Welcome to the PAVmed's Business Update and Fourth Quarter 2022 Financial Results Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. I would now like to turn the call over to your host Michael Parks, Vice President, Investor Relations. Mr. Parks, you may begin.

Thank you, Jen, and good morning everyone. Thank you for participating in today's fourth quarter 2022 business update call. The press release announcing this business update and the q 2022 financials will be available on the PAVmed's website. Please take a moment to read the disclaimer about forward-looking statements in the press release. The business update press release and the conference call both 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 the statements made. Factors that could cause results to differ are described in the disclaimer and in our filings with the U.S. Securities and Exchange Commission. For a list and descriptions of these and other important risks and uncertainties that may affect the future operations, see Part 1 Item 1A entitled Risk Factors in PAVmed's most recent annual report on Form 10-Q filed with the SEC and subsequent updates filed in the quarterly reports on Form 10-Q and any subsequent Form 8-K filings. 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 in events, conditions or circumstances on which those 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 PAVmed. Dr. Aklog?

Thanks Mike and good morning everyone. It's great to have you all today and welcome to our quarterly update call. I'd like to first start by reminding you that we did do a Lucid conference call yesterday and that – the webcast of that is available online. I will cover Lucid today, but in a limited fashion so we have time to talk about the other aspects of the PAVmed business. So I would encourage everyone to review the webcast for the Lucid call yesterday. I'd like to start by with a bit of an overview on our strategic restructuring and then some recent highlights with Veris and Lucid. In the early part of January 2022, we initiated a strategic restructuring plan, an initiative that was designed to really maximize cash flow and protect our shareholders' interests over the long-term in what were and still remain challenging market conditions. We made substantial adjustments to our near-term strategic strategy – strategic priorities and the associated resource allocations. In summary, we shifted substantially all of our resources and efforts on accelerating commercialization of the Lucid and Veris products. We had a meaningful reduction in our workforce about 20%, and in our quarterly cash burn. That initiative is completed. The team did a great job of responding to it, and now we're leaner and are able to focus on the areas that are highlighted. It's had a durable positive impact. Our consolidated cash runway has been extended and our balance sheet is now stronger and that's been further enhanced by just under $25 million financing that we announced into Lucid that we announced yesterday. So some highlights, I'll start with Veris and again have limited comments about Lucid here. Veris Health is – now is our digital health subsidiary that is seeking to…

Good morning, everyone. Thank you Lishan. Summary financial results for the fourth quarter and year were reported in our press release that was published last night. On the next three slides, we will emphasize a few key highlights from the quarter and the year, but I encourage you to consider those remarks in the context of full disclosures covered in our Annual Report on Form 10-K that was filed with the SEC, Monday afternoon and is available on our PAVmed website. So with regard to our balance sheet, cash of $39.4 million reflects a $17.1 million sequential decrease in $37.5 million for the year. Our vendor payables, there was no significant change either sequentially or year-over-year when considering accounts payable and other recurring accrued expenses. The convertible note had a net decrease of approximately $2 million sequentially. The other long-term liabilities are from capitalized leases related to our lab and our office space, shares outstanding, including unvested restricted stock awards as of today is 98.4 million shares. The GAAP outstanding shares are reflected on the slide, as well as the face of the balance sheet at 10-K. As reported on our Lucid call yesterday, the Lucid Board authorized a $20 million preferred offering and $11 million senior secured convertible debt. We completed the initial closing of the Lucid preferred in the amount of $14 million and have until the end of May to complete the remaining $6 million. The financing was priced in accordance with NASDAQ at the market closing bid price rules. The accredited investors were led by a family office familiar to our IR firm and some long-term high net worth shareholders for participants in total, but share our long-term vision for the company. After exploring a variety of alternatives, this preferred structure created a mutual win for…

Thank you. [Operator Instructions] And our first question today will come from Ross Osborn with Cantor Fitzgerald.

Good morning, Ross.

Hi, good morning. Congrats on the progress with Veris. So starting off, are you able to disclose how many cancer patients were onboarded in February?

