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spk01: 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I would now like to turn the call over to your host, Michael Parks, Vice President, Investor Relations. Mr. Parks, you may begin.
spk02: Thank you, Jen, and good morning, everyone. Thank you for participating in today's fourth quarter 2022 business update call. The press release announcing this business update and the fourth quarter 2022 financials is available on the PAVMED website. Please take a moment to read the disclaimer about forward-looking statements in the press release. The business update press release and the conference call both 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 the statement's name. Factors that could cause results to differ are described in the disclaimer and in our filings with the U.S. Securities and Exchange Commission for a list description of these and other important risks and uncertainties that may affect future operations see part 1 item 1a entitled risk factors and path meds most recent annual report on form 10q filed with the SEC and subsequent updates filed in the quarterly reports on forms into and any subsequent form 8k filing except as required by law have that disclaims any intentions or obligations to publicly update or revise any forward-looking statements to reflect changes and expectations or an event conditions or circumstances on which those 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 Akhlaq, Chairman and CEO of Patman. Dr. Akhlaq?
spk03: DR. LISHAN AKHLAQ Thanks, Mike, and good morning, everyone. It's great to have you on today, and welcome to our quarterly update call. I'd like to first start by reminding you that we did do a Lucid conference call yesterday and that the webcast of that is available online. We'll cover Lucid today, but in a limited fashion so we have time to talk about the other aspects of the PadMed business. So I would encourage everyone to review the webcast for the Lucid call yesterday. I'd like to start with a bit of an overview on our strategic restructuring and then some recent highlights with Veris and Lucid. In the early part of January 2022, we initiated a strategic restructuring plan, an initiative that was designed to really maximize cash flow and protect our shareholders' interests over the long term in what were and still remain challenging market conditions. We made substantial adjustments to our near-term strategic priorities and the associated resource allocations. In summary, we shifted substantially all of our resources and efforts on accelerating commercialization of the Lucid and Veris products. We had a meaningful reduction in our workforce, about 20%, and in our quarterly cash burn. That initiative is completed. The team did a great job of responding to it, and now we're leaner and are able to focus on the areas that I highlighted. It's had a positive impact. Our consolidated cash runway has been extended, and our balance sheet is now stronger. And that's been further enhanced by just under $25 million financing that we announced into Lucid that we announced yesterday.
spk04: So some highlights.
spk03: I'll start with Veris. And again, I have limited comments about Lucid here. Veris Health is... You may know is our digital health subsidiary that is seeking to enhance personalized cancer care. Some major highlights over the last couple of months and quarters. We launched the Varus Cancer Care Platform, Varus CCP, and executed our first commercial contract with a practice in New Jersey. The platform went live last month. with patients now transmitting their physiologic data using our Verisbox devices to the cloud-based clinician portal, and patients now reporting their symptoms and quality of life parameters through the smartphone app, which is now available on the Apple App Store and Google Play. the oncology practice and the care team are now reviewing the physiologic clinical data that is coming from the patient on the portal. And the key is they're doing so in a way that allows them to bill for remote patient monitoring services, which is the key aspect of the business model. We are receiving subscription payments under the contract within the software as a service recurring revenue model. So lots of great progress. We're really excited about being off to the races with Veris. On the Lucid side, also really strong steady strides along focused on e-cigar commercialization. Our test volume growth remains strong. We secured a very important in-network contract with the largest secondary PPO multi-plan, which has access to approximately 15 million consumers. Overall, our commercial payer and network engagements are successful. are accelerating, and our contracts are now averaging over $2,000 per test. All of our PPO contracts are at or above Medicare. So in summary, the price is holding. We had a successful launch of a new horizon in our commercial efforts, which are high-volume hashtag CheckYourFoodTube events, and that was wildly successful, and we have a robust near-term pipeline of future events. And as I mentioned, we did secure just under $25 million in financing, which extends our cash runway well into 2024. Just two slides to summarize the structure of PadMed for those of you who are just learning about us. PadMed is a diversified, commercial-stage medical technology company. We operate in medical devices and diagnostics, as well as in digital health. And we operate under a shared services model where business units and subsidiaries share services at the administrative level and really at all other aspects of regulatory and product development, clinical affairs, clinical research, and so forth, which provides us with economies of scale, overall risk mitigation, and other advantages. We currently have two subsidiaries, Lucid Diagnostics, which is publicly traded on the NASDAQ, and Veris Health, which is privately held, and we'll do updates about both. I'll start with Veris. Excuse me. So Veris is a commercial-stage digital health company that's focused on enhanced personalized cancer care. We know that cancer patients face high rates of complications, which drive poor patient outcomes and health care costs. A couple of ways to quantify it are the average cost of a hospitalization for a cancer patient during the treatment course is about $70,000, and up to 50% of hospitalizations during a course of therapy for cancer are avoidable. So our mission with VERUS is to improve outcomes utilizing modern remote patient monitoring or RPM tools.
