Good morning, and welcome to the Lucid Diagnostics Second Quarter 2024 Business Update Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Please note this event is being recorded. I would now like to turn the conference over to Matt Riley, Lucid Diagnostics Director of Investor Relations. Please go ahead.

Thank you, operator, and good morning everyone. Thank you for participating in today's business update call. Joining me today on the call are Dr. Lishan Aklog, Chairman and Chief Executive Officer of Lucid Diagnostics, along with Dennis McGrath, Chief Financial Officer of Lucid Diagnostics. The press release announcing our business update and financial results is available on Lucid's website. Please take a moment to read the disclaimers about forward-looking statements in the press release. The business update, press release, and the conference call all include forward-looking statements and these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from statements made. Factors that could cause actual results to differ are described in the disclaimer and in our files to the Securities and Exchange Commission. For a further list and a 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 SEC and any subsequent updates filed in the Quarterly Report on Form 10-Q and subsequent Form 8-K. Except as required by law Lucid disclaims any intention or obligation to publicly update or revise any forward-looking statement to reflect change and 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. I would now like to turn the call over to Dr. Lishan Aklog, Chairman and CEO of Lucid Diagnostics. Take it away, Lishan.

Thank you, Matt. Good morning, everyone. Thank you for joining our quarterly update call today. As always, I'd like to thank our long-term shareholders for your ongoing support and commitment. Our team remains singularly focused on driving this Lucid Enterprise towards its substantial commercial potential and to enhance long-term shareholder value. We're very pleased with the solid progress the team has made over multiple fronts during the past second quarter and in recent weeks. We are now fully armed with a complete body of outstanding clinical data and are poised to make our final push towards broad coverage and reimbursement to drive EsoGuard revenue and revenue growth. Let's start with some highlights. First on commercial execution, our revenue for the second quarter of 2024 was $1 million, flat relative to the prior quarter and up approximately 500% on an annual basis. EsoGuard test volume, as we previously reported, was 3,147 tests, which is a 31% increase on a quarterly basis and 44% annually, representing record EsoGuard quarterly test volume. Our Check Your Food Tube (CYFT) events continue to thrive. We held over 50 high-volume health fair events during the quarter, a 60% increase relative to the prior quarter. In partnership with the Fort Worth Fire Department, we held our first large CYFT event with upfront contracted payment. We've made solid progress in direct contracting, targeting benefit brokers, third-party administrators, and self-insured entities to offer EsoGuard as a covered benefit. We also have continued to make progress with our revenue cycle management processes, including prior authorization expansion, physician and professional society advocacy, and our pricing, as Dennis will describe in more detail, is holding with median out-of-network allowed amounts remaining near the Medicare rate. Some key strategic accomplishments. We are now fully armed with a complete body of outstanding clinical data. Much of this has come in recently. We reported on the NVET-BE clinical utility study which showed positive data with a 2.4-fold increase in yield of endoscopy, and the BE-1 clinical validation data which is also just recently released showing EsoGuard sensitivity of 88% and a negative predictive value of 99%. We'll discuss both of these studies in greater detail later. The previously released data from the Cleveland VA clinical validation study was published in a peer-reviewed journal, the American Journal of Gastroenterology, and showed similar EsoGuard sensitivity of 88% and negative predictive value of 99%. Last month, we held a productive meeting with the CMS MolDX program focused on EsoGuard clinical data, and we look forward to submitting our data and working with the MolDX team to ultimately secure Medicare coverage. The American Foregut Society, a leading professional society focused on esophageal disease, published a formal statement that strongly advocated for commercial payer coverage of EsoGuard to align with guidelines of biomarker legislation. This was a formal request, strongly worded, and we believe it will have an impact on seeking coverage from commercial payers. For those of you who are new to the Lucid story, just a few slides to provide you some background on our company. Lucid is a commercial stage cancer prevention medical diagnostic company focused on early pre-cancer detection, and our mission is to prevent esophageal cancer deaths in a well-defined, at-risk population. We have two technologies, the EsoGuard esophageal DNA test and the EsoCheck cell collection device. The EsoGuard test is the first and only commercially available test that is capable of serving as a widespread screening tool to prevent esophageal cancer deaths through the early detection of esophageal pre-cancer. EsoGuard performance is unprecedented for a molecular diagnostic test. Here, we compare the EsoGuard performance in various categories to some other early detection tests, including