Q4 2025 Lucid Diagnostics Inc Earnings Call

March 26, 2026

Operator: Good morning, and welcome to the Lucid Diagnostics Q4 2025 Business Update Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. Please note this event is being recorded. I would now like to turn the conference over to Matt Riley, Vice President of Investor Relations, Lucid Diagnostics. Please go ahead.

Speaker #2: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.

Speaker #2: Please note, this event is being recorded. I would now like to turn the conference over to Matt Riley, Lucid Diagnostics Vice President of Investor Relations.

Speaker #2: Please go ahead. Thank you, operator, and good morning, everyone. Thank you for participating in today's business update call. Joining me today on the call are Dr. Lishan Aklog, Chairman and CEO of Lucid Diagnostics, along with Dennis McGrath, Chief Financial Officer.

Matt Riley: Thank you, operator, and good morning, everyone. Thank you for participating in today's business update call. Joining me today on the call are Dr. Lishan Aklog, Chairman and CEO 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 forward-looking statements in the press release. The business update, press release, and 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 statements made. Factors that could cause actual results to differ are described in the disclaimer and in our filings with the Securities and Exchange Commission.

Speaker #2: 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 forward-looking statements and the press release.

Speaker #2: The business update press release and 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 statements made.

Speaker #2: Factors that could cause actual results to differ are described in the disclaimer and in our filings with the Securities and Exchange Commission. For a list and a description of these and other important risk factors and uncertainties that may affect future operations, see Part I, Item 1A, entitled "Risk Factors" in 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 Form 8-K.

Matt Riley: For a list and a description of these and other important risk factors and uncertainties that may affect future operations, see Part I, Item 1A, entitled Risk Factors in 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 publicly update or revise any forward-looking statements to reflect changes in expectations or 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 statements. I would now like to turn the call over to Dr. Lishan Aklog, Chairman and CEO of Lucid. Ishan?

Speaker #2: Except as required by law, 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.

Speaker #2: Or that may affect the likelihood that actual results would differ from those contained in the forward-looking statements. I would now turn the conference to Dr. Lishan Aklog, Chairman and CEO of Lucid.

Speaker #2: Lishan?

Speaker #3: Thank you, Matt, and good morning, everyone. Thank you for joining us today and for your continued engagement and support. So let's begin with some key highlights for the fourth quarter and in recent weeks.

Lishan Aklog: Thank you, Matt, and good morning, everyone. Thank you for joining us today and for your continued engagement and support. Let's begin with some key highlights for Q4 and in recent weeks. We'll start with some key highlights from the commercial side. Our EsoGuard test volume in Q4 was 3,664. That exceeds our target range that we've articulated regularly about, of approximately 2,500 to 3,000 tests per quarter. That represents a 29% increase from Q3 of 2025. Revenue came in at $1.5 million for Q4. That's a 24% increase from Q3 of 2025.

Speaker #3: So, we'll start with some key highlights from the commercial side. Our EsophaGuard test volume in the fourth quarter was 3,664. That exceeds our target range that we've articulated regularly, of approximately 2,500 to 3,000 tests per quarter.

Speaker #3: And that represents a 29% increase from the third quarter of 2025. Revenue came in at $1.5 million for the fourth quarter, about a 24% increase from the third quarter.

Speaker #3: Of 2025. We continue on the commercial side to engage our team in transitioning to target both Medicare, which we talked about before, but now also the VA, which we'll talk about in quite a bit more depth. We're continuing our event-based testing to maintain the volume as prescribed.

Lishan Aklog: We continue on the commercial side to engage our team in transitioning to target both Medicare, which we talked about before, but now also the VA, which we'll talk about in quite a bit more depth. We're continuing our event-based testing to maintain the volume as prescribed. We're entering in 2026 with significant momentum as we await Medicare coverage. Let's talk about the VA. It was a really important milestone for us that we were awarded a U.S. Department of Veterans Affairs, a VA contract for EsoGuard. This was issued under the VA Federal Supply Schedule, or FSS, which centralizes ordering and includes pricing aligned with our established Medicare rate of $1,938. That was a great accomplishment.

Speaker #3: We're entering in 2026 with significant momentum as we await Medicare coverage. So let's talk about the VA. It was a really important milestone for us that we were awarded a US Department of Veteran Affairs, the VA contract for Easter Guard.

Speaker #3: This was issued under the VA Federal Supply Schedule, or FSS, which centralizes ordering and includes pricing aligned with our established Medicare rate of 1938.

Speaker #3: That was a great accomplishment. The VA, as most of you know, operates numerous 170 medical centers across the country and serves approximately 9 million enrolled veterans annually.

Lishan Aklog: The VA, as most of you know, operates numerous 170 medical centers across the country and serves approximately 9 million enrolled veterans annually. This is a very clinically relevant population. Veterans have a higher risk of GERD and esophageal disease and a higher risk of having the risk factors recommended for esophageal pre-cancer testing. We believe a significant portion of those 9 million patients will be recommended for testing. We believe that our ability to secure this and to secure it at the Medicare rate is a testament to the strength of our clinical evidence. The VA is in many ways similar to Medicare in terms of how they view the clinical evidence in approving this.

Speaker #3: This is a very clinically relevant population. Veterans have a higher risk of GERD and esophageal disease, and a higher risk of having the risk factors recommended for esophageal precancer testing.

Speaker #3: So we believe a significant portion of those 9 million patients will be recommended for testing. We believe that our ability to secure this and to secure it at the Medicare rate is a testament to the strength of our clinical evidence.

Speaker #3: The VA is in many ways similar to Medicare in terms of how they view the clinical evidence in approving this. We'll discuss the business implications of this and the rollout from a commercial point of view in a bit more detail in a moment.

Lishan Aklog: We'll discuss the business implications of this and the rollout from a commercial point of view in a bit more detail. We're also very excited that we announced positive data from the largest reported real-world experience of esophageal pre-cancer testing. This manuscript, which is now in the process of being peer-reviewed for publication, evaluated EsoGuard and EsoCheck in nearly 12,000 at-risk patients. The results from this were really outstanding. The study confirmed excellent test technical performance, rapid cell collection times, and really appropriate physician use across the board. More specifically, the technical success rate for EsoCheck cell collection was 95%, and 95% of procedures were completed in under 2 minutes. It's important that we compare that to the historical alternative to EsoCheck and to sort of explain the contrast of that.

Speaker #3: We're also very excited that we announced positive data from the largest reported real-world experience of esophageal precancer testing. This manuscript, which is now in the process of being peer-reviewed for publication, evaluated EsoGuard and EsoCheck in nearly 12,000 at-risk patients.

Speaker #3: And the results from this were really outstanding. The study confirmed excellent technical performance, rapid cell collection times, and really appropriate physician use across the board.

Speaker #3: More specifically, the technical success rate for Easter Check cell collection was 95%. And 95% of procedures were completed in under two minutes. It's important that we compare that to the historical alternative to Easter Check as a sort of explain this in contrast of that.

Lishan Aklog: The sponge-based capsule devices, which are 30 years old and somewhat antiquated, take at least 10 minutes or greater to do so. Being able to do this in a minute or two really provides an opportunity for us to roll this out in a variety of clinical settings. It was also 100% safe, in contrast to previous sponge-based devices, which have been plagued by Class 1 recalls as a result of detachments. This data across, again, a large number of patients, 12,000 in a real-world setting, really confirmed the scalability and the viability of EsoGuard on samples collected with EsoCheck.

Speaker #3: The sponge-based capsule devices, which are 30 years old and somewhat antiquated, take at least 10 minutes or greater to do so. And so being able to do this in a minute or two really provides an opportunity for us to roll this out in a variety of clinical settings.

Speaker #3: It was also 100% safe, in contrast to previous sponge-based devices, which have been plagued by Class I recalls as a result of detachments. So this data, across, again, a large number of patients—12,000 in a real-world setting—really confirmed the scalability and the viability of EsoGuard on samples collected with EsoCheck.

Speaker #3: And it sets a very high standard that any clinically viable widespread precancer. Screening tool must meet. And we really are quite skeptical that other technologies in this space will be able to reach that high standard.

Lishan Aklog: It sets a very high standard that any clinically viable, widespread pre-cancer screening tool must meet, and we really are quite skeptical that other technologies in this space will be able to reach that high standard. EsoGuard and EsoCheck clearly work in real life, in real patients, and at real-world scale. Really the study demonstrates our preparedness for broad access. It's been extremely useful for us, even in the preprint form, in our engagements and discussions with commercial payers, and even in our side conversations with Medicare. Before turning it over to Dennis, I wanted to provide a little bit more in-depth updates on two key aspects here related to reimbursement and provide some additional context on the DAUs. Let's start with reimbursement.

Speaker #3: So, EasterGuard and EasterCheck clearly work in real life, in real patients, and at real-world scale. And really, the study demonstrates our preparedness for broad access.

Speaker #3: It's been extremely useful for us, even in the preprint form, in our engagements and discussions with commercial payers and even in our side conversations with Medicare.

Speaker #3: So before turning it over to Dennis, I wanted to provide a little bit more in-depth updates on two key aspects here related to reimbursement and provide some additional context on the VA news.

Speaker #3: So let's start with reimbursement. So obviously, we're all anxiously awaiting the publication of a draft LTV for Medicare. And we are in really highly confident that this is close.

Lishan Aklog: Obviously, we're all anxiously awaiting the publication of a draft LTB for Medicare. We're really highly confident that this is close. We've had ongoing engagements in person and otherwise with the leadership of MolDX. We continue to feel strongly and believe that the MolDX group and others view the CAC meeting, the Contractor Advisory Committee meeting that occurred in September of last year, as being a home run with 11 clinicians unequivocally, in somewhat unprecedented fashion, all aligning with the clinical validity and clinical utility evidence that we demonstrated. We believe the fact that we're still waiting for this is really related to, we have good reason to believe, logistical delays. There have been other LTB that have been held up.

Speaker #3: We've had ongoing engagements, in person and otherwise, with the leadership of Moldex. We continue to feel strongly and believe that the Moldex group and others view the CAC meeting—the Contractor Advisory Committee meeting—that occurred in September of last year as being a home run, with 11 clinicians unequivocally and, in a somewhat unprecedented fashion, all aligning with the clinical validity and clinical utility evidence that we demonstrated.

Speaker #3: So, we believe the fact that we're still waiting for this is really related to—we have good reason to believe—a logistical delay.

Speaker #3: There have been other LTVs that have been held up. We have some positive signs in that several LTVs that were in the CAC meeting process in the late summer of last year have started to come across the finish line.

Lishan Aklog: We have some positive signs and that some of the several LCD that were in the CAC meeting process in the late summer of last year have started to come across the finish line, and we really believe that we're next. The next steps, just to remind everybody, once we get this publication of this draft LCD that proposes coverage for EsoGuard, there'll be a mandatory 45-day public comment period. After that public comment period, which includes the public meeting, there'll be a publication of a final LCD and an official notice in the register of EsoGuard coverage. Once that final LCD and that official notice is complete, then Lucid will be eligible for payments going back on Medicare claims dating back 1 year.

Speaker #3: And we really believe that we're next. So the next steps, just to remind everybody, once we get this publication of this draft LTV, that proposes coverage for Easter Guard, there'll be a mandatory 45-day public comment period.

