On March 14, 2023 PAVmed Inc. (NASDAQ: PAVM, PAVMZ) ("PAVmed" or the "Company"), a diversified commercial-stage medical technology company, operating in the medical device, diagnostics, and digital health sectors, reported a business update for the Company and its subsidiaries, Lucid Diagnostics Inc. (NASDAQ: LUCD) ("Lucid") and Veris Health Inc. ("Veris"), and presented financial results for the year ended December 31, 2022 (Press release, PAVmed, MAR 14, 2023, View Source [SID1234628709]).
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Conference Call and Webcast
The webcast will be available at the investor relations section of the Company’s website at pavmed.com. Alternatively, to access the conference call by telephone, U.S.-based callers should dial 877-550-1858 and international listeners should dial 1-848-488-9160. All listeners should provide the operator with the conference call name "PAVmed, Inc. Business Update Conference Call" to join.
Those seeking further details on Lucid are encouraged to visit the company’s website at luciddx.com to view the webcast of its business update call held yesterday, and its corresponding press release.
Business Update Highlights
"Over the past two months, the PAVmed team has executed on its strategic restructuring plan to protect long-term shareholder interests during challenging market conditions by tightly focusing its efforts and resource allocation on near-term commercial activities and milestones," said Lishan Aklog, M.D., PAVmed’s Chairman and Chief Executive Officer. "The plan is working and appears to have been right-sized—extending cash runway while assuring the commercial efforts are adequately resourced. Lucid continues to deliver steady EsoGuard test volume growth through organic sales and now high-volume testing events and is gaining traction with commercial payors. Veris’ momentum is accelerating with an exciting commercial product, strong customer interest and a powerful business model which is not dependent on securing third-party reimbursement. I am proud how the team has battled through these challenges and emerged stronger with a bright commercial future for what remains a diversified portfolio."
Highlights from the fourth quarter and recent weeks include:
In January 2022, PAVmed launched a strategic restructuring initiative designed to maximize cash runway and protect long-term shareholder interests through adjustments in near-term strategic priorities and associated resource allocation. The Company stated that it would focus substantially all its resources and near-term efforts on accelerating the commercialization of Lucid’s and Veris’ products, resulting in a meaningful reduction in its workforce and quarterly cash burn. The strategic initiative has been completed resulting in a durable, positive impact on the consolidated cash runway and balance sheet, which were further strengthened by Lucid’s announcement yesterday that it had secured $24.6 million in financing extending its cash runway well into 2024.
In December 2022, Veris, PAVmed’s digital health subsidiary, focused on enhancing personalized cancer care through remote patient monitoring (RPM), commercially launching its Veris Cancer Care Platform ("Veris CCP"), and executing its first commercial contract with New Jersey Cancer Care, PA ("NJCC"), a leading oncology practice and member of the prestigious Quality Cancer Care Alliance.
In February 2023, the Veris Cancer Care Platform (Veris CCP) went live following successful onboarding of the first cohort of cancer patients and their clinicians. Enrolled patients received a VerisBox and began connecting their Bluetooth-enabled health care devices to transmit real-time physiologic data to the cloud-based Veris CCP clinician portal. The patients also began reporting symptoms and quality-of-life parameters through the Veris CCP patient smartphone app, which became available for patients on the Apple App Store and Google Play. The cloud-based clinician portal was integrated into the oncology practice and the cancer care team began using it to review physiologic and clinical data and other RPM services for which they can bill. The software-as-a-service recurring-revenue business model is now poised to deliver near-term value at attractive margins to both Veris and its clients.
Veris is now focused on optimizing the patient and clinician experience, achieving high patient compliance, and streamlining the integration processes as its commercial team drives adoption and delivers new accounts. Feedback and interest in Veris CCP from oncology practices and cancer care centers is strong, focusing on Veris CCP as tool to enhance personalized care and as well as practice economics through RPM.
Veris has made steady progress on development and regulatory milestones for its implantable physiologic monitor and is targeting a commercial launch next year. The device, which is designed to be implanted in conjunction with a chemotherapy vascular access port, will further the power of the Veris CCP platform by assuring near perfect patient compliance with RPM data reporting requirements.
Yesterday, Lucid provided a detailed update of its commercial and financial performance. Quarterly EsoGuard testing volume continues along a steady growth path, both sequentially and annually. Satellite Lucid Test Center (sLTC) activity, whereby Lucid clinicians collect samples at physician offices, continues to increase rapidly, with Lucid clinicians now performing the majority of cell collection procedures either in an LTC or sLTC.
Lucid’s commercial payor engagement is accelerating, particularly with its signing of an in-network agreement with MultiPlan, the largest secondary Preferred Provider Organization (PPO), expanding EsoGuard’s access to include Multiplan’s estimated 60 million consumers. EsoGuard pricing is holding, with in-network contracts, averaging more than $2000 per test and all in-network PPO contracts priced at or above the Medicare payment rate of $1938. Key drivers of future in-network commercial payor contracting—generating claims history with individual payors and collecting retrospective and prospective clinical utility data—are also progressing well.
Lucid continues to expand its commercial horizons bringing EsoGuard testing directly to at-risk patients at high-volume testing day events and launching a direct contracting strategic initiative to engage directly with large Administrative Services Only (ASO) self-insured employers, unions, and other entities.
Financial Results
For the fourth quarter of 2022, EsoGuard related revenues were $0.1 million while for the year ended December 31, 2022, revenues were $0.4 million. Fourth-quarter and full-year 2022 operating expenses were approximately $24.6 million and $91.3 million, respectively, which include stock-based compensation expenses of $4.9 million and $19.5 million, respectively. GAAP net loss attributable to shareholders for the fourth quarter and full-year 2022 were approximately $20.5 million and $89.2 million, or $(0.23) and $(1.00) per common share.