Cologuard, the colorectal stool test, and the Guardant Shield, colorectal blood test. It is unprecedented around its ability to detect pre-cancer and early pre-cancer. Pooled data from multiple recent clinical validation studies show 100% sensitivity for cancer, which compares favorably to these other tests. Pre-cancer sensitivity is 83%, substantially greater than the other tests and any other test in this category. Early pre-cancer sensitivity remains high at 86%, while other tests have no ability to detect early pre-cancer. EsoGuard even has a high sensitivity of 91% in the very shorter segments of disease, with 99% negative predictive values, indicating a very low false negative rate, and a positive predictive value of approximately 30%, comparable to other such tests. The commercial opportunity here is substantial, with approximately 30 million people in the United States at risk with chronic heartburn and recommended for pre-cancer testing. Medicare has established a rate of $1,938, and our out-of-network payments with commercial payers have held up, pricing remains stable. Our gross margin for the next tests in the door at current volumes is approximately 90%, which we believe will drive our business moving forward. We have a multi-pronged commercial strategy with multiple venues and locations where patients can access our test. We now have physical test centers in 23 cities. Our dominant approach is what we call our satellite Lucid test center model, partnering with primary care physicians for cell collection at their offices. Additionally, physician practices are building programs around the EsoGuard test. We also have a mobile test unit in Florida, enhancing visibility and marketing. As mentioned, we had record quarterly test volume this past quarter at just over 3,100 tests. Revenue has been flat compared to the last quarter, and this commercial activity comes with a flat headcount for sellers over the past couple of quarters, and a 30% decrease in headcount compared to our peak in approximately the fourth quarter of 2022. This represents an increase in the productivity of our sales force. On the execution side, regarding high-volume Check Your Food Tube pre-cancer detection events, we had over 50 such events this past quarter, a 60% increase relative to Q1 2024. Recently, we tested our 4,000th firefighter and continue to have a robust pipeline of events scheduled through October. Direct contracting remains vital for our near-term strategy, contributing to long-term revenue growth. We're deploying additional resources to this initiative. As mentioned, we held our first large CYFT event where we received upfront contracted payment with the Fort Worth Fire Department. This is a significant milestone where we will increasingly seek guaranteed revenue from CYFT events outside the usual insurance claims process. We're making solid progress targeting benefit brokers, third-party administrators, and self-insured entities to offer EsoGuard as a covered benefit, driving contractually guaranteed revenues. We continue to enhance our revenue cycle management processes for out-of-network payments, a crucial aspect of converting test volume growth into revenue. The median allowed payment amount remains stable near the Medicare rate. We're streamlining prior authorization processes to eliminate denials. Our appeals process is getting more sophisticated and targeted, and we're experiencing higher percentages of claims getting overturned on appeals, particularly for those related to medically unnecessary designations. Dennis will cover some of these numbers in more detail. We had a highly anticipated meeting with the MolDX leadership group last month. It was very productive and focused on our data, and we're eager to submit this data formally to work with the MolDX team for Medicare coverage. We're also pursuing an active market access strategy with commercial payers to secure medical policy coverage with regional plans and leverage ongoing biomarker legislation in several states to secure pilots with national plans. We are now fully armed with what is a complete body of outstanding clinical data, positioning us well for this final push towards broad coverage and determination. This table shows the data; I won't go through each of these, but I will briefly highlight a few. The most recently released data for the EsoGuard BE-1 and the ENVET-BE studies is working its way through peer review. We've had some recent publications and now multiple published studies demonstrate the clinical utility of ENVET-BE. The EsoGuard BE-1 study included 93 patients in a screening population with a pre-cancer sensitivity of 88%. There were no cancers detected in this population, and results similar to the negative predictive value were around 99% and a positive predictive value of 30%. This was a multi-center study led by Dr. Nick Shaheen of UNC. The ENVET-BE study, recently released on preprint and announced last week in a press release, is awaiting peer review. This study provided real-world data to confirm the utility of EsoGuard as a non-invasive triage tool, significantly increasing the positive yield of invasive upper endoscopies. BioWorld highlights that our EsoGuard test more than doubles pre-cancer detections, reporting on 199 patients for whom EsoGuard served as a triage tool to invasive endoscopy, significantly increasing the yield of endoscopy by 2.4-fold relative to conventional endoscopy. Excellent clinical utility data bolsters our overall clinical evidence. Let me pass the baton now to Dennis, who will cover our financials.

