Good morning, and welcome to the Lucid Diagnostics 4th Quarter 2025 Business Update Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator. Please note this event is being recorded. I would now like to turn the conference over to Matt Riley, Lucid Diagnostics Vice President of Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Thank you for participating in today's business update call. Joining me today on the call are Dr. Alishan Aklav, Chairman and CEO of Lucid Diagnostics, along with Dennis McGrath, Chief Financial Officer. The press release announcing our business update and financial results is available on Lucid's Please take a moment to read the disclaimers about four looking statements in the press The business update, press release, and conference call all include four 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 NRR filings with the Securities and Exchange Commission. For a list and a description of these and other important risk factors and uncertainties that may affect future operations, see Part 1, Item 1A, entitled Risk Factors, in Lucid's most recent annual report on Forms 10-K filed with the FCC and any subsequent updates filed in quarter reports on Forms 10-Q and subsequent Forms 8-K. Acceptance required by law loosely disclaims any intentions or obligations to publicly update or revise any 401 statements to reflect changes, expectations, or events, conditions, or circumstances on which the expectations may be based or that may affect the likelihood that actual results will differ from those that are in the conference with Dr. Leisha of the backlog, Chairman and CEO of LUSA.

And good morning, everyone. Thank you for joining us today and for your continued engagement and support. So let's begin with some key highlights and for the fourth quarter and in recent weeks. So we'll start with some key highlights from the commercial side. Our ESAGAR test volume in the fourth quarter was 3,664. That exceeds our target range that we've articulated regularly about represent page 25 to engage our team in transitioning Medicare, which we talked about before, but now also the VA, which we'll talk about in quite a bit more depth. And we're continuing our event-based testing to maintain the volume. We're entering in 2026 with significant momentum as we await Medicare coverage. Let's talk about the VA. It's a really important milestone for us that we were awarded under the VA federal in-depth update. So, Medicare coverage, want to make it clear that and we're proceeding accordingly. We have entered into some other alternatives. Perhaps we don't remain in Medicare. They do look at cost-effectiveness. They're not in relative to Medicare, acknowledging and validating the Medicare. The dynamics within the VA are different, that the VA can often be resource-limited. Fairly straightforward, but since we're on the FSS now, we can engage with fine clinical champions at that center. We engage in contracting. We do need to coordinate. We talked about before, it was imminent, we've made, but also in the field. This activity on the commercial team, all of the adjustments were made, volume, battle, any day now, but hopefully.

