Q1 2022 Rxsight Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the Rx site incorporated first quarter 2022 earnings conference call. At this time, all participants have been placed on a listen only mode and the floor will be open for questions and comments. After the presentation. It is now my pleasure to turn the floor over to your house.
Philip Taylor, Sir the floor is yours.
Thank you operator, presenting today are <unk>, President and Chief Executive Officer, Ron Kirk and Chief Financial Officer Shelley Thunen.
Earlier today, our X sight released financial results for the three months ended March 31, 2022, a copy of the press release is available on the company's website before we begin I would like to inform you that comments and responses to your questions. During today's call reflect management's views as of today may five 2022 only.
And will include forward looking statements and opinion statements, including predictions estimates plans expectations and other information.
Actual results may differ materially from those expressed or implied as.
As a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued earlier today and in our filings with the Securities and Exchange Commission or SEC filings can be found on our website or on the SEC's website.
<unk> are cautioned not to place undue reliance on forward looking statements.
<unk> disclaims any obligation to update or revise these forward looking statements.
We will also discuss certain non-GAAP financial measures disclosures regarding these non-GAAP financial measures, including reconciliations with the most comparable GAAP measures can be found in the press release.
Please note that this conference call will be available for audio replay on our website at RF site Dot com on the Investor calendar page of the news and events section on our Investor Relations page.
That I will turn the call over to CEO , Dr. Ron Kirk.
Good afternoon, and thank you all for joining us.
<unk> delivered strong results in the first quarter of 2022 with revenue of $8 $9 million.
Representing an increase of 157% versus the year ago quarter, and 6% versus the seasonally strong fourth quarter of 2021.
Our performance reflects continued robust demand for the late delivery device and accelerating utilization of our weight adjustable lands.
Given this performance we are raising our 2022 full year revenue guidance to a range of $41 5 million.
$45 5 million, which implies an 84% to 101% growth rate versus 2021.
During the quarter, we focused primarily on three growth strategies.
Building, a broad installed base of linked delivery devices, where ltvs to establish a durable foundation of our razor razorblade commercial model.
Second driving adoption.
Our unique light adjustable and lay out the first and only premium oil wells and individually customize this vision after cataract surgery.
And third growing the body of clinical evidence that further validates our system's reliably superior performance and helps to increased doctor awareness confidence and peer to peer endorsements.
Let's start with our progress building the installed base in the first quarter. We added 40, new Ltvs to the network of clinical sites offering postoperative <unk> treatments.
As a result, our install base rose to 246 units up 134% versus the year ago quarter, and 19% versus the fourth quarter of 2021.
<unk> placements are of course, a leading indicator of future land sales and we work closely with new sites to train doctors and staff to ensure they are proficient providers, who can begin confidently offering <unk> to patients as soon as possible.
The strength in new <unk> placements reflects in part the increasing productivity of our expanded <unk> sales force. We now have 18 sales professionals, which represents a three fold increase since our July 2021 IPO.
Importantly, our team is comprised of experienced ophthalmic sales professionals, who already have productive long standing relationships with doctors in their regions, including many of the 3000 U S cataract surgeons, who perform 70% 80% of premium wine well procedures.
I'll now turn to our progress driving adoption of our unique premium IL well that is customized via an office play treatments administered by our LDP beginning two to three weeks after cataract surgery.
The LGD induces precise changes to the lens focusing power, providing lasik like refractive correction that is specific to the patient's individual needs and is not associated with increased halos and glare starboard where lots of contrast sensitivity.
In our FDA clinical trial, 70% of patients, who achieve 2020 vision without glasses compared to roughly 40% in similar FDA trials of other premium on our wells.
A more recent phase four data has seen that number increased to approximately 80%.
This outstanding clinical performance is helping to fuel <unk> adoption.
During the first quarter of 2022, doctors implanted 4166, new Oems and increase of 166% versus the year ago quarter, and 41% versus the fourth quarter of 2021.
