Lucid Diagnostics Inc (LUCD) 2022 Q3 法說會逐字稿

Greetings, and welcome to Lucid Diagnostics Third Quarterly Update Conference Call and Webcast. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Adrian Miller, Vice President of Investor Relations. Thank you. You may begin.

Thank you, operator. Good afternoon, everyone. This is Adrian Miller, Vice President of Investor Relations at Lucid Diagnostics. 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 Diagnostics. The press release announcing our business update and financial results will be available shortly 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 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 statements made. Factors that could cause actual results to differ are described in the disclaimer and in our filings with the Securities and Exchange Commission.

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 and Lucid's most recent Annual Report on Form 10-K filed with the SEC and any subsequent updates filed in quarterly reports on Forms 10-Q and subsequent Forms 8-K. Except as required by law, Lucid disclaims any intention or obligation to publicly update or revise any forward-looking statements and to reflect changes in expectations or in the event of conditions or circumstances on which these expectations may be based or that may affect the likelihood of actual results will differ from those contained in the forward-looking statements.

With that said, I would like to turn the call over to Lishan Aklog. Dr. Aklog?

Thank you, Adrian. So thank you, everyone, and welcome to our quarterly call. I'd like to first start by thanking our long-term shareholders for their ongoing support and commitment. As we discussed at our last quarterly call, we had some recent transformational milestones that we've put behind us. And the team is now for this past quarter and moving forward and just intensely focused on executing on our long-term strategy. We're very satisfied with the solid results that they've delivered over this past quarter and are really particularly proud that they did so.

We are well under budget for the quarter and the year as we continue to keep a close eye on cash preservation. I will note that for the first time, we've changed the format here, moving from really an audio conference call to a webcast. We did so in response to feedback, including one of our long-term partner investors suggested that this would be more useful, and we look forward to ongoing feedback to make sure that we are providing the type of transparent communications that we have always aspired to.

So let me start with some quarterly highlights. Each of our testing volume has increased 28% sequentially quarter-to-quarter and 436% annually to 1,088 tests performed in the third quarter, and we're happy that we've gratified that we've cleared that 1,000 tests per quarter milestone. We now have 13 Lucid test centers that are operating in 11 states and three more are due to open during this coming quarter -- during this quarter. The Satellite LTC activity, a concept that we introduced on our last call, and I'll describe more in detail later, has been increasing rapidly and now includes about 22% of the patients undergoing EsoGuard testing.

Our laboratory LucidDx Labs is operating independently with enhanced quality and efficiency metrics in our review. We're starting to receive payments and recognizing revenue on EsoGuard claims that were submitted under LucidDx labs starting in August. We have clinical utility studies to support private and public payer reimbursement that are underway. We completed the transfer of EsoCheck to a high-volume manufacturer. And as I mentioned, we're executing on our growth strategy while continuing to focus on preserving cash and are running well ahead of our budget for both the full year and for this past quarter.

A brief introduction for those of you who are just learning about our company, Lucid Diagnostics is a commercial stage cancer prevention medical diagnostics company. We're focused on early pre-cancer detection in the tenths of millions of patients with gastroesophageal reflux disease or chronic heartburn or at risk of developing highly esophageal cancer. And our mission is to prevent these deaths from these cancers in at-risk patients with chronic heartburn. Esophageal cancer is highly lethal and is becoming more prevalent. About 16,000 patients die every year as you can see on the far right there. We've had a 500% increase in incidence over the last few decades, and it remains the second most lethal cancer with an 80% overall [target] mortality.

The key statistics on this side, however, is that the Stage 1 mortality rate of five years is 40%, unlike most other -- nearly all other common cancers like colon cancer and breast cancer where Stage 1 diagnosis is actually a victory. So because of this, early pre-cancer detection is really necessary to prevent these deaths. And unfortunately, less than 5% of those who have been recommended for screening for over a decade have historically undergone endoscopy. Lucid's products include two products, EsoGuard, or Esophageal DNA test and our EsoCheck cell collection device, and they are the first and only commercially available test capable of serving as a widespread screening tool to prevent these deaths through the early detection of esophageal pre-cancer.

