Welcome to the Lucid Diagnostics Business Update and First Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. As a reminder, this conference is being recorded. 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, Betsy. Good morning, everyone. Thank you for participating in today's first-quarter 2023 business and financial 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 the business update and first-quarter results is available on the Lucid website. Please take a moment to read the disclaimer about forward-looking statements in the press release. The first quarter business update, press release, and this conference call both include forward-looking statements. 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 annual results to differ are described in the disclaimer and in our filings with the SEC.
For a list and description of these and other important risk factors and uncertainties that may affect future operations, see Part I, Item 1A , entitled Risk Factors in Lucid's Most Recent Annual Report on Form 10-Q filed with the SEC and subsequent updates filed in quarterly reports on Form 10-Q and any subsequent Form 8-K filing. 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 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 Lucid Diagnostics. Dr. Aklog?
Thanks, Mike, and good morning, everyone. It's great to be here. Thank you for taking the time. I look forward to giving you an update of our business for the first quarter of this year, 2023. Let's just start with some highlights. These were highlighted in the press release as well. We performed 1,841 commercial EsoGuard tests in the first quarter. That's a 57% increase on a quarterly basis over the fourth quarter of 2022, and a 245% annual increase. We've seen substantial increases in the satellite Lucid Test Center activity. Now, they represent about 50% of the samples collected for testing in the first quarter. We'll dive into that a little bit further later.
Our #CheckYourFoodTube pre-cancer detection events that were launched earlier this year, that program is now in full gear and is expanding across the country. We had an excellent DDW or Digestive Disease Week meeting in Chicago this week. That's the premier gastroenterology meeting. Two studies with compelling data were presented for EsoGuard and EsoCheck. I'm gonna start with some background for those of you who are new to the story before diving into our results. Lucid Diagnostics, we're a commercial-stage cancer prevention medical diagnostic company, and we're focused on early pre-cancer detection, specifically in patients with chronic heartburn or gastroesophageal disease, GERD, who are at risk for a highly lethal form of esophageal cancer called Esophageal Adenocarcinoma.
Our mission is very straightforward, which is to prevent deaths from this awful cancer in at-risk patients. Just a couple of facts about esophageal cancer. It is highly lethal. It's a really bad actor, and it has become quite prevalent with an increase of over 500% over the last four decades, in contrast to all the other common cancers which have remained flat or gone down. This makes it the second most lethal cancer at approximately 80%, five-year mortality rate and accounts for about 16,000 deaths per year.
The key statistic is really right there in the middle of the slide there, which is that even stage 1 disease carries an over 40% mortality rate, unlike other common cancers which have where picking up the cancer at stage 1 gives you an opportunity, excellent opportunity for a cure. That's not the case with this cancer. It's one of the rare examples of that. The consequence of that is that early pre-cancer detection is necessary to prevent deaths. Although screening is recommended in a well-defined target population, less than 5% of those patients who are recommended for screening with endoscopy undergo endoscopy.
Our lead products are EsoGuard and EsoCheck, and they form collectively the first and only commercially available test that's capable of serving as a widespread tool, screening tool to prevent esophageal cancer deaths through the early detection of esophageal pre-cancer. Both major gastroenterology societies, the American College of Gastroenterology and the American Gastroenterological Association, recently updated their guidelines and now support non-endoscopic biomarker testing such as EsoGuard and EsoCheck as an equivalent, acceptable alternative to endoscopy for early detection of esophageal pre-cancer. The market opportunity here is extremely large, based on the fact that there's a large population that is recommended for screening. Approximately 30 million patients with chronic heartburn are well established by guidelines as being at risk and are recommended for screening. That number is actually somewhat conservative.
One of the two guidelines actually expanded the target population to include patients who don't have symptomatic heartburn, so that number actually is under those guidelines is actually moderately higher. Medicare has established a nationwide Medicare payment of $1,938. As you'll see, that has been reflected in our engagements with private payers as well. So that results in a very large, approximately $60 billion total addressable U.S. market. The gross margin, at volume, is over 90%. Just one quick slide on our commercial strategy. We target two groups, separately, the primary care physicians and specialty institutions. They have very different approaches to these two stakeholders.
