Lucid Diagnostics Fourth Quarter 2025 Earnings Call - VA Contract at Medicare Rate and Medicare Coverage Imminent

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

Matt Riley, Vice President of Investor Relations, Lucid Diagnostics: Thank you, operator, and good morning, everyone. Thank you for participating in today’s business update call. Joining me today on the call are Dr. Lishan Aklog, Chairman and CEO of Lucid Diagnostics, along with Dennis M. McGrath, Chief Financial Officer. The press release announcing our business update and financial results is available on Lucid’s website. Please take a moment to read the disclaimers about forward-looking statements in the press release. The business update, press release, and conference call all include forward-looking statements, and these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from statements made. Factors that could cause actual results to differ are described in the disclaimer and in our filings with the Securities and Exchange Commission.

For a list and a description of these and other important risk factors and uncertainties that may affect future operations, see Part I, Item 1A, entitled Risk Factors in Lucid Diagnostics’ most recent annual report on Form 10-K filed with the SEC and any subsequent updates filed in quarterly reports on Form 10-Q and subsequent Form 8-K. Except as required by law, Lucid Diagnostics disclaims any intentions or obligations to publicly update or revise any forward-looking statements to reflect changes, expectations, or events, conditions, or circumstances on which the expectations may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements. I would now like to turn the call over to Dr. Lishan Aklog, Chairman and CEO of Lucid Diagnostics. Lishan?

Dr. Lishan Aklog, Chairman and Chief Executive Officer, 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 for the fourth quarter and in recent weeks. We’ll start with some key highlights from the commercial side. Our EsoGuard test volume in the fourth quarter was 3,664. That exceeds our target range that we’ve articulated regularly about of approximately 2,500-3,000 tests per quarter. That represents a 29% increase from the third quarter of 2025. Revenue came in at $1.5 million for the fourth quarter, about a 24% increase from the third quarter of 2025.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

EsoGuard really fits in nicely within this clinical ecosystem as a test that will allow for broader screening, triaging only those who are positive EsoGuard, only those who have the highest yield to EGD. The process is fairly straightforward. Since we’re on the FSS now, we can engage to find clinical champions at that center. We engage in contracting, have a PO issued at the time. We do need to coordinate cell collection at these sites, and we have a variety of pathways to do that. We’ve also figured out how to allocate our commercial resources accordingly.

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

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

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

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

All of that groundwork has really been laid really nicely culminating in the data that will be published soon, and it’s public, it’s been released on the real-world experience. That foundation, 2025 was a really important year for us in laying that foundation. As we move into 2026, our focus is on converting the lessons that we’ve learned, converting our ability to generate that demand into revenue, and the focus is on the VA and Medicare, the VA right now, and then on Medicare once we secure that coverage.

That progress with the VA, with our commercial payers and with Medicare really puts us in a great position to turn the corner here with regard to our commercial experience and track record, and to ultimately help us be in a position where we can put on the gas and drive test volume and revenue accordingly. Everything we’ve done to date, all the real-world experience that we’ve been able to document, our full body of clinical evidence puts us in a great position to do so. You know, one aspect of this that comes up regularly has to do with EHR integration, and the timing for this is perfect because we believe we’re at an inflection point.

In this day and age, in 2026, for a molecular diagnostic test to be implemented clinically, it’s not sufficient just to get physician adoption. Having EHR integration, which facilitates not only the ordering of the test, but the delivery of the test results, and in our case, in fact, facilitating the identification of patients through the identification of risk factors, EHR integration can be a major boost to commercial activity. We have, in addition to this other work on the commercial side, on the VA side, and on Medicare, started to put some resources to work on EHR integration.

Now, at this stage, we’re doing so using systems that are more cost-effective to us, but that still allow us to, when we engage with the health system, for example, to engage in such a way so that the EHR, the Epic instance or whatever other system that health system happens to be using, we can actually offer the ordering physicians the ability to order the test and the ability to receive the results. Once we are in a position where we have accelerated volume and we’re further along, we’re already in a position to invest in the most aggressive way to pursue EHR integration, which is to actually engage with Epic directly on Epic, and we’re well-positioned to do that at the appropriate time.

Again, hopefully, you know, again, we’re all waiting for Medicare. Hopefully, that’s any day now, but hopefully, you get a sense as to the extensive work this team has put in over the last quarter to set us up for a lot of success this year, we’re doing now and once we get Medicare. With that, I’ll pass it over to Dennis to provide an update on the financials.