So in a sense that they're the missing link to establishing a viable cancer prevention program for this particular type of capacity. We're really excited, and we've previously announced it at the society guidelines from the major Gastroenterology Society now recommend EsoCheck in conjunction with EsoGuard as an acceptable alternative to endoscopy. And as a further update also no longer consider having symptomatic heart burn as a mandatory prerequisite, which has significantly expanded the population of patients who are candidates for EsoGuard testing.

The commercial opportunity here is very, very large. As I mentioned, the target population because of the updated guidelines of now 30 million patients, which represent patients who are at risk who have chronic heartburn and are recommended for screening. I should note that this increase does not include the elimination of the need for GERD symptoms in the American Gastroenterology Association guidelines that does reflect an expansion to include an unequivocal recommendation in women. Medicare payment has been established at $1,938 resulting in a very large multibillion dollar market opportunity and an over 90% estimated gross margin at volume.

Our sales strategy includes targeting primary care physicians in specialties and institutions. The specialists include gastroenterologists, foregut surgeons and ear, nose and (inaudible) doctors as well as institutions, large practices, hospitals and so forth. These two channels are somewhat different. When we talk to small DTC practices, our goal is to get them to order an EsoGuard test. However, with the specialties and institutions, we're looking to have them build an EsoGuard program and by making the case that by bringing more patients -- detecting more patients with esophageal pre-cancer that will create downstream revenue opportunities for more endoscopy, deflation, pH monitoring and other testing.

They also have somewhat different -- the PCP referred patients are sent to one of our Lucid Test centers, where one of our Lucid nurse practitioners perform these EsoCheck collection procedure. With the practices and institutions, there are two options. We have some practices and institutions where their own nurse or nurse practitioner or physician systems performs a test after we've trained them. But as I mentioned at the beginning, we're also increasingly utilizing our own nurse practitioners who are able to perform the cell collection procedure at this particular practice, typically allocating a day or so where patients are teed up for that date.

We've had situations where up to a dozen patients have been set up for -- a nurse practitioner to perform the step. We're looking forward to continuing to expand this. We have established a robust compliance program around this and there are a couple of states where we have some limitations in California and Florida being two, but we're figuring out ways to work around both the complaints and the regulation challenges in those states for Satellite test centers. Lucid Test Centers are (inaudible) established -- are not just physical locations where nurse practitioners can perform testing, but they also tend to be sort of centers around which a lot of educational programs targeting patients as well as the physicians are centered.

The economics of our test centers are very attractive, as I've mentioned many times before. We won't go through all of the numbers today but the bottom line is that we can cover the fixed cost of the personnel as well as the location by performing two reimbursed procedures per week. So as I noted in the beginning, we continue to show steady growth in execution of our testing volume, 1,088 tests performed through the third quarter, which represents a 28% increase from the second quarter and a 435% increase from the third quarter of 2021.

I've described this as a mid-throttle strategy where we are deploying sufficient resources to get good, steady growth but not going full throttle and so we have more predictable reimbursement, which we hope to see in the coming quarters. This growth has been driven by a variety of factors. We have increased our personnel as I'll show on the next slide. We've also dramatically improved our sales training and really data-driven sales processes, and we're now steadily as we've grown our team developing increased experience, although I will note that the median rep has only been in the field for a month or two, and we look forward to continuing to extract improved performance from our existing team through increased experience in the field.

We are starting to track the testing volume by referring sources by operator. We're still optimizing the tracking and reporting of both of these. So these are generally rough numbers, but you can see that approximately half of the patients, just under half the patients right now are being referred by small individual or small PCP practices and the remainder are coming from specialists or institutions. And as I noted earlier, the performance of the test is being done at -- in a variety of settings, including our own nurse practitioners and LTC or the Satellite LTC as well as the physician practices. But the important thing to note and the important trend from the last quarter on this slide is that 22% of the tests performed in the fourth quarter were in that Satellite LTC model where our nurse practitioners are co-locating with at a physician practice to perform tests on patients that were referred that practice.

And we expect this to continue to -- it's clearly making an impact now and expect it to be a growth driver moving forward. This slide shows the expansion of our sales team. I've shown this at previous slides, you can see we're making good steady progression month-to-month at expanding our team. We have 37 sales professionals across the full spectrum of sales reps, all the way to senior to sales leadership. Our target where we intend to plateau for the near term is at 58. We look to complete that by the end of this year, but likely we'll reset target by the early part of the first quarter of 2023.

