Q4 2023 RxSight Inc Earnings Call

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<unk>. Please go ahead.

Thank you operator.

Resenting today are <unk>, President and Chief Executive Officer, Ron <unk>, and Chief Financial Officer Shelley Thunen.

Okay.

Good day, and thank you for standing by.

Earlier today are excited released financial results for the three months at a full year ended December 31, 2023, a copy of the press release is available on the company's website before we begin I would like to inform you that comments and responses to your questions. During today's call reflect management's views as of today February 28 2020.

Welcome to the R X sight fourth quarter 2023 earnings conference call at.

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After the speaker's presentation, there will be a question and answer session.

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And we will include forward looking and opinion statements, including predictions estimates plans expectations and other information actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued earlier today.

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The conference over to Richard today offer them or off <unk>. Please go ahead.

Thank you operator, presenting today are excited president and Chief Executive Officer, Ross Kirtley, Chief Financial Officer, Shelley Thunen earlier to date are excited released financial results for the three months at a full year ended December 31 2023.

And in our filings with the Securities and Exchange Commission or SEC.

Our SEC filings can be found on our website or on the Sec's website investors are cautioned not to place undue reliance on forward looking statements. We disclaim any obligation to update or revise these forward looking statements. We will also discuss certain non-GAAP financial measures disclosures regarding this non-GAAP.

Copy of the press release is available on the company's website.

Before we begin I would like to inform you that comments and responses to your questions. During today's call reflect management's views as of today February 28, 2024 and will include forward looking an opinion statements, including predictions estimates plans and expectations and other information.

Actual measures, including reconciliations to the most comparable GAAP measures can be found in the press release.

Please note that this conference call will be available for audio replay on our investor website with that I will turn the call over to our president and CEO Dr. Curt Brian.

Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued earlier today and in our filings with the Securities and Exchange Commission or SEC.

Good afternoon, and thank you for joining us in a moment Shelly will be giving an update on our <unk> financial performance for both Q4 and full year 2023 for.

Our SEC filings can be found on our website or on the Sec's website.

For context, I wanted to discuss key factors that we believe underlying the market success height adjustable lens and can drive Rx site's performance over a sustained period.

They are cautioned not to place undue reliance on forward looking statements, we disclaim any obligation to update or revise these forward looking statements. We will also discuss certain non-GAAP financial measures disclosures regarding this non-GAAP financial measures, including reconciliations to the most comparable GAAP measures can be found in the press release.

The eye care field is at the forefront of many of the change drivers in medicine, most notably reduced reimbursements to doctors and practices from third party payers, who are facing rising costs from an ageing population.

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 our president and CEO Dr around Curt Brian.

For ophthalmic practices, the major opportunity to offset these cuts began in 2005, when ophthalmologists, where first able to charge patients directly for the additional costs associated with so called premium intraocular lenses or <unk> that can reduce a person's dependence on glasses after cataract surgery.

Good afternoon, and thank you for joining us in a moment Shelly will be giving an update on our excites financial performance for both Q4 and full year 2023.

For context, I wanted to discuss key factors that we believe underlying market success at adjustable lens and can drive Rx site's performance over a sustained period.

Growing from very low levels premium cataract surgery now represents about 20% of the overall U S cataract market and about 10% of the global market with premium procedures projected to double over the next 10 years.

The eye care field is at the forefront of many of the change drivers in medicine, most notably reduced reimbursements to doctors and practices from third party payers, who are facing rising costs from an ageing population.

By providing anywhere from 500 to $5000 in additional revenue per eye above and beyond the approximately $500 reimbursed by third party payers participation in the premium IOL market has become essential for ophthalmic practices to remain viable and continue to serve all of their patients.

For ophthalmic practices, the major opportunity to offset these cuts began in 2005, when ophthalmologists, where first able to charge patients directly for the additional costs associated with so called premium intraocular lenses or <unk> that can reduce a person's dependence on glasses after cataract surgery.

Our sales efforts are concentrated on the roughly 4000 U S cataract surgeons, who perform 70% to 80% of all premium Noel procedures, though the percentage of premium cases varies widely from doctor to Doctor and practice to practice.

Growing from very low levels premium cataract surgery now represents about 20% of the overall U S cataract market and about 10% of the global market with premium procedure is projected to double over the next 10 years.

One reason for this variability lies in the challenging clinical requirements for our broadly successful premium cataract procedure.

Mainly the ability to deliver consistent high quality vision across a range of distances.

Hi, providing anywhere from 500 to $5000 in additional revenue per eye above and beyond the approximately $500 reimbursed by third party payers participation in the premium IOL market has become essential for ophthalmic practices to remain viable and continue to serve all of their patients.

With the commercial growth of the layout and early introduction of L. Plus an increasing number of doctors recognize the power of adjustability to achieve this level of performance in a way that has not been possible with fixed optic non adjustable intraocular lenses.

Our sales efforts are concentrated on the roughly 4000 U S cataract surgeons, who perform 70% to 80% of all premium IL procedures, though the percentage of premium cases varies widely from doctor to Doctor and practice to practice.

With both the <unk> and <unk> plus doctors treat the actual refraction that is measured post operatively, rather than trying to predict a result pre operatively for the for the first time, achieving lasik level refractive results after cataract surgery.

One reason for this variability lies in the challenging clinical requirements for our broadly successful premium cataract procedure, namely the ability to deliver consistent high quality vision across a range of distances.

The <unk> platform of lenses delivers equivalent quality of vision to the gold standard mono focal ire wells something that may not be possible with multifocal Io wells that reduce contrast that should and increased rates of visual symptoms, such as glare and halos.

With the commercial growth of the layout and early introduction of L. Plus an increasing number of doctors recognize the power of adjustability to achieve this level of performance in a way that has not been possible with fixed optic non adjustable intraocular lenses.

In fact over the past 20 years doctors have moved away from higher levels of multifocal <unk> limiting the improvement in near vision for patients.

In contrast, using the <unk> platform doctors and patients can customize vision in both eyes to optimize the quality of vision over a range of distances.

With both the <unk> and <unk> plus doctors treat the actual refraction that is measured post operatively, rather than trying to predict a result pre operatively for the for the first time, achieving lasik level refractive results after cataract surgery.

We believe that by tapping into these fundamental market forces. The layout enables doctors to meet the vision goals of more of their patients as well as the financial goals of their practices in turn driving Rx site superior performance in Q4, and full year 2023, as Shelly will now review.

The <unk> platform of lenses delivers equivalent quality of vision to the gold standard mono focal ire wells something that may not be possible with multifocal <unk> wells that reduce contrast that should and increased rates of visual symptoms, such as glare and halos.

Thank you Ron and good afternoon, everyone.

In fact over the past 20 years doctors have moved away from higher levels of multifocal <unk> limiting the improvement in near vision for patients.

With our January pre announcement alright.

Fourth quarter 2023 revenue of $28 $6 million.

In contrast, using the <unk> platform doctors and patients can customize vision in both eyes to optimize the quality of vision over a range of distances.

78% compared to the year ago quarter growth was broad based reflecting both the continued expansion of our installed base appliance delivery devices and a sharp increase in lay out procedure volumes the favorable trends we observe.

We believe that by tapping into these fundamental market forces DN layout enables doctors to meet the vision goals of more of their patients as well as the financial goals of their practices in turn driving Rx site superior performance in Q4, and full year 2023, as Shelly will now review.

Our 2023 continue to be driven by surgeons growing recognition of the clinical and economic benefits provided by our system and the adjustability of our <unk> technology.

Thank you Ron and good afternoon, everyone.

In the fourth quarter of 2023, we sold 77, <unk> up 35% compared to the aircraft period.

Consistent with our January pre announcement alright.

Fourth quarter 2023 revenue of $28 $6 million.

First quarter 2023, LTE units placed generating $10 million in revenue, representing a 52% year over year growth.

78% compared to the year ago quarter.

Growth was broad based reflecting both the continued expansion of our installed base of <unk> delivery devices and the sharp increase in LDL procedure volumes the favorable trends.

We ended 2023 with an LTE game southeast of 666 units up 67% compared to year end 2020.

Our 2023 continue to be driven by surgeons growing recognition of the clinical and economic benefits provided by our system and the adjusted utility of our technology in.

<unk> sales continue to rise in the fourth quarter of 2023, reflecting surgeons and patients growing preference for the superior clinical performance of our adjustable iowans, we sold 18771 elas in the period up 98% from the fourth.

In the fourth quarter of 2023, we sold 77, Leds up 35% compared to the year ago period.

Quarter of 2022.

These procedure volumes translated into LEL revenue of $17 8 million.

First quarter 2023, LPG unit placements generated $10 million in revenue, representing a 52% year over year growth.

In the fourth quarter of 2023.

Also up 98% compared to the year ago quarter.

We ended 2023 within the LTE installed base of 666 units up 67% compared to year end 2022.

LEL volumes during the fourth quarter also contributed to an increase in the revenue mix with Lam's revenue, representing 62% of total revenue compared to 56% in the fourth quarter of 2022.

<unk> sales continued to rise in the fourth quarter of 2023, reflecting surgeons and patients growing preference for the superior clinical performance of our adjustable iowans, we sold 18771 LLS in the period up 98% for the fourth.

This change in mix, coupled with the sale of our LTE with a lower cost to manufacture and a higher average selling price expanded our gross profit margin to 62% in the fourth quarter of 2023 compared to <unk>, 46% for the fourth quarter of 2022.

Quarter of 2022.

These procedure volumes translated into LVL revenue of $17 8 million in the fourth quarter of 2023.

Fourth quarter, SG&A expenses were $21 2 million up 35% versus the prior year period.

Also up 98% compared to the year ago quarter.

Higher LVL volumes during the fourth quarter also contributed to an increase in the revenue mix with LCL revenue, representing 62% of total revenue compared to 56% in the fourth quarter of 2022.

This year over year increase in SG&A was primarily associated with increased expenses and sales and clinical personnel costs to support our growing installed base as well as our first year of Sox implementation consulting and audit cost.

This change in mix, coupled with the sale of our LD D with a lower cost to manufacture and a higher average selling price expanded our gross profit margin to 62% in the fourth quarter of 2023 compared to 46% for the fourth quarter of 2022.

On a sequential basis SG&A was up 11%, primarily due to an increase in sales head count and expenses related to the higher sales volume achieved in the fourth quarter.

Research and development expenses for the fourth quarter 2023 were $7 3 million, representing an increase of 10% year over year.

Fourth quarter SG&A expenses were $21 2 million.

The change versus a year ago quarter was primarily due to increased head count and associated increase in salaries and stock based compensation.

Up 35% versus the prior year period. This year over year increase in SG&A was primarily associated with increased expenses and sales and clinical personnel costs to support our growing installed base as well as our first year of Sox implementation consulting and audit costs.

On a sequential basis R&D expenses to remain relatively stable with the 8% increase compared to the third quarter up 2023.

We reported a net loss in the fourth quarter of $9 2 million or a loss of 26 per basic and diluted share using weighted average shares outstanding of 36 million shares.

On a sequential basis SG&A was up 11%, primarily due to an increase in sales head count and expenses related to the higher sales volume achieved in the fourth quarter.

Research and development expenses for the fourth quarter 2023 were $7 $3 million.

In the year ago quarter, our net loss was $15 6 million or <unk> 56 per share on a.

Sending an increase of 10% year over year.

Basic and diluted basis, using a weighted average of 28 million shares.

The change versus a year ago quarter was primarily due to increased head count and associated increase in salaries and stock based compensation.

Note also that stock based compensation in the fourth quarter was $4 $4 million, resulting in an adjusted net loss of $4 8 million or 13.

On a sequential basis R&D expenses remained relatively stable with 88% increase compared to the third quarter of 2023.

<unk> per basic and diluted shares.