spk04: Sorry, I screwed up the slides here. I apologize. I apologize, I didn't advance the slides.
spk03: Okay, so what are various health solutions? There are two aspects of it. One is a software platform on the left and a physiologic device, a physiologic monitor on the right. The VAERS Cancer Care Platform consists of a smartphone app as well as a cloud-based portal for the physicians and a quote-unquote VAERS box that contains Bluetooth-connected devices for measuring various physiologic parameters such as blood pressure, weight, oxygen saturation, et cetera. We're developing and are making excellent progress on a continuous remote patient monitoring and planable program. a physiologic monitor that is designed to be implanted at the same time as a chemotherapy port. You can see the purple structure there, which is the port that mates into the monitoring device. So this system and the platform in particular facilitates early detection of complications, provides longitudinal trends and risk management tools for the clinicians so they can provide enhanced personalized cancer care. The patient experience is really robust. We're very proud of the patient interface of the software application. Patients now are reporting their symptoms, and this includes general health and quality of life parameters that go directly to their cancer team through the smartphone app there. You can see on the left their report, the ability to report symptoms, a chat feature with their team. And the symptom reporting is quite robust in that it doesn't just ask about a symptom, but it has some knowledge in diving further and asking follow-up questions to really give the physician the equivalent of a virtual visit so they have a better understanding of what's transpiring with the patient.
spk04: The clinical portal.
spk03: is also real proud of the human factors aspects of the design and the interface. It's a cloud-based, fully cloud-based portal that's integrated into the oncology practices IT system and electronic health records, and it allows the team to review physiologic and clinical data that's delivered that's transmitted to ED from the patient, both from the physiologic monitors as well as from the patient reporting. You can see here it shows nice trends with physiologic parameters. It has calendaring features. It has telehealth features. It pulls in laboratory results. And our goal is to make this really the front end for their practice as opposed to their traditional EHR. From a business practice, business point of view, the practice can now bill for remote patient monitoring services on a monthly basis as long as the data is being transmitted at least 16 days a month.
spk04: And I'll show in a bit the codes are well established. The business model is very attractive.
spk03: It's one of the reasons why we decided to pursue this. Attractive on both ends, both as a revenue opportunity for VAERS as well as a value proposition for our customers. As I mentioned, the business model is software as a service that's recurring revenue. We charge a subscription fee for the practice per head, per patient. And it leverages the existing established codes. It does not require us to seek any further reimbursement from third-party payers or from Medicare. There are also additional revenue opportunities for enhanced technical support, providing off-hours and even during the day clinical support, as well as when the implantable device is ready, being able to charge for that. A brief summary on the right there of how RPM billing works. Again, these codes are CPT codes on the left are well established, and you can see how it's provided, and it really ends up for fully utilizing the system and providing the full data of about just under $200 per month of billings, and about $100 of that is marked into the practice. It also facilitates participation in value-based payment models that are offered by CMS. The most recent one is called the Enhanced Oncology Model, EOM, and other value-based payment models, and overall decreases the administrative workload on the practice. The total addressable market opportunity is approximately $2 billion based on 2 million patients undergoing or being diagnosed with cancer every year.
spk04: Here's some highlights of our commercial growth strategy.
spk03: The estimated number of oncologists in the U.S. last year is 12,500, operating in about 2,200 practices and just under 2,000 new cancer diagnoses. We're targeting a large market opportunity with a focus initially on independent oncology practices, although we are engaged with larger institutions and cancer centers, and innovative risk-bearing health systems and value-based model participants, practices that are already familiar with the Medicare EOM and prior versions of the value-based models that Medicare utilizes. The results from our first commercial clients really have immediately demonstrated the power of the system. The integration process was flawless. We got reports immediately of the impact on personalized care, of patients not having to go to their infusion centers, or adjustments of medication because of the ability to follow patients' blood pressures, and a whole host of other concrete examples of how the system is enhancing care. The RPM billing opportunity was immediate, and the practice is doing so, and the subscription revenue, again, is immediate.
spk04: It doesn't require any further sign-off with regard to reimbursement.
