Greetings, and welcome to the Lucid Diagnostics Second Quarter 2020 Business Update Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Adrian Miller. Please proceed, sir.

Thank you, Operator. Good afternoon, everyone. This is Adrian Miller, Vice President of Investor Relations at Lucid Diagnostics. Thank you for participating in today's business update call. Joining me today on the call are Dr. Lishan Aklog, Chairman and CEO of Lucid Diagnostics, along with Dennis McGrath, the 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 disclaimer about the forward-looking statements in the press release. The business update press release and this 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 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 description of these and other important risks and uncertainties that may affect future operations, see Part I Item 1A entitled Risk Factors in Lucid's most recent annual report on Form 10-K filed with the Securities and Exchange Commission and any subsequent updates filed in the quarterly report on Form 10-Q and any subsequent forms 8-K filings. Except as required by law, Lucid disclaims any intentions or obligations to publicly update or revise any forward-looking statements to reflect changes in expectations or in events, conditions or circumstances on which those expectations may be based or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements. With that said, I would like to turn the call over to Lishan Aklog. Dr. Aklog?

Thank you, Adrian. Good afternoon, everyone, and thank you for joining us today. Before proceeding, I'd like to thank our long-term shareholders for your ongoing support and commitment. Our team is always singularly focused on growing Lucid while enhancing long-term shareholder value. The past quarter and recent weeks have been anything but routine. In fact, it has been a transformational period for Lucid during which we have achieved key milestones, which represents the final brick in the foundation upon which we are building this company and driving its long-term growth stage. Since our inception, we've had EsoGuard and EsoCheck, groundbreaking technologies, to prevent cancer deaths through early pre-cancer detection, targeting a massive addressable market. We now have a consensus among the major specialty societies, which explicitly support the use of our products for this purpose and expand the addressable market even further. For the first time, we are truly, from an operational perspective, an independent full-service medical diagnostic company capable of fulfilling the clinical and economic potential of these products. For example, we have our own growing sales and marketing team with well-owned proven sales training and sales processes targeting physicians and institutions through two well-defined sales channels. We have our own expanding network of sites, our Lucid test centers, where patients referred for testing can quickly and conveniently undergo non-invasive cell sample collection. This network now incorporates a new paradigm, satellite Lucid Test Centers, which are co-located with physician practices and institutions. And perhaps, the most transformational milestone is that we have fully operationalized our own CLIA-certified and CAP-accredited laboratory, LucidDx lab, staffed by our own personnel, operating within our own quality standards and processes, and most importantly capable of submitting and aggressively pursuing claims directly with payers, which we recently began to. On the reimbursement front, we are starting to gain traction in securing private payer participating provider network agreements, which we are hopeful will start bearing fruit in the coming quarters. We have completed a public comment process for the Medicare Draft foundational Local Coverage Determination, or LCD and we have intensified our efforts to collect the clinical utility data to support a technical submission once the LCD is finalized. We've also taken an important step to solidify Lucid on the general corporate front. Partnering with our parent company PAVmed, we have completed a nearly year-long effort to strengthen our own senior leadership team, securing high-caliber talent in critical areas such as business strategy, regulatory and quality, medical affairs and laboratory operations. Finally, we have launched an ongoing company-wide initiative to confront perhaps the most challenging national and global market conditions in decades. Uncharted waters with no clear path or time frame to full recovery. Our leadership team has been challenged to think critically, creatively, and systematically to maximize runway and strengthen our balance sheet while protecting the long-term interests of our company, all while continuing to execute on strategic objectives and our mission. This has been a rewarding and clarifying experience for our team, already resulting in streamlining and strategic reallocation of resources for this fiscal year. I'll now provide a more detailed business update and then pass the baton over to Dennis, who will provide our financial update before opening it up to questions. Let me first take a step back and provide a brief background on our company and its mission for those of you who are new to Lucid's story. Lucid Diagnostics is a commercial stage cancer prevention medical diagnostics company focused on the tens of millions of chronic heartburn patients who are at risk of developing highly lethal esophageal cancer. Unlike other common cancers, mortality rates are high even in Stage I cancer. Preventing death requires us to detect esophageal pre-cancer, which occurs in approximately 5% to 15% of at-risk patients. Esophageal pre-cancer can be monitored in the early phase and cured with an endoscopic ablation procedure in its late phase. Ablation reliably halts progression to esophageal cancer. Although esophageal pre-cancer screening has been recommended in millions of at-risk chronic heartburn patients for over a decade, fewer than 10% undergo traditional invasive endoscopic screening. The profound tragedy of nearly every esophageal cancer diagnosis is that likely death could have been prevented if the patient had been screened, a collective tragedy that we are determined to eliminate. The missing element for a viable early detection program to prevent thousands of tragic deaths has been the lack of a widespread early detection tool. We believe our EsoGuard NGS methylated DNA test performed on samples collected in a brief noninvasive office procedure using our EsoCheck Cell Collection Device is the first and only commercially available diagnostic test capable of serving as such a widespread early detection tool. We believe EsoGuard has the potential to become the standard of care for esophageal pre-cancer in at-risk patients. Perhaps the most important step to date in achieving this long-term goal occurred in recent months. Both of the two major Gastroenterology Specialty Societies, the American College of Gastroenterology, or ACG, and the American Gastroenterological Association, the AGA, published updated professional society clinical practice guidelines on the management of esophageal pre-cancer for the first time in over five years. Although we have previously reported them in press releases, I will spend some time today providing a fuller context. These updates strongly enhance the value proposition of EsoGuard and Lucid in at least two important