Q1 2023 STAAR Surgical Co Earnings Call
$3 million and other product sales, we reported for Q1.
Our raised outlook represents 28%.
<unk> sales growth.
For the first quarter global ICL sales of $70 6 million with $3 6 million above the high end of our 65 million to $67 million outlook.
Results were driven by restored a quarter for ICL procedures in China, which commenced in mid January and has continued unabated.
ICL unit growth in China was 20% for the first quarter of 2023.
China, Indeed is back and as a result, ICL procedures in China are certainly back to.
To deliver the strong results in China.
Our team hosted surgeon training events academic conferences, and advanced practice development and consumer marketing activities often in partnership with our surgeon customers.
One livestream surgery training was attended by over 1800 doctors and clinical staff.
Other young surgeon conference was attended by over 1300 doctors and residents in a conference in collaboration with the key University Hospital account was attended by over 3800, ophthalmic doctors and clinical staff.
Consumer marketing in country was diversified across digital content channels and emphasize the sharp clear and high quality vision provided by Evo ICL.
As well as our custom toric lenses, specifically developed for myopia with astigmatism.
Marketing program with Influencers received over 1 million views during the quarter.
Two weeks ago.
We hosted leadership from our largest customer in China.
Hospital at our Lake Forest, California headquarters and during that meeting.
Here's leadership reinforced the importance of ICL to their overall growth strategy globally.
As a region overall APAC delivered solid performance up 19% in units and 20% in sales for the first quarter of 2023.
In the United States.
ICL units grew 78% for the first quarter well ahead of industry volumes in the U S, which the refractive surgery Council reported declined nine 1%.
Sequentially, our U S sales in the first quarter were relatively flat however.
However, we are coming off a strong March and remain confident in our Q2 projections and a doubling of sales in the U S for the full year.
During the first quarter, we executed on the plan infrastructure additions to our U S. Commercial organization, which we believe are important to driving growth and better serving our customers. The number of account executives clinical application specialists and practice development personnel across our U S commercial.
Organization.
As markedly increased and will continue to grow in targeted markets when appropriate.
We expect our new team additions will become productive in the second half of 2023, and even more so beyond that.
This month, we entered the eight months of our direct to consumer supported Evo launch in the U S. Our DTC marketing efforts, which target potential patients primarily ages 21 to 35 are working to build the awareness and the funnel of future ICL patients.
In the first quarter of 2023.
We saw a 402, 2% increase in visits to our U S. Doctor Finder, we anticipate that these visitors will begin their journey of discovery learning more about Evo and the ICL procedure for the visual freedom selection.
I would like to share with you an E mail from one of our customers. There was a surge in CEO of a multicenter chain of U S clinics.
The email reads as follows and I quote.
Just wanted to let you and your team know that stars marketing seems to really paying off with Evo ICL.
There's a lot more consumer awareness for the surgeons and staff. It is less of a cell it has become quite easy to convert patients to surgery.
Our volume is still relatively low, but I think it is because we are still targeting the higher miles for ICL.
But our surgeons and staff are getting more comfortable with Evo ICL, we have reduced the number of appointments and patient anxiety by eliminating the need for laser peripheral iridotomy.
This gives us comfort to reduce the level of myopia, we are comfortable treating with ICL. Our plan is to make our website more evo ICL friendly.
The star for having the foresight to do effective DTC marketing. Thanks to your Homestar crew for being forward thinking and putting patients and docs first end of quote.
Another Doctor a young surgeon based in California has increased his ICL unit utilization six X over the past year to approximately 12% of those practices procedure mix and tells me that he expects the move is minus eight diopter cut off even lower.
This surgeon told me he expects to see ICL gained significant market share in the coming year. The anecdotes I. Just shared are just two examples that we're building the market for Evo ICL in the U S.
New and exciting Influencer and customer co marketing partnerships in the U S have or will soon be finalized.
These investments are budgeted and consistent with the investments we've talked with you about on our last call, which Patrick will also cover shortly.
Overall based on my decades of experience in ophthalmology and <unk>.
My knowledge of our Evo ICL launch status.
I am quite pleased with where we are at this point in time.
Confident that awareness.
Adoption and selection by surgeons and patients will continue to accelerate in the U S.
Turning to our EMEA region ICL units were up 18% in the first quarter with sales up 10%, which were impacted by currency headwinds.
Five of the six major regions, we track in EMEA.
<unk> had positive growth in the first quarter as compared to just two of six regions in the fourth quarter of 2022.
