PAVmed Inc. (PAVM) Q4 2025 Earnings Call Transcript

Good morning, and welcome to the PADMEDS 4th Quarter 2025 Business Update Conference Call. At this time, all lines are listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you're requiring needed assistance, please press star 0 for the operator. This call has been recorded on Monday, March 30, 2026. I would now like to turn the conference over to Matt Riley, PADMEDS Vice President of Investor Relations. Please go ahead.

Thank you, Operator.

Good morning, everyone. Thank you for participating in today's business update call. Joining me today on the call are Dr. Lishan Aklag, Chairman and CEO of PatMed, along with Dennis McGrath, Chief Financial Officer. The press release announcing our business update and financial results is available on PatMed'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 are in filings with the FCC. For a list and description of these and other important risks and uncertainties that may affect future operations, see Part 1, Item 1A, entitled Risk Factors, and PAV Meds in this recent annual report on Forms 10-K, 5 of the SEC, and any subsequent updates 5 and quarter reports on Forms 10-Q and subsequent Forms 8-K. Accept as required by law, PAPMED disclaims any intentions or obligations to publicly update or revise any forward-looking statements to reflect changes in 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 contained in the forward-looking statements. I would now turn the call over to Dr. Lishon Ackog, Chairman and Chief Executive Officer of PadMed. Lishon?

Thank you, Matt, and good morning, everyone. Thank you for joining our quarterly update call. Before we get into our recent operational highlights, I'd like to kind of frame where PadMed is today. On our last quarterly call, I described how over the past now two years, we've undertaken a series of very deliberate and systematic actions to effectively permanently fix PadMed's legacy capital strengthen its balance sheet and improve our ability to execute on our i had mentioned that time we had one more step to go and that step was completed in february with the completion of a restructuring recapitalization and financing the toxic convertible securities that had held down uh have held us down for for a while were removed and we upon On completion of this financing, we believe we're now very well positioned. That mission is to operate as a high-growth, diversified, commercial life sciences company. With that work now complete, we're executing that model across our core businesses, which is a prominent one, of course, a diagnostic company. Lucid continues to succeed at raising its own capital. We'll highlight later today a reminder that let's start with Lucid's operational highlights from the fourth quarter and recently. As always, I encourage you to listen to Lucid's business update call for greater detail in each of these areas and I'll keep these revenue approximately as Lucid in a fair contract for Isagard that expands. So Veris is now well, the commercial phase of our engagement we're gearing up to.

Now let's talk about

some details of our relaunching of our MedTech portfolio. As I mentioned, we feel like a key aspect of this, a key element of this has been hiring the right leader. The vision here goes beyond these two entities. So we have an active and expanding pipeline. I do have to say upon completion of the restructuring that we immediately started getting inbound inquiries.

