Annual Report for Fiscal Year Ending 12-31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our consolidated financial condition and results of operations should be read together with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K (the "Financial Statements"). Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements involving risks and uncertainties and should be read together with the "Forward-Looking Statements" and "Risk Factors" sections of this Annual Report on Form 10-K for a discussion of important factors which could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Unless the context otherwise requires, (i) "we", "us", and "our", and the "Company" and "PAVmed" refer to PAVmed Inc. and its subsidiaries, including its subsidiary Lucid Diagnostics Inc. ("Lucid Diagnostics" or "Lucid") and its majority-owned subsidiary Veris Health Inc. ("Veris Health" or "Veris"), (ii) "FDA" refers to the Food and Drug Administration, (iii) "510(k)" refers to a premarket notification, submitted to the FDA by a manufacturer pursuant to § 510(k) of the Food, Drug and Cosmetic Act and 21 CFR § 807 subpart E, (iv) "CLIA" refers to the Clinical Laboratory Improvement Amendments of 1988 and associated regulations set forth in 42 CFR § 493, and (v) "LDT" refers to a diagnostic test, defined by the FDA as "an IVD that is intended for clinical use and designed, manufactured and used within a single laboratory," which is generally subject only to self-certification of analytical validity under the CMS CLIA program.

Overview

PAVmed is a diversified commercial-stage life sciences company operating in the medical device, diagnostics, and digital health sectors. It operates through multiple independently financed subsidiaries under a shared services model. The Company's strategy is to advance and commercialize innovative healthcare technologies through its subsidiaries while maintaining flexibility to structure financing at either the PAVmed level or within its subsidiaries.

The Company's subsidiaries include Lucid Diagnostics, a commercial-stage cancer prevention medical diagnostics company that markets the EsoGuard® Esophageal DNA Test and EsoCheck® Esophageal Cell Collection Device, of which the Company is the largest voting stockholder, and Veris Health, a majority-owned digital health company focused on improving personalized cancer care during treatment and throughout survivorship through digital health tools and the development of an implantable physiological monitor designed to interface with the Veris Cancer Care Platform.

PAVmed continues to support the commercial expansion of EsoGuard through Lucid Diagnostics and to pursue strategic partnerships to expand adoption of the Veris Cancer Care Platform. In addition, PAVmed is developing a medical device portfolio, including its PortIO implantable intraosseous vascular access device and recently licensed endoscopic imaging technology from Duke University. The Company continues to evaluate opportunities to expand its portfolio through internal development and external licensing.

See Part I, Item 1, Business above for a more detailed summary of the medical device, diagnostics, and digital health sectors and our key products, including in particular EsoGuard and the Veris Cancer Care Platform, which are currently our two leading products.

Recent Developments

Business

Medicare Coverage (Lucid)

In November 2024, Lucid submitted to MolDx its complete clinical evidence package in support of a request for reconsideration of the non-coverage language in the LCD to secure Medicare coverage for EsoGuard. The EsoGuard clinical evidence package included six new peer-reviewed publications: three clinical validation studies (two in the intended use population, one case control), two clinical utility studies, and one analytical validation study. The current LCD provides clear coverage criteria consistent with the ACG guidelines for esophageal precancer testing. The package was submitted as part of a request for reconsideration of the non-coverage language in the LCD to secure Medicare coverage for EsoGuard.

As part of the LCD reconsideration process, MolDx-participating Medicare Administrative Contractors convened a CAC Meeting regarding the LCD on September 4, 2025. At the meeting, eleven experts, including physicians across multiple specialties (GI, primary care, pathology), major society guideline co-authors (ACG, AGA) and industry leaders (American Foregut Society, American Society for Gastrointestinal Endoscopy), participated in this extensive discussion of the unmet clinical need with respect to early detection of esophageal precancer and the strength of the EsoGuard clinical validity and clinical utility data.

Medical Device Developments

In March 2026, PAVmed hired industry-veteran Joseph Virgilio to serve as PAVmed's Chief Business Officer for Medical Devices. Prior to joining PAVmed, Mr. Virgilio held leadership roles at a diverse group of medical device companies over the course of his 25-year career.

In this capacity, Mr. Virgilio will oversee the development and commercialization of PAVmed's current and future medical device portfolio. Such portfolio includes at this time the Company's PortIO implantable intraosseous vascular access device, which is being developed as a means for infusing fluids, medications and other substances directly into the bone marrow cavity and from there into the central venous circulation. The portfolio also includes technology licensed by PAVmed from Duke University that involves a multi-modality probe combining ("a/LCI") with optical coherence tomography ("OCT"), as more fully described below.

Endoscopic Imaging Technology

In February 2026, PAVmed entered into a definitive license agreement with Duke University, through a newly formed subsidiary, for the exclusive worldwide rights to technology involving a multi-modality probe combining angle-resolved low coherence interferometry ("a/LCI") with optical coherence tomography ("OCT"). This technology may be used to identify and facilitate treatment of advanced esophageal precancer ("dysplasia") during upper endoscopy. The platform is designed to integrate with standard endoscopic procedures and may enable real-time assessment of esophageal tissue to guide clinical decision-making during the procedure. Additionally, as the diagnosis of dysplasia currently relies on biopsy-based approaches, which require tissue sampling and subsequent pathological review, this technology may provide a complementary approach to streamline the evaluation and treatment process.

