Q2 2022 STAAR Surgical Co Earnings Call
Our details of his visual freedom with even though they are global advertising marketing and social media campaign.
We are inspired by chose personal story and appreciate his willingness to share his evo journey with millions of others, who could also benefit from living a life with visual freedom.
Enthusiasm and adoption of Evo by U S. Refractive surgeons is also growing more.
Many of our surgeon customers and their staffs are actively on social media Linkedin and in local market media, providing positive Evo testimonies.
We remain on track to train and certify at least 600 U S. Surgeons on Evo by the end of this year with already more than 400 searches trained and certified to day.
Existing and potential surgeon customers tell us they are excited about the evo search and experience when they speak to their peers outside the U S.
When they consider the evo opportunity here and when they review ethos safety and efficacy data from our U S clinical trial.
In addition to the paper available on Starz Investor website published by your medical monitor Doctor Mark Packer discussing the U S Evo clinical trial.
Data from our U S. Clinical trial has also now been updated on clinical trials Gov.
We invite investors and analysts to review key findings from the 629 is a 327 subjects implanted with Evo lenses in the trial.
Next month in September we will showcase our entire Evo family of lenses at our experts meeting and the 14th annual Congress of the European Society of cataract and refractive surgeons in Milan, Italy.
We will feature of Veeva, our innovative lens for presbyopia at both our experts meeting and E. S. Crs.
We will also begin commercialization of Veeva to certified Surgeons were approved which is CE mark countries and geographies recognizing the CE Mark.
Looking ahead to future surge in customer engagement, we plan to host our second U S. Surgeons Council meeting in San Antonio Texas in November .
Looking at full year fiscal 2022 in today's earnings release, we reaffirmed our previously provided outlook for fiscal 2022 net sales of approximately $295 million, which takes into account the significant currency.
The headwinds and a continuation of the current level of COVID-19 related challenges in China, and elsewhere offset by stronger than expected global demand for our Evo lenses, which continued through the beginning of the third quarter.
Organizational energy and enthusiasm as star is especially exciting.
In addition to the surgeon engagement and other activities I just shared we have a plan to lineup of additional Evo Ambassador influencers in the U S, including an M. B a player and a GNC actress model and style icon.
We are also introducing new ambassadors and campaigns outside the U S, including Japan and South Korea.
Like Joe Jonas all of our Evo ambassadors have had or will soon have the evo procedure.
Our Evo ambassadors will begin sharing their journeys in the coming months.
It took over 22 years.
Her star to sell the first 1 million Icl's and just about three years to sell the second 1 million lenses.
Milestone we achieved in June of 2022.
Now and in the future Shar aims to be the visual freedom company.
For those who want to experience an active and fulfilling lives freed from contact lenses and glasses.
Choice is evil.
Patricia.
Thank you Karen and good afternoon, everyone.
Total net sales for Q2 2022 were $81 1 million.
30% as compared to $62 $4 million of net sale in Q2, 2021 and up 28% on a sequential basis from Q1 2022.
The year over year increase in net sales is attributable to a 32% increase in ICL sales.
For Q2, 2022, ICL sales represented 96% of total company net sales.
Similar to the year ago quarter, which ICL sales represented 95% of total company net sales.
We continue to expect other product sales will be approximately 5% of total company net sales for fiscal 2022.
Q2, 2022 reported net sales includes an approximate $3 1 million.
Negative impact year over year.
And current.
Primarily the Japanese yen as well as Europe .
In constant currency net sales for Q2, 2022 would have been $84 2 million.
That's over 35% year over year.
Please refer to the constant currency table in today's earnings release for additional detail.
So analysts modeling purposes due to currency headwinds, we expect Q3 net sales to be approximately $74 million to $75 million.
Our outlook for fiscal 2022 global ICL unit growth remains robust and is actually higher than our outlook entering the year.
Therefore, even in the face of significant currency headwinds, we are today able to reaffirm our previously provided outlook for fiscal 2022 net sales of approximately $295 million.
Turning back to Q2 gross profit for Q2, 2022 was $63 9 million or 78, 8% of net sales as compared to gross profit of $49 2 million or <unk> 78, 9% of net sales for Q2, 2021, and $49 3 million or <unk> 77, 9% of net sales.
For Q1 2022.