Our plan as we described before, is to, at that point, to pause both the expansion of our sales team as well as the expansion of our test centers and continue through 2023, while we're establishing more predictable reimbursement by allowing the team to continue to grow volume through the measures and the effects that I described earlier. I previously mentioned, we now have Lucid Test Centers located in -- we have 13 centers located in 11 states. You can see them here. A couple of notes. We had -- we did have a center in Seattle, which we recalled as the regulatory hurdles with regards to managing nurse practitioners there became a bit cumbersome and we'll go back there at a different point, but we thought we would be better allocation of our resources elsewhere.

Since our last announcement, we've added a center in Chicago. That's our most recent opening, [you can see there in] Illinois. And we continue to, as we described, previously are shooting for an additional three centers by the end of this year. We're on a good path to do so. Let me talk a little bit about our laboratory operations. We're really quite proud of the progress that we've made. As you may recall, Lucid Diagnostics Lab or LucidDx Labs was (inaudible) in February -- February of this year. And we've been gradually working our way. And now I can probably say that we've transitioned to being fully independent with our own [products] now performing all aspects of the test and work in the laboratory.

You can see here that we've extracted substantial efficiency. I won't go through all the details here, but I just thought I'd highlight a few that our ability to extract the DNA from the sample as it arise has improved in multiple parameters there, you can see by substantial amounts, and we're actually garnering more DNA per sample, which is -- which has an impact on the performance of the test and even a very somewhat obscure aspect of the test by cell-side conversion phase, which is a critical step that has been incredibly time-consuming and costly.

You can see that the team in just a couple of months has dramatically decreased the time of resources that go into that and that bodes well for our decreasing the overall cost. And there are opportunities to continue to extract efficiencies and cost savings through a variety of needs, including automation. The team is also from a really important patient and physician facing point of view has been able to get the turnaround times down. And you can see when we took over the lab [time has] increased as there were some growing pains in the early couple of months. But now we've decreased the turnaround time to six days, which is a record for us.

I'll talk a little bit about our reimbursement strategy and where we are with that. If you look at the upper left, you can see that our payer mix for the thousands of tests that have been performed to-date and skew heavily towards private payers with Medicare and Medicaid only representing about 11%. That is really important as we look at the near-term opportunities for securing reimbursement from private payers versus Medicare and as it relates to the local coverage termination for Medicare. A quick update on that; really we do have a lot of these, the MolDX Group, which is reviewing the local coverage determination comments that occurred in the second quarter of the year that included us and about a dozen other entities that commented on a draft foundational LCD. They are working on it but we haven't heard any response to that.

Although we did have a call with them, we weren't allowed to talk about the Local Coverage Determination, but we did have a call with the team to discuss our plan for collecting the type of clinical utility data that's required that will be required to translate a final foundational LCD into an actual coverage of determination for EsoGuard at the appropriate time. And those conversations were quite fruitful and productive. On the private payer side, you see that we are steadily working our way through the -- from the lower hanging fruit, which are the secondary PPOs or Preferred Payer Organizations through increasingly -- increasing lives covered all the way to national plans.

The key factor, and we continue to have ongoing discussions with private payers, with medical directors and so forth remains as with the Medicare side with collecting clinical utility data, and I'll talk a little bit more about that later. But our plan to do so. We've been vetting that through both retired and existing medical directors with multiple plans. And we believe we have -- we're in a position to start collecting that data in a way that we should start being able to start securing do more -- to plan further down on this chart here and it's (inaudible). Claims processes -- as we've discussed last quarter, we just completed in August, the transition to our new revenue cycle management partner, which is -- (inaudible) that submits claims on our behalf and then goes through the entire claims process, including a variety of adjudications and so forth, ultimately leading to payment or denial.

That process was launched in August of this year, beginning part of August. We have several thousand claims that we've been holding. These are claims that started all the way back to February when we took over the laboratory CLIA certificate and we're able for the first time to theoretically build on our own behalf and we did start building once the revenue cycle management partner was in place in August. So we are -- so this is how it works, just to give a little (inaudible) on that. Once we build, they can -- the payer can either pay directly. And the payment -- the direct payment can be out of network as a percentage of charges built typically at (inaudible) network rate or if we're in the network on that particular payer pay to the contracted rate.