Not yet. We'll – it's a continuous process. It doesn't happen sort of any in chunks. So once we get a little bit more traction we will, but there are – I can just say that they have a pipeline, that they've offered us in terms of the number of patients that they expect to onboard in that – the single practice expects to onboard in the coming quarters than it is substantial.

Okay. Fair enough. And then I guess ahead of the implantable device, any ideas and maybe too early, but just on the relative compliance rate for those users that have been onboarded so far.

We don't have – we're just – we don't have data on that yet. It's just a little bit early, but we – the bar with regard to – it's a good opportunity to talk a little bit about patient compliance. The bar sort of in the industry is relatively low that other companies have had only modest success was getting patient compliance up to sort of 50% or so. And that means that 50% of the time, they do sufficient data is transmitted in order to be able to fill. Our aspirations are much, much higher than that. And we have already put in customer support folks they should – that will contact patients, make sure they're sending the data. So we're not going to be satisfied with 30% to 50%. The entire business model is predicated on getting high compliance. That's also one of the things that's unique about our approach to this that is compared to software only solutions, is that when we have the implantable device of in addition to clinical benefits of being able to get that kind of data will be that from an RPM point of view, it guarantees a 100% compliance, because the patient – it’s not dependent on patient – on the patient paying attention to this every day.

Okay. And then one more for me. When we're thinking about the various SaaS model in terms of revenue per patient, the telemedicine billing rate, I believe is at $46 to $110 per 30 minutes per month. So at this point, how many minutes, I guess, per month would you expect the average patient to use the platform?

Okay, I'm glad you brought that up. Because I'm going to actually pull up that slide, because it's important to make a distinction between remote patient monitoring and telehealth, okay. So remote patient monitoring is a separate process, I pulled up the slide here. There are separate codes for billing for that. That do not require actual telehealth interactions between the physician and the patient. And so they bill simply by the recording and transmission of the data and the physician documenting in the record that they reviewed the data. And our system actually just as an opportunity to mention it, does facilitate the process of billing and gives them the appropriate codes to do so. However, and so our ability to – as you can see there, the total dollar amount that they can expect is up to $200 per patient per month. And our – we expect to bill them about roughly $80 to $100 per month. So that's essentially we're splitting that $200 between us and the practice. Now, I'm glad you mentioned this, because I forgot to mention one other revenue opportunity for the practice, because our system facilitates telehealth, they can also bill for telehealth visits in addition to the remote patient monitoring. So if there is a – if the patient has some illness or they have something that needs to be worked out to decide whether they need to come to the hospital or something like that, and they engage in a telehealth visit, they can bill in addition to that. But hopefully, it's clear now that there's a distinction between telehealth billing and remote patient monitoring. By the way, just one other thing since you got me in the weeds of this Ross, which is that the remote patient monitoring codes are well established prior to COVID. They're not subject to extraordinary statutory statutes that were enacted during COVID. The telehealth, although, it has been updated and renewed is a little bit less firm ground, because much of that was escalated as a result of COVID. I mean, the expectations are that it'll remain, but that still will require governmental action.

Okay. That's very helpful. Thank you.

Yeah. Thanks, Ross.

Our next question today comes from Frank Takkinen with Lake Street Capital.

Hi, good morning.

Hi, Frank.

Good morning. Thanks for taking the questions. Congrats on all the progress. Wanted to start with one on Veris and specifically the commercialization efforts. Maybe kind of lay the playing field for how you guys expect to commercialize that platform throughout 2023. And then how does that change once the implantables approaching FDA 510(k) clearance order actually receives the clearance?

