Q2 2024 STAAR Surgical Co Earnings Call

August 7, 2024

August 7th 2024.

Speaker Change: During todays presentation, all parties will be in a listen only mode.

Following the presentation management will be taking questions for the Q&A section of today's session. We will be utilizing the raise 10 feature.

If you would like to ask a question simply click on the raise hand button at the bottom of the screen.

Once you have been invited to please on mute yourself and begin with your question.

I would now like to introduce your host Brian Moore, Vice President of Investor Relations for STAAR surgical.

Brian Moore: Thank you moderator good afternoon, everyone and thank you for joining us to discuss the Companys financial results for the second quarter ended June 28, 2020 for today's speakers are Tom Frenzy Chair of the board, President and CEO and Patrick Williams, Chief Financial Officer.

The press release of our second quarter results was issued just after four P M Eastern time.

We have posted a copy of today's earnings release and earnings presentation to the Investor Relations section.

Brian Moore: The <unk> website at investors don't Star Dot Com.

Speaker Change: Before we begin let me quickly remind you that the Companys comments. During this call will include forward looking statements.

We caution you that any statement that is not a statement of historical fact is a forward looking statement. This includes remarks about the company's projections expectations plans beliefs and prospects.

These statements are based on judgment analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward looking statements.

The risks and uncertainties associated with these forward looking statements are described in the Safe Harbor statement in today's press release as well as staar's public periodic filings with the SEC.

Except as required by law STAAR assumes no obligation to update these forward looking statements to reflect future events or actual outcomes and does not intend to do so.

Speaker Change: In addition on this call and in the press release, we discuss certain non-GAAP financial measures, including adjusted EBITDA adjusted EBITDA per share.

We also provide sales data in constant currency definitions and reconciliations to GAAP are included in today's press release.

For brevity, unless otherwise specified all comparisons on today's call will be on a year over year basis versus the relevant period.

Following our prepared remarks, we will open the webcast to questions from publishing analysts.

Publishing analysts. Please astor two initial questions. When your line is on mute. It then raise your hand again for any follow ups.

Speaker Change: Finally, we intend to use our website as a means of disclosing material nonpublic information and for complying with our disclosure obligations under regulation FD.

Brian Moore: Such disclosures will be included on our website in the Investor Relations section Accordingly investors should monitor our Investor Web site. In addition to following our press releases SEC filings and public conference calls and webcast.

Tom frankly: And with that I would now like to turn the presentation over to Tom frankly.

Brian Moore: Tom.

Tom Frenzy: Thank you Brian.

Tom: Good afternoon, everyone Star reported record net sales of $99 million.

Tom: Constant currency basis, we delivered our first ever $100 million quarter.

Speaker Change: We exceeded our sales outlook for the second quarter of 2024, demonstrating continued global adoption of our proprietary Evo ICL lens based technology.

Speaker Change: I am proud of our organization my thanks to our global Star teams for a record breaking quarter and a strong first half our.

Speaker Change: Our company is growing and we are winning market share throughout the business cycle for the quarter, we generated year over year and sequential sales growth in the U S and China, the two largest markets in the world for refractive procedures.

We are executing well against our strategy driving increased commercial momentum and benefitting from the inherent leverage in Starz business model. As a result, we are raising our fiscal 2020 for outlook for both net sales and adjusted EBITDA for.

For fiscal 2024, we now expect net sales of approximately 340 million to $345 million and adjusted EBITDA of approximately $42 million.

Speaker Change: I attribute our commercial momentum to the investments we have made to accelerate uptake of.

Speaker Change: Of our Evo ICL lenses. This includes three main areas of focus.

Speaker Change: First making it easier for sure.

Speaker Change: Surgeons to choose Eva increasing surging confidence and measurement of the eye and lend size selection by surrounding our surgeon customers with education activities, including peer review publications practice development and robust training.

Speaker Change: Second broadening the email market opportunity, we are moving down the diopter curve and as a result are beginning to realize our near term goal of becoming the choice for surgeons and their patients minus six diopters of myopia and above.

<unk> sales execution, including landing strategic agreements supporting health care professional level marketing campaigns, and amplifying compelling proof points, which demonstrates a patient and practice benefits of selecting the evo procedure and third driving innovation.

Speaker Change: And key technical and product areas of our business, which I will discuss later in more detail.

Speaker Change: Turning to our performance by region in our Americas region, we generated sales growth at 14% <unk>.

Speaker Change: Including U S sales growth of 25% year over year and 10% sequentially.

Speaker Change: Our focus on the U S business with an emphasis on key accounts through our highway 93 initiative is bearing fruit.

Speaker Change: We are effectively seeding the market by establishing meaningful relationships with some of the most influential and high volume surgeons in the United States the.

Operator: is being recorded today, Wednesday, 7 August 2024. During today's presentation, all parties will be in a listen-only mode. Following the presentation, management will be taking questions. For the Q&A section of today's session, we will be utilizing the Raise Hand feature. If you would like to ask a question, simply click on the Raise Hand button at the bottom of the screen. Once you have been invited to, please unmute yourself and begin with your question. I would now like to introduce your host, Brian Moore, Vice President of Investor Relations, for STAAR Surgical.

The progress is evident in our U S sales results for the second quarter and first half of 2024.

Marketing Campaigns and Amplifying Compelling Proof Points, which demonstrate the patient and practice benefits of selecting the EVO procedure. And third, driving innovation in key technical and product areas of our business, which I will discuss later in more detail.

Speaker Change: And U S Highway 93 accounts for the second quarter was 29% 10 percentage points above the 19% growth of non highway 93 accounts.

Speaker Change: In EMEA, we generated 10% sales growth exceeding our outlook growth was driven by the middle East European distributor markets and Spain.

Turning to our performance by region, in our America's region, we generated sales growth at 14%.

Including U.S. sales growth of 25% year-over-year and 10% sequentially. Our focus on the U.S. business, with an emphasis on key accounts through our Highway 93 initiative, is bearing fruit.

Speaker Change: These are markets, where we have invested in store personnel and new initiatives and we are encouraged by our results given the macroeconomic backdrop and conflicts in the region.

Brian Moore: Thank you, moderator. Good afternoon, everyone, and thank you for joining us to discuss the company's financial results for the Q2 ended 28 June 2024. Today's speakers are Tom Frinzi, Chair of the Board, President, and CEO, and Patrick Williams, Chief Financial Officer. The press release of our Q2 results was just issued after 4:00PM Eastern Time. We have posted copies of today's earnings release and earnings presentation to the investor relations section of STAAR's website at investors.staar.com. Before we begin, let me quickly remind you that the company's comments during this call will include forward-looking statements. We caution you that any statement that is not a statement of historical fact is a forward-looking statement. This includes remarks about the company's projections, expectations, plans, beliefs, and prospects.

Speaker Change: In APAC, we generated sales growth of 6% year over year and 37% sequentially.

We are effectively seeding the market by establishing meaningful relationships with some of the most influential and high-volume surgeons in the United States.

Speaker Change: By country in China, we entered the high season for Evo ICL implants in early June when many young people elect to have a refractive procedure in the second quarter, our sequential sales growth in China was consistent with our expectations and similar to historical trends since.

The progress is evident in our U.S. sales results for the second quarter and first half of 2024.

Growth in U.S. Highway 93 accounts for the second quarter was 29%, 10 percentage points above the 19% growth of non-Highway 93 accounts.

Speaker Change: 2018.

Speaker Change: Today, we're halfway through the high season.

In EMEA, we generated 10% sales growth, exceeding our outlook. Growth was driven by the Middle East, European distributor markets, and Spain.

We remain encouraged by Evo in market activity.

Speaker Change: Our positive sales growth in China illustrates the advantages of Evo ICL in a market, where the predominant legacy refractive procedure laser vision correction is down about 10% for the first half of 2024.

These are markets where we have invested in STAAR personnel and new initiatives, and we are encouraged by our results given the macroeconomic backdrop and conflicts in the region.

Brian Moore: These statements are based on judgment and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties associated with these forward-looking statements are described in the safe harbor statement in today's press release, as well as STAAR's public periodic filings with the SEC. Except as required by law, STAAR assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. In addition, on this call and in the press release, we discuss certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA per share. We also provide sales data in constant currency. Definitions and reconciliations to GAAP are included in today's press release.

Speaker Change: For fiscal 2024, we remain on track to achieve annual sales growth of approximately 10% in China, which would represent China sales over $200 million.

In APAC, we generated sales growth of 6% year-over-year and 37% sequentially.

By country, in China, we entered the high season for Evo-ICL implants in early June when many young people elect to have a refractive procedure.

Speaker Change: Another significant milestone for star and our China team.

Speaker Change: Turning to Japan, where our Evo ICL commands the largest market share as the standard of care for refractive vision correction, we continue to grow very nicely in this market despite currency headwinds from a weak yen sales in the second quarter for Japan were up 14% with units.

In the second quarter, our sequential sales growth in China was consistent with our expectations and similar to historical trends since 2018. Today we are halfway through the high season, and we remain encouraged by Evo in-market activity.

Our positive sales growth in China illustrates the advantages of EVO ICL in a market where the predominant legacy refractive procedure, laser vision correction, is down about 10% for the first half of 2024.

Speaker Change: Significantly higher.

Speaker Change: The Japan market, where we sell direct to an organization of approximately 50 star professionals continues to benefit from the enthusiastic key opinion leaders with a high level of confidence in the Evo procedure.

Brian Moore: For brevity, unless otherwise specified, all comparisons on today's call will be on a year-over-year basis versus the relevant period. Following our prepared remarks, we will open the webcast to questions from publishing analysts. Publishing analysts, please ask your two initial questions when your line is unmuted, then raise your hand again for any follow-ups. Finally, we intend to use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosure will be included on our website in the investor relations section. Accordingly, investors should monitor our investor website in addition to following our press releases, SEC filings, and public conference calls and webcasts. With that, I would now like to turn the presentation over to Tom Frinzi. Tom?

For Fiscal 2024, we remain on track to achieve annual sales growth of approximately 10% in China, which would represent China's sales over $200 million, another significant milestone for STAAR and our China team.

Speaker Change: Turning to South Korean we generated 20% sales growth in the second quarter.

Speaker Change: First ICL only clinics in South Korea opened earlier this year and is off to a good start.

Speaker Change: We anticipate the clinic could be the first of many ICL only clinics in South Korea. Following the path of successful ICL only clinics that already exist and thrive in China and Japan.

Turning to Japan, where our evoICL commands the largest market share as the standard of care for refractive vision correction. We continue to grow very nicely in this market.

Speaker Change: Globally, our Evo ICL lens technology continues to outpace the growth of laser vision correction procedures, including Lasik P. RK and smile the commercial momentum I just outlined indicates that our lens technology is firing on all cylinders, we're successfully moving down a diet.

Despite currency headwinds from a weak yen, sales in the second quarter for Japan were up 14%, with units significantly higher.

The Japan market, where we sell direct to an organization of approximately 50 STAAR professionals, continues to benefit from the enthusiastic key opinion leaders with a high level of confidence.

Speaker Change: Occur to lower levels of vision correction, we're expanding the overall growth opportunity for our proprietary lenses winning over both surgeons and patients and we are taking market share in the process. The average diopter of Evo ICL sold in the first half of 'twenty 'twenty four globally was minus <unk> <unk>.

Tom Frinzi: Thank you, Brian. Good afternoon, everyone. STAAR reported record net sales of $99 million. On a constant currency basis, we delivered our first-ever $100 million quarter. We exceeded our sales outlook for Q2 2024, demonstrating continued global adoption of our proprietary EVO ICL lens-based technology. I am proud of our organization. My thanks to our global STAAR teams for a record-breaking quarter and a strong first half. Our company is growing, and we are winning market share throughout the business cycle. For the quarter, we generated year-over-year and sequential sales growth in the US and China, the two largest markets in the world for refractive procedures. We are executing well against our strategy, driving increased commercial momentum and benefiting from the inherent leverage in STAAR's business model.

and the EVO procedure.