We saw standout growth in European hybrid markets, where we've made investments as a reminder, star invested in its first European hybrid market in 2020, and the Benelux, and then Italy and France in 2021.
These hybrid markets have consistently outperformed our pure European distributor markets. For example in the first quarter of 2023, we saw year over year ICL unit growth in the Benelux up 34%, France up 20% and Italy up 45.
Percent.
The star team globally is focused on executing against the targeted priorities that are important for our growth and to our customers and shareholders. In March we added two highly regarded ophthalmic leaders to our team.
Laurent fast as Chief operating officer, and Dr. Magnum, Mitch as Chief regulatory clinical and Medical Affairs Officer, We look forward to the contributions we are confident each will make for star our customers and patients.
The big picture growth drivers for our business remain highly favorable first.
The number of people with myopia continues to grow which further increases our already large addressable market globally.
Millions of contact lens wearers stop wearing context every year due to intolerance discomfort hassle and alike. In many of these former contact lens wearers have the ability to pay for Evo ICL.
Second we have an evo procedure that offer surgeons favorable economics and profitability in.
And third.
We have a great product that many patients have determined is a preferable solution, which they have chosen to break free from contacts and eyeglasses.
In early April we completed a customer survey with just over 900 responses from our surgeon customers globally.
In response to the statement I am satisfied with STAAR surgical product quality and clinical outcomes.
99% of over 300, China surging customer respondents agreed.
In the U S.
100% of approximately 100 U S surgeon customers responding agreed with the statement.
I am satisfied with STAAR surgical product quality and clinical outcomes.
Evo ICL is the real deal.
When surgeons and patients are exposed to evo.
They overwhelmingly agree.
Our focus is to make evo the first choice for doctors and patients seeking visual freedom.
We're confident we will continue to drive faster and faster growth as awareness of Evo continues to rise.
As I've said on many occasions.
The time for Evo is now.
Patrick.
Thank you Tom and good afternoon, everyone total net sales for Q1, 2023 were 72 quite $5 million up 16% as compared to the $63 2 million of net sales in Q1 2022 at a 15% on a sequential basis from Q4 2022 net sales of $64 million.
The year over year increase in net sales is attributable to a 20% increase in ICL sales, partially offset by a 36% decrease in other product sales.
<unk> sales were $70 6 million represented 96% of total company net sales for the first quarter as compared to 93% of total company net sales in the year ago quarter.
Other product sales were $2 9 million for the first quarter.
We continue to expect other product sales will represent a smaller and smaller percentage of net sales as we move through fiscal 2023 and take our support of the noncore counteract Io business.
Gross profit for Q1, 2023 was $57 6 million or <unk> 78, 3% of net sales.
As compared to gross profit of $49 3 million or 77, 9% of net sales for Q1 2022 and.
$49 8 million or 77, 7% of net sales for Q4 of 2022 to.
The 40 basis point increase in gross margin as compared to Q1 2022 is primarily due to geographic and product mix, partially offset by increased period costs associated with manufacturing projects.
The 60 basis point sequential increase in gross margin for the fourth quarter is due to the higher ICL sales mix in Q1, 2023 and geographic mix.
For fiscal 2023, we continue to expect gross margin will be approximately 80% for the full year and each quarter.
Moving down the income statement total operating expenses for Q1 2023, we're at $54 8 million as compared to $37 2 million in Q1, 2022, and $48 8 million for Q4 of 2022.
Taking a closer look at operating expenses total operating expenses for Q1 2023 were consistent with our plans that we did have some expenses, which we had anticipated to be sales and marketing that ended up being booked in G&A for Q1 and will continue moving forward.
G&A expense for Q1, 2023, with $18 1 million compared to $11 9 million for Q1, 2022, and $14 8 million for Q4 2020 to the.
The year over year increase in G&A is due to increased compensation related expenses, including a $1 5 million severance expense related to our <unk> business in Japan outside services and increased facilities costs.
The sequential increase from Q4 2022 was due to increased compensation related expenses severance expenses related to our <unk> business and increased outside services.
For fiscal 2023, we now expect G&A expense will be approximately $19 million per quarter.
The increase from our prior outlook, primarily relates to higher stock based compensation and Additionally, executive hires.
Selling and marketing expense was $26 4 million for Q1 2023 compared to $17 3 million for Q1, 2022, and $24 2 million for Q4 of 2022.
$7 million for each quarter.