Thanks, Lishan. Good morning, everyone. The summary financial results for the second quarter were reported in our press release published earlier today. On the next three slides, I'll emphasize a few key financial highlights from the quarter, but I encourage you to consider these remarks in the context of the full disclosures covered in our quarterly report on Form 10-Q. Cash at quarter end June 30th was $24.9 million. During the quarter, we closed the Series B-1 Convertible Preferred financing in the amount of $11.6 million. Our average quarterly burn rate for the trailing four quarters is $10.6 million. Burn in the second quarter included $7.4 million from ongoing operations, which aligns with the previous quarter, $2.5 from the quarterly Management Services Agreement, and $1.6 million reduction to the intercompany debt to PAVmed. We disclosed in the 10-Q that our ability to fund operations beyond one year from now relies heavily on revenue growth in the next four quarters and improvements in the reimbursement landscape with government and private health insurers. Our direct contracting efforts with self-insured employers and corporate financing, including refinancing any outstanding debt, can also help us exceed that threshold. Increases in other assets of approximately $2 million reflect GAAP accounting for a three-year lease renewal of our California Lab. That increase is also reflected in the long-term liabilities. Included in other current liabilities is the $11.2 million fair value of the Senior Convertible Debt, reflecting a quarterly decrease of $1.9 million. During the quarter, approximately 2.1 million shares were issued in satisfaction of conversion notices from the debt holder. Shares outstanding, including unvested restricted stock awards as of last week, are approximately 54 million shares, including about 750,000 shares issued subsequent to quarter end. The GAAP outstanding shares as of June 30th are $49.3 million. GAAP shares do not reflect unvested restricted stock award amounts. Currently, PAVmed continues to be the largest shareholder of Lucid Diagnostics, holding just under 60% of the common shares outstanding, maintaining controlling financial and voting interest above 50%. Recent financings have included the issuance of voting convertible preferred securities, where preferred shareholders are significantly incentivized to delay conversion of preferred shares into common shares until 2026. If all preferred shares were converted today, an additional 51.6 million shares would be outstanding. On the P&L, this slide compares this year's second quarter to last year's second quarter on select key items. Revenue of approximately $1 million for Q2 is about even with the previous two quarters and reflects more than a six-fold increase over last year's second quarter. This amount reflects actual cash collections for the quarter and a small amount from invoiced EsoGuard tests delivered to the VA. Test volume of 3,174 tests for the quarter represents nearly $8 million in submitted claims at our $2,499 ASP. It's worth repeating what we communicated previously; a key determinant in how revenue is recognized in our reimbursement journey is the probability of collection. As we are in the early stages of reimbursement, revenue recognition for claims submitted to traditional government or private insurers will occur when the claim is actually collected rather than upon patient report delivery. In our 10-Q, this is called variable consideration in GAAP’s ASC 606 revenue recognition guidelines; presently, there is insufficient predictive data to reflect revenue when the test report is delivered. For amounts contracted directly with employers that are fixed and determinable, revenue will be recognized upon contracted service delivery, meaning once the report is delivered to the referring physician. Our non-GAAP loss for the second quarter of $9.7 million aligns with the trailing six quarters, averaging $9.6 million. Non-GAAP net loss per share has remained relatively flat for each of the last six quarters at around $0.22 per share. On a GAAP EPS basis, non-cash charges accounted for approximately $0.19 per share. Regarding operating expenses, total non-GAAP OpEx for the second quarter is $10.6 million, in line with the trailing six quarters, averaging $10.3 million. Cost of revenue primarily consists of EsoCheck devices, lab supplies, and fixed lab facility costs, consistent with previous quarters. Non-GAAP G&A expense increased slightly by about $400,000, mainly due to hiring in our market access reimbursement department and some patent expenses. I'll close with a few reimbursement highlights for the first half of this year. In Q2, we billed approximately 3,174 tests, reflecting nearly $8 million in pro forma revenue. During the quarter, we collected $976,000. Of that amount, about 35% of claims paid were from current quarter submissions, about 45% from claims submitted in Q1, and the remainder from claims submitted last year, with the oldest item nearly 12 months ago. Our Revenue Cycle Manager reports increasing turnaround times for the largest payers and an uptick in claims deemed medically not necessary. The RCM has a mitigation plan for both issues, which includes increasing follow-up speed with late payers and proactively soliciting medical records for earlier appeal stages. We submitted reimbursement claims for nearly 5,600 claims during the first half, representing about $14 million in pro forma revenue. Approximately 77% are adjudicated, while 23% remain pending. Out of the 77% that have been adjudicated, about 25% resulted in an allowable amount by insurance with an average of approximately $1,540 per test. Among denied claims, about 43% were deemed not medically necessary or required prior authorization. Additionally, about 26% were deemed to be non-covered. With that, operator, let's open it up for questions.

Thank you, sir. Our first question comes from Mike Matson from Needham. Please go ahead.

Morning, Mike.

Hi Dennis, hi Lishan. This is Joseph on for Mike today.

Hi, Joe.

Hey, how are you doing?

Great.