Department of Veteran Affairs (Lucid)

In January 2026, Lucid announced that it has been awarded a contract by the U.S. Department of Veterans Affairs for EsoGuard expanding access to esophageal precancer testing across the nation's largest integrated healthcare system, which serves more than nine million enrolled veterans annually. The contract is issued under the VA Federal Supply Schedule and includes pre-negotiated pricing for EsoGuard that matches the established Medicare payment rate determined by the Centers for Medicare & Medicaid Services (CMS), enabling VA hospitals and healthcare facilities nationwide to access EsoGuard through a single, national VA procurement framework.

Real-World Experience Data (Lucid)

In December 2025, Lucid announced results from an 18-month real-world experience evaluating EsoGuard and EsoCheck in approximately 12,000 patients. The analysis demonstrated high technical success rates, rapid procedure times, and appropriate physician utilization in routine clinical practice, consistent with previously reported clinical studies. The data are currently under peer review for publication.

Strategic Commercial Partnership (Veris)

In October 2025, we announced that Veris and The Ohio State University Comprehensive Cancer Center - The James Cancer Hospital and Solove Research Institute ("OSUCCC - The James"), a National Cancer Institute-Designated Comprehensive Cancer Center, launched the commercial phase of their long-term strategic partnership agreement. This transition to a commercial phase follows successful completion of a pilot program conducted at the OSUCCC -- The James.

Clinical Study Publications (Lucid)

In September 2025, a case series published in Gastroenterology & Hepatology highlighted four real-world cases in which EsoGuard facilitated the timely detection of either high-grade dysplasia ("HGD") or intramucosal carcinoma ("IMC"; T1a esophageal adenocarcinoma). In all four cases, the patients had no prior history of EGD, including one individual who had previously declined multiple EGD referrals. Following positive in-office EsoGuard results, each patient proceeded with endoscopic evaluation, which led to successful identification and eradication of disease in all cases. This case series underscores both the clinical utility of EsoGuard in detecting early-stage neoplasia and the ease with which the test can be integrated into standard office workflows to enhance screening uptake and early disease detection.

Russell 2000® and 3000® Indexes (Lucid)

On June 27, 2025, Lucid was added to the Russell 2000® Index and the Russell 3000® Index, following the 2025 annual reconstitution by FTSE Russell.

NCCN Clinical Practice Guidelines Update (Lucid)

In March 2025, Lucid announced that a recent update to the NCCN Guidelines® focused on Esophageal and Esophagogastric Junction Cancers (Version 1.2025) has added a new section on BE screening. The NCCN Guidelines® now reference professional society guidelines on BE screening, including the most recent ACG clinical guideline discussed above, which recommends non-endoscopic biomarker testing, such as EsoGuard performed on samples collected with EsoCheck, as an acceptable alternative to invasive upper endoscopy to detect esophageal precancer.

Recent Developments - continued

Business - continued

Highmark Reimbursement Approval

On March 13, 2025, Lucid announced that Highmark Blue Cross Blue Shield, an independent licensee of the Blue Cross and Blue Shield Association, has issued a positive coverage policy for non-invasive screening of esophageal precancer and cancer in New York state. The new policy, which became effective as of May 26, 2025, covers EsoGuard in patients who meet established criteria for esophageal precancer testing consistent with professional society guidelines.

Financing

Series D Offering and Recapitalization; Series D Conversion

On February 3, 2026, PAVmed entered into subscription agreements with certain accredited investors and, pursuant to and concurrently with the execution of the Subscription Agreements, sold to the Investors, for an aggregate purchase price of $30.0 million, (i) 30,000 shares of the Company's newly designated Series D Preferred Stock, and (ii) warrants (the "Series D Preferred Stock Warrant") to purchase an additional 30,000 shares of Series D Preferred Stock, with each investor receiving 100 shares of Series D Preferred Stock and a warrant to purchase 100 shares of Series D Preferred Stock for each $100 thousand of its investment (the "Offering"). The initial conversion price of the Series D Preferred Stock is $6.50 per share, subject to adjustment in the event of stock splits, stock dividends, and similar transactions.

Concurrently with the Offering, the Company redeemed all 16,962 shares of Series C Preferred Stock outstanding and refinanced all $8.4 million in principal and interest of its 2022 Note, in consideration of a cash payment to the holder thereof (the "Holder") of approximately $22.3 million (which was made using proceeds from the sale of the Series D Preferred Stock), and the issuance to the Holder of an amended and restated 2022 Note (the "2026 Note") with a principal amount of $15.0 million.

The net proceeds of the Offering, taking into account the cash payments made in respect of the redemption of the Series C Preferred Stock and the 2022 Note, were approximately $7.6 million.

On March 27, 2026, PAVmed's shareholders approved the conversion of the Series D Preferred Stock into shares of our common stock. Promptly following such approval, 100% of the Series D Preferred Stock was converted in full into 4,615,393 shares of our common stock.

