Q4 2021 LENSAR Inc Earnings Call
Yeah.
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Good morning, and thank you for your participation 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 call will be recorded I would now like to turn the call over to Cameron <unk> of Burns Mcclellan Mr. <unk>. Please go ahead.
Thank you good morning, and welcome to the <unk> fourth quarter and full year 2021 financial results Conference call.
Earlier this morning, the company issued a press release, providing an overview of its financial results for the quarter and full year ended December 31, two.
2021.
This press release is available on the Investor Relations section of the company's website at Www Dot lens, our dot com.
Joining me on the call today is Nick Curtis Chief Executive Officer of ones are who will review the company's recent business and operational progress.
Following his comments, Tom Staab, Chief financial officer of loans, or who will provide an overview of the company's financial highlights before turning the call back over to Nick for closing remarks.
Today's conference call will contain forward looking statements, including those statements regarding future results unaudited and forward looking financial information as well as the Companys future performance <unk> achievements.
These statements are subject to known and unknown risks and uncertainties, which may cause the company's actual results performance or achievements to be.
Be materially different from any future results or performance expressed or implied in this presentation.
You should not place undue reliance on these forward looking statements.
For additional information, including a detailed discussion of the company's risk factors. Please refer to the company's documents filed with the Securities and Exchange Commission, which can be accessed on the website.
In addition, this conference call contains time sensitive information that is accurate only.
As of the date of this live broadcast March 3rd 2020 sale.
<unk> undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances.
After the date of this live conference call.
It is my pleasure to turn the call over to Nick Curtis Nick.
Thank you Cameron and good morning to everyone listening. Thank you for joining us on our fourth quarter and full year 2021 conference call.
2021 was a Europe continued progress and execution for <unk> and I'm proud of all that we've accomplished since becoming a public company in the fall of 2020, despite facing the lingering challenges associated with the global COVID-19 pandemic.
2021 represented a return to our historical growth trends as well as meeting our development milestones leading up to our 500 10-K filing for ally in the first quarter of 2022.
Our full year revenue increased 31% and procedure sold were up 37% over 2020.
It's also an important metric to note procedures were up approximately 22% in 2021 as compared to pre pandemic levels in 2019, signifying a return to our historical trend of delivering 20 plus percent growth on an annual basis.
In addition to steady growth in procedure volumes, we saw increases in both system sales and lease placements for our current product offering less our laser system with streamlined and tele access refractive capsule orexis.
This is yet another indication, reflecting our continued demand and confidence from the surgeon community and the value of our leading edge cataract surgery technology.
Even with the difficulty of placing capital equipment, and new accounts, including the more time consuming operating procedures and controls our surgeons and site space in the backdrop and uncertainty of the pandemic. We were successful in increasing our worldwide installed base of systems over 10% in 2021.
One of the key benefits to the gradual easing of Covid related restrictions has been our ability to engage in more direct in person sales and marketing activities with physicians as well as industry events, even though we were successful in adapting.
Even though we are successful in adapting our operations to whatever situation. The pandemic presented face to face interactions and the ability to visit with existing and prospective customers is beneficial to the process of demonstrating and realizing the benefits of our more highly evolved current femtosecond laser as well as to engage in more productive discussions.
Regarding the substantial benefits and enhancements of the alloy system.
As we entered the fourth quarter, our teams scheduled several meetings and presentations around the AAN conference in New Orleans, and Es Crs sponsored a GM cornea.
Linda was able to leverage the growing appreciation of our current lends our system with our core feature technologies as well as the enhanced features and advancements in technology of our next generation ally adaptive cataract treatment system that we're planning to bring defence a second laser cataract surgical procedures.
Turning to ally, we recently achieved a major milestone with the submission and the FDA acceptance of our 500 10-K application and regulatory clearance of ally as promised.
Our application is now undergoing substantive review by the agency we are on track to launch Allied in the second half of 2022, if cleared by FDA.
As we discussed in our press release announcing FDA acceptance of the 500 10-K. This submission is the first phase of a planned two step commercial release strategy.
<unk> adaptive cataract treatment system cleared by the FDA will be launched as the next generation Femtosecond laser.
This launch will be followed by an additional five 10-K application seeking clearance of the fake where most of the cases features contained within the integrated ally system later this year.
I will begin commercialization of ally as planned with a controlled launch.
