PAVmed Inc. Q4 FY2025 Earnings Call

Good morning, and welcome to PAVmed's Fourth Quarter 2025 Business Update Conference Call. This call is being recorded on Monday, March 30, 2026. I would now like to turn the conference over to Matt Riley, PAVmed's 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 Aklog, Chairman and CEO of PAVmed; along with Dennis McGrath, Chief Financial Officer. The press release announcing our business update and financial results is available on PAVmed'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 filings with the SEC. 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 in PAVmed's most recent annual report on Form 10-K filed with the SEC and any subsequent updates filed in quarterly reports on Forms 10-Q and subsequent Forms 8-K. Except as required by law, PAVmed 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 like to turn the call over to Dr. Lishan Aklog, Chairman and Chief Executive Officer of PAVmed. Lishan?

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 frame where PAVmed is today. On our last quarterly call, I described how over the past two years we've undertaken a series of very deliberate and systematic actions to effectively and permanently fix PAVmed's legacy capital structure and ultimately strengthen its balance sheet and improve our ability to execute on our strategic plan. I had mentioned at 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 us down for a while were removed. Upon completion of this financing exercise, we'll have a very clean cap table. So with PAVmed now fixed, we believe we are exceptionally well positioned to execute on our founding mission. What's that mission? It's to operate as a high-growth, diversified commercial life sciences company with multiple independently financed subsidiaries that are operating under a shared services model. With that work now complete, we're executing that model across our core businesses, which you can see here in three different buckets. The most prominent one, of course, is Lucid, which is a publicly traded diagnostic company. Lucid continues to succeed at raising its own capital. It's obviously our strongest and most advanced asset. As we discussed in the Lucid earnings call, and we'll highlight later today, Lucid is on the cusp of transformative milestones, which include a very important recent VA win and a pending Medicare coverage. A reminder that PAVmed remains Lucid's largest shareholder, holding approximately 31 million shares of Lucid common stock, and as such, it's positioned now under this new capital structure to benefit from Lucid's upcoming major value inflection points. Moving on to Veris. Veris is our majority-owned digital health company that's advancing a cancer care platform designed to enhance personalized cancer care along with an implantable physiologic monitor. As we'll discuss in more detail, we are continuing to see early commercial traction with our major strategic partner and are advancing the implantable toward an FDA submission planned for later this year. We're poised to accelerate the execution of an expanded strategic plan as we'll discuss in a bit. Having completed the steps to fix PAVmed with the new capital structure and resources available, a very important part of our future plan is to relaunch our MedTech portfolio. For those of you who've been with us for a long time, we started in medical devices, and we've always intended to reengage in that sector. So we've taken a couple of steps towards doing that. The most important of which is that we've engaged a new leader, a Chief Business Officer who will have oversight over this portfolio, and that will involve bringing in the technology that we've licensed from Duke, an endoscopic imaging technology, reinvigorating PortIO, and looking at an exciting pipeline of opportunities in the medical device space that we really do believe will enhance long-term shareholder value. Again, more on this in a bit. So let's start with Lucid's operational highlights from the fourth quarter and recent weeks. As always, I encourage you to listen to Lucid's business update call for greater detail on each of these areas, and I'll keep these comments high level. Lucid reported fourth quarter 2025 EsoGuard revenue of approximately $1.5 million and EsoGuard test volume of 3,664 EsoGuard tests. The volume has increased by 29% from the third quarter and revenue has increased by 24% over the third quarter. The volume exceeded our target range of approximately 2,500 to 3,000 tests per quarter, and we're entering 2026 with solid momentum on that front. A very important highlight that we're incredibly excited about at Lucid is that Lucid was awarded a U.S. Department of Veterans Affairs contract for EsoGuard that expands our access across the nation's largest integrated health care system, giving Lucid the opportunity to engage with numerous medical centers across the country and target the nine million enrolled veterans who have a particularly elevated risk of GERD and esophageal cancer. Another exciting development that we discussed is the announcement of positive data for the largest real-world experience of esophageal precancer detection that evaluated EsoGuard and EsoCheck. In these approximately 