Operating income in Q1, 2023, with $2.8 million or 3.8% of net sales as compared to $12.1 million or 19.1% of net sales for Q1 2022.
We anticipate other income will be approximately $1 million per quarter for the balance of the year.
Judy aforementioned growth investments and increase of stock based compensation, we know anticipate operating margin for the fiscal year 2023 will be approximately 10%.
At the middle of the range of our five year average.
Start initially achieve positive annual operating margin that gap profitability of 2018.
Remain proud of our five year track record of profitability in cash generation, which we expect to continue in 2023, and it's rare for a high growth medical device company.
Net income in Q1, 2023 was $2.7 million or five cents per diluted share.
Compared to net income of $9.6 million or 18 cents per diluted share in Q1 2022.
On a non-GAAP basis suggested that income for Q1, 2023, with the $7 million or 18 cents per diluted share.
<unk> adjusted income of $14.4 million or 29 cents per diluted share in Q1 2022.
A table reconciling the gap information to the non-GAAP information is included in today's financial relief.
For fiscal 2023, we continue to expect our effective tax rate will be approximately 25% to 30% subject to no significant change in our valuation allowance.
Turning out of our balance sheet or cash cash equivalents in investments available for sale as of March 31st 2023, total $217.3 million as compared to $225.5 million at the end of the fourth quarter of 2022.
The decrease in overall caches due to the timing of annual compensation payout that occurred in the first quarter.
We continue to expect you to invest approximately $26 million in property and equipment.
We also anticipate generating positive cash of operations for the balance of the year and ending fiscal 2023 with a higher cash balances in fiscal 2022.
As Tom mentioned earlier, we today, please our net sales outlet for $340 million to approximately $348 million for fiscal 2023.
Including approximately $345 million of Icl's sales and an approximate 30 million dollar U S icl's cells contribution.
<unk>, who would expect total icl's sales to be approximately $93 million, including sequential sales growth in China, and a U S sales of approximately $5.5 million.
We anticipate generating approximately 47 per cent of our fiscal 2023 Icl's sales outlook in the first half of the year at 53 per cent in the second half of the year.
Finally, this Friday may 5th Star will host a surgeon lunch and panel during the American Society of cataract refractive surgery.
C R S confidence in San Diego.
Please reach out to Brian Moore, and Investor Relations, if you would like to return.
Start will also be participating with the benchmark company virtual health care conference in Berkeley, Southern California, Investor Bus tour.
May 23rd.
William Blair annual growth conference in Chicago on June 6th.
<unk> and company virtual investor confidence on June 14th.
This concludes our prepared remarks.
<unk>, we are now ready to take questions.
Frankie as a reminder, if you wanted to ask a question you can press stop for like one on your telephone keypad.
If you want to withdraw your question that you know hey, Presto, so I'd like to.
Decent show you on me to Luckily went off you know a question.
First question for state comes from Anthony patrolling from Missouri Group and.
<unk>. Please go ahead.
Thank you and congratulations here on a strong first quarter result, maybe maybe Tom I'll start with just the performance in China.
Describing it is back to.
<unk> lies levels of <unk>.
Couple of follow ups here would be one as we look into the seasonal peak the normal seasonal peak, which would be two Q and three Q how.
How does it play out this year versus prior years is there any backlog that's going to be also in that number.
And then I'll have a follow up for Patrick Thanks.
No Anthony good to hear from you and thank you for the question.
China is indeed back and and <unk>.
Q2, two three being equally strong so as we enter into the high season, we're we're poised for a good run in China.
Excellent and maybe just a quick one if I could sneak it in there can can you provide maybe the data on where ICL as as a percent.
A total refractive in China.
Maybe the aspirational target and then the quick one for Patrick would be just a sales and marketing expense ramp. This year. It was actually a little bit lower than we expected and one Q just wondering how we should be thinking about it as the year progresses again, thanks and congratulations.
Sure from our market share point of view again, I think it's a moving target as we look to kind of confirm the number of refractive procedures, but I think we're comfortable that were around 20% and growing.
And then Anthony on my side for my prepared comments, we did have some expenses that we thought were going to be in sales and marketing. When we gave the original guidance back in the late February we ended up booking those in G&A. We also saw a slight increase in in stock based compensation and so.
As I said worried about the $33 million a quarter in absolute dollars for sales and marketing and that lets you will see in Q2 Q3 in queue for and so I think if you guys go back and reference to prepared remarks. It should get the models are very much in line.
Alright, Thanks, again, I'll often too.
Yeah.