Speaker #3: After that public comment period, which includes the public meeting, there'll be a publication of a final LTV and an official notice in the register of Easter Guard coverage.

Speaker #3: Once that final LTV and that official notice are complete, then Lucid will be eligible for payments going back on Medicare claims dating back one year.

Speaker #3: We're also making as we're awaiting here, as everybody else is for Medicare coverage, we're making it clear that we're continuing to push forward on two very two other very important fronts on the reimbursement and the commercial side.

Lishan Aklog: We're also making, you know, as we're waiting here, as everybody else is, for Medicare coverage. We want to declare that we're continuing to push forward on two other very important fronts on the reimbursement on the commercial side. Let's catch up a little bit on the commercial side. As we hinted at last time, and now it's become clearer, that we have some very positive engagements with several of the large payers. The most notable one is with UnitedHealthcare. As we noted at our last meeting, UnitedHealthcare included in their guideline coverage policy for endoscopy for EGD in this condition the fact that a positive EsoGuard test was an appropriate indicator for coverage of the EGD.

Speaker #3: Let's catch up a little bit on the commercial side. So as we hinted at last time, and now it's become clearer that we are we have some.

Speaker #3: Very positive engagements with several of the large payers the most notable one is with United Healthcare. So as we noted at our last meeting, United Healthcare included in their coverage policy for endoscopy for EGD in this condition the fact that a positive Easter Guard test was an appropriate indicator for coverage of the EGD.

Lishan Aklog: We viewed that, and our consultants and others viewed that as a sign of a effectively de facto coverage understanding. We're viewing it as that, and we're proceeding accordingly. We have entered into the credentialing process with UnitedHealthcare, and that positions us to enter into contracting discussions as we once that's secure. There are some other examples where that's also the case that's a little bit more complicated, but that includes Cigna and potentially Anthem, where we believe that we have the opportunity to leverage policies related to endoscopy to secure in-network coverage of EsoGuard, and we're pursuing those aggressively. What that allows us to do is to have an alternative pathway that is not typically available for molecular diagnostic tests.

Speaker #3: And we viewed that and our consultants and others viewed that as a sign of an effectively de facto coverage of this test. So we're viewing it as that, and we're proceeding accordingly.

Speaker #3: We have entered into the credentialing process with United Healthcare, and that positions us to enter into contracting discussions as we once that's secure. There are some other examples where that's also the case, though, a little bit more complicated, but that includes Cigna and potentially Anthem, where we believe that we have the opportunity to leverage policies related to endoscopy to secure in-network coverage of Easter Guard.

Speaker #3: And we're pursuing those aggressively. What that allows us to do is to have an alternative pathway that is not typically available for molecular diagnostic tests.

Lishan Aklog: Molecular diagnostic tests typically have to work through the laboratory benefit management, groups, the LBMs, and secure coverage through those, groups that work on behalf of other payers and, issue coverage policies accordingly. That's not to say that we don't remain deeply engaged with the LBMs, we do. In the situations where we have a pathway to securing in-network payment, and contracting we, through the EGD policies, we'll continue to do that, but we'll also continue to engage with the laboratory benefit. Those engagements have actually been very positive. There's been very positive feedback on our clinical evidence, on our clinical validity, on our clinical utility data and all of that description laid out. The one additional challenge with the commercial payers in general is that unlike Medicare, they do look at cost-effectiveness data.

Speaker #3: Molecular diagnostic tests typically have to work through the laboratory benefit management groups, the LBMs, and secure coverage through those groups that work on behalf of other payers.

Speaker #3: And issue coverage policies accordingly. That's not to say that we don't remain deeply engaged with the LBMs. We do. And in the situations where we have a pathway to securing in-network payment and contracting, through the EGD policies, we'll continue to do that.

Speaker #3: But we'll also continue to engage with the laboratory benefit. And those engagements have actually been very positive. There's been very positive feedback on our clinical evidence, on our clinical validity, on our clinical utility data, and all of that appears to be locked down.

Speaker #3: The one additional challenge with the commercial payers in general is that, unlike Medicare, they do look at cost-effectiveness data. We believe we have solid data already existing on that.

Lishan Aklog: We believe we have solid data already existing on that, but we're continuing to supplement that with some more sophisticated modeling on cost effectiveness that will be available for us to supplement part of these discussions in the, you know, in the coming quarters. We have secured, we believe, our first LCD positive policy coverage. Can't disclose that yet. That'll be coming up in the next couple of months. We had a very good conversation with the largest LCD recently and feel like we have a pathway forward for coverage on that front.

Speaker #3: But we're continuing to supplement that with some more sophisticated modeling on cost-effectiveness that will be available for us to supplement these discussions in the coming quarters.

Speaker #3: We do we have secured, we believe, our first LBM positive policy coverage. Can't disclose that yet. That'll be coming up in the next couple of months.

Speaker #3: And we had a very good conversation with the largest LBM recently and feel like we have a pathway forward for coverage on that front.

Lishan Aklog: We also continue to have extensive engagement with the Blue Cross Blue Shield Association, which is the umbrella organization over multiple Blue Cross Blue Shield plans, and those conversations continue to be in-depth and engaged, and we think they'll result in future positive coverage policy from regional Blue Cross plans. In addition to that, we're also remain engaged with IDNs, with integrated networks, and there are several large networks across the country, one of them, a large one on the West Coast that we have had very good engagements with. We have good clinical champions within those. Those engagements tend to be somewhat different than the engagements with the traditional commercial payers because they involve a more integrated, multifaceted engagement with both clinicians as well as the administrators there.

Speaker #3: We also continue to have extensive engagement with the Blue Cross Blue Shield Association, which is the umbrella organization over multiple Blue Cross Blue Shield plans.

Speaker #3: And those conversations continue to be in-depth and engaged, and we think they'll result in future positive coverage policies from regional Blue Cross plans. In addition to that, we're also remain engaged with IDS, with Integrated Networks, and there are several large networks across the country.

Speaker #3: One of them, a large one on the West Coast, that we have had very good engagements with. We have good clinical champions within those.

Speaker #3: Those engagements tend to be somewhat different than the engagements with the traditional commercial payers, because they involve a more integrated, multifaceted engagement with both clinicians as well as the administrators there.

Lishan Aklog: Those are those look good, and we feel like we'll have some positive news on that front in the near future. Again, to reiterate, as we're waiting for Medicare, we're continuing to work hard on the commercial side. We believe that there are some near-term wins there and that the pipeline with our upgraded team is now very robust, and we'll continue to start seeing some wins over the coming quarters. Let's talk about the VA system. Couldn't really be more excited about this. This was an important win for our team. Getting on the FSS was important. Getting on the FSS without discounting relative to Medicare, acknowledging and validating the Medicare price and our clinical evidence was a big win.

Speaker #3: And those look good, and we feel like we'll have some positive news on that front in the near future. So again, to reiterate, as we're waiting for Medicare, we're continuing to work hard on the commercial side.

Speaker #3: We believe that there are some near-term wins there, and that the pipeline with our upgraded team is now very robust. We'll continue to start seeing some wins over the coming quarters.

Speaker #3: Let's talk about the VA system. Couldn't really be more excited about this. This was an important win for our team—getting on the FSS was important. Getting on the FSS without discounting relative to Medicare, acknowledging and validating the Medicare price.

Speaker #3: And our clinical evidence was a big win. And what that now allows us to do is allows our team to engage with individual VA centers.

Lishan Aklog: What that now allows us to do allows our team to engage with individual VA centers. We have a very robust pipeline of such engagements with individual centers across the country. Those engagements have been positive. We've been able to leverage the fact that we have solid data in a VA population. That's the Dr. Greer study from the Louis Stokes Cleveland VA Medical Center that's published, part of our clinical evidence package being in the VA population, very powerful as we engage. We know that the dynamics within the VA are different than they are at other centers, that the VA can often be resource-limited with regard to procedures. EGD resources, in particular, are limited, that the wait times and timelines to get an EGD, particularly a screening EGD, can be high.

Speaker #3: We have a very robust pipeline of such engagements, with individual centers across the country. Those engagements have been positive. We've been able to leverage the fact that we have solid data in a VA population—that's the Dr. Greer study from the Lewis Stokes VA Center in Cleveland that's published, part of our clinical evidence package being in the VA population, very powerful.

Speaker #3: And as we engage and we know that the dynamics within the VA are different than they are at other centers, that the VA can often be resource limited with regard to procedures, EGD resources in particular are limited, that the wait times and timelines to get an EGD, particularly a screening EGD, can be high.

Lishan Aklog: EsoGuard really fits in nicely within this clinical ecosystem as a test that will allow for broader screening without, and triaging only those who are positive EsoGuard, only those who have the highest yield to EGD. The process is fairly straightforward. Since we're on the FSS now, we can engage with and find clinical champions at that center. We engage in contracting, have a PO issued at the time. We do need to coordinate cell collection at these sites, and we have a variety of pathways to do that. We've also figured out how to allocate our commercial resources accordingly.

Speaker #3: And so Easter Guard really fits in nicely within this clinical ecosystem, as a test that will allow for broader screening without and triaging only those who are positive Easter Guard, only those who have the highest yield to EGD.

Speaker #3: The process is fairly straightforward. Since we're on the FSS now, we can engage with fine clinical champions at that center. We engage in contracting, have a PO issued.

Speaker #3: At the time, we do need to coordinate cell collection at these sites. And we have a variety of pathways to do that. We've also figured out how to allocate our commercial resources accordingly.

Lishan Aklog: As we've talked about before, prior to the VA, when it became clear that Medicare coverage was imminent, we've made some changes to our commercial team to shift them towards, and shift their incentives towards enhancing our Medicare, the percentage of our population, the percentage of tests that we do being Medicare, so that once we get Medicare, we can put our foot on the gas and drive that Medicare business. We're reallocating our existing resources in the same way. We're not increasing our resources because we're very cognizant of our cash burn and our OPEX right now, but we are reallocating resources to make sure we're taking advantage of the opportunity with the VA.

Speaker #3: As we've talked about before, prior to the VA, when it became clear that Medicare coverage was imminent, we've made some changes to our commercial team to shift them towards and shift their incentives towards enhancing our Medicare the percentage of our population the percentage of tests that we do being Medicare, so that once we get Medicare, we can put our foot on the gas and drive that Medicare business.

Speaker #3: We're reallocating our existing resources in the same way. We're not increasing our resources because we're very cognizant of our cash burn and our OPEX right now.

Speaker #3: But we are reallocating resources to make sure we're taking advantage of the opportunity with the VA. So, we've appointed one of our senior leaders on the commercial team to be a national director for the VA.

Lishan Aklog: We've appointed one of our senior leaders on the commercial team to be a national director for the VA, and he's working in close collaboration with our VP of market access to drive these engagements with the VA, turn them into contracts, turn them into PO, test volume, and ultimately revenue. That happens both at that level, at the senior leadership level, but also in the field.

Speaker #3: And he's working in close collaboration with our VP of Market Access to drive these engagements with the VA, turn them into contracts, turn them into PO, test volume, and ultimately revenue.

