Q1 2025 IRIDEX Corp Earnings Call

May 13, 2025

Iridex earnings Conference call.

All lines have been placed on mute to prevent any background noise. Thank.

Thank you I would now like to turn the conference over to trip Taylor of Investor Relations you may begin.

Thank you and thank you all sorts of dissipating in today's call. Joining me from the company are Patrick Mercer Iridex as Chief Executive Officer, and Romeo does on the company's Chief Financial Officer earlier today, You're that's released financial results for the quarter ended March 29 2025.

Patrick Mercer: As a result, we remain on track to deliver cashflow break-even and positive adjusted EBITDA results in 2025, as long as conditions remain as they are.

A copy of the press release is available on the company's website before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of the federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.

Patrick Mercer: Now taking a closer look at the first quarter where our results demonstrate our commitment to improving operations and advancing our path to profitability. On the top line, we generated revenue of $11.9 million just above the first quarter of last year. Along with that, we again generated positive adjusted EBITDA of $0.4 million, representing an improvement of $2.9 million compared to the prior year quarter. Revenue in the quarter was driven by an increase in our Cyclo G6 product family, revenue which grew 8% year over year, and was offset by the slight declines in our Retina product revenue.

Any statements made during this call that are not statements of historical fact, including but not limited to statements concerning our strategic goals and priorities product development matters sales trends and the markets in which we operate all forward looking statements are based upon our current estimates and various assumptions. These statements involve.

All of the material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements.

Patrick Mercer: Let's take a look at our glaucoma probes performance for the first quarter of 2025. Overall, we are seeing very positive indicators in the business and we're above plan in the quarter, which is a strong start to the year. We're making real progress towards our strategic goal of driving earlier and repeat utilization of MP3 CPC treatments on mild and moderate glaucoma patients. The four providers then transitioned to treatments using our G-Probes for progressing in later stage glyphosate. Our target for the year is to sell more MP3 units than G-probes. And based on Q1 performance, we're definitely headed in the right direction.

Accordingly, you should not place reliance on these statements.

Discussion of risks and uncertainties associated with our business. Please see the most recent Form 10-K and Form 10-Q filings with the SEC.

Iridex disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.

This conference call contains time sensitive information and is accurate only as of the live broadcast today May 13, 2025, and with that I'll turn the call over to Patrick.

Patrick Mercer: MP3 probe unit cells exceeded our expectations thanks to a few key drivers. We are working hard to increase awareness and train surgeons on our new treatment studies, which is driving improved patient outcomes. We are also ensuring the glaucoma community is aware of the ongoing dose escalation study and its promising early results. Our focus on the clinical guidance has been essential to winning greater product adoption. We're also leveraging a new self-support tool, MedScout, which has proven to be a valuable asset, delivering high-impact provider-level insights that are helping our teams execute effectively in the field. G-probe unit cells have remained steady despite our recent price increase.

Good.

Speaker Change: Afternoon, everyone and thank you for joining us today I'm excited to highlight Iridex improved financial condition.

Speaker Change: Our first quarter business progress and developments with our strategic plans and partnership with novel inspiration.

Speaker Change: Over the past months, we have worked very hard and I am extremely proud of how the team has transformed iridex for the past few quarters, we've grown revenues, even while materially decreasing expenses compared to prior years. The result of these operating improvements as delivering our first two quarters of adjusted EBITDA positive.

Speaker Change: Results in recent history.

Speaker Change: Proving profitability as a result of right sizing our cost structure.

Speaker Change: In the fourth quarter, we initiated aided a number of cost reduction programs the reduction of nonessential spending across the business demonstrates the potential.

Patrick Mercer: That tells us there's still solid demand for the product.

Patrick Mercer: Now I'll discuss the retina side of the business. Pascal cells were slower in the beginning of the year as we optimized some technical settings, but this was offset by strong cells of our IQ family of products. Surgical retina cells exceeded our expectations, contributing significantly to the overall retina cell. It was a notable increase in our TS product sales as accounts increasingly seek cost-effective solutions. This was the highest volume of TX cells since Q3, 2023, while SLX product cells remain steady. It was also a very strong quarter for IndoorPros, which exceeded the forecast by $0.1 million, though the market for this product remains volatile.

