Good morning and welcome to the Lucid Diagnostics First Quarter 2026 Business Update Conference Call. Please note that this event is being recorded. I would now like to turn the conference over to Matt Riley, Lucid Diagnostics Vice President of Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Thank you for participating in today's Business update call. Joining me today on the call are Dr. LeSean Acklog, Chairman and Chief Executive Officer of Lucid Diagnostics, along with Dennis McGrath, Chief Financial Officer of Lucid Diagnostics. The press release announcing our business update and financial results is available on Lucid's website. Please take a moment to read the disclaimers and forward-looking statements from 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 on uncertainties that may cause actual results to differ materially from things that could cause actual results to differ are described in the disclaimer and in our filings with the SEC. For a list and a description of these and other important risks and uncertainties that may affect future operations, see Part 1, Item 1A, entitled Risk Factors and Lucids from this recent Annual Report on Forms 10-K filed with the SEC, and any subsequent updates filed in the Quarter Reports on Forms 10-Q and subsequent Forms 8-K. Except as required by law, LUCID displays any intentions or obligations to publicly update or revise any forward-up new statements to reflect changes in expectations or events, conditions, or circumstances on which those expectations may be based, or that may affect the likelihood that actual results would differ from those contained in the forward-up new I would now like to turn the call over to Dr. Lishan Aklag, Chairman and CEO of LUCID Diagnostic.

Thank you, Matt, and good morning, everyone. Thank you for joining us today. So let's begin with some key highlights from the first quarter and we performed $3,177 each year and generated revenue at one point slightly, but proportional to volume, which received a bit but remained above our target. We also, importantly, strengthened our balance sheet with an underwritten public offering of common stock that had approximately $16.8 million in proceeds. This significantly bolstered our balance sheet, as Meneson described in more detail, to approximately $45 million in financing overhangs and provides us with the resources that we'll need to excel. A lot's going on, particularly on the market axis and the commercial side. Obviously, all focus is on Medicare, and we do not take over and provide enough data.

Thankfully, John, and good morning.

It's an easy deal.

We had a glitch in the prerecorded and prepared remarks, but the transition was at the appropriate time, so I'll pick up from there. So the summary financial results for the first quarter were reported, our press release that had been distributed. On the next three slides, I'll emphasize a few key financial highlights from the first quarter. I'd encourage you to consider these remarks in the context of the full disclosures covered in our quarterly report in Form 10-2. The balance sheet versus 27.9 million. On a pro forma basis, including the cash equals the average burn rate for the last four quarters included cash interest on the debt was $11.3 million per quarter, with the first quarter a bit higher of 12.1. Commercial teams included a debt into a $22 million five-year note. Interest only at 12%. Cautionary disclosure at the bottom of the slide about supplemental information. The sales team sold almost 3,200 tests, testing events, toward the end of the period. With new investors once again joining us for this call, it's worth repeating what we've communicated in the past. The key to determine how revenue is recognized at this point in the reimbursement journey is the probability of collection. Therefore, due to the fact that we are in this transitional stage of our reimbursement process means revenue recognition for the majority of our claims submitted to traditional government or private health insurers will be recognized when the claim is actually collected versus when the patient report is delivered, invoiced, and submitted for reimbursement. fixed revenue recognition guidelines, and presently, there's aims to bill of our quarterly test volume at the point where the test report is delivered to the referring physician. There are billable amounts contracted directly with employers, according to the VA, and that are fixed and determinable will be recognized as revenue when our contracted service is Generally, that means when the report is delivered to the referring physician. It is important to note that a pending Medicare approval decision impacts 40 to 50 percent of our adjustable patient population, and therefore, will have a significant impact on our future revenue recognition analysis. Furthermore, on Medicare patients with dates of service, within 12 months of a final Medicare policy will also get paid within a reasonable timeframe after the policy is issued. With regard to the remainder of the P&O, the first quarter's total up-backs on both a gap and a non-gap basis is generally flat year over year. As expected, there will be increases in sales team costs, which are substantially offset by decreases in GNA expenses. This sequential decrease in total OPEX expense from the fourth quarter of about $2 million is mostly in GNA costs and one-time expenses in the last quarter. The non-GAAP net loss per share of $0.07 in the first quarter is better by about $0.03 versus each of the previous three quarters. With regard to the operating expenses, this slide is a graphic illustration of the operating expenses after eliminating non-cash expenses. Non-GAAP operating expenses of $11.7 million are basically in line with the average non-GAAP OPEX for the previous five quarters, $11.7 million versus an average of $12 million. Let me close with a few reimbursement highlights for the first quarter. In the first quarter, we sold almost 3,200 tests, reflecting about just under $9 million pro forma revenue. at our list price of $27.40. This quarter, we recognized revenue about 14% of that amount, or $1.3 million. Recognized revenue included about 72% from insurance claims submitted in prior quarters. The longest-dated item of the claims submitted in the first quarter, about 77% have been adjudicated, 23% are pending. And out of that 77%, about 31% resulted in an allowable amount by the insurance company with an average of $1,646 per test, which bumps up against the Medicare rate. Of those denied, most fit into one of three buckets. A, deemed not medically necessary or investigational, or require prior authorization, or require additional medical records. So with that, operator, let's open it up for questions.

