Q2 2024 RxSight Inc Earnings Call
Good day and thank you for standing by. Welcome to the Rxsight 2nd Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode.
Operator: second quarter 2024 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 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the call over to your speaker, Oliver Moravcevic. Please
After the speaker's presentation, there will be a question and answer session.
To ask a question during this session, you will need to press star 11 on your telephone.
You will then hear an automated message advising that your hand is raised.
To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the call over to your speaker, Oliver Moravcevic. Please go ahead.
Oliver Moravcevic: Presenting today are Rxsight President and Chief Executive Officer, Dr. Ron Kurtz, and Chief Financial Officer, Shelley Thunen. Earlier today, Rxsight released financial results for the three months ended June 30, 2024.
Oliver Moravcevic: Thank you, operator.
Speaker Change: Presenting today are Rxsight President and Chief Executive Officer, Dr. Ron Kurtz, and Chief Financial Officer, Shelley Thunen. Earlier today, Rxsight released financial results for the three months ended June 30, 2024. A copy of the press release is available on the company's website.
Oliver Moravcevic: Before we begin, I would like to inform you that comments and responses to questions during today's call reflect management's views as of today, August 5th, 2024, and 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 today and in our filings with the Securities and Exchange Commission, or SEC.
Speaker Change: Before we begin, I would like to inform you that comments and responses to questions during today's call reflect management's views as of today, August 5th, 2024, and will include forward-looking and opinion statements, including predictions, estimates, plans, expectations, and other information. Thank you.
Speaker Change: Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties.
Speaker Change: These risks and uncertainties are more fully described in our press release issued today and in our filings with the Securities and Exchange Commission, or SEC. Our SEC filings can be found on our website or the SEC's website. Investors are cautioned not to place undue reliance on foreign-looking statements.
Oliver Moravcevic: Our SEC filings can be found on our website or the SEC's website. Investors are cautioned not to place undue reliance on forward-looking statements, as we disclaim any obligation to update or revise these forward-looking statements, except as may be required by law. We will also discuss certain non-GAAP financial measures; disclosures regarding non-GAAP financial measures, including reconciliations with the most comparable GAAP measures, can be found in the press release. Please note that this conference call will be available for audio replay on our investor relations website. With that, I turn the call over to our President and Chief Executive Officer, Dr. Ron Kurtz.
Speaker Change: As we disclaim any obligation to update or revise this forward-looking statement, except as may be required by law. We will also discuss certain non-GAAP financial measures. Disclosures regarding non-GAAP financial measures, including reconciliations with the most comparable GAAP measures, can be found in the press release.
Speaker Change: Please note that this conference call will be available for audio replay on our Investor Relations website. With that, I turn the call over to our President and Chief Executive Officer, Dr. Ron Kurtz. Ron?
Ronald Kurtz: Good afternoon, and thank you for joining us. In a moment, Shelley will provide details on our Q2 results, which set new benchmarks for LAL and LDD sales, as well as for overall revenue. While we congratulate and thank both our clinical practice partners and Rxsight team members for these accomplishments, we also believe they support our long-term thesis that the unique ability to adjust our intraocular lens post-operatively elevates premium cataract surgery, enhancing precision, quality, and customization, and leading more patients to select a high-value premium procedure to achieve top-level clinical outcomes.
Ron Kurtz: Good afternoon and thank you for joining us. In a moment, Shelley will provide details on our Q2 results, which set new benchmarks for LAL and LDD sales, as well as for overall revenue.
Speaker Change: While we congratulate and thank both our clinical practice partners and Rxsight team members for these accomplishments, we also believe they support our long-term thesis that the unique ability to adjust our intraocular lens post-operatively elevates premium cataract surgery.
Speaker Change: enhancing precision, quality, and customization and leading more patients to select a high-value premium procedure to achieve top-level clinical outcomes.
Ronald Kurtz: For ophthalmic practices that have experienced persistent reductions in Medicare reimbursements, the LAL premium procedure provides a critical patient pay growth opportunity that is relatively resistant to fluctuations in the economy, unlike procedures such as LASIK that target a younger demographic. Following Shelley's review of our financial performance and guidance, I'll discuss how underlying trends and our continued focus on executions make us confident about Rxsight's near, mid, and long
Speaker Change: For ophthalmic practices that have experienced persistent reductions in Medicare reimbursements, the LAL premium procedure provides a critical patient paid growth opportunity that is relatively resistant to fluctuations in the economy, unlike procedures such as LASIK that target a younger demographic.
Speaker Change: Following Shelley's review of our financial performance and guidance, I'll discuss how underlying trends and our continued focus on executions make us confident about Rxsight's near, mid, and long-term opportunity.
Shelley Thunen: Thank you, Ron, and good afternoon, everyone. Rxsight generated second quarter 2024 revenue of $34.9 million, up 68% compared to $20.8 million in the year-ago quarter and up 18% compared to $29.5 million in the first quarter of 2024. During the quarter, we sold 24,214 LALs and generated $23.8 million in LAL revenue, 92% and 20% compared to the same year-ago quarter and the first quarter of this year, respectively. In Q2 of this year, LAL revenue represented 68% of total revenue, an increase from 60% in the year-ago period and from 67% in the first quarter of 2024.
Shelley: Thank you, Ron, and good afternoon everyone. Rxsight generated second quarter 2024 revenue of $34.9 million, up 68% compared to $20.8 million in the year-ago quarter.
Speaker Change: and up 18% compared to $29.5 million in the first quarter of 2024.
Speaker Change: During the quarter, we sold 24,214 LALs and generated $23.8 million.
Speaker Change: in LAL revenue of 92%.
Speaker Change: and 20% compared.
Speaker Change: to the same year-ago quarter and the first quarter of this year, respectively.
Speaker Change: In Q2 of this year, LAL revenue represented 68% of total revenue, an increase from 60% in the year ago period and from 67% in the first quarter of 2024.
Shelley Thunen: We sold 78 LDDs in the second quarter, up 16% compared to 67 units in the year-ago period and up 18% compared to 66 units in the first quarter of this year. During the period, LDD sales generated revenue of $10.2 million, up 32% versus the second quarter of 2023 and up 17% compared to the first quarter of 2024. As of June 30, 2024, our LDD install base stood at 810 units, 55% and 11% versus the year-ago period and the first quarter of 2024, respectively.
Speaker Change: We sold 78 LDDs in the second quarter, up 16% compared to 67 units in the year-ago period, and up 18% compared to 66 units in the first quarter of this year.
Speaker Change: During the period, LDD sales generated revenue of $10.2 million, up 32% versus the second quarter of 2023, and up 17% compared to the first quarter of 2024.
Speaker Change: As of June 30, 2024, our LDD install base stood at 810 units, up 55% and 11% versus the year-ago period and the first quarter of 2024, respectively.
Shelley Thunen: Gross margin in the second quarter of 2024 was 69.5%, compared to 57.8% in the same year-ago quarter and 70.1% in the first quarter of 2024. The year-over-year increase reflects the shift in product mix with higher-margin LAL revenue advancing to 68% of the total, as well as increased margins on our LDD. The sequential change of about 0.5% and within our guidance of annual gross margin of 68 to 70% is due to a slightly lower average selling price for our LDD in the second quarter of just over $130,500 compared to an ASP of $132,000 in the first quarter of 2024. ASPs can vary slightly depending on customer mix, with $130,000 continuing to reflect ASP stability following the 10% LDD price increase we took in the third quarter of 2023.
Speaker Change: Gross margin in the second quarter of 2024 was 69.5% compared to 57.8% in the same year-ago quarter and 70.1% in the first quarter of 2024.
Speaker Change: The year-over-year increase reflects the shift in product mix, with a higher margin LAL revenue advancing to 68% of the total, as well as increased margins on our LDD.
Speaker Change: The sequential change of about 0.5% and within our guidance of annual gross margin of 68-70%
Speaker Change: is due to a slightly lower average selling price for our LDD in the second quarter of just over $130,500 compared to an ASP of $132,000 in the first quarter of 2024.
Speaker Change: ASPs can vary slightly depending on customer mix with $130,000 continuing to reflect ASP stability following the 10% LDD price increase we took in the third quarter of 2023.
Shelley Thunen: SG&A expenses in the second quarter of 2024 were $24.3 million, representing an increase of $6.1 million, or 33% versus $18.2 million in the year-ago quarter. This year-over-year change was due primarily to an increase in personnel costs and a higher stock-based compensation expense. On a sequential basis, SG&A expenses increased $1 million, or 4%, due to primarily higher stock-based compensation expense and higher personnel costs. During the second quarter of this year, R&D expenses rose 12% to $8.3 million, compared to $7.4 million in the second quarter of 2023.
Speaker Change: SG&A expenses in the second quarter of 2024 were $24.3 million, representing an increase of $6.1 million, or 33% versus $18.2 million,
Speaker Change: in the year-ago quarter. This year-over-year change was due primarily to an increase in personnel costs and a higher stock-based compensation expense.
Speaker Change: On a sequential basis, SG&A expenses increased $1 million, or 4%, due to primarily higher stock-based compensation expense and higher personnel costs.
Speaker Change: During the second quarter of this year, R&D expenses rose 12% to $8.3 million, compared to $7.4 million in the second quarter of 2023.
Shelley Thunen: This year-over-year change was primarily attributable to increased facilities costs and increased stock-based compensation. Compared to the first quarter of 2024, R&D expenses in the second quarter increased by $300,000, or 3%, primarily driven by an increase in stock-based compensation. Our gap net loss in the second quarter of 2024 was $6.1 million, or a loss of $0.16 per basic and diluted share, using weighted average shares of 38.5 million shares. This compares to a gap net loss of $13.9 million, or 40 cents per share on a basic and diluted basis, in the second quarter of 2023.
Speaker Change: This year-over-year change was primarily attributable to increased facilities cost and increased stock-based compensation, compared to the first quarter of 2024 R&D expenses in the second quarter increased by $300,000 or 3%.
Speaker Change: primarily driven by an increase in stock-based compensation.
Speaker Change: Our gap net loss in the second quarter of 2024 was $6.1 million, or a loss of $0.16 per basic and diluted share, using weighted average shares of 38.5 million shares.
Speaker Change: This compares to a gap net loss of $13.9 million, or $0.40 per share, on a basic and diluted basis in the second quarter of 2023.
Shelley Thunen: Moving to the balance sheet, we ended the second quarter of 2024 with cash, cash equivalents, and short-term investments of $233.3 million compared to $125.4 million on March 31st, 2024. The change in cash balance includes $107.5 million net of fees and expenses from our May confidentially marketed public offering, or CMPO. Turning now to guidance.
Speaker Change: Moving to the balance sheet, we ended the second quarter of 2024 with cash, cash equivalents, and short-term investments.
Speaker Change: of $233.3 million compared to $125.4 million on March 31st, 2024.
Speaker Change: The change in cash balance includes $107.5 million net of fees and expenses from our May Confidentially Marketed Public Offering, or CMPO.