ways. First and most directly, we now have a consensus with both leading specialty associations supporting, for the first time, the use of non-endoscopic tools as an acceptable alternative to endoscopy, which has, as I previously noted, unequivocally failed as a screening tool to detect esophageal pre-cancer in at-risk patients despite over a decade of clinical guideline recommendation. Both the ACG and the AGA explicitly cite EsoCheck along with Lucid's EsophaCap device as such non-endoscopic tools—the only such devices commercially available in the U.S. Both also cite a seminal NCI-sponsored case-control study published in 2018 in Science Translational Medicine which demonstrated that EsoGuard is highly accurate at detecting esophageal pre-cancer and cancer including on samples collected with EsoCheck. The AGA, in particular, goes out of its way to acknowledge the 'significant need for non-invasive screening tools that are easy to administer, patient-friendly and cost-effective for the detection of BE.' Our EsoCheck and EsophaCap devices have demonstrated 'excellent tolerability, safety, and sensitivity for the diagnosis of BE.' Professional society guidelines support can be an important driver of physician acceptance of new technology and the AGA support already appears to be resonating, with one community gastroenterologist describing it as 'a big deal.' Guideline support is also an important driver of both private and Medicare coverage and we are working hard to educate payers on these updates. The second way these updates enhance our value proposition is through the expansion of the at-risk population targeted for early detection of esophageal pre-cancer. Previously, the guidelines the ACG, in particular, hedged on recommending testing for women with risk factors. This is no longer the case. Although being male remains a risk factor, men and women that have the appropriate number of risk factors are now treated equally with regard to the recommendation for screening. Epidemiologic data indicates that actually slightly more women than men would qualify for screening by the updated ACG guidelines, which are somewhat more stringent than the AGAs. We had previously excluded women in our estimates of the target population derived from work we engaged to do for us a couple of years ago. Including women now increases the estimated target population of those over 50 with ACG risk factors from approximately 13 million to just over 30 million, and the associated estimated total addressable market opportunity from approximately $25 billion to around $60 billion. I should note, of course, that these TAM estimates are based on the estimated prevalence of patients with risk factors, not an annual basis—since we do not yet know how often testing will be recommended once non-endoscopic testing is firmly established. The point of these estimates is to illustrate that we merely need to scratch the surface of the target population to generate substantial revenue and revenue growth in the coming years. These expanded target population estimates used a more stringent ACG criteria and do not take into account that the AGA, which has been more liberal in its criteria, extends this gap dramatically in its current update. It is estimated that about 40% of patients with GERD have silent GERD without classic heartburn symptoms, and that over 50% of U.S. patients diagnosed with esophageal cancer would not have qualified for screening using traditional symptom-plus-factor-based guidelines. The AGA seeks to close this gap by recommending, for the first time, screening in at-risk patients without symptoms. It does so by adding chronic heartburn symptoms as just another risk factor, now among seven to consider. As a result, symptoms are no longer a mandatory prerequisite, and asymptomatic patients with three other risk factors are now considered appropriate for screening, which significantly expands the target population for esophageal pre-cancer screening including by using EsoGuard and EsoCheck. One important long-term nuance is that the AGA has fundamentally shifted the paradigm for esophageal pre-cancer screening from disease-based, namely GERD, to demographic or risk factor-based. This could have an important impact on future efforts to secure a recommendation from the U.S. Preventive Services Task Force, which has historically used a narrow statutory definition of preventive screening, which is not disease-based. With that, let's now move on to an update on EsoGuard commercialization. We continue to see solid and consistent growth in EsoGuard testing volume. We processed 850 commercial EsoGuard tests in the second quarter of 2022. That represents an approximately 60% sequential increase from the first quarter of 2022 and over 300% increase year over year from the second quarter of 2021. Although testing volume growth was strong in both channels, primary care physician referrals to our Lucid test centers as well as tests performed at specialty practices and institutions, we continue to see a steady increase in the proportion of tests performed at our Lucid test centers, which now represent approximately two-thirds of the overall testing volume. This is a direct result of our investment in expanding our sales team, particularly sales representatives who call on primary care physicians. Despite a challenging labor market, we are making excellent progress towards reaching our year-end target of 39 such sales representatives and a total of 58 sales professionals overall. I'm very proud of what our sales leadership has accomplished over the past year in terms of sales processes and sales training. The sales process includes standard operating procedures for targeting, talk tracks, injection handling, routing, and other key processes. It is now well-owned, highly structured, and data-driven. The rigorous sales training process, which includes intensive field and classroom training, has also matured. An important high-yield part of this process are peer-to-peer events, utilizing key opinion leader physicians, which are being held across the country. Leadership has now firmly established a performance culture with clear, carefully tracked metrics for success. We set high expectations, and new representatives can expect to demonstrate independent traction in the field within four months of completing training. Although the team will continue to improve on these processes as we expand and grow, we believe we will be increasingly able to correlate future test volume growth with investments in the sales infrastructure. Let's now move on to an update on our expanding network of Lucid test centers, which remain a pillar of our growth strategy and, as I just noted, a leading driver of EsoGuard test volume growth. The test centers operate in leased medical office suites, each staffed by a Lucid-employed EsoCheck-trained nurse practitioner and medical assistant. The centers support our primary care physician channel by providing a facility where a patient referred for EsoGuard testing can undergo the EsoCheck cell collection procedure. The representatives work to educate the primary care physicians on the relationship between chronic heartburn and esophageal cancer and on EsoGuard's availability as a new noninvasive alternative to screen at-risk patients. The physician then orders a test to be performed at one of our test centers, directly through the electronic health