Q3 2023 RxSight Inc Earnings Call
Speaker 1: Yeah.
Okay.
Speaker 2: Good day and thank you for standing by. Welcome to the RX-8 third quarter, 2023 earnings call.
Good day and thank you for standing by welcome to the Ark site third quarter 2023 earnings call.
Speaker 2: This time, all participants are in a listen only mode.
At this time all participants are in a listen only mode.
Speaker 2: After the speaker's presentation, there will be a question and answer session.
After the speaker's presentation, there will be a question and answer session.
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You ask a question. During this session you will need to press star one one on your telephone you will then hear an automated message advising that your hand as rates.
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Speaker 2: Please be advised that today's conference is being recorded.
Please be advised that today's conference is being recorded.
Speaker 2: I would now like to hand the conference over to your first speaker today. It looks long. Please go ahead.
I would now like to hand, the conference over to your first speaker today.
Next one please go ahead.
Speaker 3: Thank you, operator. Presenting today are our Excite President and Chief Executive Officer, Dr. Ron Kurtz and Chief Financial Officer Shelley Tune.
Thank you operator.
Resenting today are <unk>, President and Chief Executive Officer, Dr. Ron Kurtz, and Chief Financial Officer Shelley Thunen.
Speaker 3: Earlier today, RxI released financial results for the three and nine months ended September 30, 2023. A copy of the press release is available on the company's web.
Earlier today <unk> released financial results for the three and nine months ended September 32023, a copy of the press release is available on the company's website.
Speaker 3: Before we begin, I would like to inform you that comments and responses to questions during today's call reflect management's view as of today, November 9, 2023. And we'll include forward looking and opinion statements, including predictions, estimates, plans, expectations, and other information.
Before we begin I would like to inform you that comments and responses to questions. During today's call reflect management's view as of today November nine 2023, and will include forward looking and opinion statements, including predictions estimates plans and expectations and other information.
Speaker 3: Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties.
Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties.
Speaker 3: These risks and uncertainties are more fully described in our press release issued today and in our filings with the Securities and Exchange Commission, or SEC.
These risks and uncertainties are more fully described in our press release issued today and in our filings with the Securities and Exchange Commission or SEC.
Speaker 3: Our sec filings can be found on our website or the sec's website
Our SEC filings can be found on our website or the Sec's website.
Speaker 3: Investors are cautioned not to place undue reliance on forward looking statements And we disclaim any obligation to update or revise these forward looking states
Investors are cautioned not to place undue reliance on forward looking statements and we disclaim any obligation to update or revise these forward looking statements. We will also discuss certain non-GAAP financial measures disclosures regarding non-GAAP financial measures, including reconciliations with the most.
Speaker 3: We will also discuss certain non-GAAP financial measures.
Speaker 3: Disclosures regarding non-GAAP financial measures, including reconciliations with the most comparable GAAP measures, can be found in the Pressure Report.
Parable GAAP measures can be found in the press release. Please note that this conference call will be available for audio replay on our investor website with that I will turn the call over to President and Chief Executive Officer, Dr. Ron trucks.
Speaker 3: Please note that this conference call will be available for audio replay on our investor website.
Speaker 3: With that, I will turn the call over to President and Chief Executive Officer Dr. Ron.
Speaker 4: Good afternoon and thank you for joining us. In a few minutes, Shelly will review our third quarter financial results and guidance for the balance of the year. But I wanted to first highlight several positive developments that we believe will further strengthen our excites ability to penetrate and expand the high growth premium cataract mark.
Good afternoon, and thank you for joining us in a few minutes Shelly will review, our third quarter financial results and guidance for the balance of the year, but I wanted to first highlight several positive developments that we believe will further strengthen our excites ability to penetrate and expand the high growth premium cataract market.
Speaker 4: In the latter part of the third quarter, we launched our reconfigured Light Delivery Device, or LDD, and ceased sales of our previous LDD version.
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In the latter part of the third quarter, we launched our reconfigured light delivery device or L. D D and C sales of our previous LTE divergent.
Speaker 4: While offering identical functionality, the new LDD's reduced footprint addresses practice-based constraints with an updated design that has elicited very favorable feedback, including at its first public exhibit at the RxSite booth during last week's annual meeting of the American Academy of Ophthalmology, or AAO.
While offering identical functionality the new L. D DS reduced footprint addresses practice space constraints with an updated design that has elicited very favorable feedback including at its first public exhibit at the Rx side Booth during last week's annual meeting of the American Academy of Us.
<unk> or a O.
Speaker 4: Even with a modest price increase, the reconfigured LDD's ROI remains highly attractive, generally paying for itself in about 6 to 9 months, assuming approximately 9 to 10 light adjustable lens implantations per month.
Even with a modest price increase the reconfigured ldds ROI remains highly attractive generally paying for itself in about six to nine months, assuming approximately nine to 10 light adjustable lens implantation per months.
Speaker 4: Also at the AAO meeting, there were numerous presentations discussing the LAL, indicating continued growth and awareness and
Also with D. A L. Meaning there were numerous presentations discussing the lay out indicating continued growth in awareness and interest this.
Speaker 4: This included real-world clinical data on 738 bilateral LAL subjects from nearly 80 clinical sites that continues to illustrate the clear advantages of postoperative adjustability.
This included real World clinical data on 738 bilateral L. L subjects from nearly 80 clinical sites. It continues to illustrate the clear advantages of postoperative adjustability.
Speaker 4: Consistent with earlier data readouts, 97% of LAL subjects achieved uncorrected binocular distance vision of 20-25 or better, and 87% achieved 20-20 or better.
Consistent with earlier data readouts, 97% of LEL subjects achieved uncorrected buying ocular distance vision of 2025 or better and 87% achieved 2020 or better.