Thank you, Sean, and good morning, everyone. The financial results for the fourth quarter of the year were reported in our press release. The next three slides will emphasize a few key financial highlights from the fourth quarter, but I encourage you to consider these year marks in the context of the full disclosures covered in our annual report on Form 2. With regard to the balance sheet, cash at year end, December 31st, was $34.7 million. The average burn rate, including cash interest on the debt for 2025, was $11.1 million per quarter, with the fourth quarter a bit higher as we made investments in our sales team and market access staffing, totally about $500,000 in the fourth quarter, and we settled some annual compensation obligations during the period. You will recall at the end of 2024, we refinanced our convertible debt into a $22 million five-year note, interest only at 12% with a $1 conversion price, which is held by long-term shareholders. The fair value of the convertible notes in the amount of $24 million at year end is really the only other substantive change from the previously reported balances at at the end of the third quarter. The fair value increase of $1.7 million in the quarter reflects a marked-to-market quarterly adjustment in parallel with the common stock price changes between the periods. The fair value increase is also a substantial part of the fourth quarter expense charge of $2.4 million, reflecting other income in the P&L. And for the year, the year-over-year change of $5.4 million reflects a 33% increase in the stock price over the year and also drives a similar non-cash expense charge to the annual P&L in the amount of $7.7 million. Shares outstanding included unvested RSAs and conversion of the Series B preferred as of last week are approximately 177 million. After the conversion of the preferred Series B on March 13th, there were approximately 13 million common shares held in abeyance due to the 4.99 percent ownership blockers in the Series B certificate of designation. If these abeyance shares had been issued, common shares outstanding would be about 190 million. The gap outstanding shares as of December 31st of 131 million are reflected on the slide as well as on the face of the balance sheet in 10K. Gap shares do not reflect unvested RSA amounts. At present, PadMed continues to be the single largest common shareholder of Lucid Diagnostics with ownership of approximately 18% of the common shares outstanding. Although PadMed has no longer has voting control of Lucid, PadMed together with the board and management still have a significant influence over LUCID with approximately a 25% voting interest. LUCID Series B1 preferred securities convert to common shares in a couple of weeks on May 6th. Including the dividends owed on the Series B1, an additional 16.8 million common shares will be issued, subject to the 4.99% beneficial ownership blocker in the certificate designation. With regard to the T&L, this slide compares this year's fourth quarter to last year's fourth quarter and year-over-year on certain key items. I trust you will review the information and my comments in light of the cautionary disclosure in the bottom of the slide about supplemental information, particularly in non-GAAP information. Our sales team sold over 3,600 tests for the fourth quarter with a billable value over $9 million, resulting in recognized revenue of 1.5 million, reflecting a sequential 29% increase in test volume and 24% sequential recognized revenue for the period. With new investors once again joining our call, it's worth repeating what we've communicated in the past quarters about revenue recognition. The key determinant of how revenue is recognized at this point in our reimbursement journey is the probability of collection. And therefore, due to the fact that we are in the transitional stages of our reimbursement process, means revenue recognition for the majority of our claim submitted to whether traditional government or private health insurers will be recognized when the claim is actually collected versus when the patient report is delivered, invoiced and submitted for reimbursement. As you'll see in our 10K, this is called variable consideration or jargon of GAAPS ASC 606 Revenue Recognition Guidelines. And presently, there is insufficient predictive data to reflect revenue from all of our quarterly we test volume at the point where the test report is delivered to the referring physician. The billable amounts contracted directly with employers and are fixed and determinable will be recognized as revenue when our contracted service is delivered. Generally, that means when the report is delivered to the referring physician, which will be the case with the VA. It's important to note that pending Medicare approval decision impacts 40 to 50 percent of our addressable patient population. and therefore will have a significant impact on our future revenue recognition analysis. Furthermore, for tests performed on Medicare patients with dates of service within 12 months of a final positive Medicare policy, we'll also get paid within a reasonable time frame after the final policy is issued. With regards to the remainder of the P&L, the variation analysis for the fourth quarter subsequently aligns with the year-over-year analysis. So I'll focus my comments on the annual changes and then happily answer any specific questions in the last quarter in the Q&A. On a non-GAAP basis, total operating expenses increased from $44.3 million in 2024 to $48.7 million in 2025, an increase of $4.4 million comprised of the sum of commercial expenses, largely increases in sales personnel and market access staff in the amount of $1.6 million with a remainder in G&A, which includes approximately $1.6 million in financing costs together with $1.8 million in annual compensation expenditures. Our non-GAAP loss for the year of $44 million versus $40 million in the prior year is largely related to the same items I just mentioned. The non-GAAP net loss per share of $0.10 in the fourth quarter and $0.43 for the year is better by almost half versus the same periods in 2024. With regard to the operating expenses, this slide is a graphic illustration of our operating expenses after eliminating non-cash expenses for the periods expected. Non-GAAP operating expenses of $14.1 million are higher than the average $11.6 million for the last four quarters, largely related to the compensation expenses related to increased personnel in sales and market access and annual compensation-related plans. Let me close with a few reimbursement highlights for the fourth quarter as we've done in past In the fourth quarter, we sold 3,600, over 3,600 tests, reflecting about 9 million pro former revenue. During the fourth quarter, we recognized revenue about 17% of that amount, or 1.5 million. Of that amount, about 49% was from claims submitted in prior quarters with the longest-dated item from over two years ago. Of the claims submitted in the fourth quarter, about 76% were adjudicated, 24% are pending. Out of the 76% that have been adjudicated, about 50%, about half of them, resulted in an allowable amount by the insurance company with an average of $1,623 per test, which bumps up against the Medicare rate. Of those denied, most fit into one of three buckets.

Medically not necessary or deemed to be not medically necessary or require a prior authorization or lastly require additional medical records. the balance are considered to be non-covered with that operator let's open it up for questions thank you ladies and gentlemen we will now begin the question and answer session did you have a question please press star followed by the one on your touchtone phone you will hear a prompt that your hand doesn't raise should you wish to decline from the polling process please press star followed by the two if you are using a speakerphone please lift the before crossing any keys. One moment please for your first question. Your first question comes from Mark Massaro with BTIG. Your line is now open.

Morning Mark. Hey guys, Mark. Hey, good morning. Thanks for taking the question. So I wanted to start with the nice increase in volumes sequentially. And what I'm curious about, because it's, let's just call it about 800 up sequentially. I'm wondering how much of that might have come from the VA versus any other targeting efforts that might have been new in the quarter. And do you think that this could be a new run rate or should we continue to think of volume trajectory in that 2500 to 3000 range?

