Q1 2025 RxSight Inc Earnings Call
Iseult,
Thank you for standing by. At this time, I would like to welcome everyone to the Rxsight first quarter, 2020-25 earnings conference call. All lines have been closed on mute to prevent any background noise.
After the speakers remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad.
Speaker Change: If you would like to read your question, press part one again. I would not like to turn the conference over to Oliver Moravcevic by his president of investor relations. Please go ahead, sir.
Speaker Change: Thank you, operator. Presenting today are Rxsight President and Chief Executive Officer Dr. Ron Kurtz and Chief Financial Officer Shelley Thunen.
Speaker Change: Earlier today, Rxsight released its financial results for three months ending March 30, 2025, and reiterated its full-year guidance. A copy of the press release is available on the company's website.
Speaker Change: Before we begin, I would like to inform you that comments and responses to questions during today's call reflect management's view as of today, May 7, 2025, and will include forward looking and opinion statements, including predictions, estimates, plans, expectations, and other
Speaker Change: Actual results made differ materially from those expressed or implied as a result of certain risks and uncertainties.
Speaker Change: These risks and uncertainties are more fully described in our press release issued today and in our filings with the Securities and Exchange Commission or NCC.
Speaker Change: Our SEC findings can be found on our website or the SEC's website.
Speaker Change: Investors are cautioned not to place undue reliance of forward-looking statements, and we disclaim any obligation to update or revise this forward-looking statement, so we will also discuss certain non-GAAP financial measures.
Speaker Change: Disclosures regarding non-GAAP financial measures, including reconfiliations with the most comparable
Speaker Change: Please note that this conference call will be available for audio replay on our investor relations website.
Good afternoon everyone and thank you for joining us.
Speaker Change: As we discussed during our pre-announcement just over a month ago, the first quarter brought an unusual combination of macroeconomic headwinds and competitive disruptions, the led to our first top-line miss since becoming a public company in Q3 2021.
Speaker Change: Although interest in our technology remains high as evidence by continued strong LDD demand, we experienced a first-time year-over-year drop in the LALs per LDD metric.
Speaker Change: I'd like to now share some of our recent analysis, which has helped us develop targeted programs focused on same-store procedure growth, while also continuing to develop the broader opportunity via the addition of new customers and markets.
Speaker Change: Unsurprisingly, the vast majority of respondents to our customer survey conducted in early April cited negative macroeconomic headwinds as the key reason for reduced LAL procedure volumes in Q1.
Speaker Change: Given that approximately 75 percent of LAL patients are drawn from candidates who would otherwise consider lower cost options like monopocal or toric lenses, it's not surprising that LALs were also affected by temporary negative wealth effects and uncertainty. Thank you very much.
Speaker Change: While macro trends worsened in early April , there were signs of improved stabilization later in the month, which were also observed in our procedure volumes.
Speaker Change: Competitive trialing was also commonly cited by customers with many commenting that the major multifocal offerings were now essentially equivalent across manufacturers.
Speaker Change: Even though we expect these competitive pressures to persist over the next several months, we also believe they signal an opportunity for the LAL to offer a compelling alternative to what is rapidly becoming a plethora of undifferentiated multi-focal offerings.
Speaker Change: As we invest in these efforts, we also remain focused on advancing innovation to drive greater clinical value and customer engagement.
Speaker Change: We are pleased to share that we are ahead of schedule and launching a previously announced software update that includes both the unique spherical collaboration treatment option as well as new LDD procedure monitoring features, both of which support our enhanced clinical education and marketing efforts.
Speaker Change: This new LDD capability represents the first such application in cataract surgery.
Speaker Change: Opening the door for further improvements in clinical results compared to fixed IOL technology.
Speaker Change: Although perhaps less groundbreaking, the additional LDD procedure monitoring features provide surgeons with new tools to ensure adherence to best clinical practices.
Speaker Change: Such upgrades enable us to not only reconnect with our customers and showcase new functionalities, but also deepen relationships, identify growth opportunities within existing practices, and embed our technology more fully in their clinical workflows.
Looking ahead, our product innovation pipeline remains robust.
Speaker Change: Recently, we secured approval for very low-diopter LAL powers that will now match those already available for LAL Plus.
Speaker Change: We look forward to continuing to develop the LAL family of lenses along with continued software and LDD enhancements that broaden the patient populations that can benefit from customization and customize visual outcomes.
Speaker Change: We believe these innovations are also key to enhancing productivity at new customer sites as surgeons and practices are more likely to recognize Rxsight's adjustable technology as a significant long-term growth driver.
Speaker Change: By capturing these strategic placements promptly, Rxsight ensures a strong foundation for sustained future growth, while the practice sees faster revenue and practice appreciation.
