Good morning and welcome to the Lucid Diagnostics Third Quarter 2026 Business Update conference call. 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. Lishan Aklog, Chairman and Chief Executive Officer of Lucid Diagnostics, along with Dennis McGrath, Chief Financial Officer of Lucid. The press release announcing our business update and financial results is available on Lucid's website. Please take a moment to read the disclaimers about forward-looking statements in the press release. The business update, press release, and 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 a description of these and other important risks 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 SEC and any subsequent updates filed in the quarterly reports on Forms 10-Q and subsequent forms 8K. Except as required by law, LUCID disclaims any intentions or obligations to publicly update or revise any forward-looking statements to reflect changes in expectations or in 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 CEO of LUCID.

Lishan. Thank you, Matt, and good morning, everyone.

Thank you all for joining us today and for your continued engagement and support. Last month, we announced a major breakthrough for Lucid. We announced that Medicare is now paying for our ESA card. We believe this breakthrough represents a truly seminal moment in our mission to end the scourge of esophageal cancer. For the first time, Medicare beneficiaries nationwide have fully reimbursed access to our groundbreaking ESA card test. With this breakthrough, Lucid now enters a new and exciting chapter focused on commercial acceleration and revenue growth. For the first time, our pursuit of the massive clinical and commercial opportunity that ESA Guard represents will be mostly unconstrained by external factors, and it will depend almost entirely moving forward on our team's commercial and operational execution. As we'll discuss in more detail, we're only a few weeks into this new chapter, But so far, things are going very well. So let's flesh out some of the details of how we got here, our updated commercial strategy, and expectations for the fourth quarter and the new year. First, though, let's do a little bit of a primer on Medicare coverage. Medicare claims for laboratory tests are adjudicated and paid by the Medicare Administrative Contractor, or MAC, with jurisdiction where the laboratory is located. Medicare's statutory standard for coverage and payment is reasonable and necessary. So a test must be reasonable and necessary for a claim to be paid. Our Texas laboratory is in the NOVATAS MAC jurisdiction, and this MAC operates outside of the MOL-DX program. The adjudication and payment of claims submitted by this lab to the MAC is not dependent on the pending MOL-DX LCD. Late this summer, we introduced e-cigar to the NOVATAS MAC. during a productive meeting with its medical directors, and we informed them of our intent to begin submitting claims from the Texas laboratory. Following the meeting, at their request, we submitted an extensive dossier. The dossier included our clinical evidence package and supporting documentation, the manuscripts, the guidelines, and so forth. The dossier incorporated their constructive feedback from the meeting. They acknowledged receipt and completed their review with no additional feedback. We therefore began submitting Medicare claims in late September and began receiving payments shortly thereafter. We have been consistently been paid on Medicare claims ever since. So what does this mean in terms of e-cigar coverage? It means that the MAC with jurisdiction over our laboratory has reviewed our clinical evidence and the professional society guidelines, and it has adjudicated our Medicare claims as reasonable and necessary. It also means that ESAGAR claims now have Medicare coverage through claim-by-claim adjudication. The term coverage through claim-by-claim adjudication is a formal CMS term. And it is worth noting, many people don't realize this, that the majority of all Medicare claims have their coverage determination through the same claim-by-claim adjudication process. What does this mean for the pending Moldy XLCD? ESA Guard coverage through claim-by-claim adjudication by this MAC is completely independent of the MOL-DX LCD process. As we'll discuss later, we remain engaged with CMS and are confident that the draft LCD will be published. It will complete the public comment process and become final and effective. What does this mean for our commercial trajectory? What's important to understand and what makes this a true breakthrough is that this coverage pathway allows us to immediately Accelerate Commercialization. So we no longer have to wait for the Moldy XLCT to become final and effective to do so. So, in effect, what has been a marathon is really now a sprint. As we'll discuss in more detail, we're moving quickly to leverage this ESO Guard Medicare coverage to accelerate commercialization nationwide. Let's dive a bit deeper on commercial execution, starting with our target population and this commercial transition. As a reminder, the at-risk population for e-cigar testing consists of approximately 30 million patients who are recommended for esophageal precancer testing by professional society guidelines. We know that approximately 50% of these 30 million patients are of Medicare age. Approximately 10 to 15% of the over 50,000 e-cigar tests that have been performed to date have been on Medicare beneficiaries. With e-Cigar now fully reimbursed by Medicare, we can now just seek to offer this test much more broadly to the entire at-risk Medicare population. So with Medicare reimbursement secured, we immediately and aggressively transitioned our commercial activity to focus on access to e-Cigar in the Medicare population. We've already implemented numerous changes to our commercial efforts, focused on patient identification and partnering with local physicians. These include geographic positioning of our sales and clinical resources, updated comp plans, data-driven routing, and a number of creative programs to find and engage with at-risk Medicare patients. Really excited to report that these efforts are very quickly bearing fruit. Just six weeks into the transition, we're seeing very strong early momentum. Our messaging with providers on the importance of offering e-cigar testing to their Medicare patients is are all resonating. They get it. These patients are at higher risk and will benefit the most from esophageal precancer testing.