spk03: So as I mentioned, a key part of our long-term plan here is not to just use the external Bluetooth-connected devices, but to have an implantable device that's implanted typically at the time of the insertion of a chemotherapy port. About 50% of patients undergoing cancer therapy get a port. And so we've designed a monitoring system, a physiologic monitor, that can be implanted at the same time. You can see there, again, the purple device is the chemotherapy port, and it snaps onto our physiologic monitor, which is a silver enclosed device. So we expect this product to be available next year. And it extends the power of the system because it guarantees 100% patient compliance with the remote patient monitoring billing requirements. As I mentioned, in order for the physicians to bill, they have to have 16 days a month of data received. And that depends, without an implantable device, that depends on patients remembering to check their blood pressure, check their heart rate, et cetera. This will provide 100% compliance right off the bat. It's designed to measure cardiac, to monitor the cardiac system, both the heart rate and the rhythm, activity as a patient-triggered event monitor, measures temperature, respiratory rate, and has Bluetooth connectivity to the smartphone. We're making excellent progress on this. We just had a recent success with Animal Lab. and we're targeting FDA 510K submission in the second half of this year. There's a regulatory path for this. We've had multiple pre-submission meetings with FDA that have gone well and put us in a good path towards a 510K for this. So that's it with Veris. I'm going to move on to Lucid again. Very limited comments on Lucid. I encourage you to look at the Just some highlights, and I encourage you to look at the full presentation from yesterday. Just focusing on the key elements here, our test volume growth continues to make steady growth, about 200 percent per year on an annualized basis. We estimate about approximately 1,600 tests for this quarter, which represent 36 percent growth sequentially from the previous quarter. As I mentioned, a big event this past quarter is that we launched our Check Your Food Tube pre-cancer testing events. And the initial event was done in partnership with the San Antonio Fire Department. The goal here is in parallel with our traditional efforts of calling on primary care physicians and specialties and others to provide testing directly to adverse patients at higher volume events that are organized with entities like Fire Department. You can see our nurse practitioners and the rest of our team simply went to San Antonio and tested 391 firefighters over two weekends. Really proud of how they were able to handle that volume as well as the laboratory receiving 200 tests a day. So we're going to continue to do this. It's going to be a major area of focus for us in conjunction with a broader direct contracting strategic initiative. and we have a robust near-term pipeline for future such high-volume testing events initially focusing on prior departments. I mentioned another big highlight is our network contract that we signed with Multiplan, the largest secondary PPO, 60 million consumers under their umbrella. They also partner with 700 payers. They have relationships with all of the top 10 payers and over a million healthcare providers. They processed Excuse me, again, I messed up the slide here, sorry. They processed about $74 billion worth of claims, of charges, excuse me, in 2022. So we're really looking forward to this engagement and being able to offer e-cigar to a much larger target population. On the contracting and payment side, again, just a real quick summary here, more details in the presentation yesterday. The key message here is that our engagement with the commercial payers is accelerating. That's key because about just under 90% of our patients that are undergoing testing are, in fact, commercial paid, just around 10% to 12% are Medicare. And the key lesson, really, from the last couple of quarters is the price is holding. We have a Medicare discount. a price of $1,938, a list price of $2,500. Our average contracted price is $2,000. So all of that indicates that the price range between $1,900 and $2,500 is being respected. And it's even being respected generally for out-of-network benefits where The payer pays usually about 50% to 60% of the charges, consistent with the benefit within the plan. And our average payment of about $14 million is consistent with the out-of-network benefit payments being respecting our general pricing. So how we're going to drive future in-network commercial payer contracts, there's really two aspects of this. One is generating claims history in order to be on the radar, to be able to have conversations with with payers and to enter into discussions around in-network coverage about sub-pricing, you have to generate sufficient claims history. That's what happened with multi-plan. We started generating claims with a multi-plan and that led to a conversation which led to an in-network contract. So we're continuing to drive claims histories. We're generating several hundred claims now with some of the major players and we look forward to engaging with them in negotiations for in-network contracting in the coming quarters. A key factor that drives – the other key factor that drives network contracting with commercial payers is demonstrating clinical utility. I'll talk about that a bit in the next slide as well. So we're working on that as well. And finally, we've launched a parallel path along with the traditional payer model, a We're calling it our direct contracting strategic initiative. Other electrodiagnostic companies have done this where you go directly to self-insured entities such as unions and employers and others that operate under an ASO model called administrative services only model and directly contract with them separate from the traditional insurer payer model. And we're excited to see if we can replicate some of the successes that other diagnostic companies have had. But to close out on the clinical utility, this is very critical for our commercial payer as well as our future Medicare coverage prospects. We have a very robust pipeline of studies that will be generating meaningful clinical utility data over the coming quarters. Our goal is to have a substantial number by mid-year. You can see here that they include collecting clinical utility data from the firefighter event. What clinical utility data is in this case is just demonstrating that our test e-cigarette has an impact on medical decision-making, that a positive or negative tests will affect the physician's care of the patient. And specifically, if a physician receives a positive test, that they will, in fact, refer the patient for an endoscopy. We just have to document this and make a referral. And then if the test is negative, that they do not refer the patient for an endoscopy unless there's some other indication other than for screening. So we have a retrospective study from NYU that's well on its way to completing its analysis of several hundred patients. We have two prospective studies, our own registry of our own patients passing through our lucid test centers, as well as the satellite lucid test centers, and the CLU study, which is a multi-center study that has now begun to enroll a few hundred patients in each of those by mid-year. We also are performing a prospective virtual patient study, which is really a survey of physicians that are done in a controlled IRB way, That's a type of data that has been accepted and been useful in conversations to provide clinical utility in conversations with commercial payers.