12,000 patients, we were able to show excellent performance across multiple metrics: technical success, procedural times, safety, and appropriateness of physician use. We contrasted that with other technologies that purport to operate in this space. Now let's discuss Veris. The commercial phase of our engagement with Ohio State University is well underway; it initiated during our last call. An important recent step is that we completed the full Epic integration with OSU. The feedback in this early phase has been extremely positive, from senior leadership down to clinician leaders and the clinicians in individual departments within OSU. The integration with Epic is a critical part of this. This is a bidirectional flow of information. So Veris data is available to clinicians within Epic. But perhaps more importantly, the clinician and the patients can access their record within the workflow that we offer within our platform. That's been really helpful in improving engagement with the clinical team, and we expect to leverage that and show increasing growth and adoption across an increasing number of departments within the OSU cancer center. In addition, as we discussed at the last earnings call, we're making solid progress with the implantable physiologic monitor and expect to have a late submission to the FDA in the latter part of this year under the 510(k) designation. Around the time of our last call, we engaged with a new vendor capable of not only designing and developing all aspects of the electronics and structure of the implantable device, but also serving as the early manufacturer. That work is going extremely well. It's under budget and focused on completing all of the design work to capture the physiologic signal, putting us in a position to enter a design freeze, complete the development process, and submit to the FDA for clearance and subsequent commercial launch. Veris is sufficiently capitalized to fund that development as Veris raised capital last year to do so. In addition, as we've discussed before, as we're gearing up on the commercial phase with our strategic engagement with OSU and making solid progress on the implantable device development, we're developing and looking forward to executing an expanded strategic vision for Veris. Fundamentally, this is a transformation of Veris from a pure-play remote patient monitoring company to one more broadly focused on AI-based clinical decision tools. We have a project launching to develop a risk stratification tool for cancer patients to identify those at risk of complications and readmissions. In addition, we're expanding the offering to include clinical support services so that our own clinical team can provide triage services for alerts as they come into the system. We've learned that this is an important part of adoption because clinicians are already somewhat overwhelmed with data. That activity, as well as the learnings and experience with OSU, will put us in a position later this year to begin leveraging that commercial success to additional systems, initially additional large cancer centers like OSU; we're also looking to explore engagements with private equity-backed networks of smaller oncology practices. That work is ongoing. We're really excited both on the implantable development and on expanding our activities with OSU, putting us in a position to execute on this expanded strategic vision as we enter the latter half of the year. Now let's talk about some details of relaunching our MedTech portfolio. As I mentioned, a key element has been hiring the right leader for this. We're excited and we'll announce this in more detail in the coming days: Joe Virgilio is joining us as Senior Vice President and Chief Business Officer for Medical Devices for PAVmed, and he will lead as Chief Executive Officer the medical device subsidiaries under PAVmed. That will start with two companies, PortIO, which we've talked about before. We've made some effort to raise capital there, but we realized that to reboot PortIO and reengage on the IDE study that will lead to FDA submission, clearance and commercial launch, we need dedicated leadership. With Joe, we now have that. We previously announced that we had engaged with Duke University to license exciting technology in the endoscopic space, in GI endoscopy, that allows the operator to diagnose later-stage precancer without the need for biopsy. That license agreement has now been fully executed, and it now resides within a new subsidiary called Arcteris, and we'll provide additional details on that. Joe Virgilio will be running that project as well, which is proceeding under a sponsored research agreement with the laboratory at Duke that's been developing this technology. Our vision goes beyond these two entities. We have an active and expanding pipeline. Upon completion of the restructuring, we immediately started getting inbound inquiries from bankers and other companies that have sought to partner with us on various medical technologies, and we are actively evaluating those and looking for ones that fit nicely within our pipeline. Those will enter our portfolio under Joe Virgilio's leadership. With that, I'll hand the call over to Dennis for an update on the financials.