Speaker 4: 91% of LAL subjects achieved uncorrected by an ocular near vision of J2 or better, which means they could read 5 point type without glasses. While 79% could read at J1 or better, equivalent to 4 points.
91% of L. L subjects achieved uncorrected by an ocular near vision of J, two or better which means they could read five point type without classes, while 79% could read at J, one or better equivalent to four point type.
Speaker 4: Just under 80% of subjects decided to optimize vision in one eye for near and intermediate distances, often referred to as blended vision.
Just under 80% of subjects decided to optimize vision in one eye for near and intermediate distances, often referred to as blended patient.
Speaker 4: For most of these subjects, the refractive difference between the eyes was quite small, at 1.25 diopters or less.
For most of these subjects the refractive difference between the eyes was quite small at 1.25 diopters or less.
Speaker 4: The results showed that 97% of blended vision LAL patients achieved 20-20 or better uncorrected distance vision, and 95% achieved J-2 or better uncorrected near vision.
The results showed that 97% of blended vision L. L patients achieve 2020 or better uncorrected distance vision, and 95% achieved J, two or better uncorrected near vision.
Speaker 4: Just under 25% of all LAL subjects in the study were post-refractive patients. However, there were no differences in visual outcomes between eyes that had previous refractive surgeries and those that had not, even though it is generally considered to be more difficult to achieve optimal results in post-refractive eyes.
Just under 25% of all L. A L subjects in the study were post refractive patients. However, there were no differences in visual outcomes between Ais that had previous refractive surgeries and those that had not even though it is generally considered to be more difficult to achieve optimal results in post refract device.
Speaker 4: Also during the AAO meeting, preliminary Phase IV clinical study results were reported on a new member of the light-adjustable lens family, called the LAL+.
Also during the AAM meeting preliminary phase four clinical study results were reported on a new member of the white adjustable lens family called the L. L plus <unk>.
Speaker 4: Approved by the FDA earlier this year, this new lens has a proprietary optical design that further extends the depth of focus before light treatments, but with the same ability to customize and deliver high-quality vision as the LED.
Approved by the FDA earlier this year. This new lands has a proprietary optical design that further extends the depth of focus before late treatments, but with the same ability to customize and deliver high quality vision as the layout.
Speaker 4: We believe this combination of quality and expanded range will be very attractive to premium eye-wall surgeons and their patients.
We believe this combination of quality and expanded range will be very attractive to premium firewall surgeons and their patients, particularly to those who favor distance dominant vision in both size and might be considering an alternative such as multifocal lens.
Speaker 4: particularly to those who favor distance dominant vision in both eyes and might be considering an alternative such as a multifocal lens that can be associated with
They can be associated with reduced quality of vision.
Speaker 4: We will be expanding our ongoing phase 4 LAL Plus clinical study to generate more real world data while continuing a controlled commercial launch for the LAL Plus in the first half of 2024.
We will be expanding our ongoing phase four L. L plus clinical study to generate more real world data, while continuing a controlled commercial launch for the <unk> plus in the first half of 2024.
Speaker 4: Surgeons in practices already familiar with the LAL can seamlessly add the LAL Plus to their premium practice, as there are no differences in the surgical procedure or post-op adjustment process.
Surgeons and practices already familiar with the L. A L can seamlessly add the L. A L plus to their premium practice as there are no differences in the surgical procedure.
Or post op adjustment process.
Speaker 4: The LAL will continue to offer outstanding visual results for those patients who are likely to utilize more blended vision or who have other ocular conditions such as previous corneal repress.
L. L will continue to offer outstanding visual results for those patients who are likely to utilize more blended vision or who have other ocular conditions such as previous corneal refractive surgery.
Speaker 4: We believe that with both the LAL and LAL+, doctors can provide nearly any patient with precise, high-quality vision across a full range of distances, while avoiding increased rates of glare, halos, or loss of contrast sensitivity common to multifocal IOLs, thereby delivering the highest level of patient satisfaction.
We believe that with both the L. A L and L. L plus doctors can provide nearly any patient with precise high quality vision across a full range of distances, while avoiding increased rates of glare and halos or loss of contrast sensitivity comment a multifocal white wells, thereby delivering the highest level of <unk>.
<unk> satisfaction.
Speaker 4: The reconfigured LDD and LAL plus are good examples of our approach to innovation, which focuses on the continuous improvement of our technology to drive progressive adoption by patients and practice.
The reconfigured L D D and L. L. Plus are good examples of our approach to innovation, which focuses on the continuous improvement of our technology to drive progressive adoption by patients and practices.
Speaker 4: Through such product enhancements, industry-leading clinical results, and individualized, high-touch customer service, we remain fully focused on helping doctors deliver the best possible vision to premium cataract patients.
Through such product enhancements industry, leading clinical results and individualized high touch customer service, we remain fully focused on helping doctors deliver the best possible vision to premium cataract patients, thereby also helping their practices to grow and prosper.
Speaker 4: thereby also helping their practices to grow and prosper.
Speaker 4: With that, I'll turn the call over to Shelley for a recap of our quarterly financial performance and guidance outlook for the balance of 2020.
With that I'll turn the call over to Shelly for a recap of our quarterly financial performance and guidance outlook for the balance of 2023.
Speaker 5: Thank you, Ron. Good afternoon, everyone. RxSite generated third quarter 2023 revenue of $22.2 million, up 76% compared to $12.6 million in the year ago quarter, and up 7% compared to $20.8 million in the second quarter of 2023.
Thank you Ron good afternoon, everyone.
Site generated third quarter, 2023 revenue of $22 $2 million up 76% compared to $12 $6 million in the year ago quarter, and up 7% compared to $28 million in the second quarter of 2023.
