Lucid Diagnostics Inc.

Good morning, and welcome to the Lucid Diagnostics First Quarter 2026 Business Update Conference Call. Please note that 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 call are Dr. Leshawn Acklog, 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, see Part 1, Item 1A, entitled Risk Factors and Lucid from this recent annual report on Forms 10-K filed with the SEC. and any subsequent updates filed in the court 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 on 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-looking statements. I would now like to turn the call over to Dr. Leishan 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 recent weeks. We performed 3,177 e-cigar tests in the first quarter of this year, and it's generated revenue at $1.3 million. The revenue was down slightly, but proportional to volume, which receded 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 had 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 in submitting 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. At each of these individual test and triage patients to endoscopy, the outcome of this will be peer-reviewed publications that demonstrate the health and economic value of Visa Card. Overall, in summary, a lot's going on, particularly on the market access and the commercial side. Obviously, all focuses on Medicare, and we acknowledge joint frustration with some of the delays within the Medicare LTD 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. It really hasn't wavered at all. But as we've discussed before, we're not idle. As we're awaiting Medicare, the commercial team continues to drive its activities, to drive patients, 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 to generate 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, COVID, healthcare economics, and such, and our direct engagements with multiple health systems across the country. And it continues to accelerate, and we think we'll 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. John, and good morning. I've seen EGD only upon a positive ease of our test. It's very attractive, too. 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 e-Cigar is a very attractive option to avoid patients having to travel for EGP if they have a negative e-Cigar test. So overall, lots of activity here. We're seeing progress. We really look forward to further engagement across the entire VAs. major GI meeting, major annual meeting of gastroenterologists under the auspices of the American Gastroenterologic Association, the AGA. We had multiple abstractions 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 regards to putting out local coverage determinations remain, and we have expectations that that will pick up in the near future.

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...

Good morning, everyone. Obviously, we had a glitch in the pre-recorded prepared remarks, but the transition was at the appropriate time, so I'll pick up from there. So, the summary financial results for the first 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 first quarter. I'd 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 in quarter end March 31st was $27.9 million. On a pro forma basis, including the recent April 24th financing, pro forma cash equals $44.8 million. The average burn rate for the last four quarters included cash interest on the debt was $11.3 million per quarter, with the first quarter a bit higher, $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 ends 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 is also a substantial part of the first quarter expense charge of $1.9 million reflected in other income in the P&L. Shares outstanding, including unvested restricted stock rewards and conversion of the remainder of the preferred shares as of last week are approximately $203 million. After the conversion of the preferred Series B1 on May 6, there was approximately 22.3 million common shares held in advance due to the 4.99% blockers, ownership blockers in Series B and B1 Certificate of Destination. If these abeyance shares had been issued, common shares outstanding would be around 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 10-Q. GAAP shares do not reflect unvested RSA amounts, and there are no longer any preferred shares outstanding. At present, PadMed continues to be the single largest common shareholder of Lucid Diagnostics with ownership of approximately 15% of the common shares outstanding. Although PadMed no longer has voting control of Lucid, PadMed together with the board and management still have considerable influence over Lucid with approximately 25% voting interest. Next slide, Matt. With regards 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 and my comments in light of the cautionary disclosure at the bottom of the slide about supplemental information, particularly non-GAAP information. Our sales team sold almost 3,200 tests, 3,177 to be exact, for the first quarter, with a billable value over $8.7 million, resulting in recognized revenue of $1.3 million. The test volume for the quarter was is above the upper end of the 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 to determining how revenue is recognized at this point in the 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 will see in our 10-Q, this is called Variable Consideration of Jargon and Gaps, ASC 606 Revenue Recognition Guidelines, and presently there's 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 position. 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 is important to note that a pending Medicare approval decision impacts 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 dates of service within 12 months of a final Medicare policy will also get paid within a reasonable timeframe after the policy is issued. With regard to the remainder of the P&L, the first quarter's total op-ex on both a GAAP and a non-GAAP basis is generally flat year over year. As expected, there will be increases in sales team costs, which are substantially offset by decreases in G&A expenses. This sequential decrease in total op-ex 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. Next slide. With regard to the operating expenses, this slide is a graphic illustration of the 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 operating non-GAAP op-ex for the previous five quarters, $11.7 million versus an average of $12 million. Let me close with a few reimbursement highlights for the first quarter. In the first quarter, we sold almost 3,200 tests, reflecting about just under $9 million pro forma revenue at our list price of $27.49. During the first quarter, we recognized revenue of about 14% of that, another $1.3 million. Recognized revenue included about 72% from insurance claims submitted in prior quarters, the longest dated item almost two years ago. Of the claims submitted in the first quarter, about 77% have been adjudicated, 23% are pending. And out of that 77% that have been adjudicated, about 31% resulted in an allowable amount by the insurance company with an average of $1,646 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, or require prior authorization, or require additional medical records. Balance are deemed to be not covered. So with that, operator, let's open it up for questions.

