Lucid Diagnostics Q1 2026 Earnings Call Transcript

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Provided by Quartr
May 14, 2026

Key Takeaways

  • Positive Sentiment: Lucid Diagnostics said first-quarter EsoGuard testing volume was 3,177 tests, above its pre-Medicare target range, and revenue of $1.3 million was broadly in line with the lower volume.
  • Positive Sentiment: The company raised about $16.8 million in an underwritten offering, ending Q1 with $44.8 million in pro forma cash and saying the runway extends well into 2027.
  • Neutral Sentiment: Management reiterated that the Medicare LCD process is delayed by logistics rather than substance and said it remains highly confident a positive decision will come in the near term.
  • Positive Sentiment: Lucid highlighted early progress in the VA system, including its first purchase order and expectations to begin testing and generating revenue soon, with reimbursement at the Medicare-rate equivalent under the Federal Supply Schedule.
  • Positive Sentiment: The company also pointed to expanding commercial payer and LBM coverage, including its first not-yet-public coverage policy from a laboratory benefit manager and encouraging feedback from payers referencing EsoGuard as a triage test.
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Earnings Conference Call
Lucid Diagnostics Q1 2026
00:00 / 00:00

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Operator

Good morning, and welcome to the Lucid Diagnostics first quarter 2026 business update conference call. Please note that this event is being recorded. I would now like to turn the conference over to Matt Riley, Lucid Diagnostics Vice President of Investor Relations. Please go ahead.

Matt Riley
Matt Riley
VP of Investor Relations at Lucid Diagnostics

Thank you, operator. 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 Chief Executive Officer of Lucid Diagnostics, along with Dennis McGrath, Chief Financial Officer of Lucid Diagnostics. The press release announcing our business update and financial results is available on Lucid's website. Please take a moment to read the disclaimers and forward-looking statements in the press release. The business update, press release, and the conference call all include forward-looking statements. 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 SEC.

Matt Riley
Matt Riley
VP of Investor Relations at Lucid Diagnostics

For a list and a description of these and other important risks and uncertainties that may affect future operations, see Part One, Item One A, entitled Risk Factors in Lucid's most recent annual report on Forms 10-K filed with the SEC and any subsequent updates filed in the quarter reports on Forms 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 in events, conditions, or circumstances on which those expectations may be based or that may affect the likelihood that actual results would differ from those contained in the forward-looking statements. I would now like to turn the call over to Dr. Lishan Aklog, Chairman and Chief Executive Officer of Lucid Diagnostics.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

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 from the first quarter and from recent weeks. We performed 3,177 EsoGuard tests in the first quarter this year and generated revenue at $1.3 million. The revenue was down slightly, but proportional to volume, which receded a bit but remained above our target range of 2,500-3,000 tests and preserving our average sale price. We also importantly strengthened our balance sheet with an underwritten public offering of common stock that netted approximately $16.8 million in proceeds. This significantly bolstered our balance sheet, as Dennis will describe in more detail, to approximately $45 million in pro forma cash at the end of Q1.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

This extends our runway well into 2027. We were encouraged by the participation of long-term institutional investors exhibiting confidence in our strategic opportunities. This also mitigated a financing overhang and provides us with the resources that we'll need to accelerate commercial efforts after we receive Medicare approval. At each of these individual test transformations to endoscopy, those outcome of this will be a peer-reviewed publication that demonstrate the healthcare economic value of EsoGuard. Overall, in summary, lots going on, particularly on the market access and the commercial side. Obviously, all focus is on Medicare, and as we acknowledge, joint frustration with some of the delays within the Medicare LCD process overall, we believe this is really at the end of the day, systematic.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

We continue to have our confidence that this is a near-term result really hasn't wavered at all. As we've discussed before, we're not idle. As we're awaiting Medicare, the commercial team continues to drive its activities to drive patients to increase the proportion of our patients that are Medicare. The VA activities are really off to a good start. Strong engagements with our early targets at the VA centers, and we look to be starting testing and generating revenue from that in the very near future. In addition, as I already outlined, lots of activity that allows us to aggressively build the infrastructure necessary to accelerate our healthcare system adoption, EHR, coding, healthcare economics and such.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Our direct engagements with multiple health systems across the country, continues to accelerate, and we think will accelerate further once we secure Medicare coverage. With that, I'll let Dennis take over and provide an update on our financials.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