Speaker 5: We sold 13,657 LALs in the third quarter of 2023, up 107% and 8% compared to 6,595 units and 12,622 units in the same year ago quarter and second quarter of this year, respectively.
We sold 13657 <unk> in the third quarter of 2023 up 107% and 8% compared to 6595 units and 12622 units in the same year ago quarter and second quarter at this year.
Speaker 5: Third quarter 2023 LAL unit sales generated revenue of 13.5 million dollars up 107 percent and nine percent compared to 6.5 million dollars and 12.4 million dollars in the third quarter of 2022 and second quarter of 2023 respectively.
Respectively.
Third quarter 2023, Ll unit sales generated revenue of $13 $5 million up, 107% and 9% compared to $6 $5 million and $12 $4 million in the third quarter of 2022 and second quarter of 2012.
<unk> three respectively.
Speaker 5: This sequential performance is consistent with a typical seasonality pattern for cataract surgery volumes, which tend to be softer in the third quarter, do primarily to summer vacation schedule.
This sequential performance is consistent with a typical seasonality patterns for cataract surgery volumes, which tend to be softer in the third quarter due primarily to summer vacation schedules.
Speaker 5: LAL revenue as a percentage of total revenue was 61% up from 52% and 60% in the third quarter of 2022.
<unk> revenue as a percentage of total revenue was 61% up from 52% and 60% in the third quarter of 2022.
Speaker 5: and second quarter of 2023 respectively.
And second quarter of 2023, respectively.
Speaker 5: We sold 66 LDDs in the third quarter of 2023, up 35% compared to 49 units in the year-ago period, and relatively even with 67 units in the prior quarter.
We sold 66 Leds in the third quarter of 2023 up 35% compared to 49 years units in the year ago period, and relatively even with 67 units in the prior quarter.
Speaker 5: Third quarter 2023 LDD sales generated revenue of $7.9 million up 39% and 3% versus the third quarter of 2022 and second quarter of 23 respectively.
Third quarter 2023 L. D D sales generated revenue of $7 $9 million up 39% and 3% versus the third quarter of 2022 and second quarter at 23, respectively.
Speaker 5: As of September 30, 2023, our LED installed base increased to 589 units, up 72% and 13% versus the third quarter of 2022 and the second quarter of 2023 respectively.
As of September 30th 2023 R. L. D D installed base increased to 589 units up 72% and 13% versus the third quarter of 2022, and the second quarter of 2023, respectively.
Speaker 5: As Ron indicated earlier, we launched the reconfigured LDD during the third quarter and phased out sales of the prior version. These reconfigured units, which are more cost effective to manufacture, represented roughly one-third of our unit sales during the period.
As Ron indicated earlier, we launched the reconfigured LDP during the third quarter and phase out sales of the prior version. These reconfigured units, which are more cost effective to manufacture represented roughly one third of our unit sales during the period.
Speaker 5: A price increase implemented at launch lifted our total LDD ASP as compared to Q2 2023 by about $5,000 to just over $120,000 in the third quarter.
The price increase implemented at launch lifted our total L. D D ASP.
As compared to Q2 2023 by about $5000 to just over $120000 in the third quarter.
Speaker 5: We expect the higher ASP for the reconfigured LDG to be maintained as we close out 2023 and enter 2024.
We expect the higher asps for the reconfigured LDH be maintained as we close out 2023 and enter 2024.
Speaker 5: Release of the reconfigured LDD with a higher average selling price and lower cost to manufacturer along with the continued shift in revenue mix drove an increase in the gross margin in the third quarter to approximately 62 percent compared to 42 percent in the year ago quarter and 58 percent in the second quarter of this year.
Please at the reconfigured L D D with a higher average selling price and lower cost to manufacture along with the continued shift in revenue mix drove an increase in the gross margin in the third quarter to approximately 62% compared to 42% in the year ago quarter and 58%.
In the second quarter of this year.
Speaker 5: SG&A expenses in the third quarter of 2023 were $19.1 million, up 28 percent, versus $14.9 million in the year-ago quarter, reflecting SOX implementation and consulting costs and increased expenses in sales and clinical personnel costs and travel.
SG&A expenses in the third quarter of 2023, or $19 $1 million up 28% versus $14 $9 million in the year ago quarter.
Reflecting sox implementation and consulting costs and increased expenses in sales and clinical personnel costs and travel.
Speaker 5: On a sequential basis, SG&A expenses were up 5% primarily due to SOC's implementation and consultation.
Our sequential basis SG&A expenses were up 5%, primarily due to sox implementation and consulting costs.
Speaker 5: R&D expenses in the third quarter of 2023 Rose 11 to 7.1 million dollars compared to 6.4 million dollars In the same year ago quarter and 7.4 million dollars in the second quarter of 2023 The change versus a year ago quarter was primarily due to increased head count and associated increase in salaries and stock-based compensation
R&D expenses in the third quarter of 2023.
It was 11% to $7 $1 million compared to $6 $4 million in the same year ago quarter, and seven $4 million in the second quarter of 2023.
<unk> versus a year ago quarter was primarily due to increased head count and associated increase in salaries and stock based compensation.
Speaker 5: We reported a gap net loss in the third quarter of 2023 of 12.4 million dollars or a loss of 35 cents per basic and diluted share using weighted average shares outstanding of 35.7 million shares.
We reported a GAAP net loss in the third quarter of 2023 of $12 $4 million or a loss of 35 cents per basic and diluted share using weighted average shares outstanding of 35 7 million shares.
Speaker 5: This compares to a gap net loss of $16.8 million.
This compares to a GAAP net loss of $16 $8 million or <unk> 61 cents per share on a basic and diluted basis using a weighted average shares outstanding of 27 7 million shares in the same year ago quarter noncash stock based compensation and loss.