Speaker Change: Though these placements have traditionally been to individual offices, we are also encouraged by the growing third-party
Speaker Change: that those still modest contributors to our total procedures have significant potential to expand access and utilization of our technology, ultimately benefiting more surgeons and patients.
Speaker Change: On the international front, we recently received full regulatory approval for our LAL, LAL plus and LDD products in South Korea. A market we believe can become highly engaged with our technology.
Speaker Change: Additionally, following last month's announcement of EU, LDD and LAO approvals, we now expect UK approval in the second quarter and have multiple additional international regulatory submissions in process.
Speaker Change: As always, the near-term focus remains on delivering excellent clinical outcomes, laying the groundwork for expanded commercialization both internationally and in the U.S.
Speaker Change: With that, I'll turn things over to Shelley to take us through the financial results for the quarter and reaffirmed guidance.
Shelley: Thank you, Ron. Good afternoon, everyone. Consistent with our April 2, 2025 pre-announcement.
Shelley: of $37.9 million, up 28% compared to the $29.5 million in the year-a-go quarter and down 6% compared to $40.2 million in the fourth quarter of 2024.
During the quarter, we sold 27,579 LALs.
Shelley: and Generated $27.2 million in LL revenue, up 37% compared to the first quarter of 2024, and down 5% compared to the fourth quarter of 2024.
Shelley: In the first quarter of this year, LL revenue represented 72% of total revenue and increased from 67% and 71% in the first and fourth quarters of 2024 respectively.
Shelley: During the first quarter of 2025, we sold 73 LDDs up 11% compared to the 66 units in the
Shelley: On a sequential basis, our LDD unit sold during the first quarter were down 12% compared to the
Shelley: As of March 31, 2025, our LED installed base stood at 1,044 units, up 43% and 8% versus the 1st and 4th quarters of 2024, respectively.
Shelley: Growth margin in the first quarter of 2025 was 74.8% compared to 70.1% and 71.6% in the first and fourth quarters of 2024 respectively.
Shelley: The increased first margin was primarily due to lower LAL costs and mix.
Shelley: Because we can sign LAL inventory, we recognize the LAL cost of goods sold about nine months after we've built product. Throughout 2024, we ramped up production to stock LAL plus inventory at ASC's.
because most of the LAL costs is fixed overhead.
Shelley: The Higher Volume Production Benefited Gross Margin at the end of 2024 and the first quarter of 2025.
Shelley: In addition, the shift in product mix benefited the first quarter of 2025 was a higher margin LAL revenue advancing to 72% of revenue.
Shelley: from 67% in the first quarter of 2024 and 71% in the fourth quarter of 2024.
Shelley: This year over year increase was primarily due to an increase in personnel costs, expanded collection of registry data with the full roll out of LA plus during 2024, and increased stock-based compensation expense.
Shelley: On a sequential basis, SGNA expenses increase 2% primarily due to higher personnel costs.
Shelley: During the first quarter of this year, R&D expenses rose 29 percent to $10.4 million, compared to $8 million in the first quarter of 2024. This year of a year changed primarily with Laxon increase in salaries and stop its compensation.
Shelley: Compared to the fourth quarter of 2024, R&D expenses in the first quarter rose by 13%, also primarily driven by increases in salaries and stock-based compensation.
Shelley: We reported a gap net loss in the first quarter of 2025 of $8.2 million or a loss of 20 cents per basic and diluted share using weighted average shares outstanding of 40.5 million shares.
Shelley: This compares to a gap net loss of $9.1 million or 25 cents per share on a basic and diluted basis in the first quarter of 2024. Note also that stock-based compensation in the first quarter of 2025.
Shelley: with $7.1 million, resulting in a non-GAAP loss of $1.1 million, or a loss of 3 cents per basic
Shelley: Please refer to the unauthored non-GAAP reconciliation and disclosure included in today's press release for more comparative information.
Shelley: We ended the quarter of 2025 with cash equivalents in search of investments of $229.3 million compared to $207.2 million on December 31, 2024.
Shelley: First quarter cashews is generally high as our employees and apportions, their compensation in performance-based bonuses which are crude during the year and paid in the first quarter of each year.
Shelley: Moving on to our 2025 outlook, we are reiterating our full year 2025 guidance for revenue growth margin and operating expenses that we provided on April 2nd as follows.
Shelley: Revenue 160 to 175 million dollars, implying year-over-year growth of 14 to 25% and assuming recovery of LAL volumes in the second half of the year.
Shelley: While the early science of stabilization April , along with our continued clinical and marketing efforts as described by Ron, are encouraging, we expect macroeconomic pressures and competitive trowings.