Thanks, Lee Shannon. Good morning, everyone. Our summary financial results for the fourth quarter and the year were reported in our press release that has been distributed. On the next four slides, I'll emphasize a few key highlights from the fourth quarter and the year, but I encourage you to consider those remarks in the context of the full disclosures covered in our annual report on Form 10-K as filed with the SEC. A couple of reminders as our financials, particularly the income statement with year-over-year comparisons, will for this last annual report illustrate periods before September 10, 2024, with Lucid's operating results being consolidated into the presented ADMED results. versus the 2025 periods without Lucid's operating results being consolidated into the PadMed financials. We do present some supplementary information in footnote 4 of the 10K that will provide some help in the comparisons. So with regard to the balance sheet, you'll recall from our investor update call since this time last year that the company is engaged in a multi-step process to regain compliance with the NASDAQ listing standard for minimum equity, which it did in February of last year, and again this year in January for compliance with the minimum bid price standard. Our focus throughout was to position the company for longer-term financial stability. This was a multi-step process that LeSean highlighted that spanned nearly 18 months with three key recapitalization steps landing PadMed on firm financial footing with its recent financing that closed on February 3rd. The steps included deconsolidating Lucid from PadMed's consolidated financial statements in September 2024 and an interim phase of restructuring our convertible debt in January 2025, whereby we exchanged about 80% of our outstanding convertible debt for a new Series C preferred equity. And lastly, just recently in February, redeeming the convertible debt and the Series C with an infusion of equity capital plus some long-term debt. This slide reflects the balance sheets for year-end 2025 and 2024, both after deconsolidation, which occurred on September 10, 2024. So a couple key things to point out on each of these balance sheets. Cash burn rate of $1.5 million for the fourth quarter reflects the various operating costs, including approximately $600,000 of outside contractor development costs associated with the implantable device, which has been funded by the two various related financings, namely $2.3 million in the first quarter of 25 and $2.5 million in the second quarter of 25 to support the development toward the FDA submission of URIS's implantable device. Additionally, there was approximately $200,000 in Delaware franchise taxes and $300,000 of annual compensation expenses that were paid. The equity method investment balance of $34 million at the end of last year reflects the 31.3 million Lucid shares marked to market and shows an 8.5 million year-over-year increase consistent with the 33% increase in Lucid stock during 2025. At present, PadMed continues to be the single largest shareholder of Lucid Diagnostics with ownership of approximately 18% of the common shares upstanding. Although PadMed no longer has voting control of Lucid, PadMed together with its board and management still have significant influence over Lucid with approximately 25% voting interest. Shares outstanding today, including unvested RSAs, are approximately 6.4 million shares, including approximately 4.6 million shares issued upon the conversion of the Series D upon the approval from the shareholders this past Friday. The gap year-ending outstanding shares of 900,000 are reflected on the slide as well as on the face of the balance sheet and the 10K. Gap shares do not reflect unvested RSA amounts. Approximately 433 shares were issued reflecting conversions of the Series see preferred prior to the redemption on February 3rd. Next slide, please. We thought it might be helpful to walk you through how the recent financing changes the financial strength of the company. So we put this non-GAAP pro forma balance sheet together to illustrate the changes. What you see in the first column is a condensed balance sheet derived directly from the published 10K without change. Next, we highlight the two securities and their balances that were redeemed and replaced with $30 million of equity in the form of short-term preferred security that has been converted into common concurrent with the shareholder approval. Additionally, $15 million of long-term, 15% interest-only, three-year debt was put in place to complete the redemption of the convertible securities. Accompanying the Series D preferred security is a $30 million warrant with an exercise price of $6.50 per common share. The warrants are callable 30 days after the CMS publication of the draft ESO Guard coverage policy. Additionally, Veris has about 2.5 million of warrants that are exercisable after the implantable device is FDA cleared. We added a Varus column to show the recent pre-money value of $35 million, reflecting the valuation at the time of the direct financing into the subsidiary. Comparatively, the gap financials in the 10K reflect $38 million of assets, which are completely offset by the sum total of the convertible debt and the Series C preferred. After the financing in February, the far right column now illustrates a company with total assets over $100 million and $15 million of long-term debt. There were six key investment themes that were attractive to the investors in this transaction, including valuation disconnect, which presented an opportunity. PadMed's market cap did not reflect the sum of the parts of the underlying assets. Second, there was an overhang from legacy securities driving mispricing. The structure of these legacy securities no longer aligned with the company's future development plans. The investors also saw that with recapitalization, they believed that it would unlock value. A clean cap table would align market cap and enterprise value combined with a limited supply of stock in the market. Fourth, inexpensive leverage to lucid diagnosis. This was a pure arbitrage opportunity in advance of a Medicare announcement. Fifth, additional optionality across high-potential health care assets was a driving interest. Veris, Octaris, Port A.O., and others. And lastly, a balanced capital structure to maximize strategic flexibility. The right mix of equity, $60 million in this case for the exercise of the warrants, and debt, $15 million, was a key premise in financially engineering for future success while extending the cash runway of the company to be opportunistic while also developing and commercializing the non-lucid asset portfolio. Next slide on the P&L. Similar to past presentations, this P&L slide provides some GAAP and non-GAAP year-over-year and quarterly and annual comparisons. As cautions earlier in my comments, there are some significant differences in how the information is compared between the comparative periods given the changes in Padmet's financial control of Lucid. Importantly, the GAAP construct for deconsolidating Lucid on September 10th of 2024, which somewhat blurs the historical understanding of the information for Padmet as a standalone entity. GAAP does not allow the presentation for prior periods on the face of financial statements to be similarly adjusted. Below, as mentioned, there are some supplemental information in the footnotes of the financials in the 10-K. On a pro forma basis, and purely for illustrative purposes on this slide only, the various revenue and the lucid management fee are combined. Collectively, more than $3 million per quarter. it visually aligns PADMED's income sources versus its operating expenses. For SEC reporting purposes, the MSA income is below the line item. Furthermore, for the fourth quarter, you see on the slide a gap net loss of $2.8 million before NCI, non-controlling interest and preferred dividends. This includes non-cash charges of about $1 million, which then reconciles to a non-GAAP loss of $942,000. That loss is comprised of about $500,000 of various contractor development costs for the implantable device and about $200,000 in annual Delaware franchise taxes that occurs once a year. I'm happy to answer any detailed questions on the slide in the Q&A, but I think it's more informative to look at the fourth quarter standalone information presented not only in the slide, that in the full fourth quarter information presented in our press release that shows a company baseline bias of operating at near cash flow break-even and incurring incremental PADMED expenses for development activities that are offset by dedicated financing or funding. Next slide. With regard to the non-GAAP operating expenses, on this slide you see a graphic illustration of our operating expenses over time is presented in more detail in our press release. Total non-GAAP OPEX since the Lucid deconsolidation in 2024 has been nearly flat for the four previous quarters. The fourth quarter OPEX were offset by approximately $1.2 million in a one-time reimbursement for Lucid for annual compensation expenses allocable to Lucid, with a balance reflecting the franchise taxes and the Verus R&D costs just mentioned. OPEX increases moving forward are likely to simply be tied to the R&D efforts to get the Verus implantable device submitted and cleared by the FDA, for which the 2025 Verus-related financings are supporting. With that, operator, let's open it up for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. 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 handset before pressing any keys. One moment, please, for your first question. Your first question comes from Jeremy Perlman with Max and Group. Your line is now open.