Thank you next question comes from Margaret Cho from William Black Margaret <unk>. Please go ahead.
Hey, good afternoon, guys. Thanks for taking my question.
Wanted to start on guidance, if I cut and specifically on the U S side. So first can you confirm the Q1 number you know paying maybe close to four and a half million dollars. If it's flat sequentially and then maybe you're up it sounds like maybe a million sequentially in Q2 to five and a half million and I think he also reference may be doubling by the end of the.
<unk>, which gets me note about 9 million. So I just wanted to walk through that and and make sure that I'm thinking about that correctly and if you could provide any drivers around that that'd be that useful. Thanks.
Yeah sure. Thanks, Margaret for the question I'll, let Patrick add his color as well, but your your assumptions are correct in both what we think will happen in two two.
Where Q1 was in and we remain confident that we'll double our business in the U S for the entire year 2000 twenty-three.
We're encouraged by some of the matrix we look at.
Such as you know Dot finder visits continue to go up in Q1 ear up over 400%.
And we continue to see very good conversions on a day to day basis of doctors committing more and more of their total refractive procedures to Evo ICL.
Okay.
Oh, great Yeah, I appreciate that and so yeah, maybe going a little bit deeper right on the U S side I really appreciate the additional examples he provided that in terms of the few that calls on accounts and going down on a diopter curve, we've heard the same but.
Maybe time, he could speak to kind of the most important or maybe even most successful practice development initiatives for the next few quarters.
And I guess when do you expect them to have a more material impact on utilization, particularly in those borderline email accounts.
Thanks.
Yeah sure Margaret as as you know change takes time and we're seeing that in the U S. But we're confident as we have made the investment in practice development and adding head count and quota carrying salespeople in clinical latched people were starting to see that bear fruit and I can tell you almost on a weekly basis.
I get calls from end users that are really pleased with their outcomes are continuing to to push the diopter trend down they're continuing to see brand awareness people coming in asking for Evo So I make it.
As we continue to monitor those I remain very confident that we're each each month, we're cracking the code more and more and we remain very optimistic.
I'm confident that the U S is going to be where we want it to be.
Okay, great. Thank you.
Thank you next question comes from my run Zimmerman of B T O G. <unk>. Please go ahead.
Hi, guys. This is Sam on for Ryan and Thank you for taking my questions. This one's on the 2023 operating margin guidance.
You brought down operating margin expectations, and 10%, but I'm also previously commented that spend will ramp in 2024.
Right now the street is sitting at around 17.8% operating margins in 2024, I know you're not Gonna guide to 2024, but what are your thoughts on that 2024th Street consensus operating margin expectations. Do you think it's too high or too low given to spend in the U S and <unk>. Thank you.
Sure Yeah, we're not going to comment as you sit on 2024.
We'll take a look as as we continue to move to the quarter to see if we wanted to give some color as we move through this year and going into 2024, but as I mentioned the primary driver was a non-cash adjustment on the operating income which was stock based compensation and so some of the other metrics that we look at internally and I know a lot of the street does as well.
What are we doing with cash flow free cash flow and certainly more of an adjusted EBITDA type number and when I look at those I'm very satisfied with where we're going and we will hold off on you know anything going into 2024 now but.
We wanted to make sure that we're investing appropriately and being able to grow that U S. Commercial specifically, but you know honestly the 95 per cent of the other revenue across the world, where we still have very low market share.
Thank you that's really helpful. Then as we look ahead for the remainder of 2023 and two 2024, how are you thinking about the impact of competition with the development of some domestic ICL companies in China. Thank you.
Yeah, Sam Thanks for the question again, we really don't see competitive forces impacting our ability to continue to grow in China.
I think 2 million implant so worldwide to safety the efficacy of our technology has been well established and we see that continuing to move forward unabated.
And just to clarify just so we're clear I heard you say domestic so I wanted to make sure where if.
If you were talking to China, or the U S. But we are at PMA device. So if anyone is going to do something here in the U S. There's a long road.
To go as well as high investment dollars on that so to be clear.
Thank you.
Thank you next question comes from Bill Clinton for Nick from kind of cold.
<unk> is now open. Please go ahead.
Hi, Tom Patrick is Shaun on for Bill. This evening, thanks for taking our questions I'll, probably start with back to the U S were allowed to focus says it was a little bit lighter than the original guy K put out last quarter and both of them weren't color on when she saw on the quarter. I know you said you saw a strong March but can you talk a little about.