In the interest of time I'll provide a brief recap of full year 2023 results revenue grew 82% $89 $1 million driven.

We reported a net loss in the fourth quarter.

$9 2 million or a loss of 26 per basic and diluted share using weighted average shares outstanding of 36 million shares.

Driven by a 43% and 117% increase in LTE and <unk> revenue respectively.

In the year ago quarter, our net loss was $15 $6 million or <unk> 56 per share on a.

Our 2023 gross margin was 60% versus 44% in 2022.

Basic and diluted basis, using a weighted average of 28 million shares.

Total operating expenses were $103 $9 million in 2023, representing an increase of 23% compared to operating expenses in 2022.

Note also that stock based compensation in the fourth quarter was $4 $4 million.

<unk> adjusted net loss of $4 8 million or 13.

For the full year of 2023, we reported a net loss of $48 6 million or $1 41 per share versus a net loss of $66 $8 million or $2 41 per share on a basic and diluted basis in 2022.

<unk> per basic and diluted shares.

In the interest of time I'll provide a brief recap of full year 2023 results revenue grew 82% $89 $1 million driven by a 43% and 117% increase in LTE and <unk> revenue respectively.

Excluding 15 points.

$7 million in stock based compensation expense and $1 8 million and loss on extinguishment of our term loan in 2023, adjusted net loss was 31 $1 million or <unk> 19 per basic and diluted shares.

Our 2023 gross margin was 60% versus 44% in 2022.

Total operating expenses were $103 $9 million in 2023, representing an increase of 23% compared to operating expenses in 2022.

Moving to the balance sheet, we ended the year with no debt and $127 $2 million in cash cash equivalents and short term investments.

For the full year of 2023, we reported a net loss of $48 $6 million or $1 41 per share versus a net loss of $66 8 million or $2 41 per share on a basic and diluted basis in 2022.

During 2023, we raised $95 $2 million net of fees and expenses from our at the market program and confidentially marketed public offering and paid off our $40 million term loan in full.

<unk>.

Excluding 15 points.

$7 million in stock based compensation expense and $1 $8 million in loss.

Adjusted cash used from operations was $33 9 million in 2023 down from $59 $5 million in 2022.

Ingwersen net of our term loan in 2023.

Net loss was 31 $1 million or <unk> 90 per basic and diluted shares.

Finally in our first year as a large accelerated filer. We are proud to report that we had no material weaknesses or significant deficiencies in our sox compliance underscoring our commitment to financial integrity and operational excellence.

Moving to the balance sheet, we ended the year with no debt and $127 $2 million in cash cash equivalents and short term investments.

During 2023, we raised $95 $2 million net.

Turning to the 2024 guidance consistent with the guidance. We provided in January of this year. We continue to expect 2020 for full year revenue to be in the range of $128 million to $135 million.

Net of fees and expenses from our at the market program and confidentially marketed public offering and paid off our $40 million term loan in full.

Adjusted cash used from operations was $33 9 million in 2023 down from $59 $5 million in 2022.

Implying year over year growth of 44% to 52%.

We expect to see overall quarterly sequential growth with seasonality expected in the first and third quarters.

Finally in our first year as a large accelerated filer. We are proud to report that we had no material weaknesses or significant deficiencies in our sox compliance underscoring our commitment to financial integrity and operational excellence.

Typically the first quarter tends to be softer sequentially for capital equipment in our case, the LGD with continued sequential growth in <unk> procedures, but lower sequential growth then the seasonally strongest quarters, which are the second and fourth quarters.

Turning to the 2020 for guidance.

We expect our gross margin to expand to a range of 65% to 67%, reflecting a continued increase in revenue mix from higher margin Ll procedure volumes as well as gross margin benefit from our LDP with a higher ASP.

System with the guidance we provided in January of this year. We continue to expect 2020 for full year revenue to be in the range of $128 million to $135 million implying.

Implying year over year growth of 44% to 52%.

And lower cost to manufacture.

We expect to see overall quarterly sequential growth with seasonality expected in the first and third quarters.

We continue to expect operating expenses to be between $125 million and $128 million.

Typically the first quarter tends to be softer sequentially for capital equipment in our case, the LGD with continued sequential growth in <unk> procedures, but lower sequential growth then the seasonally strongest quarters, which are the second and fourth quarters.

Which represents an increase of 20% to 23% over the prior year.

And reflects ongoing investments, we're making to establish a large and durable post operative treatment infrastructure to support sustained LLS procedure growth.

We expect our gross margin to expand to a range of 65% to 67%, reflecting a continued increase in revenue mix from higher margin Ll procedure volumes as well as gross margin benefit from our LDP with a higher ASP.

Included in our cost primarily in operating expense is noncash stock based compensation expense of approximately $22 million $25 million.

Before I turn the call back to Ron I am pleased to announce in conjunction with this year's <unk> Crs meeting, we will be hosting an investor event on April six at seven a M. Eastern time. Please stay tuned for more details from our Investor Relations team at the event date approaches with that.

And lower cost to manufacture.

We continue to expect operating expenses to be between $125 million and $128 million.

Which represents an increase of 20% to 23% over the prior year Andrew.

I'll turn the call back to Ron.

And reflects ongoing investments, we're making to establish a large and durable post operative treatment of infrastructure to support sustained layout procedure growth.

Thank you Shelly while we are pleased with the strong finish to 2023. We're also thrilled about the journey ahead, we're particularly inspired by the opportunity to achieve our ambitious goals, which will leverage the immense talent and creativity of both the our exciting and our clinical partners like any new clinics.

Included in our cost primarily in operating expense is noncash stock based compensation expense of approximately $22 million $25 million.

Capability Adjustability requires both a financial and intellectual investment.

Before I turn the call back to Ron I am pleased to announce in conjunction with this year's <unk> Crs meeting, we will be hosting an investor event on April six at seven am Eastern time. Please stay tuned for more details from our Investor Relations team at the event date approaches.

But as I noted earlier, the benefits to patients and practices are clear.

As we celebrate the 75th anniversary of the intraocular lens in 2024, it's essential to recognize the eyecare communities investments in innovation.

This commitment has ushered in advancements from which we all benefit today, highlighting the importance of adopting change over maintaining the comfort of the status quo.

With that I'll turn the call back to Ron.

Thank you Shelly while we are pleased with the strong finish to 2023. We're also thrilled about the journey ahead, we're particularly inspired by the opportunity to achieve our ambitious goals, which will leverage the immense talent and creativity of both are exciting and our clinical partners like any new clinic.

We look forward to highlighting this mutual commitment to continued innovation at the 50th anniversary meeting of the American Society of cataract and refractive surgery in Boston in April when our clinical partners will present more data on the latest advances in adjustable IOR technology and practice with that I'll ask the operator to open the call for <unk>.

Capability Adjustability requires both a financial and intellectual investment, but as I noted earlier the benefits to patients and practices are clear.

<unk>.

Thank you at this time, we will conduct a question and answer session and as a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. So for one on one again.

As we celebrate the 75th anniversary of the intraocular lens in 2024, it's essential to recognize the eyecare communities investments in innovation.

Please stand by while we compile the Q&A roster.

This commitment has ushered in advancements from which we all benefit today, highlighting the importance of adopting change over maintaining the comfort of the status quo.

First question comes from the line of Steve Lichtman of Oppenheimer.

Alright.

We look forward to highlighting this mutual commitment to continued innovation at the 50th anniversary meeting of the American Society of cataract and refractive surgery in Boston in April when our clinical partners will present more data on the latest advances in adjustable IOR technology and practice.

Thank you good evening guys.

So just a few questions.

Are all on L L plus.

Given its ability to provide more near vision out of the box.

You see it as a door opener for surgeons, who perhaps in the past would not have looked at all.

With that I'll ask the operator to open the call for questions.

Thank you at this time, we will conduct a question and answer session and as a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question for one on one again.

Sure.

Well thanks for the question.

It's important to note as we presented in.

And our doctors are presented at various meetings at the <unk>.

Please stand by while we compile the Q&A roster.

Itself provides a great distance in near vision.

First question comes from the line of Steve Lichtman of Oppenheimer.

And so we're starting from a very high level.

L L plus.

Alright.

Thank you good evening guys.

It does provide earlier return of near vision, and so doctors now have two adjustable tools and overtime.

So just a few questions.

First of all on L L plus.

Given its ability to provide more near vision out of the box.

Decide how they're going to use them I think that for any doctor who for whatever reason hasnt adopted adjustable technology, yet it certainly another reason for them too.

You see it as a door opener for surgeons, who perhaps.

In the past would not have looked at all.

Sure.

Well thanks for the question.

<unk> the technology.

I think it's important to note as we presented in.

And.

And make and make the make this available to their patients.

And our doctors are presented at various meetings at the al.

Great.

So how should we think about the relative growth.

Itself provides a great distance in near vision.

Of Ldds sale versus <unk>.

And so we're starting from a very high level.

Sales in year 'twenty for guidance.

The <unk> plus.

Yes, well, we don't break out in our guidance the quantity of LLS and Ldds.

It does provide earlier return of near vision and so doctors now have two adjustable tools.

Think what you've seen in the last several years is <unk> revenue.

Over time, we will decide how they're going to use them.

Goes up faster than LTE revenue and of course, that's just a natural evolution of a razor razor blade model.

I think that for any doctor, who for whatever reason hasnt adopted adjustable technology, yet it's certainly another reason for them too.

And on.

That's very consistent with how we have performed and it's really because of two reasons. One is of course, we're adding new customers with sales of the <unk> as well as the fact that part of our impetus for growth is to get further on.

Adopt the technology.

<unk> and <unk>.

And make and make the make this available to their patients.

Great.

How should we think about the relative growth.

<unk> sales versus <unk>.

Embedded in each one of our existing accounts and increase their usage.

Sales in your 'twenty guidance.

Yes, well, we don't break out in our guidance the quantity of layouts and Ldds.

Normalized we would expect just like we saw last year that <unk> revenue will accelerate faster than <unk> revenue.

Think what you've seen in the last several years is LDL revenue.

Okay got it and then I guess.

It goes up faster than LTE revenue and of course, that's just a natural evolution of a razor razor blade model.

Just lastly for now.

Guiding to sales growth and 12, 24, obviously well above opex growth.

What are you assuming in terms of growth of the customer facing sales force are you growing the sales force on either the Lalor Ldds side this year.

And that's.

That's very consistent with how we have performed and it's really because of two reasons. One is of course, we're adding new customers with sales of the <unk> as well as the fact that part of our impetus for growth is to get further.

We expect the LDS salesforce to remain relatively stable, maybe we would add one ourselves that our territories are well covered by existing salesforce, which numbers about 20 on the <unk> sales force we add.

Embedded in each one of our existing accounts and increase their usage. So normalized we would expect just like we saw last year that <unk> revenue will accelerate faster than revenue.

And this is really just dependent on depending on how their territory for ball, how many existing customers they have to support but we will continue to add.

Okay got it and then just.

Lastly for now Youre guiding to sales growth and 12, 24, obviously well above opex growth.

People, but not a tour at places like we did when we initially created.

Our sales force, where we tend to add the most people is in our clinical sales force and those folks are responsible for training doctors, both and they all are on use of our injector every.

What are you assuming in terms of growth of the customer facing sales force are you growing the sales force on either the Lalor Ldds side this year.

We expect the LGD sales force to remain relatively stable, maybe we would add one ourselves that our territories are well covered by existing salesforce, which numbers about 20 on the <unk> sales force, we add some and this is really just dependent on depending on.

IL manufacturer has one that's a little bit different.

As well as <unk>, they tend to have pretty high turnover some times.

ASC and then also they trained on the use of the <unk> both for the Doctor the optometrist and often for technicians and a partner.

Hello, there territories evolve how many existing customers they have to support but we will continue to add.