Thanks, Lishan, and 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: 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 PAVmed results versus the 2025 periods without Lucid's operating results being consolidated into the PAVmed financials. We present some supplementary information in Footnote 4 of the 10-K that will provide some help in the comparisons. With regard to the balance sheet, you'll recall from our investor update call since this time last year that the company has engaged in a multistep 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 multistep process that Lishan highlighted that spanned nearly 18 months with three key recapitalization steps landing PAVmed on firm financial footing with its recent financing that closed on February 3rd. The steps included deconsolidating Lucid from PAVmed'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. A couple of key things to point out on each of these balance sheets: cash burn rate of $1.5 million for the fourth quarter reflects Veris operating costs, including approximately $600,000 of outside contractor development costs associated with the implantable device, which has been funded by the two Veris-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 Veris' 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 mark-to-market and shows an $8.5 million year-over-year increase consistent with the 33% increase in Lucid's stock during 2025. At present, PAVmed continues to be the single largest shareholder of Lucid Diagnostics with ownership of approximately 18% of the common shares outstanding. Although PAVmed no longer has voting control of Lucid, PAVmed, 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 GAAP year-ending outstanding shares of 900,000 are reflected on the slide as well as on the face of the balance sheet in the 10-K. GAAP shares do not reflect unvested RSA amounts. Approximately 433 shares were issued, reflecting conversions of the Series C 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. We put together a non-GAAP pro forma balance sheet to illustrate the changes. What you see in the first column is a condensed balance sheet derived directly from the published 10-K 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 a 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 EsoGuard coverage policy. Additionally, Veris has about $2.5 million of warrants that are exercisable after the implantable device is FDA cleared. We added a Veris 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 GAAP financials in the 10-K 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: PAVmed'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. Investors also saw that with recapitalization, they believe 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 Diagnostics. This is a pure arbitrage opportunity in advance of the Medicare announcement. Fifth, additional optionality across high-potential health care assets was a driving interest: Veris, Arcteris, PortIO 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 cautioned earlier in my comments, there are some significant differences in how the information is compared between the comparative periods, given the changes in PAVmed's financial control of Lucid and, importantly, the GAAP construct for deconsolidating Lucid on September 10, 2024, which somewhat blurs the historical understanding of the information for PAVmed as a stand-alone entity. GAAP does not allow presentation for prior periods on the face of financial statements to be similarly adjusted. Although, as mentioned, there is supplemental information in the footnotes of the financials in the 10-K. So on a pro forma basis and purely for illustrative purposes on this slide only, the Veris revenue and the Lucid management fee are combined, collectively more than $3 million per quarter. It visually aligns PAVmed'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 GAAP net loss of $2.8 million before noncontrolling interest and preferred dividends. This includes noncash 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 Veris contractor development costs for the implantable device and about $200,000 of annual Delaware franchise taxes that occur once a year. 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 stand-alone information presented not only in the slide, but in the full fourth quarter information presented in our press release that shows the company baseline bias of operating at near cash flow breakeven and incurring incremental PAVmed 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 as 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 the balance reflecting the franchise taxes and the Veris R&D costs just mentioned. OpEx increases moving forward are likely to simply be tied to the R&D efforts to get the Veris implantable device submitted and cleared by the FDA, for which the 2025 Veris-related financings are supporting. With that, operator, let's open it up for questions.

Your first question comes from Jeremy Pearlman with Maxim Group. 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 the balance reflecting the franchise taxes and the Veris R&D costs just mentioned. OpEx increases moving forward are likely to be tied to the R&D efforts to get the Veris implantable device submitted and cleared by the FDA, which the 2025 Veris-related financings are supporting. With that, let's open it up for questions.