Notwithstanding the conversion of the Series D Preferred Stock into shares of our common stock, the Series D Preferred Stock Warrants remain outstanding. Upon the publication by Molecular Diagnostic Services Program (MolDx) of a draft local coverage determination that EsoGuard will be covered by Medicare, the Series D Preferred Stock Warrant will be callable by the Company at a price of $0.001 per warrant share. The Company may send written notice to the holders after such condition has been satisfied and, after receipt of such notice, the holders will have 30 days to exercise the warrants. If such warrants are exercised in full, the Company will receive an additional $30 million in cash proceeds in consideration for the issuance of an additional 4,615,393 shares of our common stock.

Reverse Stock Split; Reduction in Authorized Shares

At a special meeting of the Company's stockholders held on December 5, 2025, the Company's stockholders approved a Reverse Split at a specific ratio, ranging from 1-for-10 to 1-for-30, to be determined by the Board in its sole discretion, as well as the Reduction in Authorized Common Stock from 250,000,000 shares to 25,000,000 shares.

Following the special meeting, the Board approved a ratio of 1-for-30 for the Reverse Split. On December 30, 2025, in order to effect the Reverse Split and the Reduction in Authorized Common Stock, the Company filed a certificate of amendment to its certificate of incorporation, as amended, pursuant to which the Reverse Split and the Reduction in Authorized Common Stock became effective on Friday, January 2, 2026.

The purpose of the Reverse Split was to help the Company regain compliance with the $1 minimum bid requirement for continued listing on the Capital Market of the Nasdaq, which it did, as discussed below. All shares and per share amounts set forth herein give effect to the reverse stock split.

Recent Developments - continued

Financing - continued

NASDAQ Compliance

On January 21, 2026, the Company received a notification letter from the Listing Qualifications department of Nasdaq stating that the Company had regained compliance with the $1 minimum bid price requirement for continued listing on the Nasdaq Capital Market.

As previously reported, on January 23, 2025, the Company had received a notification letter from the Listing Qualifications department stating that, for the prior 30 consecutive business days (through January 22, 2025), the closing bid price of the Company's common stock had been below the minimum of $1 per share required for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). Subsequently, Nasdaq determined that, from January 2, 2026 to January 19, 2026, the closing bid price of the Company's common stock had been at $1 per share or greater. Accordingly, the Company had regained compliance with Nasdaq Listing Rule 5550(a)(2).

Veris Financing (June 2025)

On June 23, 2025, Veris entered into subscription agreements (each, a "Veris June 2025 Subscription Agreement") with certain accredited investors (collectively, the "June 2025 Investors"), pursuant to which Veris agreed to sell and the June 2025 Investors agreed to purchase (the "June 2025 Offering") 1,800,000 shares of common stock, par value $0.001 per share, of Veris ("Veris Common Stock") and warrants to purchase 1,800,000 shares of Veris Common Stock ("Veris Warrants"), at a purchase price of $1.40 per share of Veris Common Stock. On the same day, Veris consummated the June 2025 Offering, generating gross proceeds to Veris of approximately $2.5 million. The proceeds of the offering will be used to continue development activities related to Veris' implantable physiological monitor and for general working capital purposes.

The Veris Warrants become exercisable six months after issuance and expire on the earlier of (i) the five-year anniversary of the initial exercise date and (ii) the 60th day following receipt by Veris of FDA approval of its implantable physiological monitor. The Veris Warrants have an exercise price of $1.40 per share, subject to adjustment under certain circumstances.

PAVmed/Veris Financing (February 2025)

On February 18, 2025, the Company and Veris, entered into subscription agreements (each, a "Subscription Agreement") with certain accredited investors (collectively, the "Investors"), pursuant to which the Company agreed to sell and the Investors agreed to purchase (the "Offering") 85,812 shares of the Company's common stock and pre-funded warrants to purchase 25,225 shares of the Company's common stock (the "Pre-Funded Warrants"), at a purchase price of $21.345 per share or warrant share (as applicable). In addition, Veris agreed to issue to each Investor approximately 6.098 shares of Veris' common stock for each share or warrant share (as applicable) purchased by such Investor, for an aggregate of 677,143 shares of Veris' common stock. On February 21, 2025, the Company consummated the Offering, generating gross proceeds to the Company of $2.37 million. The proceeds of the offering will be used to resume development activities related to Veris' implantable physiological monitor and for general working capital purposes.

The Pre-Funded Warrants were exercised as of June 19, 2025.

PAVmed ATM

On April 17, 2025, the Company entered into a Sales Agreement with Maxim, pursuant to which the Company may offer and sell, from time to time through or to Maxim, shares of its common stock. Under the Sales Agreement, the Company may not issue or sell through Maxim a dollar amount of shares that would exceed $2.88 million of shares. The Company will pay Maxim a commission of 3.0% of the aggregate gross sales prices of the shares. The Company intends to use the net proceeds from any such sales for working capital and general corporate purposes.

This facility replaced the "at the market" facility PAVmed previously maintained with Cantor (which facility was on substantially similar terms).

Recent Developments - continued

Financing - continued

Lucid Diagnostics - Confidentially Marketed Public Offering (September 2025)

On September 11, 2025, Lucid closed on the sale of 28,750,000 shares of its common stock, pursuant to its previously announced offering of shares of common stock at a price of $1.00 per share (the "Lucid September CMPO"). The net proceeds from the Lucid September CMPO, after deducting the underwriting discount and other expenses of the Lucid September CMPO, were approximately $27.0 million. Lucid is using the net proceeds from the Lucid September CMPO for working capital and general corporate purposes.