Speaker #3: And that happens both at that level, at the senior leadership level, but also in the field. So everybody in the field, within their region, they're incentivized to not just engage with their primary care physicians or gastroenterologists or their typical call points or even with fire departments, but they're also incentivized within their region and every region has a VA to develop relationships with physicians and identify clinician champions that they can hand over to the senior leadership team and on the more strategic side.

Lishan Aklog: Everybody in the field, within their region, they're incentivized to not just engage with their primary care physicians or gastroenterologists or their typical call points or even with fire departments, but they're also incentivized within their region, and every region has a VA, to develop relationships with physicians and identify clinician champions that they can hand over to the senior leadership team and, on the more strategic side. All of this activity on the commercial team, all of the adjustments we're making, all the adjustments we've made on the Medicare side and now we're making on the VA side, we're really looking forward to those bearing fruit in the coming weeks and quarters.

Speaker #3: So all of this activity on the commercial team, all of the adjustments we're making, all the adjustments we've made for on the Medicare side, and now we're making on the VA side, we're really looking forward to those bearing fruit in the coming weeks and quarters.

Lishan Aklog: Really to summarize from a commercial point of view, throughout 2025, we've demonstrated there's a market for EsoGuard, that we can maintain a steady volume that allows us to remain engaged with commercial payers, and that engagement with the commercial payers is starting to pay off into progress towards securing in-network coverage. We've demonstrated that we know how to generate demand. We know how to get physician adoption. We're increasingly improving our ability to engage with health systems, and our ability to engage with health systems will be accelerated dramatically once we get Medicare because the lack of Medicare is an obstacle to engaging with health systems.

Speaker #3: So really, to summarize from a commercial point of view, throughout 2025, we've demonstrated there's a market for Esogard, that we can maintain a steady volume that allows us to remain engaged with commercial payers.

Speaker #3: And that engagement with the commercial payers is starting to pay off into progress towards securing network coverage. We've demonstrated that we know how to generate demand.

Speaker #3: We know how to get physician adoption. We're increasingly improving our ability to engage with health systems. And our ability to engage with health systems will be accelerated dramatically once we get Medicare, because the lack of Medicare is an obstacle to engaging with health systems.

Lishan Aklog: All of that groundwork has really been laid really nicely, culminating in the data that will be published soon in a pub has been released on the real-world experience. That foundation, 2025 was a really important year for us in laying that foundation. As we move into 2026, our focus is on converting the lessons that we've learned, converting our ability to generate that demand into revenue, and the focus is on the VA and Medicare, the VA right now and then on Medicare once we secure that coverage. That progress with the VA, with our commercial payers and with Medicare really puts us in a great position to turn the corner here with regard to our commercial experience and track record and to ultimately drive.

Speaker #3: And all of that groundwork has really been laid really nicely. It culminating in the data that the that will be published soon and is public has been released, on the real-world experience.

Speaker #3: So that foundation—2025 was a really important year for us in laying that foundation. As we move into 2026, our focus is on converting the lessons that we've learned, converting our ability to generate that demand into revenue, and the focus is on the VA and Medicare.

Speaker #3: The VA right now, and then on Medicare once we secure that coverage. And so that progress with the VA, with our commercial payers, and with Medicare really puts us in a great position to turn the corner here with regard to our commercial experience.

Speaker #3: And track record, and to ultimately help us be in a position where we can put on the gas and drive test volume and revenue accordingly.

Lishan Aklog: Help us be in a position where we can put our foot on the gas and drive test volume and revenue accordingly. Everything we've done to date, all the real world experience that we've been able to document, our full body of clinical evidence puts us in a great position to do so. You know, one aspect of this that comes up regularly has to do with EHR integration. The timing for this is perfect because we believe we're at an inflection point. In this day and age, in 2026, for a molecular diagnostic test to be implemented clinically, it's not sufficient just to get physician adoption. Having EHR integration, which facilitates not only the ordering of the test, but the delivery of the test results.

Speaker #3: And everything we've done to date, all the real-world experience that we've been able to document, our full body of clinical evidence, puts us in a great position to do so.

Speaker #3: One aspect of this that comes up regularly has to do—and the timing for this is perfect because we believe we're at an inflection point—has to do with EHR integration.

Speaker #3: In order, and in this day and age—in 2026—for a molecular diagnostic test to be implemented clinically, it's not sufficient just to get physician adoption.

Speaker #3: Having EHR integration would facilitate not only the ordering of the test, but the delivery of the test results. And in our case, in fact, facilitating the identification of patients through the identification of risk factors. EHR integration can be a major boost to commercial activities.

Lishan Aklog: In our case, in fact, facilitating the identification of patients through the identification of risk factors, EHR integration is a major boost to commercial activity. We have, in addition to this other work on the commercial side, on the VA side, and on Medicare, started to put some resources to work on EHR integration. Now, at this stage, we're doing so using systems that are more cost-effective to us, but that still allow us to, when we engage with the health system, for example, engage in such a way so that the EHR, the Epic instance or whatever other system that the health system happens to be using, we can actually offer the ordering physicians the ability to order the test and the ability to receive the results.

Speaker #3: So, we have, in addition to this other work on the commercial side, on the VA side, and on Medicare, we've started to put some resources to work on EHR integration.

Speaker #3: Now, at this stage, we're doing so using systems that are more cost-effective to us, but that still allow us to when we engage with the health system, for example, to engage in such a way so that the EHR and the Epic instance or whatever other system that health system happens to be using can

Speaker #1: Actually offer the ordering physicians the ability to order the test and the ability to receive the results. Once we are in a position where we have accelerated volume and we're further along, we're already in a position to invest in the...

Lishan Aklog: Once we are in a position where we have accelerated volume and we're further along, we're already in a position to invest in the most aggressive way to pursue EHR integration, which is to actually engage with Epic directly, and we're already well-positioned to do that at the appropriate time. Again, hopefully, you know, again, we're all waiting for Medicare. Hopefully, that's any day now, but hopefully, you get a sense as to the extensive work this team has put in over the last quarter to set us up for a lot of success this year, we're doing now and once we get Medicare. With that, I'll pass it over to Dennis to provide an update on the financials.

Speaker #1: The most aggressive way to pursue EHR integration, which is to actually engage with Epic directly on Epic. And already, we're well positioned to do that at the appropriate times.

Speaker #1: So again , hopefully again , we're all waiting for Medicare . Hopefully that's any day now , but hopefully you get a sense as to the extent of work this team has put in over the last quarter to set us up for a lot of success this year .

Speaker #1: We're doing that now, and once we get medical, so with that, I'll pass it over to Dennis to provide an update on the financials.

Dennis McGrath: Thanks, Lishan, and good morning, everyone. The summary financial results for Q4 and the year were reported in our press release that's been distributed. On the next three slides, I wanna emphasize a few key financial highlights from Q4, but I encourage you to consider these remarks in the context of the full disclosures covered in our annual report on Form 10-K. With regard to the balance sheet, cash at year-end, December 31, 2020, was $34.7 million. The average burn rate, including cash interest on the debt for 2020 was $11.1 million per quarter, with Q4 a bit higher as we made investments in our sales team and market access staffing totaling about $500 thousand in Q4, and we settled some annual compensation obligations during the period.

Speaker #2: Thanks. Good morning, everyone. The summary financial results for the fourth quarter of the year were reported in our press release. That's been distributed on the next three slides.

Speaker #2: One, I'll emphasize a few key financial highlights from the fourth quarter, but I encourage you to consider these remarks in the context of the full disclosures covered in our Annual Report on Form 10-K.

Speaker #2: With regard to the balance sheet , cash at year end December 31st was 34.7 million . The average burn rate , including cash interest on the debt for 2025 , was 11.1 million per quarter , with the fourth quarter a bit higher as we made investments in our sales team and market access , staffing totaling about 500,000 in the fourth quarter .

Speaker #2: And we settled some annual compensation obligations during the period . You recall at the end of 2024 , we refinanced our convertible debt into a $22 million , five year note .

David Brown: You'll recall at the end of 2024, we refinanced our convertible debt into a $22 million 5-year note, interest only at 12% with a $1 conversion price, which is held by long-term shareholders. The fair value of the convertible notes in the amount of $24 million at year-end is really the only other substantive change from the previously reported balances at the end of Q3. The fair value increase of $1.7 million in the quarter reflects a mark-to-market quarterly adjustment in parallel with the common stock price changes between the periods. The fair value increase is also a substantial part of the Q4 expense charge of $2.4 million, reflected in other income in the P&L.

Dennis McGrath: You'll recall at the end of 2024, we refinanced our convertible debt into a $22 million 5-year note, interest only at 12% with a $1 conversion price, which is held by long-term shareholders. The fair value of the convertible notes in the amount of $24 million at year-end is really the only other substantive change from the previously reported balances at the end of Q3. The fair value increase of $1.7 million in the quarter reflects a mark-to-market quarterly adjustment in parallel with the common stock price changes between the periods. The fair value increase is also a substantial part of the Q4 expense charge of $2.4 million, reflected in other income in the P&L.

Speaker #2: Interest only at 12% , with a $1 conversion price , which is held by long term shareholders . The fair value of the convertible notes in the amount of 24 million at year end is really the only other substantive change from the previously reported balances at the end of the third quarter , the fair value increase of 1.7 million in the quarter reflects a marked to market quarterly adjustment in parallel with the common stock price changes between the periods .

Speaker #2: The fair value increase is also a substantial part of the fourth quarter expense charge of 2.4 million , reflected in other income in the PNL and for the year .

David Brown: For the year, the year-over-year change of $5.4 million reflects a 33% increase in the stock price over the year and also drives a similar non-cash expense charge to the annual P&L in the amount of $7.7 million. Shares outstanding included unvested RSAs and conversion of the Series B preferred as of last week are approximately 177 million. After the conversion of the Preferred Series B on 13 March, there were approximately 13 million common shares held in abeyance due to the 4.99% ownership blockers in the Series B certificate of designation. If these abeyance shares had been issued, common shares outstanding would be about 190 million.

Dennis McGrath: For the year, the year-over-year change of $5.4 million reflects a 33% increase in the stock price over the year and also drives a similar non-cash expense charge to the annual P&L in the amount of $7.7 million. Shares outstanding included unvested RSAs and conversion of the Series B preferred as of last week are approximately 177 million. After the conversion of the Preferred Series B on 13 March, there were approximately 13 million common shares held in abeyance due to the 4.99% ownership blockers in the Series B certificate of designation. If these abeyance shares had been issued, common shares outstanding would be about 190 million.

Speaker #2: The year-over-year change of $5.4 million reflects a 33% increase in the stock price over the year and also drives a similar non-cash expense charge to the annual P&L.

Speaker #2: In the amount of 7.7 million . Shares outstanding included Unvested , Rsas and conversion of the series B preferred . As of last week , or approximately 177 million after the conversion of the preferred series B on March 13th , there were approximately 13 million common shares held in abeyance due to the 4.99% ownership blockers in the series B certificate of Designation .

Speaker #2: If these abeyance shares had been issued, common shares outstanding would be about 190 million. The GAAP outstanding shares as of December 31 of 131 million are reflected on the slide, as well as on the face of the balance sheet and the 10-K.