We believe the sharp rise in procedures reflects an increase in the number of doctors embracing the Rx eight system and recommending it to a greater proportion of their patients.
Supporting this conversion process is our field support team of clinical trainers and field service engineers as well as our recently established 18 person LEL account management team, which has been ramping up in recent months and is charged with engaging doctors and staff within our X sight accounts on patient awareness and education programs.
Development of efficient patient flow processes.
All outcomes and other initiatives designed to achieve successful and growing <unk> utilization.
Doctor feedback and implanting trends also suggests that our new <unk> active shield technology, which provides an extra layer of UV protection on the surface of the lens is driving procedure growth.
We introduced active shield last September and all Ldls now include this technology.
For doctors and patients active shield provides redundant protection from ambient UV light, reducing dependence on patient compliance with UV protective glasses.
Compelling real world clinical data is another powerful growth driver and as I mentioned in the fourth quarter call. We are now collaborating with more than eating RSA practices to collect and share the wealth of useful clinical data stored on practice ldds.
We are the only cataract company that can readily build and maintain a large scale real time clinical database.
Which will be a valuable asset as we work to penetrate and expand the premium firewall market.
At the recent American Society of cataract and refractive surgery meeting multiple data presentations.
Highlighted the ability of our system to deliver superior results Dr.
Dr. <unk> presented early results from a multi center phase for data collection of patients who received bilateral implantation of the <unk> with that to shield.
And the initial lead out of 102 is from a 51 bilateral layout patients refractive accuracy was at the level typically when we've seen in leasing the standard for refractive procedures with 92, 2% of <unk> within one tie up true sphere, and 94, 1% within one half payout cylinder.
This refractory these refractive results produced 2020 distance visual acuity without glasses, and 82, 4% of eyes, an astounding percentage for cataract surgery in which this number typically hovers around 40%.
A smaller study of 45 <unk> presented by Dr. <unk> net net port demonstrated similar results with 75% of patients achieving 2020, visual acuity and a 100% 2025 without glasses in both studies approximately 75% of patients selected to customize both eyes for optimal binding ocular vision.
Across a range of distances and option many cataract patients seek to address presbyopia.
For both the Doctor and patient our system is particularly well suited for success using this blended vision approach for at least two reasons.
First the <unk> is uniquely effective at reducing refractive error, including astigmatism, which improves blended vision performance.
The <unk> allows patients to test drive their vision with both eyes before and between late treatments and to make fine adjustments in one or both sides as if they were being fitted for glasses or contact lenses.
These and a host of other presentations and panel discussions during the annual meeting helped to boost awareness and enthusiasm around our technology.
As a result, we had a very productive aas crs activity at our Booth was brisk with Rx eight sales professionals busy discussing and demonstrating our technology to potential new customers.
I will sum up by saying that our excite believes that every cataract patient deserves the highest quality vision and were focused everyday on making that happen. Our technology is unlike any other <unk> on the market today and with our customers. We are working to establish a new standard that meets the exacting in progressively higher expectations of premium.
<unk> patients.
Real World data continues to validate our system's ability to achieve superior visual outcomes across a wide range of patients.
P.
Patient needs with and without compromises offering doctors, a valuable new tool to grow and strengthen their practices.
Our team possesses deep experience in the ophthalmic private pay market, having led development and launch of major refractive technologies. We continue to utilize this knowledge and expertise to communicate the significant advantages of our technology and drive adoption.
While we're still in the early days of adoption and challenged by the same macro headwinds affecting other companies. The positive momentum, we're seeing in <unk> placements and Ll procedures indicates to us that we're off to a solid start with tremendous opportunity ahead.
With that I'll turn the call over to Shelly for an overview of our first quarter 2022 financial results and full year guidance.
Thank you Ron and good afternoon, everyone as Ron noted total revenue in the first quarter was $8 9 million, increasing 157% compared to the first quarter of 2021, 6% compared to the fourth quarter of 2021.