Lucid ATM Facility

On May 30, 2025, Lucid entered into a Controlled Equity Offering Agreement (also "ATM" or "at-the-market" offering) between Lucid and Maxim Group LLC for up to $25 million of its common stock that may be offered and sold from time to time. Subsequent to December 31, 2025, as of March 27, 2026, Lucid sold 4,161,747 shares through its at-the-market equity facility for net proceeds of approximately $5.3 million, after payment of 3% commissions.

Results of Operations

Overview

Revenue

The Company recognized revenue from subscription revenue derived from its Veris Health Cancer Care Platform. Until September 10, 2024, the date of deconsolidation of Lucid Diagnostics from PAVmed's consolidated results, the Company recognized revenue primarily resulting from the delivery of patient EsoGuard test results when the Company considered the collection of such consideration to be probable to the extent that it is unconstrained.

Cost of revenue

The Company's cost of revenue from subscription revenue was derived from its Veris Health Cancer Care Platform. Until September 10, 2024, the date of deconsolidation of Lucid Diagnostics from PAVmed's consolidated results, the cost of revenues recognized was primarily from the delivery of patient EsoGuard test results and included costs related to EsoCheck device usage, shipment of test collection kits, royalties and the cost of services to process tests and provide results to physicians. We have incurred expenses for tests in the period in which the activities occur, therefore, gross margin as a percentage of revenue has varied from quarter to quarter due to costs being incurred in one period that relate to revenues recognized in a later period.

We expect that gross margin for our services will fluctuate based on the commercialization efforts of our subsidiaries.

Sales and marketing expenses

Sales and marketing expenses consist primarily of salaries and related costs for employees engaged in sales, sales support and marketing activities, as well as advertising and promotion expenses. We anticipate our sales and marketing expenses to decrease in the future compared to historical periods ending on or prior to September 30, 2024 due to the deconsolidation of Lucid as of September 10, 2024, as going forward, the expenses associated with the sales and marketing operations for the Lucid EsoGuard test will no longer recorded within the Company's operating results.

General and administrative expenses

General and administrative expenses consist primarily of salaries and related costs for personnel, travel expenses, facility-related costs, professional fees for accounting, tax, audit and legal services, salaries and related costs for employees involved in third-party payor reimbursement contract negotiations and consulting fees and other expenses associated with obtaining and maintaining patents within our intellectual property portfolio.

We anticipate our general and administrative expenses will decrease in the future compared to historical periods ending on or prior to September 30, 2024 due to the deconsolidation of Lucid as of September 30, 2024, as going forward, the general and administrative expenses, including third-party payor reimbursement costs, incurred by Lucid will no longer be recorded within the Company's operating results. In the future, general and administrative expenses will include those expenses related to being a public company, including fees and expenses for audit, legal, regulatory, tax-related services, insurance premiums and investor relations costs associated with maintaining compliance as a public company for PAVmed and its majority-owned subsidiaries.

Research and development expenses

Research and development expenses are recognized in the period they are incurred and consist principally of internal and external expenses incurred for the development of our products, including:

	●	consulting costs for engineering design and development;
	●	salary and benefit costs associated with our medical research personnel and engineering personnel;
	●	costs associated with submission of regulatory filings;
	●	cost of laboratory supplies and acquiring, developing, and manufacturing preclinical prototypes; and
	●	product design engineering studies.

The expenses of our research and development activities, including our clinical trials, for historical periods ending on or prior to September 30, 2024 were principally related to EsoGuard and the Veris Cancer Care Platform. Due to the deconsolidation of Lucid on September 10, 2024, the expenses in respect of the Company's research and development activities for subsequent historical periods and future periods will include those associated with research and development activities related to the Veris Cancer Care Platform, the PMX incubator program and other products in our pipeline as well as applicable new technologies, as resources permit.

Results of Operations - continued

Other Income and Expense, net

Other income and expense, net, consists principally of changes in fair value of our convertible notes and losses on extinguishment of debt upon repayment of such convertible notes.

Presentation of Dollar Amounts

All dollar amounts in this Management's Discussion and Analysis of Financial Condition and Results of Operations are presented as dollars in millions, except for share and per share amounts.

The year ended December 31, 2025 as compared to year ended December 31, 2024

Revenue

In the year ended December 31, 2025, revenue was $0.1 million as compared to $3.0 million for the corresponding period in the prior year. The $2.9 million decrease principally related to the revenue from Lucid's EsoGuard Esophageal DNA Tests not being included in our operating results for the year ended December 31, 2025 as compared to the prior year, during which Lucid's operating results were included through September 10, 2024.

Cost of revenue

In the year ended December 31, 2025, cost of revenue was $0.2 million as compared $4.8 million for the corresponding period in the prior year. The net decrease of $4.6 million was principally related to Lucid's results not being included in our operating results for the year ended December 31, 2025 as compared to the prior year, during which Lucid's operating results were included through September 10, 2024.

Sales and marketing expenses

In the year ended December 31, 2025, sales and marketing costs were approximately $0.9 million as compared to $11.6 million for the corresponding period in the prior year. The net decrease of $10.7 million was principally related to Lucid's results not being included in our operating results for the year ended December 31, 2025 as compared to the prior year, during which Lucid's operating results were included through September 10, 2024.