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

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

So we do continue to have ongoing dialogue with leadership, concrete or specific information with regard to where things stand. We remain confident based on the results of the CAC meeting, and we've had follow-up conversations.

I'd like to hear you guys talk about the VA. Just give us a sense, you know, there are a lot of VA systems, a little more color about having both at the national level or at the local level. And then can you speak to EHR integrations? I think that sometimes VAs have systems, or maybe can you give us an update? Maybe they are starting to unify a bit in systems integration.

Yeah, great, great question. So let's go a little bit through a bit systematically about how the VA works, particularly as a result, as it relates to molecular diagnostics as LIFR. So, as you know from our previous announcement that we are now on the federal supply schedule, we have the payment rate, contracted payment rate under that schedule is the Medicaid. There are a couple hundred VA centers for our team to engage with individual centers, and generally speaking, that's the start of the way, as we know, analogous to how we engage with opportunity between now and the end of this to generate POs, which are the fact that there are some very unique aspects that the VA often resource the clinical utility and the economic value of ESA card. And another aspect is that the VAs often operate rural centers that are actually quite remote from the main center, is that often.

One last question for me. I believe you are coming up on your one-year anniversary of signing Highmark Blue Cross Blue Shield a year ago. So, and so, you know, in recent calls, you've had some commentary about dialogue you're having with commercial payers. Can you just give us a sense for what that dialogue has been like the last, you know, number of weeks or so? I'd be curious if some of these commercial payers might be perhaps waiting for a time, even without CMS.

So, you know, that actually had been our stance, and frankly, our position and our expectation was that really for us to get the commercial run, that we would have to wait for Medicare. And there certainly are a subset and maybe even the majority of conversations and activity, which we've got for the time.

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

I'll let that effect on the numbers, and we can fill in some of the operational signs as well.

So, Kyle, I'll call it the government group, which is predominantly Medicare and Medicare Advantage, was 13% in the, as you recall, in the fourth quarter, it was percent-delta was around 60%. The compensation plans for the sales team, and Leishon will expand upon this, generating revenue as well as Medicare and VA, that's where their focus is in generating test volume. So we're in that transition phase.

Yeah, and, you know, as it relates to allocating resources, you know, we've occasioned our commitment to not add resources and not meaningfully increase our OPEX. And so what our team is really doing is a balancing act between a target of maintaining our test volume and slightly exceeding it. So on a quarter-to-quarter basis until we get Medicare, we're not expecting that number to rise dramatically because the team is sort of in parallel focus with the same level of resources.

That company is interesting. This is a good color, guys. And then on the, you know, data, as you provided a bunch of numbers, and you do this every quarter, I think, around, like, the percentage of claims you're recognizing revenue on, then the, like, the percentage that's adjudicated, like what's, you know, actually paid on there, what's ASP there. So how have some of those, like, metrics kind of changed over time? I don't have all of that in front of me. I'm just curious if, like, to the earlier points, if, you know, non, obviously, like, non-Medicare payers are, you know, getting more comfortable with this product or, you know, are they almost like, you know, waiting and maybe payment or, you know, companies, and that type of ones are actually producing because, you know, of just the waiting is kind of taking longer than maybe was, like, communicated, maybe so just if that makes sense to you, if you could deal with Snapshot on how that's progressed.

Yeah, it's still pretty volatile, and it's difficult to make sense on those that don't have a specific program or don't have consistency in payment. And the first quarter certainly clouds or increases that volatility because you have an increased amount of deductibles and co-pays where patient burden in the first quarter is heavier than it would be in the balance of the year, which influences what we get paid from some of those insurers. So even where we see some pluses and minuses in the first quarter versus, say, the third or fourth quarter, we still have to rely upon cash collection for the revenue recognition, and there's really not a sufficient path to your question yet. Those patterns are still developing.

And then, and finally, we see where R&D is coming in each quarter. It's been pretty consistent, one to two million in expenses, but are you guys either still doing or thinking about generating clinical evidence, either, you know, in a worst-case scenario with ModX, which doesn't sound like it's happening, but just, yeah, just probably the worst case, or, you know, if you want to go for FDA or things like, or just kind of, like, enhance the acceptance. I'm just curious if that line item could maybe expand over time.

I'm glad you highlighted the answer is a definite yes. But I'm glad you at least highlighted and I'd like to emphasize the fact that our commitment to ongoing data generation, ongoing clinical evidence is not a driven company. We live in an ongoing basis. And there is a lot of activity. It doesn't get a lot of attention because everyone's focused on institutional, but there is an interesting dynamic right now that we're well out front.

Sure. You know, years ago, I think you guys' intention was to, you know, scale this test, the Quest device and the test, you know, internationally, globally. You know, they're both CE-marked, you know, in Europe, obviously. So would you, I mean, how much more extra, you know, critical evidence would be needed for some kind of an international expansion and use of a decentralized model with a partner, distributed model with a partner? Is that part of the, you know, kind of formula as you look maybe on medium to long term?