The 90 basis points sequential increase in gross margin from Q1, 2022 is primarily due to favorable geographic and product mix and manufacturing efficiencies, partially offset by increased inventory reserves due to the discontinuance of our older generation visiting ICL in the U S and increased period costs associated with manufacturing.
Yes.
For fiscal year 2022, we now expect Q3 and Q4 gross margin to be approximately 79% of net sales.
Moving down the income statement total operating expenses for Q2, 2022 were $46 9 million of.
As compared to $38 $6 million in Q2, 2021, and $37 2 million for Q1 2022.
Taking a closer look at the components of operating expenses G&A expense for Q2, 2022 was $42 million compared to $11 $4 million for Q2, 2021, and $11 9 million for Q1 2022.
Year over year increase in G&A is due to increased facility costs and compensation related expenses.
The sequential increase from Q1 2022 was due to increased compensation related expenses.
We now expect G&A expense to be approximately $15 million for both Q3 and Q4 2022.
Selling and marketing expense was $24 2 million for Q2 2022 compared to $18 9 million for Q2, 2021, and $17 3 million for Q1 2022.
The increase in selling and marketing expense in the prior year was due to increased marketing promotion and advertising expenses Tradeshow expenses.
We offset by decreased compensation related expenses.
The sequential increase in selling and marketing expense from Q1 2022 is due to increased marketing promotion and advertising expenses and trade show expenses as well as compensation related expenses.
We now expect selling and marketing expenses as a percent of sales to be approximately 35% for both Q3, and Q4 2022, reflecting the timing of the exciting new marketing investments globally, we Karen just discussed.
Research and development expense was $8 6 million in Q2, 2022 compared to $8 3 million for Q2, 2021, and $7 9 million for Q1 2022.
The year over year increase in R&D is due to increased compensation related expenses, partially offset by lower clinical trial expenses.
The sequential increase in R&D from Q1, 2022 is primarily due to compensation related expenses.
We now expect R&D expense to be approximately $10 million for Q3 ramping revenue for Q4 due to the timing of investments.
Operating income in Q2, 2022 was $17 million or 21% of net sales as compared to $10 6 million or 17, 1% of net sales for Q2 2021.
We now expect operating margin for fiscal year 2020 to be approximately 15% due to higher than anticipated gross margin and lower than anticipated operating expenses.
For Q2, 2022, net income was $13 million or 26 per diluted share compared to net income of $8 6 million or <unk> 17 per diluted share for Q2 2021.
On a non-GAAP basis adjusted net income for Q2, 2022 was $20 7 million.
Or <unk> 42 per diluted share compared to adjusted net income of 30, $13 6 million or 27 per diluted share for Q2 2021.
A table reconciling the GAAP information to the non-GAAP information is included in today's financial release.
Also per analyst modeling purposes. Please note that we continue to expect our quarterly tax rate will be approximately 25% for Q3, and Q4 2022 subject to no significant change in our valuation allowance.
Turning now to our balance sheet, our cash and cash equivalents totaled $202 5 million as of July one 2022, as compared to $193 1 million at the end of Q1 2022.
In Q2, 2022, we generated $13 $2 million in cash from operations and invested $5 $3 million in property and equipment.
We continue to expect Capex for the full year fiscal 2022 will be approximately $20 million.
We also continue to anticipate generating positive cash from operations for the balance of fiscal 2022, and ending the year with a higher cash balance than fiscal 2021.
Finally, Scott will be participating in several investor conferences and events in the coming weeks.
Including the Needham virtual Med Tech and diagnostics conference on August 16th.
Piper Sandler West Coast field trip on August 23rd in Dana Point, California.
And the William Blair West Coast field trip in San Diego, California on August 30.
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'd like to ask a question. Please press star followed by the number one on your telephone keypad now to withdraw your question. Please press star followed by tank amongst Peng. Please ensure your devices underneath it like kidney.
Our first question today comes from Andrew Bachmann of William Blair. Your line is open. Please go ahead.
Hi, guys. Good afternoon, and thanks for taking the questions I guess I really wanted to ask you. What's your favorite Jonas brothers songs are but I won't go there on this call.
In all seriousness.
Aaron.
Maybe on this Influencer platform. Obviously this has been a big part of the playbook internationally before so as you think about this coming to the United States and helping with the U S launch what can you sort of tell us about sort of what you've seen in sort of terms of sales trajectory impressed past experiences when you have announced a big partnership like this and then separate.
From historical.