That’s a great question. So let’s start with the software platform and the various box connected devices. So our model is fairly straightforward. We got – we have a commercial team that calls on, that builds a pipeline and calls on oncology practices. Our Chief Commercial Officer has a long history of calling on such practices. We’re focusing initially as I mentioned on practices that have already demonstrated that they sort of get it, and they participated in value-based model such as the current EOM model and prior OCM model. And so that’s where we’re starting. And however, we have engagements with larger entities, large medical centers, and we look forward to starting the process with large cancer centers although as always the case, those are much longer, much, much longer lead time. So we – it starts with an engagement typically at the clinician level and getting clinician buy-in that the response has been positive. And one of the things that we’ve learned in our early experience, which is a bit of a surprise relative to where we, what our expectations were when we first acquired the prior company Oncodisc, is that the conversations quickly moved to RPM. We thought that, that the conversations would focus initially on the clinical benefit and being able to pick up our early complications and so forth. And what we’re finding is that likely as a result of the pandemic and other technologies, that the practices are very focused. I mean, it’s sort of typically they’ll come in and say, they’ll just say, Hey, is this an RPM thing, thing [indiscernible] my practice manager told me we need to look into this, right? And so that’s been great. So both the clinical benefit and the practice economics benefit are front and center in…

Okay. That’s helpful. And then maybe just a follow up. I think you actually answered it in the previous question, but I want to confirm I heard it correct. The rev share portion that Veris receives was 80 to 100 per patient per month?

Correct.

And two, does the – okay. And then does the model change once you have the implantable? Is there any upfront sale of the implantable or…

Yes, great question. We haven’t finalized how we’re going to do that. There is an opportunity, generally the implantable port of business is fairly commoditized with regard to pricing. But there are going to be opportunities to because of the – because of its impact on the broader business model to craft customized strategies around that. We’re not likely to provide it for free, and we think, we’ll be able to make additional revenue on that, but we, because it is part of a value-added system that we’ll be able to really, we like to say actually that – we have the opportunity here to shake up not just the cancer care part of this, but actually the vast report aspect of this as well, which has been decades of essentially the same technology without any smart features. And being able to provide that with appropriate economics, because of the value-added aspects of it’s going to be exciting, but we haven’t finalized that yet, Frank, that’s great question.

Okay. Got it. And then this last one, and I think this was like, was covered on the call yesterday, but I think it might be worth mentioning again. Test volume growth and Lucid continues to be really solid. Sounds like you’re doing some retroactive billing now. Maybe just talk to any RevRec you’ve experienced in 2023 at those higher reimbursement levels so far, and expectations going forward for RevRec now you’re starting to get those [indiscernible] in place?

Yes, so Frank, the collections are much more regular now, daily. They tend to be chunky at times. Some days with bigger volumes, it’s still fairly unpredictable. We think that this year’s growth rate will certainly have a higher percentage of collections than we’ve experienced both in the fourth quarter and even so far this quarter. Our internal models, given what we expect the improving landscape for reimbursement, we’re on target in the first quarter. And we’ll report on that as we move forward. But we are seeing more regularity of deposits on this. And the payment rates are holding both on a contracting basis that are north of the Medicare rate, and those payments we’re getting from places like United are at the 60% of the list price as the perfunctory out of network kind of amounts. That will improve as clinical utility data comes on board. And we start to engage the Chief Medical Officers with that discussion. Early on with retrospective data and then followed up with prospective data to get in network contracts for the big companies.

I think I’ll use your question, Frank, just to highlight some, what other thing that we discussed yesterday, but just to highlight it for the current group here, which is that it’ll be. We’re going very carefully monitor how the sort of new horizons as I’d like to sort of describe them. The non-traditional horizons of used of these high volume testing day events, as well as direct contracting will play out with regard to the proportion of tests that we do that get reimbursed today, as opposed to sometime in the future. And the reason why we have some optimism in that, although we don’t have the data yet, we’ll track that closely, is that unlike with a traditional payer where the first interaction we have with them is really them seeing 5,000 to 7,500 claims show up on their radar and them saying what is this test, I’ve never heard of it. And then having the conversation to bring them in the loop and get them to understand the clinical value and the clinical utility. So that’s a different type of conversation than these testing events where generally like for example, with regard to the firefighters and future firefighter events that we’re now looking to set up. We are engaged with the leadership of the fire department and the unions. And these are typically self-insured entities operating under an ASO structure where these are being set up as a partnership, so they know who we are. It’s not a surprise when these tests come through the billing process. So we have to see, and we’re going to monitor it, but we have some optimism that those events as well as the direct contracting will enhance our – the overall collection rates in the near term.