The primary care physicians, the goal is just to get them to order an EsoGuard test as others would ask them to order other tests, screening tests or otherwise. The actual performance of the cell collection procedure that results in the performance of EsoGuard test, in those situations, is performed by a Lucid nurse practitioner, either at a Lucid facility, a Lucid Test Center, or in the physician's office in the form of a satellite Lucid Test Center. As I mentioned, and I'll show the data to reflect this, the satellite test center model is actually rapidly expanding.
Just to flesh that out a little bit, what happens is that we have our nurse practitioner have a scheduled day on a regular basis at the physician's office, and they schedule patients for testing that in the office by our nurse practitioner. They can perform up to 30 of these a day. Excuse me. Sorry, I forgot to advance the slide. I apologize. With the specialty and institutions, that's a somewhat different approach where we're looking to work with these specialists or the institutions to build an EsoGuard program. That is the purpose there is to, for the specialists or the institutions to garner the downstream opportunities for building such a practice, increased endoscopies, surgeries, other testing within their facility.
In that model, the procedure can be performed either by their own clinician, a nurse practitioner, a nurse or a physician assistant, or using the satellite Lucid Test Center model as well. Onto our commercial results. We had an excellent quarter. The first quarter, our total number of tests, you can see here, continues to increase in a steady fashion. We increased 57% over the prior quarter and 245% compared to a year ago. two pie charts here reflecting some of the distribution of this testing volume. The referral source is now about 2/3. It's been stable actually in recent quarters. 2/3 primary care physicians and about 1/3 specialists and institutions.
And as you can see on the right slide there, about 60% of the EsoCheck cell collection procedures are being performed by Lucid personnel. But the number, the proportion of the total number that are being performed at a satellite's test center in conjunction with the physician's office is now over 50%. About 40% of these remain, are being performed by the physician practice itself and their own personnel. Last time we announced that we had launched our #CheckYourFoodTube precancer detection events. These events are geared towards holding high volume testing events where our nurse practitioners arrive at a location with a group that has been scheduled for testing.
The first event was with the San Antonio firefighters earlier this year, and approximately 400 firefighters were tested over two weekends. That program, as we had, as we have announced, is expanding. We've completed, as you can see here in the orange, five of these events across the country, and we have a robust pipeline. Nine of the remaining, of the others in blue are already scheduled for the coming weeks and months. A few comments about contracts and payments. On the right there, you can see that our, the proportion of patients that are Medicare or Medicaid, remains stable at around 10%. The other aspects are actually relatively stable as well. We continue to maintain an average contracted price above the Medicare rate.
Excuse me, all the contracts are above the Medicaid rate, Medicare rate. The average contracted price for the in-network contracts that we have is over $2,000. We continue to get out-of-network payments that respect our charges with an average payment of about $1,400. That's based on a typical 50%-60% out-of-network benefit. We're working hard to continue to drive future in-network commercial payer contracting. The key drivers of this are generating a claims history, and we continue to do so. We have almost 200 insurers that have to whom we've submitted claims so far. Really the critical element of this is clinical utility.
It's generating clinical utility data that is a critical part of entering into in-network commercial payers, and I'll talk about that in the next slide. We're also transitioning to a new revenue cycle management provider. We're excited that that's going to happen in the next month or so, where we'll have significantly more data and actionable data to facilitate our engagement with private payers. Last time, we also announced that we've launched a direct contracting strategic initiative, and the goal of this initiative is to engage, as others have done in the diagnostic space with ASOs, self-insured employers, unions, and other entities directly as opposed to the insurers.
We think there's a meaningful revenue opportunity outside of the traditional commercial payer contracts, and as I said, others have had some success with this. We are hiring a dedicated person to lead this program. I'll also note, the #CheckYourFoodTube events are actually part of this, and we have an internal person who is going to be leading the event planning side of things. As I mentioned, collecting clinical utility data is really a critical part of our efforts to secure predictable reimbursement and secure in-network contracts. Just briefly, clinical utility data is a very specific type of data. It's basically demonstrating to those entities that our test has an impact on medical decision-making.