David Brown: The GAAP outstanding shares as of December 31 of 131 million are reflected on the slide as well as on the face of the balance sheet in the 10-K. GAAP shares do not reflect unvested RSA amounts. At present, PAVmed continues to be the single largest common shareholder of Lucid Diagnostics, with ownership of approximately 18% of the common shares outstanding. Although PAVmed no longer has voting control of Lucid, PAVmed, together with the board and management, still have a significant influence over Lucid with approximately a 25% voting interest. Lucid Series B-1 preferred securities convert to common shares in a couple weeks on May 6. Including the dividends owed on the Series B-1, an additional 16.8 million common shares will be issued, subject to the 4.99% beneficial ownership block and the certificate of designation.

Dennis McGrath: The GAAP outstanding shares as of December 31 of 131 million are reflected on the slide as well as on the face of the balance sheet in the 10-K. GAAP shares do not reflect unvested RSA amounts. At present, PAVmed continues to be the single largest common shareholder of Lucid Diagnostics, with ownership of approximately 18% of the common shares outstanding. Although PAVmed no longer has voting control of Lucid, PAVmed, together with the board and management, still have a significant influence over Lucid with approximately a 25% voting interest. Lucid Series B-1 preferred securities convert to common shares in a couple weeks on May 6. Including the dividends owed on the Series B-1, an additional 16.8 million common shares will be issued, subject to the 4.99% beneficial ownership block and the certificate of designation.

Speaker #2: GAAP shares do not reflect unvested RSA amounts at present. Pavement continues to be the single largest common shareholder of Lucid Diagnostics Inc., with ownership of approximately 18% of the common shares outstanding.

Speaker #2: Although PavMed no longer has voting control of Lucid, PavMed, together with the board and management, still have a significant influence over Lucid.

Speaker #2: With approximately a 25% voting interest, Lucid Series B1 Preferred Securities convert to common shares in a couple of weeks, on May 6th. Including the dividends owed on the Series B1, an additional 16.8 million common shares will be issued, subject to the 4.99% beneficial ownership block on the Certificate of Designation.

David Brown: With regard to the P&L, this slide compares this year's Q4 to last year's Q4 and year over year on certain key items. I trust you will review the information and my comments in light of the cautionary disclosure in the bottom of the slide about supplemental information, particularly on non-GAAP information. Our sales team sold over 3,600 tests for the Q4 with a billable value over $9 million, resulting in a recognized revenue of $1.5 million, reflecting a sequential 29% increase in test volume and 24% sequential recognized revenue for the period. With new investors once again joining our 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.

Dennis McGrath: With regard to the P&L, this slide compares this year's Q4 to last year's Q4 and year over year on certain key items. I trust you will review the information and my comments in light of the cautionary disclosure in the bottom of the slide about supplemental information, particularly on non-GAAP information. Our sales team sold over 3,600 tests for the Q4 with a billable value over $9 million, resulting in a recognized revenue of $1.5 million, reflecting a sequential 29% increase in test volume and 24% sequential recognized revenue for the period. With new investors once again joining our 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.

Speaker #2: With regard to the P&L, this slide compares this year's fourth quarter to last year's fourth quarter, and year over year, on certain key items.

Speaker #2: I trust you will review the information and my comments in light of the cautionary disclosure at the bottom of the slide about supplemental information, particularly on non-GAAP information. Our sales team sold over 3,600 tests for the fourth quarter with a billable value of over $9 million, resulting in recognized revenue of $1.5 million. This reflects a sequential 29% increase in test volume and a 24% sequential increase in recognized revenue for the period.

Speaker #2: With new investors once again joining our call , it's worth repeating what we've communicated in the past quarter about revenue recognition , a key determinant in how revenue is recognized at this point in our reimbursement journey is the probability of collection .

David Brown: Therefore, due to the fact that we are in the transitional stages of our reimbursement process means revenue recognition for the majority of our claims submitted to whether 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 or the jargon of GAAP's ASC 606 revenue recognition guidelines, and 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 and are fixed and determinable, will be recognized as revenue when our contracted service is delivered.

Dennis McGrath: Therefore, due to the fact that we are in the transitional stages of our reimbursement process means revenue recognition for the majority of our claims submitted to whether 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 or the jargon of GAAP's ASC 606 revenue recognition guidelines, and 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 and are fixed and determinable, will be recognized as revenue when our contracted service is delivered.

Speaker #2: Therefore , due to the fact that we are in the transitional stages of our reimbursement process , means revenue recognition for the majority of our claims submitted to whether 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 .

Speaker #2: As you'll see in our 10-K, this is called variable consideration in the jargon of GAAP’s ASC 606 Revenue Recognition guidelines, and 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, and their fixed and determinable amounts, revenue will be recognized as our contracted service is delivered.

David Brown: Generally, that means when the report is delivered to the referring physician, which will be the case with the VA. It's important to note that pending Medicare approval decision impacts 40% to 50% of our addressable patient population and therefore will have a significant impact on our future revenue recognition analysis. Furthermore, for tests performed on Medicare patients with dates of service within 12 months of a final positive Medicare policy will also get paid within a reasonable time frame after the final policy is issued. With regard to the remainder of the P&L, the variation analysis for Q4 subsequently aligns with the year-over-year analysis, so I'll focus my comments on the annual changes and happily answer any specific questions on Q4 in the Q&A.

Dennis McGrath: Generally, that means when the report is delivered to the referring physician, which will be the case with the VA. It's important to note that pending Medicare approval decision impacts 40% to 50% of our addressable patient population and therefore will have a significant impact on our future revenue recognition analysis. Furthermore, for tests performed on Medicare patients with dates of service within 12 months of a final positive Medicare policy will also get paid within a reasonable time frame after the final policy is issued. With regard to the remainder of the P&L, the variation analysis for Q4 subsequently aligns with the year-over-year analysis, so I'll focus my comments on the annual changes and happily answer any specific questions on Q4 in the Q&A.

Speaker #2: Generally, that means when the report is delivered to the referring physician, which will be the case with the VA, it's important to note that, pending Medicare approval, the decision impacts 40% to 50% of our addressable patient population.

Speaker #2: Therefore , will have a significant impact on our future revenue recognition analysis . Furthermore , for test performance , Medicare patients with dates of service within 12 months of a final positive , Medicare policy will also get paid within a reasonable time frame after the final policy is issued .

Speaker #2: With regards to the remainder of the P&L, the variation analysis for the fourth quarter substantively aligns with the year-over-year analysis.

Speaker #2: I'll focus my comments on the annual changes and happily answer any specific questions over the last quarter . In the Q&A on a non-GAAP basis , total operating expenses increased from 44.3 million in 20 24 to 40 8.7 million in 2025 , an increase of 4.4 million .

David Brown: On a non-GAAP basis, total operating expenses increased from $44.3 million in 2024 to $48.7 million in 2025, an increase of $4.4 million comprised of the sum of commercial expenses, largely increases in sales personnel and market access staff in the amount of $1.6 million, with the remainder in G&A, which includes approximately $1.6 million in financing costs together with $1.8 million in annual compensation expenditures. Our non-GAAP loss for the year of $44 million versus $40 million in the prior year is largely related to the same items I just mentioned. The non-GAAP net loss per share of $0.10 in the Q4 and $0.43 for the year is better by almost half versus the same periods in 2024.

Dennis McGrath: On a non-GAAP basis, total operating expenses increased from $44.3 million in 2024 to $48.7 million in 2025, an increase of $4.4 million comprised of the sum of commercial expenses, largely increases in sales personnel and market access staff in the amount of $1.6 million, with the remainder in G&A, which includes approximately $1.6 million in financing costs together with $1.8 million in annual compensation expenditures. Our non-GAAP loss for the year of $44 million versus $40 million in the prior year is largely related to the same items I just mentioned. The non-GAAP net loss per share of $0.10 in the Q4 and $0.43 for the year is better by almost half versus the same periods in 2024.

Speaker #2: Comprised of the sum of commercial expenses, largely increases in sales personnel and market access. Staff in the amount of $1.6 million, with the remainder in G&A, which includes approximately $1.6 million in financing costs.

Speaker #2: Together with $1.8 million in annual compensation expenditures. Our non-GAAP loss for the year of $44 million versus $40 million in the prior year is largely related to the same items.

Speaker #2: I just mentioned . The non-GAAP net loss per share of $0.10 in the fourth quarter , and $0.43 for the year is better by almost half versus the same periods in 24 .

David Brown: With regard to the operating expenses, this slide is a graphic illustration of our operating expenses after eliminating non-cash expenses for the periods reflected. Non-GAAP operating expenses of $14.1 million are higher than the average of $11.6 million for the last four quarters, largely related to the compensation expenses related to increased personnel in sales, and market access, and annual compensation related plans. Let me close with a few reimbursement highlights for Q4 as we've done in past quarters. In Q4, we sold over 3,600 tests, reflecting about $9 million pro forma revenue. During Q4, we recognized revenue about 17% of that amount or $1.5 million. Of that amount, about 49% was from claims submitted in prior quarters, with the longest dated item from over two years ago.

Dennis McGrath: With regard to the operating expenses, this slide is a graphic illustration of our operating expenses after eliminating non-cash expenses for the periods reflected. Non-GAAP operating expenses of $14.1 million are higher than the average of $11.6 million for the last four quarters, largely related to the compensation expenses related to increased personnel in sales, and market access, and annual compensation related plans. Let me close with a few reimbursement highlights for Q4 as we've done in past quarters. In Q4, we sold over 3,600 tests, reflecting about $9 million pro forma revenue. During Q4, we recognized revenue about 17% of that amount or $1.5 million. Of that amount, about 49% was from claims submitted in prior quarters, with the longest dated item from over two years ago.

Speaker #2: With regard to the operating expenses, this slide is a graphic illustration of our operating expenses. After eliminating non-cash expenses for the period, subtracted non-GAAP operating expenses of $14.1 million.

Speaker #2: I higher than the average of 11.6 million for the last four quarters , largely related to the compensation expenses related to increased personnel and sales and market access , and annual compensation related plans .

Speaker #2: Let me close with a few reimbursement highlights for the fourth quarter . As we've done in past quarters . In the fourth quarter , we sold 3600 over 3600 tests , reflecting about $9 million of pro forma revenue during the fourth quarter .

Speaker #2: We recognized revenue of about 17% of that amount, or $1.5 million. Of that amount, about 49% was from claims submitted in prior quarters, with the longest dated item from over two years ago.

David Brown: Of the claims submitted in Q4, about 76% were adjudicated, 24% are pending. Out of the 76% that have been adjudicated, about 50%, about half of them, resulted in an allowable amount by the insurance company with an average of $1,623 per test, which bumps up against the Medicare rate. Of those denied, most fit into one of three buckets, medically not necessary or deemed to be not medically necessary, or require a prior authorization, or lastly, require additional medical records. The balance are considered to be non-covered. With that, operator, let's open it up for questions.

Dennis McGrath: Of the claims submitted in Q4, about 76% were adjudicated, 24% are pending. Out of the 76% that have been adjudicated, about 50%, about half of them, resulted in an allowable amount by the insurance company with an average of $1,623 per test, which bumps up against the Medicare rate. Of those denied, most fit into one of three buckets, medically not necessary or deemed to be not medically necessary, or require a prior authorization, or lastly, require additional medical records. The balance are considered to be non-covered. With that, operator, let's open it up for questions.