Shelley: Gross Margin of 71-73% representing an applied increase of 30 basis points to 230 basis points
Shelley: We are maintaining our gross margin guidance of 71 to 73% despite gross margin of 74.8% reported in the first quarter.
Shelley: because the significant portion of our LAL costs of goods sold is fixed, the anticipated benefit to close margin from higher production, LAL volume in 2025 will now be reduced, given the revised revenue outlook.
Operating expenses of $150 to $160 million.
Representing an increase of 10 to 18% over 2024.
Ron Kurtz: As Ron already indicated, our spending will be centered on strengthening our clinical education and marketing programs to better support practice needs and drive higher LAL procedure adoption and continued investment in R&D.
Ron Kurtz: Note that the operating spends estimate includes non-cash stock-based compensation expenses between twenty-seven and thirty million dollars.
Ron Kurtz: While our guidance includes targeting investments aimed to support and reinvigorate LA out procedure growth, we continue to be committed to carefully managing operating expenses.
Ron Kurtz: With 229.3 million dollars in cash, cash equivalents and short term investments, we remain well capitalized and our strong cash position supports our continued progress toward cash flow break even. And with that, I'll turn the call back to Ron.
Ron Kurtz: Thank you, Shelley. We believe that the actions we have and will be taking position us to re-accelerate LAL growth, which has been mostly responsible for expanding the premium IOL category over the past several years.
Speaker Change: The ability of our differentiated technology to meet the needs of doctors and patients was on full display at the recent meeting of the American Society of Cataract and Refractive Surgery, which also provided us with a timely check-in with many of our current and future customers.
Speaker Change: Both in the scientific sessions and on the Exhibitor floor, the more than 40 physician presentations and two numerous to count informal references to the light adjustable lens, strongly reaffirmed the distinct position our technology continues to hold within the premium eye well market and within cataract surgery more broadly.
Speaker Change: We noted a study by Lee et al that retrospectively compared visual outcomes of cataract surgery in over 150 patients implanted with either the LAL or LAL plus or a multi-focal IOL at a large academic ophthalmology department.
Speaker Change: While about three times as many LAL and LAL plus patients had had previous corneal refractive surgery compared to the multifocal group.
Speaker Change: Both binocular distance and near visual acuity without glasses was found to be statistically better with an adjustable lens. With more than twice the number of patients attaining 2020 distance and J1 reading vision than with the fixed multifocal IOL.
Speaker Change: When coupled with the growing body of data now being collected and experienced by numerous clinicians, these results in the overall excitement and engagement we observed at the meeting reinforce our conviction that the precision and customization afforded by post-operative adjustability are shaping both the present and future of premium cataract surgeries.
Speaker Change: In closing, although the first quarter presented meaningful challenges that may persist in the near term, our confidence in Rxsight's long-term growth trajectory remains unwavering.
Speaker Change: We believe the premium myowell market is undergoing a structural shift with commoditized fixed IOLs competing in a relatively stagnant market while our differentiated customized solution drives expanded premium volumes and in turn greater search and focus.
Speaker Change: As we move through 2025, our team remains highly focused on executing our plan, energized by the opportunity ahead and committed to delivering lasting values for patients, surgeons, and shareholders alike.
Speaker Change: With that, I'll ask the operator to open the call for questions.
Speaker Change: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press part one on your telephone keypad to raise your hand and join the queue.
[inaudible]
Speaker Change: And we do request for today's session that you please limit to one question and one follow-up. Thank you.
Speaker Change: Your first question comes from the line of Ryan Zimmerman with BT IG. Your line is open.
Speaker Change: Hi, Ron and Shelley, this is Izzy on For Ryan. Thanks for taking the questions. I was hoping to start out discussing the pace and scale of your redoubled commercial efforts as curious when we might start to see contributions from these start to path.
[inaudible]
Speaker Change: Yeah, I think as we discussed, taking into account the macro environment and the competitive triilings we expect those to be in the back half of the year that we would start to see impact from those.
Speaker Change: Yeah, I don't think that the macro-environment impacts are pacing internationally, which, you know, obviously is...
initially focused on continued regulatory approvals, and then...
Speaker Change: and the initial market experience. We're starting from such a low base that...
Understood. Thanks for taking the questions.
Speaker Change: Your next question comes from the line of Liang Li, Richard Fries. Your line is open.
Yang Li: Alright, great. Thanks for taking our questions. I guess I wanted to ask a little bit about the comments you made on April . You know, it sounded like early April trends were still pretty choppy and rough, but it got better later on. Can you maybe talk from a little bit more about, you know, what you're seeing, sort of in more recent periods?