If the payment is denied, there's an opportunity to appeal and to secure payment after the (inaudible) more final denial. This process is important, obviously, for securing payment, but it's also extremely important for the entire reimbursement process. I've described this many times that in order to actually have meaningful conversations with the larger payers, you actually have to generate a claims history where claims are being submitted, denied, paid, appealed and so forth, and we're looking forward to starting to -- now that we have all the elements in place starting to build out of those claims history so we can start having substantive conversations to be in the work on the various plans that are shown on the slide.

We have -- as I said, we started submitting these payments in the second quarter. We did start to see some payments -- they include a few -- in network payments, but the majority of them are out of network payments where the payer paid us typically at a 50% to 60% standard out of network benefit rate, resulting in payments of about $1,200 to $1,300, which is gratifying because these payments do reflect the full list price that we charge the payer. So we don't really have enough data yet to know what percentage of the claims submitted will get paid, and we need another couple of quarters to get a better picture of that.

But we look forward to tracking that closely over the next couple of quarters to give you a better sense as to how we'll do for out-of-network payments as we are waiting going in network and securing the network contracts. So as I've mentioned several times, the key factor for our securing reimbursement is establishing clinical utility. So if you look at the clinical studies that are currently active, we've talked about this over several quarters and substantially shifted our own internal resources from the performance studies that we have launched earlier, B1 and B2 to clinical utility studies. But I won't go through these in detail, but these are coming along. We are starting to enroll patients in them.

We have a retrospective study from NYU that [several hundreds] of patients that should start generating data quite soon, and we're hopeful by the mid-part of next year to have substantial -- a meaningful amount of clinical utility to engage private payers on. As I mentioned previously, we took -- we made the strategic decision to pause the screening portion of the performance studies at the E1 study until such time that we have better predictability and frankly, an improved asset we've been -- since we've transferred the test QR personnel, we've been making significant strides with regard to improving the asset itself. And so we're going to keep that on hold for now.

We're continuing to enroll in the case control study and expect to do so for the next couple of quarters. And once we close that out, that will be a nice piece of performance data that will supplement the excellent data that we currently have from the Science Translational Medicine paper from a couple of years ago. As I mentioned, again, even for this study, we're benefiting from the fact that we've delayed things a bit for cost control and cash reparation purposes because we're continuing to improve the (inaudible) and we'll be subjecting those samples collected to the best version of the asset.

There are a lot of other studies out there. On the far right, you can see that other investigators are initiating, whether they be ongoing National Cancer Institute studies, the American Foregut Society, and others, and we're really excited as those studies continue to enroll and generate positive data from this. Finally, before handing it over to Dennis, just a quick comment about our manufacturing. This was a long process. I want to commend our team for completing but it's a very technical process of transferring the manufacturing from -- of our EsoCheck Cell Collection Device to a high-volume manufacturer at coastline that manufacture the device. We began there in October of this year, just last month, that was a company that headquartered in San Diego with plant in Tijuana, Mexico.

It will have an median impact by moving to the high-volume provider of decreasing our per unit manufacturing cost of EsoCheck by about 60%. And also the capacity with just the initial line will go to about 20,000 units a year. But what's really important with regard to this transfer is that we have fully scalable capacity at this facility by -- we can just add additional lines as demand dictates upwards of a million devices in the year, so really, really unlimited for the near term.

And so with that, I'll pass it on to Dennis to talk about our financials.

Thanks, Lishan, and good evening, everyone. Our summary financial results for the third quarter were reported in our press release that was published earlier today. And on the next three slides, I'll emphasize a few key highlights from the quarter. But I encourage you to consider those remarks in the context of the full disclosures covered in our quarterly report on Form 10-Q that was filed with the SEC earlier today and is also available on our website. So you see the balance sheet in front of us, cash between the quarters sequentially decreased by $5.7 million. Our vendor payables decreased by $2.2 million when considering not only accounts payable that are reflected there but other recurring accrued expenses.

It is offset by intercompany debt to the parent company PAVmed, a $4.2 million increase. However, both boards have agreed that, that could be settled up in stock in coming weeks. We have a committed equity facility as you're aware, up to $50 million of possibility of stock issuances. We did, during the quarter, record $1.8 million of proceeds, most of which we had already reported to you as part of our update in August. Our shares outstanding included unvested restricted stock awards as of today is 39.1 million shares.