record when feasible. I have previously estimated that a nurse practitioner can perform up to 20 EsoCheck procedures in a normal workday. Well, we now know that to be true, as one of our senior NPs recently performed 26 procedures in a day without, as Dennis likes to say, 'breaking a sweat.' Each test center covers its personnel and medical office lease costs with only a couple of reimbursed tests per week. Last week, we announced the launch of the second stage of our Lucid Test Center program in four new major metropolitan areas, including the three largest U.S. states. During the first stage, which we completed earlier this year, we covered seven mostly medium-sized metro areas in the Southwest and Pacific Northwest. This gave us time to build and hone our sales processes and build a robust compliance program. With stage two, we're establishing a broader national footprint, using demographic and other analytics to select high-value target locations across the country. We're also able to place test centers in locations where existing sales personnel are already having success calling on specialists and institutions and where our prospects for local private payer coverage are strongest as a result of our growing participation in preferred provider networks. The first four stage two centers are located in Orange County in California, the Dallas-Fort Worth Metropolitan area, Palm Beach County, Florida, and Columbus, Ohio. The Orange County Test Center is co-located with our laboratory. We're seeking to launch five additional centers this year, targeting the Southeast and Midwest. I'd like to add one other element, which I hinted at earlier, which is that, for the first time, our team has proceeded with what we're referring to as satellite Lucid Test Centers, where our nurse practitioner co-locates within the practice of a gastroenterologist specialist or other institution and is able to provide testing services and direct collaboration with the practitioners. We're very excited about this prospect and look forward to reporting more on it as we get more traction. Let's now move on to an update on our laboratory operations. For reasons I noted in my opening comments, this is perhaps the most important update I have for you today in terms of its impact on our future business. As I stated, we are now truly, from an operational perspective, an independent full-service medical diagnostic company capable of selling the clinical economic potential of our products. To illustrate this, let me first remind you where we were at the end of 2021. We had just hired our own Chief Scientific Officer to help us plan a transition, but we were otherwise entirely dependent on a third-party commercial laboratory to perform and bill for the EsoGuard test. This required a rather convoluted contractual arrangement, whereby Lucid was in effect a marketing and sample collection arm of the third-party laboratory, which paid Lucid fixed periodic payments for these services. The small amount of recognized revenue recorded during this period was entirely from these third-party payments, not receipts received by Lucid from payers. In addition to these contractual complexities, we were entirely dependent on the third-party quality standards and processes for performing the assay and billing for it, with limited ability to advance these consistent with our own strategic goals and high-performance standards. During the first quarter, as we previously reported, we initiated a comprehensive effort to correct this deficiency by launching LucidDx Labs as a wholly owned Lucid subsidiary. We started by acquiring the assets, including the appropriate certificates and licenses to operate our own CLIA-certified and CAP-accredited laboratory rented and built out at a 20,000 square foot building in Lake Forest, California, and acquired the equipment necessary to run this next-generation sequencing asset. The laboratory passed our CAP or College of American Pathologists and New York State inspections soon thereafter. We contracted with the same third-party laboratory to manage the laboratory until we hired and trained our own personnel. That process started with securing an outstanding VP of Laboratory Operations with nearly two decades of leadership experience in clinical laboratory work in May. In less than three months, and despite labor market headwinds, we have hired a full team of outstanding clinical and research laboratory personnel to operate our laboratory. The team has already made significant strides in optimizing workflow and resolving start-up issues as they arise. For the reasons I described, perhaps the most important upgrade has been how we are now able to submit and collect claims for the EsoGuard test. Concurrent with the acquisition, we upgraded to our own revenue cycle management provider SYNERGEN L2 for the first time to submit, prosecute, and collect claims directly on our behalf. After a transition that extended much longer than we had hoped due to delays at the IRS and our commercial bank, throughout the second quarter, SYNERGEN is now fully up and running. Last week we started submitting a backlog of claims held since the lab transition in February. Although the claims cycle and time from submission to receive a payment can be longer and unpredictable, especially for any test, we should start seeing some out-of-network and PTL receipts along with recognized revenue in the coming quarters, as Dennis will describe in more detail. To summarize, we now have a fully operationalized LucidDx Labs, staffed by our own personnel, operating with our own quality standards and processes, and most importantly, capable of submitting and aggressively pursuing claims directly with payers, which we just recently began doing. Let's now move on to a brief update on where we stand with reimbursement. The short, sweet answer is steady but still early progress on private payers and the beginning of another waiting game of somewhat unknown duration with Medicare. On the private payer side, we have entered into participating provider agreements with four preferred provider organizations, including Prime Health Services, Three Rivers Provider Network, Galaxy Health, and Allevo. Collectively, these organizations cover many millions of lives. The agreements provide attractive rates of reimbursement for the EsoGuard test as a percentage of charges or the Medicare rate of $1,938. Claims are just being submitted and will take some time to get a sense of the revenue yield of these secondary TPO agreements. Our expanding market access team has been quite active, and we expect to secure many more such participating provider agreements covering millions more lives in the coming quarters. We're also laying the groundwork for in-network contracting discussions with larger, more traditional regional and national health plans. Full engagement and consummation of such contracts will require some additional time to generate meaningful claims histories as LucidDx Labs, a process that has just started, and to collect and report retrospective and prospective clinical utility data which I will describe more in a minute. On the Medicare front, after a flurry of activity early in the second quarter, things are quiet and could remain that way for some time. Briefly, in April 2022, Medicare contractor Palmetto GBA's MolDX program published a proposed foundational local coverage determination, or LCD for a