By product line, the <unk> LTE sales in the first quarter of 2022 generated revenue of $4 6 million. This compares to 13 LDP unit sales were $1 8 million in revenue in the first quarter of 2021, representing a 208% unit increase.
And 149% growth in revenue.
First quarter 2022 placements were particularly strong in a quarter. This usually seasonally weaker due in part to the fact that customers purchase multiple units to new accounts purchased two ltd's.
Two separate clinical offices and two existing accounts each purchased.
Additional LTE data for their other locations for the convenience of patients as they expand their volume.
Most importantly, these multiple LDP sales illustrate the growing level of practice commitments as customers no patients experienced superior visual yourself with the layout.
We offered preferred LDP pricing to these accounts purchasing multiple units, which contributed to the sequential dip in the first quarter 2022, LDP AFP to approximately 114000.
From 118 bouncing.
Compared to the fourth quarter of 2021, when we sold 45 mbps for $5 3 million in revenue.
First quarter 2022 elevator unit sales declined 11% and revenue declined 14% as noted earlier, our fourth quarter typically the strongest for capital equipment purchases.
Sequential decline with it.
Also as expected in this early stage of our commercialization teams continue to dominate.
Representing 51% of first quarter of 2020 revenue.
<unk> to 53% in the first quarter of 2021.
We sold 4166 LLS in the first quarter of 2022 generating $4 $1 million in revenue.
This compares to 1567 early allergy.
Net sales for $1 5 million of revenue in the first quarter of 2021, representing year over year growth of 166% for units and 168% to revenue.
In the fourth quarter of 2021, we saw $2959 three.
For $3 million in revenue, representing quarterly sequential growth of 41% for units and 42% for revenue in the first quarter of 2022.
As Ron discussed we believe multiple factors are driving strong sales growth, including expansion of our LTE sales force.
This solid base the added benefits doctors and patients derived from our active shield Lam technology and favorable real world clinical data.
We believe COVID-19 have less of an impact than in previous quarters with minimum minimal interruptions to our site practices surgery schedules, which are typically one to three months in advance.
They were early indications in the quarter and our expanded LTV salesforce and newly established sales team are beginning to influence faster Ll start to among new LGD account defined as customers purchasing new LTE gains in the fourth quarter of 2021 and first quarter of 2020.
Q and.
In addition, several accounts.
The last six months are now selecting the LDL for significant portions of premium cases, and now rank among our highest quarterly prestige customer.
First quarter profit was $3 7 million or 42% of revenue compared to $1 1 million or 32% of revenue in the first quarter of 2021, and $2 9 million or 34% of revenue in the fleet.
Plan 2021.
The sequential increase in gross profit is primarily due to mix as the lay out our higher margin products represented 46% of revenue in the first quarter of 2020 team.
<unk>, 34% in the fourth quarter two.
2021.
Selling general and administrative expenses in the first quarter of 2020 to $13 6 million up 143% compared to $5 6 million in the year ago quarter, and up 17% compared to the $11 6 million in the fourth quarter of 2021.
The quarter over quarter increase is due primarily to increased head count in sales and marketing increased costs to operating as a public company and an increase in stock based compensation.
Prior quarters sequential rise is related primarily to increased sales head count in sales and marketing.
Research and development expenses for the first quarter of 2020 was $6 7 million up one 1% compared to $6 6 million in the year ago quarter, and up 14% compared to $5 9 million in the fourth quarter of 2021.
The prior quarters sequential increase was primarily due to higher consumable materials and testing and prototype expenses.
Note that our R&D costs can vary quarterly depending upon the stage of development of our products and timing of clinical studies.
We reported a net loss in the first quarter of 2020 to $17 6 million or a loss of 64 cents per basic and diluted shares using weighted average shares outstanding of $27 4 million.
In the first quarter of 2021, our net loss was $6 8 million or a loss of $1 70 per basic and diluted share using a weighted average shares outstanding of $4 million.
I would also like to highlight the non-GAAP disclosure in the press release with the noncash stock based compensation expense and the change in the exploration of warning as it provides investors with useful comparative information.