Speaker 5: for 61 cents per share on a basic and diluted basis using a weighted average shares outstanding of 27.7 million shares in the same year ago quarter. Non-cash stock-based compensation and loss on extinguishment of debt in the third quarter of 2023 was $4.1 million and $1.4 million respectively, resulting in a non-gap loss of $6.9 million
And extinguishment of debt in the third quarter of 2023 was $4 $1 million and $1 $4 million, respectively, resulting in a non-GAAP loss of $6 $9 million.
Speaker 5: or a loss of $0.19 per basic and diluted share. Please refer to the unaudited non-GAAP reconciliation and disclosure included in today's press release for more comparative information.
Or a loss of 19 cents per basic and diluted share. Please refer to the unaudited non-GAAP reconciliation and disclosure included in todays press release for more comparative information.
Speaker 5: As previously reported, we raised $11.7 million net affees and expenses in July under our at the market for ATM program. We use these proceeds and cash reserves to pay off our remaining $20 million debt balance.
As previously reported we raised $11 $7 million net of fees and expenses in July under our aftermarket or ATM program. We use these proceeds in cash reserves to pay off our remaining $20 million debt balance.
Speaker 5: We ended the third quarter of 2023 with cash equivalents and short-term investments of $131.9 million compared to $147.1 million at June 30, 2023.
We ended the third quarter of 2023 with cash cash equivalents and short term investments of $131 $9 million compared $247 $1 million at June 32023.
Speaker 5: The change reflects the net impact of the ATM proceeds, ESPP, contributions, and stock option exercises net of the $20 million debt reduction.
<unk> reflects the net impact of the ATM.
Proceeds E S P P contributions and stock option exercises.
The $20 million of debt reduction.
Speaker 5: Excluding the proceeds from financing and capital activities and use of capital for principal debt repayments, cash use and operating activities during the third quarter was $7 million compared to $9.5 million in the second quarter of 2023.
Excluding the proceeds from financing and capital activities and use of capital for principal debt repayments cash used in operating activities. During the third quarter was $7 million compared to $9 $5 million in the second quarter of 2023.
Speaker 5: The change was due primarily to a lower net loss driven by higher gross profit and a reduction in interest expense.
The change was due primarily to lower net loss driven by higher gross profit and a reduction in interest expense.
Turning now to guidance.
Speaker 5: Based on our third quarter 2023 performance, we are increasing our 2023 revenue guidance range to 85 to 87 million dollars up from prior guidance of 81 to 86 million dollars.
Based on our third quarter 2023 performance, we are increasing our 2023 revenue guidance range $2 $85 million to $87 million up from prior guidance of $81 million to $86 million.
Speaker 5: Our new guidance implies a year-over-year growth rate of 73 to 78 percent.
Our new guidance implies a year over year growth rate of 73% to 78%.
Speaker 5: We are also increasing our 2023 guidance range for gross margin to 61 to 61% versus prior guidance of 58 to 60%.
We're also increasing our 2023 guidance range for gross margin to 61% to 61% versus prior guidance of 58% to 60%. The increase reflects the fourth quarter full benefit of improved gross margin from the reconfigured L. D D with a higher ASP.
Speaker 5: The increase reflects the fourth quarter full benefit of improved gross margin from the reconfigured LDD with a higher ASP and lower cost to manufacture.
And lower cost to manufacture.
Speaker 5: Our 2023 operating expense guidance range narrows to $106 to $107 million, which includes non-cash stock-based compensation of $15 to $16 million.
Our 2023 operating expense guidance range narrows to 106 $207 million, which includes noncash stock based compensation.
$15 million to $16 million.
Speaker 5: This annual guidance translates fourth quarter 2023 revenue guidance of 25 to 27 million dollars gross margin 61 to 62 percent and operating expense of 31 to 32 million.
This annual guidance translate fourth quarter, 2023 revenue guidance of $25 million to $27 million gross margin of 61% to 62%.
Operating expense of $31 million to $32 million.
Speaker 5: Since late 2022, we have raised $101.1 million net of fees and expenses through our Confidentially Marketed Public Offering, or CMPO, and ATM program, paid off our $40 million term loan, and cut our annualized interest expense by approximately $5.6 million.
Since late 2022, we have raised $101 $1 million net of fees and expenses through our confidentially marketed public offering or C. M. P O and ATM program paid off our $40 million termed out loan and cut our annualized interest expense by approximately.
$5 $6 million.
Speaker 5: as previously indicated. We believe our cash.
As previously indicated we believe our cash and short term investment balances combined with no outstanding debt.
Speaker 5: and short-term investment balances combined with no outstanding debt will leave us well positioned to achieve profitability from operations with a healthy balance sheet. With that, I'll turn the
We'll leave us well positioned to achieve profitability from operations with a healthy balance sheet with that I'll turn the call back Troy.
Speaker 4: Thank you, Shelley. To summarize, LAL volumes in the third quarter continued their positive advance, while favorable LDD unit trends provide an encouraging indicator for rising LAL usage in future periods. We are pleased with the early embrace of our newly released LDD and the potential of the LAL plus to further widen the addressable patient base and stimulate additional procedure growth in 2024 and beyond.
Thank you Shelly to summarize L. L volumes in the third quarter continued their positive advance while favorable <unk> unit trends provide an encouraging indicator for rising L. L usage in future periods. We are pleased with the early embrace of our newly released <unk> and the potential of the L. L plus.
To further widen the addressable patient base and stimulate additional procedure growth in 2024 and beyond.
Speaker 4: Our expanding phase four clinical data paints an increasingly clear and convincing picture of the superior visual results post-operative adjustability can deliver to patients, while creating sustained profitable revenue streams that help practices thrive.