Thanks, Lishan Aklog, and good morning.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

To EGD only upon a positive EsoGuard test is very attractive to both the clinical team as well as the centers as a whole. Many VAs operate rural satellite VAs that are quite removed from the main centers, and EsoGuard is a very attractive option to avoid patients having to travel for EGD if they have a negative EsoGuard test. Overall, lots of activity here. We're seeing progress. We're gonna look forward to further engagement across the entire VA system. Your GI meeting, major annual meeting of gastroenterologists, under the auspices of the American Gastroenterological Association, the AGA. We had multiple abstracts in the near term, following the successful public meeting that was held in September of last year.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

We continue to have ongoing engagement with leadership and other folks who are engaged in this space. There clearly remain logistical delays with regards to putting out Local Coverage Determinations. We have expectations that that'll pick up in the near future.

Matt Riley
Matt Riley
VP of Investor Relations at Lucid Diagnostics

Forward-looking statements in the press release. The business update, press release and the conference call all include forward-looking statements, and these forward-looking statements are subject to.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

Good morning, everyone. Obviously, we had a glitch in the pre-recorded prepared remarks, but the transition in the was at the appropriate time, so I'll pick up from there. The summary financial results for the first quarter were reported in our press release that has been distributed. On the next three slides, I'll emphasize a few key financial highlights from the first quarter, but I'd encourage you to consider these remarks in the context of the full disclosures covered in our quarterly report on Form 10-Q. With regard to the balance sheet, cash at quarter end March 31st was $27.9 million. On a pro forma basis, including the recent April 24th financing, pro forma cash equals $44.8 million.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

The average burn rate for the last four quarters included cash interest on the debt was $11.3 million per quarter, with the first quarter a bit higher at $12.1 million as we made investments in our commercial teams, including sales, clinical services, and market access. You'll recall at the end of 2024, we refinanced our convertible debt into a $22 million five-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 $25.2 million at quarter end is really the only other substantive change from the previously reported balances at the end of the fourth quarter.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

The fair value increase of $1.2 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 first quarter expense charge of $1.9 million reflected in other income in the P&L. Shares outstanding, including unvested restricted stock awards and conversion of the remainder of the preferred shares as of last week are approximately 203 million. After the conversion of the preferred Series B-1 on May 6th, there was approximately 22.3 million common shares held in abeyance due to the 4.99% blockers, ownership blockers in Series B and B-1 certificate of designation. If these abeyance shares had been issued, common shares outstanding would be around 225 million.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

The GAAP outstanding shares as of March 31st of 164.9 million are reflected on the slide as well as on the face of the balance sheet in the 10-Q. GAAP shares do not reflect unvested RSA amounts, and there are no longer any preferred shares outstanding. At present, PAVmed continues to be the single largest common shareholder of Lucid Diagnostics, with ownership of approximately 15% of the common shares outstanding. PAVmed no longer has voting control of Lucid, PAVmed, together with the board and management, still have considerable influence over Lucid with approximately 25% voting interest. Next slide, Matt. With regard to the P&L, this slide compares this year's first quarter to last year's first quarter.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

I trust you'll review the information and my comments in light of the cautionary disclosure at the bottom of the slide about supplemental information, particularly non-GAAP information. Our sales team sold almost 3,200 tests, 3,177 to be exact, for the first quarter, with a billable value over $8.7 million, resulting in recognized revenue of $1.3 million. The test volume for the quarter is above the upper end of the range that we've been targeting in this pre-Medicare time period. The fourth quarter sequential comparative period of 3,664 tests had an unusually high number of one-time firefighter testing events toward the end of the period, which pushed last quarter's target range well above the norm.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

With new investors once again joining us for this call, it's worth repeating what we've communicated in past quarters about revenue recognition. The key determinant in how revenue is recognized at this point in the reimbursement journey is the probability of collection. Due to the fact that we are in this transitional stages of our reimbursement process means revenue recognition for the majority of our claims submitted to traditional government or private health insurers will be recognized when the claim is actually collected versus when the patient report is delivered, invoiced, and submitted for reimbursement. As you will see in our 10-Q, this is called variable consideration in the jargon of GAAP's ASC 606 revenue recognition guidelines, presently there's 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.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