More specifically, it means that if a physician that if the physician orders a test, they actually act upon the result. A positive test results in a confirmatory endoscopy, and a negative test does not. That's the specific data that we're documenting here. We know what the result is just based on our experience broadly across thousands of tests that have been performed so far. These are the four active studies that we're pursuing to document this retrospective and prospective. The firefighter events have had given us a great opportunity for some retrospective analysis of prospectively collected data. That's approximately 390 patients. That study is actually the data collection has been completed.
The manuscript is written, and it's currently being submitted for peer review. We're looking forward to that. We have two prospective studies, the Lucid Registry and a multicenter study called the CLUE study. Our target enrollment in each of those is approximately 200 each by mid-year, and those are going well. We're at or above our target enrollment in both of those, and the firefighter events have actually been a nice boost to the registry in particular. We have a virtual randomized control study where physicians are given clinical scenarios and asked to document what their decision-making would be.
That's a well-established modality used for submitting clinical utility data to payers, and that study is also ongoing and is actively enrolling at our target. Very excited about this. We expect that we should have our first batch of data that can be submitted, the prospective data that can be submitted on top of the retrospective data that's coming from the firefighter events. We expect that to happen by mid-year, and then that will get submitted for peer review and then subsequently will be available to us for our in-network engagements with the commercial payers. Just a couple of highlights from the Digestive Disease Week meeting. As I mentioned, we had two excellent presentations.
This one is by the faculty at the VA in Cleveland, where they performed EsoCheck with follow-up endoscopy, confirmatory endoscopy on 69 veterans. They reported a 99% technical success rate, which is equivalent to the technical success rate that our own NPS have, which was excellent. The overall sensitivity was 100%, which picking up conditions along the spectrum from precancer to cancer. That translates into, of course, 100% estimated negative predictive value and a 37% estimated positive predictive value, which are both really right down exactly where you'd want it to be for a screening test such as ours. There were seven positive patients detected who had either precancer or cancer.
Notably, four of the seven were short segments, so less than 3 cm of abnormality. That's the most important category, but also the most difficult to pick up because the amount of abnormal lining of the esophagus is so short, and we're gratified that they were able to pick up all of those. Two of them had longer segments of this earlier pre-cancer, non-dysplastic BE. We're very excited about the fact that we picked up one patient who had silent stage 3 esophageal cancer and had them enter treatment with chemotherapy and radiation. Really excellent results from the VA. We also reported on an expanded cohort of patients who real-world data using the EsoCheck device for sampling of the esophageal cells.
This was approximately just under 1,500 patients. The technical success rate that we previously reported at the American Association for Cancer Research of 98% held. The average procedure time of less than three minutes also held. The DNA quantity or the DNA yields continued to improve. The quantity not sufficient rate, which is what portion of patients who undergo cell collection do not have enough DNA to run the use of that assay. That number was already quite good at 6%, but in the interval between the last report and the current report, that number is down to 2%, which is outstanding. We're quite proud that the poster presentation at DDW. Excuse me, I forgot to push the slide.
The poster presentation at DDW was in the top 10%. Excellent distinction. Finally, a summary of our lab operations here. You can see the quantity not sufficient rates have plummeted since we took over the laboratory operations in the early part of last year and is now solidly under 5%. Turnaround times also have gone down quite significantly and have held at approximately a week of work. Quite incredible. I'm gonna hand things over to Dennis to provide us with a financial update.
Thanks, Lishan. In first quarter, the board authorized $20 million preferred offering and $11 million senior convertible debt, as you can see in slide 18. Previously mentioned, we completed the initial closing of the preferred in the amount of $13.6 million. After exploring a variety of alternatives, this preferred structure created a mutual win for the company and investors by matching an attractive dividend with a strong incentive to hold the stock for more than two years. Additionally, in the first quarter, we issued $11 million in convertible debt securities with an accredited investor that has provided the same type of structures for PAVmed over the years and currently holds PAVmed's existing debt with similar terms. The note is interest only for 6 months at a $5 voluntary conversion price and has approximately a 7.9% interest rate.