Our expanding phase four clinical data paints, an increasingly clear and convincing picture of the superior visual results post operative adjustability can deliver to patients while creating sustained profitable revenue streams that help practices thrive with surgeon adoption on the rise we remain very optimistic about the future.
Speaker 4: With surge in adoption on the rise, we remain very optimistic about the future potential of our unique technology to reshape and expand the premium cataract market and create long-term value for our Excite patients, doctors, and shareholders.
<unk> of our unique technology to reshape and expand the premium cataract market and create long term value for our excite patients doctors and shareholders.
Speaker 4: In these challenging times, we greatly appreciate that our excite is not dependent on government reimbursement decisions and caters to a highly desirable patient demographic with the strong US initial focus and a large global opportunity.
In these challenging times, we greatly appreciate that Rx site is not dependent on government reimbursement decisions and caters to a highly desirable patient demographics with the strong U S. Initial focus in a large global opportunity in contrast to other clinical areas. We also do not see exposure.
Speaker 4: In contrast to other clinical areas, we also do not see exposure to GLP-1 or other potential pharma products.
Two G L P one or other potential pharma products.
Speaker 4: And now I'll ask the operator to open the call for questions.
And now I'll ask the operator to open the call for questions.
Speaker 2: Thank you. At this time, we will conduct the question and answer session as a reminder to ask a question. You will need to press star 1 1 on your telephone and wait for your name to be announced. Withdrawal question, please press star 1 1 again. Please stand by while we compile a Q and a.
Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.
Your question. Please press star one again.
Please standby, while we compile the Q&A roster.
Speaker 2: First question comes from Craig Bijoux with C of A Securities. Go ahead, your line is open.
First question comes from Craig Bijou with Bofa Securities Go ahead. Your line is open.
Speaker 6: Great, thank you. Good afternoon and congrats on another another strong quarter.
Great. Thank you good afternoon, and congrats on another another strong quarter.
Speaker 6: So, I wanted to start with, appreciate some of your comments on the Q3 seasonality, and obviously the Q4, or the guidance assumes a Q4 step up.
So I wanted to start with I appreciate some of your comments on the Q3 seasonality.
And obviously the Q4 the guidance assumes a Q4 step up.
Speaker 6: So, you know, based on what you're seeing thus far in the quarter, just wanted to see is Q4 kind of tracking towards normal seasonality that we've, that you would have seen in past years? And, you know, specifically, you know, how should we think about the seasonality impact on both utilization and LDD placement?
So based on what Youre seeing thus far in the quarter.
Just wanted to see is Q4 kind of tracking towards normal seasonality that we've that you would've seen in past years, and specifically how should we think about the seasonality impact on both utilization and LTV placements.
Speaker 5: Yeah, while we don't comment on intra-quarter results, we will say that, you know, we expect Q4 to be seasonally the strongest quarter of our year. It typically is, and you certainly see that in the Revenue Guide.
Yeah, well, we don't comment on intra quarter results.
We will say that you know, we expect Q4 to be seasonally the strongest quarter of our year typically is and you certainly see that in the revenue guidance.
Speaker 6: Got it. Thanks, Shelly. And then maybe for Ron, just on LAL plus, you know, I appreciate those comments and.
Got it thanks, Sean and then.
Maybe for Ron just on LEL plus.
I appreciate those comments.
And maybe just.
Speaker 6: different about LAL+, so obviously it sounds like it's going to be improved upon LAL and some better clinical outcomes, but is the process, the fitting process, or anything different? Is pricing going to be different? Is the cost for you guys to manufacture different?
What's different about LEL, plus so obviously it sounds like it's going to be improve upon.
LEL and some better clinical outcomes, but.
Is the process the fitting process or anything different is pricing going to be different is the cost for you guys to manufacture different.
Speaker 4: So in terms of the clinical process, it's identical both from the surgery as well as the LDD treatment. And from a financial aspect, it's also identical from our perspective in terms of pricing.
So in terms of the clinical process, it's identical both from the surgery as well as the L. D D treatment.
And from a financial aspect, it's also identical.
From our perspective in terms of pricing.
Speaker 4: And we really just want the doctor to choose the best LAL for that particular patient.
The.
And we really.
Just want the doctor to choose the best <unk> for that particular patient.
Speaker 4: We think that, you know, the LAL obviously has served as a great choice, particularly for those patients, as we see in our study, who choose blended vision and or who might be blind.
We think that.
The L a L.
Obviously has served as a great.
Choice, particularly for those patients.
As we see in our study who choose blended vision.
Speaker 4: have other conditions such as being post refractive.
Or who might be.
Have other conditions, such as being post refractive.
Speaker 4: And we feel that the LAO Plus is going to be particularly strong for those patients who might be more inclined to choose distance-dominant vision in both eyes and might be considering a multifocal lens but would like to avoid some of the drawbacks of that technique.
And we feel that the law plus is going to be.
Particularly strong for those patients who might be more inclined to choose distance dominant vision in both eyes and might be considering.
A multifocal lens, but we'd like to avoid some of the drawbacks of that technology.
Speaker 5: Great, thanks for taking the question. Oh, sure, Shelly. That's exactly the same as the LAL.
Great. Thanks for taking the question.
Sure Seth Goldman Sachs.
Exactly the same as C L L.
Okay.
Thank you Bill.
Our next question.
Speaker 2: The next question comes from Robbie Marcus with JP Morgan. Go ahead. Your line is open.
The next question comes from Robbie Marcus with Jpmorgan go ahead. Your line is open.