Dennis M. McGrath, Chief Financial Officer, Lucid Diagnostics: Thanks, Lishan, and good morning, everyone. The summary financial results for the fourth quarter and the year were reported in our press release that’s been distributed. On the next three slides, I wanna emphasize a few key financial highlights from the fourth quarter, but I encourage you to consider these remarks in the context of the full disclosures covered in our annual report on Form 10-K. With regard to the balance sheet, cash at year-end, December 31, was $34.7 million. The average burn rate, including cash interest on the debt for 2025, was $11.1 million per quarter, with the fourth quarter a bit higher as we made investments in our sales team and market access staffing totaling about $500,000 in the fourth quarter, and we settled some annual compensation obligations during the period.

You’ll recall at the end of 2024, we refinanced our convertible debt into a $22 million 5-year note, interest only at 12% with a $1 conversion price, which is held by long-term shareholders. The fair value of the convertible notes in the amount of $24 million at year-end is really the only other substantive change from the previously reported balances at the end of the third quarter. The fair value increase of $1.7 million in the quarter re-reflects a marked-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 fourth quarter expense charge of $2.4 million, reflected in other income in the P&L.

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

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

With regard to the P&L, this slide compares this year’s fourth quarter to last year’s fourth quarter and year-over-year on certain key items. I trust you will review the information and my comments in light of the cautionary disclosure in the bottom of the slide about supplemental information, particularly on non-GAAP information. Our sales team sold over 3,600 tests for the fourth quarter with a billable value over $9 million, resulting in recognized revenue of $1.5 million, reflecting a sequential 29% increase in test volume and 24% sequential recognized revenue for the period. With new investors once again joining our call, it’s worth repeating what we’ve communicated in the past quarters about revenue recognition. The key determinant in how revenue is recognized at this point in our reimbursement journey is the probability of collection.

Therefore, due to the fact that we are in the transitional stages of our reimbursement process, means revenue recognition for the majority of our claims submitted to whether traditional government or private health insurers will be recognized when the claim is actually collected versus when the patient report is delivered, invoiced, and submitted for reimbursement. As you’ll see in our 10-K, this is called variable consideration in the jargon of GAAP’s ASC 606 revenue recognition guidelines, and presently there is insufficient predictive data to reflect revenue from all of our quarterly test volume at the point where the test report is delivered to the referring physician. For billable amounts contracted directly with employers and 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, which will be the case with the VA. It’s important to note that pending Medicare approval decision impacts 40%-50% of our addressable patient population and therefore will have a significant impact on our future revenue recognition analysis. Furthermore, for tests performed on Medicare patients with dates of service within 12 months of a final positive Medicare policy will also get paid within a reasonable time frame after the final policy is issued. With regard to the remainder of the P&L, the variation analysis for the fourth quarter subsequently aligns with the year-over-year analysis. I’ll focus my comments on the annual changes and happily answer any specific questions on the last quarter in the Q&A.

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

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

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

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. One moment, please, for your first question. Your first question comes from Mark Massaro with BTIG. Your line is now open.

Dennis M. McGrath, Chief Financial Officer, Lucid Diagnostics: Morning, Mark.

Mark Massaro, Analyst, BTIG: Hey, guys.

Dennis M. McGrath, Chief Financial Officer, Lucid Diagnostics: Mark.

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

Dennis M. McGrath, Chief Financial Officer, Lucid Diagnostics: Yeah. Thanks for the question. I think we might see that as a new run rate, but it’s not because that represents the VA. That’s certainly. We’re in the early stages of engaging with individual VAs. We do think, believe that we’ll start seeing some meaningful volume come from the VA on top of the volume we’ve already established. You know, I wouldn’t discount two things.

One is the fact that, you know, the productivity of our team as we become more established continues to improve over time. But also, that as we’re transitioning and moving with the same commercial resources towards Medicare, the Medicare population and towards now increasingly VA, that we will see the fruit of those efforts. No, that 800 increase is not directly attributable to the VA. It’s too soon for that.

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

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

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

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

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

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

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

What we’ve been working on since the fall, which as we’ve discussed, is taking our commercial team, which has been frankly incentivized to drive based on volume and incentivized to drive event-based testing, increasingly event-based testing that is subject to contracting and steadily move them towards engaging with physicians, physician practices and the broader team with health systems. To do so in a way without sacrificing volume and revenue in the short term. It’s a little bit of a tricky balancing act, and really the commercial leadership team has done a remarkable job of not just maintaining volume, but as we’ve noted, growing volume while turning the ship towards

in the direction of more traditional engagements with physicians and health systems, targeting so we can get our Medicare volume up. You know, the examples are really different in every site, but we have, you know, some really fantastic examples of that. A couple examples in the Northeast and on the Atlantic Coast where, you know, high productivity teams in the field who are doing really well with engaging with fire departments, acquiring volume, and increasingly getting those events to be contracted, shifting towards Medicare, towards engaging with physicians.

