Lucid Diagnostics (LUCD) Q1 2026 earnings call transcript

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 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, 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 SEC. For a list and a description of these and other important risks and uncertainties that may affect future operations, to see Part 1, Item 1A, entitled Risk Factors on LUCID's most recent annual report on Forms 10-K filed with the SEC and any subsequent updates filed in the quarterly 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-up new statements. I would now like to turn the call over to Dr. Lishan Aklag, Chairman and CEO of 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 recently. We performed 3,177 e-cigar tests in the first quarter of this year and generated revenue of $1.3 million. The revenue was down slightly but proportional to volume, which received a bit but remained above our target range of $2,500 to $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. 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. Another important highlight from this quarter is that we had a very successful Digestive Diseases Week, or DDW. This is the major GI meeting, major annual meeting of gastroenterologists under the auspices of the American Gastroenterologic Association, the AGA. We had multiple abstracts related to the ISAGARD and ISAGCHEC and had an excellent opportunity for multiple team members to have extensive engagements with the GI community. One very important highlight from this meeting was the AGA presented a draft update of their clinical practice guidelines for Barrett esophagus for esophageal precancer. This draft was extremely positive for ESAGARD and ESACHEC.

It highlighted by name ESAGARD and ESACHEC as an alternative to endoscopy for esophageal precancer screening, and it explicitly highlighted ESAGARD and ESAJEC as being superior to other pre-commercial technologies, garnering the highest certainty of evidence compared to lower bars for the others. This is a draft, but we do expect a formal guideline publication and formal communications to come from the AGA in the near future.

Before turning it over to Dennis, let's provide some updates related with a focus on our market access and commercialization efforts. So a lot going on here, a lot to cover. We'll review our Medicare, the status of our Medicare approval, the VA, our engagement with laboratory benefit managers, commercial payers, and health systems.

So on Medicare, we continue to await the draft publication of the draft local coverage determination following our request for reconsideration. As with everybody, we've been frustrated by the delays we've expected to hear sooner, But we remain very confident that it's close and that we will get the draft publication consistent with our request in the near term following the successful public meeting that was held in September of last year. We continue to have ongoing engagement with leadership and other folks who are engaged in this space. And there clearly remain logistical delays with regard to putting out local coverage determinations remain. And we have expectations that that will pick up in the near future and that will be among them.

Lots of progress on the VA side as well. As we noted in our last meeting, we received our federal supply schedule with payments consistent with our Medicare payment, and our team is now deeply engaged with the VA across the entire commercial team led by our strategic accounts director for the VA. We have multiple engagements, a very deep pipeline of dozens of centers, and some of these early engagements are starting to bear fruit. Our first orders were placed. Our first testing will begin in the coming weeks.

And we are continuing to navigate budgeting and the workflows around cell collection at each of these individual VA centers. The budgeting process is on the government fiscal year. We do expect to get orders within this fiscal year. The major opportunity is the opportunity to really accelerate volume and revenue will happen in the new fiscal year when we're part of the new budgetary process for the new fiscal year.

So we're looking forward to demonstrating eCigar's role across the VA. There's lots of opportunities. The story here is quite powerful. Many VAs are limited in their resources and the opportunity to avoid unnecessary endoscopies. And by triaging patients to EGD only upon a positive ESAGARD test is very attractive to both the clinical team as well as the centers as a whole. And many VAs operate rural satellite VAs that are quite removed from the main centers, and ESAGARD is a very attractive option to avoid patients having to travel for EGD if they have a negative ESAGARD test. So overall, lots of activity here. We're seeing progress. We're going to look forward to further engagement across the entire VA system in the coming quarters.

We discussed in our last call, we continue to have active engagements on the commercial side, the commercial payer side, with laboratory benefit managers. We've had active discussions with some of the largest ones. As we noted last time, we have secured positive coverage from one of the local benefit managers. We have confirmation of that. That's not public yet. And we are in discussions with the individual plans that outsource their coverage policy making to this LBM and are encouraged by the feedback that we've received on that.

As we also discussed in the last call, we continue to have direct engagements with certain of the larger commercial payers. And a particularly exciting avenue for that is leveraging existing endoscopy policies that highlight ESOGARD as an appropriate triage test to triage patients to endoscopy. Those discussions continue to make progress towards credentialing and contracting in the near future. We'll report further once those are secured.

In addition, we have a lot of activity going on across health systems across the country. part of this is anticipation of getting Medicare, and there's lots of structural activities that are going into that. We've discussed a bit in our last call about the process for EHR integration that allows that provides ease of use by the physicians in terms of ordering as well as reviewing reports all within the same workflow. We have activity across multiple sites towards this, and this activity with EHR integration, as is common across the entire diagnostic industry, we know it helps drive productivity by the commercial team. We also have some active projects on coding, both the CPT code for the performance of the ESO check procedure and an ICD-10 code for patients who are undergoing endoscopy who've had a positive ESO guard test.