Shelley Thunen: Based on our strong second quarter 2024 performance, we are increasing our revenue, operating expense, and non-cash expense guidance as follows. Full year 2024 revenue is now projected to be between $139 and $140 million, an increase from our previous guidance of $132 to $137 million. This represents year-over-year growth of 56 to 57 percent. The revised revenue guidance reflects an increase of $11 million at the low end of the range and $5 million at the high end of the range compared to our initial 2024 guidance set in January.
Speaker Change: Turning now to guidance. Based on our strong second quarter 2024 performance, we are increasing our revenue, operating expense, and non-cash expense guidance as follows.
Speaker Change: Full year 2024 revenue is now projected to be between $139 and $140 million, an increase from our previous guidance of $132 to $137 million.
Speaker Change: This represents year-over-year growth of 56 to 57 percent.
Speaker Change: The revised Revenue Guidance reflects an increase of $11 million at the low end of the range and $5 million at the high end of the range compared to our initial 2024 guidance set in January .
Shelley Thunen: For the remainder of the year, we continue to anticipate sequential quarterly growth with a nominal increase in Q3, factoring in both a very strong second quarter and typical seasonality in the third quarter due to summer vacations taken by both patients and doctors.
Speaker Change: For the remainder of the year, we continue to...
Speaker Change: continue to anticipate sequential quarterly growth with a nominal increase in Q3 factoring in both a very strong second quarter and typical seasonality in the third quarter due to summer vacations taken by both patients and doctors.
Shelley Thunen: Operating expenses are projected to increase to between $135 and $136 million, up from our previous guidance of $126 to $130 million, or $7.5 million at the midpoint of guidance, and representing an increase of 30 to 31% over 2023. The guidance increase is primarily due to higher non-cash stock-based compensation expense, with a remainder of the increase related to continued investment in sales and marketing and research and development. The non-cash, stock-based compensation expenses are now expected to be between $29 and $30 million, up from our previous guidance of $22 to $25 million, representing an increase of $5 million for the top and $7 million at the bottom end of the range.
Speaker Change: Operating expenses are projected to increase to between $135 and $136 million.
Speaker Change: up from our previous guidance of $126 to $130 million or $7.5 million at the midpoint of guidance and representing an increase of 30 to 31% over 2023.
Speaker Change: The guidance increase is primarily due to higher non-cash stock-based compensation expense with a remainder of the increase related to continuing investment in sales and marketing and research and development.
Speaker Change: The non-cash stock-based compensation expenses are now expected to be between $29 and $30 million.
Speaker Change: up from our previous guidance of $22 to $25 million, representing an increase of $5 million to the top and $7 million at the bottom end of the range.
Shelley Thunen: The increase is due to stock options and restricted stock units, or RSUs, granted at higher per-share prices to date. As discussed last quarter, operating expense guidance includes continued efforts to leverage our commercial momentum, grow our educational programs, develop our product pipeline, and expand internationally as regulatory approvals are obtained. Finally, please note that our gross margin guidance range remains unchanged at 68 to 70%, which at the midpoint remains 300 basis points higher than our initial 2024 guidance set in January. Our combined revenue and gross margin increases since our initial guidance in January of 2024, excluding the increase in operating expenses, which are largely non-cash, contributed an additional $7.5 to $11 million to operating income.
Speaker Change: The increase is due to stock options and restricted stock units, or RSUs, granted at higher per-share prices to date.
Speaker Change: As discussed last quarter, operating expense guidance includes continued efforts to leverage our commercial momentum, grow our educational programs, develop our product pipeline, and expand internationally as regulatory approvals are obtained.
Speaker Change: Finally, please note that our Gross Margin Guidance Range remains unchanged at 68 to 70 percent, which at the midpoint remains 300 basis points higher than our initial 2024 guidance set in January .
Speaker Change: Our combined revenue and gross margin increases since our initial guidance in January of 2024, excluding the increase in operating expenses, which are largely non-cash.
Speaker Change: contributed an additional $7.5 to $11 million to operating income. With that, I'll turn the call back to Ron.
Shelley Thunen: With that, I'll turn the call back to Ron.
Ronald Kurtz: Rxsight's strong Q2 performance, as well as our revised 2024 guidance, is based on our technology's ability to meet the clinical needs of patients and doctors, as well as the business needs of practices. While traditional cataract surgery with fixed intraocular lenses generally delivers good results, the unique ability to non-invasively modify the LAL after surgery based on direct patient feedback enables doctors to deliver a new level of precision and customization, thereby drawing more patients into the premium IOL category, which is the most significant opportunity for practices to offset long-term negative financial trends in their businesses.
Ron Kurtz: Thank you, Shelley. Rxsight's strong Q2 performance, as well as our revised 2024 guidance, is based on our technology's ability to meet the clinical needs of patients and doctors, as well as the business needs of practices.
Speaker Change: While traditional cataract surgery with fixed intraocular lenses generally delivers good results, the unique ability to non-invasively modify the LAL after surgery based on direct patient feedback enables doctors to deliver a new level of precision and customization.
Speaker Change: thereby drawing more patients into the premium IOL category, which is the most significant opportunity for practices to offset long-term negative financial trends in their businesses.
Ronald Kurtz: The aging population in the U.S. and other developed countries continues to put pressure on health care systems to reduce reimbursements to providers, particularly in eye care. Patient-paid procedures like LASIK that may offset some of these effects have proven to be inconsistent revenue replacements as they appeal to a younger demographic whose decisions are easily deferred during downturns in the economy. In contrast, the expanding demographic of patients considering cataract surgery cannot easily defer the procedure indefinitely because reduced vision interferes with daily activities, has been linked to an increased risk for falls, and recently was added as a modifiable risk factor for dementia.
Speaker Change: The aging of the population in the U.S. and other developed countries continues to put pressure on healthcare systems to reduce reimbursements to providers, particularly in eye care.
Speaker Change: Patient-prey procedures like LASIK that may offset some of these effects have proven to be inconsistent revenue replacements as they appeal to a younger demographic whose decisions are easily deferred during downturns in the economy.
Speaker Change: In contrast, the expanding demographic of patients considering cataract surgery cannot easily defer the procedure indefinitely. Reduced vision interferes with daily activities, has been linked to an increased risk for falls, and recently was added as a modifiable risk factor for dementia.
Ronald Kurtz: Driven by social, work, and lifestyle factors, this population has developed high expectations for vision without glasses and is best positioned financially to consider a patient-pay premium eye well procedure. The potential for practices to convert more patients from their most commonly performed but poorly reimbursed conventional cataract procedure to their highest revenue and highly profitable premium procedure is a major reason why these businesses have invested in LDD technology and infrastructure for most, if not all, of their locations that serve cataract patients.
Speaker Change: Driven by social, work, and lifestyle factors, this population has developed high expectations for vision without glasses and is best positioned financially to consider a patient pay premium eye well procedure.
Speaker Change: The potential for practice is to convert more patients from their most commonly performed but poorly reimbursed conventional cataract procedure.
Speaker Change: to their highest revenue and highly profitable premium procedure is a major reason why these businesses have and we believe will continue to invest in LDD technology and infrastructure for most, if not all, of their locations that serve cataract patients.
Ronald Kurtz: With a total installed base of just over 800 LDDs in the U.S. and Canada, we believe we are still in the early phase of penetration into these clinical sites. As practices acquire and become familiar with adjustable lens technology, our focus is on continued growth in LAL procedures by leveraging the expanded human and physical infrastructure for post-operative light treatment. We continue to see growth in monthly utilization across the installed base, with the most recent expansion to 11 LALs per LDD per month in the seasonally strong second quarter, up from 10.1 LALs per LDD per month in Q1 of this year.
Speaker Change: With a total installed base of just over 800 LDDs in the U.S. and Canada, we believe we are still in the early phase of penetration of these clinical sites.
Speaker Change: As practices acquire and become familiar with adjustable lens technology, our focus is on continued growth in LAL procedures by leveraging the expanded human and physical infrastructure for post-operative light treatments.
Speaker Change: We continue to see growth in monthly utilization across the installed base, with the most recent expansion to 11 LALs per LDD per month in the seasonally strong second quarter, up from 10.1 LALs per LDD per month in Q1 of this year.
Ronald Kurtz: We believe the growing clinical awareness and experience that has driven this trend over the last several years has been accelerated by our strategic clinical and marketing experts. These experts help practices effectively integrate and utilize adjustable technology to improve patient outcomes and grow profitable practice revenue. Continued technology development is another key mechanism for growing adoption, with the LAL Plus being the latest example. Now midway through its rollout in the U.S., we continue to receive positive feedback from patients and doctors who appreciate its rapid visual rehabilitation and optical quality, with a growing body of data now being presented at clinical conferences.
Speaker Change: We believe the growing clinical awareness and experience that has driven this trend over the last several years has been accelerated by our strategic clinical and marketing teams.
Speaker Change: These experts help practices effectively integrate and utilize adjustable technology to improve patient outcomes and grow profitable practice revenue.
Speaker Change: Continued technology development is another key mechanism for growing adoption, with the LAL Plus being the latest example.
Speaker Change: Now, midway through its rollout in the U.S., we continue to receive positive feedback from patients and doctors who appreciate its rapid visual rehabilitation and optical quality, with a growing body of data now being presented at clinical conferences.
Ronald Kurtz: The addition of LAL Plus also continues to be a catalyst for LDD sales, as practices see another reason to adapt and add adjustability to their product offer. As part of our ongoing commitment to innovation, we are pleased to announce FDA approval for an extension of the spherical refractive power range for LAL+, from minus 2 to plus 3 diopter, providing Rxsight with the broadest spherical power range of any astigmatism correcting eye well in the U.S. When coupled with adjustability, this may be particularly useful in highly nearsighted eyes that also typically have less predictable outcomes after surgery.
Speaker Change: The addition of LAL Plus also continues to be a catalyst for LDD sales as practices see another reason to add adjustability to their product offerings.
Speaker Change: As part of our ongoing commitment to innovation, we are pleased to announce FDA approval for an extension of the Spherical Refractive Power Range for LAL+, from minus 2 to plus 3 diopters.
Speaker Change: providing Rxsight with the broadest spherical power range of any astigmatism correcting IOL in the U.S.
Speaker Change: When coupled with adjustability, this may be particularly useful in highly nearsighted eyes that also typically have less predictable outcomes after surgery.
Ronald Kurtz: Commercial distribution of the expanded power range is anticipated toward the end of 2024. Meanwhile, while our primary focus remains on fully developing the U.S. market, we continue to make progress towards expanding our international regulatory approvals in countries that have already adopted premium IOLs. Given that Rxsight's adjustable IOL technology uniquely addresses globally relevant clinical and business needs, these markets can provide additional growth opportunities. Taken together, we believe we are very well positioned for sustained growth in the years to come and look forward to updating you on our continued progress. With that, I'll ask the operator to open the call for questions.
Speaker Change: Commercial distribution of the expanded power range is anticipated toward the end of 2024.