And we are now [S3-eligible], as previewed with you previously. And similar to what we've done at PAVmed, the Lucid Board considers it good governance of cautionary disclosure that's probably garnered at legal in the slide, but at the bottom of the slide and provides supplemental information, particularly about non-GAAP information. The revenue for the quarter reflects 39 tests at an average payment rate of $1,945 per test. The rate slightly higher than the Medicare rate of 1,938, as we received on payment closer to our ASP of $24.99 than the Medicare rate and (inaudible) slightly higher.

The prior year reflects the fixed monthly fee received from the third-party lab that we used before setting up our own lab earlier this year. Just a comment on revenue recognition, that's consistent with our past discussions. The key determinant in revenue recognition is the probability of collection for the vast majority of patient out-of-network claims submission. This means revenue recognition occurs when the claim is actually collected versus when the patient report is invoiced and submitted for reimbursement. As you'll see in our 10-Q, this is called variable consideration in the jargon of GAAP's ASC 606 for revenue recognition guidelines.

And presently, there is insufficient predictive data to recognize revenue with invoice. That will occur in time as contracts start to come on board and the probability of what we invoice gets collected, we will shift to recognizing revenue when it is invoiced. Our GAAP and our non-GAAP loss for the third quarter of this year is fairly flat sequentially. Our non-GAAP loss per share is $0.28 for the third quarter and was also a loss of $0.28 per share in the previous quarter in the second quarter. On slide 21, is a graphic illustration of our operating expenses is presented in detail in our press release. The total non-GAAP OpEx was relatively flat sequentially.

The cost of revenue primarily consists of EsoCheck devices, lab supplies and fixed lab facility costs and is now being presented in our 10-Q as an operating expense consistent with the practices of other diagnostic companies. Sales and marketing was relatively flat sequentially and G&A decreased by 35%, primarily related to the allocation of almost $1 million of lab costs in the prior quarter. As you'll recall, there was no revenue recognized in that quarter and therefore, the typical cost of revenue type expenses are required to be reclassified to G&A. And then R&D, consistent with Lishan's comments already, decreased sequentially by 22%.

So with that, operator, let's open it up for questions.

(Operator Instructions) Our first question is from the line of Mike Matson with Needham & Company.

So I guess just doing some rough math on the test centers and some of the numbers you guys gave, if you had -- I think that it's about 240 tests of the 1,088 were at the test centers. That's about -- you have 13 centers. That's about by my math, 18 to 19 per center in the quarter, about 1.5 per week. Does that sound right? And maybe you can just comment on kind of what you've seen at the centers that are -- I know some of them are newer. So maybe the ones that have been running longer, what kind of volumes you've been seeing there on a weekly or a monthly basis?

Let me make a couple of comments on that, Mike, and then maybe Dennis can chime in. So one thing I did give -- I want to give a caveat that the numbers on that slide is the pie chart was we're still kind of improving our sort of tracking ability to understand, have to come through to the -- ultimately to the lab, who the referring physician was and who actually performed the procedure. So we're trying to capture that. There are -- so we haven't actually broken that down, and I'd be a little bit careful to sort of confirm your extrapolation there, and I'll ask Dennis to chime in if he'd like.

But you did note one thing, which is that we had test centers in Arizona that have been in good place for over a year that are quite a bit busier, and we have some that are -- that have just been getting off the ground as we've accelerated growth in them over the last couple of months. I don't think we have yet have the kind of data, which I think you're seeking, which is sort of what is what is the productivity of the center. But I just, again, I want to remind you and everyone that this is not sort of like a same-store concept, right? The test centers are just like the lobotomy labs.

I mean they're just where the tests are performed, right? Ultimately, I do think the more useful information, which I think will capture some of the trends that you're trying to seek here, Mike, as the breakdown between primary care physician referrals and referrals coming from institutions that are trying to build their own program. And right now, that number has been bouncing between about 50%, 50-50 between the two of them. So I do want to be cautious to not to get ahead of ourselves in terms of the kinds of extrapolations you're looking for. But hopefully, qualitatively that gives you a bit of a sense. Dennis, do you want to add anything to that?

Yeah. I would say that although that math is probably something that all of us want to ultimately do the chunkiness of percent or doesn't lead to the predictive value that's needed for future forecasting of what these test centers can result. Some because of the newness of how long some have been operating, but we're still pretty early in the game to be able to put trend lines to that.