Sort of experiences anything that you are expecting from this partnership in particular moving forward.
Andrew Thank you for joining us today so.
When we.
Launch with a major influencer and focus is really on getting the message out that there is an implantable calmer lens called me, though.
And the focus is to get individuals who are very interested in the lives of those influencers.
Especially those who are also challenged with glasses and contact lenses.
To immediately learn more and so what we do with the information that we have like we've done today is on Evo ICL Dot Com. If you were to go there today, Joe is on our front page of our consumer facing website talking to you personally about his journey.
And what tends to happen as we get as you can imagine a very nice bump in interest.
Which increase in dock binders, and a very nice transformation and transition ray to actually having a surgery done.
So our expectation is that in the U S. As Joe's campaign rolls out over the next especially six weeks.
Culminating on September 12 September 7th.
The full media day in New York City.
And a number of appearances on National TV.
As well followed up by Joe publishing and posting.
On Instagram tick tock twin.
Twitter and others, where he has over 30 million followers combined youre going to see a lot of immediate interest.
Also we're expecting Joe who has been interviewed today by people magazine to be featured on their on line.
Website and.
There.
I think they are approximately 77 million unique visitors a month on people magazine online.
Actually make that daily.
And then people magazine's Instagram with $11 million so.
On this particular Influencer, we love Joe We think shows terrific and we believe Joe story is real and important and so our expectation is there will be a lot of interest more than we've experience anywhere else around the world.
Okay. Thank you there are some.
Big numbers in there for things that are sort of unique.
And then maybe I guess I could ask a question around China. So obviously another strong quarter of performance there, but I guess as we're thinking longer term here and as you sort of continue to move up the ladder on market share in that region can you just sort of talk to us about how maybe some of the drivers of that share might change over the next several years is it still going.
Be predicated on sort of growing the share in the large clinics that are already using evo or does it shift a little bit more to getting into smaller clinics or different geographies within the country.
Well, we're going to continue on our successful path that has gotten us where we are.
That means that we're going to continue with our strategic Alliance partners. Many of whom are very large the largest thing ire.
So we're very successfully with them as they grow and to make sure that their business model shift toward land space, namely Evo continues aggressively so.
We just participated actively in the 20th anniversary celebration of ire.
And we continue to be impressed with their growth and their commitment to especially the refractive space.
But we have actually grown our base in China to now over 1000 hospitals and clinics.
We continue to move in all directions in China wherever there is opportunity, we're increasing our distribution centers.
To make absolutely sure that we're able to get to any surgeon anywhere in the country when needed.
So our commitment in China continues to be very strong and we expect by the way the U S to give them a run for their money.
That's great. Thanks, so much.
Youre welcome. Thank you.
Our next question today comes from Al <unk> of Canaccord Genuity.
Your line is open.
Great. Thank you and thanks for taking my questions first of all I'll just start.
I'll start with the U S.
One that number was up nicely.
And just kind of trying to understand.
How should we think about the U S. For 2022 was there any swap outs or destocking in the second quarter that may have impacted the numbers and then my second question is on <unk>.
Backlogs at from a manufacturing standpoint, I don't think theres any commentary on that but where are you in kind of burning off that 20 million lens backlog that you had at the beginning of the year.
And how should we think about that impacting the back half. Thanks.
Hey, Bill it's Patrick Yes in the U S was phenomenal and so when we got the approval in late March and we ended up launching.
What we did see where doctors wanting to switch over to Evo almost right away and so as Karen mentioned, we are very much on track in fact ahead of where we want it to be in terms of training adopt with over 600 now.
So we did talk about that in our financials that we did take a reserve on our old <unk> product in the U S and that speaks to just how quickly the adoption is happening in the U S.
The second question I'm, sorry was on Oh backwards, yes, so on the backlog, but we're not going to get into the details on it I think what we proved in Q2 is our ability to deliver a substantial number of lenses worldwide.
And we're very happy about that and we continue to work through satisfying all our customer needs, especially on the custom lenses to take a little bit longer for us to do but we're in very good shape, there and continue to bolster that up through our operational team as we move through the rest of the year.
Yes, Patrick the question on the U S was was there a negative hit to revenues. When you took the reserve or is that just the impact of the Cogs line or somewhere else or SG&A line and then on the.
The.
Our backlog I mean, it's kind of important for us to understand its have you burn that off why can refill that or is it still sitting there because if you kind of stocked in versus kind of just got rid of the old orders are you still have some of its sitting there. So thanks, thanks for taking my questions.