Speaker Change: Patient see of our business model and positions <unk> for sustained success.

Speaker Change: To further bolster our financial health of the business in March we strengthened our balance sheet with a $10 million strategic investment from novel inspiration.

Speaker Change: This capital represents novels confidence near <unk> business prospects and our ability to extend our leadership position in providing innovative and versatile laser based medical systems for the treatment of glaucoma and retinal disease.

Over the past few months, we have worked very hard and I am extremely proud of how the team has transformed iridex for the past few quarters, we've grown revenues, even while materially decreasing expenses compared to prior years. The result of these operating improvements as delivering our first two quarters of adjusted EBITDA positive.

Speaker Change: These accomplishments over the past few quarters represent significant progress stabilizing and improving the outlook of the business. As a result, we remain on track to deliver cash flow breakeven and positive adjusted EBITDA results in 2025 as long as conditions remain as they are.

Results in recent history.

Patrick Mercer: Shifting to OUS, in OMEA, the region's remains are most stable revenue generator with strong growth potential in the glaucoma. Robust sales of Pascal Systems are further driving revenue. In Asia, regulatory approvals for the IRDEX Pascal system are fueling strong capital equipment sales. particularly in India and Japan. In China, medical retina cells are showing a healthy recovery supported by continued growth in retina probe cells. Looking to Latin America, business is stabilizing with clear growth momentum, particularly following the approval of the Airdex Pascal systems across several key markets.

Our improving profitability as a result of right sizing our cost structure.

In the fourth quarter, we initiated a number of cost reduction programs the reduction of nonessential spending across the business demonstrates the potential.

Speaker Change: Now taking a closer look at the first quarter, where our results demonstrate our commitment to improving operations and advancing our path to profitability.

Patient see of our business model and positions Iridex for sustained success.

Speaker Change: On the topline we generated revenue of $11 9 million just above the first quarter of last year along.

Further bolster our financial health of the business in March we strengthened our balance sheet with a $10 million strategic investment from novel inspiration.

Speaker Change: Along with that.

Speaker Change: Again generated positive adjusted EBITDA of $4 million.

Speaker Change: <unk>, an improvement of $2 9 million.

This capital represents novels confidence near to <unk> business prospects and our ability to extend our leadership position in providing innovative and versatile laser based medical systems for the treatment of glaucoma and retinal disease. These.

Speaker Change: Compared to the prior year quarter Rev.

Speaker Change: Revenue in the quarter was driven by an increase in our cyclo <unk> product family revenue, which grew 8% year over year and was offset by the slight declines in our retina product revenues.

Patrick Mercer: And GMBH sales experienced a slight decline primarily due to some of unresolved service issues, which remains an area of active management focus.

These accomplishments over the past two quarters represent significant progress stabilizing and improving the outlook of the business. As a result, we remain on track to deliver cash flow breakeven and positive adjusted EBITDA results in 2025 as long as conditions remain as they are.

Speaker Change: Let's take a look at our glaucoma probes performance for the first quarter of 2025.

Patrick Mercer: I'd like to touch on our partnership with Novel and our strategic priorities moving forward. Novel decided to invest in Iridex because of the significant value of our franchise and the potential to enhance that value by becoming a more active participant in the ongoing market reshuffle. Together we are focused on innovation and long-term value creation, and NOVA was open to expanding our partnership as compelling opportunities become available.

Speaker Change: Overall, we are seeing very positive indicators in the business and where were above plan in the quarter, which is a strong start to the year.

Speaker Change: We're making real progress towards our strategic goal of driving earlier and repeat utilization of mp3, CPC treatments on mild and moderate glaucoma patients.

Now taking a closer look at the first quarter, where our results demonstrate our commitment to improving operations and advancing our path to profitability.

Speaker Change: Before providers and transitioned to treatments using our G probes for progressing in later stage glaucoma.

On the topline we generated revenue of $11 9 million just above the first quarter of last year.

Speaker Change: Our target for the year is to sell more MP three units and G probes and based on Q1 performance. We are definitely headed in the right direction.

Along with that.