Yeah, thanks for the question. So I think we might see that as a new run rate, but it's not because that represents the VA. That's certainly – we're in the early stages of engaging with individual VAs. But we do think – believe that we'll start seeing some meaningful volume come from the VA on top of the volume we've already established. You know, I think as we said in previous quarters, the quarter-to-quarter volume in kind of the prior paradigm, which was heavily focused on event-based testing, tended to be variable quarter to quarter based on just the size of testing. But, you know, I wouldn't discount two things. One is the fact that, you know, the productivity of our team as we've become more established continues to improve over time, but also that as we're transitioning and moving with our current towards Medicare, the Medicare population, the EA, that we will – no, that 800 increase is not directly attributable.

That makes sense. And then, Lichon, you made an interesting comment about health plan coverage, or at least certainly an interesting series of discussion on health plans, one of them, of course, being the large one, UnitedHealthcare. I think you said you indicated that you view this as coverage, given the coverage policy that they updated. So, with that, I mean, can you just give us a sense, is there any change to how maybe you've been submitting claims to them previously? And then can you give us any sense for, you know, discussions or dialogue you're having with them about perhaps formally signing a contract?

Yeah. So, this is a little bit tricky, so let me work my way through that. But it hasn't changed how we've submitted claims. You've continued to do so. The fact that we believe that the reason why this is on the radar now is, in fact, because of our prior strategy of making sure we had sufficient volume. And United has been one of the payers where we've submitted a significant number of claims. So let me just kind of walk through it step by step. It's not a positive coverage policy specifically for the ESAGARD test, right? But what we've learned since United and, as I said, other plans have followed, almost rooted ESO guard as an appropriate indication for an EGD within their endoscopy guidelines, endoscopies from sort of deep analysis of that with internally and external focus on coverage policies and positive coverage, frankly, being in network and credentialing and contracting, have been a winded way to get into the actual.

And then maybe my last question, you know, You know, you've talked about reallocating resources to, you know, Medicare lives. Can you just perhaps give us maybe an example? And then as we think about 2026 progressing, is there a time this year measuring productivity of these reps? And just give us a sense for how we should be thinking about that as we're thinking about our .

So, you know, the challenge is from a strategic point of view, we've taken the position that we want to maintain test volume, continue to have engagements where previously has been heavily dominated by event-based testing, maintaining our operating expense that we've been working on since the fall, which is a tricky balancing act, and really that's maintaining volume. They're really different in every site, but we have some really fantastic examples. This year, Dennis may want to comment on that, that we'll be ready, because we are making this transition toward one, dominated by one type of testing to another, whether we'll be in a position to stress that from that perspective.

I think reimbursement, more fulsome reimbursement across the states will certainly contribute to the timing in terms of when to start reporting that so that an individual account, they can go in and really test their entire base rather than just solicit just the Medicare patients or VA. So, in time, I think with – as we publish additional coverage policies, that's probably a metric that ultimately will start publishing as to when the end of the year is as good a guess as any.

Great. All right, guys. Thanks so much for the time.

Thanks, Mark. Your next question comes from Kyle Lixon with Canaccord. Your line is now on the middle of the call.

Good morning, guys. Thanks for the questions. Could you talk about the Medicare mix over the last two to three quarters? I think, like, in the recent past, it was maybe, like, 10% to 16% of claims. But as we think about the ability to turn on Medicare and then, you know, receive payment, essentially, or hopefully from claims just going a year back, it would be good to know, like, you know, how much of this volume has been Medicare, I mean, I guess. And obviously you can kind of set that up and just, you know, as we look backwards, that would be helpful. And I think related to this, just, Dennis, on the $9 million that you kind of called out as being billable, I think that was in the quarter. Could you just reconcile is that literally like the, you know, the $3,600 or so claims times the payment rate? Because that would be $7 million. I didn't understand the math there.

Yeah, that's the Medicare rate on our standard billable amount, $2,499. And we've actually increased that ASP by another couple hundred dollars. So that's what we bill and we collect. Obviously, we haven't billed anything to Medicare yet. As far as the Medicare component, that has grown sequentially in the fourth quarter versus the third quarter by about 28% as we started to direct the focus toward this effort. The percentage of test volume is around 16%. That's up from 10 to 12 from the prior quarters. If you go back into early 24, we were probably as high as 25%. So it does reflect, you know, post-CAC meeting September 4th in the fourth quarter to start directing that effort. And we expect as we move through 25, the percentage of our test volume with Medicare beneficiaries will be higher as well.