spk04: So with that, I'll pass the baton on to Dennis, and he'll be talking about our financial results. Good morning, everyone. Thank you, Leshawn.
spk08: Summary financial results for the fourth quarter and year were reported in our press release that was published last night. On the next three slides, We will emphasize a few key highlights from the quarter and the year, but I encourage you to consider those remarks in the context of full disclosures covered in our annual report on Form 10-K that was filed with the SEC Monday afternoon and is available on our PathMed website. So with regard to our balance sheet cash of $39.4 million reflects a $17.1 million sequential decrease in $37.5 million for the year. Our vendor payables, there was no significant change either sequentially or year over year when considering accounts payable and other recurring accrued expenses. The convertible note had a net decrease of approximately $2 million sequentially. The other long-term liabilities are from capitalized leases related to our lab and our office space. Shares outstanding, including unvested restricted stock awards as of today is 98.4 million shares. The GAAP's outstanding shares are reflected on the slide as well as the face of the balance sheet in 10-K. As reported on our Lucid call yesterday, the Lucid board authorized a $20 million preferred offering and $11 million senior secured convertible debt. We completed the initial closing of the Lucid preferred in the amount of $14 million and have until the end of May to complete the remaining $6 million. The financing was priced in accordance with NASDAQ's at-the-market closing bid price rules. The accredited investors were led by a family office familiar to our IR firm and some long-term high-net-worth shareholders, four participants in total, that share a long-term vision for the company. After exploring a variety of alternatives, this preferred structure created a mutual win for the company and the investors. It also matched an attractive dividend with the strong incentive to hold stock for more than two years. Additionally, Monday, we entered into a Lucid Securities Purchase Agreement to issue $11 million in convertible debt securities with an accredited investor that has provided the same type of structures for PadMed over the years and currently holds PadMed's existing debt with similar terms. We expect to close the funding in the next coming days. The Lucid note is interest only for six months and has a $5 voluntary conversion price and a 7.9% interest rate. Amortization on the convertible note does not begin until the six-month anniversary. Both structures keep Lucid stock out of the market for long periods of time, likely two years in the case of preferred, which allows the company to complete its work on clinical utility studies and improving reimbursement. Our consolidated runway is elongated into 2024. On a pro forma basis, when combined with our cash at the beginning of the year and combining the remaining draw under the security purchase agreement from last March of approximately $10 million, results in pro forma cash of approximately $73.3 million. We expect our burn rate to be between 53 million and 56 million for 2023 without tapping into our available ATMs. That would reflect a 25 to 30% lower burn than in 2022. So I'll refer you to the two Form 8Ks that were published Monday evening for additional details on both of the Lucid Finances. On the next slide. Slide 22 compares this year's fourth quarter and annual results to the same periods last year on certain key items. I trust you'll review the information in my comments in light of the cautionary disclosure at the bottom of the slide about supplemental information, particularly non-GAAP information. The SEC makes me say that. Revenue for the current quarter reflects approximately 90 lucid tests. The prior year reflects the fixed monthly fee. received from the third-party lab that Lucid used before setting up its own lab earlier this last year. Lucid revenue recognition. We go through this every quarter, but it's important. A key determinant is the probability of collection. For the vast majority of Lucid patient out-of-network claim submission means revenue recognition occurs when the claim is actually collected versus when the patient report is 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 recognize revenue when invoiced. As for the various revenue, we just started billing our first customer in the first quarter of 23. They expect to recognize revenue as invoiced, subject to the normal GAAP revenue recognition rules. Our OPEX and GAAP loss, is higher sequentially by $1.2 million and $1.7 million, respectively. However, our non-GAAP loss is exactly the same in both quarters at $13.8 million, hence no change sequentially as higher non-cash charges impacted the OPEX line for fourth quarter 22. And lastly, our non-GAAP loss per share is $0.15 for both fourth quarter and the third quarter. Slide 23 is a graphic illustration of our operating expenses as presented in detail in our press release. Total gap and non-gap operating expenses were relatively flat sequentially. The cost of revenue primarily consists of ESO check devices, lab supplies, and fixed lab facility costs. It's now being presented in our 10-K as operating expense consistent with the practices of other diagnostic companies. Sales and marketing was higher by about 25% sequentially. It was substantially offset by lower G&A expenses. So with that, operator, we can open it up for questions.