We’ve submitted claims to almost 200 insurers, and each one’s a little bit different. So trying to aggregate general statement in terms of where we’re at in total becomes a little bit of a challenge still yet but that data is improving and that data will become more relevant as we continue to move through this process.

Got it. Okay. All very helpful color. Thanks for taking the questions.

Great. Thanks, Frank.

And our next question comes from Anthony Vendetti with Maxim Group.

Anthony, good morning.

Hi, Anthony.

Good morning, Lishan. Good morning, Dennis. Thanks. Just a couple questions on the various cancer care platform. So I know the – it might be a little bit lumpy, but is the expectation that the enrollment of patients will ramp every month or could it vary throughout the quarter? And then is there an expected range of patient enrollment by the end 2023, or is it too early to try to gauge that?

So, Anthony, first off and combine that with the question that Ross asked earlier. Since we have onboarded our first customer, we don’t have permission from New Jersey Cancer Care to reveal their client and patient as we onboard additional customers that will be blind in terms of the size of their practice, their expectation, the amount of patients we have on there. I will tell you, they're very enthusiastic about the initial tranche of patients that have been onboarded. They have a fairly robust practice call it 100s of patients that are opportunities. These all represent revenue to the practice. So they're aspirational as well. As we onboard the additional clients that are in the pipeline that will become clearer in terms of what the likely predictive amount of the patient population versus those that get on our platform. As Lishan indicated, we model this at $80 per month per patient. It could be higher than that for a variety of reasons, but conservatively that's what it represents. So if you have a practice with a 1,000 patients that are targeted at $80 a month, you're talking about an $80,000 a month opportunity. And some of these practices are even larger than that that are in our pipeline. So it's still early to kind of provide any guidelines or guideposts in terms of what that expectation is. We know the platform works. We know that customers are extremely pleased with it. The data that's being reported is affecting patient care and we know that the reimbursement's already in place and unlikely to change, so we don't have that battle to fight. So there's lots of reasons to be optimistic about what the prospects here are, but to draw a picture of exactly what that might be like throughout 2023 is a little bit challenging this early in the end game.

I'll add just one generic kind of qualitative comment to that, which is, it is interesting like, unlike other commercialization of other products where you may have up months, you may have down months and so forth. The mechanics here do argue for the likelihood of having sort of escalating numbers within a given practice because the way they generally approach it and again, I'm making this as a generic comment not for the specific practice that we launched is that you start with your highest risk patients and you get comfortable with 50 patients or 100 patients or so forth that you think would be most likely to benefit, and then expand it out to a greater and greater portion of the cancer patients within your practice. And so because it's recurring revenue, because of that dynamic of starting with a core group and expanding it out, we have reason to believe that this will reflect the business model as we've described it. That once you have a practice onboard that you – that we would see escalating numbers of patients at some trajectory being onboarded on the system, them staying on the system for their duration of care, which is typically a minimum of six months, usually a year, sometimes as long as two years. And so that's kind of the dynamic we expect, which could very well – which we think will be different than sort of just a traditional medical device commercialization prospect where it's just one – one-offs, volumes up, volumes down, overall trends and so forth. So hopefully that that has a bit of color there [indiscernible].

No. That was great, Lishan. Yes, that's the trajectory I thought, but I just wanted to make sure that made sense.

Yes. That's the dynamic.

Yes. Perfect. And you have some large practices in the pipeline in addition to the one you're working with?

Correct, yes. We have a good solid pipeline. We don't have yet a sense as to what the term kind of the life cycle of customer acquisition is. We don't expect it to be too long, but we'll start getting some color on that. But we do have a very – we're happy with the pipeline and the diversity of practices and practice sizes with it.

Okay, great. And then just one question on the Lucid Test Centers that that seems to be growing. Well, I was just in terms of the plan to expand test centers, do you, is that – has that been outlined internally or you're holding off on that?