Stock based compensation in the first quarter of 2022 with $2 6 million and there was no exploration of clients in the quarter.
Resulting in a non-GAAP loss of $14 9 million or a loss of 54.
Basic and diluted share.
Moving to the balance sheet. We ended the first quarter of 2022 with a $143 8 million in cash cash equivalents and short term investments long term debt was $39 9 million.
On may 3rd we amended our loan and security agreement with Oxford finance to extend the draw period with the remaining 20 million.
Third in 2021 in early 2022.
Under the amendment, we now have two options for $10 million each.
And third quarters of 2023.
Amendment also extends the interest only period from December one 2023 to April 2025.
Although we do not anticipate anticipate drawing on alone. We believe the amended agreement is prudent and then best interest with shareholders, providing added financial flexibility as we continue to grow the company.
As Ron indicated we increased our 2022 revenue guidance to a range of 41 $5 million to $45 5 million.
Which implies year over year ground of 84% to 101%.
We expect the usual seasonality patterns in 2022, and the second and fourth quarter is generally the strongest for capital equipment.
Our LTV and for softer Ll procedure volumes in the third quarter as doctors and patients take time off during the summer.
We are not changing our 2022 guidance outlook related to gross margins our operating expenses.
To reiterate we expect gross margin in the range of 35% to 36% range, while the first quarter margin.
82%, we expect higher LGD material costs later in the year as the material orders for the second half of 2022 continues to increase due to supply chain shortages.
While we have been able to procure the necessary materials to manufacture the LGD and meet growing customer demand, we have faced increased supply chain headwinds and challenges exacerbated by the COVID-19 related shutdowns in China and the war in Ukraine, Our operations team has navigated the situations.
<unk>, thus far and we are keeping a close eye on supplier channels, taking steps to minimize disruptions wherever possible.
Moving on we expect operating expenses in the 86 million to $90 million range.
While R&D spending will rise in 2022, when compared to 2021, our largest increase will be in SG&A as we implemented our planned head count increases in our sales and marketing organization.
The growing demand for customer participation in phase four clinical studies using data captured in LTV units and absorb the full year costs associated with our public company status.
We maintain our estimate that noncash stock based compensation will be approximately $12 million.
$13 million for 2022 as compared to $76 million in 2021.
Now I will turn the call back to Ron for closing remarks.
Thank you Shelly to recap, we're very pleased with our strong start to 2022 solid revenue growth driven by an expanding installed base and rising procedure volumes confirms that an increasing number of doctors and patients are selecting our premium cataract solution with a significant advantages. It provides we are confident in our team.
<unk> ability to execute our growth strategy in 'twenty to 'twenty, two and beyond by continuing to focus on our core strengths exceptional visual outcomes across a range of patient types and preferences positive and interactive patient experience that results in high satisfaction rates.
And drives new patient referrals and convincing value proposition that benefits, both premium cataract practices and their patients.
And now operator, please open the call for questions.
Sure.
Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we ask that while posing your question you. Please pickup your handset if they wanted to speak to provide optimum sound quality. Please hold while we poll for questions.
Thank you. Your first question is coming from Robbie Marcus of Jpmorgan Robby. Please ask your question.
Hi, everyone. This is actually Ross on for Robbie.
Thank you so much for taking the question and congratulations on a nice quarter.
I just wanted to dive a bit deeper into guidance and I was wondering if you could give us some more color on the cadence of placements throughout the year and how you expect utilization and mix to trend.
Or are you assuming any kind of further COVID-19 variability year supply chain inflationary pressures within within the.
Guidance range, obviously, it's unchanged.
But if so what steps are you taking to mitigate these pressures. Thank you.
Thank you I'll go ahead and start as well.
Our guidance is very solid guidance for growth.
Further underscored by today's revision to the guidance by increasing it.
The usual seasonality factors will.
