Q1 2022 STAAR Surgical Co Earnings Call
Solid and the GAAP information to the non-GAAP information is included in today's press release.
Following our prepared remarks, we will open the line to questions from publishing analysts, we ask analysts limit themselves to two initial questions then re queue with any follow ups.
Thank everyone in advance for their cooperation with this process.
And with that I would now like to turn the call over to Caren Mason, President and CEO of STAAR.
Thank you Brian Good afternoon, everyone and thank you for joining us on today's call.
First quarter results, we reported today represent another quarter of record sales record ICL units and profitable growth as we successfully raised awareness and enthusiasm for the visual freedom provided by our Evo family of lenses were particularly.
Really excited about the enthusiastic adoption by surgeons first to be trained in the U S. Following recent FDA approval of our Evo family of lenses for myopia.
First U S. Evo patient implants occurred within days after approval, we enjoyed a strong commercial introduction of our evo lenses less than two weeks ago at the largest industry trade show in the U S. S. Crs.
As Crs, we shared for the first time, the safety and effectiveness of the Evo lenses.
<unk> during the pivotal trial surgeon enthusiasm throughout the trade show was palpable.
Case for Evo and star as the first choice for refractive vision correction by our surgeon customers consumer patients and investors continues to grow stronger.
The first quarter of 2022 global ICL unit growth was up 26% year over year by geography, we achieved strong ICL unit growth in China of 37%, Japan up 35% India.
<unk> up 34%.
Asia Pacific distributor markets up, 43% and Latin America up 41%.
As compared to the prior year quarter.
At the end of March and subsequent to the end of the first quarter, China, the largest refractive market globally and also our largest market began to implement COVID-19 related lockdowns in multiple cities, resulting in a delay of refractive surgeries in various.
Provider locations in China.
In other parts of China refractive surgeries have continued overall shipments of Evo lenses to China have remained robust as our distributors seeks to build inventory in anticipation of the peak summer implant season.
<unk>, China Star team continues their work in person where possible and virtually in cities that are locked down and some of you may recall, we and our surgeon customers and demonstrated flexibility and the ability to successfully navigate previous COVID-19 related pauses.
Which is also our goal during this current period.
Based on our global demand forecast, including projected release of remaining backlog lenses. We are today reaffirming our previously provided outlook for annual sales for fiscal 'twenty to 'twenty. Two we continue to anticipate approximately 295.
And net sales, which represents year over year growth of 28%.
Turning to the U S. The data from our Evo a prospective pivotal trial supported the clinical evidence and clinical experience surgeons have reported globally.
As previously announced in March we are absolutely thrilled we achieved FDA approval for our Evo family of myopia lenses for the U S. Our team is energized by refractive surgeon enthusiasm in anticipation of offering the evo lenses to their patients for example.
One prominent surgeon in the U S complemented our team at the recently held a S. Crs Congress in Washington D. C E.
E practices in a very large market in the U S and credited our consumer patient outreach or his upcoming surgery schedule, consisting of 50% of his procedures being evo versus laser vision correction. He was amazed but its early uptake as.
This is just the beginning of a multi pronged approach to properly attracting patients to surgeons offering our evo lenses. We believe it does bode very well for our ability to reach patients in the second largest refractive surgery market in the world.
Our medical monitor for the U S. Evo pivotal trial, Dr. Mark Packer recently presented the clinical trial data at the American Society of cataract and refractive surgery annual meeting in Washington D C.
These findings from 629 eyes of 327 subjects implanted with Evo lenses in the trial, whereas follows.
With regard to safety no eyes experienced pupillary block and there were no instances of anterior sub capsular cataract conclusion, the central Port design of Evo lenses functions effectively to allow physiologic flow of aqueous and prevent.
Pupil, Larry Bloch, thus, eliminating the requirement for preoperative peripheral iridotomy.
With regard to effectiveness.
Outcomes at six months post operatively, whereas follows.
98, 9% of eyes were within plus or minus one diopter of target.