The patients also get it.

We educate them that heartburn can lead to cancer and on the value of our simple one to two minute office precancer test. October was a record month for test volume. The team is now laser focused on converting this great start into a really strong quarter. Over the past six weeks, Dennis, Matt, and I have frequently been asked whether our growth is limited by capacity in any way.

It's not.

We have plenty of lab capacity, including at our Texas lab, and that capacity is scalable with short lead times. The same applies to our manufacturing capacity for both ESA Check and the ESA Guard collection kits. Our clinical specialist team is also well-positioned to support this transition, and they can scale as needed. Thanks to our recent $50 million financing, we believe we have sufficient runway

to drive commercial acceleration and revenue growth.

The next most common question that we're asked is how fast can you scale commercial activity to take advantage of this significant revenue opportunity? I think the answer to that is that we plan to be aggressive but responsible. Dennis will dive in a bit deeper on the near-term revenue opportunity simply based on closing the realization gap at our current level of activity. In terms of our sales infrastructure, we currently have approximately 30 sellers in the field, and we're confident that we can drive near-term growth by driving productivity through the efforts we've already implemented in the past few weeks. Future sales infrastructure growth will be responsibly calibrated based on the near-term revenue trajectory that we see. Let's now move on to a broader update on other aspects of our business. Starting with CMS and the MoldeX LCD, as I mentioned, we continue to wait for publication of the draft MoldeX LCD. We remain engaged with CMS on the status of this LCD given the persistent backlog of MoldeX LCDs. We held a formal meeting with CMS leadership this past quarter to discuss our pending MoldeX LCD request for reconsideration. And based on that meeting, we remain confident that the draft LCD will be published when the backlog begins to clear and that it will complete the public comment period and become final and effective. We also announced two important billing and coding milestones. A new Category 3 CPT code for ESO check cell collection was approved. This code plays an important role in our ongoing engagement with health systems. A new ICD-10 diagnosis code linked to a positive e-cigar test was also issued. The ICD-10 code gives physicians a dedicated way to document the need for follow-up endoscopy after a positive eSAGARD result. These may seem a bit mundane compared to Medicare reimbursement, but they serve a very important role making eSAGARD and eSA-CHECK easier to bill and track and integrate into clinical practice. Turning to commercial coverage, our focus on Medicare reimbursement and commercialization has in no way detracted from our parallel efforts on the commercial coverage front. The Concert Laboratory Benefit Manager ESA Guard coverage policy that we announced last quarter is bearing fruit. We expect by the end of the year to have a total of five concert client plans that have formally adopted it, including the three that we previously reported last quarter. So effective next month, this concert coverage policy and the plans associated with it will actually translate into nearly all commercial lives in the state of Minnesota being covered, and we intend to and many more. Our overall commercial payer pipeline remains very active and we expect further coverage policy wins this quarter and into the new year. We also notched two additional wins that will be important in the years to come. The American Gastroenterological Association, or the AGA, has formally released for public comment its draft updated guidelines for esophageal precancer and Barrett's esophagus Diagnosis and Management. We were happy to see that E-Cigar and E-Cigar are named as an alternative to endoscopy and rated as a high certainty of evidence. That's very significant relative to prior guideline publications. We're the only commercially available test that's cited in these guidelines. The draft guidelines remain subject to final publication. However, the AGA and the ACG guidelines remain critical in our engagements with both physicians and health systems and obviously with payers as well. And finally, a quick update on the VA. Our VA work continues to progress. Our engagement with dozens of systems and their physicians remains strong. In the end, what we're learning is that each VA is in effect a separate health system and we're learning to navigate and streamline the steps to translate this engagement into clinical and commercial activity. I'm happy to report that our first two VA programs are up and running. and we have a robust pipeline of other centers behind them. We continue to have a dedicated strategic accounts team that's focused entirely on the VA. And we continue to expect the VA to be a meaningful long-term contributor to our overall commercial activity and revenue. So before handing the baton over to Dennis, let me leave you with this. Medicare reimbursement has changed what is possible for Lucid. The opportunity ahead is enormous. and I can assure you that our team is approaching it with the urgency and the determination that it deserves. So with that, I'll turn it over to Dennis for the financial update.