Attorney in South Korea, we generated 20% sales growth in the second quarter.

The first ICL-only clinic in South Korea opened earlier this year and is off to a good start.

We anticipate the clinic could be the first of many ICL only clinics in South Korea following the path of successful ICL only clinics that already exist and thrive in China and Japan

Speaker Change: Eight two diopters of half a diopter lower than fiscal 2023 finally, our mix of lenses sold minus eight diopters and below increased three points to 35% in the first half of 2024.

Globally, our EVO ICL lens technology continues to outpace the growth of laser vision correction procedures, including LASIK, PRK, and SMILE.

Speaker Change: This progress increases our total addressable market and has contributed to a continuing market share gains globally.

The commercial momentum I just outlined indicates that our lens technology is firing on all cylinders.

Speaker Change: We are not letting up on the initiatives and strategic priorities that we've been telling you about is they are effectively strengthening our results and market position for near and long term you see that reflected in the first half and Q2 results we reported today.

We're successfully moving down the diopter curve to lower levels of vision correction. We're expanding the overall growth opportunity for our proprietary lenses, winning over both surgeons and patients, and we are taking market share in the process.

Tom Frinzi: As a result, we are raising our fiscal 2024 outlook for both net sales and adjusted EBITDA. For fiscal 2024, we now expect net sales of approximately $340 million to $345 million and adjusted EBITDA of approximately $42 million. I attribute our commercial momentum to the investments we have made to accelerate uptake of our EVO ICL lenses. This includes three main areas of focus. First, making it easier for surgeons to choose EVO, increasing surgeon confidence in measurement of the eye and lens size selection by surrounding our surgeon customers with education activities, including peer review publications, practice development, and robust training. Second, broadening the EVO market opportunity.

Speaker Change: Following Patrick's detailed review of our financial results I will update you on some additional initiatives that illustrate our company's immense growth opportunity.

The average diopter of Evo ICL sold in the first half of 2024 globally was minus 8.2 diopters.

a half a diopter lower than fiscal 2023. Finally, our mix of lenses sold minus eight diopters and below increased three points to 35% in the first half of 2024.

Speaker Change: Patrick.

Patrick Williams: Thank you Tom and good afternoon, everyone.

Patrick Williams: Total net sales for Q2 2024, our seasonally strongest quarter were $99 million as compared to net sales of $92 3 million in the prior year quarter.

This progress increases our total addressable market and is contributing to our continuing market share gains globally.

Patrick Williams: The $6 7 million increase in Q2 2024, net sales is attributable to a 7% or $6 3 million increase in ICL sales and a <unk> 4 million increase in other products.

We are not letting up on the initiatives and strategic priorities that we've been telling you about, as they are effectively strengthening our results and market position near and long term.

Patrick Williams: Constant currency net sales for Q2, 2024 were $100 4 million up nine.

Speaker Change: 9% as compared to the prior year period.

You see that reflected in the first half. NQ-2 results were reported today. Following Patrick's detailed review of our financial results, I will update you on some additional initiatives that illustrate our company's immense growth opportunity. Patrick?

Patrick Williams: Which adjust for FX headwinds due to the strong U S dollar and our second largest sales market today, Japan.

Tom Frinzi: We are moving down the diopter curve and as a result, are beginning to realize our near-term goal of becoming the choice for surgeons and their patients -6 diopters of myopia and above via sales execution, including landing strategic agreements, supporting healthcare professional-level marketing campaigns, and amplifying compelling proof points, which demonstrate the patient and practice benefits of selecting the EVO procedure. Third, driving innovation in key technical and product areas of our business, which I will discuss later in more detail. Turning to our performance by region. In our Americas region, we generated sales growth of 14%, including US sales growth of 25% year-over-year and 10% sequentially. Our focus on the US business, with an emphasis on key accounts through our Highway 93 initiative, is bearing fruit.

Speaker Change: For Q2, 2024 gross profit was $78 4 million or <unk> 79, 2% of net sales as compared to gross profit of $70 $7 million or 76, 6% of net sales for the prior year quarter and $61 million or <unk> 78, 9% of net sales for Q1 2024.

Patrick: Thank you, Tom, and good afternoon, everyone.

Patrick: Total net sales for Q2 2024, our seasonally strongest quarter, were $99 million, as compared to net sales of $92.3 million in the prior year quarter.

Speaker Change: Sure.

Speaker Change: The year over year increase in gross margin is primarily due to changes in reserves related to a cataract <unk> in the prior year quarter.

Patrick: The $6.7 million increase in Q2 2024 net sales is attributable to a 7% or $6.3 million increase in ICL sales and a $0.4 million increase in other products.

Speaker Change: As a reminder, the company exited its cataract IOL business in fiscal 2023.

Speaker Change: For 2024, we continue to expect gross margin will be approximately 80% for each remaining quarter.

Patrick: Constant currency net sales for Q2 2024 were $100.4 million, up 9% as compared to the prior year period, which adjusts for FX headwinds due to the strong U.S. dollar and our second largest sales market today, Japan.

Speaker Change: Moving down the income statement total operating expenses for Q2, 2024 were $66 5 million as compared to $62 1 million in the prior year quarter and $63 $3 million in Q1 2024.

Patrick: For Q2 2024, gross profit was $78.4 million, or 79.2% of net sales, as compared to gross profit of $70.7 million, or 76.6% of net sales.

Tom Frinzi: We are effectively seeding the market by establishing meaningful relationships with some of the most influential and high volume surgeons in the United States. The progress is evident in our US sales results for Q2 and first half of 2024. Growth in US Highway 93 accounts for Q2 was 29%, 10 percentage points above the 19% growth of non-Highway 93 accounts. In EMEA, we generated 10% sales growth, exceeding our outlook. Growth was driven by the Middle East, European distributor markets, and Spain. These are markets where we have invested in star personnel and new initiatives, and we are encouraged by our results, given the macroeconomic backdrop and conflicts in the region. In Asia Pacific, we generated sales growth of 6% year-over-year and 37% sequentially.

Speaker Change: The increase in operating expenses reflects our decision to lean into investments to build the market for Evo ICL as we lay a foundation for future growth and margin expansion.

Patrick: for the prior year quarter, and $61 million, or 78.9% of net sales for Q1 2024. The year-over-year increase in gross margin is primarily due to changes in reserves related to cataract IOLs in the prior year quarter.

Speaker Change: Including surgeon education tools to improve surgeon experience and investments in sales teams to drive long term growth.

Speaker Change: Taking a closer look at the components of operating expenses G&A expense for Q2, 2024 was $23 6 million.

Speaker Change: As a reminder, the company exited its Cataract IOL business in fiscal 2023.

Speaker Change: Compared to $18 1 million in the prior year quarter, and $23 2 million in Q1 2024.

Speaker Change: For 2024, we continue to expect gross margin will be approximately 80% for each remaining quarter.

Speaker Change: The year over year increase in G&A is primarily due to increased compensation related expenses facilities costs and outside services.

Speaker Change: Moving down the income statement, total operating expenses for Q2 2024 were $66.5 million as compared to $62.1 million in the prior year quarter and $63.3 million in Q1 2024.

Speaker Change: For 2024, we continue to expect G&A expense to be approximately $24 million per quarter.

Speaker Change: Selling and marketing expense was $28 8 million for Q2, 2024 compared to $32 3 million in the prior year quarter and $26 $7 million in Q1 2024.

Speaker Change: The increase in operating expenses reflects our decision to lean into investments to build the market for Evo ICL as we lay a foundation for future growth and margin expansion.

Tom Frinzi: By country, in China, we entered the high season for EVO ICL implants in early June, when many young people elect to have a refractive procedure. In Q2, our sequential sales growth in China was consistent with our expectations and similar to historical trends since 2018. Today, we are halfway through the high season, and we remain encouraged by EVO in-market activity. Our positive sales growth in China illustrates the advantages of EVO ICL in a market where the predominant legacy refractive procedure, laser vision correction, is down about 10% for 1H 2024. For fiscal 2024, we remain on track to achieve annual sales growth of approximately 10% in China, which would represent China's sales over $200 million. Another significant milestone for STAAR and our China team.

Speaker Change: including Surgeon Education, Tools to Improve Surgeon Experience and Investments and Sales Teams to Drive Long-Term Growth.

Speaker Change: The decrease in selling and marketing expenses from the prior year was due to lower marketing promotion and advertising activities as the company shifted brand awareness dollars to marketing activities at the practice level.

Speaker Change: Taking a closer look at the components of operating expenses, G&A expense for Q2 2024 was $23.6 million compared to $18.1 million in the prior year quarter and $23.2 million in Q1 2024.

Speaker Change: The sequential increase in selling and marketing expenses related to the variable marketing and promotion activities associated with our higher sales in the second quarter.

Speaker Change: The year-over-year increase in GNA is primarily due to increased compensation-related expenses, facilities costs, and outside services.

Speaker Change: For 2024, we continue to expect selling and marketing expense will be approximately $30 million per quarter.

Speaker Change: Research and development expense was $14 1 million for Q2, 2024 compared to $11 $8 million in the prior year quarter and $13 4 million for Q1 2024.

Speaker Change: For 2024, we continue to expect G&A expense to be approximately $24 million per quarter.

Speaker Change: Selling and marketing expense was $28.8 million for Q2 2024 compared to $32.3 million in the prior year quarter and $26.7 million in Q1 2024.

Speaker Change: The year over year increase in R&D is due to compensation related expenses, partially offset by lower clinical trial costs.

Tom Frinzi: Turning to Japan, where our EVO ICL commands the largest market share as the standard of care for refractive vision correction. We continue to grow very nicely in this market. Despite currency headwinds from a weak yen, sales in Q2 for Japan were up 14%, with units significantly higher. The Japan market, where we sell direct through an organization of approximately 50 STAAR professionals, continues to benefit from the enthusiastic key opinion leaders with a high level of confidence in the EVO procedure. Turning to South Korea, we generated 20% sales growth in Q2. The first ICL-only clinic in South Korea opened earlier this year and is off to a good start. We anticipate the clinic could be the first of many ICL-only clinics in South Korea, following the path of successful ICL-only clinics that already exist and thrive in China and Japan.

Speaker Change: For the second half of 2024, we now expect R&D expense to be slightly up at approximately $15 million per quarter.

Speaker Change: The decrease in selling and marketing expenses from the prior year was due to lower marketing, promotion, and advertising activities as the company shifted brand awareness dollars to marketing activities at the practice level.

Speaker Change: Reflecting focused investments in AI related technology innovations independent investigator studies, and global education and training to accelerate adoption of Evo ICL.

Speaker Change: The sequential increase in selling and marketing expense is related to the variable marketing and promotion activities associated with our higher sales in the second quarter.

Speaker Change: For Q2, 2024, GAAP net income was $7 4 million or <unk> 15 earnings per diluted share compared to net income of $6 1 million or 12 earnings per diluted share in the prior year quarter.

Speaker Change: For 2024, we continue to expect selling and marketing expense will be approximately $30 million per quarter.

Speaker Change: Research and development expense was $14.1 million for Q2 2024 compared to $11.8 million in the prior year quarter and $13.4 million for Q1 2024.

Speaker Change: Adjusted EBITDA of $22 5 million or <unk> 45 per diluted share for Q2, 2024 compared to adjusted EBITDA of $18 3 million or <unk> 37 per diluted share in the prior year quarter.

Speaker Change: The year-over-year increase in R&D is due to compensation-related expenses partially offset by lower clinical trial costs.

Speaker Change: As Tom said, we are raising our fiscal 2024 sales outlook $5 million to a range of 340 million to $345 million, which contemplates industry leading growth in all key markets.