spk01: Thank you. Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad now. You'll be placed into the queue in the order received. Please be prepared to ask your question when prompted. Once again, if you have a question, please press star 1 on your phone now. And our first question today will come from Ross Osborne with Cantor Fitzgerald.
spk00: Good morning, Ross. Hi. Good morning. Congrats on the progress of Veris. Just starting off, are you able to disclose how many cancer patients were onboarded in February?
spk03: Not yet. No, we'll – it's a continuous process. It doesn't happen sort of any – In chunks, so once we get a little bit more traction, we will. But there are, I can just say that they have a pipeline that they've offered us in terms of the number of patients that they expect to onboard in, that the single practice expects to onboard in the coming quarters, and it is substantial.
spk00: Okay, fair enough. And then I guess ahead of the implantable device, you know, any ideas, and it may be too early, but just on the relative compliance rate for those users that have been onboarded so far,
spk03: We don't have, we're just, we don't have data on that yet. It's a little bit early, but we, you know, the bar with regard to, it's a good opportunity to talk a little bit about patient compliance. The bar sort of in the industry is relatively low that other companies have had, you know, only modest success with getting patient compliance up to sort of 50% or so. And that means that 50% of the time they do sufficient data is transmitted in order to be able to fill. Our aspirations are much, much higher than that. And we have, already put in customer support folks that will contact patients, make sure they're sending the data. So we're not going to be satisfied with 30% to 50%. The entire business model is predicated on getting high compliance. That's also one of the things that's unique about our approach to this that is compared to software-only solutions is that when we have the implantable device, in addition to clinical benefits of being able to get that kind of data, will be that from an RPM point of view, it guarantees 100% compliance because the patient is not dependent on the patient paying attention to this every day.
spk00: Okay. And then one more for me. We're thinking about the very fast model in terms of revenue per patient. The telemedicine billing rate, I believe, is at $46 to $110 per 30 minutes per month. You know, so at this point, how many minutes, I guess, per month would you expect the average patient to use the platform?
spk03: Okay, I'm glad you brought that up because I'm going to actually pull up that slide because it's important to make a distinction between remote patient monitoring and telehealth, okay? So remote patient monitoring is a separate process. I pulled up a slide here. There are separate codes for billing for that that do not require actual telehealth interactions between the physician and the patient. And so they bill simply by the recording and transmission of the data and the physician documenting in the record that they reviewed the data. And our system actually, just as an opportunity to mention it, does facilitate the process of billing and gives them the ability and give them the appropriate codes to do so. However, and so our ability to, as you can see there, the total dollar amount that they can expect is up to $200 per patient per month. And we expect to bill them about roughly $80 to $100 per month. So that's essentially we're splitting that $200 between us and the practice. Now, I'm glad you mentioned this because I forgot to mention one other revenue opportunity for the practice. Because our system facilitates telehealth, they can also bill for telehealth visits in addition to the remote patient monitoring. So if the patient has some illness or they have something that needs to be worked out to decide whether they need to come to the hospital or something like that, and they engage in a telehealth visit, they can bill in addition to that. But hopefully it's clear now that there's a distinction between telehealth billing and and remote patient monitoring. By the way, just one other thing, since you got me in the weeds on this, Ross, which is that the remote patient monitoring codes are well established prior to COVID. They're not subject to extraordinary statutory statutes that were enacted during COVID. The telehealth, although it has been updated and renewed, is a little bit on less firm ground because much of that was escalated as a result of COVID. I mean, the expectations are that it'll It will remain, but that still will require governmental action.
spk00: Okay. That's very helpful. Thank you.
spk04: Yeah. Thanks, Russ.
spk01: And our next question today comes from Frank Tecton with Lake Street Capital.