Both of these are extremely helpful with billing and medical necessity, but especially for the healthcare systems, having this code, particularly the CPT code, It is important for them to be able to track tests and track patients as they move through the system. And we expect the CPT milestone to be in the near term. We've been able to secure strong support from professional societies in helping us go about securing this gun.

And finally, as it relates to the commercial payers, unlike Medicare, health care economics plays an important role in our ability to engage with medical directors and secure coverage policy. And so we've been actively working to expand our portfolio of data, healthcare economic data, that demonstrates the cost-effectiveness of e-cigar testing as an alternative to endoscopy. That work is going extremely well. Early graphs of the very sophisticated modeling, that economic modeling that goes into that, that is required by any payers, is well underway. And the ultimate outcome of this will be a peer-reviewed publication that demonstrates the healthcare economic value of Visa Card.

So overall, in summary, lots going on, particularly on the market axis and the commercial side. Obviously, all focus is on Medicare, and we acknowledge joint frustration and some of the delays within the Medicare LCD process overall. We believe this is really, at the end of the day, systematic, and we continue to have our confidence that this is a near term result really hasn't wavered at all. But as we discussed before, we're not idle. As we're awaiting Medicare, the commercial team continues to drive its activities, 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 of the VA centers, and we look to be starting testing and generating revenue from that in the very near future. And 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, and our direct engagements with multiple health systems across the country continues to accelerate and we think will accelerate further once we secure Medicare coverage.

So with that, I'll let Dennis take over and provide an update on our financials.

Thanks, Lee Sean, and good morning, everyone. The summary financial results for the first quarter were reported in our press release but has been distributed. On the next three slides, I'll emphasize a few key financial highlights from the first quarter, but I encourage you to consider these remarks in the context of 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-form basis, including the recent April 24th financing, pro-form of cash equals 44.8 million. The average burn rate for the last four quarters include 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. 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 also is a substantial part of the first quarter expense charge of million reflected in other income in the P&L.

Shares outstanding, including unvested RSAs and conversion of the remainder of the preferred shares as of last week, are approximately $203 million. After the conversion of the Series B1 preferred shares on May 6, there was approximately 22.3 million common shares held in abeyance due to the 4.99% ownership blockers in the Series B and B1 certificate of designation.

If these abeyance shares had been issued, common shares outstanding would be about 225 million. 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 10Q.

GAAP shares do not reflect unvested RSA amounts. There are no longer any preferred shares outstanding. At present, the PAVMED continues to be the single largest common shareholder of Lucid Diagnostics with ownership of approximately 15% of the common shares outstanding. And although PadMed no longer has voting control of LUCID, PadMed together with the board and management still have a considerable influence over LUCID with approximately 25% voting interest.

Next slide. With regard to the P&L, this slide compares this year's first quarter to last year's first quarter. I trust you'll review the information in my comments in light of the cautionary disclosure at the bottom of the slide about supplemental information, particularly non-GAAP information. As Leishan mentioned, our sales team sold almost 3,200 tests for the first quarter with a billable value over $8.7 million, resulting in recognized revenue of $1.3 million. The test volume is above the upper end of our 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.

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 least at this point in our reimbursement journey, is the probability of collection. Therefore, 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'll see in our 10Q, it's called Variable Consideration of the Jargon of Gaps, 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, 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's important to note that a pending Medicare approval decision impacts about 40 to 50 percent 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 data service within 12 months of the final positive Medicare policy, we'll also get paid within a reasonable timeframe after the final policies issued. That's generally $2 to $3 million of revenue opportunity that we'll bill once we have final Medicare approval. 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.

As expected, there are increases in sale team costs, which are substantially offset by decreases in G&A expenses. The 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. With regard to 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 $11.7 million are basically in line with the average non-GAAP OPEX for the previous five quarters, meaning $11.7 versus $12.0 on average. Let me close with a few reimbursement highlights for the first quarter. In the first quarter, we sold almost 3,200 tests, reflecting about $8.7 million in 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 72% from insurance claims submitted in prior quarters, the longest dated item from over two years ago. Of the claims submitted in the first quarter, about 77% have been adjudicated and 23% are pending.

Out of the 77% that have been adjudicated, about 31% resulted in an allowable amount by the insurance company with an average of $1,650 per test, which bumps up against the Medicare rate. Of those denied, most fit into one of three buckets. A, deemed not medically necessary or investigational, that was about 38%, or require prior authorization, that was about 16%, or require additional medical records, about 10%. The balance are deemed to be non-covered.

With that, operator, let's open it up for questions.