Speaker 7: Hi, everyone. This is actually Rohan on for Robbie. Just want to say congrats on another nice quarter here. Just two from me. The first is just, how are you thinking about penetration today across your LDD base? And how should we think about the growth in LDDs relative to LALs next year and beyond? Obviously, you've seen a pretty nice sequential step up at the percentage of total sales. If you could provide some color on where that should settle out, that would be helpful.
Hi, everyone. This is actually <unk> on for Robbie just want to say congrats on another nice quarter here.
Just two from me.
First is just how are you thinking about penetration today across your LTE base.
And how should we think about the growth in <unk> relative to <unk> next year and beyond obviously, you've seen a pretty nice sequential step up as a percentage of total sales could you. Just if you could provide some color on where that should settle out that'd be helpful.
Speaker 7: So, let me just clarify. I think you're asking about penetration of LDDs in the U.S. marketplace. Is that what you're asking? Yeah, just kind of trying to get at, like, how much growth is left in LDD placements. Obviously, over time, LALs will make up the majority of your revenues. I think that's kind of how people model it out. But just wanted to get a sense for, like, where that should plateau on the LDDs.
So let me just clarify I think youre asking about pregnant penetration of Ldds in the U S marketplace is that what youre asking yes, just kind of trying to get at like how much growth in lab and LGD placements.
See overtime Lel's will make up the majority of your revenues I think that's kind of how people model it out, but just wanted to get a sense for.
Where that should plateau on the LPG side.
Speaker 5: Yeah, you know, we've always said that there's about 30,000 optimologists in the US and about 10,000 of those performed cataract surgery. We've recently gotten updated data that about 4,000.
Yes.
We've always said that there's about 30000 ophthalmologist in the U S.
And about 10000 of those perform cataract surgery. We've recently gotten updated data that about 4000 performed about 70 or 80% of the premium procedures. So that's getting a bit more distributed than the 3000 that we have mentioned earlier, but.
Speaker 8: perform about 70 or 80% of the premium procedures. So that's getting a bit more distributed than the 3,000 that we have mentioned earlier. But we think that the LDD is an ideal way for every doctor, even those that are not doing premium procedures, to enter the premium market with a low capital cost and great results for their patients. Ron, maybe you want to add something else about that. Yeah, I would agree. I think that.
We think that the L. D. D is an ideal way for every doctor even those that are not doing premium procedures to enter the premium market with a low capital cost and great results for their patients Ron maybe you want to add something else about that.
Yes, I would agree I think that the.
Speaker 4: Obviously, we're focused on doctors who are doing the most premium procedures initially, but as we continue to expand, we want to be able to offer this to other doctors who may not be that, have not been traditionally focused on the premium market, but increasingly see this as their primary way to build the revenue in their practice and to thrive.
Obviously, we're focused on.
Doctors, who are doing the most premium procedures initially, but as we continue to expand we wanted to.
Be able to offer this to other doctors, who may not be that.
They have not been traditionally focused on the premium market, but increasingly see this as their primary way to build the revenue.
In their practice and to thrive.
Speaker 4: And really, I don't think we know what the upper limit of LDD placements is going to be over time as practices develop as they open new offices, et cetera.
And really.
Don't think we know what the upper limit of LCD placements is going to be over time as practices develop as they open new offices et cetera.
Speaker 7: Thanks, that's really helpful. Just one more from me. I guess utilization was also strong again in the quarter.
Thanks, that's really helpful.
Just one more from me.
I guess utilization was also strong again in the quarter.
Speaker 7: So, just wanted to dive into where kind of a lot of this growth is coming from. Is it more from kind of your top users or did you see it as being broad based in the quarter? And then just to follow up, how do you expect utilization to kind of trend in 2024 if you can provide just some preliminary color there?
So just wanted to dive into where kind of a lot of this growth is coming from.
Is it more from kind of your top users or did you see it as being broad based in the quarter and then just a follow up.
How do you expect utilization to kind of trend in 2024, if you can provide just some preliminary color there.
Speaker 5: So, you know, I think that the utilization and the increase in.
So I think that.
The utilization and the increase in procedures.
Speaker 5: Procedures, you know, comes from two areas like it always does, you know, new surgeons who have gotten installed.
From two areas like it always does new surgeons, who have gotten installed.
Speaker 5: Typically in the previous quarter, in the beginning of this quarter, the third quarter, and that's always a gross driver, but also we look for increased utilization as well.
Typically in the previous quarter and the beginning of this quarter the third quarter and that's always a growth driver, but also we look for increased utilization as well and while the absolute number of early.
Speaker 5: And while the absolute number of LAL procedures went up 8% in the quarter as compared to the second quarter, typically you do kind of see a little less sequential growth in the third quarter just because of seasonality.
I L procedures went up 8% in the quarter as compared to the second.
<unk> typically you do kind of see a little less sequential growth in the third quarter, just because of seasonality.
Speaker 5: And so the utilization, you know, per doctor, per LDD, however you wanna look at it.
And so the utilization.
Her doctor per L. D. D. However, you want to look at it.
Speaker 5: Overall was a little bit lower, but that's just a function of seasonality, but we have the benefit of continuing to grow our overall installed base and that grows the number of procedures even in a Quarter that might be considered a little weaker, but we see growth among all types of our customers
Overall with a little bit lower but thats, just a function of seasonality, but we have the benefit of continuing to grow.
Our overall installed base and that grows the number of procedures, even in a quarter that might be considered a little weaker but we see growth among all types of our customers.
Great. Thank you.
And our next question please.
Speaker 2: The next question comes from Larry Begelstein with Wells Fargo. Go ahead, your line is open.
Your next question comes from Larry <unk> with Wells Fargo Go ahead. Your line is open.
Speaker 9: Hey guys, thanks for taking the question. Maybe switching gears to the new LDD.
Hey, guys. Thanks for taking the question, maybe switching gears to the new LDP.