Thanks, Lishan, and good morning, everyone.

The summary financial results for the third quarter were reported in our press release that has been distributed. On the next three slides, I'll emphasize a few key financial highlights from the third quarter, but I encourage you to Consider these remarks in the context of the full disclosures covered in the quarterly report on Form 10-Q. With regard to the balance sheet, cash at quarter end September 30th was $18 million. As you know, subsequent to quarter end on October 21st, we closed a $15 million Series C convertible preferred offering, which brings our pro forma cash position to approximately $33 million. Our burn for the quarter was $10.2 million. The average burn rate for the last four quarters, including cash interest and debt, was $11.6 million per quarter. Our $22 million secured convertible debt is a five-year note, interest only at 12%, and it's held by long-term shareholders. The fair value on the notes at quarter end was $17.3 million, which is down from $23.5 million at the end of the second quarter. About $5.5 million of that decrease is a mark-to-market adjustment moving in parallel with our common stock price between the periods. And it is substantially all of the $5.6 million of other income reflected in the P&L. This is a non-cash accounting item. It does not change the principle we owe. I'd also note that upon issuance of the Series C, the conversion price on those notes reset from $1 to 35.19 cents, the Series C conversion price. With regard to share count, GAAP shares outstanding as of September 30th were 191 million, which is on the face of the balance sheet in the 10-Q. On a current basis, including unvested restricted stock awards and the 3.6 million shares we issued out of advance in October, The figure is approximately 207 million. That leaves 18.7 million shares still in advance under certain investors' 4.99% ownership blockers. At present, PadMed continues to be the single largest common shareholder of Lucid, holding 31.3 million shares, or about 15% of the common shares outstanding. Although PadMed no longer has voting control, PadMed, together with the board and management, still have considerable influence with approximately 25% voting interest. Let me spend a moment on the Series C since it closed after quarter end and is the most significant item in our subsequent events footnote. We sold 15,000 shares of Series C convertible preferred at a stated value of $1,000 per share for gross proceeds of $15 million. The investors include holders of a majority and principal amount of the secured notes. In other words, the people who know this company the best put more money in. The economics, the conversion price, as I mentioned, was just over 35 cents, so the stated value converts into approximately 42.6 million common shares. Referred carries a 20% annual dividend, but is payable in stock, not cash. It fixed 5% of the conversion shares each quarter beginning December 31st of this year and running through March 31st of 2030. Putting that together present on a fully diluted basis, approximately 330 million shares not including the 12 million stock options significantly out of the money, but including the notes, the advance shares, and the Series C conversion shares. With regard to the P&L, this slide compares this year's third quarter to last year's third quarter and year over year on certain key items. I trust you'll review the information in my comments in light of the cautionary disclosure at the bottom of the slide about supplemental information, particularly non-GAAP information. Our sales team sold 2,871 tests in the third quarter with a billable value of approximately $7.9 million, resulting in recognized revenue of $1.2 million. Volume was up about 4% sequentially and about 1% over last year's third quarter and sits comfortably within the $2,500 to $3,000 range we had been targeting in this transitional reimbursement period. Of course, the fourth quarter update on Medicare payment with Novitas will begin to change that. Revenue of $1.2 million is essentially flat with the $1.2 million we reported last year's third quarter and down from $1.5 million in the second quarter. I want to be direct about what drove that sequential change because it's almost entirely one item, direct contracting. We delivered 517 direct contract tests in the second quarter and 60 in the third. The change is mostly just event timing, with the fourth quarter picking back up to historical levels, even with the commercial team largely focused on chasing Medicare patients. Direct contract billings are fixed and determinable, so they're recognized on a delivery and a flow straight through to the revenue in the period. Setting that aside, our insurance-based revenue was modestly higher quarter over quarter, and the quality of what we are collecting improved, and I'll come back to that. If you look through the quarterly noise, the underlying trend is better than the headline. Revenue per test sold is $446 year to date against 383 for all of 25, a 17% improvement. The third quarter came in at $419 per test, essentially in line with 426 we did in last year's third quarter and ahead of the 395 in the first quarter of this year. The second quarter is 532 as an outlier and direct contracting is why. Medicare test volume for the third quarter represented about 16% of that third quarter mix, about 450 tests. In just the first month of the fourth quarter, our commercial team already achieved nearly 70% of that Medicare volume, and they're just getting started. Furthermore, October test volume for all patients, both Medicare and non-Medicare, achieved a record monthly level for the company at more than 1,800 tests in just the first month of the fourth quarter. 