Amortization does not begin until the six-month anniversary in October. Both structures keep stock out of the market for long periods of time, likely two years in the case of the preferred, which allows the company to complete its work on the clinical utility studies and improving reimbursements. Our runway is substantially elongated into 2024. When combining these financings with our cash at the beginning of the quarter, results in pro forma cash of $46.1 million. With an ending quarter cash balance of $39.5 million, the pro forma burn rate for the first quarter was $6.6 million. On the next couple slides, the summary financial results for the first quarter are reported in our press release that was published last night.
On these 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 last night and is available on our website. On slide 19, balance sheet. Note cash, $17 million sequential net increase in the first quarter. Our vendor payables were relatively flat with the sequential quarter. It was offset by the intercompany debt to PAVmed, a $2.7 million increase, reflects largely the management services agreement that continues to exist in that intercompany debt count. The shares outstanding, including unvested restricted stock awards as of today, is 43.7 million shares.
The GAAP outstanding shares are reflected on the slide as well as on face of the balance sheet in the 10-Q. On slide 20, slide 20 compares this year's first quarter to last year's first quarter on certain key items. For us to review the information, my comments in light of the cautionary disclosure at the bottom of the slide about supplemental information, particularly non-GAAP information. Revenue for the first quarter reflects actual cash collections for the quarter. The prior year reflects the fixed monthly fee received from a third-party lab that we used before setting up our own lab at the end of last year's first quarter. Revenue recognition. Key determinant is the probability of collection. With the vast majority of patient out-of-network claim submission means revenue recognition occurs when the claim is actually collected versus when the patient report is invoiced and submitted for reimbursement.
As you will see in our 10-Q, this is called variable consideration in the jargon of GAAP's ASC 606 revenue recognition guidelines. Presently, there is insufficient predictive data to reflect revenue when invoiced. Our non-GAAP loss for the first quarter of $9.8 million reflects a 7.5% sequential decrease compared to the fourth quarter loss of $10.6 million. On slide 21. Slide 21 is a graphic illustration of our operating expenses for the periods reflected. Total non-GAAP operating expense of $10.9 million for the first quarter 2023 was relatively flat sequentially.
The first quarter includes approximately $1.2 million of certain one-time expenses related to the reduction for severance costs incurred to finalize the acquisition of ResearchDx, including terminating the earn-out payments and canceling the consulting agreement, and close out of the secure development and clinical work to arrive at a point to efficiently restart it later when financial resources permit bringing that back online. Absent these costs, the non-GAAP operating expense would have been about $9.7 million, reflecting about a 9% decrease sequentially. Cost of revenue primarily consists of EsoCheck devices, lab supplies, and fixed lab facility costs. Consistent with recent SEC filings, is presented in our 10-Q as operating expense consistent with practices of other diagnostic companies.
Sequential decreases in R&D and marketing expenses were offset by approximately the $1.2 million one-time cost already mentioned, including terminating the relationship with ResearchDx, which will avoid approximately $2.7 million in future costs. These one-time first quarter costs, together with the highly variable quarter-to-quarter convertible debt non-cash charges, which are shown below the line, account for approximately $0.07 of the $0.40 GAAP loss. With that, operator, let's turn it over to questions.
We will now begin the question-and-answer session. If you would like to ask a question, please press star then one on your telephone keypad now. You'll be placed into the queue in the order received. Please be prepared to ask your question when prompted. Once again, if you have a question, please press star then one on your phone now. Your first question today comes from Kyle Nixon with Canaccord. Please go ahead.
Morning, Kyle.
Hi, Kyle.
Hi, this is, actually Alex. Yeah, I'll have Dennis flush it out, but just at a high level, just a reminder that some timing here, that the first time that Lucid DX Lab, our CLIA laboratory, started submitting claims was at the end of the third quarter of last year. We've had two full quarters of claims submissions since that process started. Data's still early. We have a positive trajectory, and I'll let Dennis flush out any other details.
Yeah, the claims collection continues to be choppy. That's why the predictive value in terms of collections still is uncertain, and we have to recognize revenue on a cash basis. We also believe that we can make improvements in the process and have taken steps to do so by changing our revenue cycle management company, which comes on board in the early part of June. We think that will help us on many dimensions, particularly on the processing of any initial non-payment charges and process them through the denial process, which we believe will have a benefit in the second half of the year to accelerate payments.