Speaker #2: Of the claims submitted in the fourth quarter, about 76% were adjudicated and 24% are pending. Out of the 76% that have been adjudicated, about 50%.

Speaker #2: About half of them resulted in an allowable amount by the insurance company , with an average of $1,623 per test , which bumps up against the Medicare rate of those denied , most fit into one of three buckets medically not necessary or deemed to be not medically necessary or require a prior authorization .

Speaker #2: Or , lastly , require additional medical records . The balance are considered to be non-covered with that . Operator , let's open it up for questions

Operator: 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 1 on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Mark Massaro with BTIG. Your line is now open.

Speaker #3: 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 one on your touchtone phone .

Speaker #3: You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two.

Speaker #3: If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please. For your first question. Your first question comes from Mark Massaro with BTIG.

Speaker #3: Your line is now open.

Lishan Aklog: Morning, Mark.

Mark Massaro: Hey, guys.

Lishan Aklog: Mark.

Dennis McGrath: Mark.

Speaker #4: Morning , Mark . Hey guys . Hey . Good morning . Good morning . Thanks for taking the question . So I wanted to start with the the nice increase in volumes sequentially .

Mark Massaro: Hey, good morning. Thanks for taking the questions. I wanted to start with the nice increase in volume sequentially. What I'm curious about, because it's, let's just call it about 800 up sequentially, I'm wondering how much of that might have come from the VA versus any other targeting efforts that might have been new in the quarter. Do you think that this could be a new run rate, or should we continue to think a volume trajectory in that 2,500 to 3,000 range?

Speaker #4: And what I'm curious about because it's let's just call it about 800 up sequentially . I'm wondering how much of that might have come from the , the VA versus any other targeting efforts that might have been new in the quarter .

Speaker #4: And do you think that this could be a new run rate, or should we continue to think of volume trajectory in that 2,500 to 3,000 range?

Lishan Aklog: Yeah. Thanks for the question. I think we might see that as a new run rate, but it's not because that represents the VA. That's certainly. We're in the early stages of engaging with individual VAs. We do think, believe that we'll start seeing some meaningful volume come from the VA on top of the volume we've already established. You know, I wouldn't discount two things. One is the fact that, you know, the productivity of our team as we become more established continues to improve over time.

Speaker #1: Yeah, thanks for the question. So I think we might see that as a new run rate, but it's not because that represents the VA.

Speaker #1: That's that's certainly we're in the early stages of engaging with individual VA's , but we do think believe that we'll start seeing some meaningful volume come , come from the VA on top of , on top of the volume .

Speaker #1: We've already established . You know , I think as we said in previous quarters , the quarter to quarter volume in our kind of the prior paradigm , which was heavily focused on event based testing , tended to be variable quarter to quarter based on on just the size of testing , but I wouldn't discount do two things .

Speaker #1: One is the fact that the productivity of our team , as we become more established , continues to improve over time . But also that as we're transitioning and moving with our current with the same commercial resources towards Medicare , the Medicare population , and towards increasing the VA that we will we will see the fruit of those efforts .

Lishan Aklog: also, that as we're transitioning and moving with the same commercial resources towards Medicare, the Medicare population, and towards now increasingly VA, that we will see the fruit of those efforts. No, that 800 increase is not directly attributable to the VA. It's too soon for that.

Speaker #1: But know that the 800 increase is not directly attributable to the VA; it's too soon for that.

Mark Massaro: Okay, that makes sense. Lee, Tom, you made an interesting comment about health plan coverage, or at least certainly an interesting series of discussion on health plans. One of them, of course, being the large one, UnitedHealthcare. I think you said you indicated that you view this as coverage, given the coverage policy that they updated. With that, I mean, can you just give us a sense, is there any change to how maybe you've been submitting claims to them previously? Can you give us any sense for you know, discussions or dialogue you're having with them about perhaps formally signing a contract?

Speaker #4: Okay , that makes sense . And then you made an interesting comment about health plan coverage , or at least a certainly an interesting series of discussion on health plans .

Speaker #4: One of them , of course , being the large one , UnitedHealthCare , I think you said you indicated that you view this as coverage , given the coverage policy that they updated .

Speaker #4: So with that , I mean , can you just give us a sense is there any change to how maybe you've been submitting claims to them previously and then can you give us any sense for , you know , discussions or dialogue you're having with them about perhaps formally signing a contract ?

Lishan Aklog: Yeah. This is a little bit tricky, so let me work my way through that. It hasn't changed how we've submitted claims. We've continued to do so. The fact that we believe that the reason why this is on the radar now is in fact because of our prior strategy of making sure we had sufficient volume. United has been one of the payers where we've submitted a significant number of claims. Let me just kind of walk through it step by step. It's not a positive coverage policy specifically for the EsoGuard test, right?

Speaker #1: Yeah . So this is a little a little bit tricky . So let me work my way , my way through that . It hasn't changed .

Speaker #1: How changed how we've submitted claims . We've continued to do so . The fact that the fact that we believe that the reason why this is on the radar now is in fact , because of our prior strategy of making sure we had sufficient volume .

Speaker #1: And United has been one of the one of the payers where we've submitted a significant number of claims . So let me just kind of walk through step by step .

Speaker #1: It's not a positive coverage policy specifically for the Esoguard test , right . But what we've learned since , since discovering that United and as I said , other plans have followed an almost verbatim identical fashion , have included Esoguard as an appropriate indication for an egd within their endoscopy guidelines .

Lishan Aklog: What we've learned since discovering that United, and as I said, other plans have followed in almost verbatim identical fashion, have included EsoGuard as an appropriate indication for an EGD within their endoscopy guidelines, you know, the endoscopies for Barrett's is. On some deep analysis of that with internal and external and in consultation with different medical directors, we've concluded, I suppose we can use the term de facto coverage. You know, much of you know, we focus on coverage policies and positive coverage policies here in this space, in the diagnostic space. You know, frankly, a lot of effective coverage of being in-network and credentialing and contracting happens outside of explicit written positive coverage policies.

Speaker #1: In copies for Barrett's is on deep analysis of that , with internally and externally and in consultation with with different medical directors . We concluded .

Speaker #1: I suppose we can use the term as de facto coverage . So much of , you know , we focus on coverage policies and positive coverage policies here in this space .

Speaker #1: And the diagnostics space . But . You know , frankly , a lot of effective coverage and being in network and credentialing and happened outside of explicit written positive coverage policies .

Lishan Aklog: A lot, particularly, my understanding is that United actually operates a lot within guidelines, right? This is within the guidelines for how they assess claims related to endoscopy. As I said, you know, it's our conclusion that we can pursue. We can go directly to credentialing and subsequently to contracting based on EsoGuard being included in the BE guidelines as an appropriate indication for the test. Because by definition, if you say that it's an appropriate indication for an EGD, then it's not experimental. It's not that there's sufficient support to justify a positive test as being in its role as a triage tool for EGD.

Speaker #1: A lot of particularly my understanding is that united actually operates a lot within guidelines . Right . And so this is within the guidelines for for how they assess claims related to , endoscopy .

Speaker #1: So as I said , you know , it's our conclusion that that we can pursue . We can go directly to credentialing and subsequently to contracting based on on the on esoguard being included in the guidelines as an appropriate indication for for the test , because by definition , if you say that it's an appropriate indication for an Egd , then it's not experimental , it's not that there's a sufficient support to justify a positive test as being its role as a triage tool for Egd .

Lishan Aklog: That's a long-winded way of getting to the actual practicalities here, which is that our team has initiated the credentialing process. The credentialing process is the process by which you become an in-network provider. Once we achieve that threshold, which we think will be shortly, we are prepared to enter into, and have solicited, the opportunity to enter into contracting discussions directly with United.

Speaker #1: So sorry , that's a long winded way of getting to the actual practicalities here , which is that our team has initiated the credentialing process , the credentialing process is , is the process by which you become an in-network provider and once we achieve that threshold , which we think will be shortly , we are prepared to enter into solicited the opportunity to enter into contract contracting discussions directly with with United

Mark Massaro: Okay, great. Maybe my last question. You know, you've talked about reallocating resources to, you know, Medicare lives. Can you just perhaps give us maybe an example or two? As we think about 2026 progressing, is there a time this year where you think we can start measuring productivity of these reps? Just give us a sense for how we should be thinking about that as we're thinking about our model for the rest of the year.

Speaker #4: Okay , great . And then maybe my last question . You know , you've talked about Re-allocating resources to , you know , Medicare lives .

Speaker #4: Can you just perhaps give us maybe an example or two ? And then as we think about 2026 progressing , is there a time this year where you think we can start measuring productivity of these reps and just give us a sense for how we should be thinking about that as we're thinking about our model for the rest of the year .

Lishan Aklog: Yep. You know, the challenge is from a strategic point of view, we've taken the position that we wanna maintain test volume, right? We wanna make sure we continue to have engagements with the individual commercial plans so that we can have meaningful conversations with them like we've seen with United and with many of the other plans. That volume previously has been heavily dominated by event-based testing, fire departments and so forth, because frankly, that was a highly efficient way for us to execute on that strategy while maintaining our operating expenses at and our cash burn at a level consistent with this as we await broader coverage for Medicare and others.

Speaker #4: Yep .

Speaker #1: So , you know , the challenge is from a strategic point of view , we've taken the position that we want to maintain test volume , right ?

Speaker #1: We want to make sure we continue to have engagements with the individual commercial plans so that we can have meaningful conversations with them .

Speaker #1: Like we've seen with United and with many of the other , many of the other plants that volume previously has been heavily dominated by by event based testing fire departments and so forth , because , frankly , that that was a highly efficient way for us to , to execute on that strategy .

Speaker #1: While maintaining our operating and our cash burn at a level consistent with this, as we await broader coverage for Medicare and others.

Lishan Aklog: What we've been working on since the fall, which as we've discussed, is taking our commercial team, which has been frankly incentivized to drive based on volume and incentivized to drive event-based testing, increasingly event-based testing that is subject to contracting, and steadily move them towards engaging with physicians, physician practices, and the broader team with health systems, but to do so in a way without sacrificing volume and revenue in the short term.

Speaker #1: And so what we've been working on since the fall , which as we discussed , is taking the our commercial team , which has been , frankly incentivized to drive based on volume and incentivized to drive event based testing , increasingly event based testing that that is subject to contracting and , and steadily move them toward , towards engaging with physicians , physician practices and the broader team with health systems .

Speaker #1: But to do so in a way , while we without sacrificing volume and revenue in the short term . So it's a little bit of a tricky a tricky balancing act .

Lishan Aklog: It's a little bit of a tricky balancing act, and really the commercial leadership team has done a remarkable job of not just maintaining volume, but as we've noted, growing volume while turning the ship in the direction of more traditional engagements with physicians and health systems, targeting so we can get our Medicare volume up. You know, the examples are really different in every site, but you know, we have some really fantastic examples of that.

Speaker #1: And really the commercial leadership team has done a remarkable job of not just maintaining volume , but as you've noted , growing volume while turning the ship towards in the direction of , of more traditional engagements with physicians and health systems targeting .

Speaker #1: So we can get our Medicare volume up , you know , the examples are really different in every , in every site , but we have , you know , we have some really fantastic examples of that .