Yes, so the cost of goods cost of goods reserve that we took so no impact on revenue on backlog. Once again I would just say that we have worked through some of that backlog there is still a little bit to go.
<unk>.
We've accounted for that in our full year guidance.
And so I'll just leave it at that.
Thank you.
Our next question today comes from Chris Cooley of Stephens, Inc. Please go ahead.
Good afternoon, and thanks for taking the questions and congrats on another record quarter.
Karen if you wouldn't mind could you just give us some additional color on these kind of early days experienced in the U S launch and in particular I'm interested.
Learning a little bit more about what youre seeing just from a prescribing pattern.
Operator.
The mix that you're seeing in some of these practices.
A couple of months out in terms of the ICL versus what is it going to smile.
And just I think John the last call you gave us some anecdotal commentary about one practice that had already moved to 50%. So just just would appreciate some additional color on kind of how youre seeing this utilized in these early early adopter practices and then I've got a follow up.
Sure. Thank you Chris.
The early adopters are really interested in offering <unk> to a wide selection of patients.
We believe that very quickly the message has gone out based on outstanding results of our clinical study that not only show great safety, but the effectiveness that the lower diopters and how great. The flattish performance in NII in the you know in the target range of minus three to minus <unk> 20.
We're seeing a number of surgeons.
Having their own family members have procedures.
And I think the greatest testimony is that we're signing the larger strategic alliance deal to be done in terms of the committed volume annually that we've ever seen here by a wide margin.
And so certain surgeons, who early in the game said that once Evo is approved they would change the mix of their offering they are now coming to the table to sign deals to prove it.
On top of that every single day, we get multiple indicators during the surgeons on work.
By then posting online on a social media all of them.
There enthusiasm about the evo product talking about its advantages as they see it over the other procedures that they offer.
And so when you think that we've only been out there for a couple of months.
Now we believe with the number of surgeons, who are trained over 400 actually it's 461 as of today, we will have 600, very soon and more beyond that.
We believe that with our Influencer campaign with all the local marketing, we're doing with the surgeons as well as the.
I'm more excited Influencers, who arent.
Maybe a household name that we just signed a really exciting schatz who's very very popular and as multiple channels.
The Internet so I think when you put it all together.
I believe that we will exceed the growth rate, we had in China. When we first started to really push in 2016 and 17.
That's super really appreciate all the color and then maybe just an operational question for Patrick.
The company has been scaling up tripling capacity.
Just would appreciate if you could give us maybe a little bit of an update on where you are in the process and then maybe more importantly, how should we think about this as it relates to gross margin I mean, obviously you.
Upper are top tier when we think about the gross margin profile today, but as that capacity comes online and is absorbed.
How should we think about the step up in product gross margin longer term. Thank you and again congrats on the quarter.
Sure Chris Yes, so in terms of where we're at things are just going outstanding.
Operational team has really stepped up as we saw by delivering such a such a huge Q2 for us, especially on a sequential basis, we are well positioned for the rest of the year and we will continue to add capacity not only in the U S. But as we move out into our Sichuan facility as well into 2023, and so does that impact on gross margin.
We tried to account for it in the guidance I think in any given quarter as we bring on new facilities that you get that fixed costs. We will do our best to guide you all from your modeling standpoint, but as I said approximately 79% in Q3, and Q4 and we're very comfortable with that.
So other than that I think we're in good shape when it comes really from all that stuff.
Thank you.
The next question today comes from John <unk> of Jefferies.
Please go ahead.
Hey, Thanks for taking my question and congrats on another great quarter.
Just wanted to touch on China procedure volumes.
Sure.
All are provided in the press release, but can you give some color on unit growth sorry on procedural trends in China through this new coated policies.
And if there's any color.
Local backlog in China that you guys are seeing.
Actually this year because of the intense effort to be able to really manufacturer aggressively.
We knew we'd be very increased demand.
For this busy season, which has turned out to be the case.
We actually had the best inventory position, we've had historically in China.
And.
We are using at all.
So the bottom line is we're having a really strong <unk> through today in the third quarter.
Our expectation is that we'll continue appropriately through the end of the busy season, which is about mid September .
And then we'll be in a replenishment mode for our more typical quarters that aren't quite as aggressive as Q2.
Which follows our annual expectation.