Yeah. Sorry, one other thing just to add to that, Mike, is that we even have some locations where we have specialty practices. We have a gastroenterology practice that's building their own test program, but it's more convenient for them. If they have a Lucid Test Center in the vicinity, is more convenient for them to send those patients to our test center. So we're still kind of grappling a sort of a 3-dimensional matrix here about who the operator is, who the referral is where it's actually being performed to try to capture that data in a way that's useful to understand more of the underlying subset to -- issues here with regard to referral patterns and so forth.

Okay. And I mean the volume number looks pretty good, the 1,088. Just wondering on the backlog, you obviously have done a fair number. I don't know what the number is off the top of my head, but test to-date because you started doing them, and a lot of them obviously haven't been paid for, but yet, at least. So do you have any feel for -- I mean, have any of them gotten to the point where it is sort of a write-off where you got to that -- you put that little flow chart up there where you kind of got that final denial stage? Or are all of them still kind of potentially.

So just to give you a sense about how early we are is process. So you're right. If you kind of total the number of tests that have been performed, you include Q3, Q2 and I believe Dennis right half of Q1. Here, you're talking several -- over 2,000 tests -- tests have been performed and claims that need to be -- that have been or need to be submitted and worked our way through the process. As you mentioned, that process just started in August. So we're just starting to see an initial trickle of payments and then initial denials.

I don't believe we've seen any final denial that would be quite sure we haven't because that would be quite early for a claim that was submitted in August. So we've gotten -- as I said, we've been -- we've got paid on a few in the second quarter. So test claims that were submitted in August got paid before the end of September, but the majority of them are still working their way through the system. So we don't have really a numerator much less on the number that would lead to final denial. That will take us a reasonable period of time to find that one.

Yeah. Okay. That makes sense. I guess I forgot how early it was in the process. So the ones that have been paid, what -- are those all coming from a single insurer or are they coming for -- have you actually got been able to get paid for multiple insurers at this point?

Yeah, yeah, from multiple insurers. We don't have the numbers yet. Again, it wouldn't really be meaningful to give you numbers yet, but no, no, it's not a single payer. We were getting them. And as I mentioned, the most gratifying thing is that they're respecting the list price, not even the Medicare price but the list charges that we submit and are paying that at a standard kind of 50% to 60% out of network payment with an average payment around $1,300.

So yeah, we -- but we really need a little bit of time to see how that holds in terms of the price, in terms of the number of payers that are paying out of network. And frankly, ultimately, for the near term, a useful metric that we're really looking forward to getting -- to get our head around, which is the percentage of the total plan submitted that get paid out of network. That will be an important number for us in the near term as we're trying to walk down on long-term contracts.

Our next question is from the line of Ross Osborn with Cantor Fitzgerald.

Congrats on the progress. So starting off, given the last quarter's update, that guidelines now include women, can you describe how the female population performed during the quarter and how you plan to drive awareness going forward?

We don't have a breakdown by gender yet. But I think qualitatively, we're seeing men and women and sort of the proportions that you might see. So I don't have a number to report to you, but we're getting -- we'll get -- a couple of things that were noted, again, [being] qualitative that we are getting patients that are consistent with sort of guidelines, right? We're not getting the patients where someone is referring 15-year-old or a 21-year-old with GERD that we consider far removed from qualifying for guidelines. It really does appear that the patients who qualify based on the factors for guideline is our typical patient, which again bodes well for us in our conversations with payers as if they're seeing patients where they believe it's not medically indicated based on guidelines would be difficult. I don't have hard numbers for you, but I think the ratio between men and women is consistent with what we'd expect from the broader population.

Okay. That makes perfect sense. And then I guess, thinking about next year as you continue to expand geographically, do you expect any staffing headwinds with getting nursing practitioners in your testing centers? And if so, what are you doing to mitigate these risks ahead of broader commercialization?

So that -- I'm glad you asked that question. It has a good opportunity for me to sort of reiterate what our plan actually is. So our plan is not to continue to grow the test centers, the nurse petitioner group or the sales team through the year. Our plan previously articulated, was to get to a level by the end of this year with 16 test centers and nurse practitioner sufficient to cover those test centers as well as 58 sales personnel. The 58 targets will leak a bit into the first quarter of next year, but that -- we've maintained that as sort of our plan.