General and administrative expenses

In the year ended December 31, 2025, general and administrative costs were approximately $16.3 million as compared to $24.5 million for the corresponding period in the prior year. The net decrease of $8.2 million was principally related to Lucid's results not being included in our operating results for the year ended December 31, 2025 as compared to the prior year, during which Lucid's operating results were included through September 10, 2024.

Research and development expenses

In the year ended December 31, 2025, research and development costs were approximately $4.5 million as compared to $5.9 million for the corresponding period in the prior year. The net decrease of $1.4 million was principally related to Lucid's results not being included in our operating results for the year ended December 31, 2025 as compared to the prior year, during which Lucid's operating results were included through September 10, 2024.

Amortization of Acquired Intangible Assets

The amortization of acquired intangible assets was $0 in the year ended December 31, 2025, as compared to $0.6 million for the corresponding period in the prior year. The decrease of $0.6 million was principally related to Lucid's results not being included in our operating results for the year ended December 31, 2025 as compared to the prior year, during which Lucid's operating results were included through September 10, 2024.

Results of Operations - continued

The year ended December 31, 2025 as compared to year ended December 31, 2024 - continued

Other Income and Expense

Change in fair value of convertible debt

In the years ended December 31, 2025 and December 31, 2024, the change in the fair value of our convertible notes was approximately $3.3 million of expense and $0.5 million of income, respectively, related to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note. The April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note were initially measured at their issue-date estimated fair value and subsequently remeasured at estimated fair value as of each reporting period date. The Company initially recognized an aggregate of $4.3 million of fair value non-cash expense on the issue dates.

Loss on Debt Extinguishment

In the year ended December 31, 2025, a debt extinguishment loss in the aggregate of approximately $0.1 million was recognized in connection with our September 2022 Senior Convertible Note as discussed below.

●

In the year ended December 31, 2025, approximately $0.2 million of principal repayments along with less than $0.1 million of interest expense thereon, were settled through the issuance of 13,377 shares of common stock of the Company, with such shares having a fair value of approximately $0.3 million (with such fair value measured as the quoted closing price of the common stock of the Company on the respective conversion date). The conversions resulted in a debt extinguishment loss of $0.1 million in the year ended December 31, 2025.

In the year ended December 31, 2024, a debt extinguishment loss in the aggregate of approximately $2.5 million was recognized in connection with our April 2022 Senior Convertible Note and September 2022 Senior Convertible Note as discussed below.

	●	In the year ended December 31, 2024, approximately $1.4 million of principal repayments along with $0.1 million of interest expense thereon, were settled through the issuance of 36,147 shares of common stock of the Company, with such shares having a fair value of approximately $2.0 million (with such fair value measured as the quoted closing price of the common stock of the Company on the respective conversion date). In addition, the Company agreed to pay $1.1 million in cash related to acceleration floor payments on these notes related to the conversion price being below the conversion floor price specified in the notes, recorded as debt extinguishment loss. The conversions and cash paid resulted in a debt extinguishment loss of $1.5 million in the year ended December 31, 2024.
	●	During the period of January 1, 2024 through September 10, 2024, the date of PAVmed's deconsolidation of Lucid, approximately $2.0 million of principal repayments along with approximately $0.8 million of interest expense thereon, were settled through the issuance of 4,172,002 shares of Lucid common stock, with such shares having a fair value of approximately $3.8 million (with such fair value measured as the quoted closing price of the common stock of Lucid on the respective conversion date). The conversions resulted in a debt extinguishment loss of $1.0 million in the period of January 1, 2024 through September 10, 2024.

See Note 12, Debt, to the Financial Statements, for additional information with respect to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note.

Gain on Deconsolidation of Lucid

As of December 31, 2024, there were 63,071,950 shares of common stock of Lucid Diagnostics issued and outstanding, of which, the Company held 31,302,444 shares. On September 10, 2024, as a result of changes in the composition of the Company's board of directors described above, in combination with the Company ceasing to have control over a majority of the voting power of Lucid, the Company was considered to cease to have control over Lucid for the purposes of U.S. GAAP, even though it continues to own, and has not disposed any of its, 31,302,444 shares of common stock of Lucid. However, PAVmed retained the ability to exercise significant influence over Lucid. As a result, the Company deconsolidated Lucid. Upon deconsolidation, the Company's ownership of 31,302,444 shares of Lucid Diagnostics common stock was valued at $25.1 million, which resulted in a gain on deconsolidation of $72.3 million in the accompanying consolidated statements of operations for the year ended December 31, 2024.

Results of Operations - continued

The year ended December 31, 2025 as compared to year ended December 31, 2024 - continued

Other Income and Expense - continued

Change in fair value of Equity Method Investment

At December 31, 2025 and December 31, 2024, the fair value of the Company's investment in Lucid was $34.1 million and $25.6 million, respectively, with the company recognizing an unrealized gain on its investment in Lucid of $8.5 million and $0.5 million, respectively, in the accompanying consolidated statements of operations for the years ended December 31, 2025 and 2024. The fair value of common shares held by the Company was determined using the closing price of Lucid's common stock per share on December 31, 2025 and 2024 of $1.09 and $0.819, respectively.