Lishan Aklog: A couple of examples in the Northeast and on the Atlantic Coast where you know high productivity teams in the field have who are doing really well with engaging with fire departments, and driving volume and increasingly getting those events to be contracted, shifting towards Medicare, towards engaging with physicians. We're seeing the way that manifests itself on the ground is we're seeing what we've referred to as our satellite Lucid test center activity at individual practices and health systems come to fruition. We have, you know, we'll suddenly see a practice that one of our field members has engaged with, you know, scheduled testing events.

Speaker #1: A couple , a couple of examples in the northeast and on the Atlantic coast , where , you know , high , high productivity teams in the field have who are doing really well with engaging with fire departments and driving volume and increasingly getting , getting those events to be contracted , shifting towards towards Medicare , towards engaging with physicians .

Speaker #1: And we're seeing the way that manifests itself on the ground is we're seeing what we've referred to as our satellite test center activity at .

Speaker #1: Individual practices . And health systems come to fruition . So we have , you know , we'll suddenly see a practice that one of our field members has engaged with , with , you know , schedule testing events .

Lishan Aklog: The SLTC model is where we bring our nurses to the physician practice, co-locate them on scheduled days to test patients. We had one recently that was notable where our clinician came in and tested, I believe it was 30 patients in a day, and the vast majority of those were Medicare patients. That process of kind of turning the ship while maintaining our volume and maintaining our revenue is working, and it's working because of a very carefully designed incentive plan and training program to train, you know, folks that are really engaged and have had significant time in the field now with this. It's going quite well.

Speaker #1: The Sltc model is where we bring our nurses to the physician practice , co-locate them on scheduled days to test patients . And we had one recently that was notable where our clinician came in and tested , I believe it was 30 patients in a day .

Speaker #1: And the vast majority of those were Medicare patients . So , so that that process of kind of turning the ship while maintaining our volume and maintaining our revenue is it's working because of a very carefully Incentive plan and training program to train folks that are , that are , that are really engaged and have had significant time in the field .

Speaker #1: Now with this , and it's going quite well . I'm not sure by the end of this year , Dennis may want to comment on that .

Lishan Aklog: I'm not sure by the end of this year. Dennis may wanna comment on that we'll be ready because we are making this transition toward one, you know, dominated by one type of testing to another, whether we'll be in a position to start reporting on individual productivity on a rep-by-rep basis. Certainly, I think that's something that'll be coming next year. Dennis, do you wanna just confirm that from your perspective?

Speaker #1: That will be ready because we are making this transition towards one dominated by one type of testing to another . Whether we'll be in a position to start reporting on individual on productivity , on a on a rep by rep basis , but but certainly , I think that's something that'll be coming next year .

Speaker #1: Dennis , do you want to just confirm that ? Yeah , I think I think reimbursement

Dennis McGrath: Yeah, I think reimbursement, more fulsome reimbursement across the states will certainly contribute to the timing in terms of when to start reporting that, so that an individual account they can go in and really test their entire base rather than just solicit just the Medicare patients or VA. In time, I think with as we publish additional coverage policies, that's probably a metric that ultimately we'll start publishing as to when the end of the year is as good a guess as any.

Speaker #5: More fulsome reimbursement across the across the states will certainly contribute to the timing in terms of when to start reporting that . So that an individual account they can go in and , and , and really test their entire base rather than just solicit just the Medicare patients or , or VA .

Speaker #5: So in time , I think with us , as we publish additional coverage policies , it's probably a metric that ultimately will start publishing as to when the end of the year is as good a guess as any

Lishan Aklog: Yep.

Mark Massaro: Great. All right, guys. Thanks so much for the time.

Speaker #4: Great . All right , guys , thanks so much for the time .

Lishan Aklog: Thanks, Mark.

Speaker #1: Thanks , Mark .

Operator: Your next question comes from Kyle Mikson with Canaccord. Your line is now open.

Speaker #3: Your next question comes from Kyle . Mix in with Canaccord . Your line is now .

Lishan Aklog: Good morning, Kyle.

Speaker #5: Open .

Speaker #6: Kyle .

Kyle Mikson: Good morning, guys.

Dennis McGrath: Good morning.

Kyle Mikson: Thanks for the questions. Could you talk about the Medicare mix over the last 2 to 3 quarters? I think like in the recent past it was maybe like 10% to 15% of claims. But as we think about the ability to turn on Medicare and then, you know, receive payment essentially or hopefully from claims going a year back, just it'd be good to know, like, you know, how much of this volume has been Medicare? I guess just, and obviously you can kind of set that up and just, you know, as we look backwards, that'd be helpful. I think related to this, just Dennis, on the $9 million that you kinda called out as being billable, I think that was in the quarter.

Speaker #7: Good morning . Thanks for the questions . Could you talk about the the Medicare mix over the last 2 to 3 quarters ? I think like in the recent past , it was maybe like 10 to 15% of claims .

Speaker #7: But as we think about the ability to turn on Medicare and then , you know , receive payment , essentially , or hopefully from claims going year back , it'd be good to know like how much of this volume has been .

Speaker #7: Medicare , I guess , just and obviously you kind of set that up and just , you know , as we look backwards , that'd be helpful .

Speaker #7: And I think related to this , just Dennis , on the 9 million that you kind of called out as being billable , I think that was in the quarter .

Kyle Mikson: Could you just reconcile, is that literally like the, you know, the 3,600 or so claims times the payment rate? 'Cause that would be $7 million. I didn't understand the math there. Thanks.

Speaker #7: Could you just reconcile ? Is that literally like the , you know , the 3600 or so claims times the payment records that would be 7 million .

Speaker #7: So I didn't understand the math . There . Thanks .

Dennis McGrath: Yeah, the Medicare reimbursement standard billable amount is $2,499, and we've actually increased that ASP by another couple hundred dollars. That's what we bill and we collect. Obviously, we haven't billed anything to Medicare yet. As far as the Medicare component, that has grown sequentially in Q4 versus Q3 by about 28% as we started to direct the focus towards this effort. The percentage of test volume is around 16%. That's up from 10 to 12% from the prior quarters. If you go back into early 2024, we were probably as high as 25%. It does reflect, you know, post CAC meeting 4 September 2024 in Q4 to start directing that effort.

Speaker #5: Yeah , that's the yeah , that's the Medicare radar standard billable amounts 24.99 and we've actually increased that ASP by another couple hundred dollars .

Speaker #5: So that's what we bill . And we collect . Obviously , we haven't built anything to Medicare yet . So as far as the the the Medicare component that has grown sequentially in the fourth quarter versus the third quarter by about 28% , as we started to direct the focus towards this effort , the percentage of test volume is around 16% .

Speaker #5: That's up from 10% to 12% from the prior quarters. If you go back into early '24, we were probably as high as 25%.

Speaker #5: So it does reflect post TAC meeting September 4th in the fourth quarter to start directing that effort . And we expect as we move through 25 , the percentage of our test volume with Medicare beneficiaries will be higher as well .

Dennis McGrath: We expect as we move through 2025, the percentage of our test volume with Medicare beneficiaries will be higher as well.

Lishan Aklog: Just a couple of reminders on that, Kyle, just for the listeners. Based on the epidemiology of the risk factors of patients recommended for testing, about 40, probably closer to 50% of patients, would be in a Medicare population. Our goal is to drive that in the early phases above that, and then just a reminder that to Dennis's the numbers that Dennis offered, that's really just less than one-quarter of active after the CAC meeting and after us transitioning the team and training them and adjusting incentives and so forth. So it really just reflects the early stages of that.

Speaker #1: Just a couple reminders on that , Kyle , just for the for the for the listeners , the based on the epidemiology of the risk factors of patients recommended for testing about 40 , probably closer to 50% of patients would be in a Medicare population .

Speaker #1: But our goal is to is to drive that in the early phases . Above that . And then just a reminder that to Dennis , the numbers that Dennis offered that really just less than one quarter of activity after we had sort of after the meeting and after us transitioning the team and training them and adjusting incentives and so forth .

Speaker #1: So it's really just reflects the early , the early stages of that . I think qualitatively , I would say that that process of shifting towards more of a greater Medicare portion of our mix is going very well .

Lishan Aklog: I think qualitatively, I would say that process of shifting towards more, a greater Medicare portion of our mix is going very well.

Kyle Mikson: Okay. Just to clarify, Dennis, you said, I think, like, I heard 28%. Okay. Was that a quarter, or a quarter increase?

Speaker #7: Okay . And then just to clarify , Dennis , you said , I think I heard 28% like a was that a quarter over quarter increase ?

Dennis McGrath: Yeah. The sequential increase in the Q4 from the Q3 was around 28% Medicare submissions.

Speaker #5: Yeah. The sequential increase in the fourth quarter from the third quarter was around 28%. Medicare.

Kyle Mikson: In Medicare claims?

Speaker #7: Medicare and Medicare claims.

Dennis McGrath: Yeah, that's correct.

Kyle Mikson: Like, last quarter it was maybe, like, a little bit above 12% of claims was Medicare?

Speaker #5: Yeah . That's correct .

Kyle Mikson: Like, last quarter it was maybe, like, a little bit above 12% of claims was Medicare?

Speaker #7: So last quarter, it was maybe a little bit above 12% of claims that were Medicare.

Dennis McGrath: In the Q3, correct.

Speaker #5: In the third quarter. Correct.

Kyle Mikson: All righty. Okay, thanks for that. Yeah, so I know, you know, Mark brought up United. That was interesting to hear. You also talked about the LBM, that the first positive coverage there, which I guess you'll be press releasing soon, so you can't provide too much detail. I mean, you know, as that turns on, you know, what does that really afford you in terms of the additional volume and maybe ASP uplifts and I guess I suppose gross margin as well from that deal? Because I feel like the LBM is even though you're not dependent upon that or reliant upon it, I think it could unlock a lot of value.

Speaker #7: All righty . Okay . Thanks for that . And so I know , you know , Mark brought up United . That was interesting to hear .

Speaker #7: But you also talked about the LBM , that the first positive coverage there , which I guess you'll be press releasing soon . So you can't provide too much detail , but I mean , you know , as , as that turns on , you know , what does that really afford you in terms of the additional volume and maybe ASP uplift ?

Speaker #7: And I guess I suppose gross margin as well from that , from that deal , because I feel like the LBM is even though you're not dependent upon that or reliant upon it , I think it could unlock a lot of value .

Kyle Mikson: honestly, it's something that we don't, you know, discuss a ton with investors at this area, so maybe it'd be helpful to dive into it.

Speaker #7: So and honestly , it's just , it's something that we don't , you know , discuss a ton with investors at this area .

Speaker #7: So, maybe it would be helpful to dive into it.

Lishan Aklog: Yeah. Yeah, yeah. Just to be clear, even though we feel like there's a path, a really interesting path, that United has brought forth and a couple of others may be in the mix with regard to using the EGD guidelines and essentially separate from the LBM process, I think it's important opportunity to emphasize that the LBM process remains kind of the main path towards positive coverage policy. Many or most of the plans continue to outsource the technical assessments and the writing of the policy and the technical assessment is still typically outsourced to the LBM. The LBMs range in size from smaller, medium, to larger, and the number of covered lives they reach.

Speaker #6: Yeah .