So first, I wanted to focus on the commercial relationship with OSU. You said you're well underway. 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? Maybe help us understand what you hope the current commercial relationship will become before you roll it out to other institutions.

Yes. Thanks for the question. Happy to elaborate on that. In terms of the clinical value of the Veris platform, we established that during a pilot that occurred last year, and that was what led to the commercial engagement. The commercial engagement has fairly high expectations. It involves a target of a minimum of 1,000 patients within the first year. 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. Our internal engagement with OSU on how that's proceeding relates to executing on that project plan, bringing on the new departments according to that plan, and the trajectory toward that goal of 1,000 patients during the first year. We call this a strategic partnership because beyond simply utilizing the platform in a commercial setting, we've also developed a registry. Those patients will be enrolled and data will be collected, and we'll be able to provide future commercial-target data on adoption during the commercial phase beyond the pilot phase. We're not reporting month-to-month numbers on that yet, but at a high level we are on track and on schedule. The planning was based on when we completed EHR integration. EHR integration is central for the flow of information within large medical centers. Now that we are integrated, there's full visibility of the Veris data on Epic as well as our preferences for clinicians to use our platform as a primary portal to the patient's care because it provides real-time physiologic data that comes through our platform and does so in a cancer-specific way beyond what they can get using Epic. That launched fairly recently, and we expect with that launch that they'll be able to start accelerating the trajectory toward the 1,000-patient target, which is a minimum and we expect to exceed. Regarding expanding our commercial team, we have the information we need and initial data from the pilot program in terms of clinical benefit to expand to other sites. What's holding us back is that we're focusing our limited capital resources right now on getting the implantable across the finish line to FDA submission and clearance. The capital we raised last year was targeted to that. While we have some legacy engagements with a dozen or so other academic cancer centers, we're not deploying the commercial resources and hiring the commercial personnel that would be necessary for a broader commercial launch; we expect to do that in full force after clearance of the implantable, although we may do limited expansion between now and then. One aspect that will be important and that we've learned from OSU is the clinical support side of things. OSU has a sophisticated call center mechanism and resources in place that can triage and screen alerts so that clinicians are not overwhelmed. Many other centers don't have that full system. One of the things we've concluded is to have that functionality available; we can offer members of our own clinical team to provide triage at various levels depending on what's desired by the center. We already have a clinician on our team helping to build that and learning from interactions with OSU. That would be a predicate to broader expansion, and we intend to develop it over time. Hopefully that gives you perspective on how we're viewing our future commercial expansion.

Yes. That was really helpful. Great information. Then maybe just one more question related to the new risk stratification tools and other tools you could integrate into the Veris platform. When those tools are ready, will the contract with OSU allow you to integrate them into the patients already using the device, or would you have to amend the agreement? Or are you planning to finalize those tools and then roll them out further down the line?

There are two aspects to your question: development work and integration. The development is not trivial; I don't want to give the impression that we have these tools ready to implement. Those AI-based tools require extensive data, and we are in discussions with OSU on how to utilize the data we're collecting as well as legacy data they have to inform development. Part of our strategic engagement contemplated a partnership on development of these tools. I view this as a broader strategic vision to evolve Veris from its original focus on remote patient monitoring—which serves as a conduit for physiologic and symptomatic data—into one that provides sophisticated AI-based clinical decision support tools. We believe the value added from going beyond being a conduit and providing clinical decision support tools is increasingly expected in digital health offerings. That requires time and resources and capital, and we're in the early stages. I would view this as a near-term and medium-term vision in partnership with OSU on development. At the time we launch these tools—whether preliminary on the research side—any patient already on the platform would be integrated with the new tools, and their care could be impacted by those additional support tools.

Okay. Understood. Great. And then just one last question, jumping to the new imaging technology licensed from Duke. I know you mentioned you'll provide more information shortly, but can you describe whether any clinical work needs to be done with that technology before rollout, and what type of commercial plans you might have?