Deemed Dividend on Series A and Series A-1 Convertible Preferred Stock Exchange Offer

The fair value of the consideration given in the form of the issue of 31,790 shares of Lucid Series B Preferred Stock, with such fair value recognized as the carrying value of such issued shares of Lucid Series B Preferred Stock, as compared to the carrying value of the extinguished Lucid Series A and Series A-1 Preferred Stock (carrying value of $24.3 million), resulting in an excess of fair value of $7.5 million recognized as a deemed dividend charged to accumulated deficit in the consolidated balance sheet on March 13, 2024, with such deemed dividend included as a component of net loss attributable to common stockholders, summarized as follows:

Lucid Series B Convertible Preferred Stock Issuance and Lucid Series A/A-1 Exchange Offer ($ in thousands)	​	Year Ended December 31, 2024		​
​	​	​	​	​
Fair Value - 31,790 shares of Lucid Series B Preferred Stock issued in exchange for Lucid Series A and Lucid Series A-1 Preferred Stock	​	$	31,790	​
Less: Carrying value related to Lucid Series A and Lucid Series A-1 Preferred Stock Exchanged for Lucid Series B Preferred Stock (of 24,295 shares)	​	​	(24,294	)
Deemed Dividend Charged to Accumulated Deficit	​	$	7,496	​

Liquidity and Capital Resources

Our current financing strategy is to obtain capital directly into Lucid, Veris and other subsidiaries to fund any product development or other related activities, while retaining the flexibility to raise capital at the PAVmed level. There are no assurances, however, we will be able to obtain an adequate level of financial resources required for the short-term or long-term commercialization and development of our products and services.

We have financed our operations principally through the public and private issuances of our common stock, preferred stock, common stock purchase warrants, preferred stock purchase warrants, and debt, both at the PAVmed level and, in the case of Lucid and Veris, at the subsidiary level. We are subject to all of the risks and uncertainties typically faced by medical device and diagnostic and medical device companies that devote substantially all of their efforts to the development of a pipeline of products through commercialization, and related ongoing research and development activities and clinical trials. We experienced a net loss before noncontrolling interests of approximately $2.5 million and used approximately $5.2 million of cash in operations for the year ended December 31, 2025. Financing activities provided $5.6 million of cash during the year ended December 31, 2025. We ended the year with cash on-hand of $1.5 million as of December 31, 2025. We expect to continue to experience recurring losses and negative cash flows from operations, and will continue to fund our operations with debt and/or equity financing transactions, including current obligations on the Company's existing convertible debt which in accordance with management's plans may include conversions to equity and refinancing our existing debt obligations to extend the maturity date. The Company's ability to continue operations 12 months beyond the issuance of the financial statements, will depend upon its ability to control its operating costs within the limits of the amounts collected from its management service contracts with its non-consolidated subsidiaries, to substantially increase its revenues from the Veris Cancer Care platform, and to raise additional capital through various potential sources including equity or debt financings, the exercise of outstanding warrants by the holders thereof or refinancing or restructuring existing debt obligations. These factors raise substantial doubt about the Company's ability to continue as a going concern within one year after the date the accompanying consolidated financial statements are issued.

Issue of Shares of Our Common Stock

During the year ended December 31, 2025:

	●	We issued 40,553 shares of our common stock for net proceeds of approximately $0.8 million, after payment of 3% commissions, through our at-the-market equity facility with Cantor (which has since been replaced by a similar facility with Maxim Group LLC). See below for more information.
	●	We issued 13,377 shares of our common stock in satisfaction of approximately $0.2 million of principal repayments along with less than $0.1 million of interest expense thereon under the September 2022 Senior Convertible Note.
	●	We issued 375,834 shares of our common stock as a result of conversions of $4.5 million of our Series C Preferred Stock.
	●	We issued 85,812 shares of our common stock and pre-funded warrants to purchase 25,225 shares of our common stock (which shares have been subsequently issued upon exercise of such warrants), in combination with the issuance of 677,143 shares of Veris, for gross proceeds of approximately $2.37 million.
	●	We issued 5,081 shares of our common stock to vendors in exchange for approximately $0.1 million of agreed upon services, which is included in general and administrative operating expenses on the Company's consolidated statement of operations.

Subsequent to December 31, 2025, the Company and its subsidiaries completed a number of financing-related transactions. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations-Recent Developments-Financing, above for more details on these transactions.

Liquidity and Capital Resources - continued

Senior Notes

On April 4, 2022 we sold to an investor a Senior Secured Convertible Note with a face value principal of $27.5 million (the "April 2022 Senior Convertible Note"). The April 2022 Senior Secured Convertible Note had an initial contractual maturity date of April 4, 2024, which maturity date the investor agreed to extend by one year, to April 4, 2025. The April 2022 Senior Convertible Note was satisfied in full in connection with the Exchange.

On September 8, 2022 we sold to the same investor an additional Senior Secured Convertible Note with a face value principal of $11.25 million (the "September 2022 Senior Convertible Note"). The September 2022 Senior Secured Convertible Note had an initial contractual maturity date of September 6, 2024, which maturity date has been now extended to December 31, 2025. A portion of the September 2022 Senior Convertible Note was satisfied in connection with the Exchange.