With our <unk> sales force to bring up procedure volumes in our existing customers, but thats, where you tend to see the most additions in sales and marketing.

People, but not a tour at places like we did when we initially created.

The sales force, where we tend to add the most people is in our clinical sales force and those folks are responsible for training doctors, both and they all are on use of our injector February.

That's helpful. Thanks, Ron and Joe and congratulations on the quarter.

Thank you.

Tier one moment for our next quarter.

Iowa manufacturer has one that's a little bit different as well as <unk>.

Our next question comes from the line of Robbie Marcus with Jpmorgan. Your line is now open.

<unk>, they can have pretty heightened turnover sometimes.

Great. Thanks for taking my questions Congrats on a nice quarter again.

ASC and then also they trained on the use of the <unk> both for the Doctor the optometrist and often for technicians and the partner.

Maybe to start.

Youre getting.

Fairly significant size and.

Along with our sales force to bring up procedure volumes at our existing customers, but that's where you tend to see the most additions in sales and marketing.

One of your competitors missed consensus.

I O L numbers today I guess the question is really.

Okay.

At what point do you think doctors are starting to make the decision whether to go with Rx site versus other competitors that may have a bigger bundle because of the better.

That's helpful. Thanks, Ron and Joe and congratulations on the quarter.

Thank you.

Tier one moment for our next question.

Clinical.

And selling benefits of the layout.

Our next question comes from the line of Robbie Marcus with Jpmorgan. Your line is now open.

Alright.

Thank you for the question Ravi.

Oh, great. Thanks for taking my questions Congrats on a nice quarter again.

I think doctors always wanted to do what's best for their patients fundamentally that's there.

You may.

Maybe to start.

Hence they want a happy patient.

Youre getting.

Both for.

Fairly significant size.

Selfish reasons, but also just quality of their own lives and so.

And one of your competitors Miss consensus.

They are really motivated to deliver the best clinical results possible.

I O L numbers today I guess the question is really.

Okay.

<unk>.

To make their decisions based on that so are.

At what point do you think doctors are starting to make the decision whether to go with our X sight versus.

Our focus is really.

Providing one providing the best clinical results, but then presenting to doctors and practices that haven't yet adopted the <unk>.

Are there competitors that may have a bigger bundle because of the better.

Clinical and.

And selling benefits of the layout.

That data and that information so that they can.

Alright.

Thank you for the question Ravi.

Make their own decisions and be confident in what they're offering so.

I think doctors always wanted to do what's best for their patients fundamentally that's there.

I think that that it's not necessarily an either or decision. It's a it's more of a decision of.

They want a happy patient.

<unk> four.

Selfish reasons, but also just quality in their own lives.

Then, making the choice to be able to offer this technology to their patients.

So.

They are really motivated to deliver the best clinical results possible.

Ravi I'd also like to add that in our latest.

And they're going to make their decisions based on that so are.

Customer survey that we had a third party conduct and the results are very similar to the previous two years about 44%.

Our focus is really.

Providing one providing the best clinical results, but then presenting to doctors and practices that haven't yet adopted the LDL.

Patients as reported by our doctors would have would not have gotten anything other than a mono focal lens. So in that case, we're growing our practice and in theory.

That data and that information so that they can.

Make their own decisions and be confident in what they are offering so.

<unk> market.

Still very small.

And then the balance come from Toric lenses and other PCI OLS.

I think that that it's not necessarily an either or decision. It's a it's more of a decision of.

No.

I think it's good to know.

Then, making the choice to be able to offer this technology to their patients.

About 66% of the volume is coming from other alternatives that might have been taken about most of those from toric lenses, where theyre up selling but it's significant amount from PCI LLS as well.

Ravi I'd also like to add that in our <unk>.

Latest.

Customer survey that we had a third party conduct and the results are very similar to the previous two years about 44%.

Great really helpful and maybe one just on <unk>.

Balance sheet and cash usage.

Patients as reported by our doctors would have would not have gotten anything other than a mono focal lens. So in that case, we're growing our practice and in theory.

You still have a pretty healthy.

Cash balance right now youre burning cash though.

I imagine that will continue to decrease cash usage as you continue to grow here.

Growing market, we are still very small.

And then the balance coming from toric lenses and other PCI LLS.

But how are you thinking about your positioning and the potential to reach cash flow breakeven. Thanks a lot.

No.

I think it's good to know.

About 66% of the volume is coming from other alternatives that might have been taken about most of those from toric lenses, where theyre up selling but it's significant amount from PCI allows us as well.

Thank you.

We have said previously that will continue to reduce our cash use throughout 2024 as compared to 2023 and also to expect that cash is heaviest in the first quarter, just because we pay yearend bonuses and.

Great really helpful and maybe one just on <unk>.

We get material and those things get paid in January.

Balance sheet and cash usage.

You still have a pretty healthy.

But you should see decreases throughout the year. We have also said and we continue to say that we have adequate cash to get to cash flow breakeven with a healthy balance sheet.

Cash balance right now youre burning cash though.

I imagine that will continue to decrease cash usage as you continue to grow here.

But how are you thinking about your positioning and the potential to reach cash flow breakeven. Thanks a lot.

Very clear I appreciate it thank you.

Thank you.

Alright. Thank you one moment for our next question.

Thank you.

We have said previously that will continue to reduce our cash use throughout 2024 as compared to 2023 and also to expect that cash use is heaviest in the first quarter, just because we pay yearend bonuses and.

Okay.

Our next question comes from the line of Larry <unk> Olson, sorry will grow your line is now open.

Hey, guys. Thanks for taking the questions. This summer in on for Larry.

I just wanted to start off on your 2024 outlook I know youre not providing.

We get material.

Things get paid in January.

Al versus IL BD Max.

But you should see decreases throughout the year. We have also said and we continue to say that we have adequate cash to get to cash flow breakeven with a healthy balance sheet.

Explicitly but how are you thinking about LDP utilization in 2024.

We're conservatively forecasting a small step down, but any reason utilization can't grow year over year.

Very clear I appreciate it thank you.

Yes, I think that utilization is a nice metric just in that anybody can calculate it.

Thank you.

Alright. Thank you one moment for our next question.

It will vary throughout the year.

Okay.

If you have because we calculated as the number of LLS implanted in a quarter divided by the LGD installed base in the previous quarter. If you have a very heavy LTV placement quarter in a seasonal quarter.

Our next question comes from the line of Larry Big Olson, sorry, well grow your line is now open.

Hey, guys. Thanks for taking the questions.

One on for Larry.

I just wanted to start off on your 2024 outlook I know youre not providing.

<unk> LLS, you might see a little bit of a step down but overall R. R.

Les al versus IL BD Max.

Explicitly but how are you thinking about LDP utilization in 2024.

Our goal is to increase that.

And but if we get very high.

We're conservatively forecasting a small step down, but any brief and utilization can't grow year over year.

<unk> sales that can mute it a little bit while we don't guide on that as I mentioned.

Yes, I think that utilization is a nice metric just in that anybody can calculate it.

To Steve's question that we expect <unk> revenue to grow faster than LTE revenue.

But it will vary throughout the year.

Great. Thank you.

If you have because we calculated as the number of <unk> implanted in a quarter divided by the LDP installed base in the previous quarter. If you have a very heavy LTV placement quarter in a seasonal quarter for LLS, you might see a little bit of a step.

Just to clarify on the phasing of sales throughout the year. It sounds like we should expect sequential growth.

Quarter over quarter throughout 2024, including Q1.

What we did guide is two sequential growth with seasonality.

<unk> down, but overall R. R.

Where we said specifically that we would expect continued sequential growth despite seasonality in our <unk> revenue.

Goal is to increase that.

And but if we get very high LGD sales that could mute a little bit while we don't guide on that.

Okay perfect.

And just in terms of your international business, how has the launch in Canada been progressing relative to your expectations and will there be any contribution from new geographies in 2024.

As I mentioned.

To Steve's question that we expect <unk> revenue to grow faster than LTE revenue.

Great. Thank you.

Just to clarify on the phasing of sales throughout the year. It sounds like we should expect sequential growth.

So Canada has gone very well, we're very pleased with the rollout in Canada.

Quarter over quarter throughout 2024, including Q1.

<unk>.

And.

That continues to go well.

What we did guide is two sequential growth with seasonality and where we said specifically that we would expect continued sequential growth despite seasonality in our <unk> revenue.

I think it's.

A good marker for.

The importance that international will play over time.

And we're certainly considering.

Yes.

Other.

Okay, perfect and just in terms of your international business.

Markets that we think will be particularly attractive to the LDL and we'll be talking more about those as the year progresses.

Has the launch in Canada been progressing relative to your expectations and will there be any contribution from new geographies in 2024.

Great. Thank you.

Alright, thank you.

For our next question.

So Canada has gone very well, we're very pleased with the rollout in Canada.

Next question comes from the line of Ryan Zimmerman VTS, Germany.

Im.

And that continues to go well.

Hey, good afternoon. Thanks for taking the question congrats Irene year on year.

I think it's.

Good.

Wanted to start.

<unk> for the importance that international will play over time.

First with.

The LD the capital sales force and.

And we're certainly considering.

You guys are leaving that Salesforce unchanged.

Other.

Markets that we think will be particularly attractive to the LDL and we'll be talking more about those as the year progresses.

Is there a point at which you reach kind of a peak sales rate per quarter in terms of LTV units just based on simply capacity.

Even if the demand is there and.

Great. Thank you.

Where are we at relative to maybe.

Alright. Thank you one moment for our next question.

Capacity in your view from.

<unk> sales force.

Okay.

Yes, I think that as we look at the LD days sales force. These folks have developed a territory now.

Comes from the line of Ryan Zimmerman PTH.

Uh huh.

Hey, good afternoon. Thanks for taking the question congrats Irene on year.

They typically start with their highest volume customers customers that they know better but.

Wanted to start.

First with.

Their efforts are really enhanced by our marketing efforts the ability to get out shows.

The LD the capital sales force and.

You guys are leaving that Salesforce unchanged.

We do about 80 tabletop shows a year.

Is there a point at which you reach kind of a peak sales rate per quarter in terms of LTV units just based on simply capacity.

In the territories and also a couple of the <unk>.

<unk> sales force, new accounts as well as potential new accounts and so.

Even if the demand is there and.

Where are we at relative to maybe at peak capacity in your view from the LGD Salesforce.

We will add people, if we see it's necessary, but typically with capital equipment people you kind of get the opposite effect, if you cut down their territories.

Yes, I think that if we.

Look at the LD days sales force.

Folks have developed a territory now as you know.

Because they've already put the money and that doesn't work real well.

They typically start with their highest volume customers customers that they know better.

But we'll always keep that ahead of ourselves.

But there are efforts are really enhanced by our marketing efforts.

But we don't think like doubling the sales force just automatically downloads.

To get out shows.

The placements I think just continued market acceptance and knowledge about the LGD and them talking to peers, both at shows and one on one.

We do about 80 tabletop shows a year.

In the territories.

And.

Also the couple the <unk> sales.

It starts to we've.

Sales force, new accounts as well as potential new accounts and so.

We've seen that momentum build through the last several years.

Yes, just to reiterate we don't have Kelly.

We'll add people, if we see it as necessary, but typically with capital equipment people.

I'm, sorry, Ryan I was just going to reiterate.

<unk>.

The <unk> account team has grown and they are.

Get the opposite effect, if you cut down their territories.

Because they've already put the money in and that doesn't work real well.

Involved with.

Capital equipment sales as well to a lesser degree, but they do receive part of their compensation from them.

We'll always keep that ahead of ourselves.

But we don't think like doubling the sales force just automatically.

Okay.

And then second question for you Ron bigger picture.

<unk>.

The placements I think just continued market acceptance.

We think about the growth of the premium segment here.

You talked about kind of where we're at today.