Patrick Mercer: Our initial focus is to leverage our loyal base of global customers and stable revenue while improving operations to create a self-sustaining Novel is aligned with our objective of creating long-term shareholder value. Looking ahead, we are evaluating our strategy to optimize our gross margins, especially in light of the new tariff policies, and ensure and improve responsiveness to customers, especially those working with Iridex through an international distributor, and searching for opportunities to drive revenue, which could include partnerships, distribution agreements, or small acquisitions to expand our product portfolio and leverage our global customer base.

Again generated positive adjusted EBITDA of $4 million representing.

Representing an improvement of $2 9 million.

Speaker Change: Mp3 probe unit sales exceeded our expectations. Thanks to a few key drivers.

Prior to the prior year quarter revenue in the quarter was driven by an increase in our cyclo <unk> product family revenue, which grew 8% year over year and was offset by the slight declines in our retina product revenues.

Speaker Change: And we are working hard to increase awareness and train surgeons on our new treatment settings, which is driving improved patient outcomes.

Speaker Change: We are also ensuring the glaucoma community is aware of the ongoing dose escalation study and its promising early results.

Let's take a look at our glaucoma probes performance for the first quarter of 2025 overall.

Speaker Change: Our focus on the clinical guidance has been essential to winning greater product adoption.

Overall, we are seeing very positive indicators in the business and were above plan in the quarter, which is a strong start to the year.

Speaker Change: We're also leveraging a new self support tool, Mexico, which has proven to be a valuable asset delivering high impact provider level insights that are helping our teams execute effectively in the field.

We're making real progress towards our strategic goal of driving earlier and repeat utilization of mp3, CPC treatments on mild and moderate glaucoma patients.

Romeo Dizon: Now I'll hand the call over to Romeo to discuss our financial Thank you, Patrick. Good afternoon, everyone. And thank you for joining us today. I would like to begin by reviewing our financial performance for the first quarter ended March 29, 2025. As we noted in our press release and in Patrick's comments, Total revenues for the first quarter of 2025 were $11.9 million, up marginally compared to $11.8 million reported for the first quarter of 2024. Right in the product revenue decreased 3% in the first quarter of 2025 to 6.6 million compared to the first quarter of 2024 driven primarily by lower Pascal system sales.

Speaker Change: <unk> unit sales have remained steady despite our recent price increase that tells US there is still solid demand for the product.

For providers, and then transition to treatments using our G probes for progressing in later stage glaucoma.

Our target for the year is to sell more MP three units and G probes and based on Q1 performance. We are definitely headed in the right direction.

Speaker Change: Now I'll discuss the readiness side of the business Pascal sales were slower in the beginning of the year as we optimize some technical settings.

Mp3 probe unit sales exceeded our expectations. Thanks to a few key drivers.

Speaker Change: This was offset by strong sales of our IQ family of products.

Speaker Change: Surgical retina sales exceeded our expectations contributing significantly to the overall retina sales.

We are working hard to increase awareness and train surgeons on our new treatment studies, which is driving improved patient outcomes.

Speaker Change: It was a notable increase in our TX product sales as accounts increasingly seek cost effective solutions.

We are also ensuring the glaucoma community is aware of the ongoing dose escalation study and its promising early results are.

Speaker Change: This was the highest volume of <unk> sales since Q3, 2023, while <unk> product sales remained steady.

Our focus on the clinical guidance has been essential to winning greater product adoption.

Romeo Dizon: partially offset by higher medical and surgical retina systems. Total product revenue from the cycle of G6 glaucoma product family is $3.2 million, an increase of 0.2 million, or 8% year over year, primarily driven by higher-approved sales. Other revenue increased $0.1 million to $2.1 million in the first quarter of 2025, compared to $2.0 million in the first quarter of 2024, driven primarily by an increase in service and a certain legacy product revenue.

We're also leveraging a new self support tool, Mexico, which has proven to be a valuable asset delivering high impact provider level insights that are helping our teams execute effectively in the field.

Speaker Change: It was also a very strong quarter for enterprise, which exceeded the forecast by $1 million. So the market for this product remains volatile.

Speaker Change: Shifting to O U S and EMEA regions.

Probe unit sales have remained steady despite our recent price increase that tells US there is still solid demand for the product.