Speaker #1: Yeah , yeah . So just to be clear , even though we feel like there's a path , a really interesting path that that United has brought forth and a couple of others , maybe in the mix with regard to using the Egd guidelines and essentially separate from the process , I think it's important Opportunity to emphasize that the album process remains kind of the main path towards positive coverage policy , and many are most of the plans continue to outsource the technical assessments and the writing of .

Speaker #1: Ultimately , it's the plan that decides the policy , but the writing of the policy , the technical assessment is still typically outsourced to the Lbms .

Speaker #1: The Lbms range in size from smaller , medium to larger , and the number of covered lives they . They reach . And so , as I said , we have had positive discussions with the largest LBM that covers the most in the largest .

Lishan Aklog: As I said, we have had positive discussions with the largest LBM that covers the most and the largest plans, and then all up and down the chain in terms of size. The one that we will announce, we obviously can't announce it until it's posted publicly. What's useful about that is that the coverage policy really does align closely with the existing guidelines. As you may recall, Kyle, the proposed LCD also aligns with existing guidelines. There's a nice consistency across the board between those. Look forward to those coming in.

Speaker #1: And then all all up and down the chain in terms of size . So the one we are that we will announce , we obviously can't announce it until it's until it's posted publicly , what's what's useful about that is that , you know , the , the coverage policy really does align closely with the existing guidelines .

Speaker #1: And as you may recall , Kyle , the the proposed LCD also aligns with existing guidelines . So there's a nice consistency across the board between those and we look forward to those coming in .

Lishan Aklog: That particular LBM, as others, have engagements with their clients, which are a set number of plans and a set number of covered lives. We will be able to use that information and know where those are geographically and be able to target those. Now, that's not going to happen immediately in terms of translating a coverage policy towards volume in that target coverage area and revenue, but it's the first step. We'd see that obviously after a coverage policy. You still need to engage in a contracting discussion and agree on pricing and so forth. Yeah, being a network following the coverage policy is, you know, an important step.

Speaker #1: They, they--that particular LBM, as others, have engagements with their clients, which are a set number of plans and a set number of covered lives.

Speaker #1: And we will be able to use that information and know where those are geographically, and be able to target those. Now, that's not going to happen immediately in terms of translating a coverage policy towards volume in that target coverage area.

Speaker #1: And , and revenue . But it's it's the first step . In . We see that obviously after coverage policy , you still need to engage in a contracting discussion and agree on pricing and so forth .

Speaker #1: But being a network following a coverage policy is an important step .

Kyle Mikson: All right, great. Final one, just like basically a housekeeping question, actually on your kind of broader commercial strategy as well. The sales and marketing expense increased $1 million quarter over quarter, 25% increase quarter over quarter, so it's quite a bit. You were at a pretty consistent run rate previously, it seemed. Should we, you know? I know you're not. You're doing more reallocating than increasing investment there. You know, is this a good? Is $5 million or so a quarter a good level to expect going forward? Could this increase quite a bit in 2026?

Speaker #7: All right . Great . And then final one , just basically a housekeeping question actually on your kind of broader commercial strategy as well , the sales , marketing expense increased a million quarter over quarter , 25% increase quarter over quarter .

Speaker #7: So that's quite a bit . And you were at a pretty consistent run rate previously . It seemed so should we , you know , I know you're not you're doing more reallocating than than increasing investment there .

Speaker #7: But you know , is this a 5 million or so a quarter a good level to , to expect going forward or could this increase quite a bit in 2026 ?

Dennis McGrath: I think that's a reasonable level going forward. The Q4 is also burdened by some annual compensation expenses, truing up sales teams and non-sales personnel in the support side of the sales and marketing side as well. The Q4 is a little bit higher than the previous run rate, but it's a reasonable number to look at moving forward over the next couple quarters.

Speaker #5: I think that's a reasonable level going forward . The fourth quarter is also burdened by some annual compensation expenses , up sales teams and non sales personnel in in the support side of the sales and marketing side , as well .

Speaker #5: So the fourth quarter is a little bit higher than the previous run rate . But it's a reasonable number to , to look at moving forward over the next couple of quarters .

Kyle Mikson: Perfect. Thanks, guys.

Speaker #7: Perfect . Thanks guys .

Lishan Aklog: Great. Thanks, Kyle.

Speaker #1: Thanks , Kyle .

Operator: Your next question comes from Mike Matson with Needham. Your line is now open.

Speaker #3: Your next question comes from Mike Matson with Needham . Your line is now open .

Lishan Aklog: Good morning, Mike.

Lishan Aklog: Yeah, thanks.

Mike Matson: Yeah, thanks.

Lishan Aklog: Good morning, Mike.

Dennis McGrath: Good morning, Mike.

Speaker #5: Yeah . Thanks . Good morning . Good morning . Just with regard to the VA , I was wondering how you're kind of sales rep , geographic coverage , sort of aligns with those locations of their facilities .

Mike Matson: Good morning. Just with regard to the VA, I was wondering how your kind of sales rep geographic coverage sort of aligns with those locations or their facilities.

Lishan Aklog: Yeah. It's really a kinda two-level process, as I would sort of intend to get to during my prepared remarks. You know, at a national level, we have a national account director, we have a national VP of market access who helps. Those two work hand in hand in bringing individual health systems across the finish line through contracting, PO submission, and then the team will implement the launch within that center. But as I mentioned, we really view our entire sales team as kind of the tip of the spear, the early engagement.

Speaker #1: Yeah . So it's really a , a kind of two level process as I was sort of hinting at through my remarks on a national level , we have a national account director , we have a national VP of market access who helps those two work hand in hand in in bringing individual health systems across the finish line through contracting po po submission , and then and then the team will implement the launch within that center .

Speaker #1: But as I mentioned , we really view our entire sales team as the kind of the tip of the spear . The early engagement .

Lishan Aklog: With any of these individual centers, we will, you still need to have a physician champion, need to have a commitment from the physicians, typically the gastroenterologist in partnership with the primary care internal medicine folks to launch within that center. The initial engagements will often be not 100% of the time, but will often be from the local team in that particular region. Once there's a champion identified and an interest, again, the interest has been strong since we're now in the FSS, that gets handed over to a national team who can quickly move towards executing and establishing cell collection and so forth.

Speaker #1: So with any of these individual centers, you will still need to have a physician champion, still need to have a commitment from the physicians.

Speaker #1: Typically the gastroenterologists in partnership with the primary care internal medicine folks to , to , to launch within that center . So the initial engagements will often be not , 100% of the time , but will often be from the local team in that particular region .

Speaker #1: But then once there's a champion identified and an interest , again , the interest has been strong . Since we're now in the FSS that gets handed over to a national team who can quickly move towards towards executing and establishing Self-collection and forth .

Lishan Aklog: We do also have a positive engagement with the national clinician leaders, particularly over GI. We believe that after we've had a number of these sites in place and given the fact that we have really solid research, both published research and an ongoing clinical trial within the VA, the VA is very kind of a research-centric health system. It bodes well for us that we have published data and incoming data from a larger study that there will certainly be discussions on the national level with national clinical leadership in this space to potentially launch some type of national program in the future.

Speaker #1: We do also have a positive engagement with the national clinician leaders , particularly over the over GI , and we believe that after we've had a number of these sites in place , and given the fact that we have really solid research , both published research and an ongoing clinical trial within the VA , the VA is very kind of a research centric health system .

Speaker #1: And it bodes well for us that we have published data and an incoming published data , incoming data from a from a larger study that there will we'll certainly be discussions on the national level with national clinical leadership in this space to potentially , you know , launch some type of national program in the future .

Lishan Aklog: The other thing that I'm just as a reminder from your question to point out is that, as most people know, VAs tend to be linked with existing academic medical centers, right? Typical medical centers in any of the major cities that are linked to medical schools will often have one or sometimes more than one VA associated with them. Often the physicians that staff the VAs hold faculty positions and clinical positions at affiliated academic medical centers, right? The LA VA and UCLA have a close relationship. That's really helpful to us in both directions, right?

Speaker #1: The other thing that I'm just as a reminder from your question to point out , is that as most , most people know , VA's tend to be linked with existing academic , medical centers .

Speaker #1: Right ? So typical medical centers in any of the major cities that are linked to medical schools will often have one or sometimes more than one VA associated with them .

Speaker #1: And often the physicians that staff the VA's hold faculty positions and and clinical positions at affiliated academic , medical centers . Right . So the lava and UCLA have a close relationship .

Speaker #1: And so that's really helpful to us in both directions . Right ? So at places where we've already engaged with the , with large health system and academic health system , transitioning , and we already have champions that are helping in working with us to bring that bring Esoguard into the into the academic medical center .

Lishan Aklog: At places where we've already engaged with the you know a large health system, an academic health system transitioning, and we already have champions that are helping and working with us to bring that, bring EsoGuard into the academic medical center. It's a natural transition to identify the physician within that group that works at the VA, and it gives us a sort of an immediate in on identifying a clinical champion there. Vice versa, that any success we have at a VA center that comes de novo gives us an entry point to the typically and often to the group associated with the academic center and the health system associated with that.

Speaker #1: It's a natural transition to identify the physician within that group that works at the VA and gives us sort of an immediate in on the identifying a clinical champion there and vice versa , that any success we have at a VA center that comes de novo gives us an entry point to the typically , often to the group associated with the academic center and the health system associated with that .

Mike Matson: Okay, great. Just the, I guess, question for Dennis on the OpEx. It did step up a little in Q4. It sounds like that's related to sales and market access investments. I mean, is it reasonable to assume that that level kind of continues in 2026?

Speaker #5: Okay , great . And then just the , I guess , question for Denis on the opex . So it did step up a little in the fourth quarter .

Speaker #5: It sounds like that's related to sales and market access investments. So I mean, is it reasonable to assume that that level kind of continues in ’26?

Dennis McGrath: Yeah. There is some annual compensation expense triggered in there. The market access team, the clinical service team, and the commercial team, I think it is a baseline that we should plan for as we move forward, particularly as volume increases and revenue increases, the variable compensation plans will kick in as well.

Speaker #5: Yeah . There is some annual compensation expense triggered in there , but the market access team , the clinical service team and the commercial team , I think it is a baseline that we should plan for as we move forward , particularly as the volume increases and revenue increases .

Speaker #5: The variable compensation plans will kick in as well . Okay . Got it . Thanks

Mike Matson: Okay. Got it. Thanks.

Operator: Your next question comes from Jeremy Pearlman with Maxim Group. Your line is now open.

Speaker #3: Your next question comes from Jeremy Perlman with Maxim Group . Your line is now open .

Jeremy Pearlman: Good morning, everyone.

Speaker #8: Good . Good morning everyone . Thank you . Good morning . How are you doing ? Thank you for taking my question . So just I want to circle back on the testing volume .

Lishan Aklog: Good morning, Jeremy.

Jeremy Pearlman: Hey, good morning. How are you doing? Thank you for taking my question. Just, I wanted to circle back on the testing volume. You know, it was really strong quarter. Just maybe, and you said it wasn't earlier, it wasn't due to any, you know, significant increase in VA testing. Was it higher utilization in existing accounts, new accounts signing up? Is it events driven or is it just, you know, team productivity that's just improving over time, and that's why you said earlier that this could be a better run rate for testing volume going forward?