Good morning, Dennis. Good morning, thank you for taking the question so just first i wanted to focus on the commercial relationship with osu you know you said you're well underway what is what are some of the key metrics you're trying to keep track of and learn before you feel comfortable rolling this out to other large institutions is there a time frame for that you know maybe help us get understand how how what you hope the current commercial relationship to become before you roll it out to other institutions Yeah, that's great.

Thanks for the question. Happy to elaborate on that a bit. So, you know, in terms of the clinical value of the Varus platform, we established that during a pilot that occurred, and that's actually last year, and that was what led to the commercial engagement. The commercial engagement has fairly high expectations. It involves a target of a thousand, minimum of a thousand patients within the first year, And we are in a very structured plan on rolling out the platform across various departments, starting with the three departments that were under the pilot program and then expanding to new departments along the way. So our internal engagement with OSU as to how that's proceeding, it really relates to executing on that project plan, and bringing on the new departments and according to that plan and also the trajectory towards that goal of 1,000 patients during the first year. We call this a strategic partnership because beyond just simply utilizing the platform in a commercial setting, it's also, we've also developed a registry so those patients will be enrolled and data will be collected and we'll be able to provide future commercial targets data on this adoption during the commercial phase beyond the pilot phase. So that's that. We haven't been reporting sort of month-to-month numbers with regard to that, but I can tell you at a high level that we're on track and on schedule to do so. The planning on that was, in fact, based on when we completed the EHR integration, because it should be clear to everybody, being integrated, you know, the EHR is really a central depot, you know, for the flow of information within, particularly within large medical centers. And so, now that we are on the platform, there's a full visibility of the VAERS data on Epic, as well as our preferences for the clinicians to use our platform as a primary portal to the patient's care because it provides the real-time physiologic data that comes from our platform and it does so in a cancer-specific way beyond what they can get using Epic. And so that launched fairly recently, and we expect with that launch that they'll be able to now start accelerating the trajectory towards that target of 1,000. And again, their goal, that's the minimum of the goal and expectations that will exceed that. I would just, to your second point about how that relates to expanding our commercial team, we have the information that we need. We have the data, initial data from the pilot program in terms of the clinical benefit that we would need to expand to other sites. What's holding us back on that is really we're focusing our limited capital resources at this point to getting the implantable across the finish line to FDA submission and clearance. And that's what we've, the capital that we raised last year was really targeting that. And we will, although we have some legacy engagements with some other, about a dozen or so other academic cancer centers were not deploying kind of the commercial resources and hiring the commercial resources that would be necessary to really do a broader commercial launch, and we would expect to do that in full force after the clearance of the implantable, although we're not ruling out some limited expansion of that over the interval of time between now and then now that things are well off the ground. One aspect of that that we think will be important, and I've mentioned this in engagement with other centers, and will require some capital resources, although we believe we can charge for this service, is the clinical support side of things. OSU has a very sophisticated call center mechanism, so they already have resources in place that can triage and screen alerts and information so that the individual caring clinicians are not overwhelmed. And many other centers, including major other cancer centers don't necessarily have that full-fledged system. And so one of the things that we've concluded and we've learned from our experience with OSU and in previous discussions with other cancer centers is to have that functionality available so that we can offer our members of our own clinical team to provide sub-level to various levels, depending on what's desired by the center, various levels of triage. And so that's something we have. We do have a clinician already on our team that's helping us build that, that's learning from her engagements with interacting with OSU as to how to develop that. But that's something that would be really a predicate to a broader expansion, and that's something we tend to develop over time. So a bit of a long-winded answer, but hopefully it gives you some perspective on how we're viewing our future commercial expansion.