For billable amounts contracted directly with employers, including the VA, and that are fixed and determinable, will be recognized as revenue when our contracted service is delivered. Generally, that means when the report is delivered to the referring physician. It is important to note that a 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. For tests performed on Medicare patients with dates of service within 12 months of a final Medicare policy will also get paid within a reasonable timeframe after the policy is issued. With regard to the remainder of the P&L, the first quarter's total OpEx on both a GAAP and a non-GAAP basis is generally flat year-over-year.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

As expected, there will be increases in sales team costs, which are substantially offset by decreases in G&A expenses. This sequential decrease in total OpEx expense from the fourth quarter of about $2 million is mostly in G&A costs and one-time expenses in the last quarter. The non-GAAP net loss per share of $0.07 in the first quarter is better by about $0.03 versus each of the previous three quarters. Next slide. With regard to the operating expenses, this slide is a graphic illustration of the operating expenses after eliminating non-cash expenses for the periods reflected. Non-GAAP operating expenses of $11.7 million are basically in line with the average non-GAAP OpEx for the previous five quarters, $11.7 million versus an average of $12 million. Let me close with a few reimbursement highlights for the first quarter.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

In the first quarter, we sold almost 3,200 tests, reflecting about just under $9 million pro forma revenue at our list price of $2,749. During the first quarter, we recognized revenue of about 14% of that amount, or $1.3 million. Recognized revenue included about 72% from insurance claims submitted in prior quarters, the longest dated item almost two years ago. Of the claims submitted in the first quarter, about 77% have been adjudicated, 23% are pending. Out of that 77% that have been adjudicated, about 31% resulted in an allowable amount by the insurance company with an average of $1,646 per test, which bumps up against the Medicare rate.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

Of those denied, most fit into one of three buckets: A, deemed not medically necessary or investigational, or require prior authorization or require additional medical records. The balance are deemed 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 the star followed by the one on your touchtone phone. You'll hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any key. One moment please for your first question. Your first question comes from Mark with BTIG. Please go ahead

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

Good morning, Mark.

Analyst at BTIG

Morning.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

Morning.

Analyst at BTIG

Hey. Hey, good morning, guys. I figured I would start with a reimbursement question. Just curious if you're, Would love just an update as far as what you might be hearing from MolDX. You know, as a someone who covers the industry, it was nice to see a Medicare coverage decision come into the space yesterday. We know that they're still open for business. Can you just give us a sense for what you're hearing, maybe any back and forth? Would love to hear any color on that topic. Thanks.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Yep. Thanks, Mark. We do continue to have ongoing dialogue with leadership. There is no sort of concrete or specific information with regard to where things stand. We remain confident, based on the results of the CAC meeting, and we've had follow-up conversations with regard to the CAC meeting, that this remains a logistical issue with regards to delays more broadly with LCDs coming through, as you sort of hinted. I believe the LCD you're referring to is the Novitas LCD that published recently.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Our conversations with them as well as with others who are knowledgeable and follow the space, there is a sense, I think, which is what you're hinting at, that some of the backlog with the LCDs is likely to start clearing in the near term. Just to be very, very clear about the fact that nothing in our conversations has raised any concerns with regards to the substantive nature, you know, of our expectations with regard to what the, you know, likelihood of the draft coming out in a positive direction.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

All of that confidence is anchored in the substance of the CAC meeting, which as we all know, is a public record of commentary that's very important in this process by physician experts across the country. We continue to view this as a logistical delay, and one that is that we still are highly confident will result in a positive outcome in the near future.