Got it. Thank you. Another question, kind of changing, switching gears here. Looking at your overall commercial strategy, it seems like these satellite testing centers are taking more and more of a spot in the limelight here. I was just curious if over time, if this could become, possibly your one of, if not the, you know, key revenue driver for the business going forward.
I think the, it's important in answering that question to flesh out some of the details a little bit just to be clear, right? The key factor is that we've decided to build a team of clinicians, of nurse practitioners who are highly skilled at performing the cell collection procedure, who have demonstrated in the published, in the presented results that I mentioned, really outstanding rates of technical success. The reason we've done that is that is the model that's necessary for us to actually have meaningful engagements and get primary care physicians to order the test because the economics as well as the logistics of individual primary care practices performing the Check procedure is just not viable.
That is the model, as you described. What that is the model by design. The evolution that I was highlighting is that we've steadily moved from that being exclusively being done in physical locations, basically just office space that we lease, to increasingly happening in the physician's office. That is a trend, and you're correct to note that. The overall share of referrals from primary care physicians that fit more directly within this model versus specialist institutions, that appears to have stabilized, both sides of that are growing at sort of two to one, which is good.
The proportion of patients that are undergoing their cell collection procedure by one of our nurse practitioners has steadily increased, and the proportion that are being done in the physician's office as opposed to in one of our leased office spaces is also increasing. All of that we see as a very positive direction and a really important sort of horizon that we're chasing because the satellite model has all sorts of opportunities and efficiencies and expanded reach. By having us go to the physician's office, we're not anchored as much to a physical location where the patient has to drive some distance. The catchment area for the activities of our nurse practitioner extend over a substantially greater geography.
That actually can include in areas where we have no physical location, where if a busy practitioner comes on board, we can actually have the nurse practitioners travel to that location for the periodic Lucid testing days at the office. You're absolutely right. That is the trend. I think we will continue to have institutions and specialists play a significant role. I think that balance is probably gonna remain stable. The model of having our own clinicians, our own nurse practitioners who are highly skilled and effective being the primary operator for the cell collection procedure is likely going to continue to go in that direction.
One last one from me. Just looking at the Lucid Dx Lab operations, it seems like there's a really strong positive trend in terms of your ability to acquire sufficient DNA as well as just average turnaround time. I was just curious, in terms of average turnaround time, do you believe that at this point you've kind of reached, I guess I wouldn't say the apex, but more or less, kind of towards the peak of what we're really looking at there. In terms of just improving the DNA quality of the samples, do you expect this, you know, it's been a pretty strong, you know, upward trend? Has this also kind of plateaued? or do you think t he efficiency can continue to be reached?
Yeah. Those are both great questions. Let me answer the DNA question first, because one thing I didn't mention in my prepared comments was that didn't happen by accident. That happened because our team, once we took over the laboratory, made substantial improvements to the DNA extraction process. That number, that 3% for the last quarter is a reflection of improvements in the laboratory, but also a reflection of that really high 98% technical success rate. Our nurse practitioners, if you don't do the procedure correctly, you're not going to get a sufficient number of cells to have a sufficient amount of DNA.
The combination of essentially, you know, 3% or so of patients who don't have enough DNA to perform the test and 2% who are unable to perform the actual complete the actual procedure, those are sort of stunningly high numbers for the type of, you know, for a diagnostic that requires a test. Yeah, it's never going to be 100% between those two. If you add those two up, it's at around 95% of patients who are referred will not only have a technically successful cell collection procedure, but also have sufficient DNA to run the assay. That's a very, very high number.
Sure, I mean, could we extract another 1% or 2%, but that is absolutely sort of at our, at our goal and our target and, you know, for a test of this type is really outstanding. The turnaround time is, you know, a turnaround time of approximately a week is actually probably where it needs to be. There is a limit in terms of what getting the turnaround time much shorter than that. There is the assay, the EsoGuard assay has a variety of steps in it, some of which require hours and multiple and over multiple days. You know, getting it down to five or six days may be possible, but seven is just fine.