Yang Li: and I have no idea what to do with this thing . I don't know what to do . I have no idea what to do with this thing . I
Yang Li: Yeah, I don't think I would go too far beyond what we've already commented. I think that, obviously,
April was
Yang Li: There are a lot of things going on at the macro level in April .
Yang Li: but overall, by the end, had roughly stabilized, and that was something that we also saw in our numbers.
Do you want to add anything, Shelley?
Speaker Change: Alright, great. That's very helpful. I guess one is a little bit about the guidance. You know, there's a lot of moving parts here with competitive trial and 2Q dynamic versus second half. Is there any incremental colors you can provide just on the quarter of the items for the recipe here?
Speaker Change: The number of LDDs that we've held during the year continues to be higher than 2024.
Speaker Change: and typically the second quarter is a very strong quarter for us seasonally but with everything going on with macroeconomics, trialing and whatnot, what we are cautioning investors.
Speaker Change: to keep in mind is the environment is so much different than it's been in past years, and that
Speaker Change: We expect the LAL volume mostly to increase in the second half of the year.
Speaker Change: and that makes a difference as well as the fact that we have to give time for some of the new marking initiatives we're using to help our customer sell.
in this kind of environment.
and John Keynes. Thank you.
No, thank you.
Thank you.
Speaker Change: Your next question comes from the line of Patrick Wood with Morgan Stanley . Your line is open.
Patrick Wood: Beautiful, thanks guys. Two quick ones. First, I'd love to dig in a little bit more on the workload challenges.
that you mentioned.
Patrick Wood: You know it is because I would have thought like the premium mile well side dropping a little bit might have freed up a little bit of consultation time so like what is it that's eating up the time for the customers so much that you know that you're speaking to what's kind of blowing up that time that's making things harder the moment.
Patrick Wood: I just want to clarify Patrick, you said the workload challenge is right.
Yeah.
Yeah.
Patrick Wood: So I think that this is not necessarily something that's brand new, it's something that's been going on for a while just staffing challenges in practices that we certainly picked up in our survey.
Patrick Wood: and that's going to be a little bit practice to practice dependent, but that was definitely one of the items that we saw in the responses to our survey, and so that's really what we were referring to.
Gotcha, but that's handy. And then just as a quick pull-up, um...
You know, for the H2 macro factors getting better.
I mean- [inaudible]
Patrick Wood: What was the sort of thought process in betting that within? [inaudible]
Patrick Wood: to guide. Is it more that you can engage with the customers more so you can pull things around that side?
Patrick Wood: You know, why, not a sound that is provocative, but why would we expect that, sort of, 70-year-old cohort to feel much better about the world in the second half of the first? Thanks.
Well, I don't know that we're necessarily expecting a...
Patrick Wood: that they're going to feel that much better, but I do feel that there's some normalization that probably has already occurred to some extent. And remember, cataract surgery is something that, you know, patients...
Patrick Wood: who generally can put off for a little bit of time, but ultimately they're going to have to do something. And, you know, one of the things that we try to emphasize and we'll continue to do so is that this is an investment that is for that person's rest of their life.
and that, you know,
Patrick Wood: that can have a direct impact on so many aspects of the quality of life.
Patrick Wood: So, we anticipate that over time that will become more apparent even if we don't see a wholesale turn around in the macro environment.
I gotcha. Thanks Ron.
Speaker Change: Your next question comes from the line of Steve Lichtman with Openheimer, your line is open.
Steve Lichtman: Thank you. Ron, you mentioned Workflow and wanting to support your customers through education and other marketing initiatives. Can you talk a little bit more about what that entails?
Steve Lichtman: Yeah, so Steven, we've learned a lot over the last four and a half years of commercialization and to some extent we've been able to disseminate that knowledge
Steve Lichtman: to our customers, but we still see gaps and we think that we can do an even better job of
Steve Lichtman: Translating all the pearls that you learn when you develop, when there's a new technology, really a new clinical capability that hasn't existed before.
There are many subtle ...
Steve Lichtman: that have to be first learned and then disseminated and we continue to collect those and are now taking the opportunity to more fully compile them in a format that our customers who may not all have made use of them can be able to be applying those best practices.
Got it.
that kind of
Steve Lichtman: that's helpful. And then, just as a follow-up, you know, the the strong-grossed margin, and then, um,
for the year and understanding the cadence, Shelley, but for the year as well as the balance sheet to suggest you got some...
Steve Lichtman: Flexibility on Opax Reinvestment. Any thought about adding more feet on the street or anything else in terms of being even more aggressive, especially in light of sort of the competitive driving environment?