Speaker Change: While our primary focus remains on fully developing the U.S. market, we continue to make progress towards expanding our international regulatory approvals in countries that have already adopted premium IOLs.
Speaker Change: Given that Rxsight's adjustable IOL technology uniquely addresses globally relevant clinical and business needs, these markets can provide additional growth opportunities.
Speaker Change: Taken together, we believe we are very well positioned for sustained growth in the years to come and look forward to updating you on our continued progress.
Speaker Change: With that, I'll ask the operator to open the call for questions.
Operator: Certainly. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And one moment for our first question. Our first question will be from Ryan Zimmerman of BTIG. Your line is open.
Speaker Change: Certainly. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And one moment for our first question.
Speaker Change: Our first question will be coming from Ryan Zimmerman of BTIG. Your line is open.
Ryan Zimmerman: Oh, good morning, or good afternoon, excuse me. A lot of RNNs have called. I want to ask about the updated guidance or range with the PMA supplement, Ron, for the LAL. You know, I was reviewing the FDA data. Can you just talk about kind of where that range was before and versus now, the minus two to plus three diopters and kind of what you size that opportunity to be as you think about expanded usage there?
Ryan Zimmerman: Oh, good morning, or good afternoon, excuse me.
Speaker Change: I want to ask about the updated guidance or range with the PMA supplement, Ron.
Speaker Change: for the LAL. You know, I was reviewing the FDA data. He was talking about kind of where that range was before and versus now, the minus two to plus three diopters and kind of...
Speaker Change: What you size that opportunity to be as you think about expanded usage there.
Ronald Kurtz: So the power range prior to this approval was plus four to plus 30 diopters, which was already a broad range. This, of course, broadens the low end of the range, which again would be likely most clinically relevant to eyes that are... highly myopic or nearsighted prior to cataracts. And so, you know, it's difficult to know exactly how many of those patients are going to be candidates for this power range. But certainly, it's something that we've been asked about by our customers, and we're very pleased that we have this approval now.
Ron Kurtz: So the power range prior to this approval was plus 4 to plus 30 diopters, which was already a broad range.
Speaker Change: This, of course, broadens the low end of the range, which, again, would be likely most clinically relevant to eyes that are highly myopic or nearsighted.
Speaker Change: prior to cataract surgery.
Speaker Change: you know, candidates for this power range. But certainly it's something that we've been asked by our customers about and we're very pleased that we have this approval now.
Shelley Thunen: Very nice. And maybe just switching gears to guidance a little bit, you know, as you think about the magnitude of your beat coupled with the size of the guidance increase, it looks like you're building in, you know, a little bit more expectation, particularly in the third and fourth quarters, Shelley. And, you know, one of the things that stood out this quarter, which you noted, Ron, was the acceleration to 11 units per LDD per month, which really is a step up versus the prior year comparable period from 1Q to 2Q23.
Speaker Change: Very nice. And maybe just switching gears to guidance a little bit.
Speaker Change: You know, as you think about the magnitude of your beat coupled with the size of the guidance increase, it looks like you're building in, you know, a little bit more expectation, particularly in third and fourth quarter, Shelley.
Speaker Change: And, you know, one of the things that stood out this quarter, which you noted, Ron, was the acceleration to 11 units per LDD per month, which really is a step up versus the prior year comparable period from 1Q to 2Q23. So, you know, as you think about that increase in guidance, kind of what's underpinning those expectations, is that higher utilization from the install base? Is there a pipeline, particularly within the LDD, you know, kind of funnel that you look to and see, just help us understand kind of what's behind that increase in guidance, particularly in the back half of the year? Thanks for taking the question.
Shelley Thunen: So, you know, as you think about that increase in guidance, kind of what's underpinning those expectations, is that higher utilization from the install base? Is there a pipeline, particularly within the LDD, you know, a kind of funnel that you look at and see? Just help us understand kind of what's behind that increase in guidance, particularly in the back half of the year. Thanks for taking the call.
Shelley Thunen: Thank you, Ryan. Yes, you are correct. In the second quarter of 2023, our usage was 9.2 LALs per LDD, and we accelerated that to 11 this quarter. And we have seen, you know, continuous improvement in that number. Sometimes in the Q3 number, it goes down a little bit because you have a really large base, but it also means that you can increase the number of absolute LALs in each quarter.
Speaker Change: Thank you, Ryan. Yes, you are correct. In the second quarter of 2023, our usage was 9.2 LALs per LDD.
Speaker Change: and we accelerated that to L211 this quarter. And we have seen, you know, continuous improvement in that number. Sometimes in the Q3 number it goes down a little bit because you have a really large base.
Speaker Change: But it also means that you can increase the absolute number of LALs in each quarter. And I think that that's one of the most important parts of our model. First, we need to sell an LDD, but second, we need to make our customers successful.
Shelley Thunen: And I think that that's, you know, one of the most important parts of our model. First, we need to sell an LDD, but second, we need to make our customers successful and their patients happy. And part of that is, one, adding procedures from new customers, having them accelerate a little bit more rapidly than we had customers do in 20, 21, 22, and we started seeing that for customers installed in 23 and again in 24, increasing our rhythm.
Speaker Change: and their patients happy.
Speaker Change: And part of that is, one, adding procedures from new customers.
Speaker Change: Having them accelerate a little bit more rapidly than we had customers do in 20, 21, 22, and we started seeing that for customers installed in 23 and again in 24.
Speaker Change: So, yes, LAL growth is, you know, as you know, and we've discussed before, an important component
Speaker Change: increasing our revenue.
Ryan Zimmerman: Thank you for taking the questions.
Speaker Change: Thank you for taking the questions.
Operator: Thank you. Our next question will be coming from Robbie Marcus of J.P. Morgan. Your line is open. Okay.
Speaker Change: Thank you, Ryan. Thank you. One moment for our next question.
Robert Marcus: Oh, great. Thanks for taking the questions. Congratulations on a really nice quarter here. Thank you all for the health and the ability to grow on LDDs and LAL adoption, and clearly, in the quarter, you had a great LDD number, and as we just talked about LAL adoption. So really, my question is sort of, What are you seeing in the field? Ron, you talked about halfway.
Speaker Change: Your next question will be coming from Robbie Marcus of J.P. Morgan. Your line is open.
Robbie Marcus: Oh, great. Thanks for taking the questions. Congrats on a really nice quarter here.
Rob: Thank you, Rob.
Robbie Marcus: the health and the ability to grow on LDDs and LAL adoption. And clearly in the quarter you had a great LDD number and as we just talked about LAL adoption. So really my question is,
Robbie Marcus: Sort of.
Robbie Marcus: What are you seeing in the field? You know, Ron, you talked about halfway. Who's buying LDDs today? Where are they placing them? Are centers...
Ronald Kurtz: Who's buying LDDs today? Where are they placing them? Are centers on their second or third units yet? Are they getting LDDs at multiple locations if they have multiple offices?
Speaker Change: on their second or third units yet? Are they, you know, getting LDDs at multiple locations if they have multiple offices? Just help us think about.
Ronald Kurtz: Just help us think about, you know, sort of, who's the incremental buyer here? And then, you know, I have to imagine, based on the increase in utilization, that you're seeing new users ramp up much quicker than you did, you know, two, three years ago, and you're still seeing improvements in utilization from existing users. So any kind of color or segment or trends you can talk about among new versus existing users there would be great. Thanks.
Speaker Change: you know sort of who's the incremental buyer here and then you know I have to imagine based on the increase in utilization that you're seeing
Speaker Change: New users ramp up much quicker than you did, you know, two, three years ago, and you're still seeing improvements in utilization from existing users. So any kind of color segment or trends you can talk about in new versus existing users there would be great. Thanks.
Ronald Kurtz: Thank you, Ravi. So maybe I'll take the first part and ask Shelley to talk a little bit about utilization trends. But, you know, I'm not sure qualitatively that there's, you know, a large difference. We're still at the early phase of penetration of the market. And so, you know, we have new customers that are similar to our previous customers that we continue to grow in the market. And, you know, why any particular customer decides that this is the right time for them to adopt the LAL versus a previous time is really kind of idiosyncratic to that practice.
Speaker Change: Thank you, Robbie. So maybe I'll take the first part and ask Shelley to talk a little bit about utilization trends. But, you know, I'm not sure qualitatively that there's...
Speaker Change: you know, a
Speaker Change: We're still at the early phase of penetration of the market, and so, you know, we have our new customers are, you know, similar to our previous customers that we continue to
Shelley: to grow into the market and why any one particular customer decides that this is the right time for them to adopt.
Shelley: The LAL versus a previous time is really kind of idiosyncratic to that practice and we can certainly influence that with our sales team and, you know, as I mentioned.
Ronald Kurtz: And we can certainly influence that with our sales team. And, you know, as I mentioned, the more we move the technology forward, the more it gives people a reason to adopt. We don't see in terms of where they're putting the LDDs. As we've noted before, there's LDD within an office is not a capacity limitation. So to throughput, so it would be highly unusual.
Shelley: The more we move the technology forward, the more it gives people a reason to adopt.
Shelley: We don't see, in terms of, you know, where they're putting the LDDs, as we've noted before,
Shelley: There's, LDD within an office is not a capacity limitation, so, to throughput. So it would be, you know, highly unusual. I can't think of a case where a office would add, a practice would add an LDD to the same office.
Shelley Thunen: I can't think of a case where a practice would add an LDD to the same office. So, they're almost always going to a new office that is serving, you know, what in that practice's mind serves a different patient population for them. They're either geographically different or, you know, demographically different in their local environment. And you know, whether that practice is, you know, a smaller practice with a couple of offices or a larger practice with many offices, that's, you know, really what they're doing. They're adding the LDDs to new offices that can then offer that technology to a new patient.
Shelley: So they're almost always going to a new office that is serving, you know, what in that practice's mind serves a different patient population.
Speaker Change: for them. They're either geographically different or, you know, demographically different in their local environment.
Speaker Change: and you know whether that practice is
Speaker Change: A smaller practice with a couple of offices or a larger practice with many offices, that's really what they're doing. They're adding the LDDs to new offices that can then offer that technology to a new patient population.
Shelley Thunen: Thank you, Ron. As we move to LAL adoption, I think that, as you noted earlier, we have talked about adoption by different cohorts of installs, and certainly those folks in 23 and 24 have accelerated faster, but the important thing with that number also is that we have continued to see all cohorts continue to grow. And we think an important part of the component of newer customers getting going faster is that, obviously, we have more references.
Speaker Change: Thank you, Ron. As we move to LAL adoption, I think that, as you noted earlier, we have talked about adoption by
Speaker Change: different cohorts of install and certainly those folks in 23 and 24 have accelerated faster but the important thing with that number also is that we have continued to see all cohorts continue to grow.
Speaker Change: And we think an important part of the component of newer customers getting going faster, obviously, is, one, we have more references. So a friend or a colleague is likely to have said to them, just get going. Do five, six, seven patients in your first week.