As shown below and for the purpose of illustrating the effect of stock-based compensation and other non-cash income and expenses on the Company’s financial results, the Company’s preliminary non-GAAP adjusted loss for the fourth quarter and year ended December 31, 2022, were approximately $13.8 million and $54.0 million or $(0.15) and $(0.61) per common share.
PAVmed had cash and cash equivalents of $39.7 million as of December 31, 2022, compared with $77.3 million as of December 31, 2021.
PAVmed Non-GAAP Measures
To supplement our unaudited financial results presented in accordance with U.S. generally accepted accounting principles (GAAP), management provides certain non-GAAP financial measures of the Company’s financial results. These non-GAAP financial measures include net loss before interest, taxes, depreciation, and amortization (EBITDA) and non-GAAP adjusted loss, which further adjusts EBITDA for stock-based compensation expense, loss on the issuance or modification of convertible securities, the periodic change in fair value of convertible securities, and loss on debt extinguishment. The foregoing non-GAAP financial measures of EBITDA and non-GAAP adjusted loss are not recognized terms under U.S. GAAP.
Non-GAAP financial measures are presented with the intent of providing greater transparency to the information used by us in our financial performance analysis and operational decision-making. We believe these non-GAAP financial measures provide meaningful information to assist investors, shareholders, and other readers of our unaudited financial statements in making comparisons to our historical financial results and analyzing the underlying performance of our results of operations. These non-GAAP financial measures are not intended to be, and should not be, a substitute for, considered superior to, considered separately from, or as an alternative to, the most directly comparable GAAP financial measures.
Non-GAAP financial measures are provided to enhance readers’ overall understanding of our current financial results and to provide further information for comparative purposes. Management believes the non-GAAP financial measures provide useful information to management and investors by isolating certain expenses, gains, and losses that may not be indicative of our core operating results and business outlook. Specifically, the non-GAAP financial measures include non-GAAP adjusted loss, and its presentation is intended to help the reader understand the effect of the loss on the issuance or modification of convertible securities, the periodic change in fair value of convertible securities, the loss on debt extinguishment and the corresponding accounting for non-cash charges on financial performance. In addition, management believes non-GAAP financial measures enhance the comparability of results against prior periods.
A reconciliation to the most directly comparable GAAP measure of all non-GAAP financial measures included in this press release for the three months and year ended December 31, 2022, and 2021 is as follows:
For the three months
ended December 31,
For the year ended
December 31,
2022
2021
2022
2021
Revenue
$ 112
$ 300
$ 377
$ 500
Operating expenses
24,616
19,979
91,304
54,893
Other (Income) Expense
68
–
12,311
1,733
Net Loss
24,572
19,679
103,238
56,126
Net income (loss) per common share, basic and diluted
$ (0.23)
$ (0.21)
$ (1.00)
$ (0.42)
Net loss attributable to common stockholders
(20,532)
(17,285)
(89,264)
(50,630)
Preferred Stock dividends and deemed dividends
71
67
281
283
Net income (loss) as reported
(20,461)
(17,218)
(88,983)
(50,347)
Adjustments
Depreciation and amortization expense1
1,426
198
2,457
226
Interest expense, net
223
–
1,272
53
EBITDA
(18,812)
(17,020)
(85,254)
(50,068
Other non-cash or financing related expenses
Stock-based compensation expense2
4,949
4,380
19,532
15,009
Debt extinguishment2
311
–
5,434
3,715
Acquisition related
226
–
653
133
Change in FV convertible debt
(466)
–
1,273
(1,682)
Offering costs convertible debt
–
–
4,332
–
Other non-cash charges
–
–
–
(300)
Non-GAAP adjusted (loss)
(13,792)
(12,640)
(54,030)
(33,193)
Basic and Diluted shares outstanding
89,759
83,307
89,076
77,516
Non-GAAP adjusted (loss) income per share
($0.15)
($0.15)
($0.61)
($0.43)
1 Included in general and administrative expenses in the financial statements.
2 Included in other income and expenses.
Non-GAAP Operating Expenses
For the three months
ended December 31,
For the year ended
December 31,
2022
2021
2022
2021
Cost of revenue
1,618
441
3,614
585
Stock-based compensation expense
(7)
–
(16)
–
Net cost of revenue
1,611
441
3,598
585
Amortization of acquired intangible assets
506
123
1,784
146
Sales and marketing expense
5,759
3,340
19,318
8,895
Stock-based compensation expense
(605)
(363)
(2,464)
(1,177)
Net sales and marketing expense
5,154
2,977
16,854
7,718
General and administrative expense total
10,059
9,106
41,041
25,420
Depreciation and amortization expense
(920)
(75)
(673)
(80)
Stock-based compensation expense
(3,985)
(3,711)
(16,001)
(12,799)
Net general and administrative expense
5,154
5,320
24,367
12,541
Research and development expense total
6,674
6,969
25,547
19,847
Stock-based compensation expense
(352)
(306)
(1,051)
(1,033)
Net research and development expense
6,322
6,663
24,496
18,814
Total operating expenses
24,616
19,979
91,304
54,893
Depreciation and amortization
(1,426)
(198)
(2,457)
(226)
Stock-based compensation expense
(4,949)
(4,380)
(19,532)
(15,009)
Net Non-GAAP operating expenses
18,241
15,401
69,315
39,658