Speaker 9: Shelley, a couple of questions on that. How will that play out in terms of the gross margin impact? I think we've assumed that the current LDD has a gross margin of about 25%. How should we think about the gross margin of the new LDD? And you gave some helpful color here on the ASPs. It looks like the new LDD has an ASP of about $130,000.
Shelley a couple of questions on that how will that play out in terms of the gross margin impact I think we've assumed that the current LTV is at the gross margin of about 25% how should we think about the gross margin the new L. D. D and you gave some helpful color here on the.
The asps.
It looks like the new LGD.
Is it ASP of about $130000 is that a good number to use going forward do you expect the vast majority of new systems.
Speaker 9: Is that a good number to use going forward? And do you expect the vast majority of new systems?
Speaker 9: to be with the new LDD going forward.
To be with the new LCD going forward.
Speaker 5: Yeah, you certainly did Matt from my commentary as well. It was about a 10%, maybe a little bit more increase in terms of the ASP compared to Our previous product overall. And if you think back to some of the commentary that we made previously, we had said that, you know, our goal for capital equipment is between 20 and 25% gross margin.
Yeah, you certainly did Matt from my commentary as well it was about a 10% maybe a little bit more increase in terms of the AOSP compared to.
Our previous product overall.
And if you think back to some of the commentary that we've made previously we had said that you know our goal for capital equipment is between 20 and 25% gross margin.
Speaker 5: and we were below that number and that was really a function that fact that the material cost had increased so much with chip and other components, shortages.
And we were below that number and that was really a function of effect that the material costs have increased so much with.
Chip another component shortages as well, while we don't break out the margin between both products. There are two things that are driving the margin up one is the S. P which is really nice.
Speaker 5: as well. While we don't break out the margin between both products, there are two things that are driving the margin up. One is the ASP, which is really nice.
Speaker 5: as well as the fact that it's less expensive to manufacture, primarily because the material is less expensive.
As well as the fact that it's less expensive to manufacture primarily because the material is less expensive.
Speaker 9: And you expect, going forward, the new LDD to basically replace the old one in terms of system sales?
And do you expect.
Going forward, the new LCD to basically replace the old one in terms of system sales.
Speaker 5: Yeah, we have already made that transition from the LDD to the reconfigured LDD and that will represent our full Q4 revenue from the LDD.
Yes, we have already made that transition.
The LGD to the reconfigured L D D and that will represent our full Q4 revenue from the LGD.
Speaker 9: Got it. Hey, I'm just curious on international, anything noteworthy in the third quarter?
Got it.
Just curious on the international anything noteworthy in the third quarter.
Speaker 9: international sales and how are you thinking about new international markets in 2024? Thanks for taking the questions guys.
For international sales and how are you thinking about new international markets in 2020 for thanks for taking the questions guys.
Speaker 4: Maybe I'll comment first, you know, we we had previously mentioned that we had begun commercialization in Canada that continues to go well. We're very excited about our new customers in Canada had an opportunity.
Maybe I'll comment first.
We had previously mentioned that we had.
Again commercialization in Canada that continues to go well, we're very excited about.
New customers in Canada had an opportunity.
Speaker 4: meeting last week. And then, you know, we're also excited about the global opportunity for this product. We haven't provided a specific timeline for that, but, you know, we believe that this, that the LAL is going to be attractive to...
And she meeting last week.
And then I.
We're also excited about the global opportunity for this product we haven't provided a specific timeline for that but.
We believe that.
Is that the L. A L. A is going to be attractive too.
Speaker 9: doctors, you know, across the world, you know, Europe , Asia, etc. Good new timeline, Ron.
Doctors.
Across the world.
Europe Asia et cetera.
Don't know timeline Ryan.
Not at this time.
Alright. Thanks.
One moment for our next question.
Speaker 2: Next question comes from David Saxon with Needham & Co. Go ahead. Your line is open.
Next question comes from David Saxon with Needham <unk> Co go ahead. Your line is open.
Speaker 9: Hi everyone, this is Joseph Long for David. Maybe just staying with geography. Are there, I guess, any areas in the US that you still need to get into? Or I guess as you guys are feeling that, you're well represented in all those major areas in the US.
Hi, everyone. This is this is joseph on for David.
Maybe just staying with geography.
Are there any areas in the U S that you still need to get into or.
I guess as you guys are feeling that.
You are well represented representative and all those major areas in the U S.
Speaker 4: I would say that we're equally represented geographically. We have a good footprint across all the major regions, but we're still room for growth in all of them. And so we have efforts across the country.
I would say that we are.
Equally represented geographically we have.
A good footprint.
All the major.
Regions, but we're still there's still room for growth in all of them.
<unk>.
And so.
We have efforts across the country.
Okay.
Okay great.
And then.
Speaker 9: I guess expectations for fourth quarter and, you know, moving into 2024, I guess around hiring, any color there would be great. You know, do you need to, you know, expand hiring just given the new LDD and the new LAL, you know, on the way? Yeah, just any color around there would be great.
I guess expectations for fourth quarter and moving into 2024.
I guess around hiring any color there would be great.
You need to expand.
And just given the new LTV in the new L. L.
On the way.
Just any color around there would be great.
Speaker 5: Okay, you know, I'm going to actually let Ron comment first, because the new LDD is very easy to install, and in fact, it's a little easier than our other one, which was just a four-hour installation, and the new LDD can also be moved around within a clinic.
Okay, I'm going to actually let Ron comment first because the new LTV is very easy to install and in fact, it's a little easier than our otherwise which was just before our installation.
And the new LTV can also be moved around within the clinic.