Still prevail Q1 was stronger than we would normally expect as I mentioned by customers buying multiple units and again, we continue to see the cadence of Ldds as probably being strongest in the second and fourth quarter. That's typically what happens in capital equipment and Thats, where we also saw last year.
As we think about the.
A question about.
Ll volumes again, they were very encouraging we had a very heavy percentage of.
<unk>.
As a percent of the.
Of the total, but we expect we won't be as high on Ltvs are about 60% of the total revenue last year. This year, we still expect it to be over 50, but somewhere in between.
<unk> 60.
LEL revenue continues to grow.
And then in terms of supply chain, we have managed that well overall.
We continue to manage it the price increases that we expect.
In the LGD.
<unk> already into our gross margin guidance I think.
We have pretty good visibility on that but we continued to talk about.
Supply chain not in terms of whether we can get product with the timing of when annualized.
During the year and so I think that Thats very important we've been very proactive.
This supply chain issue and working very closely with our vendors.
So I think I answered all your questions or did I Miss something one.
Maybe going to interest rates the effective interest rates.
Obviously interest rates going up.
As a factor, but it's relatively small factor in the decision of practices to purchase cheap LGD, which is really based on an ROI.
Analysis and that continues to be very very strong and then I think you also asked about the effects of Covid.
Shelley mentioned, we think the effects.
And the last quarter were much less significant.
Well.
There are always concerns about how COVID-19 can.
Can affect things in the future.
The because cataract surgery is performed in afcs, which is not.
Away from hospitals for the vast majority of cases and.
Ophthalmic practices really have.
Largely figured out how to how to deal with at least the type of Covid outbreaks that we've had but we're not anticipating a big COVID-19 impact as of now.
Great. Thank you so much.
Thank you.
Thank you. Your next question is coming from Ryan Zimmerman of BT IAG, Brian . Please ask your question.
Yeah. Thank you congrats Ron in Cheyenne and great start to the year.
I wanted to ask couple of questions. If I may about the sales force and.
It seems like it's ramping really well youre filling out that sales force as you had said.
How do you think about the productivity of the sales force today and the capacity that they have.
In their respective markets over time, I mean are we at a point, where you need to consider additional sales heads and that would.
Early but again, where is the capacity for them from a productivity standpoint.
Thank you Ryan so.
As you mentioned, we've grown the sales force really over the last.
Six to nine months.
And these folks are coming with a great deal of experience both in ophthalmology and in their local market.
But they do.
Need to learn our technology and how to position it.
With practices and so there is in that.
It takes a certain amount of time it varies based on the on the individual but I think.
Six to nine months is kind of a typical.
Arrange that we would expect people to get fully productive so we're still.
In the in that range since we've been hiring people relatively recently.
We haven't really looked at.
Expanding the force beyond what we have.
We do have the 18 LGD sales team as well as our matched group of 18.
Al sales professionals, and we will likely continue that for a while before making any any any other decisions, which would be based on whether there was an opportunity for further growth.
Understood I appreciate that Ron.
I may ask another question I think back to the IPO I think you had outlined that maybe there was <unk> hundred 6800, or so kind of premium cataract positions.
I heard you correctly, you called out 3000 so.
Would seem to be.
Maybe a more expansive customer base than you had initially thought for <unk> and subsequently the lay out and is that what youre trying to indicate here that there.
Our interest beyond maybe a subset of the cataract physician market and how you're just thinking about the broader customer base.
Yes, I think that.
The data continues to get updated quite often.
Right now with the most recent data we got from market scope Vishal just over 9000 overall cataract surgeons in the U S.
Closer to 3000 doing the highest volume of course, we could argue about what highest volume is necessarily our focus we think is on the top <unk> hundred <unk> hundred but we also think there are growth opportunities among people who are not doing as many procedures because so much easier for them to do.
And allowed.
Surgeons, who are not doing a lot of premium to enter the market. So we do think probably thats expanding I think that we're all trying to determine about how many accounts does that mean what is the overall number of <unk> that we would have in the United States over time, because often narrow more.
The one doctors and our clinical practice and then of course, you also get other doctors.