All I will have the February most location device integrated as part of the system. However, the features we will not be enabled for use until we receive FDA clearance on this aspect of the combined system. We believe the staged approach allows us to the most efficient expeditious and clear pathway to commercialization for ally and more importantly puts the most advanced.
Vance and most contemporary femtosecond laser in the hands of surgeons in 2022.
The majority of competitive Femtosecond lasers currently in use are nearing the end of their useful life and are clearly vulnerable to replacement ophthalmic surgeons demand. The most contemporary and advanced technology not systems that lacks substantive relevant enhancements that are based on technology more than a decade old.
They want access to the most efficient and best tools in their hands because provides the opportunity to deliver best practice outcomes for their patients in their practices.
Other than our current LLS the first femtosecond lasers for cataract surgery entered the market as early as 2010 and they haven't evolved much from their initial state. These lasers lack. The key features that are at the core foundation and the current generation LLS and in the alloy adaptive cataract treatment system.
<unk> laser system has been evolutionary to include a suite of fixed significant upgrades in the past six years, providing better technology to assist a surgeon and delivering consistently better efficiencies and outcomes.
Proving both the patients and surgeons experience in cataract surgery.
Now we are moving to ally.
Allies revolutionary having the potential to address many of the limitations of current technology through its small footprint.
Significantly increase laser speeds and both the cornea and lens treatments that are part of the cataract procedure.
<unk> superior imaging capabilities and includes advanced Astigmatism management features we believe that ally sets a new standard for Femtosecond laser assisted cataract surgery with the potential to improve surgeon efficiency and enable them to deliver optimal outcomes for patients.
First in market dual pulse laser is designed to significantly reduce the duration of treatments cutting procedure time by up to two thirds.
We look forward to the FDA review process and updating you on all of our progress as we move closer to a potential clearance decision.
2021 presented challenges I believe we are on the verge of revolutionizing the cataract treatment market, where at this juncture. Thanks to the commitment teamwork and supported the entire lens, our team and working toward our collective objectives of continuing to be the technology leader in the industry.
Now, let me turn the call over to Tom to cover our financial highlights for the quarter and year Tom.
Thank you Nick.
Our fourth quarter and full year 2021 financial results are included in our press release issued earlier this morning, but I'd like to take this opportunity to expand on that information by adding some color to the remarks contained in the release.
Revenue was $11 2 million in the fourth quarter of 2021 compared to $8 3 million in the fourth quarter of 2020.
All individual components of revenue product lease and service increased from the fourth quarter of 2020.
It was a very strong quarter for us with total revenue, increasing $2 9 million or.
35% over the fourth quarter of 2020.
The increase in 2021 total revenue was primarily driven by increased procedure volume generating approximately $1 $8 million with the remainder due to system sales and lease placements.
In the fourth quarter of 2021, we sold 41642 procedures compared to 30503 procedures sold in the fourth quarter of 2020.
Our procedure volume increased 37% over the fourth quarter of 2020, and 30% over the fourth quarter of 2019.
Gross margin for the quarter was $5 6 million and represented a gross margin percentage of 52%.
We increased gross margin and $1 million in the quarter over the $4 7 million recorded in the fourth quarter of 2020.
Total operating expense for the fourth quarter of 2021 were $9 5 million compared.
Compared to $11 5 million in the fourth quarter of 2020.
This decrease was largely due to less noncash stock compensation expense somewhat offset by an increase in R&D expenditures.
The increase in R&D for the fourth quarter of 2021 was related to additional costs for the continued development of ally as we neared our 500 10-K filing as well as materials purchased for the manufacturer of Allied which totaled approximately $1 million in the quarter.
Total stock based compensation in the fourth quarter of 2021, and 2020 was $1 5 million and $5 $1 million respectively.
Net loss for the quarter decreased significantly and was $3 9 million.
We're a 41 loss per share compared to a six $8 million loss or <unk> 78 loss per share in the fourth quarter of 2020.
Adjusted EBITDA for the fourth quarter of 2021, which excludes stock based compensation expense was a 1.6.
$6 million loss compared to a $1 $1 million loss in the fourth quarter of 2020.
As of December 31, 2021, we had cash and cash equivalents of $31 6 million as compared to $40 6 million at December 31 2020.
Cash utilized in the fourth quarter was $700000 and $9 million for the full year.
With over $31 million on cash on hand at December 31.