Speaker Change: <unk> remains our most stable revenue generator with strong growth potential in the glaucoma segment.

Speaker Change: Robust sales of Pascal systems are further driving revenue expansion.

Now I'll discuss the revenue side of the business Pascal sales were slower in the beginning of the year as we optimize some technical settings, but this was offset by strong sales of our IQ family of products.

Speaker Change: And Asia regulatory approvals for the Iridex Pascal system are fueling strong capital equipment sales.

Larry: Larry in India, and Japan, and China Medical retina cells are showing a healthy recovery supported by continued growth in retina approach cells.

Romeo Dizon: Switching attention to gross profit, expenses, and cash. Gross profit for Q1 2025 is $5.1 million for a gross margin of 42.5%. an increase compared to 4.5 million or a gross margin of 37.9% in Q1 2024. The increase in gross margin was driven by favorable product mix and lower manufacturing expenses. Operating expenses were $5.3 million in Q1 2025. Substantial decrease of 2.5 million compared to 7.8 million in Q1 2024. A decrease was due primarily to expense reduction measures taken in late 2024, driven by a reduction in the workforce, resulting in lower headcount related expenses and lower discretionary spend.

Surgical retina sales exceeded our expectations contributing significantly to the overall retina sales.

Larry: Looking to Latin Americas business is stabilizing with clear growth momentum, particularly following the approval of the Iridex Pascal systems across several key markets.

Was a notable increase in our TX product sales as accounts increasingly seek cost effective solutions.

This was the highest volume of <unk> sales since Q3, 2023, while SLS product sales remained steady.

Larry: And <unk> sales experienced a slight decline primarily due to some unresolved service issues, which remains an area of active management focus.

It was also a very strong quarter for enterprise, which exceeded the forecast by $1 million.

Larry: Now I'd like to touch on our partnership with novel and our strategic priorities moving forward novel decided to invest in Iridex because of the significant value of our franchise and the potential to enhance that value by becoming.

So the market for this product remains volatile.

Shifting to our U S and EMEA regions remains our most stable revenue generator with strong growth potential in the glaucoma second.

Larry: A more active participant.

Robust sales of Pascal systems are further driving our revenue expansion.

Larry: And the ongoing market reshuffling.

And Asia regulatory approvals for the Iridex Pascal system are fueling strong capital equipment sales.

Larry: We are focused on innovation and long term value creation and novel was open to expanding our partnership as compelling opportunities become available.

Romeo Dizon: During the quarter, we settled the LendNote payable, which resulted in writing off the associated capitalized loan origination costs of approximately $1.5 million. Consequently, net loss is $1.7 million or $0.10 per share for Q1 2025, compared to a net loss of $3.5 million or $0.21 per share in the same period as the prior year. Total adjusted EBITDA for Q1 2025 was $0.4 million, an improvement of $2.9 million compared to adjusted EBITDA loss of $2.5 million for Q1 2024. The improvement is driven primarily by the expense reduction measures implemented in late 2021.

<unk> in India, and Japan, and China Medical retina cells are showing a healthy recovery supported by continued growth in retina approach cells.

Larry: Our initial focus is to leverage our loyal base of global customers and stable revenue, while improving operations to create a self sustaining entity.

Looking to Latin Americas business is stabilizing with clear growth momentum, particularly following the approval of the Iridex Pascal systems across several key markets.

Larry: Novel is aligned with our objective of creating long term shareholder value.

Larry: Looking ahead, we are evaluating our strategy to optimize our gross margins.

<unk> sales experienced a slight decline primarily due to some unresolved service issues, which remains an area of active management focus.

Larry: Specially in light of the new chair policies and insurance improve responsiveness to customers, especially those working with iridex through an international distributor and searching for opportunities to drive revenue, which could include partnerships distribution.

Now I'd like to touch on our partnership with novel and our strategic priorities moving forward.

I will decided to invest in iridex because of the significant value of our franchise and the potential to enhance that value by becoming a more active participant in the ongoing market reshuffling.

Romeo Dizon: Onto the balance sheet. In March 2025, we had a cash infusion of $10 million from novel inspiration. And current with the close of this investment, we sell the linden milk payable and use the portion of the proceeds to liquidate the debt. We believe the convertible portion of the non-gold investment represents a lower cost of capital and more favorable terms for the company. With that, cash and cash equivalents totaled $7.2 million at the end of the first quarter of 2025.