Thanks, Gail. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speaker phone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Mark with CPIG. Please go ahead.

Good morning, Mark. Good morning. Hey, good morning, guys. I figured I would start with a reimbursement question. Just curious if you're, you know, would love just an update as far as what you might be hearing from Moldex, you know, As someone who covers the industry, it was nice to see Medicare coverage decision come into the space yesterday. So we know that they're still open for business. But can you just give us a sense for what you're hearing, maybe any back and forth? We'd love to hear any color on that topic. Thanks.

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 the Novitas LCD that I 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 the LTDs 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 CAC 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 we still are highly confident will result in a positive outcome into 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? Sure. 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 it relates to VAs. 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 $9,238. 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. It's 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 information, connections with and engagements with clinical champions within their own region, but we've also centralized. We have two senior members of our team that are focused on nationally on sort of a strategic accounts matter with individual VAs. Those conversations, as we noted, our 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 many more along the way. The VAs, you know, obviously operate within the overall federal budget and they all have their individual questions. 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-budget. But in parallel, we are 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 engagements. 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 EGDs. So the value, the clinical utility, the economic value of ESA card 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 centers. 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 engaged – 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. HR integration with the VA is really not a major factor. I think you point out the fact that there's a lot of work, I believe, to integrate their systems, but in the individual health systems, it's much less of a factor than it is. outside the VA system in our traditional commercial engagements, which we've discussed in our last call. I'm 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 run, that we would have to wait for Medicare. And there certainly are a subset and maybe even a majority of payers where that is. 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 Isagard as an appropriate triage test to use. 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 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 LBM 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 LBMs on a pathway forward.

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

Your next question comes from Kyle with Canaccord. Please go ahead. Good morning, Kyle.

Hi, guys. Good morning. So, I wanted to start where we typically start off with and ask about the percentage of claims that are represented by the Medicare segment. It's been like, you know, we think like the increasing portion of the test that you guys report is still kind of probably below 20% of the total claims, but how is that, where does it stand now in When you think about some of your efforts to either, you know, increase the sales team in favor of more, like, Medicare-focused reps or maybe train them or incentivize them a little bit more to, like, kind of increase that kind of area, that segment of the market a bit more, how would that progress as well in light of the, hopefully, like, increased percentage, like, the NICs as well?

I like that effect 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% fell to around 60-some tests. But the compensation plans for the sales game, and Leishan will expand upon this, is focused on predominantly the revenue-generating components of the target population, and that is contracted revenue as well as Medicare and VA. That's where their focus is in generally, testifying. 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 op-ex. 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 focus with the same level of resources and 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, the percentage of claims you're recognizing revenue on, then the... the percentage that's adjudicated, like what's actually paid on there, what's the ASB there. So how have some of those 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 obviously non-Medicare payers are getting more comfortable with this product or are they almost like you know, waiting and maybe payment or, you know, and that was actually reducing because, you know, just the waiting is kind of taking longer than maybe was, like, indicated. Maybe so just that makes sense to you if you could give a snapshot on 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 payments. 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 is 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, $1 million to $2 million in expenses. But are you guys either still doing or thinking about generating clinical evidence for either, you know, in a worst-case scenario with Moldex, which doesn't sound like it's happening, but just, yeah, 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, that our commitment to ongoing data generation and ongoing clinical evidence is not connected to the fact that we believe that we have sufficient evidence to secure the OCD. 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 LVT role 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 regards to generating clinical evidence is fundamentally informed by that.

Great. And 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 clutch device and the test, you know, internationally, globally. You know, they're both C-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. We use 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 at 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 – and potentially expand internationally. We, you know, we looked from day one at opportunities internationally, but Europe, as you noted, we went ahead and got to E-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 look 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 countries. OUS countries for the opportunity to partner. We've had some from Canada, South America, the UK, and we engage in those conversations and we look forward to 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 really made sense to us. 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.

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

Thanks, guys.