Just a couple of reminders on that, Kyle, just for the listeners. There's the – based on the epidemiology of the risk factors, patients recommended for testing about 40, probably closer to 50 percent of patients would be in the Medicare population. But our goal is to drive that in the early stages. Above that, and then just a reminder that to Dennis's – the numbers that Dennis offered, that's really just less than one quarter of activity after we had sort of – after the CAC meeting and after us transitioning the team and training them and adjusting incentives and so forth. So it really just reflects the early stages of that. I think qualitatively I would say that that process of shifting.

Okay. And then just to clarify, Dennis, you said I think like I heard 28 percent. Was that a quarter or a quarter increase?

Yeah, the sequential increase in the fourth quarter from the third quarter was around 28% Medicare.

In Medicare claims?

Yeah, that's correct.

So, like, last quarter it was maybe, like, a little bit above 12% of claims was Medicare?

In the third quarter, correct.

All righty. Okay, thanks for that. And so I know, you know, Mark brought up United. That was interesting to hear. But you also talked about the LBM, the first positive coverage there, which I guess you'll be press-releasing soon so you can't provide too much detail. But, I mean, you know, as that turns on, you know, what does that really afford you in terms of the additional volume and maybe ASP uplift and I suppose with margin as well from that deal? Because I feel like the LBM is, even though you're not dependent upon that or reliant upon it, I think it could unlock a lot of value. So – and honestly, it's something that we don't, you know, discuss a ton with investors in this area, so maybe it would be helpful to dive into it.

Yeah, yeah. So just to be clear, even though we feel like there's a path, a really interesting path that United has brought forth and a couple of others may be in the mix with regard to using the EGD guidelines and essentially separate from the LBM process, I think it's an important opportunity to emphasize that The LBM process remains kind of the main path towards positive coverage policy, and many or most of the plans continue to outsource the technical assessments and the writing of ultimately the plan that decides the policy, but the writing of the policy and the technical assessment is still typically outsourced to the LBM. The LBMs range in size from smaller, mediums to larger, and the number of cover lines they reach. And so, as I said, we have had positive discussions with the largest LBM that covers the most and the largest and then all up and down. So the one we are – that we will announce, we obviously can't announce it until – what's – you know, the – that particular LBM, as others, have engagements with their clients, which are – send that information and know where those are geographically and revenue.

Final one, just basically a housekeeping question, actually, on your kind of broader commercial strategy as well. The sales and marketing expense increased $1 million quarter over quarter to 25%. That's quite a bit. And you were at a pretty consistent run rate previously, it seems. So should we, you know, I know you're doing more reallocating than increasing investment there, But, you know, is $5 million or so a quarter a good level to expect going forward, or could this increase quite a bit in 2026?

I think that's a reasonable level going forward. The fourth quarter is also burdened by some annual compensation expenses, truing up sales teams and non-sales personnel in the support side of the sales and marketing side as well. So the fourth quarter is a little bit higher than the previous run rate, But it's a reasonable number to look at moving forward over the next couple of quarters.

Thanks, guys. Thanks, Kyle.

Your next question comes from Mike Mattson with Needham. Your line is now open.

Yeah, thanks. Good morning.

Just with regard to the VA, I was wondering how your kind of sales rep geographic coverage sort of aligns with those locations and their facilities? Yeah, so it's really a kind of two-level process, as I was sort of hinting at during my great remarks. You know, at a national level, we have a national account director. We have a national VP of market access who helps those two work hand-in-hand in bringing individual health systems, I do contracting PO submission, and then the team will implement the launch within that center. But as I mentioned, we really view our entire sales team as the kind of the tip of the spear, the early engagement. So with any of these individual centers, we want to champion, still need to have a commitment from the physicians, typically the gastroenterologists in partnership with the primary care internal medicine folks in that center. So the initial engagements will often be, not 100% of the time, but will often be from the local team in that particular fight, and an interest positive engagement with the very kind of recent.

Okay, great. And then just the, I guess, question for Dennis on the OPEC. So it did step up a little in the fourth quarter. It sounds like that's related to sales and market access investments.

So, I mean, is it reasonable to assume that that level kind of continues in 26?

Yeah, there is some annual compensation expense triggered in there, but the market access team, the clinical service team, and the commercial team, I think it is a baseline that we should plan for as we move forward, particularly as the volume increases and revenue increases, the variable compensation plans will kick in as well. Okay, got it.

Your next question comes from Jeremy Perlman with Maxim Group. Your line is now open.

So, good morning, everyone. Thank you for taking my question. So, just I want to circle back on the testing volume. You know, it was really a really strong quarter. Just maybe, and you said it wasn't earlier, it wasn't due to any, you know, significant increase in VA testing. So, is it higher utilization in existing accounts, new accounts signing up? Is it events driven or is it just, you know, team productivity that's just improving over time and that's why you said earlier that this could be a better run rate for testing volume going forward?