Speaker Change: For the second half of 2024, we now expect R&D expense to be slightly up at approximately $15 million per quarter.

Speaker Change: Reflecting focused investments in AI-related technology innovations, independent investigator studies, and global education and training to accelerate adoption of Evo ICL.

Tom Frinzi: Globally, our EVO ICL lens technology continues to outpace the growth of laser vision correction procedures, including LASIK, PRK, and SMILE. The commercial momentum I just outlined indicates that our lens technology is firing on all cylinders. We're successfully moving down the diopter curve to lower levels of vision correction. We're expanding the overall growth opportunity for our proprietary lenses, winning over both surgeons and patients, and we are taking market share in the process. The average diopter of EVO ICL sold in 1H 2024 globally was -8.2 diopters, a half a diopter lower than fiscal 2023. Finally, our mix of lenses sold -8 diopters and below increased 3 points to 35% in 1H 2024. This progress increases our total addressable market and is contributing to our continuing market share gains globally.

Speaker Change: For the third quarter of 2024, we anticipate net sales of approximately $87 million.

Speaker Change: We also anticipate the U S sales of approximately 5 million to $5 5 million in the third quarter, reflecting summer seasonality.

Speaker Change: For Q2 2024, GAAP net income was $7.4 million, or $0.15 earnings per diluted share, compared to net income of $6.1 million, or $0.12 earnings per diluted share in the prior year quarter.

Speaker Change: Followed by a reacceleration of U S sales in the fourth quarter above our Q2 results of $5 5 million.

Speaker Change: Adjusted EBITDA of $22.5 million, or $0.45 per diluted share for Q2 2024, compared to adjusted EBITDA of $18.3 million, or $0.37 per diluted share in the prior year quarter.

Speaker Change: Based on our higher sales outlook, we are raising our full year adjusted EBITDA by approximately $3 million and now anticipate adjusted EBITDA to be approximately $42 million for fiscal 2024.

Speaker Change: Using approximately 52 million shares outstanding our outlook for adjusted EBITDA per diluted share is now approximately <unk> 80 per share up from approximately 75 previously.

Speaker Change: As Tom said, we are raising our fiscal 2024 sales outlook $5 million to a range of $340 million to $345 million, which contemplates industry-leading growth in all key markets.

Speaker Change: A reconciliation of non-GAAP financial measures is shown in today's earnings press release and earnings presentation.

Speaker Change: For the third quarter of 2024, we anticipate net sales of approximately $87 million.

Speaker Change: For modeling purposes. Please refer to slide 21, and 'twenty two of this earnings presentation for additional detail and specific line item updates.

Speaker Change: We also anticipate the U.S. sales of approximately $5 million to $5.5 million in the third quarter, reflecting summer seasonality.

Tom Frinzi: We are not letting up on the initiatives and strategic priorities that we've been telling you about, as they are effectively strengthening our results and market position near and long term. You see that reflected in the first half and Q2 results we reported today. Following Patrick's detailed review of our financial results, I will update you on some additional initiatives that illustrate our company's immense growth opportunity. Patrick.

Speaker Change: By region, you can see the increase to our outlook in the Americas up 15% driven by U S growth outlook of 25% versus 10% previously.

Speaker Change: followed by a re-acceleration of U.S. sales in the fourth quarter above our Q2 results of $5.5 million.

Speaker Change: In EMEA, where we now expect 6% growth versus flat growth in our prior outlook.

Speaker Change: We continue to expect 7% growth in our APAC region, which would be the fastest growth for the refractive industry in this key region.

Speaker Change: Using approximately 52 million shares outstanding, our outlook for adjusted EBITDA per diluted share is now approximately $0.80 per share, up from approximately $0.75 previously.

Speaker Change: For fiscal 2024 hour new increased outlook for the U S represents about half of the $5 million increase in our new outlook for global net sales.

Patrick Williams: Thank you, Tom, and good afternoon, everyone. Total net sales for Q2 2024, our seasonally strongest quarter, were $99 million as compared to net sales of $92.3 million in the prior year quarter. The $6.7 million increase in Q2 2024 net sales is attributable to a 7% or $6.3 million increase in ICL sales and a $0.4 million increase in other products. Constant currency net sales for Q2 2024 were $100.4 million, up 9% as compared to the prior year period, which adjusts for FX headwinds due to the strong US dollar and our second-largest sales market today, Japan.

Speaker Change: Turning now to our balance sheet, our cash cash equivalents and investments available for sale were $235 $5 million at the end of Q2 2024 as compared to $232 4 million for fiscal year end 2023.

Speaker Change: A reconciliation of non-GAAP financial measures is shown in today's earnings press release and earnings presentation.

Speaker Change: For modeling purposes, please refer to slide 21 and 22 of this earnings presentation for additional detail and specific line item updates.

Speaker Change: As a reminder, our DSO is about 90 days, we will collect cash for a Q2 record sales quarter in the third quarter.

Speaker Change: By region, you can see the increase to our outlook in the Americas, up 15%, driven by U.S. growth outlook of 25% versus 10% previously.

Speaker Change: We look forward to meeting with many of you in the days and weeks ahead at Investor conferences and meetings in the U S Europe and Asia Elisa.

Speaker Change: and EMEA, where we now expect 6% growth versus flat growth in our prior outlook.

Speaker Change: We continue to expect 7% growth in our APAC region, which would be the fastest growth for the refractive industry in this key region.

Speaker Change: A list of conferences as shown here on slide 15 and includes the Canaccord growth conference in Boston.

Patrick Williams: For Q2 2024, gross profit was $78.4 million or 79.2% of net sales. As compared to gross profit of $70.7 million or 76.6% of net sales for the prior year quarter, and $61 million or 78.9% of net sales for Q1 2024. The year-over-year increase in gross margin is primarily due to changes in reserves related to cataract IOLs in the prior year quarter. As a reminder, the company exited its cataract IOL business in fiscal 2023. For 2024, we continue to expect gross margin will be approximately 80% for each remaining quarter. Moving down the income statement, total operating expenses for Q2 2024 were $66.5 million as compared to $62.1 million in the prior year quarter, and $63.3 million in Q1 2024.

Speaker Change: The Piper Sandler West Coast field trip, the William Blair West Coast field trip.

Speaker Change: For Fiscal 2024, our new increased outlook for the U.S. represents about half of the $5 million increase in our new outlook for global net sales.

Speaker Change: The Goldman Sachs European Med Tech and Health care services conference in London.

Speaker Change: And the Sidoti small cap virtual conference.

Speaker Change: Turning now to our balance sheet, our cash, cash equivalents and investments available for sale were $235.5 million at the end of Q2 2024, as compared to $232.4 million for fiscal year end 2023.

Speaker Change: Finally, we are adding an Asia based our Investor relations professional as a resource for the investment community.

Speaker Change: In addition to our normal course of Investor conferences. We will also have in person investor meetings in Hong Kong and mainland China for Q3.

Speaker Change: As a reminder, our DSO is about 90 days. We will collect cash for our Q2 record sales quarter in the third quarter.

Speaker Change: We do expect to report Q3 results in early November.

Speaker Change: And now back to Tom.

Tom: Thank you Patrick we met or exceeded our targets in the first half of 2024, and our commercial momentum has accelerated our deep engagement with our surgeon customers is guiding the way we conducted two global customer surveys in 2023, which significantly broaden our understanding of the knee.

Speaker Change: We look forward to meeting with many of you in the days and weeks ahead at investor conferences and meetings in the U.S., Europe , and Asia.

Speaker Change: A list of conferences is shown here on slide 15 and includes

Speaker Change: The Cannacourt Road Conference in Boston, the Piper Sandler West Coast Field Trip, the William Blair West Coast Field Trip, the Goldman Sachs European MedTech and Healthcare Services Conference in London, and the Sidoti Small Cap Virtual Conference.

Patrick Williams: The increase in operating expenses reflects our decision to lean into investments to build the market for EVO ICL as we lay a foundation for future growth and margin expansion, including surgeon education, tools to improve surgeon experience, and investments in sales teams to drive long-term growth. Taking a closer look at the components of operating expenses, G&A expense for Q2 2024 was $23.6 million compared to $18.1 million in the prior year quarter and $23.2 million in Q1 2024. The year-over-year increase in G&A is primarily due to increased compensation-related expenses, facilities costs, and outside services. For 2024, we continue to expect G&A expense to be approximately $24 million per quarter.

Speaker Change: <unk> of our customers.

Speaker Change: It allowed us to design programs to reduce friction and speed Evo ICL adoption.

Speaker Change: Were building upon this customer focus with a study we recently commissioned in the U S with the American European Congress of ophthalmic surgery.

Speaker Change: Finally, we are adding an Asia-based STAAR Investor Relations Professional as a resource for the investment community.

Speaker Change: Hey coach and organization I have mentioned in the past represents leading edge cataract and refractive surgeons. The study we commissioned in June analyzed approximately 1900 refractive procedures in the U S across laser and lens based vision correction procedures. The data shows the evo.

Speaker Change: In addition to our normal course of investor conferences, we will also have in-person investor meetings in Hong Kong and mainland China for Q3.

Speaker Change: We do expect to report Q3 results in early November .

Speaker Change: And now, back to Tom.

Tom: Thank you, Patrick. We met or exceeded our targets in the first half of 2024, and our commercial momentum has accelerated.

Speaker Change: ICL combatant commands a 13% procedure mix among these U S. A coast surgeons significantly above our approximate 3% share of the overall U S refract refractive market today.

Speaker Change: Our deep engagement with our surgeon customers is guiding the way. We conducted two global customer surveys in 2023, which significantly broadened our understanding of the needs of our customers and allowed us to design programs to reduce friction and speed EVO ICL adoption.

Speaker Change: Survey Echo Surgeons have also moved down the diopter curve more quickly than the U S market overall, the yanko surge in average diopter implanted is minus eight five diopters versus nearly minus 10 diopters for all U S. Evo ICL surgeons Sir.

Patrick Williams: Selling and marketing expense was $28.8 million for Q2 2024 compared to $32.3 million in the prior year quarter and $26.7 million in Q1 2024. The decrease in selling and marketing expenses from the prior year was due to lower marketing, promotion, and advertising activities as the company shifted brand awareness dollars to marketing activities at the practice level. The sequential increase in selling and marketing expense is related to the variable marketing and promotion activities associated with our higher sales in Q2. For 2024, we continue to expect selling and marketing expense will be approximately $30 million per quarter. Research and development expense was $14.1 million for Q2 2024 compared to $11.8 million in the prior year quarter and $13.4 million for Q1 2024.

Speaker Change: We are building upon this customer focus with a study we recently commissioned in the U.S. with the American-European Congress of Ophthalmic Surgery. ACOS, an organization I've mentioned in the past, represents leading-edge cataract and refractive surgeons.

Speaker Change: Certified.

Speaker Change: The Acos, David illustrates our larger opportunity in the United States, but our total addressable market is even bigger as you can see on slide 17, moving from 3% share in the U S. Today to the 13% share currently with a co surgeons represent seven.

Speaker Change: The study we commissioned in June analyzed approximately 1,900 refractive procedures in the U.S. across laser and lens-based vision correction procedures.

Speaker Change: The data shows that Evo ICL commands a 13% procedure mix among these U.S. ACO surgeons, significantly above our approximate 3% share of the overall U.S. refractive market today.

Speaker Change: <unk> thousand U S procedures, and an additional $70 million in annual sales.

Speaker Change: Assuming we reach 20% share in the United States as we have in other large markets. This equates to a $140 million in U S annual sales.

Speaker Change: Surveyed ACO surgeons have also moved down the diopter curve more quickly than the U.S. market overall.