test to detect esophageal pre-cancer and cancer. This triggered a public comment period, which included an open meeting on May 10th and written comments submitted soon thereafter. We had very strong participation in this public comment period including recruiting over a dozen entities, such as key opinion leaders, NCI investigators, professional medical societies, patient and industry advocacy groups and presented a unified strong evidence-based message on how to improve the draft LCD that can actually be operationalized consistent with clinical evidence updated guidelines and precedent. In a surprise move we welcome, Noridian Healthcare Solutions, the Medicare contractor, which covers our laboratory and will have the final say on EsoGuard coverage in Medicare beneficiaries, published its own proposed draft LCD mirroring MolDX. This triggered an identical public comment process with an open meeting on May 26, and written comments soon thereafter. We and our partners actively participated in the Noridian process with an identical strong message. We have crossed follow-up meetings with both MolDX and Noridian to further discuss the draft LCD and the proposed changes we and our partners submitted. Moving forward, Noridian will review the comments and revise the draft LCD as warranted, a process whose duration is really impossible to predict. But given our experience to date with backlogs, it will almost certainly extend into next year. Once the final operational foundational LCD is published, we will have the opportunity to submit a technical file, including new clinical utility data and information specifically requesting EsoGuard coverage under the LCD. The good news is that our case volume to date has skewed heavily towards private pay, not Medicare. This provides us with the opportunity to make steady incremental progress on the private pay side while awaiting the more binary opportunity for Medicare. With our own labs and revenue cycle manager now in place and operational, we hope to start seeing the fruits of these efforts in terms of receipts and revenue and have a sense of its trajectory sometime thereafter. Let's now move on to clinical research. Gathering the appropriate clinical evidence for EsoGuard testing remains a pillar of our growth strategy. Given that clinical studies are very expensive and represent a substantial portion of our budget, it's important that we ensure that we are investing the right amount in the right studies at the right time. Accordingly, a key element of the company-wide initiative that I briefly described at the opening has been to take a careful look at our allocations of resources into clinical research to align with our near, medium and long-term goals. With all parts of our commercial engine now operational, our highest priority is to secure private and then Medicare coverage. These require us to collect critical real-world clinical utility data, demonstrating to payers that EsoGuard positively impacts medical decision-making. That a positive test results in a follow-up endoscopy and a negative test does not. Such data will be necessary for us to secure direct in-network coverage from regional and national health plans and to convert a future foundational LCD into Medicare coverage for EsoGuard. This effort is well underway, a retrospective clinical utility review should yield data by the end of the year. Additionally, multiple prospective clinical utility studies including a Lucid-sponsored registry at existing commercial sites in a prospective Lucid-sponsored clinical utility study named CLUE and institution-sponsored clinical utility studies are underway. In parallel with this clinical utility study push, we have revised our strategy on our two prospective screening and case control studies EsoGuard BE1 and BE2 in consultation with our board principal investigators and advisers to better align with our strategic needs. When we launched these studies, securing FDA PMA approval for EsoGuard and EsoCheck as FDA-registered in vitro diagnostics appeared to be a necessary near-term goal to secure commercial traction and reimbursement. We now see from our direct experience that this is not the case. We have a good understanding from the trenches of what drives clinical adoption and securing reimbursement. Although the data and associated PMA clearance will be valuable, it will be in supporting medium and long-term goals such as expanding guideline support, including recommendations from the U.S. Preventive Services Task Force. There are numerous factors we considered in addition to being prudent stewards of our capital. These include promising research data on the next-generation version of the EsoGuard assay, which our own research team is now executing, and the opportunity to conform the clinical trial process to current clinical practice and expand the target population to include women. Our current plan is to pause enrollment in BE1, the prospective screening study, and reboot it under the breakthrough device umbrella at a later date when the next version of the assay is optimized and we can justify the capital investment. We will continue BE2, the case-control study, and will likely complete enrollment at a somewhat lower sample size in early 2023. We will hold those samples and wait to run them again until the next version of the assay is optimized. Before handing the reins over to Dennis, let me quickly summarize the strategic priorities from our company-wide initiative that I have touched on through the course of my remarks. With an increasingly predictable sales process and well-home sales training, we will continue to invest in the necessary sales infrastructure, training, and supporting resources to drive steady testing volume growth, demonstrate clinical utility, and generate claims history to support our reimbursement efforts. This includes sticking to our trajectory for sales team and Lucid Test Center growth for this year. Thereafter, we anticipate slowing or even flattening that curve, focusing on driving test volume growth within our existing infrastructure of approximately 60 sales team members and 18 test centers. Once reimbursement is more fully established, we will transition to full throttle efforts to drive testing volume and revenue growth nationwide. We will continue to aggressively seek to secure private and Medicare reimbursement, investing whatever is necessary in that effort, including into generating clinical utility data. We'll also not skimp in any way in terms of investing in our laboratory to ensure we have the most efficient, cost-effective high-quality processes and are operating the revenue management cycle, plan submission and prosecution in a manner that maximizes effectiveness and efficiency. We will adjust our clinical trial strategy as described outside of the clinical utility studies, generating the best data we can from patients enrolled, while preserving our capital to deploy at a later date. Finally, we will continue the process of transferring EsoCheck to our high-volume manufacturing partner to ensure sufficient capacity for future growth and will continue to invest aggressively in getting EsoCure, our Esophageal Ablation Device designed to supplant the Medtronic, Barrx device on the market in 2023. That work remains very promising. With that, I will pass the baton on to Dennis to provide an update on our financials before opening it up for questions.