A cash burn of less than $10 million for 2021.
And our ally five 10-K submission accepted for substantive review by the FDA we.
We have a strong balance sheet and positive momentum going into our anticipated ally launch in the second half of this year.
I would also like to touch on a few other high points for 2021.
Our total revenue for 2021 increased $8 1 million or 31% over 2020 levels.
Our recurring revenue for the year with 86%.
Which represents all revenue outside of system sales and provides a recurring revenue foundation of approximately $30 million going into 2022.
As you look at procedures are annual procedure volume in 2021 increased 35% over 2020 levels and 22% over 2019 levels, indicating system utilization and a primary indicator of our business growth has returned to historical trend levels.
Historically, excluding 2020, when elective procedures were shut down due to the pandemic. We successfully grew our business by at least 20% every year.
As we report today, we feel we have persevered through the pandemic, well and we look forward to achieving exciting and pivotal align milestones in 2022.
In summary.
Our annual procedure and revenue growth accompanied with our cash provides strong pillars supporting the lens our foundation to launch ally in the second half of 2022.
Now I'd like to turn the call back over to Nick for some closing remarks.
Thank you Tom.
I really appreciate everyone, taking the time to listen this morning, and I'm going to turn the call back over to the operator, and we look forward to your questions.
At this time, if you would like to ask a question press star one on your telephone keypad again that is star and the number one for any questions.
Your first question is from the line of Danielle <unk> with SBB Leerink.
Hi, Good morning, gentlemen, thank you so much for taking the question and congrats on a really strong 2021, given all the all the dynamics. There I'm just curious if you could talk a little bit directionally about how to think about 2020 to indicate Anthony obviously, you had a strong Q4, even though we did have a.
Covid surge.
Maybe talk a little bit more about what you saw towards the end of Q4 and into Q1 and how to think about.
Procedure volume and.
The first quarter, specifically, obviously, but then if that drives any sort of recovery in the back part of the year and then I have follow up.
Sure. Thank you Hi, Danielle I appreciate the question.
So.
Fourth quarter traditionally in cataract surgery because people are.
Reaching their deductibles.
And.
Health care funds to spend at the end of the year. So traditionally fourth quarter from a procedure perspective cataract surgery wise would would be a strong quarter, but we're also.
And so historically fourth quarter has always been the best quarter of the year for the number of procedures and then theres some drop off of procedures in the first quarter as compared to fourth quarter overall cataracts and then.
They build again towards the fourth quarter of the year. So that's traditionally now with the Covid.
Dunnock, it's been a little bit different volumes have been overall cataract surgery volumes have been less than what they were previously but it seems that that people are more willing to convert to these types of procedures now and so we've seen.
Strong continued use the other thing that I'd mentioned in the in the call was that we've got some additional system placements that were that were putting in and debt that was strong in the fourth quarter. So these systems will get installed.
In the field as we move into the first quarter and get up and running and so.
I would expect that we would continue to see some some solid procedure growth there.
Okay got it so kind of would it be fair to characterize Q1, and we can take this offline too, but sort of abnormal normal seasonality or maybe more pronounced because on the primary is the message here you are actually still seeing pretty strong procedure volume and COVID-19 not having as much of an impact as maybe in some other areas within med Tech.
I don't want to Jinx us.
Okay.
Received we seem to see.
Decent.
Certainly decent procedures, it's been a little spotty in areas just because of the because of the Covid, but then but then it comes back strong the doctors if theyre not doing surgery.
Weaker or whatnot.
Here's that things slow down then they are busy and they come back and get back at it.
Got it and then I just had two.
Level questions one the utilization on your procedure volumes per system.
Much higher than other peers like J&J and Alcon.
What is driving that and how sustainable is that.
So there are several.
Really good question because it's important it's important for our lens are.
Really.
Our system is much more efficient than the other systems.
Number one because we can transfer data from the preoperative devices and a variety of preoperative devices into the system.
Eliminates the need for manual marking in the transposition of data and sort of the surgical planning that the physicians do because the surgical plan comes up automatically in the system does make some adjustments for the Doctor and they just you have to make the choice as to what theyre going to do rather than manually controlling some of that also the organon.
<unk> of our system are.
Better as well in terms of where.
Where and how the system can be placed in used and then so so that has a big.
That's a big thing driving.