Patrick Williams: The year-over-year increase in R&D is due to compensation-related expenses, partially offset by lower clinical trial costs. For the second half of 2024, we now expect R&D expense to be slightly up at approximately $15 million per quarter, reflecting focused investments in AI-related technology innovations, independent investigator studies, and global education and training to accelerate adoption of EVO ICL. For Q2 2024, GAAP net income was $7.4 million or $0.15 earnings per diluted share, compared to net income of $6.1 million or $0.12 earnings per diluted share in the prior year quarter. Adjusted EBITDA of $22.5 million or $0.45 per diluted share for Q2 2024, compared to adjusted EBITDA of $18.3 million or $0.37 per diluted share in the prior year quarter.

Speaker Change: The ACO Surgeon Average Diopter Implant is minus 8.5 diopters versus nearly minus 10 diopters for all U.S. Evo ICL surgeons certified.

Speaker Change: However, none of these growth vectors contemplate us growing the market, which we have done in other geographies and intend to do that in the United States with $52 million size and our approved range and based on the a coast data I now believe.

Speaker Change: The ACOS data illustrates our larger opportunity in the United States, but our total addressable market is even bigger.

Speaker Change: S business can be even bigger than what I originally envisioned.

Speaker Change: As you can see on slide 17.

Speaker Change: Moving from 3% share in the U.S. today to the 13% share currently with ACO Surgeons represents 70,000 U.S. procedures and an additional $70 million in annual sales.

Speaker Change: We are listening and learning, which are the most important levers to accelerate growth and realize our tremendous market opportunity.

Speaker Change: First we're innovating and surgeon experience and education are new stellar ordering system, which delivers a more streamlined workflow and cuts time needed to order by over 25%.

Speaker Change: Assuming we reach 20% share in the United States, as we have in other large markets, this equates to $140 million in U.S. annual sales.

Speaker Change: Star University website launched just a few months ago in the United States is our new Medical Affairs, and surgeon education site, which is receiving praise and positive feedback from our surgeon customers and their staff, both stellar and star University are already being.

Speaker Change: However, none of these growth factors contemplate us growing the market.

Patrick Williams: As Tom said, we are raising our fiscal 2024 sales outlook $5 million to a range of $340 million to $345 million, which contemplates industry-leading growth in all key markets. For Q3 2024, we anticipate net sales of approximately $87 million. We also anticipate the US sales of approximately $5 million to $5.5 million in Q3, reflecting summer seasonality, followed by a re-acceleration of US sales in Q4 above our Q2 results of $5.5 million. Based on our higher sales outlook, we are raising our full-year adjusted EBITDA by approximately $3 million and now anticipate adjusted EBITDA to be approximately $42 million for fiscal 2024.

Speaker Change: which we have done in other geographies and intend to do that in the United States.

Speaker Change: With 52 million USI's in our approved range, and based on the ACOS data, I now believe the U.S. business can be even bigger than what I originally envisioned.

Speaker Change: It globally.

Speaker Change: Next week, we will open our brand new state of the art Evo ICL experience Center at Starz Lake Forest, California headquarters. The center is significantly larger than our previous center and will serve as a hub of live surgeon and ophthalmic practice education with a full slate of events.

Speaker Change: We are listening and learning, which are the most important levers to accelerate growth and realize our tremendous market opportunity.

Speaker Change: First, we're innovating in surgeon experience and education, our new Stella ordering system, which delivers a more streamlined workflow and cuts time needed to order by over 25%.

Speaker Change: Already planned throughout the end of the year.

Speaker Change: Secondly, we are innovating to drive clinical confidence we're in the final stages of developing a new U S space head to head study versus laser vision correction procedures. We are confident that the results will further demonstrate <unk> advantages, including high patient satisfaction and quality of vision.

Speaker Change: STAAR University website, launched just a few months ago in the United States, is our new medical affairs and surgeon education site, which is receiving praise and positive feedback from our surgeon customers and their staff.

Patrick Williams: Using approximately 52 million shares outstanding, our outlook for adjusted EBITDA per diluted share is now approximately $0.80 per share, up from approximately $0.75 previously. A reconciliation of non-GAAP financial measures is shown in today's earnings press release and earnings presentation. For modeling purposes, please refer to slide 21 and 22 of this earnings presentation for additional detail and specific line item updates. By region, you can see the increase to our outlook in the Americas, up 15%, driven by US growth outlook of 25% versus 10% previously. EMEA, where we now expect 6% growth versus flat growth in our prior outlook. We continue to expect 7% growth in our APAC region, which would be the fastest growth for the refractive industry in this key region.

Speaker Change: Across the approved diopter range.

Speaker Change: We are working with surgeons to advance AI based protocols and investing in technology to guide measurement and site selection.

Speaker Change: Both Stella and STAAR University are already being expanded globally.

Speaker Change: Next week, we will open our brand-new, state-of-the-art Evo ICL Experience Center at STAAR's Lake Forest, California headquarters.

Speaker Change: Finally, we're working to expand our market potential through the harmonization of our label indications globally.

Speaker Change: The center is significantly larger than our previous center and will serve as a hub of live surgeon and ophthalmic practice education with a full slate of events already planned throughout the end of the year.

Speaker Change: The investment case for STAAR surgical is compelling.

Speaker Change: Number one our product we have a proprietary and differentiated products.

Speaker Change: ICL that is disrupting the refractive market with patients and surgeons are looking for a broader set of solutions, which give them more options in the future.

Speaker Change: Secondly, we are innovating to drive clinical confidence.

Speaker Change: We're in the final stages of developing a new U.S.-based head-to-head study versus laser vision correction procedures.

Speaker Change: Secondly, our market by 2000 55 billion people will have myopia, including $1 billion with high myopia. So the total addressable market opportunity globally, including emerging markets, such as India, and Brazil is immense and growing <unk>.

Speaker Change: We are confident that the results will further demonstrate EVO's advantages, including high patient satisfaction and quality of vision across the approved diopter range.

Patrick Williams: For fiscal 2024, our new increased outlook for the US represents about half of the $5 million increase in our new outlook for global net sales. Turning now to our balance sheet. Our cash equivalents, and investments available for sale were $235.5 million at the end of Q2 2024 as compared to $232.4 million for fiscal year-end 2023. As a reminder, our DSO is about 90 days. We will collect cash for our Q2 record sales quarter in the Q3. We look forward to meeting with many of you in the days and weeks ahead at investor conferences and meetings in the US, Europe, and Asia.

Speaker Change: We are working with surgeons to advance AI-based protocols and investing in technology to guide measurement and size selection.

Speaker Change: Just as the interest in penetration of the legacy predominant procedure laser vision correction continues to decline.

Speaker Change: And finally, we're working to expand our market potential through the harmonization of our label indications globally.

Speaker Change: Third our people and our process, we have the team to execute and we will continue to bolster and strengthen our teams as needed. We introduced a high performance management process based on facts data and continuous improvement around our vital few strategic priorities and in January.

Speaker Change: The investment case for STAAR Surgical is compelling.

Speaker Change: Number one, our product. We have a proprietary and differentiated product, Evo ICL, that is disrupting the refractive market where patients and surgeons are looking for a broader set of solutions which give them more options in the future.

Speaker Change: <unk> of this year, we cascaded the process to all 200 plus store employees.

Speaker Change: Secondly, our market. By 2050, 5 billion people will have myopia, including 1 billion with high myopia.

Speaker Change: Fourth our financial model, we have a strong business model with high gross margins and a demonstrated ability to generate cash to sustain and prudently invest in our business.

Patrick Williams: A list of conferences is shown here on slide 15 and includes the Canaccord Genuity Growth Conference in Boston, the Piper Sandler West Coast Field Trip, the William Blair West Coast Field Trip, the Goldman Sachs European MedTech and Healthcare Services Conference in London, and the Sidoti Small Cap Virtual Conference. Finally, we are adding an Asia-based star investor relations professional as a resource for the investment community. In addition to our normal course of investor conferences, we will also have in-person investor meetings in Hong Kong and Mainland China for Q3. We do expect to report Q3 results in early November. Now, back to Tom.

Speaker Change: So the total addressable market opportunity globally, including emerging markets such as India and Brazil, is immense and growing.

Speaker Change: And all of that leads to building momentum at Star, we are driving focus on the customer identifying and investing in accelerators and watching the market change right before our eyes Evo ICL is proving to be a competitive differentiator with every search.

Speaker Change: Just as the interest and penetration of the legacy predominant procedure, laser vision correction, continues to decline. Third, our people and our process.

Speaker Change: We have the team to execute and will continue to bolster and strengthen our teams as needed.

Speaker Change: Implements evo in their practice.

Speaker Change: We introduced a high-performance management process based on facts, data, and continuous improvement around our vital few strategic priorities. And in January of this year, we cascaded the process to all 1,200-plus STAAR employees.

Speaker Change: The initiatives I've covered today are starting to translate into better growth laying the foundation for future sales acceleration into 2025 and towards our 500 million dollar plus vision 2026 sales target clearly.

Tom Frinzi: Thank you, Patrick. We met or exceeded our targets in the first half of 2024, and our commercial momentum is accelerating. Our deep engagement with our surgeon customers is guiding the way. We conducted two global customer surveys in 2023, which significantly broadened our understanding of the needs of our customers and allowed us to design programs to reduce friction and speed EVO ICL adoption. We are building upon this customer focus with a study we recently commissioned in the US with the American-European Congress of Ophthalmic Surgery. AECOS, an organization I've mentioned in the past, represents leading-edge cataract and refractive surgeons. The study we commissioned in June analyzed approximately 1,900 refractive procedures in the US across laser and lens-based vision correction procedures.

Speaker Change: Fourth, our financial model. We have a strong business model with high gross margins and a demonstrated ability to generate cash to sustain and prudently invest in our business.

Speaker Change: And evolution is happening. Thank you for your attention and operator, we will now take any questions.

Speaker Change: Okay.

Speaker Change: Thank you at this time, if you would like to ask a question. Please click on the raise hand button, which can be found on the black bar at the bottom of your screen.

Speaker Change: And all of that leads to building momentum. At STAAR, we are driving focus on the customer.

Speaker Change: identifying and investing in accelerators and watching the market change right before our eyes. Evo ICL is proving to be a competitive differentiator with every surgeon that implements Evo in their practice.

Speaker Change: You may remove yourself from the queue at any time by lowering your hand.

Speaker Change: When it is your turn you will receive a message on your zoom screen asking permission to allowed to talk to.

Speaker Change: Please accept and once your name has been called human mute your audio and ask your question.

Speaker Change: The initiatives I've covered today are starting to translate into better growth, laying the foundation for future sales acceleration into 2025 and towards our $500 million plus Vision 2026 sales target.

Speaker Change: If you do not accept we will move on to the next analyst.

Tom Frinzi: The data shows that EVO ICL commands a 13% procedure mix among these US AECOS surgeons, significantly above our approximate 3% share of the overall US refractive market today. Surveyed AECOS surgeons have also moved down the diopter curve more quickly than the US market overall. The AECOS surgeon average diopter implanted is -8.5 diopters versus nearly -10 diopters for all US EVO ICL surgeons certified. The AECOS data illustrates our larger opportunity in the United States, but our total addressable market is even bigger. As you can see on slide 17, moving from 3% share in the US today to the 13% share currently with AECOS surgeons represents 70,000 US procedures and an additional $70 million in annual sales.

Speaker Change: We'll wait just a moment to allow the cater for it.

Speaker Change: Our first question will be from Brian Zimmerman with B T I D.

Speaker Change: Clearly.

Speaker Change: an evolution is happening

Speaker Change: Thank you for your attention, and operator will now take any questions.

Speaker Change: Okay.

Brian Zimmerman: Hopefully I unneeded and I get that right can you guys hear me okay.

Brian Zimmerman: Yes, we hear you Ryan.

Speaker Change: At this time, if you would like to ask a question, please click on the raise hand button, which can be found on the black bar at the bottom of your screen.

Speaker Change: Wonderful okay.