Shelley Thunen: So a friend or a colleague is likely to have said to them, just get going, do five, six, seven patients in your first week because you're going to see the results from a larger scale than just one patient. And that gives them confidence, as well as the fact that we continue to improve in our clinical training and in our account management training, in terms of teaching them how to sell the technology, as well as how to integrate practice flow for them. And those are all important in adoption.
Speaker Change: because you're going to see the results.
Speaker Change: from a larger N than just one patient.
Speaker Change: And that gives them confidence, as well as the fact that we continue to improve in our clinical training, in our account management training, in terms of teaching them how to sell the technology, as well as how to integrate practice flow for them.
Shelley Thunen: And as Ron said, each time we add a feature, function, or even a software upgrade, it helps our customers continue to penetrate their market and also gives a new customer another reason to buy. You know, they're able to say, "aha," I should be doing more of this now. And, of course, you know, what we've seen in the last three years, consistent in each of the customer surveys that we've had run in the fall, is 40 to 44 percent of LAL patients come from what would have been a monofocal patient, a patient that would not have gotten any premium.
Speaker Change: And those are all important in adoption. And as Ron said, each time we add a feature, function, even a software upgrade...
Ron Kurtz: It helps our customers continue to penetrate their market and also gives a new customer another reason to buy. You know, they're able to say, aha, I should be doing more of this now.
Ron Kurtz: And of course, you know, what we've seen in the last three years, consistent in each of the customer surveys that we've had run in the fall, is 40 to 44 percent of LAL patients come from
Ron Kurtz: what would have been a monofocal patient, a patient that would not have gotten any premium. And then about another third, a little bit more than a third, come from
Shelley Thunen: And then, about another third, a little bit more than a third, come from a non-focal patient. Torque lenses or Stigmatizing Correction Lenses, which they typically sell for less than half of the price of a PCIOL. So within a practice, they have more and more opportunity to sell the LAI.
Ron Kurtz: torque lenses or stigmatizing correction lenses which they typically sell for less than half of the price of a PCI OL. So within a practice they have more and more opportunity on the LAL front.
Shelley Thunen: Thank you.
Ron Kurtz: Would you like anything more?
Robert Marcus: Shelley, maybe just to follow up on that, um... What's your latest view on what percentage are coming from monofocal versus share conversion from premium IOL? It's one of the more attractive components of the story that you're actually expanding the market here. So any color you could give on the receptivity, is it nationally, you know, different pockets, any, Thanks a lot.
Ron Kurtz: Shelley, maybe just to follow up on that...
Speaker Change: What's your latest view on what percentage are coming from monofocal versus share conversion from premium IOL? It's one of the more attractive components of the story that you're actually expanding the market here. So...
Speaker Change: Just any color you could give and and sort of the receptivity. Is it nationally? You know different pockets Anything you could give. Thanks a lot
Shelley Thunen: So I will say that the data comes from a survey we had run by a third party among our existing customers, and that's one of the questions they ask them, you know, and how much you charge for each and what your conversion rate is for each type of patient population. So the last time the survey was run was in the fall of 2023. We usually only run that annually, but the numbers have been very consistent and are inching up a little bit. I think we started at 40%, and last year it was 44%.
Speaker Change: So I will say that where the data comes from is the survey we've had run by a third party among our existing customers, and that's one of the questions they ask them, you know, in addition to how much you charge for each and what your conversion rate is for each type of patient population.
Speaker Change: So the last time the survey was run was in the fall of 2023, we usually only run that.
Speaker Change: Annually, but the numbers have been very consistent and inching up a little bit. I think we started at 40 percent and last year was 44. That really is information that comes, you know, directly from the practice.
Shelley Thunen: That really is information that comes, you know, directly from the practice. Other information might be anecdotal at this point in time. I don't know if you see anything when you're out visiting customers, Ron, or not.
Speaker Change: Other information might be anecdotal at this point in time. I don't know if you see anything when you're out visiting customers, Ron, or not. I haven't seen anything that would make me suspect that that number has changed. Okay.
Ronald Kurtz: I haven't seen anything that would make me suspect that that number has changed.
Robert Marcus: Great, thank you very much.
Ron Kurtz: Great. Thank you very much.
Operator: One moment for our next question. Our next question will be coming from Steven Lichtman of Oppenheimer and Co., Inc. Your line is open.
Robbie Marcus: Thank you, Robbie.
Speaker Change: One moment for our next question.
Speaker Change: Our next question will be coming from Steven Lichtman of Oppenheimer & Co. Incorporated. Your line is open.
Steven Lichtman: Thank you. Evening, everyone, and congratulations on the quarter.
Steven Lichtman: Thank you. Good evening, everyone, and congratulations on the quarter.
Steven Lichtman: I wanted to start with LAL+. It does seem to be another opportunity to go after new customers. And, Ron, you mentioned it was a door-opener.
Steven Lichtman: I wanted to start first with LAL+.
Steven Lichtman: It does seem to be another opportunity to go after new customers, and Ron, you mentioned it being a door opener. Can you talk more about what you're seeing on that front?
Ronald Kurtz: Can you talk more about what you're seeing on that front and, for those surgeons not yet customers, what they might see with LAL+ that would sort of pique their interest and convert them over? Then, you know, I would start by saying that LAL and LAL-PLUS are both great quality lenses. They provide both the same degree of adjustability and are more similar than different, and that's why we price the lenses the same so that we're not, you know; we want the doctor to make the best choice for the patient.
Speaker Change: For those surgeons not yet customers, what they might see with LAO Plus that would peak their interest and convert over.
Ron Kurtz: I would start by saying that LAL and LAL Plus are both
Ron Kurtz: Great quality lenses. They provide both the same degree of adjustability and are more similar than different and that's why we
Ron Kurtz: Price the lenses the same so that we're not, you know, we want the doctor to make the best choice for the patient.
Ronald Kurtz: The feedback that we've received is things, you know, on the order of what you would expect from the optical design of the LAL+, which provides, you know, perhaps faster visual recovery, particularly for intermediate and near tasks. And so, you know, that feedback is consistent with the optical design, which slightly extends the depth of focus relative to the LAL.
Ron Kurtz: Feedback that we've received are things, you know, on the order of what you would expect from the optical design of the LAL+, which provides, you know,
Ron Kurtz: Perhaps faster visual recovery, particularly for
Ron Kurtz: Intermediate and Tasks and Near Tasks and so you know that feedback is consistent with the optical design which slightly extends the depth of focus relative to the LAL.
Ronald Kurtz: So anecdotally, you know, Eric Weinberg, who's our chief commercial officer, says every sale, when you have a new technology, which he's done multiple times, starts with a no and turns into a yes. And so you and he always say to us, every time we have a technological advance, right? It gives the customer who's been saying no an opportunity to say yes, and you know they do that without losing face. They can say, "Yeah, well, I've been waiting for this, or this is the reason, and that's important to our LBD cells as well as our LAL cells in existing practice.
Eric Weinberg: So anecdotally, you know, Eric Weinberg, who's our chief commercial officer, says every sale when you have a new technology, which he's done multiple times, starts with a no and turns to a yes.
Speaker Change: And so you and he always say to us, every time we have a technological advance, right, it gives the customer who's been saying no an opportunity to say yes.
Speaker Change: And, you know, they do that without losing face. They can say, yeah, well, I've been waiting for this, or this is the reason. And that's important to our LDD cells, as well as our LAL cells in existing practices.
Ronald Kurtz: Yes, and I think it also establishes a record that we've carried through at previous companies and now here at Rxsight that we have a long-term plan for the technology that will continue to grow the benefits to whoever acquires the technology. And that's important because this is a, you know, we're entering into a long-term relationship with our customers. And then, just secondly, you're getting SG&A leverage, and you increased the non-stock-based comp SG&A by less than the revenue increase, so you're continuing to get leverage. But given the strength of the balance sheet, any thoughts of accelerating investment on the commercial side?
Speaker Change: Yes, and I think it also establishes, you know, a record
Speaker Change: that we've carried through at previous companies and now here at Rxsight.
Speaker Change: that we have a long-term plan for the technology.
Speaker Change: that will continue to grow the benefits to whoever acquires the technology. And that's important because this is a, you know, we're entering into a long-term relationship with our customers.
Speaker Change: Great, and then just secondly, you're getting SG&A leverage and you increase the non-stock based comp SG&A by less than the revenue increase, so continuing to get leverage.
Speaker Change: But just given the strength of the balance sheet, any thoughts to accelerating investment on the commercial side, or is that something in the near-term plans?
Shelley Thunen: Or is that not something in the near term?
Shelley Thunen: Yes, you know, when we raised the money from the CMPO, and what we did say is that this gives us an opportunity to invest more in sales and marketing and also in R&D to accelerate our internal projects, which can take quite a while. And so we talked about specific things such as additional education for our customers, reaching more out to the optometrist community, and those efforts, along with additional marketing and not marketing to our customers, not direct to consumer.
Speaker Change: Yes, you know when we raised the money from the CMPO and what we did say is that this gives us an opportunity to invest more in sales and marketing and also in R&D to accelerate our internal projects which can take quite a while.
Speaker Change: And so we had talked about specific things such as additional education for our customers, reaching more out to the optometrist community.
Speaker Change: and those efforts along with additional marketing.
Shelley Thunen: And so we talked about that, and where you saw the increase in OPEX, most of it was in stock-based compensation, but about $2 million in 2024 really relates to this additional ability to invest in the business. And what we said at that point in time is that while we'll always be careful with OPEX, it takes a while to get all these programs rolling. And so we will see more of the effect of these programs in 2025.
Speaker Change: And not marketing to our customers, not DTC. And so we had talked about that, and where you saw it in the increase in OPEX, most of it was in stock-based compensation, but about $2 million in 2024 really relates to...
Speaker Change: This additional ability to invest in the business and what we said at that point in time is while we'll always be careful with OPEX, it takes a while to get all these programs rolling. And so we would see more of the effect of these programs in 2025.
Steven Lichtman: Got it. Thanks, Ron and Shelley.
Speaker Change: Got it. Thanks, Ron and Shelley. Thank you.
Operator: Thank you. One moment for our next question, which will be coming from David Saxton of Needham and Company. Your line is open.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: which will be coming from David Saxton of Needham & Company. Your line is open.
David Saxon: Great. Good afternoon, Ron and Shelley. Thanks for taking my questions.
David Saxton: Great. Good afternoon, Ron and Shelley. Thanks for taking my questions.
David Saxton: Maybe I'll start on the LDBs. Obviously really strong placement number here in the second quarter. If I look to last year in the third quarter, LDB placements were essentially flat sequentially.
Shelley Thunen: Maybe I'll start on the LDDs. Obviously, really strong placement numbers here in the second quarter. If I look to last year, in the third quarter, LDD placements were essentially flat sequentially. I heard, Shelley, your comments around the third quarter modest sequential growth. But first, specifically for the LDD placements, should we be thinking about a similar sequential trend as we saw last year, so kind of flattish? Or is there any reason why seasonality would be more impactful this year and maybe cause LDD placements to dip sequentially?