Yeah. Thanks, Mark. So 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 a Novitas LCD that published recently. but 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 LCDs is likely to start clearing in the near term.

But just to be very, very clear about the fact that nothing in our conversations has raised any concerns with regard to the substantive nature of our expectations with regard to the likelihood of the draft coming out in a positive direction. And all of that confidence is anchored in the substance of the CAG 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. So 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.

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, So maybe can you give it 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?

And then can you speak to EHR integrations? I think that sometimes VAs have separate systems, or maybe can you give us an update? Maybe they are starting to unify a bit in systems integration. Yeah, great, great question. So let's go a little bit through a bit systematically about how the VA works particularly as a result, as it relates to molecular diagnostics as like ours. So 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.

And generally speaking, that's the starting point with regard to getting engaged with the VA is on a health center by health center basis. And so our team has a very, 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. but we've also centralized two senior members of our team that are focused nationally on sort of a strategic accounts matter with individual VAs.

Those conversations, as we noted, are – and engagements are going really well. The pipeline is 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 and the center as a whole with regard to the cell collection part of it. So we have received our first PO, which is great, and look forward to beginning testing at our first target. And there are actually many more along the way.

The VAs, you know, obviously operate within the overall federal budget, and they all have their individual budget. So 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. And so our opportunity between now and the end of the federal fiscal year is, in fact, to generate POs which would be off but in parallel we having conversations to be on the full budget for the next fiscal year as part of those parallel processes And then the federal fiscal year starts on October 1st. So really overall, again, very positive, really good engagement.

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 VGDs. So the value of the clinical utility and the economic value of ESAGARD as a triage test to the more expensive and more complicated invasive endoscopic procedure is a very attractive value proposition. 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 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 almost – most VAs are partnered with academic medical centers. So many of the same physicians that we're in discussions with, with the health systems underlying academic medical centers are the same physicians who – or partners of the same physicians who operate at the VA, and that's been a very useful aspect of these relationships. and obviously ultimately will help us within the health system as well. EHR integration with the VA is really not a major factor. I think you point out the fact that there is a lot of work, I believe, to integrate their systems. But in the individual health systems, it's much less a factor than it is outside the VA system and our traditional commercial engagements, which we've discussed in our last call.

Happy to talk a bit more about that. Okay, that makes perfect sense. One last question for me. I believe you are coming up on your one-year anniversary of signing Highmark Blue Cross Blue Shield a year ago. And so, 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?

Yeah. So, you know, that actually had been our stance, And 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. And 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. So 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 ESOGARD as an appropriate triage test that drives the indication for endoscopy.

And so 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. But that activity involves credentialing as well as engaging in contracting, And that's a process that we are actively pursuing with the payers that have published policies, coverage policies that include ESAGARD 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. And we expect after that's public that plans under that LVM will also publish their own positive coverage policies. And, again, I think I mentioned this last time, we've had very good conversations with one of the largest LVMs on a pathway forward.

Great. Thanks, guys, for the time. Yeah, thanks, Mark.

Yeah, I'll let that affect you on the numbers, and we can fill in some of the operational side as well. So, Kyle, I'll call it the government group, which is predominantly Medicare. 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 Lee Sean 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 in generating test volumes. So we're in that transition phase.

Yeah, and, 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. And so 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 health care events, while positioning ourselves so that once we get Medicare that we can aggressively drive up that percentage. So 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 with the same level of resources at maintaining our overall test line.

Okay, that's interesting. That's a good call, guys. Thanks. And then on the, you know, Dennis, you provided a bunch of numbers, and you do this every quarter, I think, around, like, you know, the percentage of claims you're recognizing revenue on, then the, like, the percentage that's adjudicated, like what's, you know, actually paid on there, what's the ASP there. So how have some of those, like, metrics kind of changed over time? I don't have all of that in front of me. I'm just curious if, like to the earlier point, if, you know, obviously like non-Medicare 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 ones are actually producing because, you know, just the waiting is kind of taking longer than maybe was like communicated maybe.

So that makes sense to you, if you could give a snapshot of how that's progressed.

Yeah, 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. And the first quarter certainly clouds 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 insurers. So 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, and 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. And then, and finally, we see where R&D is coming in each quarter. It's been pretty consistent, one to two million in expenses. But are you guys either still doing or thinking about generating clinical evidence either, you know, in a worst-case scenario with Moldex, which doesn't sound like it's happening, but just obviously worst case, or, you know, if you want to go for FDA or things like that, or just kind of like enhance the acceptance. I'm just curious if that line item could maybe expand over time.

Yeah, 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 LCT. But we are a data-driven company. We firmly believe in expanding our clinical evidence on an ongoing basis. And there is a lot of activity. It doesn't get a lot of attention because everyone's focused on – we're all, you know, very much focused on the reimbursement side. But there are ongoing clinical studies. There are ongoing institutional clinical studies. There's an active NIH study going on right now.