Speaker Change: Biggest my biggest fear it alright, so I wanted to ask about China.

Brian Zimmerman: Obviously.

Speaker Change: You may remove yourself from the queue at any time by lowering your hand.

Speaker Change: Very topical theres been kind of mixed messages about China in terms of some of your peers in the refractive market you guys did about five 7% growth in the first half of China.

Speaker Change: When it is your turn, you will receive a message on your Zoom screen asking permission to allow to talk. Please accept, and once your name has been called, you may unmute your audio and ask your question.

Brian Zimmerman: 10.

Speaker Change: So talk to us about what informs your kind of mid teens growth profile in the second half of 'twenty four.

Speaker Change: If you do not accept, we will move on to the next analyst. We will wait just a moment to allow the queue to form.

Speaker Change: And what Youre prevailing views are around recovery and health of the consumer in China.

Speaker Change: Potentially longer term.

Speaker Change: Our first question will be from Ryan Zimmerman with BTIG.

Speaker Change: Yeah, Hey, Ryan good to hear from you and thanks for the question.

Speaker Change: We look at as we sit here today, we feel good about where we are in China. If you think about the headlines in the areas that people seem to have a lot of questions around whether it's competition, whether its anti corruption, whether its PPP or whether it's the economy I would say three out of those four really have minimal.

Tom Frinzi: Assuming we reach 20% share in the United States, as we have in other large markets, this equates to $140 million in US annual sales. However, none of these growth vectors contemplate us growing the market, which we have done in other geographies and intend to do that in the United States. With 52 million US eyes in our approved range and based on the AECOS data, I now believe US business can be even bigger than what I originally envisioned. We are listening and learning which are the most important levers to accelerate growth and realize our tremendous market opportunity. First, we're innovating in surgeon experience and education. Our new Stella ordering system, which delivers a more streamlined workflow and cuts time needed to order by over 25%.

Ryan Zimmerman: Okay, hopefully I unmuted and I did that right. Can you guys hear me okay?

Speaker Change: Yeah, we hear you, Ryan.

Ryan Zimmerman: Oh, wonderful. Okay. That's my biggest, my biggest fear right there. Alright, so so I want to ask about China just, you know, it's obviously

Speaker Change: What if any impact to our business.

Speaker Change: Very topical. There's been kind of mixed messages about China in terms of some of your peers in the refractive market. You guys did about 5.7% growth in the first half of China, down to just 10. So talk to us about what informs your kind of mid-teens growth profile in the second half of 24.

Speaker Change: Condoms clearly we read the same things you see we know there are some headwinds out there, but as we look at our business certainly through the first half and halfway through the high season.

Speaker Change: Ari pleased with where we are in a declining market. We continue to grow we're taking market share and we feel good about our business not only today, but for tomorrow.

Speaker Change: And what your prevailing views are around, you know, recovery and health of the consumer in China, you know, potentially in longer term.

Speaker Change: Thank you. Our next question will come from Tom Stephen at Stifel.

Speaker Change: Yeah, hey, Ryan. Good to hear from you. Thanks for the question. You know, again, look, as we sit here today, we feel good about where we are in China.

Tom Stephen: Okay can you guys hear me okay.

Speaker Change: If you think about the headlines and the areas that people seem to have a lot of questions around.

Tom Stephen: Yeah, we can't tell them how are ya perfect. Good. Thanks.

Tom Frinzi: STAAR University website, launched just a few months ago in the United States, is our new medical affairs and surgeon education site, which is receiving praise and positive feedback from our surgeon customers and their staff. Both Stella and STAAR University are already being expanded globally. Next week, we will open our brand-new state-of-the-art EVO ICL Experience Center at STAAR's Lake Forest, California, headquarters. The center is significantly larger than our previous center and will serve as a hub of live surgeon and ophthalmic practice education with a full slate of events already planned throughout the end of the year. Secondly, we are innovating to drive clinical confidence. We're in the final stages of developing the new US-based head-to-head study versus laser vision correction procedures. We are confident that the results will further demonstrate EVO's advantages, including high patient satisfaction and quality of vision across the approved diopter range.

Speaker Change: Whether it's competition, whether it's anti-corruption, whether it's DPP, or whether it's the economy, I would say three out of those four really have minimal, if any, impact for our business.

Tom Stephen: Maybe if I can start I'll ask both upfront.

Tom Stephen: I wanted to ask about 2025, if that's all right.

Speaker Change: <unk> grew 6% in <unk>.

Speaker Change: <unk> implied 6% growth again in <unk>.

Speaker Change: Economy, clearly. We read the same things you see. We know there's some headwinds out there, but as we look at our business, certainly through the first half and halfway through the high season,

Speaker Change: Patrick or Tom what are your early thoughts about growth accelerating in 2025, I think street modeled revenue growth of 15% coming into this afternoon.

Speaker Change: We're very pleased with where we are in a declining market. We continue to grow. We're taking market share and we feel good about our business, not only today, but for tomorrow.

Speaker Change: Are you comfortable with that type of Reacceleration next year, maybe as we sit here today.

Speaker Change:

Speaker Change: And then hopefully a quick a follow up just on M&A I mean as it relates to the headlines that were put out there why would now be the right time for STAAR.

Speaker Change: Thank you. Our next question will come from Tom Stephen at CFO .

Speaker Change: From an M&A perspective understand.

Tom Steven: Okay, can you guys hear me okay?

Speaker Change: Obviously part of your fiduciary responsibilities, but the stock is.

Tom Steven: Yeah, we can, Tom. How are you? Perfect. Good. Thanks. Um, maybe if I can start off both up front, um, you know, I want to ask about 2025, if that's all right. You know, I think you grew 6% in 1H.

Speaker Change: Back at pre Covid levels refractive end markets argued.

Nathan: We're arguably at a low point in the U S. It's still so early so maybe if you can elaborate a bit on I guess kind of the companys motive Nathan and your long term vision for start.

Speaker Change: Guidance implies 6% growth again in 2H. Patrick or Tom, what are your early thoughts about growth accelerating in 2025? I think street.

Tom: I'll take the first one at a time, but we're not giving out 2025 or even beyond guidance at this point, but to be fair. We did give our vision 2026 guidance out there, which was a $50 to 20% three year CAGR. So as Tom said in his prepared remarks, we feel good about where we are.

Tom Frinzi: We are working with surgeons to advance AI-based protocols and investing in technology to guide measurement and size selection. Finally, we're working to expand our market potential through the harmonization of our label indications globally. The investment case for STAAR Surgical is compelling. Number one, our product. We have a proprietary and differentiated product, EVO ICL, that is disrupting the refractive market where patients and surgeons are looking for a broader set of solutions which give them more options in the future. Secondly, our market. By 2050, 5 billion people will have myopia, including 1 billion with high myopia. So the total addressable market opportunity globally, including emerging markets such as India and Brazil, is immense and growing. Just as the interest and penetration of the legacy predominant procedure, laser vision correction, continues to decline. Third, our people and our process.

Speaker Change: Modeled revenue growth at 15% coming into this afternoon.

Speaker Change: Are you comfortable with that type of reacceleration next year, maybe as we sit here today?

Speaker Change: And then hopefully a quicker follow up just on M&A. I mean, as it relates to the headlines. That were put out there, you know, why would now be the right time for star. Uh, from an M&A perspective, you know, understand it.

Speaker Change: Our six seven months into a 36 month plan.

Speaker Change: I think the initial question was we have a reacceleration in the second half of 2024, which is very apparent we're going to see double digits, maybe mid teen growth in revenue across the board and so less judge us as we move through this year, but we believe all of the things that we're putting in place.

Speaker Change: Obviously, part of your fiduciary responsibilities, but the stock is, you know, back at pre-COVID levels, refractive end markets.

Speaker Change: are arguably at a low point and the U.S. is still so early. So maybe if you can elaborate a bit on, I guess kind of the company's motivation and your long-term vision for STAAR. Thanks.

Tom: Give us some time to really take effect, there's a lot of really good stuff that Tom outlined in his closing statements that we believe will result in a much quicker adoption of moving down the diopter curve and all geographies around the world and that gives us more conviction about hitting that vision 2026.

Speaker Change: I'll take the first one, Tom, but, you know, we're not giving out 2025 or even beyond guidance at this point. But to be fair, we did give our Vision 2026 guidance out there, which was a 15 to 20% three-year CAGR. So, as Tom said in his prepared remarks,

Tom: I think Tom from your question around M&A activity.

Tom: As I've said, many a time.

Speaker Change: Our heads down focused on execution continuing to grow our business around the globe and in quite frankly.

Tom Steven: You know, we feel good about where we are, six, seven months into a 36-month plan.

Speaker Change: Rumors are what they are but we're focused on our business and that's what matters to us.

Tom Frinzi: We have the team to execute, and we'll continue to bolster and strengthen our teams as needed. We introduced a high-performance management process based on facts, data, and continuous improvement around our vital few strategic priorities. In January of this year, we cascaded the process to all 1,200-plus STAAR employees. Fourth, our financial model. We have a strong business model with high gross margins and a demonstrated ability to generate cash to sustain and prudently invest in our business. All of that leads to building momentum. At STAAR, we are driving focus on the customer, identifying and investing in accelerators, and watching the market change right before our eyes. EVO ICL is proving to be a competitive differentiator with every surgeon that implements EVO in their practice.

Speaker Change: I think the initial question was, we have a reacceleration in the second half of 2024, which is very apparent. We're going to see double digits and maybe mid-team growth and revenue across the board.

Speaker Change: Thank you. Our next question will be from Margaret Katzir, Andrew with William Blair.

Speaker Change: And so let's judge us as we move throughout this year, but we believe all the things that we're putting in place.

Margaret: Hey, Margaret.

Speaker Change: We've got to give them some time to really take effect. There's a lot of really good stuff that Tom outlined in his closing statements that we believe will result in a much quicker adoption of moving down the diopter curve in all geographies around the world, and that gives us more conviction about hitting that Vision 2026 ultimate.

Margaret Katzir: And good afternoon, I'm going to do whatever else.

Speaker Change: Asked and say can you hear me now.

Speaker Change: Okay, Alright appreciate it.

Margaret Katzir: So I was hoping to talk a little bit about about the U S. I mean, you guys are saying now from some nice sequential traction two quarters in a row.

Speaker Change: And I think, Tom, from your question around M&A activity, look at, you know, as I've said many a time, our head is down. We're focused on execution, continuing to grow our business around the globe and, and quite frankly,

Speaker Change: Up 10% sequentially in Q2.

Speaker Change: I guess some of the comments around seasonality as we go into Q3 and Q4, but yeah, all things being equal on average seems pretty pretty similar flat sequentially from what we saw in Q2 $1. So I guess is that not conservative in your view.

Speaker Change: You know, rumors are what they are, but we're focused on our business, and that's what matters to us.

Speaker Change: Yeah, especially assuming that the sequential increases were saying and new highway 93 accounts, maybe continued traction you're seeing in those highway 93 accounts and I guess net net with all of that and when will you guys feel comfortable enough to start saying that that more significant.

Tom Frinzi: The initiatives I've covered today are starting to translate into better growth, laying the foundation for future sales acceleration into 2025 and towards our $500 million plus Vision 2026 sales target. Clearly, an evolution is happening. Thank you for your attention. Operator, we'll now take any questions.

Speaker Change: Thank you. Our next question will be from Margaret Katzer-Andrew with William Blair.

Speaker Change: Hey, Margaret.

Speaker Change: Hey, good afternoon. I'm going to do what everyone else asked and say, can you hear me now?

Speaker Change: Sequential increase in guidance and traction thank you.

Speaker Change: We can.

Speaker Change: All right, appreciate it.

Speaker Change: Yes, sure listen thanks for the question Margaret.