Thanks Lishan, and good afternoon everyone. Our preliminary and summary financial results for the second quarter ended June 30 were reported in our press release that was published earlier today. Plan to file our quarterly report for Lucid Diagnostics on Form 10-Q with the SEC later today—maybe even in a few minutes. At that time, it will be available at sec.gov and also on the Lucid website. As you already know from our previous corporate update calls, as a rule, EsoGuard performs recognized GAAP revenue when cash is collected by the company. Also, as previously mentioned, it is more than likely will be true during this transition period of negotiating third-party private payer reimbursement contracts and related coverage policies. As part of the transition to our company-owned commercial clinical laboratory, we also contracted with a revenue cycle management company, or RCM as mentioned. The service provider will submit third-party claims on our behalf. The RCM service provider will also oversee payer claims, deals processes, patient billing, online payment collection and claims tracking. With the appropriate licenses and certifications for billing and credentialing secured and recently having put in place the back-office systems, claims for approximately 1,000 tests performed since the establishment of our own lab are now being processed. Presently recognized revenue for GAAP purposes is subject to actual amounts collected during the period. Due to the delays, as Lishan pointed out, in receiving certain information related to establishing required lockboxes at JPMorgan, our commercial bank, the initial batch claims were submitted by RCM on August 1. Accordingly, since the RCM submitting process from June 30, there were no collections during the three months ended June 30. Future revenues will be recognized based upon actions until such time as the coverage policies are in place with CMS and payment contracts with the private payers. This obviously can result in a disconnect between the timing of revenues recognized versus the timing they are submitted for third-party reimbursement until these future conditions are met. The gap in claim submission represents near-term GAAP revenue recognized until the system catches up with the claims for the tests performed. The number of tests performed and submitted for payment are provided in the press release and was discussed earlier by Lishan. Obviously, in the early stages of our commercial launch of the test centers, we continue to evolve our reporting metrics as various sales and marketing efforts further influence adoption, particularly with the ramp-up of our Lucid Test Centers and the EsoGuard Telemedicine Program. Presently, there are five banking analysts who have issued coverage on Lucid and others doing their diligence. We believe that the quantity of EsoGuard tests assuming the related claims will be reimbursed at fair payment rates will need to be performed to meet the 2022 revenue estimates provided by the analysts. The quantity of collections and therefore the recognized revenue for each accounting period are highly dependent upon the evolving reimbursement landscape. Since there was no revenue in the second quarter, costs for the test centers in our laboratory are reclassified to operating expenses. In the second quarter, excluding non-cash expenses, test center costs were approximately $460,000 and are included in marketing expenses. For the second quarter, excluding non-cash expenses of $375,000, laboratory costs were approximately $745,000 and are included in general and administrative expenses. For a few comments about our operating expenses, sales and marketing for the quarter ended June 2022, expenses were approximately $3.9 million, compared to $1 million for the corresponding prior year, and also reflects an increase of about 17% sequentially, not including stock-based compensation charges. This largely reflects headcount increases and related costs. On today's front, G&A expenses were $7.3 million for the quarter ended June 30, compared with $3.1 million for the corresponding period last year, showing approximately a 28% increase sequentially. The increases are largely related to compensation and other outside consulting services related to patents, regulatory compliance, legal costs, and public company expenses. R&D expenses for the quarter just ended were approximately $3.4 million, as compared to $1.9 million in the corresponding period last year, showing approximately a 19% increase sequentially, with the changes between the periods largely tied to clinical trial expenses. There's a table we provide in the press release highlighting these amounts along with non-cash charges, namely depreciation, stock-based compensation and acquisition-related costs for a better understanding of the financial performance. You'll notice from the table, after adjusting the second quarter GAAP loss by approximately $4.6 million for non-cash charges, the company reported a non-GAAP adjusted loss for the second quarter of $10.1 million or $0.28 per common share. Lucid had cash of $32.7 million as of June 30, compared to $53.7 million at December 31. As you're aware from our last call, Lucid entered into a committed equity facility with an affiliate of Cantor Fitzgerald, where Cantor committed to purchase up to $50 million in the company's common stock from time to time at the request of the company. Any future funding from this facility is completely at the discretion of the company. As reported in the 10-Q, we received approximately $1 million from this facility subsequent to June 30, 2022. With that operator, let's open it up for questions.