And knowledge about the LGD and them talking to peers, both at shows and one on one.

20% of the U S, 10% globally and the expectations are that that goes.

Sorry, it's too.

<unk>.

We've seen that momentum build through the last several years.

When you're thinking about those market forces that you talked about.

Yes, just to reiterate we believe that.

Is there any reason to think that.

That cadence from a to b.

I'm, sorry, Ryan I was just going to reiterate.

Is not evenly distributed over the next call it five to 10 years.

<unk>.

The <unk> account team has grown and and they are in.

Is there anything in your mind that accelerates it.

Involved with.

Or maybe hockey sticks.

Capital equipment sales as well to a lesser degree, but they do receive part of their compensation from that.

If you will.

Later half of that that timeframe, just trying to think about kind of the broader adoption.

Okay.

And second question for you Ron bigger picture.

The premium segment here.

We think about the growth of the premium segment here.

You guys continue to grow.

Well I mean, obviously, we hope to be part of that driver by.

You talked about kind of where we're at today.

20% of the U S 10% globally.

And the expectations are that that goes.

Providing clinic.

Two.

Clinicians with tools that they can use to.

When you're thinking about those market forces that you talked about.

Give their patients high quality vision with very high consistently consistency and so.

I think that that has been a factor in our holding back.

All clinicians, but a number of clinicians from participating more widely in this market.

Also.

An important component of our technology is that it involves optometry in a very meaningful way.

And they are a huge part of the eye care community that up to now has had a relatively minor role in premium cataract surgery.

So I think that those two factors are ones that will help to drive the overall market and and obviously fuel our growth as well.

Understood. Thank you.

Alright. Thank you one moment for our next question.

Okay.

Next question is from the line of Craig Bijou with Bank of America. Please go ahead.

Good afternoon, guys. Thanks for thanks for taking the questions. So.

Just wanted to ask on maybe some utilization trends at the individual practices. I know you guys have talked about seen adoption, maybe faster adoption with the newer surgeons.

Faster utilization relative to some of the surgeons that were added a couple of years ago.

So what I wanted to know is that still kind of what youre seeing is that would you expect for 'twenty four and maybe just.

Color from you on why you do think that's the case why newer adopter is going to move faster ramp faster with with.

The LLS.

Thanks for the question Craig I think maybe I'll take the broader question and ask Kelly to two.

Pontificate more about the future but.

<unk>.

It's not.

It's kind of understandable that as time goes on.

Two things happened one we.

We get better at.

Ed.

Initiating customers we have.

We've learned our processes, we've refined our processes.

They have the customers themselves have experienced vicariously through their through their <unk>.

Friends and competitors.

Is going to move faster ramp faster with with the LLS.

The <unk> experience and so it's.

Just a.

Thanks for the question Craig I think maybe I'll take the broader question and then ask Shelly to pontificate more about the future but.

Better process for them. The second is I think a little bit the.

Characteristic of people who are adopting not.

The.

Not at the initial rollout, but a little bit later is still early but a little bit later in the process and those those people as you typically see in an adoption curve tend to be a little bit more.

It's not.

It's kind of understandable that as time goes on.

Two things happened one.

We get better at.

At.

Initiating customers we have.

Thoughtful about what they're trying to achieve there are more focused on getting an ROI.

We've learned our processes, we've refined our processes.

They have the customers themselves have experienced vicariously through their through their <unk>.

As soon as possible obviously.

And so they're more likely to once they are convinced of the value of the technology to implement that a little bit more quickly.

Friends and competitors.

The <unk> experience and so they.

Just a.

Better process for them. The second is I think a little bit the.

Yes, the only thing I would add is that our goal is to become standard of care in the first place we need it become standard carriers inside of each individual account.

Characteristic of people who are adopting not.

Not at the initial rollout, but a little bit later is still early but a little bit later in the process and those those people as you typically see in an adoption curve tend to be a little bit more.

And other than a few customers, we haven't gotten there yet and that's why it's so important for us to continue to penetrate our existing customers.

And we're just not at that level, yet and so that is a major emphasis for our salespeople and our clinical personnel as well so.

Thoughtful about what they are trying to achieve theyre more focused on getting an ROI.

As soon as possible obviously.

And so they're more likely to once they are convinced of the value of the technology to implement that a little bit more quickly.

Expect certainly our goal to continue to get further penetrated in each account.

And.

Thank you guys and maybe just a follow up on that.

Yes, the only thing I would add that.

When you think about it.

Our goal is to become standard of care in the first place we needed to kind of standard carriers.

Individual practice are you guys.

At each individual account.

Obviously it show you just mentioned it is not standard of care, yet or only with a few practices but.

And other than a few customers, we haven't gotten there yet and that's why it's so important for us to continue to penetrate our existing customers.

What is the percentage of penetration is that trending above the 20%.

And we're just not at that level, yet and so that is.

Of the broader market for premium maybe just a little bit of color on how you see.

Major.

It says for our salespeople and our clinical personnel as well so.

An individual practice evolving in terms of percentage of of <unk> debt.

Expect certainly our goal to continue to get further penetrating each account.

They are using <unk> for.

I think that that's voice of customer and I have to tell you that is not information that we ask customers on quarterly or even an annual basis.

And thank.

Thank you guys and maybe just a follow up on that.

When you think about it.

Individual practice.

What we do look at is trend by account and trends by Doctor and so our clinical and <unk>.

You guys.

Obviously show you just mentioned, it's not standard of care yet.

Or only with a few practices, but what is the percentage of penetration is that trending above the 20%.

Account managers, which are LEL personnel look at each one of the accounts that they're responsible for on a weekly and monthly basis, and if they see something up or down they're going to talk to the practice, if theyre down may be adopters on vacation if they're out there.

The broader market for premium maybe just a little bit of color on on how you see.

An individual practice evolving in terms of percentage of of <unk> debt.

I'll try and find out.

What's driving it what can we do to continue to drive it for you. So we really.

They are using <unk> for.

I think that does voice of customer and I have to tell you that is not information that we ask customers on quarterly or even an annual basis.

Go bottoms up and the accounts.

But we do know over all.

We talk to a particular customer that they will say to us. They are very heavily penetrated hey, I'm using you for 50% of my premium cases are amusing for 80.

What we do look at is <unk>.

By account and trends by Doctor and so our clinical and <unk>.

Other people aren't saying that yet so I would say, mostly it's anecdotal.

Account managers, which are personnel look at each one of the accounts that they're responsible for on a weekly and monthly basis, and if they see something up or down they're going to talk to the practice, if theyre down may be adopters on vacation if there.

Overall.

Brian would you add anything to that the only thing I would add is that it.

Goes to the previous <unk>.

And I think a little bit is that overall, while the while the earlier customers may be getting up to speed more quickly all of our customer cohorts are continuing to grow.

I'll try and find out.

What's driving it what can we do to continue to drive it for you.

And.

Really.

That.

Go bottoms up and the accounts.

Yes.

That's driven by all the factors that we've already discussed the pulling in patients from.

But we do know over all.

Talk to a particular customer that they will say to us they're very heavily penetrated hey, I'm using you for 50% of my premium cases, using you for 80.

The mono focal category.

Bye.

The.

Realizing that the technology can also provide excellent.

Other people aren't saying that yet so I would say, mostly it's anecdotal.

Range of vision and extending it into that realm of their practices as well so.

Overall.

Brian would you add anything to that the only thing I would add is that.

I think it's a adding adding.

<unk> to the previous <unk>.

Question, I think a little bit is that overall, while the while the earlier customers may be getting up to speed more quickly all of our customer cohorts are continuing to grow.

Adding additional doctors within the practice once the infrastructure is there to support them. So they are just a number of factors that helped to drive adoption within a practice and and our team is looking at all of those both the internal team and of course, the R&D team here as well.

And.

<unk>.

That's driven by all the factors that we've already discussed.

Great. Thanks for taking the questions.

Pulling in patients from the.

Thank you.

The amount of focal category.

Our next question.

Bye.

Next question comes from the line of Patrick Wood of Stanley or normal line.

Realizing that the technology.

And also <unk>.

Provide excellent.

Amazing. Thank you just two quick ones for me I guess, maybe to jump off on the kind of the health of the customer and the practice side of things I mean, I guess U S. Refractive, it's probably down 20% in Q4.

Range of vision and extending it into that realm of their practices as well.

No.

I think it's a adding.

Adding additional doctors within the practice once the infrastructure is there to support them. So they are just a number of factors that helped to drive adoption within our practice and our team is looking at all of those.

Tri focal and <unk> has been a little sluggish as the market how much more opportunity is that for you today.

To your point, you're still additive to a practice given 44% also going from multifocal to lay out how much more of an opportunity is there to help the practices improve their economics, given the environment seems.

The internal team and of course, the R&D team here as well.

Great. Thanks for taking the questions.

It'll trickier than it has been in the past.

Thank you.

For next question.

Well. Thanks for the question Patrick I think that we always have to remember that the market is complex in.

Next question comes from the line of Patrick Wood Stanley or normal line.

In private pay and we don't want to conflate, the refractive corneal refractive markets or.

Amazing. Thank you just two quick ones from me I guess, maybe to jump off on the kind of the health of the customer and the practice side of things I mean, I guess U S. Refractive is probably down 20% in Q4.

They are generally a younger population.

Much more sensitive to overall economic factors than the patients who are the demographic for our technology, which quite frankly have done quite well over the last five years Center.

Trifocal and eat off has been a little sluggish as the market how much more opportunity is that for you today given to your point, you're still additive to a practice given 44 casinos, so going from multifocal to lay out how much more of an opportunity is there to help the practices improve their economics, given the environment seems.

Probably.

They're sitting on the bulk of the wealth in our country. So.

I think that.

Little trickier than it has been in the <unk>.

That potential is still very strong.

<unk>.

And the underlying desire of patients in that demographic to maintain there.

Well. Thanks for the question Patrick I think that we always have to remember that the market is complex in private pay and we don't want to conflate, the refractive corneal refractive markets or.

Functionality they are there.

The ability to participate in work and leisure activities at the same levels.

There are generally a younger population.

Through great eyesight and <unk>.

Much more sensitive to overall economic factors than the patients who are the demographic for our technology, which quite frankly have done quite well over the last five years.

Our classes, that's a that's a durable trend.

<unk> is in that demographic of course is growing as the population ages.

So.

Wow.

Probably.

They're sitting on the bulk of the wealth in our country. So.

The PC market may have.

I think that.

We might have seen or some people have reported.

That potential is still very strong.

<unk> of that the overall premium market continues to grow obviously, we are a part of that.

And the underlying desire of patients in that demographic to maintain there.

The toric market continues to grow and I think both of those are indicative of this drive to quality of vision.

<unk> they are there.

The ability to participate in work and leisure activities at the same levels.

And we can't underestimate that patients really do value quality vision.

Through great eyesight and without.

Without glasses, that's a that's a durable trend.

That's helpful. I guess I meant more that the clinics themselves had been losing some of the patients on the refractive side.

And as is and that demographic of course is growing as the population ages. So.

A little bit more sluggish on the other side and therefore, you can help them with that because your business is obviously additive to them I guess I was coming at it more from the clinic angle yes.

I think that while.

The.

The PC market may have.

Yes, absolutely I mean, I think that's an argument that our sales force is making that as the.

We might have seen or some people have reported flattening of that the overall premium market continues to grow obviously, we are a part of that.

As the corneal refractive.

Business goes up and down ebbs and flows with the economy.

But the toric market continues to grow and I think both of those are indicative of this drive to quality of vision.

Certainly focusing on the premium <unk> business, particularly one that provides high quality vision is a much better long term investment.

And we can't underestimate that patients.

That's super helpful. And then follow on I know it must be hard for you guys to get this kind of data but.

Really do value quality vision.

That's helpful. I guess I meant more that the clinics themselves had been losing some of the patients on the refractive side.