Any productivity gains you're seeing and how many of the plan 10 reps you had mentioned in the last call were hired and just what do you expect for productivity out of the 10 Ayers. Thanks.
Yeah, No I appreciate that I appreciate the call in and certainly we have fill that I think about 90% of those job openings that that we are posted and talked about in previous calls and we feel good about the quality of the people we've attracted.
And I think as we've said previously it'll it'll take a quarter or two for those people to be very productive. So we feel good about the second half of the year.
I think March was a strong month April we continue to see conversions happening.
Which gives us confidence in and where are we thank you too will be in the fact that we reiterate it that we believe we will double our business for the year.
In 2023 so.
Again in my years of being in this ophthalmic business.
When you're creating a market and growing to market. It takes time and quite frankly, we're right where we need to be.
When you think about it even though we're reprove the year ago.
We're really only about six to seven months.
Into our launch, but when we really started to gear up our direct to consumer spending.
Spend in creating brand awareness incretion our infrastructure.
So when you look at it from that viewpoint or that contacts I think we're right, where we need to be in and I feel very confident as we keep growing month to month to month, where right, where we need to be and we remain confident that the U S is growing at the rate it should be.
Put that in further context, when you think about where we were in China.
Back in 2016 were growing at a rate in the U S. Greater than we were in China I have a similar point in time.
So again, another reason for being confidence.
Great. Thanks, and just made me to go a bit deeper into that strategy can you talk a little about any contacts round <unk> engagement, which I know is a new focus for you. Tom and then also just the new account versus <unk> and and how many <unk> today are trained thanks.
Surgeons trained today are approaching I think 650 to 700 in that range, but as I said.
We're more focused on going deeper than wider obviously demand is going to be there will certify new surgeons as that demand comes in but we're really trying to concentrate on ensuring the surgeons that are already certified to do Evo ICL are surrounded with practice development support clinical applications support.
And quota carrying sales support to ensure they really are reducing this into the fabric of their practice and moving towards being the first choice when it comes to patient patient shaking visual freedom.
Not there that's are aspirational goal, but we think we have the people the programs in the process to get us there.
Thank you.
Thank you.
Thank you next question comes from young Lee of Geoffrey's your.
Linus I'll open. Please go ahead.
Alright, great. Thanks for taking my question.
Maybe first one.
Just on the quote in the press release about evil increasingly becoming a patients first choice.
Where are you seeing that.
Is there an inflection point in terms of patient awareness or surgeon experience.
Well I mean, thank you for the question, but I would say the fact that we're growing we're up 70 plus percent.
Year over year suggests that more and more patients are walking in the door and more and more docs are starting to convert as I said are aspirational goal is to be the first choice.
We're not there yet the inertia of Lasik is real laser vision correction has been around awhile.
An evo is is very early in its in its launch phase and in this particular market in the U S. But as previously stated.
I think we're right, where we need to be and I remain confident as previously stated that we're right, where we <unk> we need to be we're growing we have momentum and we really feel good about the U S growth.
And I'll just add we're we're about to go to a a C. R. S here and we're going to be doing a surgeon panel there on Friday, which we talked about and I think people are going to be excited to hear that they take away from that and you're going to start hearing a lot more doctors talk about exactly what you just ask young which is that they're thinking Evo first one a patient walks in the door.
Asking for refractive surgery.
Okay, great Yeah, looking forward to that I'll be there maybe for the follow up.
Accurate I guess.
Been a little bit more than a year since the U S approval.
You know just.
High level, you know how do you think the U S launches goin' relative to your expectations westcon better than expected or what's been a little bit more challenging unexpected.
Yeah, I think Tom hit the nail on the head right whenever you're trying to launch into a new market you learn as you go along and I think what you heard in the prepared comments now is a definite focus from Tom on voice of the customer.
And listening to that and trying to figure out what are those things that we need to knock down in order to make even though the first choice and so I'm very pleased with where we're at we're better today than we were yesterday and certainly a year ago.
And we're feeling really good of how we're starting off and excited about how the year Linda.
Alright, thank you.
Thank you on that.
Next question comes from David Saxon of need David you'll understand what open. Please go ahead.
Yeah, Thanks, Hi, Tom Hi, Patrick Congrats on the really strong quarter. Thanks for taking my questions.
Maybe I'll start with one on the U S. I mean by my math, I think you're tracking right around 3% volume share best for the whole market. So one task is that what you're seeing internally.
And then since you're taking the approach of going deep versus White can you talk about the Sharon you see once you do get into account.