spk06: Frank, good morning. Hi, Greg. Good morning. Thanks for taking the questions. Congrats on all the progress. I wanted to start with one on VAERS and specifically the commercialization efforts, maybe kind of lay the playing field for how you guys expect to commercialize that platform throughout 2023, and then how does that change once the implantable is approaching FDA 510 clearance or actually receives the clearance?
spk03: That's a great question. So, let's start with the software platform and the various box connected devices. So, our model is fairly straightforward. We have a commercial team that calls on that builds a pipeline and calls on oncology practices. Our chief commercial officer has a long history of calling on such practices. We're focusing initially, as I mentioned, on practices that have already demonstrated that they sort of get it and they participated in a value-based model such as the current EOM model and the prior OCM model. And so that's where we're starting. However, we have engagements with larger entities, large medical centers, and we look forward to starting the process with large cancer centers, although, as is always the case, those are much longer lead times. So it starts with an engagement. typically at the clinician level and getting clinician buy-in, that the response has been positive. And one of the things that we've learned in our early experience, which is a bit of a surprise relative to what our expectations were when we first acquired the prior company, OncoDisc, is that the conversations quickly moved to RPM. We thought that the conversations would focus initially on the clinical benefit and be able to pick up early complications and so forth. And what we're finding is that likely as a result of the pandemic and other technologies that the practices are very focused. I mean, it's sort of typically they'll come in and say, hey, this is an RPM thing, thingamajig. My practice manager told me we need to look into this, right? And so that's been great. So both the clinical benefit and the practice economics benefit are front and center in those conversations. And then After we get buy-in, there are demos, on-site demos that are done and contracts are negotiated. And then there is an integration process that we're working to streamline that require our team to come in and make sure that the system runs properly on their IT system and is fully integrated, as well as training and the process by which patients on our So that's the current process. Again, we're in the early stages, but it's working well. We're continuing to fine-tune it, to streamline it, to make it more efficient and more cost-effective over time. Once we get the implantable device, it won't change the fundamentals dramatically in that it'll remain heavily focused on on enhancing care as well as on remote patient monitoring and the impact of that on a practice, but it'll obviously supercharge that in some way because the implantable provides more sophisticated data as well as guaranteeing 100% patient compliance. We will need at that point to start engaging with the folks who implant these devices, typically interventional radiologists or vascular surgeons, to train them and to get them to bring them into the loop, and that's something we'll start doing as we get closer to a commercial implantable device.
spk06: Okay, that's helpful. And then maybe just a follow-up. I think you actually answered it in the previous question, but I want to confirm I heard it correct. The RedShare portion that Veris receives was 80 to 100 per patient per month, And then two, does the, okay, and then does the model change once you have the implantable? Is there any upfront sale of the implantable?
spk03: Yeah, great question. We haven't finalized how we're going to do that. There is an opportunity. Generally, the implantable port of business is fairly commoditized with regard to pricing, but there are going to be opportunities to, because of its impact on the broader business model, to craft, you know, customized strategies around that. We're not likely to provide it for free, you know, and we think we'll be able to make additional revenue on that, but we, because it is part of a value-added system that we'll be able to really, you know, we like to say actually that, you know, we have the opportunity here to shake up not just the cancer care part of this, but actually the value report aspect of this as well, which is you know, been decades of essentially the same technology without any smart features and being able to provide that with appropriate economics because of the value-added aspects of it is going to be exciting. But we haven't finalized that yet, Frank. That's a great question.
spk05: Okay.
spk06: Got it. And then this last one, and I think this was covered on the call yesterday, but I think it might be worth mentioning again. Test volume growth in Lucid continues to be really solid. Sounds like you're doing some retroactive billing now. Maybe just talk to any RevRec you've experienced in 2023 at those higher reimbursement levels so far and expectations going forward for RevRec now that you're starting to get those contracts in place.
spk08: Yeah. So, Frank, the... The collections are much more regular now, daily. They tend to be chunky at times, some days with bigger volumes. It's still fairly unpredictable. We think that this year's growth rate will certainly have a higher percentage of collections than we've experienced both in the fourth quarter and even so far this quarter. Our internal models Given what we expect, the improving landscape for reimbursement, we're on target in the first quarter, and we'll report on that as we move forward. But we are seeing more regularity of deposits on this, and the payment rates are holding, both on a contracting basis that are north of the Medicare rate, and those payments we're getting from places like United are at the 60% of the list price at the perfunctory out-of-network kind of amounts. That will improve as clinical utility data comes on board, and we start to engage the chief medical officers with that discussion early on with retrospective data and then followed up with prospective data to get in-network contracts for the big companies.