Not doing <unk> converting.
We think that probably that number is in excess of 1000, but it could change as well in terms of practices.
Somewhere between that <unk> hundred 3000, but we do think the target doctors.
We thought say nine to 12 months ago based on the data we've seen would you add anything to that one.
No other than.
If we think that it's somewhere in the 3000 range and we probably have.
Just scratched the surface of that with maybe 10% penetration to date. So we're still in the early stages.
Right.
Alright, I appreciate that and again nice quarter. Thank you.
Thank you. Thank you.
Thank you very much. Your next question is coming from Danielle and healthy.
As Phebe Securities Danielle the floor is yours.
Hey, Good afternoon, guys. This is Ryan on for Danielle today. Thanks, so much for taking our questions.
So you just ask your promising results presented touched on our expense experience at Crs I was wondering if you could please talk a little bit more specifically that the physician reception at the back to the <unk> and how it has been more broadly in the market and then I had one quick follow up.
Well specifically at the meeting.
I'd say it was very very positive we had a.
Pre meeting event, which was extremely well attended so there was a lot of pre meeting interest.
The meeting itself had.
Roughly 15 different presentations.
That either were specifically about el al or involved.
Les adjustable ends.
There was there was a lot of interest that brought a lot of activity to our booth, we felt and were told by others that our booth was if not the busiest one of the busiest at the show and there was just broad interest many many physicians, who surprisingly enough had not had much exposure to.
<unk> made their way to the booth and we're getting.
Getting educated from our team there so I would say it was a very positive meeting for us.
Great happy to hear that and then one more for me have you guys seen any sort of material impact on the customer's ability or willingness to make large scale capital equipment purchases given these ongoing inflationary impacts and pressure that we've seen on healthcare systems and physician office visits.
Yes. It is.
Good question I think it's important to remember.
When youre thinking about capital.
Capital purchases by especially large hospitals that are sometimes in the millions of dollars.
Our purchase of purchases are being made by practices.
So they are generally where.
The physician if theyre not the decision maker there is certainly a very significant influencer and the scale of the investment.
<unk>.
Approximately $125000.
So that's a much smaller amount and with the additional revenue that the LCD bring brings in that can be.
That ROI it turns out to be anywhere from six to 18 months typically depending on the volume and pricing of that particular practice. So.
Obviously.
We're watching that but at least with respect to the first quarter that hasnt been a major impact.
Can I ask something Ryan the other thing for.
Our customers' practices, while they may have some inflationary pressure inside of the practice for wages.
Standard cataract procedure reimbursement continues to go down so it's harder and harder for doctors to either make money or breakeven and so they are really reliant on procedures that are patient pay such as ours and so there is more and more interest in the law.
Al and premium cataract surgery overall, because it offset some losses in itself increases the profitability.
The other thing is that patients are older.
Typically in the $65 $70 70, plus range and so there are less impacted by the short term inflationary pressures at least emotionally than say younger customers in their thirty's importing considering lasik.
So we think those kind of offset the overall tone in the marketplace about inflation.
Awesome. Thank you both.
Thank you. Our next question is coming from Larry <unk> of Wells Fargo. Larry Please pose your question.
Hi, This is Charles on for Larry.
Does that take a little bit more into you mentioned this quarter you saw.
Several accounts buying multiple ltd's.
I wanted to better understand I can kind of explain the dynamic here is that just.
They just have multiple physicians interested in.
Just wanted to trying to better understand if you have 246.
246 installed base. There does that mean you have exactly 246 physicians that are doing these LEL procedures or is there a different dynamic there to be aware of.
Okay. So I'll start maybe Ron can talk about physicians over all the reason we mentioned it on the call. Today is we had a greater concentration of bigger number.
Customers who bought.
On multiple ldds in the quarter and it really comes down to this <unk> practices. We even had two practices bought too at the same time very often.
High volume surgeon.
And their partners will have multiple offices in the city, but they could be an hour driving distance from each other and so as they either start their practice like these two they'll start with both offices.