So I just – maybe we could separate the clinical evidence question from the international mark question. So our – clinical evidence is not a limiting factor for us to potentially expand internationally. We – you know, we looked from day one at opportunities internationally, but Europe, as you noted, we went ahead and got CE mark right off the bat from the earliest days. And the challenge is, you know, the U.S. is obviously one of the largest market opportunity. We remain a small company. We have limited resources. And we do on a regular basis get the U.K.

From Mike with Needham.

Yeah, I guess just the DDW presence that you guys had. Can you maybe comment on kind of interest level you're seeing from physicians, any kind of feedback, et cetera?

Well, thanks for – I'm just chuckling a little bit here, Mike. Thanks for bringing that up because that was the portion of our – of the prerecords I got to fill that. DDW went great. So for those on the call who were not aware of this, DDW is the largest gastroenterology meeting in the country, one of the two or three major ones here in the U.S. And we had a very strong presence there, both from our clinical team, lots of engagement with clinicians just overall with our best financial questions.

So I guess, Dennis, the share count, what should we be modeling? I think you said post-offering is $203 million, but there's $52 million in abeyance. I'm not sure.

The number you should model your EPS on will be issued once the holders, for the time being, is probably the right number. Investors will be term shareholders, so it may be a while before they get issued.

All right. And then the quarterly cash burn rate, you know, given that you did raise some additional capital and you're getting closer to the Medicare coverage, is there any potential that that would go up or are you expecting to kind of hold it around recent levels?

I think the burn rate at where it is right now is probably the level it will stay. Yes, we will be making additional investments. We do think some of that cost, if not all of that cost, will be offset by revenue opportunity, either collections or increased volume as we move forward with increased, you know, reimbursement landscape.

Okay.

Great. Thank you.

Your next question comes from Jeremy with Maxon. Please go ahead.

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

Yeah, the first quarter, you remember the announcement was in late January, and the first quarter was focused on pipeline metrics and building a pipeline, converting engagement into purchase orders. So you'll see more of that as the year unfolds, but that's correct in the first quarter.

Okay, I understood. And just also, is that, is the reimbursement from the VA contract, that's completely separate from Medicare, right? If you, you'll get whatever their, the $1,900 rate for the test, you'll get reimbursed through the VA system regardless of when you get the CMS reimbursement. So you can go full steam ahead on that opportunity.

Correct, yeah, it's a direct payment through the VA. Obviously, we're saying rate as Medicare.

Maybe also, I don't know if you have this number, how many, I think we'll call it covered lives, you have currently based, both in the VA, I think you mentioned last call, that was roughly 9 million lives, and then maybe the commercial payers that you have also under contract now. How many covered lives then, and hopefully when you get the Medicare, what would that increase to?

Well, I mean, it's a bit of a multi-capital question there, right? The VA, as you mentioned, is 9 million patients, and we'll be able to target that. that we're able to, I mean, the epidemiology of the conditions that leads to a recommendation for testing the target population is at least approximately 50% Medicare. And once we haven't yet reached this with contracting and with coverage and contracting.

This last question, you know, how do you, how should we look at, you know, your sales force productivity, like currently versus let's say what it was a year ago, the sales on cycle, especially considering now you've, you've, you said, I think you said in the whole, your entire sales team is also engaging with the VA, so they have, you know, there's new, I guess, job descriptions they have. So how do you look at that?

Yeah, I think productivity is all, and it's gone up over the years. We have an increasingly tenured and increasingly experienced staff. But what we're asking them to do is sort of juggle multiple things at the same time, right, to maintain their test volume, to drive, to find opportunities within the VA system that they can hand over to our national director on that. And so, yeah, productivity as a whole is great. And I think, as we mentioned, we positioned ourselves, we have been positioning ourselves with the composition of our team to have some more senior level folks so that when the time comes to expand the team, that we'll be able to do so. And it's sort of the most efficient way to maintain that productivity.

Okay, great. Thank you for taking my questions. Enjoy the opportunity. Thanks, Jeremy.

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

Good morning, Ed. Yeah, congratulations.

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

We have no plans to do so. I mean, the whole Medicare fee schedule process is a complex one, but we have no particular plans to pursue that. We're quite happy with that rate, and we feel we can build, you know, a very robust business under these rates.

Well, that's all the questions I have. I wish you guys good luck. Thanks, Ed.

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

Thank you all for taking the time and for your attention this morning. Again, apologies for the technical glitch that led to the need being cut off. I appreciate the opportunity. Obviously, great questions, as always, from our analysts, and I appreciate the opportunity to fill in some of those gaps. I hope you all found that. Obviously, we're acknowledging and sharing some of the frustrations with regard to the logistics around the LCD process, but, you know, just the outcome of the LCD. We're not resting on our laurels. will. We're very encouraged by our efforts at VA, regulatory benefit management today, but it's working on. As always, we encourage you to keep aggressive of our progress.

The paving, you may now disconnect.