Analyst at BTIG

Okay, perfect. It was nice to hear you guys talk about the VA activities, off to a good start. Can you just give us a sense, you know, there are a lot of VA systems, maybe can you give a little more color about what types of dialogue you're having, both either at the sort of the national level or at the local level? Can you speak to EHR integrations? I think that sometimes VAs have separate systems, maybe can you give us an update, maybe they are starting to unify a bit in systems integration.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Yeah, great question. Let's go a little bit through a bit systematically about how the VA works, particularly as it relates to a molecular diagnostic test like ours. As you know from our previous announcement that we are now on the Federal Supply Schedule, we have the payment rate, contracted payment rate under that schedule is the Medicare rate of $1,938. There are a couple hundred VA centers across the country, and by being on the FSS, we have the opportunity for our team to engage with individual centers.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Generally speaking, that's the starting point with regard to getting engaged with the VA is on a health center by health center basis. Our team has a very deep pipeline, has had extensive outreach to the VA systems all across the country. I think I mentioned on our last call that the internal process by which we are engaging with the VA includes our entire sales team, generating leads, generating connections with and engagements with clinical champions within their own region. We've also centralized. We have two senior members of our team that are focused on nationally on a sort of a strategic accounts manner with individual VAs.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Those conversations, as I, as we noted, are, and engagements are going really well. The pipeline's robust. We have a number that are going through the process of working with the individual VA centers to ultimately The way this works is you ultimately generate a PO that is for a number of tests, and then we work out the logistics with the clinical team in the center as a whole with regard to the cell collection part of it. We have, we've received our first PO, which is great, and look forward to beginning testing at our, at our first target, and there are actually many more, many more along the way.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

The VAs, you know, obviously operate within the overall Federal budget, and they all have their individual budgets. When we work with the VAs, this is, you know, somewhat analogous to how we engage with other health systems on the, you know, other health systems, private or otherwise. But we do have to work, in this case, within their budget. Our opportunity between now and the end of the Federal fiscal year is, in fact, to generate POs, which would be off budget. In parallel, we're having conversations to be on the full budget for the next fiscal year as part of those parallel processes. The Federal fiscal year starts on October first.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Overall, again, very positive, really good engagements. The engagements with the clinical team has been excellent, with the clinical champions has been excellent. We've talked previously about the fact that there are some very unique aspects to the VA that enhance our ability to engage with clinicians. The VA tends to have a population that is higher risk with regard to these conditions and also is often resource constrained with regard to the number of EGDs. The value, the clinical utility and the economic value of EsoGuard as a triage test to the more expensive and more complicated invasive endoscopic procedure is a very attractive value proposition.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Another aspect is that the VAs often operate rural centers that are actually quite remote from the main center, and that's another obviously very just a classic opportunity for a non-invasive test to prevent patients from having to travel to the main center. One other aspect is that, you know, VAs, as you know, are often Most VAs are partnered with academic medical centers. Many of the same physicians that we're in discussions with the health systems underlying academic medical centers are the same physicians who or partners of the same physicians who operate at the VA. That's been a very useful aspect of this, of these relationships, and obviously ultimately will help us within the health system as well.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

EHR integration with the VA is really not a major factor. I think you point out the fact that there's a lot of work, I believe, to integrate their systems. In the individual health systems, it's much less factor than it is outside the VA system in our traditional commercial engagements, which we've discussed in our last call. Happy to talk a bit more about that.

Analyst at BTIG

Okay. That makes perfect sense. One last question from me. I believe you are coming up on your one-year anniversary of signing Highmark Blue Cross Blue Shield a year ago. You know, in recent calls, you've had some really nice commentary about dialogue you're having with commercial payers. Can you just give us a sense for what that dialogue has been like the last, you know, number of weeks or so? I'd be curious if some of these commercial payers might be perhaps waiting for CMS to move first, or do you think that you could sign some even without CMS?