Subsequent to December 31, 2025, on February 3, 2026, we consummated a series of financing-related transactions (the "February 2026 Financing"), in connection with which we refinanced the September 2022 Senior Secured Convertible Note by issuing to the holder thereof an amended and restated September 2022 Senior Secured Convertible Note with a face value principal of $15.0 million (the "2026 Note"). The February 2026 Financing generated gross proceeds to the Company of approximately $7.6 million. The 2026 Note has an initial contractual maturity date of February 3, 2029.

See Note 12, Debt, to the Financial Statements for additional information about the September 2022 Senior Convertible Note. See also Note 4, Equity Method Investment, to the Financial Statements for additional information about the September 2022 Senior Convertible Note as it relates to the MSA.

Convertible Preferred Stock

On November 15, 2024, the Company entered into an Exchange Agreement (the "Debt Exchange Agreement") with the holder (the "Holder") of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note. The Debt Exchange Agreement provided for the exchange (the "Exchange") of $22.3 million in principal amount of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note and interest thereon for 22,347 shares of Series C Preferred Stock. On January 17, 2025, after satisfaction of all conditions to closing, the parties consummated the Exchange.

On November 20, 2024, the Company entered into a Securities Purchase Agreement (the "Series C Securities Purchase Agreement") with the Holder. The Series C Securities Purchase Agreement provided for the purchase of 2,653 shares of Series C Preferred Stock at a price of $1,000 per share, with the purchase price to be satisfied through the cancellation of $2.6 million of certain unsecured debt obligations owed by the Company to the Holder (the "Purchase"). On January 24, 2025, after satisfaction of all conditions to closing, the parties consummated the Purchase.

Subsequent to December 31, 2025, on February 3, 2026, the Company consummated the February 2026 Financing, in connection with which we sold to certain accredited investors (i) 30,000 shares of Series D Preferred Stock, and (ii) warrants (the "Series D Warrants") to purchase an additional 30,000 shares of Series D Preferred Stock, with each investor receiving 100 shares of Series D Preferred Stock and a warrant to purchase 100 shares of Series D Preferred Stock for each $100,000 of its investment. Concurrently therewith, the Company redeemed all 16,962 shares of Series C Preferred Stock outstanding.

The Series D Warrants entitle the holders thereof to purchase an aggregate of 30,000 shares of Series D Preferred Stock at an exercise price of $1,000 per share. The Series D Warrants expire on February 3, 2031. Commencing on the publication by Molecular Diagnostic Services Program (MolDx) of a draft local coverage determination that EsoGuard will be covered by Medicare, the Series D Warrants will be callable by the Company at a price of $0.001 per warrant share. The Company may send written notice to the holders after such condition has been satisfied and, after receipt of such notice, the holders will have 30 days to exercise the Series D Warrants. If such warrants are exercised in full, the Company will receive an additional $30 million in cash proceeds in consideration for the issuance of an additional 4,615,393 shares of our common stock.

See Note 14, Preferred Stock, to the Financial Statements for additional information about the Series C Preferred Stock and the Series D Preferred Stock.

Liquidity and Capital Resources - continued

PAVmed Inc. ATM Facility

In the year ended December 31, 2025, the Company sold 40,553 shares through its at-the-market equity facility with Cantor Fitzgerald & Co. and for net proceeds of approximately $0.8 million, after payment of 3% commissions.

On April 17, 2025, the Company entered into a Sales Agreement with Maxim, pursuant to which the Company may offer and sell, from time to time through or to Maxim, shares of its common stock. Under the Sales Agreement, the Company may not issue or sell through Maxim a dollar amount of shares that would exceed $2.88 million of shares. The Company will pay Maxim a commission of 3.0% of the aggregate gross sales prices of the shares. The Company intends to use the net proceeds from any such sales for working capital and general corporate purposes. This facility replaces the "at the market" facility PAVmed previously maintained with Cantor (which facility was on substantially similar terms).

PAVmed/Veris Financing (February 2025)

On February 21, 2025, the Company, Veris and certain accredited investors consummated an offering (the "February 2025 Offering") of 85,812 shares of the Company's common stock and pre-funded warrants to purchase 25,225 shares of the Company's common stock (the "Pre-Funded Warrants"), at a purchase price of $21.345 per share or warrant share (as applicable). In addition, Veris issued to each participating investor approximately 6.098 shares of Veris' common stock for each share or warrant share (as applicable) purchased by such investor, for an aggregate of 677,143 shares of Veris' common stock. The February 2025 Offering generated gross proceeds to the Company of $2.37 million. The Pre-Funded Warrants were classified (through their date of exercise, on June 19, 2025) as equity as they were indexed to the Company's own stock and met the criteria for equity classification. The proceeds received were recorded in additional paid-in capital with no subsequent remeasurement.

The Pre-Funded Warrants were exercised as of June 19, 2025.

Veris Financing (June 2025)

On June 23, 2025, Veris and certain accredited investors consummated an offering (the "June 2025 Offering") of 1,800,000 shares of common stock, par value $0.001 per share, of Veris ("Veris Common Stock") and warrants to purchase 1,800,000 shares of Veris Common Stock ("Veris Warrants"), at a purchase price of $1.40 per share of Veris Common Stock. The June 2025 Offering generated gross proceeds to Veris of approximately $2.5 million. The proceeds of the offering will be used to continue development activities related to Veris' implantable physiological monitor and for general working capital purposes.