The reason it's fine is that this is an elective test. This is not an urgent test that requires where some immediate action is awaiting the result of that test, like, you know, other tests would be. Because it's an elective test where the action is going to be starting a surveillance, it's sort of getting an endoscopy to confirm this and then putting them in a surveillance regimen and all that. There's actually plenty of time. A week is absolutely fine from a clinical adoption and acceptance point of view. Sure, there might be an opportunity to shave a day off of that or more, but we're really at sort of at our target. Our goal is really to maintain it.
The goal is to maintain it at seven with the escalating volume, particularly not just the overall volume, but the spikes in volume that happen when we do these high volume testing events where the lab can get sort of 200 samples in a day, which it had not been used to. The lab's done a great job of absorbing not just a general increase in volume, but also those peaks.
Some really good color. Thank you very much.
Yeah. Thanks a lot. Great questions.
The next question comes from Mike Matson with Needham. Please go ahead.
Morning, Mike.
Hi, Mike.
Yeah. Thanks. Good morning. I want to ask about the #Check Your Food Tube event with the firefighters in the quarter?
We had just the first quarter reflected just that one that we had previously announced, the San Antonio event, which was just under the just under 400 tests, right? We saw growth both in our organic numbers as well as our the obviously the testing events, the CYFT events. I just maybe I'll use this as an opportunity to comment on this. You know, we see, you know, these testing events as well as the other direct contracting efforts are just part of our, of sort of an all of the above strategy.
I just want to keep emphasizing, I did this last time as well, that we're not sort of tacking or swapping one strategy for another. We're just adding new horizons where we can identify ways to get patients who are out there into the channel and ultimately test it. We have been very careful in how we manage our sales team to make sure that the organic growth by directly engaging with primary care physicians, specialists, and otherwise, continues to move forward strongly. You know, we obviously expect to see a meaningful volume from the testing events as well, and they'll both be contributing to what we believe will be ongoing growth, solid growth.
Just following up on that, so at those events, I mean, what's the expectation for getting paid for those tests? Is it, you know, more likelihood of getting paid versus your other distribution channels, or is it kind of similar or?
It's quite early to predict, right? We just had our first one, I think it was less than about two months ago. Purely speculating and purely, you know, on a theoretical basis, we would expect that it might be easier to engage in in-network conversations with these entities. They tend to be self-insured entities, unions and otherwise. Having an audience with them in conjunction with these events has the potential, although we don't know for sure, we don't have any have a direct evidence of this yet, to enter more quickly into discussions as opposed to the standard model with a traditional payer where you really have to wait until you get a sufficient number of claims just from the kind of the random in the wild activity that goes on. There is an opportunity there. We're quite cognizant of it. We're focused on it.
We are tailoring the way we engage with the, with the entities that are sponsoring these events, in a way to effectuate what you're suggesting, but way too early to say whether that'll actually materialize in terms of how it translates into payments. Into payment as well as into in-network contracting.
Okay. As far as the test that you've done to date, I know you're trying to go through insurance companies and collect payment, but, you know, when do you sort of give up on trying to get paid for a test? You know, has any portion of that, the volume you've done to date, have you know, given up on any of those or written them off or are you just continuing to try to collect payment?
I'll let Dennis flesh out some of the details, but the answer I see... I'm taking your question to mean on an individual claim, right? The process by which an individual claim gets adjudicated is actually quite long. You know, you get submitted, there's all these, you know, back and forth about, you know, all the I's being dotted and T's crossed. Then, often, there's two possible ways that can proceed. One is that if you don't have an in-network contract, you can still get paid out-of-network, and there's some payers that pay out-of-network at a reasonable clip and others that don't. That just depends on the individual insurer. Those that are not paid where there is no out-network payment or out-of-network benefit payment, those will typically get denied. Then there's an appeals process, and there's multiple levels of appeal.
We don't give up until we actually exhaust that entire appeals process, which can take many, many months. The number, Dennis, correct me if I'm wrong, but the number of the thousands of claims that we've submitted where we've actually reached the end of an appeals process is low. It's a relatively small portion of those. Honestly, even those are not. Look, we'd love to get paid on every on every test, but we know from just historical precedent and others who've done this before that this entire process, you know, going through the claim submission process, getting on the radar of insurers, getting denied, going through appeals process and all that is how you.