spk03: You know, I think I'll use your question, Frank, just to highlight some other thing that we discussed yesterday, but just to highlight it for the current group here, which is that it'll be, we're going to very carefully monitor how the sort of new horizons, as I'd like to sort of describe them, the non-traditional horizons of use of these high volume testing day events, as well as direct contracting will play out with regard to the proportion of tests that we do that get reimbursed today, as opposed to sometime in And, you know, the reason why we have some optimism in that, although we don't have the data yet, we'll track that closely, is that unlike with a traditional payer where the first interaction we have with them is really them seeing, you know, 50, 75, 100 claims show up on their radar and them saying, you know, what is this stuff? I've never heard of it. and then having the conversation to bring them in the loop and get them to understand the clinical value and the clinical utility. So, you know, that's a different type of conversation than these testing events where generally, like, for example, with regard to the firefighters and future firefighter events that we're now looking to set up, we are engaged with the leadership of the fire department and the unions. These are typically self-insured entities operating under an ASO structure. where these are being set up as a partnership, so they know who we are. It's not a surprise when these tests come through the billing process. So we have to see, and we're going to monitor it, but we have some optimism that those events, as well as the direct contracting, will enhance the overall collection rates in the near and medium term.
spk08: We've submitted claims to almost 200 insurers, and each one's a little bit different. So trying to aggregate general statement in terms of where we're at in total becomes a little bit of a challenge still yet. But that data is improving, and that data will become more relevant as we continue to move through this process.
spk04: Got it. Okay. All very helpful, Culler. Thanks for taking the questions. Great. Thanks, Frank.
spk01: Our next question comes from Anthony Vendetti with Maximum Group.
spk04: Anthony, good morning. Hi, Anthony.
spk07: Good morning, LeSean. Good morning, Dennis. Thanks. Just a couple questions on the various cancer care platforms. So I know it might be a little bit lumpy, but is the expectation that the enrollment of patients will ramp every month, or could it vary throughout the quarter? And then is there an expected range of patient enrollment by the end of 2023, or is it too early to try to gauge that?
spk08: So, Anthony, first off, and combine that with the question that Ross asked earlier, since we have onboarded our first customer, we don't have permission from New Jersey Cancer Care to reveal their client and patient information. As we onboard additional customers, that will be blinded in terms of the size of their practice, their expectation, the amount of patients we have on there. I will tell you, they're very enthusiastic about the initial tranche of patients that have been onboarded. They have a fairly robust practice. Call it hundreds of patients that are opportunities. These all represent revenue to the practice. So they're They're aspirational as well. As we onboard the additional clients that are in the pipeline, that will become clearer in terms of what the likely predictive amount of the patient population versus those that get on our platform. As Leishon indicated, we model this at $80 per month per patient. It could be higher than that for a variety of reasons, but conservatively that what it represents. So if you have a practice with a thousand patients that are targeted at $80 a month, you're talking about an $80,000 a month opportunity. And some of these practices are even larger than that, that are in our pipeline. So it's still early to kind of provide any guidelines or guideposts in terms of what that expectation is. We know the platform works. We know that customers are extremely pleased with it. The data that's being reported is is affecting patient care, and we know that the reimbursement's already in place and unlikely to change, so we don't have that battle to fight. So there's lots of reasons to be optimistic about what the prospects here are, but to draw a picture of exactly what that might be like throughout 2023, It's a little bit challenging this early in the game.
spk03: I'll add just one generic kind of qualitative comment to that, which is it is interesting, unlike other commercialization of other products where you may have up months, you may have down months, and so forth. The mechanics here do argue for the likelihood of having sort of escalating numbers within a given practice because the way they generally approach it, and again, I'm making this as a generic comment, not for the specific practice that we launched, is that you start with your highest risk patients and you get comfortable with, you know, 50 patients or 100 patients or so forth that you think would be most likely to benefit and then expand it out to a greater and greater portion of the cancer patients within your practice. And so because it's recurring revenue, because of that dynamic of starting with a core group and expanding it out, we have, you know, reason to believe that this will reflect the business model as we've described it, that once you have a practice on board, that we would see escalating numbers of patients at some trajectory being onboarded on the system, them staying on the system for their duration of care, which is typically a minimum of six months, usually a year, sometimes as long as two years. And So that's kind of the dynamic we expect, which could very well be, which we think will be different than sort of just a traditional, you know, medical device commercialization prospect where it's just one, you know, one-offs, volumes up, volumes down, overall trends and so forth. So hopefully that has a bit of color there, Anthony.
spk07: That was great, Lushan. Yeah, that's the trajectory I thought, but I just wanted to make sure that made sense. Yep, that's the dynamic. Yeah, perfect. And you have some large practices in the pipeline in addition to the one you're working with.