You know look at I I I would say that are on.
The goal I put out for the team, let's put it that way as I think we should go into accounts thinking we should our way to 50% of their total refractive procedure volume are we there today no absolutely not.
Do we have practices that are approaching 20% to 25% of their refractive procedures are evo ICL, yes, and we're continuing to grow those types of practices, but as I said, you know when you're creating a market when you're changing the market when you're moving the inertia of Lasik It takes time and.
This this.
This evo launch is going to be no different.
But I'm not discouraged.
At all by anything we're seeing quite frankly, just the opposite I'm encouraged as I've had dinner meetings and phone calls with kols across the country.
There are excited about what star is doing and how Evo is performing.
Okay. That's helpful and then to their eyes.
Let me just make one final comment for Ya.
Further testimony to that our top 30 customers that we stay very close to our two X year over year. So again, we're seeing the kind of growth we want to see and.
<unk>, yeah, it keeps us feeling very bullish about the future.
Okay. That's super helpful. Thanks for that and then in the script I think you talked about.
In Europe you are.
Seeing hybrid markets grow faster than distributor market. So I wanted to ask how big of a growth opportunity is that.
To get more.
Of your distributor markets converted to hybrid markets and then maybe I'll tack on another one for Europe , maybe just talking about the VEBA launch I think that was launched in September so how's that going.
And then thoughts on the timeline for Viva getting into the U S and thanks so much.
Yeah, I'll look at I, I think hybrid versus distributor, it's depending on the market and what we find we're trying to be responsive to what moves the market. The most as we said in prepared remarks, we're very pleased with what we've seen in <unk> in France and Italy.
It doesn't mean that our distributor markets are performing but we're very pleased with those three in particular, and that's where we've put some investment dollars to work and it seems to be bearing fruit I'm glad you mentioned ymir because again I.
I get that a lot of you are focused on the U S. But quite frankly, we are a global company and we're continuing to grow around the World China Asia Pack in general had great quarter, Europe had a great quarter. The U S is continuing to grow and I think it speaks to the excitement of evo around the world.
Alright, thank you.
Thank you.
Thank you next question comes from Steven <unk> from open I'm, Steven Yolanda, It's I'll open. Please go ahead.
Hi, guys. This is Ron on for Steve I wanted to ask on China, continuing to see really great <unk>. How long do you guys think <unk> growth can continue.
Obviously, China is a very big part of stars revenue so.
How far do you guys think sounds market over there is going to shift in your favor and do you have any targets and trends like that in other countries that would be similar.
Yeah, I I I think the.
The runway is big in China.
Well established there, but before we have great opportunity for continued growth.
China is back as we said earlier all indications are <unk>.
It's back to normal levels were seeing very good in country.
Demand so the sky's the limit.
And I'll just add on that one I think one of the big things that we talked a little early as to what the total addressable market sizes and we're now talking more along the lines of a $1.5 million at 1.6 million is we just had our largest customer here. The Iron Hospital group is Tom talked about his prepared remarks they.
They supported that in fact, we're starting to hear numbers that are even higher they're approaching that $2 million and we're obviously trying to get some of that out, but where we very much have a long runway as Tom just said.
Okay, Thanks, guys and I'm, calling to follow up sorry, if I missed with them they opt to arrange them.
We know that our recommendations are changing change between countries and they keep getting update into coin downingtown.
Can.
Can you tell us what trends you're seeing generally across as you look at the your markets with regard to I feel he's Laura dropped Arrangers and are you seeing I feel he's growing over a diopter inches any more I, specifically, maybe any trends in the U S could you could talk about.
You know I I I don't know, if it's appropriate to speak on trends, but but what I will tell you is.
Surgeons gain confidence and more experience in the use of Evo ICL. The naturally began to start coming down the diopter curve.
[noise] pivotal trial in the U S was I think the average diopter treat it was a minus seven you heard in my prepared remarks, you know some people have arbitrarily established a minus aid is kind of that that cut off period when they.
Think lasik versus lens base refractive surgery, and we're seeing more and more minus three minus four is minus five being treated so I think the.
The trend is moving down, but I think it it's it's predicated on gaining the experience seeing the confidence of happy patients happy staff happy surgeon, usually equates to coming down diopter curve.
Alright, Thank you guys.
Thank you.
Thank you next question comes from George Sellers of Stevens zinc George Yolanda final open. Please go ahead.
Hey, guys. This is Harrison on for George Good afternoon. Thanks for taking my question. My My first one was about.