Do you have any sense for how often youre getting bilateral implantation, because obviously, there's some patients monovision, if they're not familiar with it.

A little bit more sluggish on the other side and therefore, you can help them with that because your business is obviously additive to them I guess I was coming at it more from the clinic angle yes.

Can be a good and sometimes it can be a bad fit how often youre getting implanted say within eat off our trifocal simultaneously.

Yes, absolutely I mean, I think that's an argument that our sales force is making that as the.

I think that that's pretty unusual.

We don't have firm numbers, but when we.

As the corneal refractive.

Business goes up and down ebbs and flows with the economy.

We do have a large data registry, which has over last time. It was reported on was over 800 subjects and in those patients about 90% were bilateral.

Certainly focusing on the premium <unk> business, particularly one that provides high quality vision is a much better long term investment.

So.

Layout bilateral LVL and <unk>.

That's super helpful. And then follow on I know it must be hard for you guys to get this kind of data but.

Presumably some of those some of the residual patients.

Do you have any sense for how often youre getting bilateral implantation, because obviously for some patients monovision, if they're not familiar with it.

We're only had monocular cataract, which is certainly possible where they had previous cataract surgery in one eye, possibly with amount of <unk> or with <unk>.

Can be a good and sometimes it can be a bad fit do you know how often youre getting implanted say within eat off our trifocal simultaneously.

Different premium Iowa.

There are.

You are beginning to see some talks from doctors, which are which are.

I think that that's pretty unusual.

We don't have firm numbers, but when we.

Talking about.

Using the DLA al with.

We do have a large data registry, which has over last time. It was reported on was over 800 subjects and in those patients about 90% were bilateral.

With perhaps a <unk>, but.

I think with the addition of <unk>, plus that's probably going to be less important.

Super helpful. Thank you for taking the questions.

So.

No.

Thank you one moment forward and the next question.

Bilateral layout and <unk>.

Presumably some of those some of the residual patients.

Next question comes from the line.

We're only had monocular cataract, which is certainly possible or they had previous cataract surgery in one eye, possibly with the amount of <unk> with <unk>.

Tom's Stefan of Stifel. Please go ahead.

Great Hey, guys. Thanks for taking the questions first one on LDL Pos for me Ron.

Different premium Iowa.

Ron I guess over time or once the full <unk> plus launch is in motion and is there a way we should be thinking about the split between legacy <unk> and <unk> plus I guess, just trying to get a better sense for what level of impact do you anticipate <unk> plus having on the business relative to the legacy loans.

There are.

You are beginning to see some talks from doctors, which are which are.

Talking about.

Using.

DLA all with a.

With perhaps a PCI coal but.

I think with the addition of <unk>, plus that's probably going to be less important.

And then I have a follow up.

Super helpful. Thank you for taking the questions.

Well, obviously, we want to have a positive impact who we went through and introduced it but the.

Thank you one moment forward into the next question.

I think that.

Next question comes from the line.

Yes.

I think people have recognized.

Tom Stefan of Stifel. Please go ahead.

<unk> recognized that the.

That <unk> delivers.

Great Hey, guys. Thanks for taking the questions first one on costs for me Ron.

Exceptionally high quality vision and can be used with a blended vision approach to provide a range of vision and that works really well, we see again in our registry data that.

Brian I guess over time or once the full <unk> plus launch is in motion and is there a way we should be thinking about the split between legacy <unk> and.

Over approximately 90% of patients who are seeing 2020 at distance and able to read Jay too.

In L. A L plus I guess, just trying to get a better sense for what level of impact do you anticipate us having on the business relative to the legacy loans and then I have a fall.

At near which is about five funds.

Slow up.

The size of the footnote on the page.

Well, obviously, we want to have a positive impact who we went to a introduced it but the.

So I think that Thats, a great solution to the extent that doctors.

I think that.

Yes.

Felt that Gee they wanted to have.

I think people have recognized increasingly recognize that.

More immediate near vision.

And they might they might have.

<unk> delivers.

Not considered an <unk> in a particular patient.

Exceptionally high quality vision and can be used with a blended vision approach to provide a range of vision.

I think the <unk> plus is going to give them.

And that works really well, we see again in our registry data that.

Additional motivation to use to get the benefits of adjustability and they're there.

<unk>.

Approximately 90% of patients are seeing 2020 at distance and able to read Jay too.

A lot of them.

As we've talked about.

The other thing I would point out is both the <unk> plus.

Plus we really just call our <unk> platform are both price.

At near which is about five five months.

The size of the footnote on the page.

Per eye.

For Iowa, and so we wouldn't see any mix change due to pricing.

So I think that Thats, a great solution to the extent that doctors.

Yes.

And therefore.

Felt that Gee they wanted to have.

Got it.

Sorry, just the intent there is that we want the doctor and the patient to choose the best.

More immediate near vision.

And they might they might have.

Oh for their for their case.

Not considered an <unk> in a particular patient.

Perfect that makes sense and then quick follow up just shifting gears.

I think the <unk> plus is going to give them.

Just on Europe, Ryan could you maybe compare and contrast, the U S and European markets, just as we try to think about the ramp in the U S. In the context of I guess, what's the common Europe down more than maybe you could talk to the competitive landscape.

Additional motivation to use to get the benefits of adjustability and there. There are there are a lot of them.

As we've talked about.

The other thing I'd point out is both the <unk>.

Yes.

Regulatory.

Really just call our <unk> platform are both price.

Any other key factors thanks.

Dollars per eye.

For Iowa, and so we wouldn't see any mix change.

Well I think that it's always hard to generalize about the whole continent.

Pricing.

Are there are a number of countries in Europe and they each have.

And the other thing that therefore.

Got it Im sorry, just the intent there is that we want the doctor and the patient to choose the best.

And each one has individual market characteristics. So we don't necessarily look at it as a.

Ll for their for their case.

Perfect that makes sense and then quicker followup to shifting gears just on Europe, Ron could you maybe compare and contrast, the U S and European markets, just as we try to think about your ramp in the U S. In the context of I guess, what's to come in Europe down. The line, maybe you could talk to the competitive landscape.

Europe, we look at it as specific markets within Europe. They do they do for the most part share a regulatory <unk>.

Process.

Which.

<unk> has gotten more complicated.

Especially over the last year or so.

Regulatory.

So.

But overall.

Sure.

Or any other key factors. Thanks.

It's a large market.

Well see.

Well I think that it's always hard to generalize about a whole continent. There are there are a number of countries in Europe and they each have.

Market and.

Ultimately patients are driven by the same motivations as they are everywhere else they want to have high quality vision.

And each one has individual market characteristics.

And.

Excellent range of vision and I think that.

So we don't necessarily.

Ultimately that will.

Look at it as a as.

There'll be a number of.

As Europe, we look at it as specific markets within Europe. They do they do for the most part share a regulatory <unk>.

Very attractive markets for the <unk>.

That's great. Thanks again.

Alright, thank you.

One moment.

Process.

Our next question.

Which.

<unk> has gotten more complicated.

Especially over the last year or so.

All right. Our final question comes from the line of David Saxon of Needham <unk> Company. Your line is now open.

So.

But overall.

It's a large market.

Great Good afternoon, Brian and Charlie Thanks for taking my questions.

Wealthy.

Market and.

Apologies if any of these have been asked.

Ultimately patients are driven by the same motivations as they are everywhere else they want to have high quality vision and.

Shelley, maybe I'll start with you I know, we talked about patents a couple of months ago. Do you have a couple of expiring in 2006, I believe but can you remind us what.

Sure.

Excellent range of vision and I think that.

Ultimately that will.

Those ones are and then when the kind of quote unquote key patents expire and generally how you feel about the IP portfolio and then I'll.

There'll be a number of.

Very attractive markets for the <unk>.

That's great. Thanks again.

Alright, thank you.

Quick couple of follow ups.

So David I'm going to have Ron answered that question.

One moment.

Our next question.

Hey, David So.

I don't know that I would identify any specific patent is a key patent we've got.

All right. Our final question comes from the line of David Saxon of Needham and company. Your line is now open.

Very large patent portfolio now that we've expanded over the years as we continue to develop.

Great Good afternoon, Brian and Charlie Thanks for taking my questions.

And further develop this technology.

I apologies if any of these have been asked.

And so.

As as things come off patent and there is things that are there.

Shelley, maybe I'll start with you I know, we talked about patents a couple months ago do you have a couple of expiring in 2006, I believe but can you remind us what.

There's a whole slew of things that replaces them.

Underlying your question I think though as an assumption that.

And those ones are and then when the kind of quote unquote key patents expire and generally how you feel about the IP portfolio and then I'll.

That.

IP is a.

Yeah.

Is that somehow critical for us and I don't want to minimize the importance.

Quick couple of follow ups.

So David I'm going to have Ron answered that question.

Intellectual property of course, we take it very seriously and we have an excellent program to maintain and expand our portfolio but.

Hey, David So I.

I don't know that I would identify any specific patent is a key patent we've got.

Very large patent portfolio now that we've expanded over the years as we continue to develop and further develop this technology.

There are a number of barriers to entry to this technology and I wouldn't put IP at the top of it.

The number one barrier areas. This is just technically really hard to do is.

So as as things come off patent there is there is things that are.

To adjust to lens after it's been implanted in the human body with.

There is a whole slew of things that replaces them.

With the precision of making classes is really difficult and.

Sure.

Underlying your question I think though as an assumption that.

That.

I think that it took us a long time to do it.

IP is a.

Yeah.

I wish anybody luck to try to.

<unk> is somehow critical for us and I don't want to minimize the importance.

Their request to to do it as well.

Intellectual property of course, we take it very seriously and we have an excellent program to maintain and expand our portfolio but.

And then obviously over the last several years we've built.

A commercial footprint, which we're expanding.

And with that comes.

There are a number of barriers to entry to this technology and I wouldn't put IP at the top of it.

Whole education of the field and in building of expectation on the part of clinicians as to what what is what does just ability what are the measures of adjustability what are the.

The number one barrier is this is just technically really hard to do it to.

To adjust to lens after it's been implanted in the human body with.

Requirements for Adjustability, and we keep advancing those and that same process of course is going on on the regulatory front, where we continue to.

With the precision of making classes is really difficult and.

I think that it took us a long time to do it.

Move the technology forward and thereby educate the regulators.

I wish anybody look to try to.

In their quest to to do it as well.

And so there are just several layers of barriers.

And then obviously over the last several years we've built.

Okay perfect. Thanks for that Ron and then cut.

A commercial footprint, which we're expanding.

Couple for probably Shelly.

And with that comes a.

Gross margin was kind of flat sequentially. So.

A whole education of the field and in our building of expectation on the part of clinicians as to what what is what does just ability what are the measures of adjustability what are the.

Can you help us with the drivers there I think makes it better in the fourth quarter.

So anything there and then on international.

Have you talked about what percent of revenues coming from international and then what pricing is in Canada, Mexico and Germany. Thanks, So much.

Requirements for Adjustability, and we keep advancing those and that same process of course is going on on the regulatory front, where we continue to.

Okay. Good thank you very much.

Mix between Ll and LD.

Move the technology forward and thereby educate the regulators.

Third and the fourth quarter was very similar and therefore also are.

And so there are just several layers of barriers.

Gross margin was similar I think what you were.

Okay perfect. Thanks for that Ron and then cut.

Intimating that you would hope we would have a little bit more increase in gross margin from the fact that we were selling on the LTE data with a higher ASP PMO or costs throughout the entire fourth quarter and I just have to say and I think we've talked about this before is that there are always period costs.

Couple for probably Shelly.

Gross margin was kind of flat sequentially. So.

Can you help us with the drivers there I think makes it better in the fourth quarter.

So anything there and then on international.