David Saxton: I heard, Shelley, your comments around third quarter modest...
Speaker Change: Sequential growth, but for specifically for the LDD placements.
Speaker Change: Should we be thinking about a similar sequential trend as we saw last year, so kind of flattish, or is there any reason why seasonality would be more impactful this year and maybe cause LDD placement to dip sequentially?
Shelley Thunen: Yeah, I think that, you know, we did guide specifically that we would have a nominal increase in revenue in the third quarter, and I think that's very typical with seasonality. We do see seasonality both in capital equipment as well as in procedures. And so, I would expect seasonality on the LDD front. And I think that if you go back to when we were very early, we always had the law bigger and bigger numbers, right?
Speaker Change: Yeah I think that you know we did guide specifically that we would have a nominal increase in revenue in the third quarter and I think that's very typical with seasonality. We do see seasonality both in capital equipment as well as in procedures.
Speaker Change: and so I would expect seasonality on the LDD front and I think that if you go past when we were very early we always have the law bigger and bigger numbers.
Speaker Change: And that's an important component in the overall growth story. It's still tremendously high growth, but wouldn't be as high as it was, say, two years ago. So I would...
Shelley Thunen: And that's an important component. And the overall growth story is still tremendously high growth, but it wouldn't be as high as it was, say, 2 years ago. So, I would suspect that we would have seasonality in LDDs while we're not providing specific guidance and that, you know, our most powerful growth is likely to come from LALs, just because of the fact that we've added new customers, even though existing customers may have some effect from summer vacations, both for themselves as well as for the community.
Speaker Change: I suspect that we would have seasonality in LDDs while we're not providing specific guidance.
Speaker Change: and that, you know, our most powerful growth is likely to come from LALs just because of the fact that we've added new customers even though existing customers may have some effect from summer vacations both for themselves as well as for their patients.
David Saxon: Okay, got it. Very clear. Thanks for that, Shelley. And then I'll probably stick with you, Shelley.
Speaker Change: Okay, got it. Very clear. Thanks for that, Shelley. And then I'll probably stick with you, Shelley.
Speaker Change: was down sequentially. Sounds like that was really just around LDD pricing. The first half gross margin is something like 69.8%, so really at the top of the guidance range.
Shelley Thunen: So gross margin was down sequentially, but it sounds like that was really just around LDD pricing. The first half gross margin is something like 69.8%, so really at the top of the guidance range. I mean, it sounds like the LAL mix is going to increase sequentially in the third quarter and, you know, maybe even so in the fourth quarter. So why not raise the gross margin guidance? Is there anything in the back half that would put pressure on gross margins? Or is it really just conservatism? Thanks so much.
Speaker Change: I mean, it sounds like LAL mix is going to increase sequentially in the third quarter.
Speaker Change: you know, maybe even so in the fourth quarter. So why not raise the gross margin guidance? Is there anything in the back half that would put pressure on gross margins? Or is it really just conservatism? Thanks so much.
Shelley Thunen: I wouldn't call it exactly conservatism overall. I think that's a pretty narrow range for a company of our size. But I do think that other than mix, which is the most important component of the gross margin, we also have things like period costs, right? And we're also rolling out, alongside our existing injectors, a disposable injector. I think Ron talked about that a couple quarters ago, as well.
Shelley Thunen: I wouldn't call it exactly conservative.
Speaker Change: I wouldn't call it exactly conservatism overall. I think that's a pretty narrow range for a company of our size.
Speaker Change: But I do think that other than mix, which while is the most important component of
Speaker Change: We also have things like
Speaker Change: period costs. We saw that in the fourth quarter of last year when people expected, because of the mix, it would be a little higher.
Speaker Change: But you have certain things that customers don't pay for directly, and what we see is at the end of the year, sometimes the ASCs order a little heavier.
Speaker Change: Right.
Speaker Change: because they're not paying for that inventory.
Speaker Change: And we're rolling out the balance of our ASCs with LAL+.
Speaker Change: in the third and fourth quarter.
Speaker Change: As well, primarily in the third quarter, our inventory is quite balanced and we're able to fulfill the AFCs, so that's really good news. And we're also rolling out, alongside our existing injectors, a disposable injector. I think Ron talked about that a couple quarters ago as well. So we'll have some things like higher shipping costs, and those things can be...
Shelley Thunen: So we'll have some things like higher shipping costs. And those things can be one-time costs; service can go up a little up and down in terms of the costs incurred in a quarter. So I always try and leave room for some period costs as well as disposable.
Speaker Change: One-time cost service can go up a little up and down in terms of the costs incurred in a quarter So I always try and leave room for some period costs as well as mix
Operator: One moment for our next question, and our next question will be coming from Craig Bijou at Bank of America Securities. Your line is open.
Speaker Change: Great. Thanks so much.
Speaker Change: One moment for our next question.
Speaker Change: And our next question will be coming from Craig Bijou of Bank of America Securities. Your line is open.
Craig Bijou: Good afternoon. Thanks for taking the questions. I wanted to follow up on the LAL Plus specifically, and Ron heard your comments on how it's driving LDD sales. And I'm not sure if, with some of your commentary on utilization, you talked about how LAL Plus is impacting that, but I'm curious.
Craig Bejew: Good afternoon. Thanks for taking the questions. I wanted to follow up on
Craig Bejew: on the LAL plus specifically and
Craig Bejew: You know, Ron heard your comments on how it's driving LDD sales, and I'm not sure if, you know, with some of your commentary on utilization, if you talked about how LAL plus is impacting that, but I'm curious. I know you guys are agnostic given the price.
Ronald Kurtz: I know you guys are agnostic, given the price, as to LAL or LAL Plus. But Is it driving, you know, utilization higher because you're seeing more LAL+ use, or maybe just talk about how we should think about the mix from a DOC perspective? Well, I mean, we certainly hope that utilization grows because of LAL+. I mean, we wouldn't have introduced it if we didn't think that, but I don't know that it really makes any difference, you know, what a doctor uses. We really just want them to use an adjustable lens, a light adjustable lens, whether that's an LAL original or an LAL+.
Ron Kurtz: as to LAL or LAL plus but
Speaker Change: Is it driving, you know, is utilization higher because you're seeing more LAL plus use, or maybe just talk about how we should think about the mix from a doc perspective?
Speaker Change: Well, I mean, we certainly hope that utilization grows because of LAL+. I mean, we wouldn't have introduced it if we didn't think that.
Speaker Change: But
Speaker Change: I don't know that it really makes any difference, you know, what a doctor uses. We really just want them to use an adjustable lens, a light adjustable lens, whether that's an LAL original or an LAL plus.
Craig Bijou: And, you know, overall, I think that, you know, different doctors have different opinions, have different, you know, different patient populations, and that will, that will, you know, work itself out over time. But, you know, overall, we have continued very positive reviews, both from the LAL as well as from the... Okay, thanks. Thanks, Ron.
Speaker Change: And, you know, over, I think that, you know, different doctors have different opinions, have different, you know, different patient populations.
Speaker Change: and that will work itself out over time. But overall, we have continued very positive reviews, both from the LAL as well as from the LAL Plus.
Ronald Kurtz: And then maybe following up on some of the international comments that you've been making. I know you've talked about it increasingly over the last few quarters. So, you know, any perspective on timing or some of the markets that you may be targeting? I think we've talked about Asia before, but any perspective on the market and timing of potential approval? Not in terms of market entry.
Speaker Change: Okay, thanks. Thanks, Ron. And then maybe following up on some of the international comments that you've been making. I know you've talked about it.
Speaker Change: increasingly over the last few quarters. So, any perspective on timing or some of the markets?
Speaker Change: that you may be be targeting. I know, I know, I think we've talked about Asia before, but any, any perspective on, you know, market and, and timing of potential approval?
Craig Bijou: Obviously, our focus right now is, as you mentioned, approvals. And we're making progress. You know, I would hope that, you know, we'll continue to be able to update you as the year progresses. But, you know, regulatory approvals are not an exact science. And so I'd like to give us a little bit more time as we continue to make progress. Great. Thanks for taking the questions. Congratulations on the quarter.
Speaker Change: You know, I...
Speaker Change: Not in terms of market entry. Obviously, our focus right now is, as you mentioned, approvals. And we're making progress. I would hope that we'll continue to be able to update you as the year progresses. But regulatory approvals are not an exact science. And so I'd like to give us a little bit more time as we continue to make progress.
Speaker Change: Great. Thanks for taking the questions. Congrats on the quarter.
Operator: One moment for our next question. Our next question is coming from Larry Biegelsen of Wells Fargo. Your line is open.
Speaker Change: Thank you.
Speaker Change: One moment for our next question.
Speaker Change: Our next question is coming from Larry Biegelsen of Wells Fargo. Your line is open.
Lawrence Biegelsen: Hey guys, thanks for taking the question and congrats on the quarter. Ron, I'm curious about your share, and by the way, it looks like, by our math, your share of premium ILLs is over 10% this quarter for the first time. I'm curious about that, you know, 40% number you talked about; do you have any evidence that that is coming from model focal? Is there any evidence that you're expanding the market?
Lawrence Biegelsen: Because I'm looking at the market scope, you know, penetration numbers, and it's been pretty flat now for a few years. So, why wouldn't, if you're 10%, why wouldn't we see, you know, all of us being equal, kind of a 400 basis point increase in the premium ILL market if you're 10%, and, you know, 40% are coming from model focal?
Larry Beagleson: Hey guys, thanks for taking the question and congrats on the quarter. Hey, Ron, I'm curious, you know, your share, and by the way, it looks like it by our math, your share of premium ILLs is, you know, over 10% this quarter for the first time. I'm curious on that, you know, 40% number you talked about.
Speaker Change: Do you have, is there any evidence, you know, that are coming from monofocal? Is there any evidence that you're expanding the market? Because I'm looking at the market scope, you know, penetration numbers, and it's been pretty flat.
Speaker Change: Now for a few years, so why wouldn't, if you're 10%, why wouldn't we see, you know, all this being equal, kind of a 400 basis point increase in premium IOL market if you're 10% and, you know, 40% are coming from monofocal?
Ronald Kurtz: Well, you know, one is that I haven't looked at those numbers. So I think that, you know, those numbers are likely directionally, but, you know, they're still going to be, they may not fully capture our adoption in real life. But also, there are definitional questions, so, you know, that those surveys often look at premium IOLs versus, you know, what we would more define as premium cataract surgery.
Speaker Change: Well you know one is you know I I haven't looked at those numbers so I think that you know those numbers are likely directionally but you know they're they're still going to be
Speaker Change: They may not fully capture our adoption in real time.
Speaker Change: But also, you know, there's definitional questions. So, you know, those surveys often look at premium IOLs.