This is still in the early phases. As a reminder, the technology is an optical technology that combines well-established OCT technology with a newer approach called a/LCI. The combination, implemented at the end of an endoscope, can image abnormal tissue in the lower esophagus at the time of endoscopy to discriminate between early and later precancer. Specifically, it can potentially distinguish non-dysplastic Barrett's esophagus from dysplastic Barrett's esophagus—the latter being the later-stage precancer that requires intervention to prevent cancer. Currently, that distinction is made by biopsy; the patient gets a biopsy and returns if the biopsy shows dysplasia to undergo definitive ablation therapy. The promise of this technology is that it can detect dysplasia with very high sensitivity in early clinical experience, by measuring nuclear diameter in a sophisticated way, with excellent performance that may outperform molecular diagnostic tests based on initial data. The advantage is that if you can diagnose dysplasia on the spot during endoscopy, you could potentially bypass biopsy and perform ablation on the spot, which would be transformational for managing esophageal precancer. The work is in early phases. It has been used clinically with documented efficacy in real patients, and that data is published. There is work to modify the technology so the form factor and size are applicable for a broad commercial launch. That redesign of the probe is underway under a sponsored research agreement in Dr. Wax's laboratory at Duke. Once that's done, the probe will be deployed in another round of patients in partnership with Dr. Shaheen at UNC. After design freeze and demonstration, we'll complete product development, pursue a 510(k) FDA pathway for clearance, and then commercialization. So that's a bit down the road.

Your next question comes from Ed Woo with Ascendiant Capital.

Yes. Congratulations on all the progress. I had a quick question. You mentioned that you guys are now ready to engage in expanding your medical device portfolio with new technology. Is there any particular areas or products that you might be interested in?

Thanks, Ed. Glad you asked. After we closed the last restructuring and financing, within days we received inbound inquiries. It's not just in medical devices—it's across the board, including diagnostic companies, molecular diagnostic companies, medical devices, and pharma assets. It's been a short time since we completed the transaction, and it's really because this goes back to PAVmed's roots where people contacted us as potential partners. That's what led to Lucid and Veris and our access to those technologies. It's exciting that people now view us as being in a position to continue that legacy. On the medical device side, we have interest in technologies that align with the GI space, which is consistent with our interest in Arcteris and our internal expertise in esophageal disease and Barrett's esophagus. We're open to inquiries across the board, but GI-related technologies that align with gastroesophageal reflux and Barrett's esophagus capture our attention because of our internal expertise there. PortIO is in the vascular access space and there's activity more broadly, so we're not limiting ourselves to any particular specialty.

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

Great. Thanks, operator, and thank you all for taking the time and for your attention this morning. We appreciate, as always, the thoughtful and informed comments and questions from our covering analysts. I hope you found that discussion useful. My goal is that you leave today with a clear set of takeaways: PAVmed's corporate structure and balance sheet are now fixed. It was a long and somewhat painful process to get here, but we're here. Two commercial subsidiaries are both making strong commercial progress and approaching key milestones. They're at different points in their corporate life cycles, but both are making really good progress. Both have shown the ability to raise capital independently of PAVmed over time. The news we're focused on today is that our medical device portfolio is relaunching. We're excited to have Joe on board; his leadership will not only move Arcteris and PortIO forward but also put us in a good position to evaluate the inflow of opportunities that have already been brought to us. The fact that we're getting inquiries from banks, innovators, and academic medical centers is a testament to the hard work that's gone into fixing the structure and the balance sheet and reflects a sense of confidence that we're in a good position to return to our roots. We believe in our founding mission and our structure of subsidiaries and shared services model and the economies of scale that go with that. We feel we're now in a strong position to take advantage of that structure, our history, and the opportunities that are coming before us. We encourage you to keep abreast of our progress via our news releases, quarterly updates and calls, our website, and social media. Of course, feel free to reach out to us if you have specific questions. 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.