Have you talked about what percent of revenue is coming from international and then what pricing is in Canada, Mexico and Germany. Thanks, So much.

In those period cost, particularly on the lay out are things like the consumption and the ordering of glass and cartridges and other accessories from from customers. They are not a one for one relationship.

Okay, great. Thank you very much.

Nick between Ll and LD.

And we don't charge separately for those.

Third and the fourth quarter was very similar and therefore also are.

As well as just period costs for things like inventory reserves.

Gross margin was similar I think what you were.

Things like that both on the LGD.

<unk> side.

Intimating that you would hope we'd have a little bit more increase in gross margin from the fact that we were selling on the LTE data with the higher ASP lower costs throughout the entire fourth quarter and I just have to say and I think we've talked about this before is that there are always period costs.

Graph on the LDP at just 10% quarter to quarter center period costs.

Tend to have a minor impact on margin, but they can vary quarter by quarter, and we saw little bit of that in the fourth quarter.

Why issue.

And then I think you are.

Next question.

In those period cost, particularly on the lay out are things like the consumption and the ordering of glass and cartridges and other accessories from from customers. They are not a one for one relationship.

Think of revenue are we getting from international.

International and that would just be Canada in our case and no we don't break it out.

It's remained relatively steady in terms of their contribution on on a quarterly basis, but growing.

And we don't charge separately for those.

As well as just period costs for things like inventory reserves.

We're out 2023, but it's not significant relative to the overall, but it's a great market for us.

Things like that both on the LDP.

<unk> side.

Graph on the LGD, it just depends quarter to quarter said period costs.

And then I think your third question with pricing in Canada, and we do use a distributor that changes are.

Tend to have a minor impact on margin, but they can vary quarter by quarter and we saw a little of that in the fourth quarter.

ASP internally, a little bit, but again, it's not predominant in terms of our overall LTV volume in low volume.

Why is that.

And then I think you are.

Next question.

But the absolute pricing to the end user customer in Canada is a bit higher than it is in the U S. One there.

Think of revenue are we getting from international.

International and that would just be Canada in our case and no we don't break it out.

In an earlier stage of adoption.

It has remained relatively steady in terms of their contribution on on a quarterly basis and growing.

But more often they do expect to pay margin because.

Product introductions lower volume things like that.

We're out 2023, but it's not significant relative to the overall, but it's a great market for us.

Okay, great. Thank you so much.

Thank you.

Alright. Thank you. This concludes the question and answer session I would now like to turn it to.

And then I think your third question was pricing in Canada, and we do use a distributor that changes our ASP internally a little bit, but again, it's not predominant in terms of our overall LTV volume in low volume.

To Ron Kirk CEO for closing remarks.

Thank you for your time and attention today. We appreciate your interest and are excited and look forward to updating you on our progress in future quarters.

But the absolute pricing to the end user customer in Canada is a bit higher than it is in the U S. One there.

Goodbye.

Alright. Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

In an earlier stage of adoption.

But more often they do expect PE margins because.

Yes.

<unk> introductions lower volume things like that.

Okay, great. Thank you so much.

Thank you.

Alright. Thank you. This concludes the question and answer session I would now like to turn it to.

To Ron Kirk CEO for closing remarks.

Thank you for your time and attention today. We appreciate your interest in our excite and look forward to updating you on our progress in future quarters.

Goodbye.

Alright. Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

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Okay.

Good day and thank you for standing by welcome to the Rx side fourth quarter 2023 earnings Conference call.

At this time all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session.

To ask a question during the session you will need to press star one on your telephone and then Youll hear an automated message advising your hand is raised.

To withdraw your question. Please press star one again.

Please be advised that today's call is being recorded.

The conference over to Richard today.

Rob. Please go ahead.

Thank you operator, presenting today are excite president and Chief Executive Officer, Ron <unk>, and Chief Financial Officer Shelley Thunen earlier today are excited released financial results for the three months at a full year ended December 31 2023.

Copy of the press release is available on the company's website.

Before we begin I would like to inform you that comments and responses to your questions. During today's call reflect management's views as of today February 28, 2024 and will include forward looking an opinion statements, including predictions estimates plans and expectations and other information.

Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued earlier today and in our filings with the Securities and Exchange Commission or SEC.

Our SEC filings can be found on our website or on the Sec's website.

<unk> they are cautioned not to place undue reliance on forward looking statements, we disclaim any obligation to update or revise these forward looking statements. We will also discuss certain non-GAAP financial measures disclosures regarding this non-GAAP financial measures, including reconciliations to the most comparable GAAP measures can be found in the press release.

Please note that this conference call will be available for audio replay on our investor website with that I will turn the call over to our president and CEO, Dr. Ron Curt Brian.

Good afternoon, and thank you for joining us in a moment Shelly will be giving an update on our <unk> financial performance for both Q4 and full year 2023.

For context, I wanted to discuss key factors that we believe underlying market success height adjustable lens and can drive Rx site's performance over a sustained period.

The eye care field is at the forefront of many of the change drivers in medicine, most notably reduced reimbursements to doctors and practices from third party payers, who are facing rising costs from an ageing population.

For ophthalmic practices, the major opportunity to offset these cuts began in 2005, when ophthalmologists, where first able to charge patients directly for the additional costs associated with so called premium intraocular lenses or <unk> that can reduce a person's dependence on glasses after cataract surgery.

Growing from very low levels premium cataract surgery now represents about 20% of the overall U S cataract market and about 10% of the global market with premium procedure is projected to double over the next 10 years.

Hi, providing anywhere from 500 to $5000 in additional revenue per eye above and beyond the approximately $500 reimbursed by third party payers participation in the premium IOL market has become essential for ophthalmic practices to remain viable and continue to serve all of their patients.

Our sales efforts are concentrated on the roughly 4000 U S cataract surgeons, who perform 70% to 80% of all premium <unk> procedures, though the percentage of premium cases varies widely from doctor to Doctor and practice to practice.

One reason for this variability lies in the challenging clinical requirements for our broadly successful premium cataract procedure, namely the ability to deliver consistent high quality vision across a range of distances.

With the commercial growth of the layout and early introduction of L. L plus an increasing number of doctors recognize the power of adjustability to achieve this level of performance in a way that has not been possible with fixed optic non adjustable intraocular lenses.

With both the <unk> and <unk> plus doctors treat the actual refraction that is measured post operatively, rather than trying to predict a result pre operatively for the for the first time, achieving lasik level refractive results after cataract surgery.

The <unk> platform of <unk> lenses delivers equivalent quality of vision to the gold standard mono focal ire wells something that may not be possible with multifocal Io wells that reduce contrast that should and increase rates of visual symptoms, such as glare and halos.

In fact over the past 20 years doctors have moved away from higher levels of multiple chaldee limiting the improvement in near vision for patients.

In contrast, using the <unk> platform doctors and patients can customize vision in both eyes to optimize the quality of vision over a range of distances.

We believe that by tapping into these fundamental market forces.

Al enables doctors to meet the vision goals of more of their patients as well as the financial goals of their practices in turn driving Rx sites superior performance in Q4, and full year 2023, as Shelly will now review.

Thank you Ron and good afternoon, everyone.

With our January pre announcement.

<unk> fourth quarter, 2023 revenue of $28 $6 million up 78% compared to a year ago quarter growth was broad based reflecting both the continued expansion of our installed base of like delivery devices and a sharp increase in LDL Chris.

Ctrip volumes the favorable trends, we observed throughout 2023 continue to be driven by surgeons growing recognition of the clinical and economic benefits provided by the oryx system and the adjustability of our technology.

In the fourth quarter of 2023, we sold 77, ldds up 35% compared to the year ago period.

First quarter 2023, LPG unit placements generated $10 million in revenue, representing a 52% year over year growth.

We ended 2023 within the LTE installed base of 666 units up 67% compared to year end 2022.

<unk> sales continued to rise in the fourth quarter of 2023, reflecting surgeons and patients growing preference for the superior clinical performance of our adjustable iowans.

We sold 18771 LLS in the period up 98% from the fourth quarter of 2022.

These procedure volumes translated into LVL revenue of $17 8 million in the fourth quarter 2023.

Also up 98% compared to the year ago quarter.

Higher LVL volumes during the fourth quarter also contributed to an increase in the revenue mix with LCL revenue, representing 62% of total revenue compared to 56% in the fourth quarter of 2022.

This change in mix, coupled with the sale of our LD D with a lower cost to manufacture and a higher average selling price expanded our gross profit margin to 62% in the fourth quarter of 2023 compared to 46% for the fourth quarter of 2022.

Fourth quarter SG&A expenses were $21 2 million.

Up 35% versus the prior year period.

This year over year increase in SG&A was primarily associated with increased expenses and sales and clinical personnel costs to support our growing installed base as well as the first year of Sox implementation consulting and audit costs.

On a sequential basis SG&A was up 11%, primarily due to an increase in sales head count and expenses related to the higher sales volume achieved in the fourth quarter.

Research and development expenses for the fourth quarter, 2023 were $7 $3 million, representing an increase of 10% year over year.

James versus a year ago quarter was primarily due to increased head count and associated increase in salaries and stock based compensation.

On a sequential basis R&D expenses remained relatively stable with the 8% increase compared to the third quarter up 2023.

We reported a net loss in the fourth quarter.

<unk> $9 2 million or a loss of 26 cents per basic and diluted share using weighted average shares outstanding of 36 million shares.

In the year ago quarter, our net loss was $15 6 million or <unk> 56 cents per share on the <unk>.

Second dilutive basis, using a weighted average of 28 million shares.

Note also that stock based compensation in the fourth quarter was $4 4 million, resulting in an adjusted net loss of $4 8 million or 13.

Per basic and diluted shares.

In the interest of time I'll provide a brief recap of full year 2023 results revenue grew 82% $89 $1 million.

Written by a 43% and 117% increase in LTE and <unk> revenue respectively.

Our 2023 gross.

Margin was 60% versus 44% in 2022.

Total operating expenses were $103 $9 million in 2023, representing an increase of 23% compared to operating expenses in 2022.

For the full year of 2023, we reported a net loss of $48 6 million or $1 41 per share versus a net loss of $66 $8 million or $2 41 per share on a basic and diluted basis in 2022.

Excluding 15 points.

$7 million.

<unk> based compensation expense and $1 $8 million in loss.

Distinguishing net of our term loan in 2023, adjusted net loss was 31 $1 million or <unk> 90 per.

Our basic and diluted shares.

Moving to the balance sheet, we ended the year with no debt and $127 $2 million in cash cash equivalents and short term investments.

During 2023, we raised $95 2 million.

Net of fees and expenses from our at the market program and confidentially marketed public offering and paid off our $40 million term loan info.

Adjusted cash used from operations was $33 9 million in 2023 down <unk> $9.5 million in 2022.

Finally in our first year as a large accelerated filer. We are proud to report that we had no material weaknesses or significant deficiencies in our sox compliance underscoring our commitment to financial integrity and operational excellence.

Turning to the 2020 guidance.

System with the guidance we provided in January of this year. We continue to expect 2020 for full year revenue to be in the range of $128 million to $135 million implying.

Implying year over year growth of 44% to 52%.

We expect to see overall quarterly sequential growth with seasonality expected in the first and third quarters.

Typically the first quarter tends to be softer sequentially for capital equipment in our case, the LGD with continued sequential growth in prestige.

Procedures, but lower sequential growth then the seasonally strongest quarters, which are the second and fourth quarters.

We expect our gross margin to expand to a range of 65% to 67%, reflecting a continued increase in revenue mix from higher margin Elio procedure volumes as well as gross margin benefit from our LDP with a higher ASP.

And lower cost to manufacture.

We continue to expect operating expenses to be between $125 million and $128 million, which represents an increase of 20% to 23% over the prior year and reflects ongoing investments, we're making sure stablish, a large and durable post op.

Like treatment infrastructure.

