NEW YORK - PAVmed Inc . (NASDAQ:PAVM), a diversified medical technology company, has announced the deconsolidation of its subsidiary Lucid (NASDAQ:LCID) Diagnostics (NASDAQ:LUCD) from its financial statements in an effort to comply with Nasdaq's listing requirements. This strategic move comes after PAVmed received a notification from Nasdaq on September 10 regarding non-compliance with listing standards due to its financial performance.
The deconsolidation implies that PAVmed will no longer include Lucid's operating losses in its consolidated financial statements. PAVmed's stockholder's equity is expected to increase as the value of its holdings in Lucid will now be reported as an asset. Despite these changes, PAVmed's ownership of Lucid common stock remains the same, and the company continues to be Lucid's largest shareholder.
To facilitate this process, PAVmed has altered the composition of its board of directors, ensuring that the majority of Lucid's board members are not PAVmed directors. This included the appointment of Sundeep Agrawal, M.D., a seasoned biotech investor, to PAVmed's board, replacing James L. Cox, M.D., and Joan B. Harvey. Dr. Cox will continue to serve on Lucid's board.
Dennis McGrath, PAVmed's President and Chief Financial Officer, stated that the deconsolidation is an essential step in strengthening the company's balance sheet to maintain its Nasdaq listing. PAVmed plans to request a hearing before a Nasdaq Hearings Panel, expected to be held in October, as part of its efforts to regain compliance.
Dr. Agrawal brings extensive experience in biotech and life sciences investing to PAVmed's board. As a General Partner at Colt Ventures, he has led significant investments in the biotech sector and serves on the boards of several companies, including BlossomHill Therapeutics and Alterome Therapeutics.
PAVmed's portfolio includes Lucid Diagnostics, which markets tools for early detection of esophageal precancer, and Veris Health Inc., a digital health company that provides a digital cancer care platform and is developing an implantable physiological monitor.
The company has filed a Current Report on Form 8-K with further details regarding the deconsolidation and board changes. The information in this article is based on a press release statement from PAVmed Inc.
In other recent news, Lucid Diagnostics reported a significant 500% year-over-year increase in revenue for the second quarter of 2024, reaching $1 million. The company also noted a substantial rise in the volume of EsoGuard tests, marking a 31% sequential increase and a 44% year-over-year growth. Analyst firms Cantor Fitzgerald and Needham maintained their positive outlook on Lucid Diagnostics, reiterating their respective price targets.
Lucid Diagnostics has also recently partnered with Front Line Mobile Health to increase early detection of esophageal cancer in firefighters, leveraging Lucid's EsoGuard Esophageal DNA test. The company also published a study confirming the analytical accuracy of its EsoGuard test in diagnosing esophageal precancer and cancer, with an accuracy rate of 96%.
Despite a decrease in payment rate due to medically unnecessary claims and a backlog of $12.5 million in claims, Lucid Diagnostics is actively working to secure broad coverage and reimbursement for EsoGuard. Analysts from Needham and Cantor Fitzgerald anticipate improvements in Lucid Diagnostics' revenue growth as the company begins to process claims and collect payments. They also foresee potential benefits as the company secures coverage from Medicare and other insurance providers.
InvestingPro Insights
As PAVmed Inc. (NASDAQ:PAVM) adjusts its strategy to meet Nasdaq's listing requirements through the deconsolidation of Lucid Diagnostics (NASDAQ:LUCD), it's crucial to understand Lucid's financial standing and outlook. InvestingPro provides real-time data and expert analysis to help investors gain deeper insights into Lucid's performance and potential.
InvestingPro Data for Lucid shows a marked revenue growth in the last twelve months as of Q2 2024, with an impressive increase of 379.19%. This surge is further highlighted by a quarterly revenue growth of 513.84% in Q2 2024. Despite these growth figures, Lucid's financial health is challenged by a negative gross profit margin of -67.39% and an operating income margin of -1172.76%, indicating significant costs are outstripping revenue.
InvestingPro Tips for Lucid underscore the company's position with two key insights. Firstly, Lucid holds more cash than debt on its balance sheet, which is a positive sign for liquidity and financial flexibility. Secondly, analysts are anticipating sales growth in the current year, aligning with the reported revenue growth metrics. However, it's important to note that Lucid is quickly burning through cash, suffers from weak gross profit margins, and analysts do not anticipate the company will be profitable this year.
For investors looking to dive deeper into Lucid's financials and future prospects, there are additional InvestingPro Tips available at https://www.investing.com/pro/LUCD. These tips provide a comprehensive analysis, including valuation implications and profitability forecasts, which are essential for making informed investment decisions.
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