Thank you very much. We will now begin the question-and-answer session. The first question comes from Ross Osborn from Cantor Fitzgerald. Please go ahead with your question, Ross.

Hi, congrats on the strong volumes and thanks for taking questions.

Hi, Ross. How are you?

I am well. How are you guys?

Good.

Starting off, given the updated guidelines to include women, have any women been screened at this point? And then how should we think about your marketing efforts going forward to drive awareness of the female population?

Great question. So it gives me the opportunity to make a bit of a distinction here. For the commercial experience for the tests that are being performed, we have not in any way limited tests or frankly argued strongly that women should not be tested. I don't have the numbers in terms of the breakdown, but there are definitely women who have undergone the test within the commercial side, and we expect that we'll be able to make that distinction a little bit more clearly given particularly that the ACG guideline is no longer hedging on that. It is important, and it is actually one of the aspects, the advantages of us pausing the BE1 study is that our clinical studies that BE1 and BE2 studies in particular did were actually designed only to enroll men because we felt it would give us the best shot in our discussions with the FDA, knowing that that would be an important consideration given those guidelines. So when we eventually reboot the BE1 screening study, we will be able to expand — we'll work with the FDA to expand the inclusion criteria to be consistent with the updated guidelines, which include women.

Okay, great. And then maybe switching over to marketing efforts. Is there any feedback you can share on your advertising initiatives in existing markets? And then with the rollout of new geographies, what market development initiatives do you plan to undertake based upon your learnings from the initial markets?

Great. Thanks for asking—this gives me a chance to elaborate on something I didn’t earlier, which is that one of the things we are definitely keeping at a low burn and being cautious about is our DTC efforts. So as you know, we do have our EsoGuard Telemedicine program in place. It's actually quite useful, because when we get self-referrals from individuals who hear about us through various channels on the web—it's quite useful. We have some data back from the efforts within Phoenix, and we know that we've had good responses. We've had good responses with regard to general awareness, as well as people who have come to the test centers through the telemedicine program having directly heard from that. All that being said, just one thing to emphasize: we are definitely looking to keep that in check, and that's one of the things in this company-wide initiative that we've chosen not to invest significant resources into—because frankly, that's paying for a test volume that's not reliably getting reimbursed. So we have the results in place. We have the collateral in place. We have the telemedicine program in place and still useful at a low level. But our plans for the coming quarters until reimbursement is more predictable is to focus entirely on the other two sales channels targeting primary care physicians and specialists and institutions.

Okay, got it. Congrats again on the progress, and thanks for taking my questions.

Thanks, Ross.

Thank you. The next question comes from Mike Matson from Needham & Company. Please proceed with your question, Mike.

So, just on the PPO Agreements. I mean I've never heard this. I'm assuming they're smaller. Is that kind of the strategy to start with some smaller ones and sort of work your way up, or I guess just why these particular ones?

Yes. So, let me talk a little bit about them. So, these are secondary PPOs, and there's an entire market of secondary preferred provider organizations that are not small. Prime Health is the second-largest in the country and doesn't fully report their numbers, but it covers about 10 million to 20 million lives. So, they're not small, but they're really aggregators. They have providers within their network that they contract like us for set fees and they have clients, including some health plans, employers, unions, and other entities that contract with them directly to provide these services. So they're not at the Blue Cross large nationwide or even large regional traditional healthcare plans, but they do serve a similar purpose. And you hit on the right thing, which is that they are lower-hanging fruit. It's certainly easier to make these arrangements. We've been quite gratified that we've been able to hold the line on payment as a percentage of our charges and payment numbers that are quite attractive to us. We’ll obviously know in the coming quarters how much traction we get from these, but they're a place to start while we are getting our clinical utility data set up in the claims history so that we could have more fulsome conversations with traditional health plans as we start to see how the out-of-network payment trajectory plays out. As you know, our third-party laboratory was generating out-of-network receipts at a decent clip at a 50% to 60% sort of typical out-of-network coverage level and we're looking forward to seeing whether we can reproduce and increase that, particularly now that we have the ability to be more aggressive about pursuing those claims. So past a question regarding the secondary PPOs, we'll continue to expand the number of covered lives that can be covered.

Okay. Thanks. And I'm glad you mentioned that 50% to 60% number. So I want to make sure I understand that correctly. That was for the prior lab that you guys were using that was doing their own sort of billing. Is that a reasonable kind of assumption for this revenue cycle manager that you're now using that they could get maybe 50% to 60% of the test paid for?