To support sustained LDL procedure crowd.

Included in our cost primarily in operating expense is noncash stock based compensation expense of approximately $22 million $25 million.

Before I turn the call back to Ron I am pleased to announce in conjunction with this year's Crs meeting, we will be hosting an investor event on April six at seven am Eastern time, Please stay tuned for more details from our Investor Relations team.

Kate approaches with that I will turn the call back to Ron.

Thank you Shelly while we are pleased with the strong finish to 2023. We're also thrilled about the journey ahead, we're particularly inspired by the opportunity to achieve our ambitious goals, which will leverage the immense talent and creativity of both are exciting and our clinical partners like any new <unk>.

Clinical capability adjustability requires both a financial and intellectual investment, but as I noted earlier the benefits to patients and practices are clear.

As we celebrate the 75th anniversary of the intraocular lens in 2024, it's essential to recognize the eye care community as investments in innovation. This commitment has ushered in advancements from which we all benefit today, highlighting the importance of adopting change over maintaining the comfort of.

The status quo, we look forward to highlighting this mutual commitment to continued innovation at the 50th anniversary meeting of the American Society of cataract and refractive surgery in Boston in April when our clinical partners will present more data on the latest advances in adjustable IOR technology and practice.

With that I'll ask the operator to open the call for questions.

Sure.

Thank you at this time, we will conduct a question and answer session and as a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. So for one on one again.

Please stand by while we compile the Q&A roster.

First question comes from the line of Steve Lichtman of Oppenheimer. Please go ahead.

Thank you good evening guys.

So just a few questions.

First of all on <unk> plus.

Given its ability to provide more near vision out of the box do you see it as a door opener for surgeons, who perhaps in the past would not have looked at.

All right.

Yes.

Well thanks for the question.

I think it's important to note as we presented in.

Our doctors are presented at various meetings at the al.

<unk> itself provides a great distance in near vision.

And so we're starting from a very high level.

L plus.

Does provide earlier return of near vision.

And so doctors now have two adjustable tools and overtime, we will decide how they're going to use them.

I think that for any doctor, who for whatever reason hasn't adopted adjustable technology, yet, but certainly another reason for them to adopt the technology.

<unk>.

And make and make the make this available to their patients.

Great.

So how should we think about the relative growth of Ldds sale versus <unk> in your 'twenty guidance.

Yes, well, we don't break out in our guidance the quantity of LLS and Leds.

I think what you've seen in the last several years is revenue.

Goes up faster than LTE revenue and of course, that's just a natural evolution.

A razor razor blade model.

And that's.

That's very consistent with how we have performed and it's really because of two reasons. One is of course, we're adding new customers with.

<unk> at the LD as well as the fact that part of our impetus for growth is to get further.

Embedded in each one of our existing accounts and increase their usage. So normalized we would expect just like we saw last year that <unk> revenue will accelerate faster than LTE revenue.

Okay got it and then I guess just.

Lastly for now Youre guiding to sales growth and 12, 24, obviously well above opex growth.

What are you assuming in terms of growth of the customer facing sales force are you growing the sales force on either the Lalor Ldds side this year.

We expect the LCD sales force remain relatively stable, maybe we would add one ourselves that our territories are well covered by existing salesforce, which numbers about 20 on the <unk> sales force, we add some and this is really just dependent on depending on.

How their territory for Bob how many existing customers they have to support but we will continue to add.

People, but not a tour at places like we did when we initially created.

The sales force, where we tend to add the most people is in our clinical sales force and those folks are responsible for trained doctors.

Our use of our injector February.

Iowa manufacturer has one that's a little bit different as well as <unk>.

<unk>, they can have pretty high turnover some time.

ASC and then also they trained on the use of the LGD both for the Doctor the optometrist and often for technicians and a partner a lot.

With our <unk> sales force to bring up.

Ctrip volumes at our existing customers, but that's where you see the most editions.

Marketing.

That's helpful. Thanks, Ron and Joe and congratulations on the quarter.

Yes.

Tier one moment for our next question.

Our next question comes from the line of Robbie Marcus with Jpmorgan. Your line is now open.

Oh, great. Thanks for taking my questions Congrats on a nice quarter again.

Yes.

Maybe to start.

Youre getting.

Fairly significant size.

And one of your competitors Miss consensus.

I O L numbers today I guess the question is really.

No.

At what point do you think doctors are starting to make the decision whether to go with our X sight versus.

Are there competitors that may have a bigger bundle because of the better.

Clinical and.

Selling benefits of DLA out.

Alright.

Thank you for the question Ravi.

I think doctors always wanted to do what's best for their patients fundamentally that's there.

And they want a happy patient.

<unk> four <unk>.

Selfish reasons, but also just quality of their own lives and so.

They are really motivated to deliver the best clinical results possible and.

They're going to make their decisions based on that so are.

Our focus is really.

Providing one providing the best clinical results, but then presenting to doctors and practices that haven't yet adopted the LDL.

That data and that information so that they can.

Make their own decisions and be confident in what they're offering so.

I think that that it's not necessarily an either or decision. It's a it's more of a decision of.

Then, making the choice to be able to offer this technology to their patients.

Ravi I'd also like to add that in our <unk>.

Latest.

Customer survey that we had a third party conduct and the results are very similar to the previous two years about 44%.

Patients as reported by our doctors would have would not have gotten anything other than a mono focal lens. So in that case, we're growing their practice and in theory.

Growing market, we're still very small.

And then the balance coming from Toric lenses, another PCI LLS.

No.

I think it's good to know.

About 66% of the volume is coming from other.

<unk> that might have been taken about most of those from toric lenses further upselling, but it's significant amount from PCI allows us as well.

Great really helpful and maybe one just on.

Balance sheet and cash usage you.

You still have a pretty healthy.

Cash balance right now youre burning cash though.

I imagine that will continue to decrease cash usage as you continue to grow here.

But how are you thinking about your positioning and the potential to reach cash flow breakeven. Thanks a lot.

Thank you.

We have said previously that will continue to reduce our cash use throughout 2024 as compared to 2023 and also to expect that cash is heaviest in the first quarter, just because we pay yearend bonuses and.

We get materially.

Things get paid in January.

But you should see decreases throughout the year. We have also said and we continue to say that we have adequate cash to get to cash flow breakeven with a healthy balance sheet.

Very clear I appreciate it thank you.

Yes.

Alright. Thank you one moment for our next question.

Okay.

Next question comes from the line of Larry Big Olson, Sorry, <unk>. Your line is now open.

Hey, guys. Thanks for taking the questions Zimmern on for Larry.

I just wanted to start off on your 2024 outlook I know youre not providing.

L a al versus our BD Max.

Explicitly but how are you thinking about LDP utilization in 2024.

We're conservatively forecasting a small step down, but any reason utilization can't grow year over year.

Yes, I think that utilization is a nice metric jetson that anybody can calculator.

They will vary throughout the year.

Because we calculated as the number of LLS implanted in a quarter divided by the LDP installed base in the previous quarter. If you have a very heavy ldds placement quarter in a seasonal quarter for LLS, you might see a little bit of a step down.

But overall our.

Our goal is to increase that.

And but if we get very high.

<unk> sales that could mute a little bit while we don't guide on that as I mentioned.

To Steve's question.

We expect <unk> revenue to grow faster than LTE revenue.

Great. Thank you.

Just to clarify on the phasing of sales throughout the year. It sounds like we should expect sequential growth.

Quarter over quarter throughout 2024, including Q1.

What we did guide is two sequential growth with seasonality and where we said specifically that we would expect continued sequential growth despite seasonality in our <unk> revenue.

Yes.

Okay, perfect and just in terms of your international business. How has the launch in Canada been progressing relative to your expectation and will there be any contribution from new geographies in 2024.

So Canada has gone very well, we're very pleased with the rollout in Canada.

And that continues to go well.

I think it's.

Good.

<unk> for the importance that international will play over time.

And we're certainly considering.

Other markets that we think will be a particularly attractive to the LDL and we'll be talking more about those as the year progresses.

Great. Thank you.

Alright. Thank you one moment for our next question.

Okay.

Comes from the line of Ryan Zimmerman of <unk>.

Awesome.

Hey, good afternoon. Thanks for taking the question congrats <unk> on year.

Wanted to start.

First with.

The LD the capital sales force and.

You guys are leaving that Salesforce unchanged.

Is there a point at which you reach kind of a peak sales rate per quarter in terms of LTV units just based on simply capacity.

Even if the demand is there and.

Where are we at relative to maybe at peak capacity in your view from the LGD Salesforce.

Yes, I think that if we look at the LD days sales force.

Folks have developed a territory now as you know they typically start with their highest volume customers customers that they know better but their efforts are really enhanced by our marketing efforts the ability to get out shows.

We do about 80 tabletop shows a year.

In the territories.

And also the couple the <unk> salesforce and new accounts as well as potential new accounts and so.

We will add people, if we see it as necessary, but typically with capital equipment people you kind of get the opposite effect, if you cut down their territories.

Because they've already put the money and that doesn't work real well.

We will always keep that ahead of ourselves.

But we don't think like doubling the sales force just automatically downloads.

The placements I think just continued market acceptance.

And knowledge about the LDP and then talking to peers, both at shows and one on one.

Sorry, it's too we've.

We've seen that momentum build through the last several years.

Yes, just to reiterate with Kelly.

I'm, sorry, Ryan I was just going to reiterate.

<unk>.

The <unk> account team has grown and and they are.

Involved with.

Capital equipment sales as well to a lesser degree, but they do receive part of their compensation from that.

Okay.

And then second question for you Ron bigger picture.

We think about the growth of the premium segment here.

You talked about kind of where we're at today.

20% of the U S, 10% globally and the expectations are that that goes.

<unk>.

When you think about those market forces that you talked about I mean.

Is there any reason to think that that cadence from a to b.

Is not evenly distributed over the next call it five to 10 years.

Is there anything new here.

Your mind that accelerates it.

Or maybe hockey sticks.

Yes, you will.

Later half of that that timeframe, just trying to think about kind of the broader adoption.

The premium segment here.

As you guys continue to grow.

Well I mean, obviously, we hope to be part of that driver by.

Providing clinic.

Clinicians with tools that they can use to.

Give their patients high quality vision with very high consistently consistency and so.

I think that that has been a factor in our holding back.

All clinicians, but a number of clinicians from participating more widely in this market.

Also.

An important component of our technology is that it involves optometry in a very meaningful way.

And they are a huge part of the eye care community that up to now has had a relatively minor role in premium cataract surgery.

So I think that those two factors are ones that will help to drive the overall market and and obviously fuel our growth as well.

Understood. Thank you.

Alright. Thank you one moment for our next question.

Okay.

Our next question is from the line of Craig Bijou with Bank of America. Please go ahead.

Good afternoon, guys. Thanks for thanks for taking the questions. So.

Just wondering I wanted to ask on maybe some utilization trends at the individual practices. I know you guys have talked about same adoption, maybe faster adoption with the newer surgeons.

Faster utilization relative to some of the surgeons that were added a couple of years ago.

So what I wanted to know is that still kind of what youre seeing is that would you expect for 'twenty four and maybe just.

Color from you on why you do think Thats. The case why are newer adopter is going to move faster ramp faster with with the LLS.

Thanks for the question Craig I think maybe I'll take the broader question and then ask Shelly to pontificate more about the future but.

<unk>.

It's not.

It's kind of understandable that as time goes on.

Two things happened one.

We get better at it.

Okay.

Initiating customers we.

Have we've learned our processes, we've refined our processes.

They have the customers themselves have experienced vicariously through there.

Their friends and competitors.

The.

<unk> experience and so they.

Just a.

Better process for them. The second is I think a little bit the.

Characteristic of people who are adopting not.

Not at the initial rollout, but a little bit later still early but a little bit later in the process and those those people as you typically see in an adoption curve tend to be a little bit more.