And in the context of our kind of strategic assessment and cash preservation mode, we believe that we'll be able to continue to show steady kind of mid-throttle test volume growth with that team as they get more experience in the field and become individually more productive. So we may reassess that into the year as depending on sort of how some of these numbers play out with regard to reimbursement, out-of-network payments and so forth. We're not ruling out the possibility that we could pivot from that stance. But given our current stance where we're very much focused on resource utilization and cash preservation, we're looking to keep those plans up.

Now we still have a way to go on both of those. So the answer to your question is that I think I've said this before, we've been very gratified despite the challenges with the workforce labor shortages and workforce limitations and our ability to recruit both nurse practitioners and sales personnel. It always takes time. It takes time to interview. We're very picky. We have a very robust process. We don't just sort of hire people without a very extensive process where they interview literally half a dozen people or more. So it takes time, but we've been able to secure candidates, high-caliber candidates that we want, and that's true also on sales.

Our next question is from the line of Kyle Mikson with Canaccord.

This is Alex Alex Duca. I'm on for Kyle Mikson. Great quarter guys. Just had a couple of questions for you. So I guess a good place to start would be on the new high-volume manufacturer coastline. I was wondering if you could dive into this a little bit. More specifically, were you feeling a bit capacity constrained before or is this more so just a preemptive measure prior to ramping up the business and this potentially become initiative in the future?

So it's absolutely the latter. So we're just planning ahead. We knew it'd take a while. It took about a year, honestly, there were a variety of delays. It's not a trivial thing to take a small batch manufacturing line and move it towards to a high-volume manufacturer where these lines are easily reproducible and you could rapidly escalate capacity over time. So our team led by [Katherine Howard] did a great job of getting -- working their way through that. But it was all anticipatory. We also -- we haven't shut down the small volume manufacturing because it's always a good idea to have dual sourcing because there's a variety of -- you never know what issues could arise, but this is just planning ahead for future volume.

Got it. And I know this is looking a little bit far ahead, but just thinking about 2023, can you provide us any color on like possibly like a revenue breakdown by customer type or any trends that you're seeing at the end of this year, possibly that could be going into next year. That would be helpful.

I think the only trends, and I'll let Dennis answer this -- the only trends are really the ones we talked about. We are clearly are getting some out-of-network payments. We're getting paid at that 50% to 60% to $1,200, $1,300 level. We're working through generating claims histories. We're getting good quarter-on-quarter mid-throttle growth, but translating that into sort of predictable revenue projections, it's going to take us several more quarters so we can get a sense as to what our out-of-network, what portion is claims submitted will get paid out of network and how we're progressing with regard to using our clinical utility data to secure in network contracts. So I'm quite sure Dennis will concur with -- speaking with that. I don't think we have anything more we can provide.

No, that's exactly right. The predictive value is what we're striving for, and we just don't have that as of yet.

Our next question is from the line of Ed Woo with Ascendiant Capital.

Yes. Congratulations on lot of progress. Have you noticed any significant either increases or decreases in either nurse practitioner or medical supplies or any input costs or office space?

Sort of inflationary pressures. No. I mean inflation is out there. I think we've generally had both whether it's sales reps or the bulk of our team are well paid professionals. But in terms of -- certainly in terms of our budgeting and our targeted expenses for personnel or even for supply, we've had supply chain issues, which we've described before, where we've had to work around challenges with regard to supply chain. But in terms of -- from a cost point of view, I mean there are -- that is there, but it hasn't had a significant impact on our business the past where it would -- Dennis, would you agree with that?

Yeah, I agree. And that the inflationary pressure for the delivery side of our test centers is not as sensitive given the margin level of the next patient coming in the door in that test. So even if salaries or rents did creep up as a percentage of the total revenue opportunity for us, it's still a small portion.

Operator, do you have any more questions?

There are no further questions at this time.

Okay. With that, I'd like to thank all of you for taking the time and listening to our update today. Hopefully, you found the webcast portion of this useful and informative. We look forward to feedback, any feedback that you might have. And we look forward to having you keep up with (inaudible) with our progress through our news releases and period-to-period audit calls such as this. And also feel free to talk to us for e-mail alerts either in our Investor Relations website and on social media as well. And you can always contact us through Adrian Miller, our VP of Investor Relations at AKM@PAVmed.com. So thank you again, and have a great evening.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.