Just to be clear: not 50% to 60% of the tests—they are receiving 50% to 60% of the list price. Basically, we were charging around $2,000. And that's kind of a standard out-of-network rate. We weren't balance billing the patients. So those weren't balance billed on the patients. So I think we were averaging about $1,100, which represents a bit more than 50% of our charge. That's gratifying, and we hope to reproduce that in terms of the percentage of tests that are actually generating that number. We certainly hope to do better than they are because we're in a much stronger position to be aggressive in pursuing those claims. But we need a couple of quarters to see how that plays.

Okay. And I mean, is there any way to—you've got the sales force out there, you've got these test centers. Is there any way to try to target patients that are in these PPOs or somehow more likely to actually resolve in getting paid and receiving a cash collection?

Yes.

We actually mentioned that, and it was maybe kind of buried in the press release on the test centers. I'm not sure—I don't remember if I reiterated that today. But absolutely, yes, because many of these are somewhat regional, and some are local. Now that we're unshackled from the states we had targeted because of low regulatory hurdles and have the full regulatory program in place, we're free to pursue placement of test sensors wherever we choose. So absolutely, we have been selecting—we have a clear process where we're selecting the ones we've done so far and the sites that we're looking to complete for the rest of the year in areas that overlap with coverage, as well as areas where we already have a presence with our sales force. So, yes, there's an opportunity to do that. We'll obviously have to see how that plays out in terms of yield.

Okay. And then just finally on the satellite test centers. You kind of explained what it was, but I guess I was wondering how that came about and why you opted to do that as opposed to just maintain the existing kind of test center model that you had.

Yes. It's not because there was any issue frankly with the original test center model. That's cranking along just as we've designed. It really arose sort of spontaneously, and I give credit to the team on the ground for their creative thinking around this from more of the other channel of engagement with specialty practices and institutions, particularly large primary care and multi-specialty practices and community hospitals. In discussions with those—it's a different engagement where we're not looking to just get them to order a test to send to our test center, but we're looking for them to build a program. As you go through the conversations around what that takes and how to put together the infrastructure and scheduling, the question came up of could we be in a position—do we have some extra capacity with our nurse practitioners in certain areas—could we provide a nurse practitioner to come into a practice and utilize space provided to process patients, to do EsoCheck procedures that are referred from them, either as an interim step or maybe even potentially as a longer-term step? It really came about creatively to facilitate the expansion of the specialty and institutional channel. When I first heard about it, I was quite excited, and it's something we had contemplated at the beginning. We obviously, this time went through an exhaustive compliance assessment with our in-house and external team to ensure it was being done in a compliant way. It's been gratifying so far, but it's early, early, early efforts. Again, it doesn't detract from anything. It wasn't because other aspects of how we've been pursuing this have not worked or anything to do with our Lucid Test Centers. It's just frankly another opportunity to get patients in for testing.

Okay. Got it. Thank you.

Okay. Thanks, Mike.

Thank you. The next question comes from Ed Woo from Ascendiant Capital. Please proceed with your question, Ed.

Yes. Congratulations on the progress. As you guys continue with Stage 2 of moving out your test centers to bigger population markets, are you having any issues finding labor, nurse practitioners, or is the cost of these test centers going up as you go to bigger population areas?

So great question. I've kind of hinted both with regard to this and regarding recruiting personnel for the laboratory—we are very much going this with expecting headwinds. There's a tight labor market, particularly for skilled personnel. I don't mean to minimize the effort that our team has had, and they've worked incredibly hard to fill these slots. But now they've done well, and we've been able to get high caliber people. We're maintaining quite high standards. The interview process, particularly for the sales reps, is very rigorous. We're very much better now at what we know in terms of what works and what doesn't. We just had a training event last week and got some high-caliber folks, and we've been able to get them in the door and excited about moving forward. Kudos to the team for overcoming the broader headwinds to fill those roles.

Great. And then you start to open these test centers at more bigger markets. Is your rental costs...

Oh yes. Sorry. Yes. So I'll let Dennis comment on that, but the general answer is no. I mean we estimate that the two tests per week to cover reimbursed test per week is based on even somewhat conservative estimates of lease costs. And even in these larger cities, sure it costs more to rent the medical office in Orange County than it does in Boise, Idaho, but that difference does not substantially change the overall model or the return on investment from them. Dennis, do you want to add anything to that?

Yes, I agree with that. In smaller markets, the monthly rental is in the $1,000 to $1,500 a month range, in some cities even lighter than that. In some of the bigger markets with bigger pricing—it might range from $1,500 to $2,500 a month. But as you can quickly see, you're talking about a handful of tests over the course of a year to cover that. It really isn't a factor in the decision about where to place these. From a labor cost standpoint, your bigger markets probably still trade within a narrow range. You might see a 10% to 50% variance. But again, the conclusion in terms of how to cover the overhead there with a handful of treatments still applies even in the bigger markets we're experiencing.

Yes, it's really exciting because now it gives us the ability to do, like any business, to place sites and conduct fairly sophisticated market analysis—demographics, traffic, all the things to see how to get a good catchment area to link it up with primary care and other healthcare institutions that you think are high-yield targets. Also, as I mentioned, for the first time, we can put test centers in areas where we already have personnel. As you might imagine, the personnel in Ohio, in Orange County, and even in Texas who have been working hard on the non-LTC side are ecstatic to have an LTC that will help them greatly. It’s a lot of fun to try to figure those out.