Speaker Change: So I was hoping to talk a little bit about about the US. You guys are saying now from some nice sequential traction two quarters in a row, up 10% sequentially in Q2. And I get, you know, some of the comments around seasonality as we go into Q3 and Q4. But you know, all things being equal on average seems pretty, pretty similar flat sequentially from what we saw in Q2 in dollars. So I guess, is that not conservative in your view?

Speaker Change: I think as we've said in our prepared remarks, and you've probably heard from Patrick and I anecdotally, we feel good about where the U S is.

Operator: Thank you. At this time, if you would like to ask a question, please click on the Raise Hand button, which can be found on the black bar at the bottom of your screen. You may remove yourself from the queue at any time by lowering your hand. When it is your turn, you will receive a message on your Zoom screen asking permission to allow to talk. Please accept, and once your name has been called, you may unmute your audio and ask your question. If you do not accept, we will move on to the next analyst. We will wait just a moment to allow the queue to form. Our first question will be from Ryan Zimmerman with BTIG.

Speaker Change: And if I were to use an analogy I think for the U S business.

Speaker Change: We call. These starting to walk you might start to jobs by the end of the year and we will be running in 2025. So I mean I feel really good about what we're doing all the initiatives we rolled out are being well received.

Speaker Change: You know, especially assuming the sequential increases we're seeing in new Highway 93 accounts, maybe continued traction you're seeing in those Highway 93 accounts.

Speaker Change: And I think we're setting ourselves up for the right kind of cadence of growth, that's really both near term and long term.

Speaker Change: And, you know, I guess, net-net with all of that is, when will you guys feel comfortable enough to start seeing that more significant and sequential increase in guidance and traction in the U.S.? Thank you.

Speaker Change: Sustainable so.

Speaker Change: The initiatives, we have the contracts we've signed the contracts that are pending.

Speaker Change: Everything is clicking on all cylinders, so I think just with <unk>.

Speaker Change: Trying to be balanced we're trying to be prudent we don't want to get out ahead of ourselves but.

Speaker Change: yes sure listen thanks for the question margaret

Ryan Zimmerman: Okay, hopefully I unmuted, and I did that right. Can you guys hear me okay?

Speaker Change: I think as we send our prepared remarks, and you've probably heard from Patrick and I anecdotally, we feel good about where the U.S. is.

Speaker Change: Again, I would just say we feel very good not only about our U S business, but where our business sits globally.

Tom Frinzi: Yeah, we hear you, Ryan.

Ryan Zimmerman: Oh, wonderful. Okay. That was my biggest fear right there. All right. I want to ask about China. Just, you know, it's obviously very topical. There's been kind of mixed messages about China in terms of some of your peers in the refractive market. You guys did about 5.7% growth in the first half in China. Guidance suggests 10. Talk to us about what informs your kind of mid-teens growth profile in the second half of 2024, and what your prevailing views are around, you know, recovery and health of the consumer in China, you know, potentially in longer term.

Speaker Change: And if I were to use an analogy, I think for the U.S. business, you know, we crawled, we started to walk.

Speaker Change: Thank you moderator.

Moderator: Moderate let's take Ryan Zimmerman second question. Please.

Moderator: Perfect well too Ryan go ahead and ask your question.

Speaker Change: You might start the job by the end of the year, and we'll be running in 2025. So, I mean, I feel really good about what we're doing. All the initiatives we rolled out are being well received.

Ryan Zimmerman: Thanks for taking Penny on me for the follow up.

Ryan Zimmerman: I just wanted to ask a second question and it was similar.

Ryan Zimmerman: My first but but Tom you laid out this slide about kind of growth of the refractive market, particularly in the U S and Europe.

Ryan Zimmerman: Okay.

Ryan Zimmerman: Yeah.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Alright, Thank you break out Brian.

Tom Frinzi: Yeah. Hey, Ryan. Good to hear from you. Thanks for the question. You know, again, look, as we sit here today, we feel good about where we are in China. If you think about the headlines and the areas that people seem to have a lot of questions around, whether it's competition, whether it's anti-corruption, whether it's DPP or whether it's the economy, I would say three out of those four really have minimal, if any, impact for our business. Economy, clearly, we read the same things you see. We know there's some headwinds out there, but as we look at our business, certainly through the first half and halfway through the high season, we're very pleased with where we are.

Speaker Change: Okay.

Speaker Change: Brian let's pause on heavy repeating your question.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Well I'll turn it back to you Ryan tried again to a stronger yes self service failure.

Speaker Change: Let's go to the next question will come back to you Ryan.

Speaker Change: Our next question will be from David Saxon that need them.

Speaker Change: Yeah.

Speaker Change: Great Hi, David Yeah, Hi, can you hear me okay.

Speaker Change: Yes, we can.

David Saxon: Okay, great well, thanks for taking the questions maybe I'll start in China with air.

Tom Frinzi: In a declining market, we continue to grow, we're taking market share, and we feel good about our business, not only today but for tomorrow.

David Saxon: I know that's a key account for you guys. I think there were some reports there that are lowered their pricing for latex that's about half of ICL procedure pricing.

Operator: Thank you. Our next question will come from Thomas Stephan at Stifel.

Speaker Change: Just given the consumer over there have you seen any impact from that.

Thomas Stephan: Okay. Can you guys hear me okay?

Speaker Change: That pricing move from then.

Tom Frinzi: Yeah, we can, Tom. How are you?

Speaker Change: And then secondarily as it relates to air.

Thomas Stephan: Perfect. Good, thanks. Maybe if I can start, I'll ask both upfront. You know, I want to ask about 2025, if that's all right. You know, I think you grew 6% in 1H. Guidance implies 6% growth again in 2H. Patrick or Tom, what are your early thoughts about growth accelerating in 2025? I think Street modeled revenue growth of 15% coming into this afternoon. Are you comfortable with that type of re-acceleration next year, maybe as we sit here today? Hopefully a quicker follow-up, just on M&A. I mean, as it relates to the headlines that were put out there, you know, why would now be the right time for STAAR, from an M&A perspective?

Speaker Change: We all know their strategy.

Speaker Change: It involves M&A and I think they just acquired 34 more hospitals in the last week or so so.

Speaker Change: As we think about that strategy, how does that factor in to your China volumes are you in those hospitals that they tend to acquire.

Speaker Change: If not I guess, what does that useful for your volumes and on the flip side. If you are in those hospitals.

Speaker Change: Should we think about that pricing headwind as they maybe convert those volumes into their preferred pricing.

Speaker Change: And I'll just have one quick follow up thanks.

Thomas Stephan: You know, understand it's obviously part of your fiduciary responsibilities, but the stock is, you know, back at pre-COVID levels. Refractive end markets are arguably at a low point, and the US is still so early. Maybe if you can elaborate a bit on, I guess, kind of the company's motivation and your long-term vision for STAAR. Thanks.

Speaker Change: Yeah. Thanks for the question, David I think just to clarify.

Speaker Change: What we're aware of his smile has lowered their price not so much lasik has lowered pricing within a higher to be maybe a little bit more competitive lasik, but listen you know our relationship with buyers very strong they continue to be a solid customer we're continuing to grow EBITDA within the I R.

Patrick Williams: I'll take the first one, Tom. Look, you know, we're not giving out 2025 or even beyond guidance at this point. To be fair, we did give our Vision 2026 guidance out there, which was a 15 to 20% 3-year CAGR. As Tom said in his prepared remarks, you know, we feel good about where we are six, seven months into a 36-month plan. I think the initial question was we have a re-acceleration in the second half of 2024, which is very apparent. We're gonna see double digits to maybe mid-teen growth and revenue across the board. Let's judge us as we move throughout this year, but we believe all the things that we're putting in place, we gotta give them some time to really take effect.

Speaker Change: Hospital systems and.

Speaker Change: And we feel good about our growth strategy with ire not only through the first half of this year, but certainly continuing on through the back half and into 25 and 26 and beyond.

Speaker Change: So hope that gives you some color as to how we're doing there again I think some of the noise out there is more laser vision correction competing with each other.

Speaker Change: From our perspective, though we continue to grow we continue to take share and as I said earlier in my comments feel very good about where our business is in China broadly, but certainly within our relationship with ire hospitals.

Patrick Williams: There's a lot of really good stuff that Tom outlined in his closing statements that we believe will result in a much quicker adoption of moving down the diopter curve in all geographies around the world, and that gives us more conviction about hitting that Vision 2026 ultimate.

Speaker Change: Okay, Great and then I.

Speaker Change: I guess, maybe if you could comment on just kind of how their M&A strategy factor.

Speaker Change: Factors into.

Tom Frinzi: I think, Tom, from your question around M&A activity, look at, you know, as I've said many a time, our head is down. We're focused on execution, continuing to grow our business, around the globe. Quite frankly, you know, rumors are what they are, but, we're focused on our business, and that's what matters to us.

Speaker Change: Your volumes and pricing there and then my follow up or second question is just on guidance for the third quarter guidance.

Speaker Change: <unk> growth accelerates on a two year stacked basis at least into the fourth quarter. So is that conservatism around third quarter or what are you seeing that gives you confidence in that two year stack acceleration into the fourth quarter. Thanks, so much.

Operator: Thank you. Our next question will be from Margaret Kaczor Andrew with William Blair.

Speaker Change: Sure David It's Patrick I think on the Iron recent M&A that they need it's a little early for us to speculate we are still kind of vetting through if you want to call. It.

Tom Frinzi: Hey, Margaret.

Margaret Kaczor Andrew: Hey, good afternoon. I'm gonna do what everyone else asked and say, can you hear me now?

Speaker Change: Existing accounts et cetera, but we don't think theres a lot of.

Tom Frinzi: We can.

Margaret Kaczor Andrew: All right. Appreciate it. I was hoping to talk a little bit about the US. You guys are seeing now some nice sequential traction two quarters in a row, up 10% sequentially in Q2. I get, you know, some of the comments around seasonality as we go into Q3 and Q4, but, you know, all things being equal on average seems pretty similar or flat sequentially from what we saw in Q2 in dollars. I guess, is that not conservative in your view? You know, especially assuming the sequential increases we're seeing in new Highway 93 accounts, maybe continued traction you're seeing in those Highway 93 accounts.

Speaker Change: Crossover there in terms of our guidance look.

Speaker Change: I think Tom hit on the head, we're trying to be very balanced we did less $87 million or approximately for Q3, we all can do the math of what that is on a year over year basis compared to last year. It is a reacceleration of revenue growth going into Q3, and we know that that implies.

Speaker Change: A number for Q4, it's probably closer to $88 million and pick the midpoint of our guidance, which is also pretty strong growth and clearly.

Speaker Change: This is now I think the third quarter, where we've been able to beat and raise and certainly coming into 2020 for the second quarter of <unk>.

Margaret Kaczor Andrew: you know, I guess net-net with all of that is when will you guys feel comfortable enough to start seeing that more significant sequential increase in guidance and traction in the US? Thank you.

Speaker Change: Good beat on the topline and you've given some of that.

Speaker Change: Our full year guidance so.

Speaker Change: The momentum.

Speaker Change: Setting ourselves up for what I believe to be a very strong second half and we look forward to reporting in the next 90 days.

Tom Frinzi: Yeah, sure. Listen, thanks for the question, Margaret. I think as we said in our prepared remarks, and you've probably heard from Patrick and I anecdotally, we feel good about where the US is. If I were to use an analogy, I think for the US business, you know, we crawled, we're starting to walk. We might start to jog by the end of the year, and we'll be running in 2025. I mean, I feel really good about what we're doing. All the initiatives we rolled out are being well-received. I think we're setting ourselves up for the right kind of cadence of growth that's really both near-term and long-term, sustainable. The initiatives we have, the contracts we've signed, the contracts that are pending, everything is clicking on all cylinders.

Speaker Change: Thank you. Our next question will be from Anthony Petrone with Mizuho.