Speaker #8: You know , it was really a really strong quarter , just maybe . And you said it wasn't earlier . It wasn't due to any significant increase in VA testing .

Speaker #8: So was it higher ? Higher utilization in existing accounts ? New accounts signing up ? Is it events driven or is it just , you know , team productivity that's just improving over time .

Speaker #8: And that's why you said earlier that this could be a better run rate for testing volume going forward .

Lishan Aklog: I think it's a mix of all of the above. Again, I just, you know, this is an opportunity to kind of give kudos to the team that they actually grew volume during a quarter where we were asking them to make a significant transition away from kind of the higher, more efficient, event-based testing, not away from those, but towards more traditional engagements, to drive Medicare, and then increasingly with the VA. I would say it's a kind of combination of the factors you listed, but still driven at the end by productivity because that volume has increased. That increase in volume, despite the structural changes, is driven by the same number of people. We haven't increased the meaningful numbers in the field.

Speaker #1: I think it's a mix of all of the above . And again , I just , you know , this is an opportunity to kind of give kudos to the team that they actually grew volume during a quarter where we were asking them to make a significant transition away from kind of the higher , more efficient event based testing , not away from those , but towards more traditional engagement to , to drive Medicare .

Speaker #1: And then increasing with the VA . So I would say it's a , it's a kind of combination of the factors you listed .

Speaker #1: But , but still driven at the end by productivity , because that volume is increased , that increase in volume , despite the the structural changes is driven by the same number of people .

Speaker #1: We have an increase . The meaningful numbers in the field . And then as I said , I think the potential to continue to sustain somewhat higher volume than the target that we've had is , could be driven by the opportunity to start seeing volume in the VA .

Lishan Aklog: As I said, I think the potential to continue to sustain, you know, somewhat higher volume than the target that we've had is could be driven by the opportunity to start seeing volume in the VA. Obviously, you know, once we get Medicare in pushing volume more aggressively there.

Speaker #1: And obviously, you know, once we get Medicare in, pushing volume more aggressively, there.

Jeremy Pearlman: Okay. Understood. Just, you know, on the VA, you know you mentioned that it serves 9 million lives, but the patient population does have a higher, you know, I guess, risk of Barrett's. Then it would be for your target population, a strong one. What are you, how are you viewing the total addressable market there, you know, and what, you know, what are you hoping to in 2026 to, you know, testing volume run rate, you know, let's say, end of the year?

Speaker #8: Okay . Understood . So just , you know , on the VA , you know , you mentioned that it serves 9 million lives , but and , and the patient population does have a higher , you know , I guess , risk of Gerd .

Speaker #8: And then so it would be for your , for a target population , strong one . But what do you how do you view the total addressable market there , you know , and what you know , what are you hoping to in 2026 to , you know , testing volume run rate , you know , let's say leaving the year ?

Lishan Aklog: Sure. I think if you start with 9 million patients, the proportion of those patients that would be recommended for testing by existing guidelines is certainly at least a couple million patients. Call it 25% of that population would be the target based on existing in the most conservative subset of those guidelines, of the risk factors for testing. For example, over 50 with three risk factors based on the ACG. You take a couple million times the Medicare rate, and that's what would be the addressable market within the VA.

Speaker #1: Sure . I think if you start with 9 million patients , the proportion of those patients that are would be recommended for , for testing by existing guidelines is certainly at least a couple of million patients .

Speaker #1: So call it 2020 , 20 , 25% of that population would be the target based on existing and existing in the most conservative , the most conservative subset of those guidelines .

Speaker #1: Of the of the risk factors for , for , for testing . So , for example over 50 . With with three risk factors based on the ACG .

Speaker #1: So you take a couple of a couple of million times The Medicare rate . And that's , that's , that's what we would be the addressable market within the VA's .

Jeremy Pearlman: Got it. Understood. Okay. It seems it's a really good opportunity. Okay. Then just the last question. I know as you've mentioned numerous times in the past that there's a one-year look-back period for Medicare billing. Anything, once you get, you know, approval, you could look back a year. Just questioning why, you know, it seems like we were hoping to get that draft letter by the end of 2025. Now it's, you know, the end of Q1, so hopefully it's really any day now. It's really imminent. You know, why, what's holding you back from, you know, signing on more sales, you know, beefing up the sales team and to push the Medicare because you still have that look-back, hopefully you'll get that.

Speaker #8: Got it . Okay . So it seems it's a , it's a really good opportunity . Okay . And then just the last question .

Speaker #8: I know you've mentioned you mentioned numerous times in the past that there's a one year lookback period for Medicare billing . So anything once you get , you know , approval , you could look back a year just questioning why , you know , it seems like we were hoping to get that that draft letter by the end of 2025 .

Speaker #8: Now it's , you know , the end of the first quarter . So hopefully it's really any day now , it really imminent .

Speaker #8: You know , why what's what's holding you back from , signing on more sales . You know , beefing up the sales team and to push the Medicare because you still have to look back .

Jeremy Pearlman: Then it's not like, you know, it's just maybe putting the costs up front and then getting the reimbursement, you know, in a couple of months once you get the approval. Is it just because you're nervous, you know, that you never know with the with the.

Speaker #8: You hopefully you'll get that . And then it's not like it's , you know , it's just maybe putting the cost up front and then getting the reimbursement , you know , in a couple of months , once you get the approval , it's just because you're nervous , you know , you never know with the .

Lishan Aklog: No, I don't think we're nervous. I'll let Dennis chime in on that. I just think it's prudent to be cautious about that. It's not because of any sort of concern about the likelihood of us getting Medicare or the likelihood of us getting paid for that amount. We just think it's just a general prudence with regard to being super careful about our OPEX in a particular capital markets environment. I don't know, Dennis, if you'd like to add anything to that.

Speaker #1: No , I don't think we're nervous . I think we're I'll let Dennis chime in on that . I just think it's prudent to to be to be cautious about that .

Speaker #1: It's not because of any sort of concern about the likelihood of us getting Medicare or the likelihood of us getting paid for that amount.

Speaker #1: But we just—I think it's just a general prudence with regard to being super careful about our opex and a particular capital markets environment.

Speaker #1: I don't know, Dennis, if you'd like to add anything to that.

Dennis McGrath: 80% of our billable amounts are not being collected. We have been judicious about our spend, and you see that we have started to spend more. We're not gonna turn the faucet on completely until we have the ability to collect a good chunk of the test volume that we actually bill for. That'll be kind of the gating factor. To your point, could we put more salespeople on, particularly to go after Medicare patients? The answer is yes. We, but anytime they walk in the door, there's gonna be commercial patients as well that they're attracted to. Having a Medicare draft policy in place and knowing the timing certainly would give us clarity as to when to step on the gas even further.

Speaker #5: , 80% of our billable amounts are not being collected and and so we have been judicious about our spend . And you see that we have started to spend more .

Speaker #5: We're not going to turn the faucet on completely until we have the ability to collect a good chunk of , of the test volume that we actually bill for .

Speaker #5: So that'll be kind of the gating factor . So to your point , could we put more salespeople on particularly to go after Medicare patients ?

Speaker #5: The answer is yes , we . But any time they walk in the door , there's going to be commercial patients as well that they're they're attracted to .

Speaker #5: And so having a Medicare draft policy in place and knowing the timing , certainly would give us clarity as to when the step step on the gas , even further .

Dennis McGrath: We've started to. We're being judicious about it, and we'll accelerate that initiative once we know the timing of it.

Speaker #5: We've started to we're being judicious about it . And we'll accelerate that initiative once we know the timing of it .

Jeremy Pearlman: Got it. Understood. Just last question related to that. Do you have an estimate how many of these Medicare testings, you know, over the past year that you would be able to bill outstanding or-

Speaker #8: Got it understood . And then just last question related to that , do you have an estimate ? How many of these Medicare testings , you know , over the past year that you would be able to bill outstanding or roughly what that represents a rolling couple ?

Dennis McGrath: That's.

Jeremy Pearlman: Roughly what that represents.

Dennis McGrath: It's a rolling couple million dollars. Obviously, it changes every day, right? We're delayed in getting this toward a final policy. As a rule of thumb, it's a couple million dollars of collections that we'll be able to get soon after we get the final policy.

Speaker #5: It's a rolling couple million dollars . Obviously , it changes every day , right , that we that we're delayed in getting this this towards the final policy .

Speaker #5: But as a rule of thumb , it's it's a couple million dollars of collections that we'll be able to get soon after we get the final policy .

Jeremy Pearlman: Okay, great. All right. Thank you for taking my questions. Have a nice day.

Speaker #8: Okay , great . All right . Thank you for taking my questions . Have a nice day .

Dennis McGrath: Thanks, Jeremy.

Lishan Aklog: Thanks, Jeremy.

Speaker #5: Thanks , Jeremy .

Speaker #6: Thanks

Operator: There are no further questions at this time. I will now turn the call over to Lishan Aklog for closing remarks.

Speaker #3: There are no further questions at this time . I will now turn the call over to Lishan Aklog for closing remarks

Lishan Aklog: Great. Thanks, operator. Thank you all for taking the time and for your attention this morning. You know, really, as always, we appreciate, in particular, the thoughtful and informed questions by our analysts and hope all the listeners find that back and forth enlightening. Again, we really believe this is gonna be a big year for Lucid. You know, last year we established a solid commercial foundation, established a really solid evidence base with addition to our evidence base with our large real-world study. Medicare's coming, it's a matter of when, not if. Our activity to date while we're waiting for Medicare with the VA, with Medicare patients and our continued progress on the commercial side with payers and laboratory benefit managers continues to really lay a strong foundation for future growth.

Speaker #1: Great . Thanks . Operator . And thank you all for taking the time and for your attention this morning . You know , really , as always , we appreciate in particular the thoughtful and informed questions by our analysts and hope all the listeners find that back and forth enlightening .

Speaker #1: So again , we really believe this is going to be a big year for lucid . Last year established a solid commercial foundation , established a really solid evidence base with additional additions to our evidence base with our large real world study , Medicare is coming just a matter of when , not if , and our activity today , while we're waiting for Medicare with the VA , with Medicare patients and our continued progress on the commercial side , with payers and laboratory benefit managers continues to really lay a strong , strong foundation for future growth .

Lishan Aklog: We're also, you know, really excited on the commercial side to be moving into network credentialing and contracting for the first time with a large payer. We hope that will, you know, really be a transformational event in the coming weeks and quarters. Thanks again. As always, we encourage you to keep abreast of our progress. Please follow our news releases, our quarterly update calls, as well as through our website and social media, and feel free to reach out to us if you have any questions. Thanks again, everybody. Have a great day.

Speaker #1: We're also really excited on the commercial side to be moving into network credentialing and contracting for the first time with with a large payer , we hope that that will really be a transformational event in the in the coming weeks and quarters .

Speaker #1: So thanks again . As always , we encourage you to keep abreast of our progress . Please follow our news releases , our quarterly update calls , as well as through our website and social media .

Speaker #1: And feel free to reach out to us , reach out to us if you have any questions . So thanks again everybody . Have a great day

Operator: Ladies and gentlemen, this concludes your conference call for today. Thank you for participating, and I ask that you please disconnect your lines.

Q4 2025 Lucid Diagnostics Inc Earnings Call

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