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. Because we have been and still are in the transitional stages of our reimbursement process, Revenue for the majority of our claims is recognized when the claim is actually collected rather than when the patient's report is delivered, invoiced, and submitted. As you'll see in our 10-Q, this is called variable consideration, in line with ASC 606, the accounting jargon. And presently, there's insufficient predictive data to reflect revenue from all of our quarterly test volume at the point the report is delivered to the referring physician. For billable amounts contracted directly with employers that are fixed and determinable, revenue is recognized when our contracted service is delivered. What is now changing that picture is the Medicare reimbursement breakthrough with our Texas Lab and Novitas Medicare payments that have begun consistently in mid-October. Medicare claims coming out of our Texas Lab and submitted to Novitas for payment are now predictable enough to consistently recognize upon report delivery. and a reminder that Medicare represents approximately 50% of our addressable patient population. With regard to the remainder of the P&L, total operating expenses of 13.5 million were down approximately 6% from 14.3 million in the second quarter. On a non-GAAP basis, operating expenses were 11.8 million versus 12.3. The non-GAAP net loss per share of six cents in the third quarter is level with the second quarter. and I'd point out that our gap loss per share of 3 cents versus 8 cents last quarter benefits from the non-cash fair value gain I described a moment ago. I encourage you to look at the non-gap figure in the operating trend. Next slide. With regard to operating expenses, this slide is a graphic illustration of our operating expenses after eliminating non-cash expenses for the periods reflected. Non-GAAP operating expenses of $11.8 million are below the average of $12.4 million for the previous four quarters. The composition this quarter was $1.4 million of cost of revenue, $4.9 of sales and marketing, $4.5 of general and administrative, and $1 million of research and development. We are holding operating expenses steady while initial Medicare volume grows, which will be beneficial to our burn rate. But we're standing at the ready to pour additional resources into our commercial efforts as the Medicare test trajectory is more certain. And we're pretty optimistic based upon the early results so far. Let me close with a few reimbursement highlights for the third quarter. In the third quarter, as we mentioned, we sold 2,871 tests, reflecting about $7.9 million in pro forma revenue at our list price of $2,749. During the quarter, we recognized revenue of about 15% of that amount, or 1.2 million. Looking at the claims with third quarter dates of service, and these figures are as of the beginning of this month, about 78% have been adjudicated. Of those adjudicated, 39% resulted in an allowable amount from the insurance company. The number I point you to is the average insurance allowable amount for successful claims itself, which is $1,701 per test In the third quarter, up about 19% from 1424 in the second quarter and ahead of our year-to-date average of 1598. This is the clearest financial evidence I can give you that the mix of what we are getting paid for is improving. Of the claims that were denied, the mix is more evenly spread than it used to be, roughly 21% deemed not medically necessary or investigational. 18% out-of-network provider, 17% from non-covered routine screening exams, and 17% requiring additional documentation and prior authorization. And on Medicare, during the third quarter, we began submitting claims for e-Cigar tests performed at our Irving, Texas laboratory. The first payments from Novitas arrived in October. At e-Cigar's established clinical laboratory fee schedule rate, of $1,938.01 per test under the PLA code 0114U. Every Medicare claim allowed to date has been allowed at the full rate. That is a fourth quarter event and it's the single most important development in the company's commercial history. One last piece. of Context on Scale. As Lishan mentioned, we have now performed more than 50,000 e-cigar tests since inception, reflecting more than $140 million billings against approximately $16 million collected to date. That realization gap is only part of the opportunity in front of us. It is not a receivable, and I'm not forecasting, but it is the installed base of submitted claims that a functioning reimbursement pathway lets us build upon. 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 number one on your touch-tone 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 number two. If you are using a speakerphone, please lift the handset before pressing any keys. The first question comes from Kyle Melchison from Canaccord. Please go ahead.

