Lucid Diagnostics Inc. Common Stock 2026 Q2 Earnings Call

Please go ahead. Thank you, operator, and good morning, everyone.

Thank you for participating in today's business update call. Joining me today on the call are Dr. Eli Shonberg, Chairman and Chief Executive Officer of Lucid Diagnostics, along with Dennis McGrath, Chief Financial Officer. The press release announcing our business update and financial results is available on Lucid's website. Please take a moment to read the disclaimers about forward-looking statements in the press release. The business update, press release, and conference call all include forward-looking statements, and these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from statements made. Factors that could cause actual results to differ are described in the disclaimer and in our filings with the SEC.

For a list and a description of these and other important risks and uncertainties that may affect future operations, see part one, item one-A, entitled Risk Factors in Lucid's most recent annual report on Forms 10-K filed with the SEC and any subsequent updates filed in quarter reports on Forms 10-Q and subsequent Forms 8-K. Except as required by law, Lucid disclaims any intentions or obligations to publicly update or revise any forward-looking statements to reflect changes in expectations or in events, conditions, or circumstances on which expectations may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statement. I would now like to turn the call over to Dr. Eli Shonberg.

Thank you, Matt, and good morning, everyone. Thank you for joining us today and for your continued engagement and support. We continue to make strong progress across key commercialization initiatives as we await Medicare draft LCD publication, and we're eager to discuss these today. Let's begin with some key highlights from the second quarter and recently. This quarter, our laboratory performed 2,770 EsoGuard tests, and we recognized $1.5 million in revenue. Revenue is up about 17% from the prior quarter, and our volume remains within our target range of approximately 2,500 to 3,000 tests. This reflects increased commercial focus on testing opportunities that are likely to drive revenue. In addition, we secured our first laboratory benefit manager commercial coverage policy from Concert. The Concert policy's already been adopted by multiple client health plans.

This is a major commercial coverage milestone and represents third-party review of what EsoGuard's clinical evidence. Concert concluded that EsoGuard is medically necessary for patients meeting established screening criteria and that the evidence definitively demonstrates improved health outcomes. We will talk more about Concert and the significance of this policy shortly. Now let's turn to key updates related to market access and commercialization. With regard to Medicare, we continue to wait for publication of our draft LCD, but we remain confident that we will secure a positive draft policy. We do note that there has been a broad backlog at CMS with regard to LCD output. However, there does seem to be a sign that backlog may be loosening. Several long-awaited LCDs have been posted in recent weeks. With regard to the VA, this remains a very large opportunity for us, and the process is progressing very well.

Our team has built a robust, high-quality pipeline of VA centers across the U.S., and most notably, our clinical engagement has been extremely positive. We are essentially getting no pushback from the clinicians. The team is making progress in translating those clinical engagements into contracts. A key focus is securing contracts for the new federal fiscal year, which begins on October 1. Next, let's try to provide some additional context on Concert and our commercial coverage updates. As anticipated last week, Concert issued positive coverage policy for EsoGuard, representing our first laboratory benefit manager LCD coverage policy. They specifically covered our test but noted that other esophageal pre-cancer tests that were evaluated were considered investigational due to insufficient evidence. Let's talk a little bit about how laboratory benefit managers work.

Laboratory benefit managers concentrate the technical assessment of molecular diagnostic tests into single entities, and client health plans contract with them in order to write coverage policies. Three of Concert's client plans have adopted our policy, with several more expected to do so in the coming months. Not all plans permit public announcements, so they will not necessarily be presenting that publicly. The plans that have adopted the policy are somewhat concentrated in securing these regional commercial plans enhances our ability to allocate resources accordingly. We continue to be actively engaged with all the other laboratory benefit managers, and we do feel confident that the Concert policy will set a precedent for others. Moving on to healthcare economic research. Unlike with Medicare, an important tool for commercial coverage is demonstrating cost-effective.

We have partnered with the lead author of the American College of Gastroenterology guidelines and have developed a sophisticated cost-effectiveness model, working alongside AGORA experts and international key opinion leaders in Barrett's esophagus and esophageal cancer. This model compares the long-term clinical and economic impact of EsoGuard screening versus current care across the at-risk population. It is very important to take a long-term view of these cost-effectiveness models, particularly in screening, where the benefits of early detection can take years to emerge. The model assessed the impact on BE detection, on esophageal cancer stage shifting, esophageal cancer avoidance, and esophageal cancer-related mortality. This information helps payers assess whether the clinical benefits of EsoGuard Genos justify the cost. The model is expected to be completed this summer, but the preliminary results are actually very encouraging and show positive clinical impact, with EsoGuard appearing as cost-effective compared to current care.

The other key area of focus is our engagements with health systems. There's extensive health system work underway and it's a major part of our commercialization strategy. We're translating those initial conversations into active implementation work. The lead time of this can take a bit of time, but we're starting to see results from it. Part of the work involves tailoring the clinical workflow, supporting patient identification, ordering, and results. The EHR plays a particularly important role in health systems with regard to automated patient identification, streamlining patients within the health systems toward EsoGuard testing as appropriate. To summary, we really are getting meaningful traction across market access and our commercialization efforts, and we haven't been idle as we await Medicare coverage. Obviously, Medicare coverage remains our most important near-term milestone, and we remain confident we will secure a positive draft policy.

Our VA work, as I noted, is progressing well, and we expect that success to build in the new budget cycle and contribute to future revenue growth. Commercial coverage, economic evidence, and health system infrastructure are all advancing extremely well. Collectively, this progress is increasing Lucid's visibility and creating interesting opportunities for broader strategic engagement. With that, I'll turn it over to Dennis for the financial update.

Thanks, Lishan, and good morning, everyone. The summary financial results for the second quarter were reported in our press release that has been distributed. On the next three slides, I'll emphasize a few key financial highlights from the second quarter, but I encourage you to consider these remarks in the context of the full disclosures covered in our quarterly report on Form 10-Q. With regard to the balance sheet, cash at quarter end, June 30th, was $33.4 million, which is essentially flat with the year-end balance. We completed a common stock offering during the quarter with net proceeds of about $16.8 million. The average burn rate for the last four quarters, including cash interest on the debt, was $11.6 million per quarter, with the second quarter a little bit lower at $11.3 million.

Our $22 million secured convertible debt is a 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 $23.5 million at quarter end is really the only other substantive change from the previously reported balances at the end of the year and also at the end of the first quarter. The fair value decrease of $1.7 million in the quarter reflects a mark-to-market quarterly adjustment in parallel with the common stock price changes between the periods. The fair value decrease also is a substantial part of the second quarter income pickup of $1 million reflected in other income in the P&L. Shares outstanding, including unvested restricted stock awards, and the earlier conversion of the remainder of the preferred shares, are approximately 203 million.

After the conversion of the Series B1 preferred shares on May 6th, there were approximately 22 million common shares held in abeyance due to the 4.99% ownership blockers in the former Series B and B1 certificate of designation. If these abeyance shares had been issued, common shares outstanding would be around 225 million. The GAAP outstanding shares as of June 30th of 190.8 million are reflected on the slide as well as on the face of the balance sheet in the 10-Q. GAAP shares do not reflect unvested RSA amounts, and there are no longer any preferred shares outstanding. At present, PAVmed Inc. continues to be the single largest common shareholder of Lucid Diagnostics, with ownership of approximately 15% of the common shares outstanding.