Anthony Petrone: Hey, Tom can you hear me to stop I'll stay in line with excellent excellent. Thank you very much congrats on a good quarter here.

Speaker Change: Maybe start with China on the one on the U S as well when.

Speaker Change: When we look at.

Anthony Petrone: China, maybe a few questions in there one would be how much contribution came from the second distributor I know, it's maybe six months or so now into having to distributors there so what.

Speaker Change: Factors that play in the market into Q4 star specifically.

Speaker Change: And was there any price tailwind and in China in the quarter.

Tom Frinzi: I think just, we're trying to be balanced. We're trying to be prudent. We don't wanna get out ahead of ourselves. Again, I would just say we feel very good, not only about our US business, but where our business sits globally.

Speaker Change: And then the last quick one on China, just anything your team is on the ground talking about as it relates to stimulus.

Speaker Change: Just timing of when stimulus could could be enacted and what that may mean for business there.

Speaker Change: And I'll just have one on U S. After that.

Patrick Williams: Thank you, moderator. Moderator, let's take Ryan Zimmerman's second question, please.

Speaker Change: Yeah, I think the second part of your question first.

Operator: Perfect. Will do. Ryan, go ahead and ask your question.

Speaker Change: Too early to tell but it.

Speaker Change: It's encouraging that the Chinese government continues almost on a daily basis to put out some reports around stimulus.

Ryan Zimmerman: Thanks for taking pity on me for the follow-up. I just wanna ask a second question, and it was similar, you know, to my first. But Tom, you laid out this slide about kind of growth of the refractive market, particularly in the US. You know, you're

Speaker Change: And I think our local intelligence fields, it will have an impact.

Speaker Change: In the back half of this year and beyond.

Speaker Change: Relative to.

Speaker Change: The first part of your question CDK and just the contract Yeah, I think look at we've been very pleased with.

Speaker Change: How that integration is done with both Lang Shang Nhcd K and I think the impact they are having is certainly our outreach and our ability to get inventory closer to the customer certainly.

Tom Frinzi: Ryan, you're breaking up, Ryan.

Patrick Williams: Ryan, let's pause and have you repeat the question. Thank you.

Ryan Zimmerman: Okay.

Speaker Change: Certainly is having a very positive impact but in terms of just outright topline revenue I think it's a push if you will both are working well.

Patrick Williams: We'll come back to you, Ryan.

Tom Frinzi: Try to get into a stronger,

Patrick Williams: Yeah

Tom Frinzi: cell service area, Ryan.

Patrick Williams: Moderator, let's go to the next question. We'll come back to you, Ryan.

Speaker Change: And we're pleased with how smooth quite frankly, the integration has gone and how customers are getting taken care of.

Operator: Thank you. Our next question will be from David Saxon at Needham.

Speaker Change: And I think that where you said, which is we're about six months into this key Anthony.

Tom Frinzi: Hi, David.

David Saxon: Yeah. Hi. Can you hear me okay?

Speaker Change: East from both distributors, but now with <unk> coming on board they are getting their feet wet in six months into it and so certainly as we close out this year go into 'twenty five and beyond we do expect the reason why we chose them as a partner with them to see even more efficiency productivity whatever words, you want to use from them.

Tom Frinzi: Yeah, we can.

David Saxon: Okay, great. Well, thanks for taking the questions. Maybe I'll start in China with Aier. I know that's a key account for you guys. I think there were some reports there that Aier lowered their pricing for LASIK, so it's about half of ICL procedure pricing. Just given the consumer over there, have you seen any impact from that pricing move from them? Secondarily, as it relates to Aier, I mean, they, we all know their strategy, you know, involves M&A, and I think they just acquired 34 more hospitals in the last week or so. You know, as we think about that strategy, how does that factor into your China volumes? Are you in those hospitals that they tend to acquire? If not, I guess what does that do for your volumes?

Speaker Change: And their expanded Salesforce that we're able to use in terms of tailwind with pricing no nothing different in Q1, we baked that in you've been pretty consistently saying that.

Speaker Change: There's maybe 300 bps or so of pricing economics that we were able to get where we are.

Speaker Change: Re sign a new deal with launching and then of course with these TDK as a new deal but.

Speaker Change: That's already factored into evergreen.

Speaker Change: Anthony on a much lighter note and thank you for at least congratulating us on a strong quarter youre. The first to do so oh, absolutely absolutely it's been a tough quarter in med tech all around so good to see.

David Saxon: On the flip side, if you are in those hospitals, how should we think about that pricing headwind as, you know, they maybe convert those volumes into their preferred pricing? I'll just have one quick follow-up. Thanks.

Speaker Change: Beaten race here and then just on U S that number of raising the guidance for.

Speaker Change: For U S contribution you've announced a number of wins the last few quarters.

Speaker Change: Our vision for one for example, and obviously digging into that highway 93 initiatives. So.

Speaker Change: Is this increase linked to those wins that you spoke about over the past two quarters are or is this more just.

Tom Frinzi: Yeah. Thanks for the question, David. I think just to clarify, what we're aware of is SMILE has lowered their price, not so much LASIK has lowered pricing, within Aier to be maybe a little bit more competitive with LASIK. But listen, you know, our relationship with Aier is very strong. They continue to be a solid customer. We're continuing to grow EVO within the Aier hospital systems. And we feel good about our growth strategy with Aier, not only through the first half of this year, but certainly continuing on through the back half and into 2025 and 2026 and beyond. So, hope that gives you some color as to, you know, how we're doing there.

Speaker Change: New account openings within highway 93. Thanks.

Speaker Change: Yeah, I think look at highway 93 was the right focus.

Speaker Change: Programming initiatives, we undertook we're seeing a disproportionate amount of growth in our highway 93 accounts versus our accounts at large so I think it's it's certainly the high profile accounts and strategic agreements. We've signed are having their impact, but we're seeing it across the entire highway 93 initiatives.

Speaker Change: And as I said, we're growing significantly more within those accounts and we are accounts in general specifically I think it's somewhere around 29% growth within.

Speaker Change: On highway 93 accounts versus 19% growth in our accounts that are part of highway 93, So it's across the board and I think it just proves the feel that Evo ICL are having.

Tom Frinzi: Again, I think some of the noise out there is more laser vision correction competing with each other. From our perspective, though, we continue to grow, we continue to take share. As I said earlier in my comments, feel very good about where our business is in China broadly, but certainly within our relationship with Aier Eye Hospital.

Moderator: Thanks for your question Moderator, Yes next question will be from George Sellers with Stephens.

Speaker Change: You'll hear me alright.

David Saxon: Okay, great. I guess maybe if you could comment on just kind of how their M&A strategy factors into your volumes and pricing there. My follow-up or second question is just on guidance. The Q3 guidance implies growth accelerates on a two-year stack basis, at least into the Q4. Is that conservatism around Q3, or what are you seeing that gives you confidence in that two-year stacked accelerations into the Q4? Thanks so much.

George Sellers: Yes, we can George how are you great. Thanks for taking the question and congrats on a great quarter.

George Sellers: Maybe to stick with the U S. I just wanted to dig in a little bit on the highway 93 commentary obviously.

George Sellers: An important piece of the growth both sequentially and year over year could you give us any additional color on it.

Speaker Change: Maybe what's driving that growth within those accounts is there more buy in from those accounts in terms of spending on marketing dollars may be any change in affordability of Evo with those accounts that have their own surgical suite.

Patrick Williams: Sure, David. It's Patrick. You know, I think on the Aier recent M&A that they did, it's a little early for us to speculate. We're still kind of vetting through, if you wanna call it, you know, existing accounts, et cetera, but we don't think there's a lot of crossover there. In terms of our guidance, look, you know, I think Tom hit this on the head. We're trying to be very balanced. We did like $87 million approximately for Q3. We all can do the math of what that is on a year-over-year basis compared to last year.

Speaker Change: Any acceleration.

Speaker Change: Acceleration down the diopter curve in those accounts either anything would be would be helpful. There.

Speaker Change: Yeah, I think it's a combination of all of that George to be honest.

Speaker Change: We have said.

Speaker Change: We.

Speaker Change: Kind of made a pivot relative to how we were spending our marketing dollars and driving it more down to the practice level versus.

George Sellers: Consumer awareness I think thats, having an impact on <unk>.

Patrick Williams: It is a re-acceleration of revenue growth going into Q3, and we know that that implies, you know, a number for Q4, that's probably closer to $80-ish million if you pick the midpoint of our guidance, which is also pretty strong growth. Clearly, you know, this is now I think the third quarter where we've been able to beat and raise. Certainly coming into 2024, it's the second quarter of us doing a good beat on the top line, and we've given some of that in our full year guidance. A lot of momentum setting ourselves up for what I believe to be a very strong second half. We look forward to reporting in the next 90 days.

Speaker Change: Clearly a surge in confidence increases within the highway 93 accounts, but I would say with any account we're working with.

Speaker Change: We do see Evo adoption.

Speaker Change: Go up we've had certainly certain practices demonstrate that as they brought their pricing more in line still a premium to laser vision correction, but maybe not a doubling of laser vision correction, but something a little closer to what the prevailing laser vision correction pricing that has in it.

Speaker Change: An impact so I think all of it.

Speaker Change: And coming down the diopter curve again, you know as.

Speaker Change: As we said in our prepared remarks, we're very encouraged by what we saw in the group of eight co surgeons.

Operator: Thank you. Our next question will be from Anthony Petrone with Mizuho.

Speaker Change: Where we did the study and showed that not always do we have a higher rate of adoption 13%.

Tom Frinzi: Hey, Anthony.

Anthony Petrone: Hey, Tom. Can you hear me? Just, I'll stay in line.

Speaker Change: Of the total for.

Tom Frinzi: Yes, we can.

Speaker Change: Procedural volume, but also the fact that they had come down the diopter curve a lot sooner than any market around the world has.

Anthony Petrone: Excellent. Excellent. Thank you very much. Congrats on a good quarter here. Maybe start with China. I'll have one on the US as well. When we look at China, maybe a few questions in there. One would be, you know, how much contribution came from the second distributor? I know it's maybe six months or so now into having two distributors there. So what factor did that play in the market in Q2 for STAAR specifically? And was there any price tailwinds in China in the quarter? And then the last quick one on China. Just anything your team is on the ground talking about as it relates to stimulus, just timing of when stimulus could be enacted and what that may mean for business there. And I'll just have one on US after that.

Speaker Change: And we were encouraged by again surging confidence equates to growth equates to coming down the diopter curve. It all feeds into one another and.

Speaker Change: Again, I think the U S is really starting to turn.

Speaker Change: To click on all cylinders.

Speaker Change: Okay, Great. That's really helpful and then outside the U S. Highway 93 groups still really strong growth there could you just speak to maybe any impact combining.

Speaker Change: Combining some of the.

Speaker Change: The clinical data with your marketing team.

Speaker Change: How that's going if that's part of what's driving this growth.

Speaker Change: Where youre seeing doctors really.

Speaker Change: Latch on from that perspective.

Tom Frinzi: Yeah. I think the second part of your question first. I think, again, too early to tell, but it's encouraging that the Chinese government continues almost on a daily basis to put out some reports around stimulus. You know, I think our local intelligence feels it will have an impact in the back half of this year and beyond. Relative to the first part of your question.

Speaker Change: Yeah, No we'll look at it as I said our growth outside of highway 93%, 19% put that in context for you.

Speaker Change: And we were encouraged by again surging confidence equates to growth acquaints to coming down the diopter curve. It all feeds into one another and.

Speaker Change: <unk> refractive market in Q2 was down significantly.

Speaker Change: Again, I think the U S is really starting to turn.

Speaker Change: I think somewhere in the area of around 15% to 17%. So I mean, that's a remarkable growth factor when you keep that in context and again, even though is producing happy patients and happy patients make a hacking practice hacking practice makes evo growth.