Good morning, Kyle. Hi, Kyle. Can you talk about, hey, can you talk about the, in the tests in October 1800, can you talk about how many were paid and how can we arrive at a revenue assumption? Thanks.

Yeah, so the payments are progressing, and the first payment in October was a test filing for Novitas, which came through clear. and we'll give that update as we continue to move forward here.

So. Hello, Kyle.

Kyle? Hi, Brian. Is Kyle still there?

Hello, Kyle.

He's still there. Maybe put him back in the queue. Yeah. Thank you.

All right. Thank you. The next question comes from Mark Massaro with BITG. Please go ahead.

Hi, Mark. Hey, guys. Congratulations on the quarter and for the important goal of getting paid by Medicare. This is very significant. I wanted to start actually with the volume. So I'm really interested in that record month number of over 1,800 tests in October. I think, Dennis, in your prepared remarks, you indicated that Q4, you may begin to change the trajectory of the 2,500 to 3,000 quarterly number. You know, I also am looking at the calendar, and I see Thanksgiving and Christmas coming up. So I wanted to just try to level set if we could figure out. It looks like you'll probably be able to clear 3,000 tests in Q4, but I wanted to get a gauge. That's how you're thinking about seasonality in Q4 and what that run rate might look like going forward.

Yeah, look, Mark, I mean, I think you noted, as you noted, seasonality is clear and the combination of the holidays at the end of the fourth quarter is always a challenge for not just ours, but for all commercial teams. I would really look at the October number and really the reason we wanted to highlight it was that it's just sort of a reflection of a great start here. So we do expect, you know, we really do expect a very solid fourth quarter, but it is probably too premature to kind of extrapolate from that number in terms of how things will play out for the rest of the year, for the rest of the quarter. But, you know, we'll just leave it at the great start. We expect both the combination of That trajectory with regard to the volume as well as the sort of the rapid and consistent payments from on the Medicare side really, really bode well for this quarter.

Okay, great. And then of the 30 people you have in the field, are substantially all of them now focused on Medicare age folks? Or how are you guys thinking about the plan of attack here? Yeah. You know, whether it's by state or by clinic size or patient type, how should we think about the way that you're going to the market right now?

Yeah, so we did attack it directly and fully. So everybody, the entire team, the entire sales team, except for, as we mentioned there, we do have some targeted efforts at the VA and some targeted efforts with regard to health systems. But our regular sales team are all under the same construct, under the same paradigm, which is to engage with the physician community and their local health systems and really tailor their message to encourage offering ESAGARD to the Medicare population because, as I mentioned, and this has become, we've already learned this is actually a very straightforward message that resonates with the physicians because The Medicare population is at the highest risk and represents the majority or at least half of the patients who are targeted. So it is actually quite universal across the entire sales force. Now, some of the things that you mentioned with regard to targeting and allocation of resources regionally, sure, that's ongoing. It's data driven and we continue to look for areas where we think there's a high likelihood of there being patients and physicians that would fit within this strategy. Historically, we've always had a stronger concentration of our commercial team in areas that happen to have larger elderly populations, such as Arizona and Florida. And so it's kind of a natural transition from that.

Okay, great. And then, you know, you've done over 50,000 tests. Obviously, you haven't been paid on all of them. Now that you're getting paid by Medicare, how are you thinking about the claims that you have not been paid on? Are you planning to submit those that were previously rejected to Novitas, or are you perhaps waiting on the LCD to be finalized?

Yeah, so the submission of a claim has to happen from the laboratory that performs the test and issues the report. So there is no sort of mixing and matching between those two. The issue of the Thank you. Thank you. That number will decrease depending on when the LCD arrives because those Medicare claims are being submitted to, are being processed right now in a Texas laboratory and being submitted to Novitas. So it really depends on when the LCD If the LCD is issued tomorrow, then that will go back the full year. If the delay continues, then the one-year look-back will overlap with the period of time during which we're getting paid by Novotax. Okay, that's great. Ultimately, let me just add one other thing. Let me just add one other thing. Maybe Dennis can concur. At the end of the day, in an era that we believe, in this chapter that we believe we're starting on where we believe we can drive revenue growth, That backlog will represent a smaller and smaller proportion and be somewhat less relevant. Do you agree with that? Yes. Agreed. Yeah.