We’re seeing the way that manifests itself on the ground is we’re seeing what we’ve referred to as our satellite Lucid Test Center activity at individual practices and health systems come to fruition. We have, you know, we’ll suddenly see a practice that one of our field members has engaged with you know scheduled testing events. The SLTC model is where we bring our nurses to the physician practice, co-locate them on scheduled days to test patients. We had one recently that was notable where our clinician came in and tested, I believe it was 30 patients in a day, and the vast majority of those were Medicare patients.

That process of kind of turning the ship while maintaining our volume and maintaining our revenue is working, and it’s working because of a very carefully designed incentive plan and training program to train critical, you know, folks that are really engaged and have had significant time in the field now with this. It’s going quite well. I’m not sure by the end of this year, Dennis may want to comment on that that we’ll be ready because we are making this transition toward one, you know, dominated by one type of testing to another, whether we’ll be in a position to start reporting on on productivity on a rep-by-rep basis. Certainly, I think that’s something that’ll be coming next year.

Dennis, do you want to just confirm that from your perspective?

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

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

Dr. Lishan Aklog, Chairman and Chief Executive Officer, Lucid Diagnostics: Thanks, Mark.

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

Dr. Lishan Aklog, Chairman and Chief Executive Officer, Lucid Diagnostics: Good morning, Kyle.

Kyle Mikson, Analyst, Canaccord: Good morning.

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

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

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

We expect as we move through 25, the percentage of our test volume with Medicare beneficiaries will be higher as well.

Dr. Lishan Aklog, Chairman and Chief Executive Officer, Lucid Diagnostics: Just a couple of reminders on that, Kyle, just for the listeners. Based on the epidemiology of the risk factors of patients recommended for testing, about 40, probably closer to 50% of patients would be in a Medicare population. But our goal is to drive that in the early phases above that. Just a reminder that to Dennis’s the numbers that Dennis offered, that’s really just less than one quarter of if after the CAC meeting and after us transitioning the team and training them and adjusting incentives and so forth. It really just reflects the early stages of that.

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

Kyle Mikson, Analyst, Canaccord: Okay. Just to clarify, Dennis, you said, I think it’s like I heard 28%. Okay. Was that a quarter-over-quarter increase?

Dennis M. McGrath, Chief Financial Officer, Lucid Diagnostics: Yeah. The sequential increase in the fourth quarter from the third quarter was around 28% Medicare.

Kyle Mikson, Analyst, Canaccord: In Medicare claims?

Dennis M. McGrath, Chief Financial Officer, Lucid Diagnostics: Yeah, that’s correct.

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

Dennis M. McGrath, Chief Financial Officer, Lucid Diagnostics: In the third quarter, correct.

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

Honestly, it’s something that we don’t, you know, discuss a ton with investors in this area, so maybe it’d be helpful to dive into it.

Dennis M. McGrath, Chief Financial Officer, Lucid Diagnostics: Yeah. Just to be clear, even though we feel like there’s a path, a really interesting path, that UnitedHealthcare has brought forth and a couple of others

Dr. Lishan Aklog, Chairman and Chief Executive Officer, Lucid Diagnostics: Maybe in the mix with regard to using the EGD guidelines and essentially separate from the LBM process. I think it’s an important opportunity to emphasize that the LBM process remains kind of the main path towards positive coverage policy. Many or most of the plans continue to outsource the technical assessments and the writing of the policy. Ultimately, it’s the plan that decides the policy, but the writing of the policy and the technical assessment is still typically outsourced to the LBM. The LBMs range in size from smaller, medium to larger, and the number of covered lives they reach. As I said, we have had positive discussions with the largest LBM that covers the most and the largest claims, and then all up and down the chain in terms of size.

That we will announce, we obviously can’t announce it until it’s posted publicly. What’s useful about that is that, you know, the coverage policy really does align closely with the existing guidelines. As you may recall, Kyle, the proposed LCD also aligns with existing guidelines. There’s a nice consistency across the board between those. Lapidus, for those coming in, they target that particular LBM, as others have engagements with their clients, which are a set number of plans and a set number of covered lives. We will be able to use that information and know where those are geographically and be able to target those.

Now, that’s not going to happen immediately in terms of translating a coverage policy towards volume in that target coverage area and revenue, but it’s the first step. We’d see that obviously after a coverage policy. You still need to engage in a contracting discussion and agree on pricing and so forth. Yeah, being a network following a coverage policy is an important step.

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

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

Kyle Mikson, Analyst, Canaccord: Perfect. Thanks, guys.

Dr. Lishan Aklog, Chairman and Chief Executive Officer, Lucid Diagnostics: Great. Thanks, Kyle.

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

Mike Matson, Analyst, Needham: Good morning, Mike.

Yeah, thanks.

Dr. Lishan Aklog, Chairman and Chief Executive Officer, Lucid Diagnostics: Good morning, Mike.

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

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

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

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

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

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

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

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

Jeremy Pearlman, Analyst, Maxim Group: Okay. Got it. Thanks.

