Lucid Diagnostics Inc. annual report, FY2022

Lucid Diagnostics Inc. — FY2022 Form 10-K

Reporting period: Fiscal year ended December 31, 2022; filed March 13, 2023. The filing reports annual results, not a standalone fourth-quarter financial breakdown. Lucid is a commercial-stage diagnostics company developing and marketing EsoGuard, a laboratory-developed DNA test, and EsoCheck, an esophageal cell-collection device. PAVmed controlled approximately 73% of Lucid’s voting power at year-end.

Financial performance and liquidity

Metric	FY2022	FY2021
Revenue	$0.377 million	$0.500 million
Cost of revenue	$3.614 million	$0.585 million
Gross loss	$3.237 million	$0.085 million
Operating expenses	$56.548 million	$27.919 million
Operating loss	$56.171 million	$27.419 million
Net loss	$56.171 million	$28.078 million
Basic and diluted loss per share	$1.55	$1.51
Net cash used in operating activities	$29.685 million	$17.668 million

Gross margin was negative in both years; revenue was insufficient to cover cost of revenue. The wider 2022 gross loss reflected expanded laboratory operations and supplies, following the transition to Lucid’s own laboratory. Sales and marketing expense rose to $16.134 million from $5.260 million; general and administrative expense to $23.685 million from $12.778 million; and research and development expense to $11.466 million from $9.296 million. The 2022 results also included $1.649 million of acquired-intangible amortization and $14.991 million of stock-based compensation.

Cash flow and balance sheet: Cash at year-end was $22.474 million, down from $53.656 million. Investing activities used $4.108 million, principally for equipment and an asset acquisition; financing activities provided $2.611 million, including $1.807 million from the committed equity facility. Current assets were $24.356 million and current liabilities $8.425 million. Total liabilities were $9.462 million, including $4.960 million due to PAVmed and $1.999 million of operating lease liabilities. The balance sheet reported no preferred stock or debt outstanding at December 31, 2022. Management expects continued operating losses and reliance on financing.

The financial statements received an unqualified audit opinion. Management reported disclosure controls and internal control over financial reporting effective at year-end; the auditor did not attest to internal control effectiveness.

Material changes and business developments

• Revenue declined $0.123 million year over year, mainly because the RDx commercialization arrangement ended as Lucid moved testing to its own laboratory. The filing reports $0.188 million of revenue from patient test results and $0.189 million under the former RDx arrangement in 2022.
• Operating expenses increased substantially as Lucid expanded commercial, laboratory, and corporate operations. Net loss approximately doubled year over year.
• Common shares outstanding rose to 40.519 million at year-end from 34.918 million a year earlier. Lucid issued shares for financing and to settle certain PAVmed-related obligations.
• Lucid reported a $4.960 million year-end payable to PAVmed for management fees, employee-related costs, and operating expenses. PAVmed may elect share settlement for certain amounts under the applicable agreements.
• The company acquired laboratory assets and began performing EsoGuard testing at its own CLIA-certified laboratory in 2022. In February 2023, it ended the RDx laboratory management agreement; the remaining related payments were reduced to $0.725 million from $3.450 million and settled with 553,436 Lucid shares, which the company said saved $2.725 million versus continuation of the agreement.

Outlook, risks, and contingencies

• Funding: Management stated that cash on hand and committed equity sources were expected to fund operations and obligations for one year from the financial statement issuance date. This is not a guarantee of future funding or profitability. In March 2023, Lucid raised $13.625 million gross through Series A preferred stock. The preferred stock has a $1,000 stated value per share, a $1.394 conversion price, a one-times liquidation preference, and dividends payable in additional shares equal to 20% of the convertible share amount on the first and second anniversaries.
• Lucid also agreed, subject to closing conditions, to issue an $11.1 million senior secured convertible note with 7.875% stated annual interest, a $5.00 conversion price, and a two-year maturity. As of the filing date, it had not been issued. Proposed covenants include a minimum $5 million available-cash requirement and market-capitalization tests.
• Commercialization and reimbursement: EsoGuard had a Medicare payment determination of $1,938.01, effective January 1, 2021, but Lucid was still awaiting a Medicare local coverage decision. The company reported insurer agreements providing access to over 70 million patients in aggregate, but coverage, payment, collections, and reimbursement remain uncertain.
• Clinical evidence: A published 408-patient case-control study reported sensitivity and specificity above 90%, as described by the company. Lucid said clinical utility evidence—evidence that testing changes clinical decisions—is important to reimbursement and adoption. It prioritized other studies and delayed its previously commenced BE-1 and BE-2 trials; planned study results and timelines are forward-looking expectations.
• Regulatory exposure: EsoCheck had FDA 510(k) clearance as a cell-collection device; EsoGuard was marketed as a laboratory-developed test and had not received FDA approval as an IVD. The regulatory framework for LDTs was described as uncertain. The company says it cannot jointly market EsoGuard and EsoCheck as a combined product without FDA approval.
• Other significant risks include limited operating history and revenue, continuing losses and cash burn, dependence on a single laboratory and third-party manufacturers, competitive technologies, uncertain market adoption, clinical-trial execution, compliance and billing risks, intellectual-property dependence on CWRU, and PAVmed’s control and related-party arrangements.
• The company cited updated ACG and AGA guidance supporting non-endoscopic screening as an acceptable alternative to endoscopy in specified populations. Its estimated market size and clinical claims are company assessments, not demonstrated revenue or assurance of adoption.

Important facts for investors to verify

• Current cash, operating cash burn, remaining availability and terms of equity facilities, and whether the March 2023 secured convertible note closed and its covenants were finalized.
• Preferred-stock conversion and dividend provisions, potential dilution, and subsequent share counts, including shares issued to PAVmed and under financing arrangements.
• Medicare local coverage status, commercial-payor coverage and actual collections, and the difference between stated payment rates, access agreements, and realized revenue.
• EsoGuard clinical-utility results, study progress, and whether evidence supports physician adoption and payer reimbursement.
• Current FDA/LDT requirements, any FDA submission plans or approvals, and compliance status of Lucid’s laboratory and test-center network.
• Actual test volumes, turnaround times, gross margins, and laboratory capacity utilization; the filing does not provide a clear annual test-volume figure.
• Related-party balances and share-settlement practices, PAVmed’s continuing control, and any changes to the company’s funding outlook.