Yeah, thank you. That was really helpful. Great information. Then maybe just one more question related to the – you said you mentioned there's new risk stratification tools and other tools that you could integrate into the system, to the various platforms. Is that, are those, I don't know, whenever they, whenever these tools, when they're ready, are they, is part of the contract with OSU to allow them, you to integrate them into already the patients that are using the device, or do you have to amend, or you're planning on finalizing those and then rolling those out maybe further down the line?

Oh, yeah, so there's a, I think there's two aspects to your question. One is kind of the development work, and that's not trivial, so I don't want to give the impression that we have these tools ready to go and to implement and to integrate within our platform. Those AI-based tools require data, extensive data, and we are in discussions with OSU on how exactly we utilize the data that we're collecting as well as legacy data they have to inform the development of these technologies. and part of our strategic engagement with them contemplated a partnership on the development of these kinds of tools. So the way I would view this perspective is really a broader kind of strategic vision to evolve Veris from its original vision of being primarily focused on remote patient monitoring, which is really just serving as a conduit for important physiologic and symptomatic data from the patient to the clinicians to do so in a very timely way to bring up, to highlight potential risks that may arise, and we know from our experience to date that Varus works extraordinarily well in doing that, but we believe that in this era, the value added from going beyond just being a conduit for information, but to provide truly sophisticated AI-based clinical physician support tools are really becoming standard practice when it comes to digital health offerings, and that's what we're seeking to do. That requires time, and that does require resources and capital, and so these are where we're in the early stages of that. So, I would view that as articulating sort of a near-term and medium-term vision partnership with LSU on the development of that. Certainly, at the time we would launch that, whether it's in a preliminary phase, you know, kind of a research On the research side, any patient that was already on the platform would be obviously, you would integrate it within the platform, and they would have, their care could be impacted by those additional support tools.

Okay, understood. Great. And then just maybe this last question, jumping to the new, you know, imaging technology that you licensed from Duke. I know you mentioned you're going to provide some more information shortly, but maybe you could just, right now on the call, you know, is there anything clinically that needs to be done with that technology? and then what, before you could roll it out, and then maybe what type of commercial plans you might have for that? Thanks.

Yeah, that's still in the early phases, so let's be clear about that. That's technology, as we described in sort of the press release when we entered into the letter of intent. We will provide a full press release announcing the full license agreement that was executed and Joe Rogelio's role in overseeing Arctaris, which falls under that. But just as a reminder, that's a little bit more detail on that technology. The technology is an optical technology that combines well-established technology called OSC with newer technology called ALCI, and the combination of the two implemented at the end of an endoscope, a tool that can be deployed through an endoscope, can, at the time of an endoscopy of the lower esophagus, can image abnormal tissue, tissue that has, that appears to have Barrett's esophagus, the precancerous condition, in order to discriminate between early and late precancer. So, non-dysplastic Barrett's esophagus, which is the earliest precancer, to dysplastic Barrett's esophagus, which is the later precancer that requires intervention to prevent cancer. Obviously, those of you who follow along on LUCID understand how an important part of the paradigm of the management of esophageal precancer, that That distinction is that when someone has this precancerous condition, it's critical to distinguishing early and late because late is where we intervene. Right now, that distinction is made purely on a biopsy. And so, the patient gets a biopsy, and then they come back. If the biopsy comes back for dysplasia for the late-stage precancer, they undergo a definitive ablation or eradication therapy to prevent cancer. The promise of this technology is that it's capable with a very, very high sensitivity in their early clinical experience as part of a partnership between Duke and UNC at detecting, using these optical techniques, dysplasia. It does that by measuring the diameter of the nuclei in a very clever and sophisticated way with incredibly excellent performance that, frankly, will likely outperform any molecular diagnostic test based on initial data. And the advantage of that is that if you can diagnose it on the spot on endoscopy, then you can, in the future, prove that you can bypass biopsies and do an ablation on the spot. So that would be very transformational for how esophageal precancer is managed. You would look, you'd have visible evidence of precancer, you would use this technology, the Octaris technology to image and determine whether that patient had a high likelihood of that area being dysplastic, and then right there do the ablation procedure on the spot. So that would be transformational. So this work is still in the early phases. You know, it was used in a clinical setting that documented in real patients with real pre-cancer, its efficacy, that data is published now. And so, there is work to be done to modify the technology to be more where the form factor size and form factor can be more applicable to a broad commercial launch. So, that was the first step, and that's happening under a sponsored research agreement in the laboratory, Dr. Wax's laboratory, at Duke, where those revisions and that redesign of the probe is underway. Once that's done, the probe will be deployed in another round of patients in partnership with Dr. Shaheen at UNC. And once we have design freeze, we've demonstrated that, then we'll complete the product development process, secure what we believe is a 510K FDA pathway for clearance and then subsequent commercialization. So that's a bit down the road.