The Veris Warrants become exercisable six months after issuance and expire on the earlier of (i) the five-year anniversary of the initial exercise date and (ii) the 60th day following receipt by Veris of FDA approval of its implantable physiological monitor. The Veris Warrants have an exercise price of $1.40 per share, subject to adjustment as described below. The Veris Warrants may be exercised only for cash. The exercise price and number and type of securities or other property issuable on exercise of the Veris Warrants may be adjusted in certain circumstances, including in the event of a stock split or combination, stock dividend, or a recapitalization, reorganization, merger or similar transaction. In addition, if Veris completes a subsequent equity raise at a lower valuation, the exercise price of the Veris Warrants will be reduced to such lower valuation and the number of shares issuable on exercise of the Veris Warrants will be increased so that the aggregate exercise price remains the same.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions affecting the reported amounts of assets, liabilities, and equity, along with the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the corresponding periods. In accordance with U.S. GAAP, we base our estimates on historical experience and on various other assumptions we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in our consolidated financial notes, we believe the following accounting estimates to be critical to the judgments and estimates used in the preparation of our consolidated financial statements.

Fair Value Option ("FVO") Election

Under a Securities Purchase Agreement dated March 31, 2022, the Company issued a Senior Secured Convertible Note dated April 4, 2022, referred to herein as the "April 2022 Senior Convertible Note", and a Senior Secured Convertible Note dated September 8, 2022, referred to herein as the "September 2022 Senior Convertible Note", which are accounted under the "fair value option election" as discussed below.

Under a Securities Purchase Agreement dated March 13, 2023, Lucid Diagnostics issued a Senior Secured Convertible Note dated March 21, 2023, referred to herein as the "Lucid March 2023 Senior Convertible Note", which is accounted under the "fair value option election", through September 10, 2024, the date of Lucid's deconsolidation from PAVmed's results of operations, as discussed below.

Under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 815, Derivative and Hedging, ("ASC 815"), a financial instrument containing embedded features and /or options may be required to be bifurcated from the financial instrument host and recognized as separate derivative asset or liability, with the bifurcated derivative asset or liability initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date.

Alternatively, FASB ASC Topic 825, Financial Instruments, ("ASC 825") provides for the "fair value option" ("FVO") election. In this regard, ASC 825-10-15-4 provides for the FVO election (to the extent not otherwise prohibited by ASC 825-10-15-5) to be afforded to financial instruments, wherein the financial instrument is initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date, with changes in the estimated fair value recognized as other income (expense) in the statement of operations. The estimated fair value adjustment of the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and (through September 10, 2024, Lucid's deconsolidation date) the Lucid March 2023 Senior Convertible Note are presented in a single line item within other income (expense) in the accompanying consolidated statement of operations (as provided for by ASC 825-10-50-30(b)). Further, as required by ASC 825-10-45-5, to the extent a portion of the fair value adjustment is attributed to a change in the instrument-specific credit risk, such portion would be recognized as a component of other comprehensive income ("OCI") (for which there was no such adjustment with respect to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note or (through September 10, 2024, Lucid's deconsolidation date) the Lucid March 2023 Senior Convertible Note).

The estimated fair values recognized utilized PAVmed and Lucid's common stock prices, along with certain Level 3 inputs, in the development of Monte Carlo simulation models, discounted cash flow analyses, and /or Black-Scholes valuation models. The estimated fair values are subjective and are affected by changes in inputs to the valuation models and analyses, including the respective common stock prices, the dividend yields, the risk-free rates based on U.S. Treasury security yields, and certain other Level-3 inputs including, assumptions regarding the estimated volatility in the value of the respective common stock prices. Changes in these assumptions can materially affect the recognized estimated fair values.

See Note 11, Financial Instruments Fair Value Measurements, with respect to the FVO election; and Note 12, Debt, for a discussion of the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and the Lucid March 2023 Senior Convertible Note.

Recent Accounting Standards

Recent Accounting Standards Updates Adopted

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)-Improvements to Income Tax Disclosures ("ASU 2023-09"), which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2024. Early adoption is permitted. The guidance was adopted by the Company effective January 1, 2025, on a prospective basis. The adoption of this standard did not have a material impact on the Company's consolidated financial statements, but resulted in new or expanded disclosures upon adoption.

Recent Accounting Standards Updates Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This update enhances financial statement disclosures by requiring public business entities to disclose specified information about certain costs and expenses including the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, and (d) intangible asset amortization included in each relevant expense caption. The update also requires disclosure of certain amounts that are already required to be disclosed under current GAAP, disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and disclosure of the total amount of selling expenses and, in annual reporting periods, an entity's definition of selling expenses. The amendments in this update may be applied either prospectively or retrospectively and are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements.

In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative. This update modifies the disclosure or presentation requirements of a variety of topics in the Accounting Standards Codification to conform with certain SEC amendments in Release No. 33-10532, Disclosure Update and Simplification. The amendments in this update should be applied prospectively, and the effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or S-K becomes effective. However, if the SEC has not removed the related disclosure from its regulations by June 30, 2027, the amendments will be removed from the Codification and not become effective. Early adoption is prohibited. The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements and disclosures.

Off-Balance sheet arrangements

We do not have any off-balance sheet arrangements.