98, 5% of eyes achieved post operative corrected distance visual acuity C. D V E at six months equal to or better than Preoperative C. D V. A.
We believe based on the data from our U S clinical trial and more than 100 clinical papers supporting the safety and or efficacy of Evo lenses.
And the commercial success of the now more than 1.5 million Evo lenses implanted outside the U S that Evo is a phenomenal game changing product Evo lenses off her patients visual freedom from glasses and contact lenses excellent vision there.
And night, no dry eye syndrome, no corneal reshaping and a removable if desired along with other benefits.
For our research and customers, particularly in countries such as the U S. We're laser vision correction has declined evo lenses offer the opportunity to grow the number of refractive procedures to previous peak levels and beyond with high levels of patient satisfaction and minimum.
<unk> investment.
We believe stars investments in the clinical evidence consumer awareness and customer partnerships in the U S will continue the elevation of vivo to a premium and primary refractive vision correction solution for a wide range of patients as it has successfully demonstrated.
In leading refractive markets globally.
With the approval of our Evo family of myopia lenses in the U S and estimated 100 million U S. Adults ages 21 to 45 with myopia in the range of minus three Diopters and minus 20 Diopters are now potential candidates for Evo.
A few highlights from the initial few weeks of our U S. Evo commercial launch include Evo with surgeon training and certification has already been completed for more than 100 doctors.
New practice support tools are in the hands of certified surgeons and their staff.
New and exciting patient consult tools and brochures have been distributed.
And the new Evo web site in the U S was launched on April 18th.
The initial stages of a growing multi city multichannel digital advertising and public relations campaign are underway with the goal of increasing Evo awareness and driving consumer desirability. The campaign will include Evo display search engine marketing.
Instagram Youtube Facebook tick tock, Snapchat connected streaming TV and our podcast.
In the near future, our first U S. Celebrity Evo brand ambassador will be implanted with Evo lenses.
STAAR team globally is focused on making fiscal 2020 to another year of record commercial and financial progress. We are particularly proud that we are continuing to achieve high levels of sales growth. While also growing our company in a responsible manner with profit.
Stability and as a good corporate citizen.
We recently issued our third annual sustainability report in April the report highlights our commitment to our culture of quality employee wellbeing diversity and inclusion are growing philanthropy and community service efforts and partnerships and our efforts to reduce.
Our impact on the environment the.
The case for Star and Evo as the first choice refractive vision correction.
Our surgeon customers consumer patients and investors is indeed growing stronger.
The trick.
Thank you Karen and good afternoon, everyone.
Total net sales for Q1 2022 were $63 2 million.
About 25% as compared to the $58 million of net sales in Q1 2021.
Up 7% on a sequential basis from Q4 2021 the.
The year over year increase in net sales was primarily attributable to a 26% increase in ICL Phil.
ICL sales represented 92% of total company net sales for the first quarter of 2022, similar to the year ago quarter, and which ICL sales represented 92% of total company net sales.
We continue to expect other product sales will be approximately 5% of total company net sales for fiscal 2022.
As Karen mentioned, our outlook for fiscal 2022, net sales remains unchanged at approximately $295 million.
We expect net sales for Q2 to be approximately $80 million.
Gross profit for Q1, 2022 was $49 3 million or 77, 9% of net sales as compared to gross profit of $39 1 million or 77, 1% of net sales for Q1, 2021, and $45 million or 76, 3% of net sales for Q4 of 2021.
The 80 basis point increase in gross margin as compared to Q1, 2021 is primarily due to geographic and product mix and decreased period costs associated with manufacturing projects.
The 160 basis point sequential increase in gross margins from the fourth quarter is due to the higher ICL sales mix in Q1, 2020 to geographic mix of sales and a decrease in period costs and manufacturing projects.
For fiscal year 2022, we continue to expect gross margin to be approximately 77% of net sales.
Moving down the income statement total operating expenses for Q1, 2022 were $37 2 million as.
<unk> to $31 7 million in Q1, 2021, and $37 6 million for Q4 2021.