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

Great. And just if I could just, like, you know, add on to that just briefly. Sure. You know, years ago, I think your guys' intention was to, you know, scale this test, the question device and the test, you know, internationally, globally. You know, they're both CE-marked, you know, in Europe, obviously. So would you, 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? So I just, maybe we could separate the clinical evidence question from the international market question. So clinical evidence is not a 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 mark right off the bat from the earliest days.

And the challenge is, you know, the U. S. is obviously the largest market opportunity. We remain a small company. we have limited resources, and so we certainly would expect to focus our resources in the near term. Europe is a very difficult market for screening tests because of the overall economics of their socialized health system. And when we've looked at this in the past, it just simply has not made sense. And I believe even many of the larger companies, their traction in Europe is molecular diagnostic companies 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. , and we engage in those conversations, and we've explored 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 made sense from an overall business strategy point of view, but it's certainly something we're open to. And, 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 related to our U. S. efforts.

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

Yeah, thanks for, I'm just checking a little bit here, Mike. Thanks for bringing that up because that was the portion of our, of the pre-record that got garbled, so I'm happy to have the opportunity to fill that. DDW went great. So 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. And 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, frankly, our best conference ever. just very there's a lot of just generalized increased attention, increased buzz around esophageal pre-cancer screening, about baritophagus 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 related to ISA-Guard that were very well received. One of the highlights of the meeting, in addition to all of that, was that the American Gastroenterology Association presented a preview of an upcoming update, a draft of their updated guidelines, clinical practice guidelines for Barrett's esophagus. And we're very excited about that. They, for the first time, at least in this preview, they highlight individual non-metoscopic testing, tests, including Isagard and Isacek by name, and they evaluate the clinical evidence for accuracy, the certainty of the evidence, and Isagard and Isacek came out or presented as having high certainty of evidence, which was the only one the rest of the potential future modalities were rated as low.

This is a preview of the draft, but 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, and having this finalized in this form will be a real good to us.

Okay, great. And then just a few financial questions. So I guess, Dennis, the share count, what should we be modeling? I think you said post-offering is $203 million, but there's $52 million in abeyance. I'm not sure if we should be including that in our share count or not. for now.

Yeah. 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. So I think 203 for the time being is probably the right number. But in the future, that additional $22 million that they're owed to those investors will be issued. These are long-term shareholders, so maybe a while before they get issued. But nonetheless, they're out there. But 203 is probably the right number to use for your EPS modeling. All right. And 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?

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 reimbursement landscape.

Okay, great. Thank you. Thanks, Tony.

Yeah, the first quarter, you 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. So you'll see more of that as the year unfolds, but that's correct in the first quarter. Okay, I understand. And just also, is that reimbursement from the VA contract, that's completely separate from Medicare, right? You'll get whatever their – the $1,900 rate for the test, you'll get reimbursed through the VA system regardless of when you get the CMS reimbursement. So you could go full steam ahead on that opportunity.

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

It's not a reimbursement. And then...

Right.

Well, I mean, it's a bit of a multi-passeted question there, right? The VA, as you mentioned, is 9 million patients, and we'll be able to target that. We're able – 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 percent Medicare. And once we have Medicare coverage, there's no reason we can't, as others have done, to expand beyond that number. and Medicare, I believe, represents 60 to 80 million people overall.

So that's that. On the commercial side, we haven't yet reached the level. We're still in the early stages with coverage and contracting, so we have not reported on covered 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 corporate lives. But it's a little bit premature to do that on the commercial side.

Yeah, I think productively solid has gone up over the years. We have an increasingly tenured and increasingly experienced staff, but 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 our national director on that. And so, yeah, productivity as a whole is great. And I think, as we mentioned, we positioned ourselves, 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 in sort of the most efficient way to maintain that productivity as we expand our team.

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

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. Great. Well, that's all the questions I have. I wish you guys good luck. Thank you.

Thanks, Ed.

I'll turn the call back over to Dr. Lee Sean Akalak. Great. Thanks, Operator, and thank you all for taking the time and for your attention this morning. Again, an apologies for the technical glitch that led to the need being cut off. I appreciate the opportunity. Obviously, great questions, as always, from our analysts, and I appreciate the opportunity to fill in some of those gaps.

I hope you all found this dialogue informative. So, again, just obviously we're acknowledging and sharing some of the frustrations with regard to the logistics around the LSD process, but, 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 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 great opportunities on the commercial payer side as well as something we didn't spend as much time on today but is progressing very nicely which is our engagement with this series of major health systems and 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.

So thanks again. As always, we encourage you to keep progress of our progress. 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. So thanks again, everybody, and have a great day.