Speaker Change: versus you know what we would more define as premium cataract surgery. So it's possible that some procedures that are
Ronald Kurtz: So it's possible that some procedures that are, you know, would be more broadly considered patient pay but don't involve a premium IOL. Some of those may be converting to LAL. Again, I can't give specific reasons without looking at the...
Speaker Change: You know, more broadly considered patient pay, but don't involve a premium IOL. Some of those may be converting to LAL.
Speaker Change: Again, I can't give specific reason without looking at the specific survey that you're referring to.
Lawrence Biegelsen: Fair enough.
Speaker Change: Fair enough. Shelley, I don't know if you wanted to add something. I was just looking at the data that's in the MarketScope newsletter.
Shelley Thunen: Yeah, no, and I think you and I have had, you know, a number of conversations about, you know, survey data in particular. And that's what some of the basis of market scope is as well. And we consider them probably the most accurate information that we have access to. And I think that some of it's determined after the fact, and so the projections aren't necessarily, and sometimes the after-the-fact numbers come around three months later, right?
Speaker Change: Yeah.
Speaker Change: No, and I think you and I have had, you know, a number of conversations about, you know, survey data in particular, and that's what some of the basis of market scopes is as well, and we consider them probably the most accurate information that we have access to.
Speaker Change: And I think that some of it's determined after the fact.
Speaker Change: Right, and so the projections aren't necessarily, and sometimes the after the fact numbers come around three months later, right, once everybody's reported and he's had a chance to talk to people.
Shelley Thunen: Once everybody's reported and he's had a chance to talk to people, So, um... We can't really comment on the overall market because we're not large enough yet, but we definitely know that we're building premium access and premium patients inside of our customers. And I think that that's very important to their success and their payback on the LDD.
Speaker Change: We can't really comment on the overall market because we're not large enough yet, but we definitely know that we're building premium access and premium patients inside of our customers. And I think that that's very important to their success and their payback on the LDD.
Lawrence Biegelsen: All right, I'll leave it there. Thanks for taking the question. Congratulations again.
Speaker Change: All right, I'll leave it there. Thanks for taking the question. Congrats again.
Operator: Thank you. One moment for our next question, which is coming from Tom Stephan of DFOR. Your line is open.
Speaker Change: Thank you.
Speaker Change: One moment for our next question, which is coming from Tom Stephan of DFOR. Your line is open.
Thomas Stephan: Great. Hey everyone.
Tom Stephan: Great. Hey, everyone. Thanks for the questions and congrats on a really nice quarter. Maybe just to start on LAL utilization growth, I think year-over-year growth accelerated for the first time in, I believe, well over a year based on our models, calculations. Ron or Shelley, can you talk about what specifically you're seeing?
Thomas Stephan: Thanks for the questions, and congrats on a really nice quarter. Maybe just to start on LAL utilization growth, I think year-over-year growth accelerated for the first time in, I believe, well over a year based on our models calculations. Ron or Shelley, can you talk about what specifically you're seeing that's driving this? And then, maybe more importantly, do you believe there is sustainability in this potential inflection that you saw in 2Q? And when we're tying out our model kind of real-time here, it seems like you expect consistent year over year utilization growth in 3Q. So you know, maybe any comments on the sustainability would be very helpful.
Speaker Change: that's driving this. And then maybe more importantly, do you believe there is sustainability in this potential inflection that you saw in 2Q, and when we're tying out our model kind of real-time here, it seems like you expect in 3Q
Speaker Change: consistent year-over-year utilization growth. So, you know, maybe any comments on the sustainability would be would be very helpful.
Shelley Thunen: I think that I'll start with sustainability rather than the absolute numbers, but what we do see, particularly when we look at our cohorts, you know, as we've talked about multiple times, that our cohort is, the one I look at is based upon year of installation, and those cohorts continue to grow. Our clinical people and our account managers, our LAL account managers, are tasked with working with their individual practices. They each have assignments and practices.
Speaker Change: Yeah, I think that I'll start with sustainability rather than the absolute numbers.
Speaker Change: But what we do see, particularly when we look at our cohorts, you know, as we've talked about multiple times, that our cohort is, the one I look at, is based upon year of install. And those cohorts continue to grow.
Speaker Change: And I think that's an important component as well. Sometimes people ask us, what's the max in a practice? You know, we don't know the answer to that. And certainly these numbers are aggregated.
Speaker Change: And then, of course, the slope of the line in terms of adoption is higher for our newer customers. And if we think about it overall,
Speaker Change: that the most important thing we do with the LAL is continue to get adoption. Certainly, we have customers where we're probably less than 10% of their total volume, because that's voice of customers. Others, where we...
Speaker Change: are approaching 100%. Nothing is absolutely 100%, but we're predominant in those practices.
Speaker Change: Our clinical people and our account managers, our LAL account managers,
Shelley Thunen: They look at their volume, and they come in and retrain if they need to. If new doctors are coming in, they do that. If they have a staff member that's been replaced, they make sure that they have all the digital tools that they need.
Speaker Change: test with working with their individual practices. They each have assignments practices. They look at their volume. They come in and retrain if they need to. If new doctors are coming on, they do that. If they have a staff member that's been replaced, they make sure that they have all the digital tools that they need.
Shelley Thunen: And that's an important component of what we do, to be in front of the customer and make sure they understand the benefits as well as, you know, the fact that LAL Plus came out. The fact that we have a new injector. The fact that we will be expanding the diopter range for LAL Plus. So I think that those are all things that give them an opportunity to call and make sure that we're fulfilling the needs of our customers.
Speaker Change #100: And that's an important component of what we do, is to be in front of the customer and make sure they understand the benefits as well as, you know.
Speaker Change #101: The fact that LAL Plus came out, the fact that we have a new injector, the fact that we will be expanding the diopter range for LAL Plus.
Speaker Change #101: So I think that those are all things that give them an opportunity to call and to make sure that we're fulfilling the needs of our customers.
Shelley Thunen: So I think that that's an important component. And while we do see variability, right, you know, we were at 9.2 in the second quarter of 23, 8.7 in the third, and that is not inconsistent with seasonality. And then up to 10.2 in the fourth quarter and then 10.1 in the first.
Speaker Change #101: I think that that's an important component. And while we do see variability, right,
Speaker Change #101: You know, we were at, you know, 9.2 in the second quarter of 23, 8.7 in the third, and that...
Speaker Change #101: is not inconsistent with seasonality, and then up to 10.2 in the fourth quarter, and then 10.1 in the first. And of course, fourth quarter is typically your strongest, and we had just a really strong quarter in the second quarter.
Speaker Change #101: And we think that that continued growth might be, you know...
Speaker Change #101: [inaudible]
Speaker Change #101: Our ultimate goal is to be 50% of the market, and that's it.
Speaker Change #101: That's a long-term goal, but our first goal is to increase our penetration in each one of our accounts.
Thomas Stephan: That's a great color. Thanks, Shelley. And then my follow up was just
Speaker Change #102: That's great color. Thanks, Shelley. And then my follow-up was just on...
Speaker Change #102: International and specifically Europe . Ron, maybe maybe to pivot to you.
Ron Kurtz: Can you discuss the key differences compared to the U.S. that we should be mindful of?
Speaker Change #103: in terms of the end market and the opportunity. I guess I'm just curious, what specifically gives you sort of the confidence that your success in the US can be replicated in Europe specifically? Thanks.
Ronald Kurtz: Well, I think that, you know, many of us have been involved with launches in Europe. There's...
Speaker Change #104: Well, I think that, you know, as many of us have been involved with launches in Europe , there's...
Ronald Kurtz: It's really not a single market; it's multiple markets, individual markets that each have to be addressed individually, and so that does take some time. We also have a new regulatory environment in Europe, which many companies or all companies are dealing with now, and so that also has added a layer of complexity. But at the end of the day, you know, clinical ophthalmology is the same across the entire country and across the globe. Whether it's Europe or Asia, there's a broad commonality in what patients want and how physicians react to technology. So it's certainly positive, and it's been our experience that if you have success in the U.S., that's a good harbinger of ultimate success outside the U.S.
Speaker Change #105: You know, it's a, it's a...
Speaker Change #105: It's really not a single market. It's multiple markets, individual markets that each have to be addressed individually.
Speaker Change #105: And so that does take some time.
Speaker Change #105: We also have a new regulatory environment in Europe , which, you know, many of the companies or all the companies are dealing with now. And so that also has added a layer of complexity. But at the end of the day, you know,
Speaker Change #107: Clinical Ophthalmology
Speaker Change #107: is the same across the entire country and across the globe, whether it's Europe or Asia. You know, there's a broad...
Speaker Change #107: commonality in what patients want and what and how physicians react to technology. So it's certainly a positive and it's been our experience that if you have success
Speaker Change #107: in the U.S. that that's a good harbinger for ultimate success.
Speaker Change #107: outside the U.S. But because of these individual dynamics within regions, you know, that can be, that can, that doesn't necessarily mean that that happens overnight.
Thomas Stephan: That's great. Thanks, Ron. Thanks, Shelley. Congratulations again.
Speaker Change #108: That's great. Thanks, Ron. Thanks, Shelly. Congrats again.
Ronald Kurtz: I would now like to turn the call back to Ron for his closing remarks.
Speaker Change #108: Thank you.
Speaker Change #108: I would now like to turn the call back to Ron for closing remarks.
Operator: Well, thank you all for your time and attention today. We appreciate your interest in Rxsight and look forward to updating you on our progress in future quarters.
Ron Kurtz: Well, thank you all for your time and attention today. We appreciate your interest in Rxsight and look forward to updating you on our progress in future quarters. Goodbye.
Operator: Goodbye. This concludes today's conference call. Thank you for participating. You may now disconnect. In the name of the Father, and of the Son, and of the Holy Spirit, amen.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? Good day, and thank you for standing by.
Speaker Change #109: This concludes today's conference call. Thank you for participating. You may now disconnect.
Speaker Change #109: [inaudible]
Operator: Welcome to the Rxsight 2nd Quarter 2024 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 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the call over to your speaker, Oliver Moravcevic.
Speaker Change #110: Good day and thank you for standing by. Welcome to the Rxsight 2nd Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode.
Speaker Change #111: After the speaker's presentation, there will be a question and answer session.
Speaker Change #111: To ask a question during the session, you will need to press star 11 on your telephone.
Speaker Change #111: You will then hear an automated message advising that your hand is raised.
Oliver Moravcevic: Presenting today are Rxsight President and Chief Executive Officer, Dr. Ron Kurtz, and Chief Financial Officer, Shelley Thunen. Earlier today, Rxsight released financial results for the three months ended June 30, 2024.
Speaker Change #111: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the call over to your speaker, Oliver Moravcevic. Please go ahead.
Speaker Change #112: Thank you, Operator. Presenting today are Rxsight President and Chief Executive Officer, Dr. Ron Kurtz, and Chief Financial Officer, Shelley Thunen. Earlier today, Rxsight released financial results for the three months ended June 30, 2024. A copy of the press release is available on the company's website.