Just in terms of, I guess, the MolDX meeting, did you have the recent data, especially the clinical utility data, to be presented in that pre-submission meeting? And then, when do you expect the next one where you would have another batch of data to show them? Is there a timeline for final dossier submission in 2024, or do you think that may be pushed out to 2025?

Okay, a couple of questions there. So, the data that we reviewed during the pre-submission meeting included the three clinical utility studies. We did not spend much time on the original paper from the STM. One of those was in preprint and has not yet been published in terms of the CV data. We did not have the fourth CU data, the ENVET-BE study prepared at the time, but we did discuss the additional data we expected in the pipeline. We do not expect to have another formal pre-submission meeting. This was really our first formal reintroduction since the early days when we first submitted prior to the LCD. Our next step is to collect the data, put it together in a dossier as you mentioned, and submit it for consideration. One of the gating items for that is the publication of the EsoGuard BE-1 data, which is currently in preprint and has been submitted to a journal, awaiting peer review. That will be the key item for us to finalize a package and submit it. As for a timeline, it is hard to say right now, but we certainly expect the B-1 data will be published promptly enough for us to do so this year.

Okay. Yeah, all that color is very helpful. Looking at the payment rate for the quarter, EsoGuard volume was up a fair amount sequentially, I think it was 30%, which is great. The payment rate was down. I understand some details from Dennis about increases and what was being deemed medically not necessary. Could you compare that or frame that with the large CYFT event, where you had a contracted payment? What was that contracted payment rate, and was that recognized in this quarter?

Yes, please proceed.

Yes. So the contracted amount was paid in advance, and we deferred that revenue because the event occurred in the third quarter, meaning it will be recognized then.

Okay, that's very helpful then. Just one more question regarding your current cash burn. With the recent financing, what does your cash runway look like right now?

Yeah, $25 million in cash burn, just around $10 million. You've got a little more than six month’s worth of cash.

Okay, beautiful. Well, thank you guys very much and congrats on the record quarterly e-cigar volume.

Okay, thanks Joseph.

Thanks, Joseph.

Our next question comes from the line of Kyle Mikson from Canaccord. Go ahead, please.

Kyle, good morning.

Hey, guys. Thanks for the questions. Congrats on the progress. Given all of the clinical evidence you are building now, it seems it will be very useful for reimbursement. How are you thinking about partnering with a larger distribution partner, whether it be a larger healthcare diagnostics company with a network or health system? I feel like it's a pretty legitimate story, and how are you thinking about that partnership model?

I think we've talked about this intermittently over previous quarters. I don't think we're quite there yet, Kyle. We need to achieve a higher percentage of realized reimbursement. However, with the progress we've made and the data we have, it is a consideration. I don't expect this to be a near-term event, as those arrangements require precise payments to justify expenses on both sides. Dennis, do you want to add anything?

Alright, great. Lishan, what's been the reaction in the medical community or among payers to the recent studies? Has that resulted in an increase in adoption, or is volume going to be stable until Medicare coverage accelerates?

Our adoption is quite good, with volumes driven by the number of personnel we have in the field. We have fewer reps but greater productivity. The data is being well-received, particularly the clinical validation data, which appeals to physicians. Clinical utility generally interests payers. We've conducted numerous peer-to-peer events, including a large one associated with the Fort Worth Fire Department event I attended. It's crucial to have data, and enthusiasm in the physician community was strengthened with quality clinical data.

That was great, thanks. Dennis, you mentioned that 43% of claims submitted in the first half were deemed not medically necessary. Can you elaborate on that and what that means?

The 43% included a combination: medically not necessary was about 25%, and 18% required prior authorization. The designation may need additional information and provides an opportunity for us to appeal these claims. Many patients meet well-established guidelines, which allows us to demonstrate medical necessity. Each denial serves as a tool for appeals, where we're making progress, seeing more claims overturned. We have a backlog of $12.5 million in submitted claims, so there's a significant opportunity for our market access team to engage with payers and demonstrate medical necessity.

To emphasize what Dennis said, these are out-of-network claims, so it's expected that some will be denied. Medically unnecessary claims can be leveraged to support appeals and reinforce overall inquiries about our services. As we enhance prior authorization processes, we aim to secure approvals before tests are performed, helping to reduce denials.

With prior authorization, 35% of claims billed in Q2 were in facts from the current quarter. Is 35% typical, or do you want to see that improve? How should we think about that metric changing as you gain coverage?

As we move to medical policy and engage with insurers, we will expect a smoother claim turnaround time of 30-45 days. Currently, turnaround times are extended as we deal with out-of-network issues, potentially requiring additional submission data. Medical policy will streamline this process, allowing us to collect a larger percentage billed in a quarter and recognize revenue in real-time.