Sure.
And they will add <unk> <unk> to make it more convenient for their patients and so that's what we have seen that before but not at the level that we thought in the first quarter.
And as far as your question regarding <unk>.
The ratio of Ldds too.
Surgeons.
One to one generally there are more and more.
Surgeons and we certainly trained.
Surgeons, but it varies quite a bit and within a practice there might be.
One <unk>.
One Doctor Who's who is the primary our primary premium well doctor there might be others, who are lower volume obviously, we look at it once we're in the practice and once the practice has adopted the <unk> the <unk>.
Rest of the staff.
It has been on boarded then that's a great.
Time for us to go back to the other doctors, who who may be may.
They haven't adopted premiums because theyre not lasik surgeons.
And so they haven't felt comfortable.
With the with the ability.
Our inability to fixed results themselves. This provides them an opportunity to get into the premium space and again address the revenue deficits that Shelley referred to earlier that are coming on in the conventional space.
Okay. That's helpful. And then one just quick follow up so.
So then just thinking the implications going forward you mentioned this quarter was great.
Greater than normal about buying multiple.
Is that something you expect becoming more normal in future quarters Im just trying to think about.
ASP implications.
While we've seen this happen in previous quarters, it's just that it wasn't as heavy as it was in the first quarter, we think that's a little unusual.
And well just have to see what the cadence is going forward.
Okay. Thanks, guys.
Thank you very much. Your next question is coming from David Saxon of the knee.
Company David <unk>.
Yes, Hi, Rodney and Shelly congrats on the quarter and thanks for taking the questions.
Maybe just wanted to start on utilization.
<unk> jumps out to me.
If my model is right at least it looks like <unk> <unk> per <unk>.
So just would love to hear what you are.
Where youre seeing that strength is it mature accounts continuing to increase.
Or is that.
Ramping up the sales.
Sales team driving adoption.
And then I mean, if youre willing to say, what's the utilization look like at the higher volume customers.
And I'll start on that.
Yes.
Model does work correctly, we went from about five eight.
Eight.
<unk> per <unk> per month in the second and third quarters of last year up to $6. One and this quarter was quite strong at six eight and I think that.
It is an important metric in part because the street can calculate it.
And.
The business to that number but yes of course that would have to be part of what we're doing in order to increase you know our procedures are first line of attack, though to increase in procedures is increasing the number of Bell D. DS we sell each quarter.
Could you add anything to that one.
Just.
Already said it but just to reiterate that there is a large range of practices.
The amount of cataract surgery practices doing how much of that is premium and that all plays into that number. So it's not just the.
It's not a pure rep.
Representation of the adoption of DLL.
Okay. Yeah, that's super helpful. And then maybe just a question on gross margin I mean, if I'm hearing you correctly inflation.
Inflation starts to impact that P&L more meaningfully in the second half so should we be thinking about the third quarter gross margin kind of being the trough and then you get some sort of balance as.
L I LS.
Or procedures kind.
Kind of rebound into the seasonally strong fourth quarter.
Yeah, I think that that that's part of it the number one thing for our overall gross margin as a percent.
L L L.
Revenue as compared to L. D T.
So that's the number one driver and of course, we would never hold back LDP sales to finish Martin that's what we'd need longterm, but you would expect in the quarters, where we have the highest Ltte sales that would be where we might have a little bit of depression on the margin and the reason in particular that you mentioned.
This again is well we have these cost bake into overall guidance.
We didn't want anybody thinks that that 42% with sustainable.
As we go forward, just because we're going to have higher material customer second half of the year.
Great. Thanks, and congrats on the start of the year.
Thank you so much.
Great. Thank you all for your doubts about the questions and the kids would you like to hand back the closing.
Okay.
Thank you operator, thank you all for your time and attention today and for your continued interest in our excite wish you the best for the rest of the day.
Thank you. Thank you ladies and gentlemen, this does conclude today's conference call. He may now disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.
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