Yes. I think, I say again I'm going to take advantage of your question to clarify something that I think comes up quite frequently. So a couple of things: one, is that, these other initiatives whether it's incorporating the Satellite Test Center model where our nurses go to the physician practices and do EsoGuard days at their practices opposed to one of our physical location. These high volume testing events potentially even future horizons that we're looking at as other ways to get access to patients. Those are all in parallel. It's all of the above. We're not attacking from one to the other. We're not – we're looking to just drive business across multiple, through multiple channels. On the – so I do encourage folks to think not in terms of sort of physical Lucid test centers translating into specific volume target. It’s really the overall volume is coming, now coming increasingly from a diverse pathways to get patients in the door. What we did describe back in our update in conjunction with the strategic update earlier in January, is that we are going to pause the number of physical test centers for now at 13 and drive test volume growth at sort of a mid broader level while we’re garnering improved coverage and reimbursement through enhanced activity with our current sales force through increasing tenure of our sales force and being able and driving their productivity up. So this, we expect to see continued growth despite the fact that we’re keeping the, the physical test center flat. And then something I highlighted yesterday, didn’t get in today, is that the satellite LTC activity is accelerating. So an increasing number now about a third of our overall volume and about half the volume of our – what our nurse practitioners are performing are in the context of a satellite center where they go to a physician’s office. So, we’re focused. So that’s one of the reasons why we’re being cautious about adding physical centers because it’s become a bit more fluid in a dynamic situation, and we think there are opportunities for growth that come from the expanded geographic, out geographic reach of our nurse practitioners. So, I would encourage you to think more in terms of the bodies, how many nurse practitioners, how many sales reps and how is that personnel driving test volume growth as opposed to the physical standards. Does that make sense?

Great. That was helpful. Yes, absolutely. Thank you so much. I’ll hop back in the queue. Appreciate it.

Great. Thanks.

Thanks, Anthony.

And our next question comes from Ed Woo with Ascendiant Capital.

Ed. Good morning.

Good morning, Ed.

Yeah, congratulations on the progress. I know you guys are focusing your resources on the more immediate projects, but have you guys thought about international opportunities for either Lucid or Veris?

Yes. We’ve had, we have had limited. We did at one point have a fairly extensive inquiries and engage with consultants about European commercialization for EsoGuard. What we discovered is that, that Europe has a pretty robust reimbursement for precision oncology tests. But that the screening side is difficult, that payments for screening tests, I mean, others have, have encountered this Cologuard and others as well, just historically in Europe, don’t there’s just not parody with the U.S. that makes it, that makes sense for us to given, our resource constraints now to seek to launch in Europe. We do have CE Mark, we do have the ability to do so. There are potentially some opportunities in the UK that might be different, but we’re those are relatively just inquiries at this point without a clear plan. There are other parts of the world that we’ve had inquiries from where we’ve had local diagnostic groups that have asked about doing that. And those are conversations that continue and they may bear fruit and the coming quarters and years. No such conversations with regard to Veris, on the, I think for the international aspect of the Veris business really will have to wait for the implantable device. That some of the service aspects of this and some of the business model, frankly around remote patient monitoring is very different in other parts of the country. So Ed may make the business model more difficult, but once we have the value added smart port functionality, then there’ll be a potential opportunity. And there the playing field in Europe should be relatively level, and we should have some prospects there.

Great. Well, thank you. And I wish you guys good luck.

Okay. Thanks a lot, Ed.

And that’s all the time we have for questions. I’d like to turn the call back to Mr. Parks for closing remarks.

I’ll take that operator. So it’s Dr. Aklog. So thank you again everyone, for taking the time and the attention. Thank you for the questions. Really great discussion. We look forward to continuing to update you on our progress, as we always do. For more information please feel free to go to our website the PAVmed website pavmed.com, the lucid website, luciddx.com, and the Veris Health website, which is in under construction. But we look forward to having that up and running soon. As always feel free to contact Mike Parks with any questions. He’s very responsive. His email address is mep@pavmed.com. So thanks again, and everybody have a great day.

This concludes today’s conference call. Thank you for attending.