Operating expenses for Q1, 'twenty two we're at approximately $3 $3 million lower than planned primarily due to a shift in marketing expenses to Q2, Q3, and Q4 related to the timing of our U S approval.
Taking a closer look at the components of operating expenses G&A expenses.
For Q1, 2022 was $11 9 million compared to $10 2 million for Q1, 2021, and $11 5 million for Q4 2021.
The year over year increase in G&A is due to increased facilities costs and compensation related expenses. The sequential increase from Q4 2021 was due to increased facility costs to allow expansion the scalability of our manufacturing operations to support sales growth.
We continue to expect G&A expense to be approximately 13 million to $14 million per quarter through the balance of fiscal 2022.
Selling and marketing expense was $17 3 million for Q1 2022 compared to $13 2 million for Q1, 2021, and $17 1 million for Q4 2021.
The increase in sales and marketing expense in the prior year was due to increased advertising and promotional expenses and compensation related expenses.
We now expect selling and marketing expenses as a percent of sales to represent approximately 32% to 34% per quarter for the balance of fiscal 2022 and to be at the higher end of this range in Q2, and Q3 to support sales during our busiest quarters and reflecting the timing of U S marketing.
Estimates following FDA approval of the Evo lenses in the U S.
Research and development expense was $7 $9 million in Q1, 2022 compared to $8 3 million for Q1, 2021, and $9 1 million for Q4 2021.
The year over year decrease in R&D is due to lower U S. Clinical trial expenses, which were partially offset by an increase in compensation related expenses.
The sequential decrease in R&D is primarily due to lower compensation related expenses.
We now expect R&D expense based on the timing of investments to be approximately $11 million per quarter for the balance of fiscal 2022.
Operating income in Q1, 2022 was $12 1 million or 19, 1% of net sales as compared to $7 5 million or 14, 7% of net sales for Q1 2021.
Approximately half of the $4 6 million increase in Q1 2022 operating income is due to the timing of marketing investments that will now occur in Q2, and Q3 due to FDA approval occurring at the end of the first quarter on March 25th.
For fiscal year 2022, we continue to expect operating margin will be similar to the 14, 5% of fiscal 2021.
Anticipated leverage on G&A and R&D expenses is offset by higher sales and marketing investments targeted at building awareness and market share globally.
Net income in Q1, 2022 was $9 $6 million or <unk> 19 per diluted share compared to net income of $5 million or <unk> 10 per share in Q1 2021.
On a non-GAAP basis adjusted net income for Q1, 2022 was $14 4 million or 29 cents per diluted share compared to adjusted net income of $9 6 million or <unk> 20 per diluted share in Q1 2021.
For fiscal 2022 subject to no significant change in our valuation allowance, we now anticipate our quarterly tax rate for Q2 through Q4 will be approximately 25%.
A table reconciling the GAAP information to the non-GAAP information is included in today's financial release.
Turning now to our balance sheet, our cash and cash equivalents as of April one 2022 totaled $193 1 million as compared to $199 $7 million at the end of the fourth quarter 2021.
The decrease in overall cash is due to the timing of annual compensation payouts that occurred in the first quarter.
We still anticipate generating positive cash from operations for the balance of fiscal 2022, and ending fiscal 2022 with a higher cash balance in fiscal 2021.
Finally star will be participating in the William Blair annual growth conference in Chicago on June seven.
The Jefferies Healthcare conference in New York on June nine.
And the Sidoti <unk> Company virtual Investor Conference on June 15th.
We look forward to speaking with many of you at these events.
This concludes our prepared remarks, operator, we are now ready to take questions.
Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to remove this question. Please press star followed by two again to ask a question. It is star followed by one.
The first question today comes from Bill.
Telephonic from Canaccord. Please go ahead. Your line is now open.
Great. Thanks for taking my questions.
First just on the ICL launch in the U S and I was wondering if you could help us understand the contribution in the first quarter I know it was right at the end and how we should think about that and then in terms of the guidance the ramp into the year and maybe Karan I appreciate that.
On the 100 docs trained kind of how do we how would.