Okay.

Your next question comes from Mike with Needham. Please go ahead.

Hey, thanks for taking my questions. I guess just the DDW presence that you guys had, can you maybe comment on kind of interest level you're seeing from physicians, any kind of feedback, et cetera?

Yeah, thanks for, I'm just checking a little bit here, Mike. Thanks for bringing that up because that was the portion of the prerecorded so I'm happy to have the opportunity to distill that. DDLV went great. So for those on the call who are not aware, DDLV 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, it was our best, frankly, our best conference ever. There's a lot of just generalized increased attention, increased buzz around pre-cancer screening, 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, you know, on the academic side. There were multiple abstracts that related to ISAGARD that were all very well received. One of the highlights of the meeting, in addition to all of that, was that the American Gastroenterological Association presented a preview of an upcoming update, a draft of their updated guidelines, clinical practice guidelines for Barrett's esophagus. We're very excited about that. They, for the first time, at least in this preview, they highlight individual momentoscopic 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, were presented as having high certainty of evidence. which was the only one, the rest of the potential future modalities were rated as low. Now, 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 boon to us.

Okay, great. And then just a few financial questions. So I guess, Dennis, the share count, you know, what should we be modeling? I think you said post-offering it's $203 million, but there's $50 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 holder's 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. Okay. But in the future, that additional $22 million that they're owed to those investors will be issued. These are long-term shareholders, so it may be 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 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, you know, reimbursement landscape. Okay. Great. Thank you.

Your next question comes from Jeremy with Maxim.

Please go ahead. Good morning. Thank you for taking my question. I'm just related to the VA. I think I inferred, and correct me if I'm wrong, In the first quarter, there was no contribution to both volume or revenue from the VA opportunity from that contract?

Yeah, the first quarter, if 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. Okay, I understand. And just also, is that reimbursement from the VA contract, that's completely separate from Medicare, right? You'll get whatever 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 can go full steam ahead on that opportunity.

That's correct. 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.

That's a great reimbursement. POs. PO invoicing. Right. No, no, that's great. And maybe also, I don't know if you have this number, how many, let's say, we'll call it covered lives you have currently based both in the VA. I think you mentioned last call that was roughly 9 million lives, and then maybe the commercial payers that you have also under contract now. How many covered lives then, and hopefully when you get the Medicare, what would that increase to?

Well, I mean, it's a bit of a multi-faceted question there, right? The VA, as you mentioned, is 9 million patients, and we'll be able to target that 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% Medicare, and once we have Medicare coverage, there's no reason we can't, as others have done, expand beyond that number, and Medicare, I believe, represents 60, 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 contracting and with coverage and contracting. So we have not reported on covered lives. Once this first LDL, Laboratory Benefit Manager, coverage policy is publicized and we hear from the payers that operate and work under that policy, that outsource their technical assessments to that LVM will be able to start discussing corporate lives. It's a little bit premature to do that on the commercial side.

Okay. Understood. And then just this last question, you know, how should we look at, you know, your Salesforce productivity currently versus let's say what it was a year ago, the sales on cycle, especially considering now you've said, I think you've said on the whole your entire sales team is also engaging with the VA so they have You know, there's new, I guess, job descriptions they have. They're new. So how should we look at that?

Yeah, I think productivity is solid. It's gone up over the years. We have 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 teams. director on that. And so, yeah, productivity as a whole is great. And I think, as we mentioned, we are, we've 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. And it's 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. Thanks, Jeremy.

Your next question comes from Ed Wu with Ascendant Capital. Please go ahead.

Morning, Ed. Yeah, congratulations. Progress. My question is on the Medicare reimbursement rate. Is there any opportunity to increase it over time?

We have no plans to do so. I mean, the whole Medicare pre-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 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.

There are no further questions at this time. I'll turn the call back over to Dr. Lishan Akulak.

Great. Thanks, operator, and thank you all for taking the time and for your attention this morning. Again, apologies for the technical glitch that led to me being cut off. I appreciate the opportunity. Obviously, great questions, as always, from our analysts, and appreciated 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 LCD process. But, you know, just to continue to reiterate, our confidence has not wavered that this is a near-term positive outcome. Again, as we've said repeatedly, as we wait to 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, you know, great opportunities on the commercial payer side as well as something we didn't spend as much time on today but is working on, is progressing very nicely, which is our engagement with a 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 abreast of our progress. Please follow up on our news releases, the USAID 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.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.