Oliver Moravcevic: Before we begin, I would like to inform you that comments and responses to questions during today's call reflect management's views as of today, August 5th, 2024, and 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 today and in our filings with the Securities and Exchange Commission, or SEC.
Speaker Change #113: Before we begin, I would like to inform you that comments and responses to questions during today's call reflect management's views as of today, August 5, 2024, and will include forward-looking and opinion statements, including predictions, estimates, plans, expectations, and other information. Thank you.
Speaker Change #113: Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties.
Speaker Change #113: These risks and uncertainties are more fully described in our press release issued today and in our filings with the Securities and Exchange Commission or SEC.
Oliver Moravcevic: Our SEC filings can be found on our website or the SEC's website. Investors are cautioned not to place undue reliance on forward-looking statements, as we disclaim any obligation to update or revise these forward-looking statements, except as may be required by law. We will also discuss certain non-GAAP financial measures; disclosures regarding non-GAAP financial measures, including reconciliations with the most comparable GAAP measures, can be found in the press release. Please note that this conference call will be available for audio replay on our Investor Relations website. With that, I'll turn the call over to our President and Chief Executive Officer, Dr. Ron Kurtz.
Speaker Change #113: Our SEC filings can be found on our website or the SEC's website. Investors are cautioned not to place undue reliance on forward-looking statements.
Speaker Change #113: As we disclaim any obligation to update or revise this forward-looking statement, except as may be required by law. We will also discuss certain non-GAAP financial measures. Disclosures regarding non-GAAP financial measures, including reconciliations with the most comparable GAAP measures, can be found in the press release.
Speaker Change #113: Please note that this conference call will be available for audio replay on our Investor Relations website. With that, I turn the call over to our President and Chief Executive Officer, Dr. Ron Kurtz. Ron?
Ronald Kurtz: Good afternoon, and thank you for joining us. In a moment, Shelley will provide details on our Q2 results, which set new benchmarks for LAL and LDD sales, as well as for overall revenue. While we congratulate and thank both our clinical practice partners and our Rxsight team members for these accomplishments, we also believe they support our long-term thesis that the unique ability to adjust our intraocular lens post-operatively elevates premium cataract surgery, enhancing precision, quality, and customization, and leading more patients to select a high-value premium procedure to achieve top-level clinical outcomes.
Ron Kurtz: Good afternoon and thank you for joining us. In a moment, Shelley will provide details on our Q2 results, which set new benchmarks for LAL and LDD sales, as well as for overall revenue.
Speaker Change #114: While we congratulate and thank both our clinical practice partners and Rxsight team members for these accomplishments, we also believe they support our long-term thesis that the unique ability to adjust our intraocular lens post-operatively elevates premium cataract surgery.
Speaker Change #114: enhancing precision, quality, and customization, and leading more patients to select a high-value premium procedure to achieve top-level clinical outcomes.
Ronald Kurtz: For ophthalmic practices that have experienced persistent reductions in Medicare reimbursements, the LAL premium procedure provides a critical patient pay growth opportunity that is relatively resistant to fluctuations in the economy, unlike procedures such as LASIK that target a younger demographic. Following Shelley's review of our financial performance and guidance, I'll discuss how underlying trends and our continued focus on executions make us confident about Rxsight's near, mid, and long
Speaker Change #114: For ophthalmic practices that have experienced persistent reductions in Medicare reimbursements, the LAL premium procedure provides a critical patient pay growth opportunity that is relatively resistant to fluctuations in the economy, unlike procedures such as LASIK that target a younger demographic.
Speaker Change #115: Following Shelley's review of our financial performance and guidance, I'll discuss how underlying trends and our continued focus on executions make us confident about Rxsight's near, mid, and long-term opportunity.
Shelley Thunen: Thank you, Ron, and good afternoon, everyone. Rxsight generated second quarter 2024 revenue of $34.9 million, up 68% compared to $20.8 million in the year-ago quarter and up 18% compared to $29.5 million in the first quarter of 2024. During the quarter, we sold 24,214 LALs and generated $23.8 million in LAL revenue, 92% and 20% compared to the same year-ago quarter and the first quarter of this year, respectively. In Q2 of this year, LAL revenue represented 68% of total revenue, an increase from 60% in the year-ago period and from 67% in the first quarter of 2024.
Shelley: Thank you, Ron, and good afternoon, everyone.
Speaker Change #116: RxSight generated second quarter 2024 revenue of $34.9 million.
Shelley: Up 68% compared to $20.8 million in the year-ago quarter, and up 18% compared to $29.5 million in the first quarter of 2024.
Speaker Change #117: During the quarter, we sold 24,214 LALs and generated $23.8 million in LAL revenue of 92% and 20% compared
Speaker Change #117: to the same year-ago quarter and the first quarter of this year, respectively.
Speaker Change #117: In Q2 of this year, LAL revenue represented 68% of total revenue, an increase from 60% in the year ago period and from 67% in the first quarter of 2024.
Shelley Thunen: We sold 78 LDDs in the second quarter, up 16% compared to 67 units in the year-ago period and up 18% compared to 66 units in the first quarter of this year. During the period, LDD sales generated revenue of $10.2 million, up 32% versus the second quarter of 2023 and up 17% compared to the first quarter of 2024. As of June 30, 2024, our LDD installed base stood at 810 units, up 55% and 11% versus the year-ago period and the first quarter of 2024, respectively.
Speaker Change #117: We sold 78 LDDs in the second quarter, up 16% compared to 67 units in the year-ago period, and up 18% compared to 66 units in the first quarter of this year.
Speaker Change #117: During the period, LDD sales generated revenue of $10.2 million, up 32% versus the second quarter of 2023, and up 17% compared to the first quarter of 2024.
Speaker Change #117: As of June 30, 2024, our LDD install base stood at 810 units, up 55% and 11% versus the year-ago period and the first quarter of 2024, respectively.
Shelley Thunen: Gross margin in the second quarter of 2024 was 69.5% compared to 57.8% in the same year-ago quarter and 70.1% in the first quarter of 2024. The year-over-year increase reflects the shift in product mix, with higher-margin LAL revenue advancing to 68% of the total, as well as increased margins on our LDD. The sequential change of about 0.5% and within our guidance of annual gross margin of 68 to 70% is due to a slightly lower average selling price for our LDD in the second quarter of just over $130,500 compared to an ASP of $132,000 in the first quarter of 2024. ASPs can vary slightly depending on customer mix, with $130,000 continuing to reflect ASP stability following the 10% LDD price increase we took in the third quarter of 2023.
Speaker Change #117: Growth margin in the second quarter of 2024 was 69.5% compared to 57.8% in the same year-ago quarter and 70.1% in the first quarter of 2024.
Speaker Change #117: The year-over-year increase reflects the shift in product mix, with a higher margin LAL revenue advancing to 68% of the total, as well as increased margins on our LDD.
Speaker Change #117: The sequential change of about 0.5% and within our guidance of annual gross margin of 68-70%
Speaker Change #117: is due to a slightly lower average selling price for our LDD in the second quarter of just over $130,500 compared to an ASP of $132,000 in the first quarter of 2024.
Speaker Change #117: ASPs can vary slightly depending on customer mix, with $130,000 continuing to reflect ASP stability following the 10% LDD price increase we took in the third quarter of 2023.
Shelley Thunen: SG&A expenses in the second quarter of 2024 were $24.3 million, representing an increase of $6.1 million, or 33% versus $18.2 million in the year-ago quarter. This year-over-year change was due primarily to an increase in personnel costs and a higher stock-based compensation expense. On a sequential basis, SG&A expenses increased $1 million, or 4%, due to primarily higher stock-based compensation expense and higher personnel costs. During the second quarter of this year, R&D expenses rose 12% to $8.3 million, compared to $7.4 million in the second quarter of 2023.
Speaker Change #117: SG&A expenses in the second quarter of 2024 were $24.3 million, representing an increase of $6.1 million, or 33% versus $18.2 million,
Speaker Change #117: in the year-ago quarter. This year-over-year change was due primarily to an increase in personnel costs and a higher stock-based compensation expense.
Speaker Change #117: On a sequential basis, SG&A expenses increased $1 million, or 4%, due to primarily higher stock-based compensation expense and higher personnel costs.
Speaker Change #117: During the second quarter of this year, R&D expenses rose 12% to $8.3 million, compared to $7.4 million in the second quarter of 2023.
Shelley Thunen: This year-over-year change was primarily attributable to increased facilities costs and increased stock-based compensation. Compared to the first quarter of 2024, R&D expenses in the second quarter increased by $300,000, or 3%, primarily driven by an increase in stock-based compensation. Our gap net loss in the second quarter of 2024 was $6.1 million, or a loss of $0.16 per basic and diluted share, using weighted average shares at 38.5 million shares. This compares to a gap net loss of $13.9 million, or $0.40 per share, on a basic and diluted basis, in the second quarter of 2023.
Speaker Change #117: This year-over-year change was primarily attributable to increased facilities costs and increased stock-based compensation, compared to the first quarter of 2024 R&D expenses in the second quarter increased by $300,000, or 3%.
Speaker Change #117: primarily driven by an increase in stock-based compensation.
Speaker Change #117: Our gap net loss in the second quarter of 2024 was $6.1 million or a loss of $0.16 per basic and diluted share using weighted average shares at 38.5 million shares.
Speaker Change #117: This compares to a gap net loss of $13.9 million, or $0.40 per share, on a basic and diluted basis in the second quarter of 2023.
Shelley Thunen: Moving to the balance sheet, we ended the second quarter of 2024 with cash, cash equivalents, and short-term investments of $233.3 million compared to $125.4 million on March 31st, 2024. The change in cash balance includes $107.5 million net of fees and expenses from our May confidentially marketed public offering, or CMPO. Turning now to guidance.
Speaker Change #117: Moving to the balance sheet, we ended the second quarter of 2024 with cash, cash equivalents, and short-term investments.
Speaker Change #117: of $233.3 million compared to $125.4 million on March 31, 2024.
Speaker Change #117: The change in cash balance includes $107.5 million net of fees and expenses from our May Confidentially Marketed Public Offering, or CMPO.
Shelley Thunen: Based on our strong second quarter 2024 performance, we are increasing our revenue, operating expense, and non-cash expense guidance as follows. Full year 2024 revenue is now projected to be between $139 and $140 million, an increase from our previous guidance of $132 to $137 million. This represents year-over-year growth of 56 to 57 percent. The revised revenue guidance reflects an increase of $11 million at the low end of the range and $5 million at the high end of the range compared to our initial 2024 guidance set in January.
Speaker Change #117: Turning now to guidance. Based on our strong second quarter 2024 performance, we are increasing our revenue, operating expense, and non-cash expense guidance as follows.
Speaker Change #117: Full year 2024 revenue is now projected to be between $139 and $140 million, an increase from our previous guidance of $132 to $137 million.
Speaker Change #117: This represents year-over-year growth of 56 to 57 percent.