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Yeah. You know, that actually had been our stance, frankly, our position and our expectation was that really for us to get any meaningful traction within on the commercial realm, that we would have to wait for Medicare. There certainly are a subset and maybe even the majority of payers where we would need that as a catalyst or accelerant to advance our conversations and secure coverage. However, as we sort of introduced previously, that hasn't been the case for others.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

One very interesting and potentially productive pathway that we are pursuing is engaging with certain payers who have published on their own EGD endoscopy policies that explicitly reference EsoGuard as an appropriate triage test to, you know, that drives the indication for endoscopy. That activity, which we highlighted in the last couple of calls, is very active. There's a whole process that you go through. This is separate from the laboratory benefit manager process, which I'll touch on in a second.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

That activity involves credentialing as well as engaging in contracting, and those are, that's a process that we are actively pursuing with the payers that have published policies, coverage policies that include EsoGuard as a, as a triage test for endoscopy. With regard to the laboratory benefit manager side of things, again, as we've talked about before, we continue to have positive engagements with laboratory benefit managers as we previewed last time, and we'll reiterate today. We have secured our first coverage policy with a laboratory benefit manager. It's not public yet, but it will be public in the next couple of weeks. We expect after that's public, that plans under that LBM will also publish their own positive coverage policies.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Again, I think I mentioned this last time, we've had very good conversations with one of the largest LBMs on a pathway forward for coverage.

Analyst at BTIG

Great. Thanks guys for the time.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Yeah. Thanks, Lauren.

Operator

Your next question comes from Kyle with Canaccord. Please go ahead.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Morning, Kyle.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

Hi, Kyle.

Analyst at Canaccord

Hey, thanks. Morning. Wanted to start where we typically start off with and ask about the percentage of claims that are represented by the Medicare segment. It's been like, you know, we think like the increasing portion of the test that you guys report is still kind of probably below 20% of the total claims, but how is that, where does it stand now?

Analyst at Canaccord

When you think about, some of your efforts to either, you know, increase the sales team in favor of more like Medicare-focused reps or maybe train them or incentivize them a little bit more to like kind of increase that kind of area, that segment of the market a bit more, how has that progressed as well in light of the, hopefully we're like increased percentage like the mix as well?

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Yeah. I'll let Dennis touch on the numbers, and we can fill in some of the operational side as well.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

Kyle, the, I'll call it the government group, which is predominantly Medicare Advantage, was 13% in the first quarter. As you recall, in the fourth quarter it was around 15%. That 2% delta is around 60-some tests. But the compensation plans for the sales team, and Lishan will expand upon this, is focused on predominantly the revenue generating components of the target population. That is, contracted revenue as well as Medicare and VA. That's where their focus is on in generating test volume. We're in that transition phase.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Yeah. You know, as it relates to allocating resources, you know, we've stated on several occasions our commitment to not add resources and not meaningfully increase our OpEx. What our team is really doing is a balancing act between a target of maintaining our test volume and slightly exceeding it, which is most efficiently done through these increasingly contracted healthcare events, while positioning ourselves so that once we get Medicare that we can aggressively drive up that percentage. On a quarter to quarter basis until we get Medicare, we're not expecting that number to rise dramatically because the team is sort of in parallel focused while with the same amount level of resources at maintaining our overall test volume.

Analyst at Canaccord

Okay. That's interesting. That's good color, guys. Thanks. On the, you know, Dennis, you provided a bunch of numbers, and you do this every quarter, I think, around like, you know, the percent of claims you're recognizing revenue on, then the like the percent that's adjudicated, like what's, you know, actually paid on there, what's the ASP there. How have some of those, like metrics kind of changed over time? I don't have all the in front of me.

Analyst at Canaccord

I'm just curious if, like to the earlier points, if, you know, obviously like non-Medicare, you know, payers are, you know, getting more comfortable with this product or, you know, are they almost like, you know, waiting and maybe payment or, you know, kind of ASP and that type of thing is actually producing because, you know, just the waiting is kind of taking longer than maybe was like communicated maybe. Just that makes sense to you, if you could give a snapshot on how that's progressed.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

It's still pretty volatile, and it's difficult to make sense on those that don't have a specific program or don't have consistency in payment.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

In the first quarter, certainly causes or increases that volatility because you have an increased amount of deductibles and co-pays where patient burden in the first quarter is heavier than it would be in the balance of the year, which influences what we get paid from some of those insureds. Even where we see some pluses and minuses in the first quarter versus, say, the third or fourth quarter, we still have to rely upon cash collection for the revenue recognition. There's really not a sufficient pattern to give you an adequate answer to your question yet. Those patterns are still developing. Okay, fair enough. Finally, we see where R&D is coming in each quarter. It's been pretty consistent, $1 million to $2 million in expenses.