The expectation so I think bottom line here is that we're in where we're going to definitely need to replenish because we're using everything that we're sending.
Got it that's helpful and then just.
One of them.
Presbyopia.
Any early feedback that you're hearing that you can share.
Yes.
Well, we're still in a limited launch we're really not going to formally launch beyond the early surgeons until after.
About September 20th.
Feedback, we're getting now from the surgeons, who are contributing to the playbook is that the Evo family of lenses with Aviva addition is giving them a great armamentarium to treat their presbyopic patients.
As they learn from their myopia business, what it takes to properly identify oppose the alpha patient prop.
Properly target for that patient implant and follow up it is a whole different game it takes longer but we believe we're going to have a heck of an entry in the market.
Got it that's helpful. And then just one follow up on <unk>, if I could any color on getting them into other markets beyond the CE Mark countries. Thanks for taking my questions.
Yes, our initial focus and of course with <unk>.
Hey, Mark countries and countries that recognize the CE Mark that we are getting closer to announcing other countries, where we will be able also to distribute the land.
Thank you Zack.
Our next question today comes from Ryan Zimmerman with <unk>.
Please go ahead with your question.
Yes. Thanks, good afternoon, thanks for taking our questions I want to start.
And if I could around pricing and asp's.
First.
I think just based on the proportion of sales in the China, you saw a little bit lower ASP, one is that correct, but but how to think about modeling asps as the U S becomes a larger proportion of sales and just what can you say in terms of your thoughts on it globally given.
The larger FX that inflationary dynamics that we are seeing across the med tech industry.
Well I think I'll add to the back half of your question first and had we not had the FX headwinds, we would be reporting $84 $5 million of revenue and so we're very pleased with that.
Our asps are on track in our Asian markets. They do differ by each country, China being the most aggressive pricing for the highest volume in terms of our pricing and other Asian markets. We continue to be increasing our asps in spite of volume increase as a premium and primary mark.
Hitting garners.
Garners that kind of commitment and that kind of price point as we add more volume in the United States, where we do charge a different price schedule. We do go direct.
And so as a result of that we ought to see those asps going up nicely over the next 24 to 36 months.
Okay. That's helpful Caren and just Patrick given the FX impact this quarter.
Do you have an idea or can you give us the FX that you're expecting.
For the full year, given the reaffirmed guidance how much FX.
I guess I should say underlying what is your underlying expectations for revenue given FX for the remainder of the year.
Yes, no I appreciate the question Ryan and so.
We gave the original guidance of approximately 295 at the beginning of the year on a constant currency table you can see that we've now had about $5 million of FX headwinds for the first six months, notably 3 million plus within Q2, which is when we really started to see increased volatility with the strengthening of the dollars.
So I really have to go back to what would be the impact in the second half of the year based on that additional guidance, which we've now been able to really keep steady in light of these headwinds. So I think it would be fair to say, there's probably at least an additional $5 million of FX impact in the second half of the year.
And so we've taken that into account in this guidance and we'll have to see where the rates go from here, but we're feeling comfortable with where we're at and we that's why we try to focus everyone. On units is just phenomenal unit quarter with over 40% growth on the unit side, but we're still able to deliver the revenue.
Okay I appreciate that and then.
Lastly for me.
Just.
How to think about the U S trajectory and I think this has been kind of asked already but.
Given where kind of street expectations, where this first.
This first quarter of launch for Evo actually I'd say.
How do you see that growing.
Quarter over quarter.
Through the remainder of the year.
Any any color Eric.
Commentary you can give guidance I think would be appreciated by the street.
Well, we haven't really.
Released what we thought the growth should be or will be what we are doing is reporting really great growth I think the bottom line is.
I wouldn't be uncomfortable thing will grow more in the four in the third quarter than we did in the second quarter and so on.
But at this point.
We're just giving kind of the overall view of the business the strength of the business and our ability to manage multiple market as well, but our real focus in the United States. Now is is real it's tangible and we have the highest hopes for some great demand.
Making sure that our surgeon partners are ready for what we hope will be an onslaught of interests.
So at this point, we're not going to call a number but we will say that the growth matters not to exceed where we've been.
Thanks for taking my question.
Thank you Ryan.
Our next question today comes from David Saxon of Needham and company. Your line is open.
Oh good good afternoon, thanks for taking the questions and congrats on the quarter.
I guess, a number that stood out to me in the script was the 400 docs trained.