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

Dr. Lishan Aklog, Chairman and Chief Executive Officer, Lucid Diagnostics: Good morning, everyone. Jeremy-

Jeremy Pearlman, Analyst, Maxim Group: Good morning. How are you doing?

Dr. Lishan Aklog, Chairman and Chief Executive Officer, Lucid Diagnostics: Hey, good morning. How are you doing? Thank you for taking my question. Just, I want to circle back on the testing volume. You know, it was really strong quarter. Just maybe, you said it wasn’t earlier, it wasn’t due to any, you know, significant increase in VA testing. Is it higher utilization in existing accounts, new accounts signing up? Is it events driven, or is it just, you know, team productivity that’s just improving over time, and that’s why you said earlier that this could be a better run rate for testing volume going forward? I think it’s a mix of all of the above. Again, I just, you know, this is an opportunity to kind of give kudos to the team that they actually...

We grew volume during a quarter where we were asking them to make a significant transition away from kind of the higher, more efficient, event-based testing. Not away from those, but towards more traditional engagements, to drive Medicare and then increasingly with the VA. I would say it’s a kind of combination of the factors you listed, but still driven at the end by productivity because that volume has increased. That increase in volume, despite the structural changes, is driven by the same number of people. We haven’t increased the meaningful numbers in the field.

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

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

Dr. Lishan Aklog, Chairman and Chief Executive Officer, Lucid Diagnostics: Sure. I think if you start with 9 million patients, the proportion of those patients that would be recommended for testing by existing guidelines is certainly at least a couple million patients. Call it 20-25% of that population would be the target based on existing and the most conservative subset of those of the risk factors for testing. For example, over 50 with 3 risk factors based on the ACG. You take a couple million times the Medicare rate, and that’s what we would be the addressable market within the VA.

Jeremy Pearlman, Analyst, Maxim Group: Got it. Understood. Okay. It seems it’s a really good opportunity. Okay. Just the last question.

Dr. Lishan Aklog, Chairman and Chief Executive Officer, Lucid Diagnostics: Absolutely.

Jeremy Pearlman, Analyst, Maxim Group: I know, as you’ve mentioned, numerous times in the past that there’s a one-year look-back period for Medicare billing, so anything, once you get, you know, approval, you could look back a year. I’m just questioning why you know, it seems like we were hoping to get that draft letter by the end of 2025. Now it’s, you know, the end of the first quarter, so hopefully it’s really any day now, it’s really imminent. You know, what’s holding you back from, you know, signing on more sales, you know, beefing up the sales team and to push the Medicare because you still have that look back. Hopefully, you’ll get that. Then it’s not like you...

It’s, you know, it’s just maybe putting the cost up front and then getting the reimbursement, you know, in a couple of months once you get the approval. Just because you’re nervous, you know, that you never know with the.

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

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

We’re being judicious about it. We’ll accelerate that initiative once we know the timing of it.

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

Dennis M. McGrath, Chief Financial Officer, Lucid Diagnostics: That’s a-

Jeremy Pearlman, Analyst, Maxim Group: or roughly what that number does

Dennis M. McGrath, Chief Financial Officer, Lucid Diagnostics: It’s rolling a couple million dollars. Obviously, it changes every day, right? That we’re delayed in getting this towards a final policy. As a rule of thumb, it’s a couple million dollars of collections that we’ll be able to get soon after we get the final policy.

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

Dennis M. McGrath, Chief Financial Officer, Lucid Diagnostics: Thanks, Jeremy.

Dr. Lishan Aklog, Chairman and Chief Executive Officer, Lucid Diagnostics: Thanks, Jeremy.

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

Dr. Lishan Aklog, Chairman and Chief Executive Officer, Lucid Diagnostics: Great. Thanks, operator. Thank you all for taking the time and for your attention this morning. You know, really, as always, we appreciate, in particular, the thoughtful and informed questions by our analysts and hope all the listeners find that back and forth enlightening. Again, we really believe this is gonna be a big year for Lucid. You know, last year, we established a solid commercial foundation, established a really solid evidence base with addition to our evidence base with our large real-world study. Medicare is coming. It’s a matter of when, not if.

Our activity to date while we’re waiting for Medicare with the VA, with Medicare patients and our continued progress on the commercial side with payers and laboratory benefit managers continues to really lay a strong foundation for future growth. We’re also, you know, really excited on the commercial side to be moving into network credentialing and contracting for the first time with a large payer. We hope that will, you know, really be a transformational event in the coming weeks and quarters. Thanks again. As always, we encourage you to keep abreast of our progress. Please follow our news releases, our quarterly update calls, as well as through our website and social media.

Feel free to reach out to us if you have any questions. Thanks again, everybody. Have a great day.

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