Analyst at Canaccord

Are you guys either still doing or thinking about generating clinical evidence either, you know, in a worst-case scenario with MolDX, which doesn't sound like it's happening, but just, you know, obviously worst case.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Yeah.

Analyst at Canaccord

You know, if you wanna go for FDA or things like or just kind of like enhance the acceptance. Just curious if that metric, if that line item could maybe expand over time.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

I'm glad you highlighted. The answer is a definite yes, but I'm glad you at least highlighted. I'd like to emphasize the fact that our commitment to ongoing data generation, ongoing clinical evidence is not connected to the fact that we believe that we have sufficient evidence to secure the LDT. We are a data-driven company. We firmly believe in expanding our clinical evidence on an ongoing basis. There is a lot of activity. It doesn't get a lot of attention 'cause everyone's focused on, you know, very much focused on the reimbursement side. There are ongoing clinical studies. There are ongoing institutional clinical studies. There's an active NIH study going on right now.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

We have a registry. We've been collecting real-world evidence. You know, it would be a long conversation, but there is an interesting dynamic right now that we're well out from the courts vacating the FDA LDT role as to how, what the advantages of engaging with the FDA may be for single laboratory tests. We're certainly aware of those and we're crafting our, you know, our longer term strategies in relation to that. The fact that that landscape is settling a little bit. Certainly our longer term goals with regard to generating clinical evidence is fundamentally informed by that.

Analyst at Canaccord

Great. I just if I could just like, you know, add onto that just briefly.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Sure.

Analyst at Canaccord

You know, years ago, I think your guys' intention was to, you know, scale this test, the collection device and the test, you know, internationally, globally. You know, they're both CE marked, you know, in Europe, obviously. I mean, how much more extra, you know, clinical evidence would be needed for some kind of an international expansion? Maybe some kind of decentralized model with a partner, distributed model with a partner. Is that part of the, you know, kind of formula as you look maybe like medium to long term?

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

I just, maybe we could separate the clinical evidence question from the international market question. Our clinical evidence is not the limiting factor for us to potentially expand internationally. We, you know, we've looked from day one at opportunities internationally, both in Europe, as you noted, we went ahead and got CE marked right off the bat from the earliest days. The challenge is, you know, the U.S. is obviously the largest market opportunity where we remain a small company. We have limited resources we certainly would expect to focus our resources in the near term.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Europe is a very difficult market for screening tests because of the overall economics of their socialized health system. When we've looked at this in the past, it just simply has not made sense. I believe even many of the larger companies, molecular diagnostic companies, their traction in Europe is more limited. That said, we do on a regular basis get inbound inquiries from, I think as you were suggesting, from commercial entities in various OUS countries for the opportunity to partner. We've had some from Canada, South America, the U.K.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

We engage in those conversations, and we've explored every one, each of them as whether that's something that with limited resources on our part, we could engage in activity in those markets with the help of a local partner. None of those have really come to fruition. None of them have really have made sense from an overall business strategy point of view. It's certainly something we're open to. Again, those activities are really related to the local sort of economic dynamics in these regions and countries. It's not really, it doesn't really inform our clinical evidence plan that's really limited to our U.S. efforts.

Analyst at Canaccord

Got it. Okay. That's helpful. Thanks, guys. Appreciate it.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Okay. Thanks, Kyle. Have a good day.

Operator

Your next question comes from Michael Matson with Needham & Company. Please go ahead.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Morning, Mike.

Michael Matson
Michael Matson
Analyst at Needham & Company

Yeah. Thanks. Hey, thanks for taking my questions. I guess just the DDW presence that you guys had, can you maybe comment on kind of interest level you're seeing from physicians, any kind of feedback, et cetera?