Thanks, guys.

Thanks Kyle.

Our next question comes from the line of Ross Osborn from Cantor Fitzgerald. Go ahead, please.

Hey Ross.

Hey guys, thanks for taking our questions. Any color on your direct contracting engagement for the rest of the year?

We now have three full-time employees engaging directly with employers, focusing on having our test covered within their plans. We've seen success engaging brokers, integral to our efforts with third-party administrators and employers. Expect traditional CYFT events, such as the firefighter events, to yield pre-negotiated payments more quickly. Altering benefits programs has a longer lead time, but we anticipate seeing some activity there.

Thanks. As entering 2025, do you plan on adding to the sales force or believe your current headcount is sufficient?

We're assessing this quarter-by-quarter. While our sales training is effective, maintaining flat operating expenses is a priority. Despite higher productivity, there is a threshold that would justify increasing our sales team, similar to considering partnerships based on revenue realization progress. For now, we assume headcount remains flat.

Got it. Thanks for your insights.

Thanks, Ross.

Our next question comes from the line of Anthony Vendetti from Maxim Group. Go ahead, please.

Good morning, Anthony.

Thanks. Hi, Dennis, hi Lishan, just following up on the tests deemed not medically necessary. What are your expectations for the trajectory here? Are you expecting this 25%-26% to remain stable for a while, or do you foresee improvement sequentially over the next year?

The out-of-network process differs from our direct contracting initiative, which shouldn't go through traditional claims. Regarding medically unnecessary claims, without medical policy coverage, initial denials may remain stable. We expect to reduce this through our ongoing initiatives, but they remain subject to appeal. These efforts clarify our submissions, potentially lowering denials; however, medical policy progress could ultimately change denial rates.

It’s reasonable to expect that medically not necessary claims will decrease as medical policy changes take place. Our efforts presented with strong clinical data can facilitate this process.

Thanks. How can you ensure claims get submitted with necessary histories to validate criteria purposely under Revenue Cycle Management?

It's a joint effort by our teams. The field team, sales team, and clinical operations all ensure comprehensive data is provided for claims, while coordinating closely with Quadax, our Revenue Cycle Management team. We continually refine our procedures to maximize claim processing success.

Thanks, I appreciate it.

Great. Thanks, Anthony.

Our next question comes from the line of Mark Massaro from BTIG. Go ahead, please.

Hey, guys. Thanks for taking the questions. Congrats on the strong volume quarter, with record volumes up sequentially 31%. You hosted over 50 events in Q2, up from 32 in Q1. What do you think Q3 might look like? Do you expect sequential growth or a tough compare?

It's hard to say. We’re not pushing a narrative of dramatic quarter-on-quarter growth. We aim for modest growth given current sales and lean sales team. While CYFT volume has potential, we prefer to maintain a cautious approach to expectations.

I see you've tested over 4,000 firefighters, and you're expanding to other targets. Can you share those, and are they higher risk?

The expanding line blurs between firefighter-focused CYFT events and similar groups like police departments or teachers, leading into unions and employer contracts. We're eyeing municipal groups for expansion but also focusing on employer contracts.

With at least 15 states passing biomarker bills, have you spoken with payers about the bills? Any insights on timing for movement in 2025?

Yes, we are actively having conversations with multiple plans and our market access team is aware of the legislation. Regional payers are key targets as they mandate coverage based on FDA guidelines. We anticipate progress, but it's a bureaucratic process, yet we believe traction will accelerate by year's end or early next year.

Thanks again.

Thanks Mark.

Thanks Mark.

Our next question comes from the line of Ed Woo from Ascendiant Capital. Go ahead, please.

Congratulations on the progress and quarter. If you have more health fairs with upfront contracted payments, has there been pressure to negotiate lower testing prices?

There is varied pricing models that we explore with event organizers, focusing on value rather than pressure. Each pricing structure is unique, ensuring profitability without excessive negotiation pressure. Dennis, any additional comments?

We can engage in arrangements with fixed rates for each event, tailored to the volume and scheduling dates. We maintain profitability throughout these agreements, adapting as necessary.

Thanks for the clarification. Best of luck ahead.

Thanks, Ed.

Very good, Ed. Thank you.

There are no further questions at this time. I'd like to turn the call back over to Mr. Lishan Aklog for final comments.

Thank you for your time and questions. We have a fireside chat tomorrow at the 44th Annual Canaccord Genuity Growth Conference. We look forward to keeping you updated on our progress via releases and calls like this one. For updates, sign up for our email alerts on the Lucid Investor Relations website and follow us on social media. Thank you all, and have a great day!

Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day!