As we as you see the U S surgeons ramp and utilization I was wondering where specifically you see investment opportunities to drive that utilization higher and how does that investment compared to what was needed in China. During the early days of that launch.
Yeah I I.
Here.
The early days of China, but I would tell you the investment that we've put forward relative to this year is is appropriate and we're confident in the return on that investment so.
So I think our our monies are being well utilized at this stage of where we are in the U S versus.
When when we started that process in 2016 in China.
Got it yeah that makes sense and then secondly, I was.
Wondering in order.
To convert the U S practices from the laser base practice two lanes base you know practice what are your stomach your biggest hurdles and where have you wherever you found the most success I know you've had a lot of success and the direct to consumer campaign reach in the the million viewers, but uhm any.
Hang on this surge of nowhere and a side, we should be aware of.
You know again I I really don't think it's a or situation I think it's in any situation I think evo ICL.
It is fits very well into a comprehensive refractive practice it doesn't have to be is it lay sick or is it ego ICL.
That's why we're trying to build brand awareness of patients are coming in enquiring about it we're spending time educating and training surgeons, so they're comfortable offering a range of of modalities to meet the needs of a practice clearly.
The fact that you can maintain the quality of the cornea youre not severing corneal nerves, it's removable et cetera patients like that story in as practices see those kinds of outcomes manifest in their patients postoperatively their confidence level goes up particularly at the staff level.
The staff level gets more and more comfortable the surgeon becomes even that much more comfortable and you begin to to to see that inflection point are we there in the U S. As we are around other markets globally, no, but are we approaching that yes.
<unk> Q2 will be stronger Q.
Two three Q for as we move into twenty-four again, if you use.
Or international experience in particular, China. It was about a two and a half year process as I've stated.
And we're about in my mind six seven months into it. So we have about a two year run to really get to that inflection point and I think we're right, where we need to be confident that we're going to be able to achieve that.
Great Yeah, Thank you and congrats on the corner.
I appreciate it thank you.
Thank you next.
Next question comes from Tom Stefan from Stifel Tongue. It's final open. Please go ahead [laughter].
Great Hey, guys. Thanks for the questions happened in between calls so apologies if some of these were asked but I wanted to start in China. Tom If you want to maybe elaborate a bit more on kind of trends to date and what you believe the slope of the recovery their year to date is look.
Like I guess the past two to three months, maybe how did April look relative to March and then there's a follow up to that where do we stand in terms of the recapture of the procedures that had to be deferred and <unk> 22 in early one Q twenty-three I guess if this is still ongoing when do we think we.
See that backlog benefit ultimately work down if not already.
And then I had to call it.
Yeah.
Thanks for the questions I I I would say that as it relates to the backlog. The fact that we saw some really record levels of and market procedures. In Q1 would suggest to me that that if there was a backlog it's it's been handled.
Well, we had a very strong Q1 and as stated we remain very confident that Q2 and Q3 as we enter into the rural high seasons in that particular market.
We're very well positioned to to have record quarters. So.
Yeah. The the growth has been very consistent as.
We've previously stated February is much stronger than January March was much stronger than February we're coming off of a really solid April . We think Q2 is going to be a really strong and then obviously the royal high season kicks in July August into early September . So we continue to feel good about where.
<unk> yeah.
And I'll just add obviously, there's some sensitivity right and just want to make sure. The question as as we understand it completely.
It is a challenge sometimes to figure out if if there was someone to put off the surgery back into Q3 Q for when there was the no COVID-19 policy, but.
Tom said, it's we're off to very good starting Q1 record breaking quarters.
And we're off to a great start in Q2, and so in our minds you know things are moving along there and as we said with China. It is just a very very robust market affirmed once again by what we said in prepared comments of our biggest customer being here a couple of weeks ago, and reiterating they're focused and there.
Investment and to continuing to build that market for ICL Evo specifically.
Very helpful makes sense, and then I wanted to shift to the U S and I am sorry to harp on this but.
And tell them you've given.
Drink a lot of really good color, but U S came in a bit below for one Q and I think Q Q also looks like at least versus our estimates, but you are encouragingly reiterating the full you're twenty-three guidance. It does imply a pretty meaningful to reach in collection basically doubling of sales and utilization.
I guess, what I'm asking is what gives you that confidence just given the start of the launch maybe hasn't rant really in the upward direction that maybe some people had hoped and I know their stock finder metrics and investments for making but it's still a pretty significant number implied for two H, especially with the docks trained number slowly.