Okay. Maybe one last quick one. Sure. The concert was significant. There are some other lab benefit managers. I am curious if the – since you've announced getting paid by Medicare, has that been a little helpful as you're engaging commercial payers?

I wouldn't say it's a little too early to tell. I think actually the bigger factor as it relates to our engagement with the other laboratory benefit managers, some of the larger ones, actually relates more to the concert policy. So getting the first LBM under our belt does in fact and many more. and sort of been waiting for Medicare coverage, and we may see that. But the more important thing is starting to get some commercial plans under our belt through that LVM. Another thing which I think actually could kick in as volume grows, and we've noticed this once, there's sort of an interesting dynamic between the LVMs and the individual client plans, right? The plans are clients. And we've noticed, we've had a couple of examples that are encouraging where are the utilization within a particular geographic plan has gone up, and the plan has gone to the LVM and said, hey, we're getting a lot of claims from this particular, on this particular test, we'd rather be in network, and it has encouraged the LVM to push forward on a coverage policy. We've seen one very encouraging example of that.

Fantastic.

Thanks for all the time, guys.

Yeah, thanks, Mark. Appreciate it.

Thank you. The next question comes from Kyle Mixing with ConnoCore. Please go ahead.

Kyle, welcome back. Kyle, welcome back. You dropped before I gave you a fulsome answer to your question about collections. Let me give you a little bit more color to that one. So, Novitas is consistently paying on a week-in and week-out basis, and sometimes twice a week. So, the Novitas claims are predictable. and I gave you a little bit of a glimpse of what that was of the 1800 test mix in October when I indicated that we had already in October did about 70% of what we did the entire previous quarter. That's over 300 Medicare. The mix of the 1800 is across three pools here. Direct contracting, which will get paid when the reports are delivered within a reasonable period of time. Novotas, which will continue to pay at the $19.38 as that momentum continues to build through the quarter. What's left in the middle is normal submissions to all of the other carriers. And that is the one that's less predictable. But I will give you an indication that in October, we've had a record collection month in one of our weeks. predictable going forward we're still developing those statistics but the early collections in October are very encouraging in terms of what that will represent in terms of recognized revenue knowing that two of the three buckets Novotas and the direct contracting will contribute definitively to that total and the unpredictable piece is the one in the middle where it's just submitting to insurance companies out of network and we're beholden to what that collection is. Now, I also will tell you that most of the deductibles and co-pay components that are influential in the first quarter of the year are largely satisfied and that will, you know, be to our advantage in terms of total collection for that third bucket.

All right. Awesome. Thanks, Dennis. Sorry for dropping before. That all makes sense. And, you know, I wanted to ask about the, you know, the CLFS kind of update recently, and we'll get a finalization soon. So, USIGARD is part of this gap bill process, given that there wasn't enough commercial claims or medical claims either. Is there a chance, but maybe just Lishan, walk through the process there and the chance that maybe you're not granted the same 1938 rate, and especially amid this, you know, this new facility, Texas lab and all that stuff. So, it'd be good to get some clarity there.

Yeah, the process is obviously fast moving and a little bit maybe complicated for others who are not in the weeds like you and I are to follow. But let me try to make it a bit simple. This, which you're referring to just for others on the call, is a panel meeting that was held a bit over a month ago that relates to this PAMA. Thank you for joining us. It's really a fast-moving process. As you know, the preliminary determinations have come out. The final determinations will be out later in the year. We're in active discussions with CMS, and we're quite confident that our pricing will be preserved.

All right, great. And then, just last one, how are you thinking about Salesforce Additions Investment next year? So, is there a run rate, like volume level that you think You want to hit that, and then you start kind of being really added to the team, or is this how you're thinking about and what makes sense for now? I'm getting a little early with it, but here.