I think it's a mix of all of the above, and again, I just, you know, this is an opportunity to kind of give to us as a team that they actually, we grew volume during a quarter where we were asking them to make a significant transition away from kind of the higher, more efficient event-based testing, not away from those, but towards more traditional engagements to drive Medicare and then increasing with the VA. So I would say it's a kind of combination of the factors you've listed, but still driven at the end by productivity because that volume has increased. That increase in volume, despite the structural changes, is driven by the same number of people. We haven't increased the meaningful numbers in the field. And then, as I said, I think the potential to continue to sustain, you know, somewhat higher volume than the target that we've had is, could be driven by the opportunity to start seeing volume in the VA. And obviously, you know, once we get Medicare and pushing volume.

Okay, understood. So just, you know, on the VA, you know, you mentioned that it serves 9 million lives, and the patient population does have a higher, you know, I guess, risk of GERD, and then so it would be for your target population, a strong one. But what do you, how are you viewing the total addressable market there, you know, and what, you know, what are you hoping to in 2026 to, you know, testing volume run rate, you know, let's say leaving the year?

Sure. I think if you start with 9 million patients, the proportion of those patients that are, would be recommended for testing by existing guidelines, And certainly at least a couple million patients, so call it 20, 25 percent of that population, would be the target based on existing and existing in the most conservative subset of the risk factors for testing. So, for example, over 50 with three risk factors based on the ACG. So, you take a couple of, you know, a couple million times the Medicare rate, and that's.

Okay. So, it seems it's a really good opportunity. Okay. And then just the last question, I know as Steve mentioned, you mentioned numerous times in the past that there's a one-year look back period for Medicare billing. So, anything, once you get, you know, approval, you could look back a year. So, just questioning why, you know, it seems like we were hoping to get that draft letter by the end of 2025, now it's, you know, the end of the first quarter. So, hopefully, it's really any day now, really imminent. You know, what's holding you back from, you know, signing on more sales, you know, beefing up the sales team and to push the Medicare because you still have that look back, hopefully you'll get that, and then it's not like, you know, it's just maybe putting the cost up front and then getting the reimbursement, you know, in a couple months once you get the approval. Just because you're nervous, you know, you never know what's up with the.

No, I don't think we're nervous. I think we're, I'll let Dennis chime in on that. I just think it's prudent to be cautious about that. It's not because of any sort of concern about the likelihood of us getting Medicare or the likelihood of us getting paid for that amount, but I think it's just a general provenance with regard to being super careful about our OPEX in a particular capital markets environment. I don't know, Dennis, if you'd like.

Eighty percent of our billable amounts are not being collected, and so we have been judicious about our spend. and you see that we have started to spend more, we're not going to turn the faucet on completely until we have the ability to collect a good chunk of the test volume that we actually bill for. So that will be kind of the gating factor. So to your point, could we put more salespeople on, particularly to go after Medicare patients? The answer is yes. But any time they walk in the door, there's going to be commercial patients as well that they're attracted to. And so having a Medicare draft policy in place and knowing the timing certainly would give us clarity as to when the step on the gas even further. We've started to. We're being judicious about it. And we'll accelerate that initiative once we know the timing of it.

Got it. And this last question related to that. Do you have an estimate how many of these Medicare testings, you know, over the past year that you would be able to bill? Outstanding or roughly what that represents?

It's a rolling couple million dollars. Obviously, it changes every day, right, that we're delayed in getting this towards a final policy. But as a rule of thumb, it's a couple million dollars of collections that we'll be able to get soon after we get the final policy.

Okay, great. All right, thank you for taking my questions. Have a nice day. Thanks, Jeremy.

There are no further questions at this time. I will now turn the call over to Leeshawn Ackwag for closing remarks.

Great. Thanks, Operator. And thank you all for taking the time and for your attention this morning. You know, really, as always, we appreciate in particular the thoughtful and informed questions by our analysts, and hope all the listeners find that back and forth enlightening. So, again, we really believe this is going to be a big year for Leeshawn. You know, last year, we established a solid commercial foundation, established a really solid evidence base with addition to our evidence base with our large real world study. Medicare is coming. Activity today, while we're waiting for Medicare with the VA, with Medicare patients, and our continued progress on the commercial side with payers and laboratory benefit managers continues to really lay a strong foundation for future growth. We're also, you know, really excited on the commercial side to be moving into network credentialing and contracting for the first.

This concludes your conference call for today.

Thank you for participating in that that you please disconnect your lines.