How should we measure that as we go through the balance of the year.
At 200, 300 or 400 by the end of the year or is it just a 100 or 200 high volume kind of help us understand some of the metrics in terms of account reps and maybe even asps to the doctor patient.
So first of all the contribution in the first quarter from Evo with negative I mean, there was nothing in that quarter as busy in ICL, but there was a nice ramp up in.
C&I ICL in that a number of surgeons, we're getting ready.
Hopefully for an EMA approval, which we were happy to receive by the end of the quarter in terms of ramping up into the year you know.
Our goal is to exceed.
Our global growth lever level easily in the U S market, we aren't going to talk about exactly what that growth is but obviously its going to be high growth in terms of the training of our surgeons. We expect to have 200 trained by June and 600 trained minimally by the end of the year.
In terms of Asps.
We're not going to be providing.
Asps, we see in the U S. At this point.
But the pricing plan in the U S is the same as it is globally. When you have a strategic alliance agreement you commit to a certain number of lenses you have price and marketing assistance practice development and other aspects of the agreement that all play into the overall cost.
<unk> per patient.
So that's pretty much how we see the year, which is going to be pretty darn successful.
Yeah, great. Thanks for that level of granularity I appreciate that and then just my second question is for Patrick.
On the manufacturing backlog, that's baked into the guidance I think that was pretty clear that the $2 95 million kind of includes that work off of inventory kind of where did you end the quarter and.
So kind of how much do you expect and do you expect to have it all cleaned up by the end of the second quarter. Thanks for taking my questions.
Sure Bill Thanks for the question. So, yes, we did not call out backlog and as we've said now we.
We hope to not to be able to call out backlog again, and we kept that promise we are continuing to work through and demand is very strong as Karen has outlined.
And so we do plan to work through that by the end of the second quarter is the goal right now, but these are very much on track from a capacity standpoint, and we're very pleased with where we're headed in Q2 and beyond.
Great. Thanks for taking my questions.
Thank you.
The next question today comes from Zack <unk> of Jefferies.
Please go ahead. Your line is now open.
Hey, Thanks for taking my question and congrats on a great quarter.
Just curious if you could give some color on the distributor sales that were mentioned in the press release are those films in the first quarter or the beginning of Q2 and how should we think of sales running through that.
And this year.
Okay. So we've talked about.
<unk> distributor sales.
Those were strong the entire quarter those are outside China, China is considered a hybrid market.
In terms of China, we were very strong until the last week.
The quarter.
In terms of our run rate to the surgeons from our warehouses in China, our expectation now as I mentioned in my prepared remarks is that there will continue to be opportunities to prepare for a very.
<unk> two two in Q3 in China associated with ramping up to be prepared for what we believe will be very strong demand from patients for surgeons to do procedures.
In multiple cities throughout China.
So our confidence level is really built on the fact that we have such strong representation in China, both from our sales organization as well as from our prime distributor.
In China, who has been doing a masterful job managing distribution entry points that match the opportunities by cities, where surgeons are very very active.
We are also preparing as I said earlier for the real busy season.
That really starts June and goes through July August this year, we believe it will go all the way and through September .
To be sure, we're very well prepared.
So we have for a long time Ben.
Selling out of our distribution warehouses to our surgeons to match the inventory available. So our opportunity now to rebuild is very very welcome based on what we think will be very strong demand, especially in the June timeframe.
That's helpful. Thanks very much.
Yeah.
Thanks Zack.
Thank you Jack.
The next question today comes from Ryan Zimmerman from <unk> <unk>. Please go ahead. Your line is now open.
Thank you and congrats on the quarter and the progress is really fantastic to see Karen and Patrick.
I wanted to ask a couple of things in terms of Oh, sorry, yeah. Thanks Youre welcome.
I wanted to ask a couple of things around.
The buildup of inventory and some of the dynamics in China, I know Theres a lot of focus on this right now.
And if there's anything you can comment in terms of how much inventory kind of needs to be built up in the Chinese market ahead of our busy season, because they were somewhat depleted.