Yeah, I think it's a little too early to tell. I think what our primary focus of this quarter and heading into the new year, and this will change rapidly once we have sort of a few data points in that trajectory, is taking our existing team and shifting them towards this new paradigm. and driving productivity within our current team. We continue to remain sensitive to our OPEX and our burn rate and we would love to see a revenue trajectory that can drive that burn rate down in the immediate term. So we think we can drive volume, we think we can drive revenue with our current team simply through this transition and by increasing productivity and increasing the percentage of our total volume that is represented by Medicare from the historic 10% to 15% certainly and hopefully quickly up to the 50% that the target population represents and perhaps even higher than that. So we'll go through that process. That process, we may go through that rather quickly and see how that revenue trajectory looks. and the associated obviously volume trajectory. And then, you know, fairly soon we'll be in a position to determine when it makes sense for us to start ramping up the sales team. We're not shy about that. We're happy to be aggressive about it, but certainly we're going to be responsible with regard to that with a close eye on our OPEX and our burn and not put ourselves in a position that other companies certainly found themselves in where they got ahead of themselves in terms of dialing up infrastructure.

Okay, that makes sense.

Thanks, guys.

Yeah, great. Thanks.

Thank you. The next question comes from Mike Metzing with NITAN. Please go ahead.

Yeah, thanks for taking my questions. Hey, guys. So just, you know, obviously great news on the Novotax situation, the fact you're getting paid for Medicare now. But, you know, I'm just curious, is there any kind of trade-offs or drawbacks of using, going to Novitas route versus the Palmetto, Moldvx route? I know you're still hoping to get that with time, but, or is it basically equivalent at this point?

Yeah, no, there's no downside. I mean, I would just really view this, you know, a very straightforward way. We have two laboratories. One is in the, is in the Meridian jurisdiction, which is a We have a lab in Texas that's in the Novitas jurisdiction, which is outside of Molde X. The Texas laboratory is submitting claims and getting paid. So we have effective Medicare coverage by claim by claim adjudication for that laboratory. and we are expecting, I would say more than hope, based on the meeting that we described with CMS leadership, we absolutely expect to get the LCD completed and published through a draft, through a comment period and ultimately to be final and effective. We have every expectation to do that. We're now, as I mentioned, very confident that the delays are related to the administrative backlog at Multi-X, including having been exacerbated by a change in the leadership there. So I would just encourage you to view them as two completely separate things. How it ultimately plays out over the long term, you know, over the years, you know, that's to be determined, but that's really not our focus at this point.

Okay, I understand. And then when you get the Palmetto Multi-X coverage, do you expect to Thank you very much.

just having dual sourcing, right? And we feel better about the fact that we are dual sourced with regards to capacity. It turns out that having it in two jurisdictions is helpful at this immediate point in time. But look, this is a large market opportunity we expect over the long term to have substantial growth, and we will need additional capacity. So, operating that in two laboratories has certain attractions to it that, you know, at this point I would argue I would say that it's likely that we would maintain both of them and there would be no need to sort of consolidate that. We will be able to use that capacity over time.

Okay. Other good news is the Category 3 CPT code. But my understanding is that those generally aren't associated with payments. They're more of a tracking code. So, you know, how important is it that there is ultimately a payment there for the physician that's doing the collection? And, you know, when would you see yourselves getting a Category 1 code, I guess, that would have a payment? Yeah.

Yeah, you nailed it for those who are not sort of nerds about how CPT codes work. So the entire purpose of seeking out the CPT code was not to provide a payment pathway for the cell collection procedure. We view the cell collection procedure really no different than a phlebotomy, frankly, as it relates to other tests. It's something that is not sort of central to the overall economic The reason we pursued this code, which you correctly described as being a tracking code, is for the purposes of it really facilitates our ability to engage in health systems. So when you go into a health system and you put a product on the shelf and have a procedure associated with it, There's sort of an expectation that there's a code associated with that procedure so they can track it and so forth. It's not in any way designed to try to garner additional reimbursement. That reimbursement, even if we sought a reimbursable code that was associated with payment, would be a drop in the bucket relative to the economics of the overall testing.

Okay. I understand. Thank you. Yeah. Great. Thanks, Mike.

Thank you. The next question comes from Jeremy Perlman with Maxine. Please go ahead.

Jeremy, good morning. Hi, Jeremy.

Hello, Jeremy.

All right, thank you. The next question comes from Ed Wu with the Sandia Capital. Please go ahead.

Good morning. Congratulations. My question is, with the expected ramp up in test volume, do you see margin and opportunities for better operating leverage? So at the $19.38, let's say $2,000 test volume, the next price, the next patient in the door contributes about 90%. And just to be more specific about that, the self-collection devices cost us under $60 to make and will go down in volume. So that will, it adds an incremental margin. Process and test through the laboratory is roughly $120. That will go down over time as volume picks up as well. So there is opportunity, but when you do the simple math, that's facing the door is a 90% margin. So it gives us lots of opportunity to grow the sales force and at the same time not increase our burn rate dramatically. And that's why we're being judicious about that. Productivity first in the sales force, then increase it. We clearly have the capability to increase, but we'll do so in tandem with decreasing our burn rate and the rush to get the cash flow break even.

