What Lucid Diagnostics (LUCD) Said on Its Q3 Earnings Call

Key Points

• Medicare payments for EsoGuard have begun through Lucid’s Texas lab, with allowed claims paid at $1,938.01 per test. This is claim-by-claim payment, separate from the still-pending MolDX coverage decision.
• Third-quarter revenue was flat year over year at $1.2 million on 2,871 tests, while October volume topped 1,800—a monthly record. Lucid is shifting its sales team toward Medicare patients as it works to increase productivity.
• Lucid ended September with $18 million in cash and raised $15 million through a preferred offering, bringing pro forma cash to about $33 million. The preferred shares carry a 20% annual stock dividend and could convert into approximately 42.6 million common shares.

Lucid Diagnostics NASDAQ: LUCD said Medicare payments for its EsoGuard esophageal pre-cancer test have begun through its Texas laboratory, prompting the company to redirect its sales efforts toward Medicare beneficiaries after third-quarter revenue remained flat from a year earlier.

The company sold 2,871 tests in the third quarter and reported $1.2 million in revenue, unchanged from the same period last year and down from $1.5 million in the second quarter. October test volume exceeded 1,800, a monthly record, executives said on the company’s business update call.

Chairman and CEO Dr. Lishan Aklog said the company expects a solid fourth quarter but cautioned against extrapolating the October volume across the full period, noting that Thanksgiving and Christmas can affect commercial activity.

Medicare payments begin as separate coverage decision remains pending

Lucid began submitting Medicare claims from its Texas laboratory in late September and received its first payments from Medicare administrative contractor Novitas in October, executives said. Aklog described the payments as coverage through claim-by-claim adjudication, rather than through a formal local coverage determination, or LCD.

CFO Dennis McGrath said every Medicare claim allowed to date had been allowed at the full clinical laboratory fee schedule rate of $1,938.01 per test. He said Novitas has been paying consistently, but did not provide the number of October tests for which payment had been received.

The Texas laboratory operates outside the MolDX program, and its claims are independent of the pending MolDX LCD, Aklog said. Lucid continues to await publication of a draft LCD and remains confident it will proceed through public comment and become final, he said. The CEO attributed the delay to an administrative backlog.

Aklog said claims must be submitted by the laboratory that performed the test. For tests previously performed at Lucid’s California laboratory, he said the potential to collect on Medicare claims would depend on when the LCD is issued and its one-year lookback period. McGrath cautioned that the company’s historical gap between billings and collections is not a receivable or a forecast.

Asked about a Medicare pricing review, Aklog said Lucid is in discussions with the Centers for Medicare & Medicaid Services and is confident its current pricing will be preserved. Final determinations are expected later in the year, he said.

October volume rises as sales team shifts focus

Medicare beneficiaries accounted for about 450 tests, or 16% of third-quarter volume. In October alone, Lucid performed more than 300 Medicare tests, nearly 70% of the prior quarter’s total, McGrath said.

Aklog said the company’s regular sales team is focused on encouraging physicians to offer EsoGuard to Medicare patients, while separate targeted efforts continue with health systems and the Department of Veterans Affairs. Lucid has approximately 30 salespeople in the field.

The company plans to increase productivity with its existing team before deciding when to expand it, Aklog said. He added that laboratory, manufacturing and clinical specialist capacity can support growth. The company’s first two VA programs are operating, with other centers in its pipeline, he said.

On commercial insurance, Aklog said Lucid expects five client plans of laboratory benefit manager Concert to have formally adopted an EsoGuard coverage policy by year-end. The company also expects the policy and associated plans to cover nearly all commercial insurance lives in Minnesota beginning the following month.

Revenue recognition and cash position

McGrath attributed most of the sequential revenue decline to fewer direct-contract tests, which fell to 60 in the third quarter from 517 in the second. Those contracts have fixed, determinable billings that are recognized as revenue when services are delivered, he said.

For most other claims, Lucid has generally recognized revenue when it collects payment because it lacks sufficient data to predict collection. McGrath said Medicare claims submitted through the Texas lab are now predictable enough to recognize revenue upon delivery of the test report.

Third-quarter operating expenses fell to $13.5 million from $14.3 million in the second quarter. The GAAP loss narrowed to $0.03 per share from $0.08, helped by a noncash fair-value gain on the company’s convertible notes, McGrath said. The non-GAAP loss was $0.06 per share, unchanged from the preceding quarter.

Lucid ended September with $18 million in cash. A $15 million Series C convertible preferred offering closed on Oct. 21, bringing its pro forma cash position to approximately $33 million, McGrath said. The preferred shares carry a 20% annual dividend payable in stock, and the stated value converts into approximately 42.6 million common shares.

McGrath said Lucid was holding operating expenses steady while initial Medicare volume grows, with plans to add commercial resources as the trajectory becomes clearer.

About Lucid Diagnostics (NASDAQ:LUCD)

Lucid Diagnostics Inc. NASDAQ: LUCD is a medical diagnostics company focused on improving the detection of esophageal disease. The company develops and commercializes diagnostic technologies intended to identify patients at elevated risk of esophageal cancer, particularly those with gastroesophageal reflux disease (GERD). Lucid's principal products include EsoGuard, a laboratory-developed DNA test that analyzes cells collected from the esophagus for molecular changes associated with Barrett's esophagus and esophageal cancer risk, and EsoCheck, a swallowable, balloon-based device designed to collect cells from the esophageal lining.

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