The volume and because we're more efficient that way they feel more comfortable doing cases, and really we're we're publishing a lot of data regarding the outcomes and so were now showing that surgeons using lens, our laser can get better outcomes in cataract surgery then.
Then people were getting before and what they were getting with with the competitive type systems and so this is driving a higher utilization.
As they get more confidence in that.
Got it okay, and if I could squeeze in one more question, sorry, I'm sure I'll get back on the line.
Hawaii coming in the second half.
Second half approval.
Why can you talk a little bit more about ally and why it's so disruptive to the market and then sort of how you think this accelerates the growth trajectory from.
A capital placement perspective, and probably more important in procedure volume.
Thanks, so much.
So the system is really small.
It's barely.
About the same size as the current <unk>.
Most of the patient technology, so it can be placed anywhere.
Also ergonomically, what we call it an adaptive cataract treatment system. It can be placed anywhere within the 250 degree.
Range of the patients so it's.
From an ergonomic perspective, no comparison.
The laser is also.
Four times faster than the cornea and two times faster than the lens.
And we've also with this dual pulse laser we for the first time most of these lasers from all the companies, including ones are with the first generation where either optimized for the lens.
They were optimized for the cornea, depending on where their roots were flown and so this will be the first device in the marketplace that is optimized for both the cornea and the lens and so.
It will it will just it will change the way that the treatments are being performed.
And so very.
We disrupted that way excuse me.
And also we've gone to some instantaneous imaging through the use of <unk> cameras and so it overall.
Overall, it will give you better treatments will cut the procedure time down by up to two thirds. It can be placed anywhere within the environment that.
The surgeon and the practice decides to put it in.
Super helpful. Thank you so much.
Thank you.
Your next question is from the line of Ryan Zimmerman with <unk>.
Hey, guys. This is Phil on for Brian . Thanks for taking the question can you hear me okay.
Can you hear me.
Alright.
So the first one right off the bat, how do you think about the early adoption of ally.
<unk> lends our users are competitive equipment users and what kind of pipeline do you think you have around the ophthalmologists waiting to purchase ally.
So really a good question.
Okay.
People that are that are existing lens our users.
Obviously people that are keenly interested in what we're doing with ally.
Good news there is that.
Ally will do things much faster.
A bit of a different way than their current system, but the core feature technologies are going to be the same. So we're going to try and we're working towards a mix where were adding because we now have the ability to really attract a lot of new customers because.
As I mentioned in my remarks, the existing lasers are getting better in the field from our competitors. They havent been upgraded like lens or has.
The roles.
And so we believe that we're going to be able to attract.
A lot of new.
Femtosecond laser users to lens are.
And we're going to see that from a growth perspective, we obviously have to manage the existing base.
We want to grow.
Our business and the number of placements and attract new customers to replace the old technology.
But we also know that took a lot of enthusiasm so it's going to be a balance there in terms of the pipeline.
We've seen a lot.
A lot of Av.
New physicians interested in replacing old technology come to the table and.
To discuss and I don't want to say too much now because.
This is the year end call in and but we're we're beginning to work very very very hard on the launch, especially now that we filed so it becomes reality and so now we're sort of targeting and lining up the first 10 systems, which.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Appreciate it.
Okay.
No.
Drive procedure volume per system, but I was wondering if you like a line of sight on extending those studies to helping with adoption.
New physicians in the future.
Most definitely.
That's mix.
But I think as I can put it.
Particularly as the as the doctors that are current Femtosecond lasers.
Start to use the ally.
I believe that it's going to drive more new physicians that have never.
Use femtosecond lasers for one reason or another.
<unk> not be in the least of those.
They are they're going to they're going to we've already seen activity in that regard.
It was attending a conference this week and I had meetings with several people that have not adopted femtosecond lasers that were very curious about.
And some of the things we've talked about and the clinical data.
So I believe that that's certainly going to happen as we as we get this underway.
Awesome glad to hear and thanks for asking and answering the questions here.
No problem.
There are no further questions I will now turn the call back over to Nick for closing remarks.
Well thank you so.
2021 was certainly.
An important year for us and.
We're very excited about the filing of of ally.
Everyone joining the call today and your continued interest in what we're doing at lens are and we certainly look forward to updating you as we make further progress.
As we approach that.
The launch of alloy.
Thank you.
This.
Today's conference call you may now disconnect.
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