And if I think back to 2020.
There was a fear that we couldn't get product into China, and so some of it was confined do you anticipate needing to consign anything.
And the second quarter just given.
Oh excuse me not consigned.
Our excuse me it was some time, but any fear that you have to consigned inventory in the second quarter.
Just given some of the lockdown dynamics that are taking place there.
No if anything we see Shanghai opening up and that is the primary location, where we normally fly in our inventory.
There are multiple opportunities within the Shanghai show and a number of other major cities, where we are able to ship.
And have distribution within China effectively.
So our distributor has multiple sites for reception in fact this morning. It was really fun to hear that one of its newest sites is right next to one of our biggest hospitals.
So you have to be very fluid and have really really strong presence in China on the ground to know what youre doing.
If you are just basically managing China.
Without being a very very effective in terms of understanding the protocol, what's going on in terms of getting good input about even at the airports, what theyre going to expect when they're going to be able to receive and on and on I mean thats great for us is critical and we manage it exceptionally well.
From our facility in Switzerland. So the end of the day here the dynamics in China for US are very strong we really believe that youll see multiple markets open up which they are already beginning to do we know that the Chinese team and our surgeons in China.
Our partners.
Always work income credibly hard to make up.
What time, they've lost and so whether it's 12 hour days or seven days, that's what they'll do so we're going to make sure. We've got inventory available and then it's in the right place at the right time.
I appreciate that color Karen.
And then just yeah.
The U S market Big picture longer term, we have all of these.
Discussions about inflationary pressures and consumer demand.
And so forth.
Is there a different commercial strategy in your mind in terms of how you approach the U S market.
Relative to maybe some of your other markets like China, or Japan Korea. For example in terms of how you think about price or how are you thinking about promotions and things like that.
As we start to look at vivo launching in the U S. Thanks for taking the questions.
Sure. Thank you Brian .
We believe the U S market, probably have some of the most.
I would say sophisticated high end consumers in the world. We know that there are many in China.
At the end of the day refractive surgery.
Is not inexpensive however.
There is no doubt that the mathematics associated with the decision to purchase are very much in favor of refractive surgery in terms of a single initial onetime payment and then not having repetitive contact lenses contact lens solutions repetitive doctor visits as well as glasses.
Sure.
Necessary any longer so we need take basically our customer base in the United States. They tend to be well educated they tend to have high disposable income there.
And there are individuals who really value in active outdoor life.
More women than men actually at least at our last month between 235 years old.
Their choices.
In their lives on health.
And happiness frankly tend to be some of the greatest in the world. So our expectation in the U S is that we will be very successful by following a lot of the protocol and a lot of the plans that we've done around the world and you heard in my prepared remarks, the amount of social media outreach there will be and will include some <unk>.
Exciting influencers, so our belief in the U S is that inflation.
Yes.
Comms extreme at all levels should not impact us much at all.
Okay.
Thank you Karen I'll get on Tech Tuck ins start following some of those Influencers I appreciate it.
We will do that.
Thank you Ryan.
The next question today comes from Chris Cooley from Stephens. Chris. Please go ahead. Your line is now open.
Good afternoon, and thank you for taking my questions and congratulations on a great start to the year.
I'm not sure.
Sure if I might.
Just thinking back to just two weekends ago with grocery was clearly a very powerful pause about evo here in the United States and you all.
Im not going to join to talk with Brian I'll, let him do that but just looking at social media.
Prolific presence there as well.
Could you just speak to.
As youre kind of building the pipeline a little bit more color about the surgeon base that youre, bringing on board 200 to be trained here by June .
These are these are kind of unique practices.
You said at least early on and so I just want to get a little bit more color on kind of how you pick these practices and maybe while they are more resilient for you in terms of building a practice going forward, especially in this inflationary type environment and I've got a quick follow up.
Sure Chris So.
When we determined the order and timing of training search on so it was really all about those surgeons, who either had already successfully been busy in ICL surgeons and very comfortable in the eye.