Steve Lichtman: No, I think it's a good question. We have rights as the op-ex to the size of revenue right at the low end and I think one of the things that we did is we did not do rock as much of the gross margin impact.
Steve Lichtman: to the bottom line as we did in, as a percent, as we did in our initial guidance when we expected revenue to be higher.
Steve Lichtman: I think that, you know, if we can continue to, you know, make progress, particularly in the second half, that any kind of additional reinvestment,
Steve Lichtman: Wood being sales and marketing, I think that the R&D line is pretty fixed.
Steve Lichtman: to where we're expecting right now. But if we could put more into sales and marketing, we saw the benefit from that, we would as well.
Steve Lichtman: I wouldn't expect us to put more money than we budgeted into the international side just because in the initial phases of international introduction, very focused on key opinion leaders.
Makes sense. Thanks so much.
Thank you. Bye.
Steve Lichtman: The next question comes from the line of David Saxon with Nidam and Company. Your line is open.
Speaker Change: Great, good afternoon, Ron and Shelley, thanks for taking my questions.
Speaker Change: Maybe I'll start with you, Shelley, on the PNL, so Gross Margin, almost 75% obviously really strong. Can you quantify the benefit you saw from the volume leverage as a result from the LL Plus production last year? I guess do you think some of that benefit might spill into the second quarter and then just give in kind of the back half waiting of?
Speaker Change: of the year and the guidance, I guess, why won't you see similar volume leverage for the four-year assuming that guidance plays out?
Speaker Change: is that we increase production a lot to stop the ASCs in 2024.
Speaker Change: Had we kept at our initial guidance, you know, with a higher revenue number, we probably would have produced to fulfill both orders as well as
Speaker Change: I probably a pretty comparable level but we're also reducing the production this year in 2025 and we started that
Speaker Change: Yes, the end of the first quarter to recognize one we wouldn't sell as much during the year, and also we went into the year because you've got to have inventory with an inventory consistent with our original guys and so we cut back to that as well.
Speaker Change: But I think that will primarily be affected in the third and fourth quarters where you see the lower gross margins to come between the 71 and 73 percent.
Speaker Change: Okay, that's helpful. Thanks for that, Shelley. And then on international
Speaker Change: Congrats on South Korea, it looks like UK's, you know, in the near term, so can you quantify
Speaker Change: The Premium Eyewall volumes in those markets. I think the US is around a million. We'd love to hear what the combined South Korea, UK, and you can throw Europe in there. And then I guess how are you thinking about tariffs as you prepare to launch in those regions? Thanks so much.
Speaker Change: Yeah, I don't have those numbers left to talk my head that Oliver could certainly pull those. I would say typically in the OUS market that
Speaker Change: Premium volume as a percent of total cataract, surgery is closer to 10%, but higher in these specific countries.
Speaker Change: Have potential value, number of good countries in Asia, Korea is certainly one of them as well.
Speaker Change: and Japan, China, ultimately, and a few smaller countries within the EU, predominantly in Germany, which is very strong, for premium, it would be Spain, Italy.
Thank you.
Speaker Change: Spain, Italy, France, and then of course UK, that are the most penetrated and where we'll start our penetration.
Speaker Change: and I think that, you know, one of the things that Ronald always says to me and I'll let him talk about that, particularly when he's in Asia, you know, the AFCs and doctors' offices are just superb, and they're very, very focused on...
on quality.
Ron Kurtz: and I think that's very important because that's what we offer to customers. Would you add anything about that Ron?
at all.
Ron Kurtz: Yeah, I think that, you know, again, ophthalmology is an international field, it's very similar across the developed world in Asia and Europe , you know, specifically
South Korea, Iseult
Dutuwei, Dutuwei,
Ron Kurtz: Changes in some of the reimbursement rules in the last several years, but overall it's a very strong private pay market in a number of fields.
Ron Kurtz: and we think that there will be a lot of interest in the LAL there.
Ron Kurtz: It's a total cataract market is somewhat larger than the US, but the premium market has been smaller, as Shelley mentioned, and they'll be, and we'll take a targeted approach there.
Ron Kurtz: Okay, great. Thanks so much. And then just on the tariff, part of the question, will the LAL and LVD be examined or is there some impact there? Thanks so much.
Speaker Change: We did have our text accounts look at Candex, we're currently selling into Canada. Life very often, pharmaceuticals and medical devices are exempt.
Speaker Change: Now, of course, with the administration coming in and saying that pharmaceuticals coming in from China are going to be subject to taxes coming into the US.
Speaker Change: I don't know about other countries yet and of course it is a back and forth number whether any country would...
Speaker Change: You know, have a retaliatory tariff on met device and on pharma, but you know, where we're going so far it's these our products have been exempt from tariff.