Speaker Change #117: The revised revenue guidance reflects an increase of $11 million at the low end of the range and $5 million at the high end of the range compared to our initial 2024 guidance set in January .
Shelley Thunen: For the remainder of the year, we can continue to anticipate sequential quarterly growth with a nominal increase in Q3, factoring in both a very strong second quarter and typical seasonality in the third quarter due to summer vacations taken by both patients and doctors.
Speaker Change #117: For the remainder of the year, we continue...
Speaker Change #117: continue to anticipate sequential quarterly growth with a nominal increase in Q3 factoring in both a very strong second quarter and typical seasonality in the third quarter due to summer vacations taken by both patients and doctors.
Shelley Thunen: Operating expenses are projected to increase to between $135 and $136 million, up from our previous guidance of $126 to $130 million, or $7.5 million at the midpoint of guidance, and representing an increase of 30 to 31 percent over 2023. The guidance increase is primarily due to higher non-cash stock-based compensation expense, with a remainder of the increase related to continuing investment in sales and marketing and research and development. The non-cash stock-based compensation expenses are now expected to be between $29 million and $30 million, up from our previous guidance of $22 million to $25 million, representing an increase of $5 million at the top and $7 million at the bottom end of the range.
Speaker Change #117: Operating expenses are projected to increase to between $135 and $136 million.
Speaker Change #117: up from our previous guidance of $126 to $130 million or $7.5 million at the midpoint of guidance and representing an increase of 30 to 31% over 2023.
Speaker Change #117: The guidance increase is primarily due to higher non-cash stock-based compensation expense with a remainder of the increase related to continuing investment in sales and marketing and research and development.
Speaker Change #117: The non-cash stock-based compensation expenses are now expected to be between $29 and $30 million.
Speaker Change #117: Up from our previous guidance of $22 to $25 million dollars, representing an increase of $5 million dollars for the top and $7 million dollars at the bottom end of the range.
Shelley Thunen: The increase is due to stock options and restricted stock units, or RSUs, granted at higher per share prices to date. As discussed last quarter, operating expense guidance includes continued efforts to leverage our commercial momentum, grow our educational programs, develop our product pipeline, and expand internationally as regulatory approvals are obtained. Finally, please note that our gross margin guidance range remains unchanged at 68 to 70%, which at the midpoint remains 300 basis points higher than our initial 2024 guidance set in January. Our combined revenue and gross margin increases since our initial guidance in January of 2024, excluding the increase in operating expenses, which are largely non-cash, contributed an additional $7.5 to $11 million to operating income.
Speaker Change #117: The increase is due to stock options and restricted stock units, or RSUs, granted at higher per-share prices to date.
Speaker Change #117: As discussed last quarter, Operating Expense Guidance includes continued efforts to leverage our commercial momentum, grow our educational programs, develop our product pipeline, and expand internationally as regulatory approvals are obtained.
Speaker Change #117: Finally, please note that our Gross Margin Guidance Range remains unchanged at 68-70%.
Speaker Change #117: which at the midpoint remains 300 basis points higher than our initial 2024 guidance set in January .
Shelley Thunen: With that, I'll turn the call back to Ron.
Speaker Change #117: Our combined revenue and gross margin increases since our initial guidance in January of 2024, excluding the increase in operating expenses, which are largely non-cash.
Speaker Change #117: contributed an additional $7.5 to $11 million to operating income. With that, I'll turn the call back to Ron.
Ronald Kurtz: Rxsight's strong Q2 performance, as well as our revised 2024 guidance, is based on our technology's ability to meet the clinical needs of patients and doctors, as well as the business needs of practices. While traditional cataract surgery with fixed intraocular lenses generally delivers good results, the unique ability to non-invasively modify the LAL after surgery based on direct patient feedback enables doctors to deliver a new level of precision and customization, thereby drawing more patients into the premium IOL category, which is the most significant opportunity for practices to offset long-term negative financial trends in their businesses.
Ron Kurtz: Thank you, Shelley. Rxsight's strong Q2 performance, as well as our revised 2024 guidance, is based on our technology's ability to meet the clinical needs of patients and doctors, as well as the business needs of practices.
Speaker Change #118: While traditional cataract surgery with fixed intraocular lenses generally delivers good results, the unique ability to non-invasively modify the LAL after surgery based on direct patient feedback enables doctors to deliver a new level of precision and customization.
Speaker Change #118: thereby drawing more patients into the premium IOL category which is the most significant opportunity for practices to offset long-term negative financial trends in their businesses.
Ronald Kurtz: The aging population in the U.S. and other developed countries continues to put pressure on health care systems to reduce reimbursements to providers, particularly in eye care. Patient-paid procedures like LASIK, that may offset some of these effects, have proven to be inconsistent revenue replacements as they appeal to a younger demographic whose decisions are easily deferred during downturns in the economy. In contrast, the expanding demographic of patients considering cataract surgery cannot easily defer the procedure indefinitely because reduced vision interferes with daily activities, has been linked to an increased risk for falls, and recently was added as a modifiable risk factor for dementia.
Speaker Change #118: The aging of the population in the U.S. and other developed countries continues to put pressure on health care systems to reduce reimbursements to providers, particularly in eye care.
Speaker Change #118: Patient pay procedures like LASIK that may offset some of these effects have proven to be inconsistent revenue replacements as they appeal to a younger demographic whose decisions are easily deferred during downturns in the economy.
Speaker Change #118: In contrast, the expanding demographic of patients considering cataract surgery cannot easily defer the procedure indefinitely. Reduced vision interferes with daily activities, has been linked to an increased risk for falls, and recently was added as a modifiable risk factor for dementia.
Ronald Kurtz: Driven by social, work, and lifestyle factors, this population has developed high expectations for vision without glasses and is best positioned financially to consider a patient-pay premium eye well procedure. The potential for practices to convert more patients from their most commonly performed but poorly reimbursed conventional cataract procedure to their highest revenue and highly profitable premium procedure is a major reason why these businesses have invested in LDD technology and infrastructure for most, if not all, of their locations that serve cataract patients.
Speaker Change #118: Driven by social, work, and lifestyle factors, this population has developed high expectations for vision without glasses and is best positioned financially to consider a patient pay premium eye a while procedure.
Speaker Change #118: The potential for practice is to convert more patients from their most commonly performed but poorly reimbursed conventional cataract procedure.
Speaker Change #119: to their highest revenue and highly profitable premium procedure is a major reason why these businesses have and we believe will continue to invest in LDD technology and infrastructure for most, if not all, of their locations that serve cataract patients.
Ronald Kurtz: With a total installed base of just over 800 LDDs in the U.S. and Canada, we believe we are still in the early phase of penetration into these clinical sites. As practices acquire and become familiar with adjustable lens technology, our focus is on continued growth in LAL procedures by leveraging the expanded human and physical infrastructure for post-operative light treatment. We continue to see growth in monthly utilization across the installed base, with the most recent expansion to 11 LALs per LDD per month in the seasonally strong second quarter, up from 10.1 LALs per LDD per month in Q1 of this year.
Speaker Change #119: With a total installed base of just over 800 LDDs in the U.S. and Canada, we believe we are still in the early phase of penetration of these clinical sites.
Speaker Change #119: As practices acquire and become familiar with adjustable lens technology, our focus is on continued growth in LAL procedures by leveraging the expanded human and physical infrastructure for post-operative light treatments.
Speaker Change #119: We continue to see growth in monthly utilization across the installed base, with the most recent expansion to 11 LALs per LDD per month in the seasonally strong second quarter, up from 10.1 LALs per LDD per month in Q1 of this year.
Ronald Kurtz: We believe the growing clinical awareness and experience that has driven this trend over the last several years has been accelerated by our strategic clinical and marketing experts. These experts help practices effectively integrate and utilize adjustable technology to improve patient outcomes and grow profitable practice revenue. Continued technological development is another key mechanism for growing adoption, with the LAL Plus being the latest example. Now midway through its rollout in the U.S., we continue to receive positive feedback from patients and doctors who appreciate its rapid visual rehabilitation and optical quality, with a growing body of data now being presented at clinical conferences.
Speaker Change #119: We believe the growing clinical awareness and experience that has driven this trend over the last several years has been accelerated by our strategic clinical and marketing teams.
Speaker Change #119: These experts help practices effectively integrate and utilize adjustable technology to improve patient outcomes and grow profitable practice revenue.
Speaker Change #119: Continued technology development is another key mechanism for growing adoption, with the LAL Plus being the latest example.
Speaker Change #119: Now, midway through its rollout in the U.S., we continue to receive positive feedback from patients and doctors who appreciate its rapid visual rehabilitation and optical quality, with a growing body of data now being presented at clinical conferences.
Ronald Kurtz: The addition of LAL Plus also continues to be a catalyst for LDD sales, as practices see another reason to add adjustability to their product offerings. As part of our ongoing commitment to innovation, we are pleased to announce FDA approval for an extension of the spherical refractive power range for LAL+, from minus 2 to plus 3 diopter, providing Rxsight with the broadest spherical power range of any astigmatism correcting eye well in the U.S. When coupled with adjustability, this may be particularly useful in highly nearsighted eyes that also typically have less predictable outcomes after surgery.
Speaker Change #119: The addition of LAL Plus also continues to be a catalyst for LDD sales as practices see another reason to add adjustability to their product offerings.
Speaker Change #119: As part of our ongoing commitment to innovation, we are pleased to announce FDA approval for an extension of the Spherical Refractive Power Range for LAL+, from minus 2 to plus 3 diopters.
Speaker Change #119: providing Rxsight with the broadest spherical power range of any astigmatism correcting eye well in the U.S.
Speaker Change #119: When coupled with adjustability, this may be particularly useful in highly nearsighted eyes that also typically have less predictable outcomes after surgery.
Ronald Kurtz: Commercial distribution of the expanded power range is anticipated toward the end of 2024. Meanwhile, while our primary focus remains on fully developing the U.S. market, we continue to make progress towards expanding our international regulatory approvals in countries that have already adopted premium IOL. Given that Rxsight's adjustable IOL technology uniquely addresses globally relevant clinical and business needs, these markets can provide additional growth opportunities. Taken together, we believe we are very well positioned for sustained growth in the years to come and look forward to updating you on our continued progress. With that, I'll ask the operator to open the call for questions.
Speaker Change #119: Commercial distribution of the expanded power range is anticipated toward the end of 2024.
Speaker Change #119: While our primary focus remains on fully developing the US market, we continue to make progress towards expanding our international regulatory approvals in countries that have already adopted premium IOLs.
Speaker Change #119: Given that Rxsight's adjustable IOL technology uniquely addresses globally relevant clinical and business needs, these markets can provide additional growth opportunities.
Speaker Change #119: Taken together, we believe we are very well positioned for sustained growth in the years to come and look forward to updating you on our continued progress.
Speaker Change #120: With that, I'll ask the operator to open the call for questions.
Operator: Certainly. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And one moment for our first question. Our first question will be from Ryan Zimmerman.
Speaker Change #121: Certainly. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And one moment for our first question.