Noel who were very excited about visiting ICL, but really wanted to get rid of the peripheral iridotomy as was evidenced that our special Friday night educational event.
And then also those surgeons, who are interested in transforming their menu of services and offerings to patient tomorrow lens based care.
And so and we've put that all together it was easy for us to determine where we needed to go first and then we also wanted to make sure. We had great representation in every major refractive market in the United States and that we could begin to do a multi media campaign in each of those markets effectively between now, especially in the <unk>.
End of the year, when they're starting up so that story about 50% in demand out of full demand for refractive procedures being evo in a major market.
That's exactly what we wanted to here and so at AFC Crs and thank you for bringing it up it was an amazing show for us.
We loved actually having a starring role to be blunt and honest.
And I think what we believe is that this training progression.
It's quite smoothly for those who already have successfully implanted visiting in AI. We can do some virtual certification and then the ones that need to be in person, we have a phenomenal team of trainers.
Who will be working with them. So that we can achieve the numbers that I referenced earlier in terms of fully trained surgeons ready to go.
Thank you I really appreciate all the additional color and then maybe just lastly for me when.
When we think about utilization, obviously the label myopia with them without astigmatism down to minus three.
Far more favorable than the old busy in ico in.
Indication for use.
Just curious how you see that.
Broadening obviously the opportunity do you think this is still going to be initially used by the higher microbes.
And then worked its way down or is this going to be more frontline day, one for the lower my hope and then alongside of that could you also update us on your strategy.
The hyperope indication as well thank you.
So in terms of the bio.
And what this surgeon will offer in terms of minus three and above and kind of where theyre going to be part I think it's going to be a surgeon by surgeon determination of where they will start but I'm very encouraged in that the number of surgeons we talk to.
Many of them said they were going to offer to our patients which is what we've found especially in other major markets around the world as surgeons might start off around maybe minus seven to minus 10, but then as they get is phenomenal feedback of patient satisfaction.
Incredible complement.
In terms of the ability to have a patient satisfied almost from the first minutes after the procedure.
They start to offer to everyone for all of those benefits, we talked about earlier and we will continue to talk about.
I think with hyper OPEC will table that for another day in terms of how we'll manage that market, but at this point in time I think we've got a great opportunity really minus three minus <unk> seven in the United States in a bigger way than we could have imagined.
Thank you and congratulations.
Thanks, Chris.
Thank you Chris.
The next question today comes from Andrew <unk> from William Blair. Andrew. Please go ahead. Your line is now open.
Hi, good afternoon, and thanks for sneaking me in here.
Maybe I can just sort of ask on capacity. So I think last quarter. Karen you had said sort of a tripling of lending capacity here over the next 18 months or so any update you can provide us on that effort and then I guess bigger picture can you just sort of talk about some of the assumptions that you have sort of driving that that's the right level of capacity that you need here just trying to better understand.
In the process.
Sure.
So what we decided to do is to triple capacity.
And where we're at.
Daily as we've talked about we're looking at 20% plus market share in the major markets around the world, we want to get higher than that is even possible. So and our plan does is allow that allows us to sell millions of lenses a year instead of hundreds of thousands of.
<unk> since a year.
So we're nearing to over 2 million lenses sold Icl's, we've got $1 million and a half lenses sold <unk> and with this growth rate bottom line is we could see ourselves selling millions of lenses in the not too distant future on an annual basis. So that's what we're building.
Our capacity to handle.
Makes a lot of sense and then maybe just one more and sorry, if I missed this patrick but as it relates to sort of spending for the year can you just quantify how much of that sales and marketing spend is going to be specifically spent on sort of the marketing for the U S launch and then just as we sort of think about the ROI there any sort of case.
But we should be looking at in terms of sort of your ability to sort of create that brand awareness.
Sure Yeah. So we haven't broken out what percentage is going to the U S. What I can tell you, though that this is clearly an investment year of building brand awareness in conjunction with U S. <unk> approval, but as we've always said and as Karen said earlier.
U S market is a very strong market, but it also can be a global influencer across it. So we look at this as really building global brand awareness, but we haven't broken it out but as I said the increase is primarily involved the general brand awareness for Evo in the U S.