Speaker Change: And of course, on the other side of the tariff equation, we produce everything in the US and most of our suppliers were also in the US.
Speaker Change: Your next question comes from the line of Adam Nader with Bipersandler, who lines open.
Adam Nader: Hi, good afternoon. Thank you for taking the questions. Two from me, just one quick one on international, and just wondering if there's any update, Ron or Shelley in terms of the commercial strategy for those geographies, you know, will you be going to Raktor, you know, partnering with the distributor, and then I'd follow up. Thanks.
Speaker Change: So that will be, that's a market by market decision, some markets including South Korea require distributor and so we do have one. The other markets where there's not will make the decision whether they're, you know, will be direct
or not. Currently we use a distributor in Canada.
Speaker Change: Okay, that's helpful, Ron, appreciate the color. And then for the follow-up, I'm admittedly newer to the story but...
Speaker Change: I just wanted to level set on the free-standing LVD Treatment Center initiative that you guys have, when did the initiative start?
Speaker Change: How far along are you in terms of number of sites or customers that use the option, volumes that come from those freestanding sites and just how you think about some of those metrics trending going forward? Thank you for taking the questions.
Speaker Change: Again, these are third parties. That idea has been around for several years, and there have been a few successful ones more individually based in certain regions.
I would say it's caught more, you know, as are...
Speaker Change: Market awareness has grown about the light adjustable lens, then certainly there's been more interest.
Speaker Change: amongst surgeons on figuring out how they can get access if they wanted to not necessarily purchase an LDD or offer the light treatment centers in their own clinics.
Speaker Change: and there can be various reasons for that. And certainly, you know, we saw in, we've seen in other areas of ophthalmology, specifically basic where center models have been successfully implemented.
Speaker Change: So currently, there are several efforts out there, and we're, you know, they're, you know,
Speaker Change: We're certainly working with them and see them as good partners.
but it's still really...
Speaker Change: in the rollout, but we do see there's some natural advantages for certain customers and we see this as a promising area.
Thank you.
Speaker Change: Your next question comes from the line of Robbie Marklis with JP Morgan. Your line is open.
Robbie Marcus: Oh, great. Thanks for taking the questions, too for me. First, Shelley, I just want to make sure I heard you right. I think you said, second quarter will be below the low end of the range. Does that mean we're looking at something less than 38 million in sales in 2Q?
Robbie Marcus: To not be the type of quarterly typically seen with a big uptick and the most the growth on the LAL side would happen in the second half.
Ron Kurtz: What Ron did say is that we saw encouraging signs as we exited April in terms of volume getting better.
Ron Kurtz: and so I'm just being cautionary on the second quarter just given the macroeconomics and you know some market turmoil and giving us time for
Ron Kurtz: Consumers to not necessarily have a bit of harm, but people tend to stand still until they know how something is going to affect them. So we think more that will happen in the second half, and also that trialing will start to evade in the third quarter.
Speaker Change: Great, appreciate the clarification, then maybe just to continue on that thought.
Speaker Change: What makes you think that trialing will abate in third quarter and sales in the macro will pick up? Just simply, you have Balsch and Loam who's re-entering the market after a pause, I imagine they'll sample for a while, outcomes launching.
Speaker Change: Why wouldn't it continue for a long time and given the lower guidance do you think it's prudent to assume a stoppage in a third quarter?
Bye.
Ron Kurtz: So Ron, why don't you start and then I think I said to a bait, but not absolute sausage. I mean, I think we're in a, you know, we've sort of exited an arrow when there was a single player that dominated the market. We now have multiple players in terms of
Fixed IOLs, particularly multifocal IOLs.
that you have very similar offerings.
Ron Kurtz: and we anticipate that that'll, you know, return to what used to be the case where there was more competitive back and forth.
Ron Kurtz: But recall that three-quarters of our volume for LALs comes from non-multipocal IOL patients.
Ron Kurtz: Patience, who would have other guys gotten a monofocal or a Torah cleanse.
Ron Kurtz: and so we would, again, we're not ignoring that there will continue to be competition.
Ron Kurtz: and that there is going to continue to be a more complicated macro environment.
Ron Kurtz: but we think that it won't be quite as dramatic as what we saw over the last six to nine months when we had, you know, that...
Ron Kurtz: a pretty dramatic change in what had been existing in the premium space.
Great. Thanks, Ron.
Speaker Change: Your next question comes from the line of Larry Biegelsen with Wells Fargo. Your line is open.
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. He is a licensed financial professional both in the U.S. and Israel. His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered
Speaker Change: Ron and Shelley, I think what a lot of people are trying to understand is how de-risk the updated guidance is. So for my question
Speaker Change: You did 28% growth in Q1. You talked about, and your Q4 call was in late February . Some marks, you know, it seems like it really deteriorated.