Thoughtful about what they are trying to achieve there more focused on getting an ROI.

As soon as possible obviously.

And so they're more likely to once they are convinced of the value of the technology to implement that a little bit more quickly.

Yes, the only thing I would add is that our goal is to become standard of care in the first place we need to become standard of care.

At each individual account.

And there's been a few customers we haven't gotten there yet.

And that's why it's so important for us to continue to penetrate our existing customers.

And we're just not at that level, yet and so that is.

Major emphasis for our salespeople and our clinical personnel as well so.

Expect to certainly our goal to continue to get further penetrated in each account.

And.

Thank you guys and maybe just a follow up on that.

When you think about it.

Individual practice.

Are you guys.

Obviously show you just mentioned, it's not standard of care yet.

Or only with a few practices, but what is the percentage of penetration is that trending above the 20%.

Of the broader market for premium maybe just a little bit of color on on how you see.

An individual practice evolving in terms of percentage of of <unk> debt.

They are using <unk> for.

I think that does voice of customer and I have to tell you that is not information that we ask customers on quarterly or even an annual basis.

What we do look at is <unk>.

By account and trends by Doctor and so our clinical and <unk>.

Account managers, which are LEL personnel look at each one of the accounts that they're responsible for on a weekly and monthly basis, and if they see something up or down they're going to talk to the practice, if theyre down may be adopters on vacation.

Hi.

I'll try and find out.

What's driving it what can we do to continue to drive it for you.

Really.

Go bottoms up and the accounts.

But we do know over all.

We talked a particular customer that they will say to us that they're very heavily penetrated hey, I'm using you for 50% of my premium cases, using you for 80.

Other people aren't saying that yet so I would say, mostly it's anecdotal.

Overall.

Brian would you add anything to that Joe the only thing I would add is that it.

Goes to the previous <unk>.

And I think a little bit is that overall, while the while the earlier customers may be getting up to speed more quickly all of our customer cohorts are continuing to grow.

And.

Hi.

That's driven by all the factors that we've already discussed the pulling in patients from.

The amount of focal category.

Bye.

The.

Realizing that the technology can also provide excellent.

Range of vision and extending it into that realm of their practices as well so.

I think it's a adding adding.

Adding additional doctors within the practice once the infrastructure is there to support them. So they are just a number of factors that helped to drive adoption within a practice and and our team is looking at all of those.

Both the internal team and of course, the R&D team here as well.

Great. Thanks for taking the questions.

Thank you.

Our next question.

Next question comes from the line of Patrick Wood Stanley or normal line as well.

Amazing. Thank you just two quick ones from me I guess, maybe to jump off on the kind of the health of the customer and the practice side of things I mean I guess.

Refractive is probably down 20% in Q4.

Tri focal and <unk> has been a little sluggish as the market how much more opportunity is that for you today given to your point, you're still additive to a practice given 44 casinos, so going from motorcycle to lay out how much more of an opportunity is there to help the practices improve their economics, given the environment seems a little.

Chuck here than it has been in the Pos.

Yes.

Well. Thanks for the question Patrick I think that we always have to remember that the market is complex in private pay and we don't want to conflate, the refractive corneal refractive markets or.

There are generally a younger population.

Much more sensitive to overall economic factors than the patients who are the demographic for our technology, which quite frankly have done quite well over the last five years Center.

<unk>.

They're sitting on the bulk of the well.

In our country so.

Think that.

That potential is still very strong.

And the underlying desire of patients in that demographic to maintain there.

Functionality there.

Our ability to participate in work and leisure activities at the same levels.

Through great eyesight and.

Classes, that's a that's a durable trend.

And as you know.

And that demographic of course is growing as the population ages.

So.

Think that Wow.

The.

The PC market may have.

We might have seen or some people have reported a flattening of that the overall premium market continues to grow obviously, we are a part of that.

But the toric market continues to grow and I think both of those are indicative of this drive to quality of vision.

And we can't underestimate that patients really do value quality vision.

That's helpful. I guess I meant more that the clinics themselves had been losing some of the patients on the refractive side.

A little bit more sluggish on the other side and therefore, you can help them with that because your business is obviously additive to them I guess I was coming at it more from the clinic angle.

Absolutely I mean, I think that's an argument that our sales force is making that as the.

As the corneal refractive.

Business goes up and down ebbs and flows with the economy.

Certainly focusing on the premium IOL business, particularly one that provides high quality vision is a much better long term investment.

That's super helpful. And then follow on I know it must be hard for you guys to get this kind of data but.

Do you have any sense for how often youre getting bilateral implantation, because obviously for some patients monovision, if they're not familiar with it.

Can be a good and sometimes it can be a bad fit Dana how often youre getting implanted say within eat off our trifocal simultaneously.

I think that that's pretty unusual.

We don't have firm numbers, but when we.

We do have a large data registry, which has over last time. It was reported on was over 800 subjects and in those patients about 90% were bilateral.

So.

No.

Bilateral layout and <unk>.

Presumably some of those some of the residual patients.

Neither were only had monocular cataract, which is certainly possible or they had previous cataract surgery in one eye, possibly with amount of <unk> or with <unk>.

Different premium Iowa.

There are.

You are beginning to see some talks from doctors, which are which are.

Talking about.

Using the DLA al with.

With perhaps a PCI coal.

But I think with the addition of <unk>, plus that's probably going to be less important.

Super helpful. Thank you for taking the questions.

Thank you one moment forward into the next question.

Next question comes from the line.

Tom Stefan of Stifel. Please go ahead.

Great Hey, guys. Thanks for taking the questions first one on costs for me Ron.

Ron I guess over time or once the full <unk> L. Plus launch is in motion and is there a way we should be thinking about the split between legacy <unk> and <unk> plus I guess, just trying to get a better sense for what level of impact do you anticipate <unk> plus having on the business relative to the legacy loans.

And then I have a follow up.

Well, obviously, we want to have a positive impact who we went through and introduced it but.

I think that.

Yes.

Think people have recognized increasingly recognize that the all that.

<unk> delivers.

Exceptionally high quality vision and can be used with a blended vision approach to provide a range of vision and that works really well, we see again in our registry data that.

<unk>.

Approximately 90% of patients are seeing 2020 at distance and able to read Jay too.

At near which is about five funds.

The size of the footnote on a on a page.

So.

That's a great solution to the extent that doctors.

Felt that Gee they wanted to have.

More immediate near vision.

And they might they might have.

Not considered an ll in a particular patient.

I think the <unk> plus is going to give them.

Additional motivation to use to get the benefits of adjustability and there. There are there are a lot of them.

As we've talked about.

The other thing I'd point out is both the <unk>, plus which we really didn't call. Our <unk> platform are both price.

Per eye.

For Iowa, and so we wouldn't see any mix change due to pricing.

And therefore.

Got it.

Im sorry, just the intent there is that we want the doctor and the patient to choose the best.

Oh for their for their case.

Perfect that makes sense and then quick follow up just shifting gears.

On Europe, Ron could you, maybe compare and contrast, the U S and European markets, just as we try to think about the ramp in the U S. In the context of I guess, what's the common Europe down more than maybe you could talk to the competitive landscape.

Regulatory.

Yes.

Any other key factors thanks.

Well I think that it's always hard to generalize about the whole continent.

There are a number of countries in Europe and they each have.

And each one has individual market characteristics. So we don't necessarily look at it as a.

As Europe, we look at it as specific markets within Europe. They do they do for the most part share a regulatory <unk>.

Process.

Which.

<unk> has gotten more complicated.

Especially over the last year or so.

So.

But overall.

It's a large market.

Wealthy.

Market and.

Ultimately patients are driven by the same motivations as they are everywhere else they want to have high quality vision.

Sure.

Excellent range of vision and I think that.

Ultimately that will.

There'll be a number of.

Very attractive markets for the <unk>.

That's great. Thanks again.

Alright, thank you.

One moment.

Next question.

All right. Our final question comes from the line of David Saxon of Needham <unk> Company. Your line is now open.

Great Good afternoon, Brian and Charlie Thanks for taking my questions.

I apologies if any of these have been asked.

Shelley, maybe I'll start with you I know, we talked about patents a couple of months ago. Do you have a couple of expiring in 2006, I believe but can you remind us what.

Those ones are and then when the kind of quote unquote key patents expire and generally how you feel about the IP portfolio and then I'll.

Quick couple of follow ups.

So David I'm going to have Ron answered that question.

Hey, David So.

I don't know that I would identify any specific patent is a key patent we've got.

Very large patent portfolio now that we've expanded over the years as we continue to develop.

And further develop this technology.

And so.

As as things come off patent and there is things that are there.

There is a whole slew of things that replaces them.

Underlying your question I think though as an assumption that.

IP is a.

Yeah.

<unk> is somehow critical for us and I don't want to minimize the importance.

Of intellectual property of course, we take it very seriously and we have an excellent program to maintain and expand our portfolio but.

There are a number of barriers to entry to this technology and I wouldn't put IP at the top of it.

The number one barrier areas. This is just technically really hard to do is to adjust.

Just a lens after it's been implanted in the human body with.

With the precision of making glasses is really difficult and.

I think that it took us a long time to do it.

I wish anybody luck to try to.

In their request to to do it as well.

And then obviously over the last several years we've built.

A commercial footprint, which we're expanding.

And with that comes.

Whole education of the field and in a building of expectation on the part of clinicians as to what what is what does just ability what are the measures of adjustability what are the.

Requirements for Adjustability, and we keep advancing those and that same process of course is going on on the regulatory front, where we continue to.

Move the technology forward and thereby educate the regulators.

And so there are just several layers of barriers.

Okay perfect. Thanks for that Ron and then cut.

Couple for probably Shelly.

Gross margin was kind of flat sequentially. So.

Can you help us with the drivers there I think makes it better in the fourth quarter.

So anything there and then on international.

Have you talked about what percent of revenue is coming from international and then what pricing is in Canada, Mexico and Germany. Thanks, So much.

Okay. Good thank you very much.

Mix between Ll and LD.

Third and the fourth quarter was very similar and therefore also are.

Gross margin was similar I think what you were.

Intimating that you would hope we'd have a little bit more increase in gross margin from the fact that we were selling on the LTV with a higher ASP PMO or costs throughout the entire fourth quarter and I just have to say and I think we've talked about this before is that there are always period costs.

And those period cost, particularly on the Lal are things like the consumption and the ordering of glasses and cartridges and other accessories from from customers. They are not a one for one relationship.

And we don't charge separately for those.

As well as just period costs for things like inventory reserves.

Things like that both on the LDC.

<unk> side.

Graph on the LGD it just quarter to quarter said the period cost.

Tend to have a minor impact on margin, but they can vary quarter by quarter, and we saw little bit of that in the fourth quarter.

Why.

And then I think you are.

Next question.

Think of revenue are we getting from international.

International and that would just be Canada in our case and no we don't break it out.

It has remained relatively steady in terms of their contribution on on a quarterly basis, but growing.

2023, but it's not significant relative to the overall, but it's a great market for us.

And then I think your third question with pricing in Canada, and we didn't use a distributor that changes.

ASP internally, a little bit, but again, it's not predominant in terms of our overall LTV volume and lay out volume.

But the absolute pricing to the end user customer in Canada is a bit higher than it is in the U S. One there.

Earlier stage of adoption right.

But more often they do expect to pay more because.

Product introductions lower volume things like that.

Okay, great. Thank you so much.

Thank you.

Alright. Thank you. This concludes the question and answer session I would now like to turn it.

To Ron Kirk CEO for closing remarks.

Thank you for your time and attention today. We appreciate your interest and are excited and look forward to updating you on our progress in future quarters.

Goodbye.

Alright. Thank you for your participation in today's conference. This does conclude the program you may now disconnect.