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

I'm just chuckling a little bit here, Mike, thanks for bringing that up 'cause that was the portion of our of the pre-record that got garbled. I'm happy to have the opportunity to fill that. DDW went great. For those on the call who are not aware of this, DDW is the largest gastroenterology meeting in the country. One of the two or three major ones here in the U.S. We had a very strong presence there, both from our commercial team and our clinical team. Lots of engagement with clinicians. Just overall was our best, our frankly, our best conference ever.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Just very There's a lot of just generalized increased attention, increased buzz around esophageal pre-cancer screening, about Barrett's esophagus in particular, on multiple fronts, and we very much benefited from that in our engagements, and they were very positive. We had a significant presence on the academic side. There were multiple abstracts that related to EsoGuard that were all very well received. One of the highlights of the meeting, in addition to all of that, was that the American Gastroenterological Association presented a preview of upcoming update draft of their updated guidelines, clinical practice guidelines for Barrett's esophagus. We're very excited about that.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

They, for the first time, at least in this preview, they highlight individual endoscopic testing, including EsoGuard and EsoCheck by name. They evaluate the clinical evidence for accuracy, the certainty of the evidence. EsoGuard and EsoCheck came out, were presented as having high certainty of evidence. It was the only one. The rest of the potential future modalities were rated as low. This is a preview. It's a draft. There was a lot of excitement on a lot of us around this. Obviously, guidelines are a very important driver, an important part of our engagement, particularly with commercial payers. Having this finalized in this form will be a real boon to us.

Michael Matson
Michael Matson
Analyst at Needham & Company

Okay, great. Just a few financial questions. I guess, Dennis, the share count, you know, what should we be modeling? I think you said post-offer, it's 203 million, but there's potentially million in abeyance. I'm not sure if we should be including that in our share count or not for now.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

The 203 is the number you should model your EPS on. The remaining 22 million shares will be issued once the holders' 4.99% limitation is lowered, either by distributing it to their members or, if the share count goes up. I think 203 for the time being is probably the right number.

Michael Matson
Michael Matson
Analyst at Needham & Company

Okay.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

In the future, that additional $22 million that they're owed to those investors will be issued. These are long-term shareholders, so it may be a while before they get issued. Nonetheless, they're out there. 203 is probably the right number to use for your EPS modeling.

Michael Matson
Michael Matson
Analyst at Needham & Company

All right. Then the quarterly cash burn rate, you know, given that you did raise some additional capital and you're getting closer to the Medicare coverage, is there any potential that that would go up, or are you expecting to kind of hold it around recent levels?

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

I think the burn rate at where it is right now is probably the level it will stay. Yes, we will be making additional investments. We do think some of that cost, if not all of that cost, will be offset by revenue opportunity, either collections or increased volume as we move forward with increased, you know, reimbursement landscape.

Michael Matson
Michael Matson
Analyst at Needham & Company

Okay, great. Thank you.

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

Thanks, Mike.

Operator

Your next question comes from Jeremy with Maxim. Please go ahead.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Jeremy, you're muted, I guess.

Analyst at Maxim

Good morning. Thank you for taking my question. Just related to the VA, I think I inferred, and correct me if I'm wrong, that in the first quarter, there was no contribution to both volume or revenue from the VA opportunity from that contract?

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

Yeah, the first quarter, you'll remember the announcement was in late January, and the first quarter was focused on pipeline metrics and building a pipeline, converting engagement into purchase orders. You'll see more of that as the year unfolds. That's correct, in the first quarter.

Analyst at Maxim

Okay. Understood. Is the reimbursement from the VA contract, that's completely separate from Medicare, right?

Dennis McGrath
Dennis McGrath
CFO at Lucid Diagnostics

Yeah.

Analyst at Maxim

That's the $1,900 rate for the test. You'll get reimbursed through the VA system regardless of when you get the CMS reimbursement. You could go full steam ahead on that opportunity.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

That's correct. Yeah. It's direct payment through the VA. Obviously, we're appreciative that we were able to secure the same rate as Medicare. The process is entirely separate from Medicare, and it just directly comes through the VA, through POs that get invoiced and paid.

Analyst at Maxim

That's good. Great.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

It's not reimbursed. PO invoicing.

Analyst at Maxim

Right. No, no, that's great. Maybe also, I don't know if you have this number, how many, let's say, we'll call it covered lives you have currently based both in the VA. I think you mentioned last call that was roughly at 9 million lives, and then maybe the commercial payers that you have also under contract now. How many covered lives then if-- and when-- hopefully, when you get the Medicare, what would that increase to?

