, thanks. Thanks.

Thank you.

The next question comes from. Ed do with ascendant Capital? Please go ahead.

Yeah, congratulations.

Congratulations on all the progress, Dennis. I think earlier you mentioned that the variable cost of these tests is about $200. Has there been any significant inflation impact on this cost, or do you think it'll be pretty steady going forward?

We think it's pretty steady that pricing, uh, you should check particularly is, uh, over a, a, a large, uh, um, manufacturing level. So, and that expecting it to change very much, I think we've got a good economic number at this point. Uh, you know, in 50 dollars, the inflationary impact will be negligible and as far as the, um, the last supplies that are consumed during the

To get it down. We're just not pursuing that yet. Probably get AI is another another um tool that can be used in various aspects of the

uh, the process of running the assay that can lower cost over time.

Great. Well, thanks for answering my questions and I wish you guys. Good luck. Thank you.

I said, thanks Ed.

Thank you.

There are no further questions at this time, I will not turn the call over to Dr. Leon alag for closing remarks, please go ahead, sir.

Great. Thanks operator. And uh, thank you all for taking the time and for your attention this morning. We really, as always, appreciate the thoughtful and informed question by our covering analysis, gives us an opportunity to to provide additional color, um, along the way. Um, so hopefully you got a sense that, you know, that we're feel and they feel like we're in a bit of a holding pattern here, but that's really a function of our, uh, F fiscal discipline with regard to holding our burn. And um uh we're we we remain very confident that we're in the near-term processes, uh, for getting securing Medicare coverage. It's not a matter of when it's a matter of. If uh, the uh, ccli meeting was uh was just a sort of another um confirmation um and validation of that confidence. And um well as we've talked about in you know several several uh uh specific ways. We are working to lay the groundwork for a great.

Phase once we secure, um, once we secure Medicare coverage so um, hopefully um, that, that was clear. Uh, so again with that, we appreciate your time, we encourage you to keep a breast of our progress. Uh please follow our news releases, um, follow up on these calls as well, as through our website and social media and feel free to uh reach out to us. If you have any specific uh additional questions, so thanks again and everybody have a great day.

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for your participation. You may now disconnect