Great. Thanks for answering my questions, and I wish you guys good luck. Thank you. Thanks, Ed.

Thank you. The next question comes from Jeremy Perlman with Maxim Group. Please go ahead.

Okay, so just firstly, maybe it can help us understand why there seems to be such a seemingly disparate path to coverage between the different MAC areas. And if this is not LCD currently, is there any risk that it could get pulled or someone down the line could decide, you know, maybe we have to reevaluate? Whereas if you get that LCD, it's pretty much, you know, set in stone more or less? Yeah.

Yeah, so, yeah, look, this is the fragmented world we live in, right? That of all the MACs, this portion of the MACs operate under the MoldeX program. Our participators in the MoldeX program and other MACs, including a large one in this case, Novitas, does not. And that's just sort of the current landscape, right? The MACs that are Molde, if you're operating, if you're within a MoldeX, if your laboratory is within a MoldeX-participating MAC, You are not allowed to submit claims during that until an LCD is final and effective. And so the disparate nature of that is just simply a function of the fact that the Multi-X program functions under a subset of the max. Second part of your question is, no, we don't really have any concerns about what you described, which is that there would be effectively a non-coverage LCD that would come in and change the dynamics within Novitas. And the reason for that is that, and this was clear from our engagement, Our clinical evidence package with clinical validity, clinical utility, analytical validity, existing guidelines, guidelines that are about to be substantially upgraded to a high certainty of evidence with the American Gastroenterology Association. and as was evidenced in the CAC meeting for the LCD, there really is no controversy with regard to the underlying clinical evidence in support of this test and in support of the fact that this test is reasonable and necessary within the Medicare population. We believe that that's a subtle fact and that the LCD process is just bogged down by administrative delays. We don't just believe that. We've been given every reason to believe that. And so the fact that the process within Novitas is simpler because it is outside of the MOL-DX program is obviously something that's worked in our favor. But we think the fundamentals underlying this are incredibly rock solid. So it's not a concern of ours.

Okay. I understand. I know you talked about some of the targeting efforts to focus on the Medicare population. Is there anything maybe that's a little outside the box? You hosted those events for high-risk populations, for the firefighters. Is there something maybe in the pipeline to do that for similar maybe retirement communities? I know you said focus in Florida, Arizona, but any other type of strategies you're going to be using to really, or maybe run, you also in the past had run Lucid Run testing centers, maybe set those up, anything outside of the normal just sales teams going out to the physicians that we could think about?

You're looking for a sales job, Jeremy? I'm just kidding. The answer is yes, obviously. You know, one of the things that we haven't, we've been, you know, our team has been working incredibly hard over the last four years coming up to this point. And so, there's a substantial amount of sophistication and institutional knowledge about how to navigate all the various scenarios and ways to identify and many more. to do that. All of those methods are on deck. Ultimately, direct-to-patient, so-called direct-to-consumer efforts will play an important part of this. So, this is a very creative team, and we're already well on our way with regard to many of the pathways that you discussed.

Okay, great. Thank you for taking my questions.

Yeah, great. Thanks, Jeremy.

Thank you. There are no further questions at this time. I will now turn the call back to Dr. Lishan Aklog, Chief Executive Officer, for closing remarks. Please go ahead.

Great. Thanks, operator, and thank you all for taking the time and for your attention this morning. As always, great questions from our analysts, despite some of the technical issues. I hope you all found this discussion to be really informative. So it's obvious that our core takeaway message today is that with Medicare now paying for e-cigar, Lucid has entered a really new and exciting chapter of commercial acceleration and growth. It's been a long time coming. It's been a marathon to date, and we're really excited about that. We're just a few weeks. into this chapter and things as we described are off to a great start with the record October. We expect a very strong, very solid fourth quarter and really strong momentum entering to what we expect to be a transformational 2027. Hopefully you've gotten the sense of how, you know, that our team is excited and energized now that really in some sense the shackles are off, that our commercial and operational execution is really no longer meaningfully constrained by external factors. We've navigated those. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.