Great. Well, I'm sure, you can't wait until they open one in the Big Apple, because if you can make it to New York, you can make it anywhere. Thanks a lot, guys. Thank you for answering my question.

Thank you.

Thank you. The next question comes from Mark Massaro from BTIG. Please proceed with your question, Mark.

Hey, guys. It's going to be tough to follow up that last comment about New York, but anyway congratulations on the really strong Q2. Certainly, your volumes beat my estimate, and I was not expecting revenue in Q2. I apologize, I've been jumping around different calls and missed your prepared remarks. But do you think Q3 is the period where you can start recognizing revenue, or do you think it's going to take a little bit longer than that just given some of the administrative items you guys have laid out?

Yes. I'll defer that to Dennis. But I think…

So the second quarter had no revenue because of getting set up with the revenue cycle management company. That's in place. It wasn't the revenue cycle management company; it was related to the IRS and certain documents we needed to get to open up the lockbox, which was a condition for the revenue cycle management company to put certain things in place. That's done. We started submitting claims on August 1. The overall guideline is to recognize revenue upon collection. So we are submitting claims to payers. There's roughly 1,000 tests since we started our own lab—850 in the most recent quarter—submitted. If we use the experience from ResearchDx as a proxy for what might happen, those that got paid were paid at out-of-network rates in 50% to 60%, and actually that was increasing over time. One of the things ResearchDx didn't do is that SYNERGEN will do for us, and it's of our overall due to push policies and contracts with the larger appeal those denials, which is a normal process for anybody at the early stages of reimbursement. It could also help in terms of the overall payment per claims submitted. So in terms of the third quarter, it's reasonable to expect that there will be some revenue. How much of those claims that are submitted will get paid is still somewhat of an uncertainty, and it will take some time to catch up. I think we all know that reimbursement from your personal experience is often tireless. It is our expectation that in the second half, we'll catch up on or have an explanation of benefit for many of those that we have submitted and understand where we stand with payments per claim submitted. So I can't give you a full answer to what you asked, but that gives you kind of the boundaries of what to expect.

Okay, that's helpful. And obviously, you guys are scaling the organization, which is nice to see, especially at a time when other companies are shrinking their organization. So, certainly some reps looking for jobs. Maybe can you just talk about the 850 volumes you had in the quarter, how much of that was repeat orders from existing physicians? And how much of that was, whether you want to call it same-store versus maybe additional reps contributing or volumes coming from territories that you didn't have set up like six months ago?

I can't – I'm not sure, I certainly can't give you numbers on that. I can sort of qualitatively tell you that, often the assumption is that it's— that you're going to again even early in our experience where we had chunky volume driven from few large providers, now folks representing a large portion, we've expanded substantially. We do have sites that are generating repeat business. But there is a meaningful amount of new account openings. Again we're not at the point where that noise in those numbers is sufficiently limited to report on it and make it useful. But we're seeing both. One of the points I can relate to is that we are expanding and we look to expand through the end of this year. As I mentioned, after we get to that $60 million total number and just under 40 reps, we'll likely slow down that growth quite a bit and look to do what you're saying: drive in our existing areas at our existing geographies with our existing team—both same-store, as well as new account openings and prior volume.

Yes, there are a couple of other things that we've talked about that might help in terms of that, and we're still developing, as you said, same-store metrics. But one of the things in Lishan’s prepared remarks is that the test centers are about two-thirds of the total tests. Lishan also talked about how we're growing the sales force, and it takes about four months for them to be productive. We exited March—this first quarter—with 21 people in the sales force designated as primary care folks. So if you think about four months producing the same-store sales force of those reps, we're producing a great portion of that. Now we presently in August have about a headcount of 40, and the primary care salespeople are at 40. So looking at who was producing in the second quarter—predominantly those 10 folks in the primary care channel and driving tests to our test centers. So it’s not completely responsive to your question, but I will give you a little bit more color on why we're pretty optimistic about where we're heading.

Just to be clear, I just want to make one point to clarify that number just so people don't miss. The proportion of tests that are coming through our test centers has gone up at one point with two-thirds of that in volume. That's great, because it's consistent with where we think the long-term model is. But I want to make sure that doesn't lead people to interpret from that the other channel where institutions and specialty practices are longer lead times, right, because that's program building. That's not, 'hey, could you order a test for this month?' That part of the business grew as well. We think it’s an important part of the business. We're not shifting from that group to the primary care channel—both are growing, but the growth has expanded and my guess is we’ll probably settle somewhere in this two-thirds, three-quarter range.

Great. Thank you very much. And I will leave it there.

Thanks Mark. Appreciate it.

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. Now I would like to turn the call back to Dr. Lishan Aklog for closing remarks. Thank you, sir.

Great. Thank you, operator. And thank you all for joining us today and for the great questions as always. We look forward to keeping you abreast of our progress through news releases and periodic calls such as this one. As always, the best way to keep up with recent news, updates, and events is to sign up for our email alerts on the Lucid Investor Relations website and to follow us on social media on Twitter, LinkedIn, and YouTube. You can also contact Adrian at [email protected]. So thanks again and everyone have a great evening.

Thank you very much, sir. This concludes today's conference. You may disconnect your lines at this time, and thank you very much for your participation.