You had one more question there I think you had at the end there Andrew.
Yes. It was just sort of around the Kpis you should be looking at in terms of your efforts.
Yes, so things have changed quite a bit I think we're still deciding what's appropriate for us to talk about we track a lot of things internally.
But certainly with the Influencers and the ability to track those much more accurately than what you could have done 510 years ago with some of the traditional marketing programs out there we feel very good about being able to attract dollars invested to what it ends up being which is what we ultimately want which is a conversion someone getting implanted, but we'll hold off on that.
As we get more information, we'll look at what we want to share.
Okay, Thanks, and congrats on the quarter.
Thanks.
Thank you Andrew.
The next question today comes from David Saxon from Needham David. Please go ahead. Your line is now open.
Yeah.
Yes, good afternoon, Karen and Pat Thanks for taking my question.
Maybe starting off with vivo in the U S. I know, it's early days, but any stories or color you can share about what you're seeing in terms of evo driving volume growth in prior <unk> practices at least in that initial group of about 100 docs and expectations on how much of the longer term EBIT.
Growth is going to be driven by increasing penetration.
Current ICL practices versus <unk>.
Broader adoption.
While there are a number of prognosticators slipped in refractive surgery about how big a piece of the action Star will begin to conquer I can tell you right now that based on the enthusiasm and the fact that every new surge in us posting on Instagram and <unk>.
Youtube and other places themselves in their search I'm satisfied and excited.
I think that some of those higher numbers of percentage of opportunity for star probably in play.
We have a number of practices that are signing agreements. We have a number of practices that are asking for support with practice development with marketing.
And when we put all that together.
Some surgeons of renown think we'll be at 30% sooner.
Sooner than we ever expected.
So it really I think it really is going to depend on.
Our ability to meet a very strong demand and make sure that we manage this rollout, which I believe the team is doing a phenomenal job I. Thank them very very much.
Really great.
Sales and marketing organization distribution operations in the U S.
And I'm very pleased with their progress so long answer but.
We can talk about this holiday where that excited we just really think we're going to do phenomenally well here in the U S better than expected.
Great that's super helpful and just Claire.
Clarify before.
Good question.
Some surgeons that goal.
You'll be at 30%.
Unexpected is that within their practices or is that.
U S refractive error.
Market.
And then I'll just ask my second question.
Maybe for Pat I know you are finishing up some manufacturing work, but any sort of framework for how we should think about free cash flow for the year.
So much.
So with regard to.
Surgeon uptake and whose.
Making these.
Yes.
Estimates of where we'll be I mean, it's all over the board, but there have been some major society meetings, where some surgeons has stood up and said I really see star and.
Lens based future.
Taking.
Over 50% share.
And there are others that think there'll be a split between smile laser vision correction other laser vision correction and star, but any way you look at it.
For us this is a tremendous opportunity.
To make sure that our lens based future happens with the best possible lens on the planet, which is us.
Patrick.
Thanks, David Patrick So on the on the free cash flow.
The quarter, we did have.
Negative operating cash and I talked about that's really had to do with annual compensation timing and then also some timing of just some.
Related to us primarily some of the customers towards the end of the quarter. So we're in very good shape will have positive cash flow, we still plan to spend upwards of $20 million on Capex, we did almost $2 5 million in Q1, and so that's all part of the capacity that we've talked about.
I would expect free cash flow will be pretty close to positive really depends on how the balance of the year goes and then we'll come back.
Has anything changed but where we're going to get spot from a cash standpoint.
Great Thanks, and congrats on the quarter.
Thanks.
Thank you David.
This concludes the question segment of the call I would now like to turn the call back to Kevin makes sense for closing remarks.
Thank you so much for your participation on our call today, we look forward to speaking with many of you in the days and weeks ahead. We appreciate your interest and investment in STAAR surgical please take good care and all the best to all of you.
Thank you that concludes today's conference call you may now disconnect your lines.
Okay.
Yes.