Speaker 5: providing just a little bit more flexibility where they want to do the light treatments. The LAL, and I think Ron, the process is exactly the same. So it doesn't require additional training for a doctor who already is doing LAL treatments as well as implanting the LAL.
Providing just a little bit more flexibility, where they wanted to the light treatments.
Ill.
Hey, Ron.
<unk> process is exactly the same so it doesn't require additional training for a doctor who already is doing L. L treatments as well as.
Implicitly mailed out.
Speaker 4: Yeah, so I think the impact on our field force is just going to be the continued growth of the installed base and utilization as we train more doctors and continue to do installations. That does, you know, as the installed base and the number of implanting surgeons goes up, we do increase our clinical training and account manager core a little bit to account for that.
So I think the impact on our field force is just going to be the continued growth of the installed base and utilization as we train more doctors and continue to do installations.
That does.
As the installed base and the number of implanting Surgeons goes up we do it.
Increase our clinical training and account manager core a little bit to account for that.
Speaker 10: Okay, that's perfect. Thanks very much. If I can just squeeze one quick one in there, I appreciate the info on the balance sheet that you guys gave, but if you think you could give any specific timing around operating break even.
Okay.
That's perfect thanks very much.
If I could just squeeze one quick one in there I appreciate the info on the on the balance sheet.
Guys gave but do you think you could give any specific timing around operating breakeven.
Speaker 9: No, we haven't done that yet. You know, we're balanced in the course top line growth along with leverage. Okay, great. We'll congrats on the
No we havent done that yet we're balanced sure horse topline growth along with leverage.
Okay, great well congrats on the terrific quarter.
Thank you. Thank you.
One moment for our next question.
Speaker 2: The next question comes from Stephen Lickman with Oppenheimer and Co, excuse me, go ahead.
Your next question comes from Steven Lichtman with Oppenheimer.
Oppenheimer <unk> co excuse me.
Go ahead your line is open.
Speaker 11: Thank you. Good evening and congratulations. Ron and Shelly, with the growing install base, to what extent do you think we're at a point where surgeons not offering LAL
Thank you.
And congratulations.
Ron in Chile, with the growing installed base to.
To what extent do you think we're at a point, where surgeons not offering elas.
Speaker 11: might be losing out prospective patients to other offices in their area, and that might be another incremental driver of demand here. And if you're not hearing that yet, anecdotally, do you see that as a potential based on what you're seeing from current customers in terms of marketing programs, et cetera?
Might be losing out prospective patients to other offices in their area and that might be another incremental driver of demand here.
And if you are not hearing that yet anecdotally do you see that as a potential based on what youre seeing from current customers in terms of marketing programs et cetera.
While we hope that's the case.
Speaker 4: But I would say that, you know, the, I think the bigger factor is that doctors want to be able to offer this technology to their patients. You know, they're trying to give their patients the best visual acuity, the best clinical results that they can't.
But I would say that.
<unk>.
I think the bigger factor is that doctors want to be able to offer this technology to their.
There are patients there.
They are trying to give their patients the best visual acuity the best clinical results that they can and as.
Speaker 4: And as they become more aware of the LAL and its performance, either through people in their area or through their attendance at meetings like the AAO.
As they become more aware of the <unk> and its performance either through people in their area or through their attendance at meetings like the a O.
Speaker 4: they're looking for ways to drive their own businesses. And focusing on premium IOLs is the best way to do that. It's the one area of their business that they can control and it's a win-win for the practice and their patients.
They're looking for ways to drive their own businesses and focusing on premium my wells is the best way to do that it's the one area of their business that they can control.
And it's a win win for the practice and their patients.
Speaker 11: Got it. Okay, great. And then secondly, R&D is still at a healthy percent of sales, even on the higher base. You know, we saw the LAL plus, of course. How should we think about how you're looking at sort of the investment gears? Should we look for continued incremental advancements? Are you focusing more on clinical data? Can you talk a little bit about where your R&D focus is overall?
Got it okay, great and then.
Secondly, R&D.
Okay.
Healthy percent of sales even on a higher base.
We saw the L. A L plus of course.
Should we think about how youre looking at sort of the <unk>.
Figures are.
Should we look for continued incremental advancements are you focusing more on clinical.
Data can you talk a little bit about where your R&D focus is overall.
Speaker 4: Well, I would look back to what we've done over the past several years, where we've continued to drive innovation of the technology. We've mentioned before that we've had over 30 PMA supplements approved by the FDA since our initial FDA approval. And those have driven, you know,
Okay.
Well I would look back to what we've done over the past several years.
We've continued to drive innovation of the technology.
We've mentioned before that we've had over 38 30 PMA supplements are approved by the FDA.
Since our initial FDA approval and.
Those have driven.
Hi.
They can be considered incremental advances, but cumulatively they have a significant impact on <unk>.
<unk>.
Outcomes as well as the.
Speaker 4: usability of the technology. And so this is the way that we penetrate the market, both on the practice side as well as on the patient side, continuing to raise the bar of our technology, and we'll continue to do that for many years to come.
Usability of the technology and so.
This is the way that we penetrate the market both on the on the practice side as well as on the patient side.
Continuing to raise the bar of our technology and we'll continue to do that for many years to come.
Great. Thanks, Ron.
Speaker 2: I'm showing no further questions at this time, so I would now like to turn it back to Ron for closing remarks.
Thank you.
I'm showing no further questions at this time.
Now like to turn it back to Ron for closing remarks.
Speaker 4: Well, thank you all for your time and attention today. As always, we appreciate your interest in our excite and we look forward to updating you on our progress in future quarters. Goodbye.
Well. Thank you all for your time and attention today as always we appreciate your interest in our excite and we look forward to updating you on our progress in future quarters Goodbye.
This does conclude the program you may now disconnect.
Okay.
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Okay.
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