Memory serves.
Last quarter, you only trained 100 docs. So just wondering if 300 is a good quarterly pace, we should think about and then looking at the 400 docs who have trained maybe can you just talk about that.
Refractive share ramp.
Seeing for Evo in the weeks and months after.
That training.
Okay.
But there isn't a.
There isn't a statistic associated with the number of surgeons already trained and how that will play out over the coming quarters other than what we know we can do by the end of the year.
So our goal is to be sure that we are certifying surgeons.
Have a dedicated commitment to increasing their profile of Evo managed patients.
And that in the agreements we have with them.
That they meet their growth trajectory to commit to and that they have really happy patients and so with all of that we're pacing ourselves to do this right.
In terms of the number of additional surgeons who come on.
Believes that talk is that it's not going to be unlike any new medical device that catches on with the strongest surgeons in a market.
Every other surgeon is going to be very interested in getting trained and getting smart and making sure that economically they benefit from what we believe is an incredibly excellent outcomes for their patients.
So my answer to you is that stay tune our goal is to have thousands of refractive surgeons trained.
We are not committing to a volume other than the 600 or so through the end of this year as we have a.
What you might call a longer timeframe to success with surgeons, who are brand new to them planning lenses, maybe from an all laser vision practice.
So I think the bottom line, though is as is the case in a lot of procedures.
You get a huge amount of your volume from a relatively small number of surgeons and then others catch on and before you know your market share does get up to that 15%, 20%. That's certainly what's happened in every other market, where we have unravel and rolled out these new.
Ways to perform refractive surgery that really does garner excellent support from search and spend a lot of patient satisfaction.
Okay. That's super helpful. And then maybe I'll ask another on the U S. I mean, it sounds like you're expecting growth to accelerate from here on out so maybe.
Maybe talk about the sales force you have in the U S do you need to hire more.
Do you feel like the sales the size of Salesforce, which is sufficient to support the U S launch alright, thanks, so much and congrats again on the quarter.
Thank you very much David.
So we have a really strong contingent of account executives practice development clinical.
We wrap around our surgeon customers a team of expert what we believe is excellent.
We make sure we get them over the goal line, we make sure we monitor and work with them on their outreach to their local consumers.
Our web marketing et cetera.
It is a unique skill set.
It is a very strong leadership requirement of which we have a very strong contingent of players.
We will continue as need be to add on.
But we also find that being in the unique situation. We are today and hope to be in for a long period of time, our premium and primary mutation does not require us to have a sales organization claimed defense were purely an offensive game and we expect to stay there.
Wait for a relatively long period of time.
So as a result of that our sales and marketing expenditures will be more tilted toward digital marketing social media Influencers.
Those are going to be the way that we get evo out. So people are asking for evo the way they know to ask for other important procedures like they have for years laser vision correction.
Thank you.
Our next question today comes from Steve Lichtman of Oppenheimer and clay.
Please go ahead.
Thank you hi, guys.
Karen.
You mentioned the stronger than expected demand for <unk> and Patrick I think you mentioned you have a higher unit growth expectations now for the year versus versus when you started is there is there a region or to that.
Standing out versus your original expectations and any you'd point out in particular that is driving the upside versus your expectations heading into the year.
I would say that today, Japan Korea, China.
Yeah.
Germany, and the U S and even in India are performing better than expected.
Okay got it.
Pat Patrick but nice to see gross margin guide raise in this environment are you.
Still.
Feeling some headwinds from inflation in that number how much if so in what are you doing to offset it.
Yes.
Yes, so the nice thing about our operations that were fairly vertically integrated so we do get raw material in order to make our polymer but from there we build obviously the lenses and go forward.
We haven't seen related to Covid as everyone else has wage increases thats factored into our guidance.
We have seen maybe a little bit on the raw materials, which is factored in.
But I think generally.
The ability for us to raise our gross margin has everything to do with the efficiencies that we're seeing out of our outstanding operations team. So we're very pleased with what they've been doing over the last couple of quarters and pleased with what's going to come through the second half of the year.
Great. Thanks, Patrick Thanks, Karen.
Thank you.
We have now reached our allotted time for questions. So I would now like to turn the call back to Carol Nathan for closing remarks.
Thank you very 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 take good care all the best to all of you. Thank you.
Okay.
This concludes today's call. Thank you for joining you may now disconnect your lines.
Yeah.