Speaker Change: and you said, you know, April actually worsened before it stabilized. So, are you willing to give us any color on how March and April were relative to call it the guidance range?
Speaker Change: or the midpoint of the Q2 to Q4 guidance, which is 17% or so implied. Any color on where March and April were relative to the updated guidance range and I had one follow up.
Speaker Change: Yeah, so I'll start with March and then make commentary that you made about April . In March, what we saw is that typically March approaches or is that 45% of the total volume for the first quarter.
Speaker Change: and you see that uptick in March as you lead into this seasonally strong second quarter. We didn't see that March. It wasn't many worse than January of February , it was certainly up a bit. And that...
Speaker Change: But it was more a third, a third, a third, and that was kind of one of the things that was unexpected in the first quarter as well, of course a lot more turmoil.
F, economically, and macroeconomically in...
Speaker Change: in that March time period. I didn't say that April was worse. What we said is, is April and maybe I misspoke.
Speaker Change: in, you know, the entire quarter, right? So I think that that was positive as well. In terms of our overall guidance,
Speaker Change: If I think about the low end of the guidance, and I'm just going to provide two bookmarks, the low end of guidance, even though we're expecting more LDD sales, which I think is very positive.
Speaker Change: The way I thought about the low end of guidance when we gave it is that we would sell more LEDs.
Speaker Change: But the same source sales would remain relatively stagnant to the first quarter, which we haven't seen that so far, so that's good news.
Speaker Change: We hope to see is two things. One is that consumers get used to.
Speaker Change: The turmoil, or maybe an even end, and therefore they have more confidence in upgrading to a premium IOL rather than staying with the monofocal or even atoric. And so that is certainly a part of it, as well as the fact that...
that competitive pricing on the premiums in terms of tri-ling.
Ron Kurtz: that, as Ron said, the multifocal IOLs are not all that different from each other.
Ron Kurtz: and the reason is they go less and less multi-focality.
Speaker Change: as the introduction of products. And that cuts down the glare and halo, but they're all moving in the same direction as well. Would you add anything to that on the railing run?
Speaker Change: No, again I think this is something that we've seen over the years in the field and you know there is this waning that typically is in about the six month time frame so that's within the time frame that we've discussed.
Speaker Change: Alright, I'll leave it there. Thanks so much for taking the question.
Thank you.
Speaker Change: Your next question comes from the line of Craig Bijou with Bank of America. Your line is open.
Craig Bichoux: Good afternoon. Thanks for taking the questions. Just one from me. And I appreciate the comments on the LDDs and you still expect LDD growth or LDD placements to be above 24 in 25.
Craig Bichoux: But I wanted to get a sense for, have you heard or have you had discussions with?
Craig Bichoux: Some of the practices that are in your funnel thinking about purchasing an LDD.
Craig Bichoux: and if they have any concerns on a software premium IOL market and whether that could have some impact on...
Craig Bichoux: You know, the timing or maybe the furl of purchasing an LDP until they see that pick up.
Craig Bichoux: Well, I guess the way I would answer that would be that
Craig Bichoux: Well, that's certainly a possible reaction. It's given that a large fraction of the LAL patients come from non-premium. If you wanted to grow your premium, not adopting the LAL would be the opposite of what you would want to do.
Craig Bichoux: So we think there's a strong rationale to actually adopt the technology now and take the opportunity of perhaps a soft market to incorporate that into your practice.
Okay, thanks for taking the question.
Speaker Change: Your next question comes from the line of Tom Stephan with Tiffel. Your line is open.
Tom Stephens: Hi everyone, thanks for the questions. I'll start with a big picture question, you know, no, there's
Tom Stephens: Obviously a lot of macro and competitive factors play. The main kind of investor concern we hear right now is...
Tom Stephens: Now, if the US could be, I guess, nearing or approaching...
Speaker Change: Some sort of saturation point that a runner Shelley, your reaction to that or thoughts to that maybe notably given Shelley I think you've said the class of 2024's. [inaudible]
Speaker Change: Adoption curve has been a little slower than prior classes. Maybe if you can talk about that.
Speaker Change: So I just want to make sure I understand the question Tom, you're talking about reaching a ceiling for LAL.
Speaker Change: Correct. LAL either on a on a per surgeon basis or adoption kind of within the context of the 10,000 cataract surgeons in the US, either or kind of just big picture.
Yeah, again, I just-
You know, don't have a-
Speaker Change: I don't see a good argument for that based on the overall
Speaker Change: Somewhere between 10 and 12%, there are many surgeons, I would say even most who are just getting familiar with the LAL and the potential.
