Lucid Diagnostics Inc.

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.

Thank You operator and good morning everyone thank you for participating in today's business update call joining me today on the caller dr. Alicia MacLeod chairman and CEO of Lucid Diagnostics along with Dennis McGrath chief 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 for 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 1, Item 1A, entitled Risk Factors and Lucid's most recent annual report on Forms 10-K, filed with the FCC, 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 Florida Open 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 would differ from those contained in the Florida Open Statement. I would now like to turn the call over to Dr. Nishan Akhlaq, Chairman and CEO of Lucid. Nishan.

Thank you, Matt, and good morning, everyone. Thank you for joining us today and for your continued engagement and support. So, let's begin with some key highlights for the fourth quarter and in recent weeks. So, we'll start with some key highlights from the commercial side. Our Eastern Guard test volume in the fourth quarter was 3,664. That exceeds our target range that we've articulated regularly of approximately 2,500 to 3,000 tests per quarter, and that represents a 29% increase from the third quarter of 2025. Revenue came in at $1.5 million for the fourth quarter. That's 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. And 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. So let's talk about the VA. It was a really important milestone for us that we were awarded. U.S. Department of Internal Affairs, the VA contract for e-cigar. This was issued under the VA Federal Supply Schedule, or FFS, which centralizes ordering and includes pricing aligned with our established Medicare rate of $19.38. 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 pre-cancer testing. So 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 pre-cancer testing. This manuscript, which is now in the process of being peer-reviewed for publication, evaluated ESA-GARD and ESA-CHECK in nearly 12,000 at-risk patients, and 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 ESO Check cell collection was 95%, and 95% of procedures were completed in under two minutes. It's important that we compare that to the historical alternative to ESO Check and to sort of explain this in contrast to that. The sponge-based castle devices, which are 30 years old and somewhat antiquated, take at least 10 minutes or greater to do so. And 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 detachments. So this data across, again, a large number of patients, 12,000 in a real-world setting, really confirmed the scalability and the viability of ESA-Guard on samples collected with ESA-Check. It sets a very high standard that any clinically viable widespread pre-cancer screening tool must meet, and we really are quite skeptical that other technologies in this space will be able to reach that high standard. So ESA-Guard and ESA-Check clearly work in real life in real patients. and at real-world scale. And really, this 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 side conversations with Medicare. So 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 VAUs. So let's start with reimbursement. So obviously, we're all anxiously awaiting the publication of a draft LTD for Medicare. And we are really highly confident that this is close. We've had ongoing engagements in person and otherwise with the leadership of Moldy X. We continue to feel strongly and believe that the Moldy X 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. So 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 LTDs that have been held up. We have some positive signs in that some of the several LTDs 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. So there are the next steps, just to remind everybody, once we get this publication of this draft LCD that proposes coverage for e-cigar, there'll be a mandatory 45-day public comment period. After that public comment period, which includes the public meeting, there'll be a publication of a final LCD and an official notice in the register of e-cigar coverage. Once that final LCD and that official notice is complete, then Lucid will be eligible for payments going back on Medicare claims dating back one year. We're also making, you know, as we're awaiting here, as everybody else is, for Medicare coverage, we want to make it clear that we are continuing to push forward on two other very important fronts on the reimbursement and the commercial side. Let's catch up a little bit on the commercial side. So as we hinted at last time and now it's become clear that we have some very positive engagements with several of the large payers. The most notable one is with United Healthcare. So as we noted at our last meeting, United Healthcare included in their coverage policy for endoscopy, for EGD in this condition, the fact that a positive e-cigar test was provided was an appropriate indicator for coverage of the EGD. And we viewed that, and our consultants and others viewed that as a sign of effectively de facto coverage of the standard. So 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 once that's secure. There are some other examples where that's also the case, but 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 esagardine. 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 through the EGD policies, we'll continue to do that, but we'll also continue to engage with the laboratory benefit groups. And 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. The one additional challenge with the commercial payers in general, 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 these discussions in the coming quarters. We have secured, we believe, our first LVM positive policy coverage. We can't disclose that yet. That will be coming up in the next couple of months. And we had a very good conversation with the largest LPM 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 of a multiple Blue Cross Blue Shield plans, and those conversations continue to be in-depth and engaged, and we think that will result in future positive coverage policies from regional Blue Cross plans. In addition to that, we also remain engaged with with integrated networks. And there are several large networks across the country. One of them, a large one on the West Coast that we have had 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. And those look good, and we feel like we'll have some positive news on that front in the near future. So again, to reiterate, as we're waiting for Medicare, we're continuing to work hard at 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 FSF was important. getting on the FSS without discounting relative to Medicare, acknowledging and validating the Medicare price, and our clinical evidence was a big win. And what that now allows us to do is 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 VA Center in Cleveland that's published. Part of our clinical evidence package being in the VA population, very powerful as we engage. And 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. And so ESAGARD really fits in nicely within this clinical ecosystem as a test that will allow for broader screening and triaging only those who are positive ESAGARD, only those who have the highest yield to EGD. The process is fairly straightforward, but since we're on the FSS now, we can engage with, 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. So 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. And that happens both at that level, at the senior leadership level, but also in the field. So 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 relations with physicians and identify clinicians champions that they can hand over to the senior leadership team on the more strategic side. So all of this activity on the commercial team, all of the adjustments we're making, all the adjustments we've made on 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. So really to summarize from a commercial point of view, throughout 2025 we've demonstrated There's a market for ESAGAR 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 the 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 is an obstacle to engaging with health systems. And 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. So 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 on the VA and Medicare. The VA right now and then on Medicare once we secure that coverage. And so 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 drive, help us be in a position where we can put on the gas and drive test volume and revenue accordingly. And 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. One aspect of this that comes up regularly has to do, and the timing for this is perfect because we believe we're at an inflection point, has to do with EHR integration. In order, in this day and age, in 2026, for a molecular diagnostic test to be implemented clinically, it's not sufficient just to get sufficient 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 is a major, can be a major boost to commercial activity. In addition to this other work on the commercial side, on the VA side, and on Medicare, we've 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 Incidence or whatever other system that health system happens to be using, 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 Aura, and we're already in a position to do that at the appropriate time. So, 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 back.