Down a bit so.
What gives you confidence in that to each reflection.
And then I wanted to ask about <unk> in particular, Tommy called out I think a strong March what you got into the $5 million in late February . So I'm, just curious where the disconnect us in terms of the slight mess on the on the one Q guide thanks.
Sure again I appreciate the question I think confidence comes from certainly my ears of launching different technologies in ophthalmology and knowing.
What it takes and I think we're doing all the right things in terms of where we've made investments how're surrounding customers and it's being well received our DTC spend is having an impact where we are spending dollars targeted cities were seeing that kind of growth we want to see.
And those targeted cities. So it gives us confidence that we have the right people we have the right programs and we have the right process is in place that are going to bear fruit.
I would agree with you put a big number on the back half of the year.
But yeah we.
We think we're doing the right things to be able to pull that off and it's just gonna take time right I think the other part of your question was I think relative to Q1 or Patrick England, Yeah, Yeah, <unk>, It's a it's a fair comment Tom and what.
I would tell you is we are very pleased with where we ended Martin at clearly it was a little shy of what we are told is treated approximately $5 million, but I know that you've heard from me you've heard from Tom Brian as well that when you're launching a product like this you know a couple of hundred thousand dollars a year, there doesn't make or break is right and.
We believe that we are continuing to do the right things you are right about the ramp up in the second half, but we're confident in what we saw in clearly we've had internal discussions on this and we came through and gave a number three Q2, which we hadn't given before but it doesn't buy a doubling in the second half and we're sticking with the approximately $30 million for the full year.
Got it thanks for taking the questions.
Besser appreciate it though.
Thank you next question comes from Ah, Jim <unk> and companies Jim <unk>. Please go ahead.
Hi, good afternoon. Thanks for taking the questions. I know you said other products are being sent out but you did have about $3 million revenue in the corner with that higher than you thought it would be.
Yeah, we.
A little bit higher than we thought I think as we started talking about exiting the business clearly customers wanted to buy more and so we thought this would spread out into Q2 and maybe even the Q3, but as a reminder, Jan Marc guidance did not imply any other product IRL business. So it's low mark.
<unk> doesn't that a lot the bottom line, but yeah definitely will take the revenue for sure.
Okay, and then you know if I will get the guidance updated today relative to where you were at the end of the at the end of the year.
Only real changes on the gene a line, which looks like it's gonna be up.
Maybe.
Eight or 9 million from where you thought it was gonna be when you landscape guidance is is that all related to stock we've come confusion.
Primarily we did talk about the fact that we added a couple of executives.
As well and and some of the other infrastructure things, but yeah. It's hi, my jewelry high majority of it is stock based compensation and you did hit the nail on the head, it's a little bit of an increase in G&A and I gave ourselves a little bit of living room, maybe in that number for the full year, but there's not a lot of modeling changes for sure.
Right so other than the upside of revenue.
In this quarter and the <unk>. It seems like your guidance is pretty much exactly the same as it was the last time you issued.
I would say that we upped our guidance on the revenue side clearly right. So we're feeling good about that but that if you wanted to say that was the the beat associated with in Q1, then we can debate that but you are correct on the rest of the model, we kept margins opex everything else a very steady.
Okay alright, thank you.
Thank you.
Next question comes from Bruce Jackson of Benchmark company.
<unk> open. Please go ahead.
Hi, Thanks for taking my question I was hoping to get some clarification on the pacing of the sales cadence historically second quarters like Super strong and then a trills off for the rest of the year this year.
Do you think that the the U S is can contribute to the revenue growth roots up sequentially for the rest of your can you give us a little help on the the back half of the year for the <unk>.
Yeah. So we talked about the second quarter, all in being a approximately $93 million with the U S being five and a half I think as you model that out at least that I was looking at some of the models, you're not gonna see perhaps the large cute or the outside it's Q2 as compared to the other three quarters and the year.
Some of that has to do with what we've been talking about quite a bit on the call now which is the U S. By math has to do about $20 million in the second half and.
And so that's what sort of making up what I would call a more even spread of revenue to hit that 348 between Q2 to queue for it.
Okay perfect. Thank you.
Thank you at this time, we have no further questions. So cool too fancy for any closing remarks.
Alright, Thank you operator, and thank you for joining our call today, we look forward to speaking with many of you later this week at the <unk> meeting in San Diego.
Other upcoming events in the days and weeks ahead. Thank.
Thank you.
Thank you all for joining the science cool you may now disconnect your lines.
[music].