While I understand the concern, I think that that's—
Still something that is…
Speaker Change: in the later years. I think there are better ways that we can certainly address the market. We've talked about some of them. Some of those doctors are going to be better addressed through an open access model.
and some of them will be traditional, more traditional methods.
Speaker Change: The continued negative onslaught of reimbursement cuts that they're seeing in all other aspects of the practice.
Speaker Change: and the LAL has been the primary mechanism for growing premium overall, so I still see that in play for a long time to come.
Speaker Change: That's helpful. Thanks, Ronald. Appreciate that. And then pivot into the pipeline. No, you keep it pretty close to the vest by it. Just want to ask what your view is on both a multi multi focal LAL and an accommodated LAL. I guess my question is are these? [inaudible]
Speaker Change: feasible technologies to begin with when considering, I guess, the beast adjustability technology with LA out. Thanks for the questions.
Speaker Change: for all types of I.O.L.s. And, you know, my view and I think I've said this before is that, I
You know, if not a requirement, a very strong preference.
Speaker Change: for any time there's in the premium space where patients have the ability to upgrade for technology.
I...
So, you know, in that context...
Speaker Change: and as we've already kind of done with LAL Plus and some of our expansions.
Speaker Change: in to the different power ranges. We're developing a family of lenses and where that takes us is going to be guided by
Speaker Change: Surgeon input and financial opportunity. Certainly, you know, multi-focals have a strong place in the market and accommodating IOLs have a strong interest in the market.
Speaker Change: You know, I think we've seen other efforts towards accommodating Iowa's recognize that in order to have a practical accommodating Iowa, you likely need to have a adjustable Iowa first.
So, I would, you know, I think, we're, we have
Speaker Change: A long runway of product pipeline activity for this technology, I'm certainly beyond my career and I think that all the things that you mentioned are certainly possible.
That's great. Thanks, Ron. Thanks, Shelley.
Thank you.
Thanks for watching!
Speaker Change: Your next question comes from the line of Angela Camiri, with the UBS Group. Your line is open.
Hi, thank you for taking our question.
I'm on for Danielle.
Speaker Change: So mine is just a follow-up on Larry's question. You say to scurriedly, my truth is on about 45% of the court's revenues, and that is usually a good proxy of the round to 2Q, but that is not something that you saw this quarter. So was this wondering, are you appreciating your comment on science of improving the ability in April ?
Speaker Change: What level of visibility do you have into customer key schedules? You're just going to get a sense of your confidence in being able to reach your needs guidance and then I have one follow-up
Speaker Change: So I just want to restate your question, Andrew, so you're asking how do we have visibility into April numbers? Is that what your question is?
Yes, two cute numbers.
Speaker Change: So obviously because we can sign inventory it's reported to us when the implant is made into the patient.
Speaker Change: So we see those usually within a few days of implant as they get reported to us.
We don't have this ability into a particular doctor's schedule.
Speaker Change: Some historical data, but we have stopped using it given our unique circumstances as well. And as we said, you know, the low end of the guidance, you know, assumes
Speaker Change: You know, virtually no recovery in things or sales. The higher end of the guidance obviously does so and the only warning we have about second quarter is [inaudible]
Speaker Change: While we saw improvement in April , we would expect most of the growth to get beyond the lower end of the guidance would happen in the second half. Then I answer your question.
Oh yes, that is helpful.
Speaker Change: And then my second follow-up is just also a follow-up on type question on workload challenges. What types of practices are making these comments and what are you doing to relieve capacity today because
Speaker Change: All checks have sometimes showed doctors looking at the post-operative adjustments as a barrier to do more LALs. So any color on the practice profile for those making workload challenge comments would be helpful for us.
I'm
So, you know, I think that, I'm, um,
but
These are, you know, these are not a-
New, and so we've developed over the last several years.
Speaker Change: Good, not only good explanations for how practices have adopted the technology successfully, but we have many many examples of that that we can refer new and potential practices to to be able to see the benefits of making that commitment to this technology.
Speaker Change: significantly different than every other new paradigm that has come into ophthalmology which, you know, there's these same objections are raised and then
Amazing, thanks Ryan, Shelley Oliver [inaudible]
Thank you.
Speaker Change: Seeing no further questions at this time, I will turn the call back over to Ron Kurtz, CEO for closing remarks.
Speaker Change: Well, thank you all for your time and attention today, we appreciate your interest in Rxsight and we're looking forward to updating you on our progress in future quarters. Goodbye. Thank you.
Speaker Change: This concludes today's conference call. Thank you all for joining and you may now disconnect.
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