Okay, great. Thank you so much for all the information. I'll hop back in the queue.

Ladies and gentlemen, as a reminder, should you have a question, please press star 1. Your next question comes from Ed Wu with Ascenda Capital. Your line is now open.

Yeah, congratulations on all the progress. I had a quick question. You mentioned that you guys are now ready to kind of engage in expanding your medical device portfolio with new technology.

Is there any particular areas or products that you might be interested in?

Yeah, thanks, Ed. I'm glad you gave me a chance to kind of maybe flesh out my previous comment about that. It's been, it was really quite remarkable, honestly, after we closed the last restructuring and financing, frankly, within days, we were getting calls. And I'll actually highlight something that wasn't clear in my prepared remarks. It's not just in the medical device side. It's actually across the board. We've gotten inquiries on really interesting diagnostic companies, electric diagnostic to companies, medical devices, as well as pharma assets, a good number, and I believe it's just been a month since we completed that transaction, and it's really because this really goes back to the roots of PadMed where we were also in a position where people contacted us as possible partners. That's what led to Lucid and Veris of us having access to those technologies, and it's really exciting that folks now view us in a position to be able to continue that legacy that brought those other assets into the fold. I would say on the medical device side, there's obviously interest in technologies that align with the GI space, right? So our interest in Octaris and the interest of the folks at Duke in inquiring about that obviously has to do with the fact that we have in Lucid extensive experience with esophageal disease, with baritophagous and otherwise. And so, I would say we're open for inquiries across the board. I have port IOs in the vascular access space. There's been, you know, activity in a broader sense. So, we're not limiting ourselves to any particular specialty, but certainly GI, things related to gastroesophageal reflux, to baratoesophagus, and so forth, obviously capture our attention because we have, obviously, a substantial amount of internal expertise there.

Great. Well, thanks for answering my question, and I wish you guys good luck. Thank you. Thanks, Ed. I appreciate it.

I don't know for the questions at this time. I will now turn the call over to Dr. Leeshawn Ackwag for closing remarks.

Great. Thanks, Operator, and thank you all for taking the time and for your attention this morning. We appreciate, as always, thoughtful, informed comments and questions from our covering analysts, and hopefully you found that discussion useful as well. Really, I hope my goal and our hope is that you leave today with a pretty clear set of takeaways here, that HAVMED's corporate structure and balance sheet is now fixed. It was a long and somewhat painful process to get here, but we're here. It's two subsidiaries. Commercial subsidiaries are both making strong commercial progress and approaching key milestones. Obviously, there are different points in their corporate life cycles, but really good progress on both of those. Both of them have been also capable of showing their ability to raise capital-independence of PadMed over time. The new, obviously, news that we're focused on today is that our medical device portfolio is relaunching. We're really excited to have Joe on board and his leadership not only to move Opteris and Port.io forward, but also puts us in a really good position to evaluate the inflow of opportunities that have been brought to us already in hardly a month after we've been in a position to do so. And so the fact that we're getting those inquiries both from banks and from innovators and from academic medical centers, I think is a testament to the hard work that's gone into fixing the structure and the balance sheet and the sort of sense of confidence that we're in a good position to go back to our roots there. So all I can say is that we believe Padme is back, that our founding mission and our structure of subsidiaries and our shared services model and economies of scale that go with that, that we really feel like we're now in a really good position to take advantage of that structure of that history um um and of the opportunities that are that are coming coming before us uh so with that as always we encourage you to continue to keep abreast of our progress and please um follow our news releases our quarterly updates and calls in the future as well as to our website and social media and of course always feel free to reach out to us if you have any specific questions. So with that, I hope everyone has a great day. Thank you very much.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.