That actually all is sort of a positive experience that gets you traction. That whole history is important to get traction to actually engage in to secure in-network contracts. Hopefully that answers your question. Dennis, I don't know if you have anything...
Yeah. During the early phase that we're in now claims history and the denial process have real value for us in terms of getting to full reimbursement. I always consider full reimbursement is ultimately when you get north of 80%. To your question, when you get to that point of nearly 80%, you probably give up in your term, after a year of process. Right now that is all part of gaining value, gaining attention, and getting towards contracts. We're not giving up on any claim just yet.
Yeah. Exactly.
Later down the road, that probably makes more sense. A good estimate would be greater than a year.
Okay. And the legwork on all this stuff, I mean, that's basically being handled by this, the revenue, the RCM, revenue cycle management firm that you're working with or?
Correct. In conjunction with our team. Yeah. That is... That they're-
We outsource that.
We outsource that. They're obviously geared towards that. Again, we're looking to upgrade and get some more aggressive activity in this regard, as well as just better data, better sort of visibility as to, you know, what's happening with individual payers. That's the reason we're looking to upgrade in this in the near term-
Much more sophisticated in their processes.
Yeah. Okay. Got it. Thanks.
Thanks, Mike.
Thanks, Mike.
The next question comes from Mark Massaro with BTIG. Please go ahead.
Morning, Mark.
Hi, Mark.
Hey, guys. This is actually Vivian on for Mark. Morning.
Hi, Vivian.
Hi, Vivian.
Hi. Yeah. Wanted to grab your thoughts on volume pacing for 2023. It's probably safe to say sequential volume growth for the remainder of the year, but just wanted your thoughts around ASP traction as well. Thanks.
Yeah. I'll let Dennis handle that.
We think it will continue to grow quarter to quarter. Last quarter, we did give a preview of the first quarter because we were within 17 days of the end of the quarter. This quarter is still unfolding. We're optimistic about that and optimistic about the balance of the year, and what that represents in terms of total claims submission and total tests delivered. We think it will be pretty strong, but we haven't provided any guidance for the second, third, or fourth quarter so far. We're thinking that it continues to grow sequentially.
Okay. Perfect. Understood. I apologize if you covered this maybe earlier in the call, but could you just remind us where you stand in the technical assessment process, and just your updated thoughts around the timing around securing Medicare coverage under the umbrella LCD?
Sure. Yeah. Nothing really new to report on that. As you, as you hinted at, both, MolDX, Palmetto, the Palmetto MAC, as well as Noridian MAC, which is the MAC that covers our laboratory in California, published a final and effective local coverage determinations. These are foundational local coverage determinations that cover the category of tests, which EsoGuard falls within. So that was, that happened.
About 31st.
End of March. Thank you, Dennis. Nothing to report on that front. There's no ongoing activity there. The process moving forward is one where we get sufficient clinical utility data whereby we believe we achieve the criteria that they've outlined. As we mentioned when we talked about this, when it first came out, the improvements to the final LCD relative to the draft LCD a year ago were entirely consistent with what we and others had requested to make it, to make it truly operational. The criteria are solid.
They're very much focused on the newly published guidelines, and we believe that the clinical utility data is what we need in order to try to convert this to a, to coverage, Medicare coverage for EsoGuard. You know, as is the case with, as has been the case now for the three -four years that we've been working on this, the activity with Medicare and with the MolDX and with the LCD is very kind of, we hear it, we get a bunch of news, there's a flurry of activity, and then there's sort of a waiting period while you're collecting data or awaiting a response. Don't expect to have any news in the near term.
I will put out my usual reminder that we continue, although some of the large payers do like to see a Medicare LCD for your test, we continue to believe we will continue to get traction with the private payer side and that private payers represent 90% of our total volume. That activity is day to day. Medicare is basically awaiting the completion of our clinical utility, the publication thereof, and then subsequent steps from there.
Okay. Awesome. Thank you. If I can just squeeze in one more. I guess on the commercial payer front, can you just remind us on the number of commercial pay contracts, number of covers lives at Q1? Could you also remind us, maybe one for Dennis, the number of tests that you were paid on in Q1? Thanks.