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

I mean, it's a bit of a multi-faceted sort of question there, right? The VA, as you mentioned, is 9 million patients, we'll be able to target that that's available to us right now. Medicare, the epidemiology of the conditions that lead to a recommendation for testing the target population is at least approximately 50% Medicare. Once we have Medicare coverage, there's no reason we can't, as others have done, to expand beyond that number. Medicare, I believe, represents $60 million-$80 million people overall. That's that. On the commercial side, we haven't yet reached the level.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

We're still in the early stages with contracting and with coverage and contracting. We have not reported on uncovered lives. Once this first LBM, laboratory benefit manager, coverage policy is publicized and we hear from the payers that operate, that work under that outsource their technical assessments to that LBM, we'll be able to start discussing covered lives. It's a bit premature to do that on the commercial side.

Analyst at Maxim

Okay. Understood. Just last question. You know, how should we look at, you know, your sales force productivity, like currently versus, let's say, what it was a year ago, the sales on cycle, especially considering now you've said I think you've said on the call your entire sales team is also engaging with the VA, so they have, you know, there's new, I guess, job descriptions they have. They're new. How should we look at that?

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Yeah. I think productivity's solid. It's gone up over the years. We have a increasingly tenured and increasingly experienced staff. What we're asking them to do is sort of juggle multiple things at the same time, right? To maintain their test volume, to drive, to find opportunities within the VA system that they can hand over to the, to our national director on that.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Yeah, productivity as a whole is great, I think as we mentioned, we have been positioning ourselves with regard to the composition of our team to have some more senior-level folks so that when the time comes to expand the team, that we'll be able to do so and in sort of the most efficient way to maintain that productivity as we expand our team.

Analyst at Maxim

Okay, great. Thank you for taking my questions. Enjoy the rest of your day.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Yeah. Thanks, Jeremy.

Operator

Your next question comes from Edward Woo with Ascendiant Capital. Please go ahead.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Morning, Ed. How are you?

Edward Woo
Edward Woo
Analyst at Ascendiant Capital

Yeah. Congratulations on the progress. My question is on the Medicare reimbursement rate. Is there any opportunity to increase it over time?

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

We have no plans to do so. I mean, there are The whole Medicare fee schedule process is a complex one, but we have no particular plans to pursue that. We're quite happy with that rate, and we feel we can build, you know, a very robust business under these rates.

Edward Woo
Edward Woo
Analyst at Ascendiant Capital

Great. That's all the questions I have. I wish you guys good luck. Thank you.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Thanks, Ed.

Operator

There are no further questions at this time. I'll turn the call back over to Dr. Lishan Aklog.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

Great. Thanks, operator, thank you all for taking the time and for your attention this morning. Again, apologies for the technical glitch that led to me being cut off. I appreciate the opportunity. Obviously, great questions as always from our analysts, appreciated the opportunity to fill in some of those, some of those gaps. Hope you all found this dialogue informative. Again, just obviously we're acknowledging sharing some of the frustrations with regard to the logistics around the LCD process, you know, just continue to reiterate our confidence has not wavered, that this is a near-term positive outcome. Again, as we've said repeatedly, as we await the draft LCD, we're not resting on our laurels.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

We're very encouraged by our efforts on multiple fronts, our engagements with the VA, our securing of our first positive coverage policy from a laboratory benefit manager and, you know, great opportunities on the commercial payer side, as well as something we didn't spend much time on today but is working on is progressing very nicely, which is our engagement with a series of major health systems. Obviously, we came out of the DDW meeting very energized and feeling very positive about the prospects of an updated guideline that enhances our position within this field. Thanks again. As always, we encourage you to keep abreast of our progress.

Lishan Aklog
Lishan Aklog
Chairman and CEO at Lucid Diagnostics

You know, please follow up. Please follow our news releases, these update calls, and on our website and social media, and feel free to reach out to us if you have any questions. Thanks again, everybody, and have a great day.

Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

Executives
    • Dennis McGrath
      Dennis McGrath
      CFO
    • Lishan Aklog
      Lishan Aklog
      Chairman and CEO
    • Matt Riley
      Matt Riley
      VP of Investor Relations
Analysts
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