Speaker Change: To click on all cylinders.

Speaker Change: Okay, Great. That's really helpful and then outside the U S. Highway 93 groups still really strong growth there could you just speak to maybe any impact combining.

Patrick Williams: Yeah. HDDK and just their contribution.

Tom Frinzi: Yeah. I think, look, we've been very pleased with how that integration has gone with both Lansheng and HDDK. I think the impact they're having is certainly our outreach and our ability to get inventory closer to the customer, certainly is having a very positive impact. In terms of just outright top line revenue, I think it's a push, if you will. Both are working well, and we're pleased with how smooth, quite frankly, the integration has gone and how customers are getting taken care of.

Speaker Change: Combining some of the.

Speaker Change: Yeah, I think I tried to hit it in a little bit and this is a question that was about.

Speaker Change: The clinical data with your marketing team.

Speaker Change: How that's going if that's part of what's driving this growth.

Speaker Change: Our ability to accelerate revenue as we leave 2024 and I think the question. You. Just asked is a great win George because such things is that whether it's clinical data that we want to put in the hands of the sales team not just in the U S. But globally. We're really just at the beginning stages of that and Theres a lot of different initiatives, we're working on to help them to deploy it.

Speaker Change: Where youre seeing doctors really.

Speaker Change: Latch on from that perspective.

Speaker Change: Yeah, No we'll look at it as I said our growth outside of highway 93 is 19% put that in context for you.

Speaker Change: <unk> refractive market in Q2 was down significantly.

Speaker Change: And to make sure that you get it in the hands of everyone in a compliant manner.

Patrick Williams: Yeah. I think the word you said, which is we're about six months into it, is key, Anthony. You know, for both distributors, but you know, with HDDK coming on board, you know, they're getting their feet wet. They're six months into it. Certainly as we close out this year, go into 25 and beyond, you know, we do expect the reason why we chose them and to partner with them to see even more efficiency, productivity, whatever words you wanna use, from them and their expanded sales force that we're able to use. In terms of tailwinds with pricing, no, nothing different than Q1. You know, we baked that in.

Speaker Change: I think somewhere in the area of around 15% to 17%. So I mean, that's a remarkable growth factor when you keep that in context, and again, even though is producing hacking patients and happy patients make a hacking practice hacking practice makes evo growth.

Speaker Change: As well as what Tom talked about which is a lot of stuff on labeling and other such season. We're working on so we're really excited about a lot of these initiatives and the Salesforce is always also getting pumped up globally about things that are going to be coming down.

Speaker Change: Okay.

Speaker Change: Yeah, and I think I tried to hit it in a little bit and this is the question that was about.

Speaker Change: Thank you we will now take our final question from John Young at Canaccord.

Speaker Change: Our ability to accelerate revenue as we leave 2024.

John Young: Oh, great. Thanks for fitting me in and congrats on a nice quarter.

Speaker Change: And I think the question you just asked is a great win George because such things is that whether it's clinical data that we want to put in the hands of the sales team not just in the U S. But globally. We're really just at the beginning stages of that and Theres a lot of different initiatives, we're working on to help to deploy it and to make sure that you get it in the hands of everyone in a compliant manner.

Patrick Williams: We've been pretty consistently saying that, you know, there's maybe 300 bps or so of pricing economics that we were able to get when we re-signed the new deal with Lansheng and then of course with HDDK, the new deal. You know, that's already factored into everything as we move forward as well.

Speaker Change: Sure.

John Young: So, let's first start hey, thanks, Thanks again.

Speaker Change: Want to start on the U S first.

Speaker Change: Last quarter, you talked about.

Speaker Change: <unk> Vaseline accounts.

Speaker Change: <unk> had more of those that fit that fast lane criteria, how many as shadow and.

Speaker Change: As well as words that Tom talked about which is a lot of stuff on labeling and other such season. We're working on so we're really excited about a lot of these initiatives and our Salesforce is always also getting pumped up globally about things that are going to be coming down.

Tom Frinzi: Anthony, on a much lighter note, thank you for at least congratulating us on a strong quarter. You're the first to do so.

Speaker Change: Plans are signing more strategic alliances in second half this year any way to quantify that.

Anthony Petrone: Absolutely. It's been a tough quarter in Medtech all around, so good to see beat and raise here. Then just on US, that number, raising the guidance for US contribution. You've announced a number of wins the last few quarters, SharpeVision for one, for example, and obviously, you know, digging into that Highway 93 initiative. Is this increase, you know, linked to those wins that you spoke about over the past two quarters, or is this more just, you know, new account openings within Highway 93? Thanks.

John: Yeah John.

Speaker Change: We signed nine new agreements.

Speaker Change: Hi.

John Young: Total so far this year in the U S against a target list of about 15. So there is still a few more pending.

Speaker Change: Thank you we will now take our final question from John Young at Canaccord.

John Young: But again I think last time, we spoke <unk> six we're now up to nine.

Speaker Change: Yeah.

John Young: Oh, great. Thanks for fitting me in and congrats on a nice quarter.

Speaker Change: Against that.

Speaker Change: Sure.

Speaker Change: 15 targeted list.

Speaker Change: So let's start hey, thanks, Thanks again.

Speaker Change: And we're actually starting this year our accounts.

John Young: I just want to start on the U S spirits.

Speaker Change: Approach us now and we call that the Halo effect and so on one of our large.

Speaker Change: Last quarter, you talked about.

Speaker Change: <unk> Vaseline accounts.

Tom Frinzi: Yeah, I think look at Highway 93 was the right focus program and initiative we undertook. We're seeing a disproportionate amount of growth in our Highway 93 accounts versus our accounts at large. I think it's certainly the high-profile accounts and strategic agreements we've signed are having their impact, but we're seeing it across the entire Highway 93 initiative. As I said, we're growing significantly more within those accounts than we are in accounts in general. Specifically, I think it's somewhere around 29% growth within Highway 93 accounts versus 19% growth in our accounts that aren't part of Highway 93. It's across the board, and I think it just proves the appeal that EVO ICLs are having.

Speaker Change: Identify more of those that fit that fast lane criteria.

Speaker Change: DMA, we have we've got to other accounts now, saying how do I get in on it. So that was always part of the plan.

Speaker Change: Many asciano and.

Speaker Change: Plans for signing more strategic alliances in the second half this year any way to quantify that.

Speaker Change: You call it whatever you want to call it.

Speaker Change: Seems again are starting to click very nicely for us.

Speaker Change: Yeah John.

Speaker Change: We signed nine new agreements.

Speaker Change: Thank you for your participation that now concludes the call for today you may now disconnect.

John Young: Total so far this year in the U S against the target list of about 15. So there is still a few more pending.

Speaker Change: Again, I think last time, we spoke <unk> six we're now up to nine or <unk>.

Speaker Change: Against that.

Speaker Change: 15 targeted list.

Speaker Change: And we're actually starting this year our accounts.

Speaker Change: Approach us now and we call that the Halo effect and so on one of our large.

Speaker Change: DMA, we have we've got the other accounts now, saying how do I get in on it. So that was always part of the plan.

Operator: Thank you.

Tom Frinzi: Next question, moderator.

Operator: Yes. Next question will be from George Sellers with Stephens.

Speaker Change: What do you call it whatever you want to call it seems.

George Sellers: Can you all hear me all right?

Speaker Change: Seems again are starting to click very nicely for us.

Tom Frinzi: Yeah, we can, George. How are you?

George Sellers: Great. Well, thanks for taking the question, and congrats on a great quarter. Maybe to stick with the US, I just wanted to dig in a little bit on the Highway 93 commentary, obviously an important piece of the growth, both sequentially and year-over-year. Could you give us any additional color on, maybe what's driving that growth within those accounts? You know, is there more buy-in from those accounts in terms of spending on marketing dollars maybe? Any change in affordability of EVO, with those accounts that have their own surgical suite? Any acceleration down the diopter curve in those accounts? You know, anything would be helpful there.

Speaker Change: Thank you for your participation that now concludes the call for today you may now disconnect.

Speaker Change: Yeah.

Tom Frinzi: Yeah. I think it's a combination of all of that, George, to be honest. As we've said, you know, we kind of made a pivot relative to how we were spending our marketing dollars and driving it more down to the practice level versus, you know, consumer awareness. I think that's having an impact. Clearly a surge in confidence increases within the Highway 93 accounts. But I would say with any account we're working with, we do see EVO adoption go up. We've had certainly certain practices demonstrate that as they brought their pricing more in line, still a premium to laser vision correction, but maybe not a doubling of laser vision correction, but something a little closer to what the prevailing laser vision correction pricing is. That had an impact.

Tom Frinzi: I think all of it, and coming down the diopter curve, again, you know, as we said in our prepared remarks, we were very encouraged by what we saw within the group of AECOS surgeons, where we did the study and showed that not only do we have a higher rate of adoption, 13%, of their total procedural volume, but also the fact that they had come down the diopter curve a lot sooner than any market around the world has. We were encouraged by, again, surgeon confidence equates to growth, equates to coming down the diopter curve. It all feeds into one another and, you know, again, I think the US is really starting to click on all cylinders.

George Sellers: Okay, great. That, that's really helpful. And then outside the US Highway 93 group, still really strong growth there. Could you just speak to maybe any impact, combining some of the clinical data with your marketing team, how that's going, if that's, you know, part of what's driving this growth and where you're seeing doctors really latch on from that perspective?

Tom Frinzi: Yeah, no. Well, look at, as I said, our growth outside of Highway 93 is 19%. Put that in context. The US refractive market in Q2 was down significantly, you know, I think somewhere in the area of around 15% to 17%. I mean, that's a remarkable growth factor when you keep that in context. Again, EVO's producing happy patients, and happy patients make a happy practice, and a happy practice makes EVO grow.

Patrick Williams: Yeah. I think, you know, I tried to hit it in a little bit in the question that was about our ability to accelerate revenue as we leave 2024. I think the question you just asked is a great one, George, because such things as that, whether it's clinical data that we wanna put in the hands of the sales team, not just in the US, but globally, we're really just at the beginning stages of that. There's a lot of different initiatives we're working on to help to deploy it and to make sure that we do get it in the hands of everyone in a compliant manner, as well as what Tom talked about, which is a lot of stuff on labeling and other such things that we're working on.

Patrick Williams: We're really excited about a lot of these initiatives, and the sales force is always also getting pumped up globally about things that are gonna be coming down the pipeline.

Operator: Thank you. We will now take our final question from John Young at Canaccord.

John Young: Oh, great. Thanks for fitting me in. Congrats on a nice quarter here. Just to start. Hey, thanks again. You know, I just wanna start on the US first. You know, last quarter you talked about the six Fast Lane accounts. You know, have you identified more of those that fit that Fast Lane criteria? How many if so? Plans for signing more strategic alliances in the second half of this year, any way to quantify that?

Jon Young: Oh, great. Thanks for fitting me in. Congrats on a nice quarter here. Just to start. Hey, thanks again. You know, I just wanna start on the US first. You know, last quarter you talked about the six Fast Lane accounts. You know, have you identified more of those that fit that Fast Lane criteria? How many if so? Plans for signing more strategic alliances in the second half of this year, any way to quantify that?

Tom Frinzi: Yeah. Yeah, John. We've signed 9 new agreements, total, so far this year in the US against a target list of about 15. There's still a few more pending. Again, I think last time we spoke, we were at 6. We're now up to 9 against that 15 targeted list.

Patrick Williams: We're actually starting to hear accounts approach us now, and we call that the halo effect. In one of the large DMA we have, we've got the other accounts now saying, "How do I get in on it?" That was always part of the plan. Whether you call it FOMO, whatever you wanna call it, things again are starting to click very nicely for us.

Operator: Thank you for your participation. That now concludes the call for today. You may now disconnect.

Q2 2024 STAAR Surgical Co Earnings Call

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