Yeah. I'll let Dennis answer those.
We have just under, I think it's 15 in-network contracts, secondary PPOs, the largest of which is MultiPlan that recently entered into a contract with us. You'll recall that they have 60 million consumers as part of their overall umbrella. The revenue collected in the quarter was $446,000, and the average claim, as indicated in the slide deck, was $1,440. I was looking for my notes to do the division, I couldn't find it quick enough, but I'm sure you can do that yourself.
Okay. Perfect. Thanks for taking the question.
Thanks, Vivian.
The next question comes from Edward Wu with Ascendiant Capital. Please go ahead.
Good morning, Ed.
Yeah. Congratulations on the quarter. My question is on the #CheckYourFoodTube detection event. They seem to be very high value and relatively low cost events for you to get patient outreach. Have you considered making that your primary marketing event? How hard or difficult would it be to expand these events exponentially across the country?
Yeah. I'll answer that by sort of reiterating what I said earlier. Like, we're gonna put in. You're correct in your assessment. They are quite efficient ways to get a targeted population. In response to Mike's question, we have some hopes that they'll also be an efficient way to get to accelerate the reimbursement process. That's TBD. We are fully committed to them, and you can see just over a very short period of time, we've gone from one to having completed half a dozen or so and having quite a robust profile. Now as you can see from that map, that we've had multiple conversations, some with smaller entities, some with larger entities. Those conversations have really been consistently quite positive.
There's a lot of receptivity. Obviously, we're starting with firefighters, but we have plans to expand into other areas. Our commitment, our motivation, our determination to use this as a way to garner access to the EsoGuard test to as many people as possible is solid, and we'll continue to push that as hard as we can. I won't go as far as your question, which is to say that we wanna sort of make it our primary mode. We're not, that's not the way we're thinking about this at all. We're looking at all of the modalities, all of the ways, all of the methodologies for doing this.
At the end of the day, we're gonna continue sort of an all-of-the-above strategy that includes the bread and butter traditional reps going to primary physicians and garnering physician adoption. You have to garner physician adoption for long-term, you know, for the long-term traction here. You know, if you, if you think about it, one of these events typically has a limited number of physicians, which is great. It makes it highly efficient. You only have to work with one physician or two physicians, and you can end up with, you know, hundreds of tests. That doesn't take away from the importance of establishing this test as the standard of care for patients who fulfill criteria and who are recommended for testing. That'll continue to involve us driving adoption within the broader physician community.
Maybe just one additional comment to further amplify Lishan's analysis there. Ultimately, a good portion of the patients who are our target population are self-medicating. As reimbursement unfolds, our test centers will continue to have a prominent position as we do direct-to-patient advertise, that educational marketing to go after those patients will come through telemedicine. All of these components are important. At this point in time, one may have a higher driver component to the number of tests, but there's still big patient pools in each of the categories that our go-to-market strategy is approaching. It will change over time, and there is a big patient pool that we're going after in all of those dimensions.
Yeah. Just to close on that, I mean, the broader patient pool is large. We've talked about that repeatedly. It's at least 30 million patients, we're not sort of segmenting that to some narrow group that we're looking to get. I mean, at the end of the day, the market opportunity here is across the board. If you think about it, the number of we don't know for sure, but the proportion of those 30 million who would fall under an entity like a union or an employer, that would be a lot of them would under one of these high-volume testing events, is not gonna represent the vast majority of those patients. The vast majority of those patients are either self-medicating, as Ben said, and could be contacted directly or through their primary care physician or a specialist.
Great. Thanks for answering my questions, and I wish you guys good luck.
Thank you. Thanks a lot. I appreciate it.
As a reminder, to ask a question, please press star then one to join the question queue. That's star then one to enter the question queue.
Operator, we can close out now. I'd like to thank you all for taking the time this morning. We found it informative. We encourage you to follow us on our websites and social media, but also feel free to contact Michael Parks for any questions. We're always open for business in that regard. His email address is mep@pavmed.com, P-A-V-M-E-D.com, mep@pavmed.com. Thank you very much and have a great day.
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