spk03: Correct. Yeah, we have a good solid pipeline. We don't have yet a sense as to what the life cycle of customer acquisition is. We don't expect it to be too long, but we'll start getting some color on that. But we do have a very – we're happy with the pipeline and the diversity of practices and practice sizes within it.
spk07: Okay, great. And then just one question on the Lucid test centers. That seems to be growing well. I was just In terms of the plan to expand test centers, do you, is that, has that been outlined internally or you're holding off on that?
spk03: Yeah, you know, I think, again, I'm going to take advantage of your question to clarify something that I think comes up quite frequently. So a couple of things. One is that These other initiatives, whether it's incorporating the satellite test center model where our nurses go to the physician practices and do e-cigar days at their practice as opposed to whatever physical location, these high-volume testing events, potentially even future horizons that we're looking at as other ways to get access to patients, those are all in parallel. It's all of the above. We're not tacking from one to the other. We're looking to just drive business across multiple channels. So I do encourage folks to think not in terms of sort of physical lucid test centers translating into specific volume targets. It's really the overall volume is now coming increasingly from a diverse pathways to get patients in the door. What we did describe back in our update in conjunction with the strategic update earlier in January, is that we are going to pause the number of physical test centers for now at 13 and drive test volume growth at sort of a mid-provel level while we're garnering improved coverage and reimbursement through enhanced activity with our current sales force, through increasing tenure of our sales force and driving their productivity up. So we expect to see continued growth despite the fact that we're keeping the physical test centers flat. And then something I highlighted yesterday, I didn't today, is that the satellite LDC activity is accelerating. So an increasing number, now about a third of our overall volume and about half the volume of what our nurse practitioners are receiving performing are in the context of a satellite center where they go to a physician's office. So we're focused. So that's one of the reasons why we're being cautious about adding physical centers because it's become a bit more fluid in a dynamic situation. We think there are opportunities for growth that come from the expanded geographic reach of our nurse practitioners. So I would encourage you to think more in terms of the bodies, how many nurse practitioners, how many how many sales reps and how is that personnel driving test volume growth as opposed to the physical centers.
spk07: Does that make sense? Great. That was helpful. Yeah, absolutely. Thank you so much. I'll hop back to Nick here. Appreciate it.
spk04: Great. Thanks, Anthony.
spk01: And our next question comes from Ed Wu with Ascendian Capital.
spk04: Ed, good morning. Good morning, Ed.
spk05: Yeah, congratulations on the progress. I know you guys are focusing your resources on the more immediate projects, but have you guys thought about international opportunities for either Lucid or Verus?
spk03: Yeah. You know, we have had limited. We did at one point have a fairly extensive inquiries and engaged with consultants about European commercialization for IsoGuard. What we discovered is that Europe has pretty robust reimbursement for precision oncology tests, but that the screening side is difficult. That payments for screening tests, I mean, others have encountered this, Cologuard and others as well. Just historically in Europe, there's just not parity with the U.S. that makes sense for us to, given our resource constraints now, to seek to launch in Europe. We do have CE mark. We do have the ability to do so. There are potentially some opportunities in the U.K., That might be different, but those are relatively just inquiries at this point without a clear plan. There are other parts of the world that we've had inquiries from where we've had local diagnostic groups that have asked about doing that, and those are conversations that continue, and they may bear fruit in the coming quarters and years. No such conversations with regard to VAERS on the – I think for – So the international aspect of the various business really will have to wait for the implantable device, that some of the service aspects of this and some of the business model, frankly, around remote patient monitoring is very different in other parts of the country. So it may make the business model more difficult. But once we have the value-added smart port functionality, then there'll be a potential opportunity. And there, the playing field in Europe should be relatively level, and we should have some prospects there.
spk04: Great. Well, thank you, and I wish you guys good luck. Okay. Thanks a lot.
spk01: And that's all the time we have for questions. I'd like to turn the call back to Mr. Parks for closing remarks.
spk03: I'll take that, operator. So, thank you again, everyone, for taking the time and the attention. Thank you for the questions. Really great discussion. We look forward to continue to update you on our progress as we always do. For more information, please feel free to go to our websites, the PavMed website, pavmed.com, the Lucid website, luciddex.com, and the Varus Health App website, which is under construction, but we look forward to having that up and running soon. As always, feel free to contact Mike Parks with any questions. He's very responsive. His email address is mep at pavmed.com. So thanks again, and everybody have a great day.
spk01: This concludes today's conference call. Thank you for attending. The host has ended this call. Goodbye.
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