Larry: <unk> agreements or small acquisitions to expand our product portfolio and leverage our global customer base now.

Speaker Change: Now I'll hand, the call over to <unk> to discuss our financials.

Together, we are focused on innovation and long term value creation and novel was open to expanding our partnership as compelling opportunities become available.

unknown: Thank you Patrick good afternoon, everyone and thank you for joining us today.

Speaker Change: I'd like to begin by reviewing our financial performance for the first quarter ended March 29 2025.

Our initial focus is to leverage our loyal base of global customers and stable revenue, while improving operations to create a self sustaining entity.

As we noted in our press release and in Patrick's comments, our total revenues for the first quarter of 2025 or.

Speaker Change: $11 9 million.

Navajo is aligned with our objective of creating long term shareholder value.

Speaker Change: Margin compared to $11 8 million reported for the first quarter of 2024.

Romeo Dizon: Before turning it back to Patrick, I will touch on the recent global trade policy contemplated by the U.S. government. We want to highlight that we manufacture and source our products primarily within the United States. And as such, we expect minimal direct exposure to the most recently implemented tariff-related policy.

Looking ahead, we are evaluating our strategy to optimize our gross margins, especially in light of the new chair policies and ensuring improve responsiveness to customers, especially those working with iridex through an international distributor and searching for opportunities to drive revenue, which could include <unk>.

Speaker Change: Product revenue decreased 3% in the first quarter of 2025 to $6 6 million compared to the first quarter 2024, driven primarily by lower Pascal system sales.

Speaker Change: Partially offset by higher medical and surgical retina system sales.

Romeo Dizon: We will continue working on areas that we control, that is reducing operating expenses and generating additional efficiencies to improve our gross margins.

Gartner ships.

Speaker Change: Total product revenue from our <unk> glaucoma product family with $3 2 million, an increase of <unk> 2 million or 8% year over year, primarily driven by higher probe sales.

Distribution agreements or small acquisitions to expand our product portfolio and leverage our global customer base.

Patrick Mercer: And with that, I will now turn the call back to Patrick. Thank you, Romeo. As you can hear, we're extremely proud of our progress over the past two quarters, growing revenues, and generating positive adjusted We have stabilized our business and improved our balance sheet.

Speaker Change: Now I'll hand, the call over to <unk> to discuss our financials.

unknown: Thank you Patrick good afternoon, everyone and thank you for joining us today.

Speaker Change: Other revenue increased <unk> 1 million to $2 1 million in the first quarter of 2025.

unknown: I'd like to begin by reviewing our financial performance for the first quarter ended March 29 2025.

Speaker Change: Compared to 2.0 million in the first quarter of 2024.

Patrick Mercer: We will continue to focus on driving adoption of our differentiated glaucoma and retina technology platforms, enhancing our global customer relationships, and improving operations to advance our path to profitability. There is a massive opportunity ahead for AirDex, and we believe we have the team and strategy in place to create a durable value for AirDex share.

unknown: As we noted in our press release and in Patrick's comments for total revenues for the first quarter of 2025 or $11 9 million.

Speaker Change: Driven primarily by an increase in service and in certain legacy product revenue.

Speaker Change: Switching to cash as the gross profit expenses and cash burn.

unknown: Marginally compared to $11 8 million reported for the first quarter of 2024.

Speaker Change: Gross profit for Q1, 2025 was $5 1 million or a gross margin of 42, 5%.

unknown: Product revenue decreased 3% in the first quarter of 2025 to $6 6 million compared with the first quarter 2024, driven primarily by lower Pascal system sales.

Speaker Change: The increase compared to $4 5 million or a gross margin of 37, 9% Q1 2024.

Patrick Mercer: Now I'd like to address some questions we have recently received from Iridex Sheriff. Question number one.

Speaker Change: The increase in gross margin was driven by favorable product mix and lower manufacturing expenses.

unknown: Partially offset by higher medical and surgical retina system sales.

Patrick Mercer: First, people are interested in hearing more about the impact if the tariffs remain in place, particularly with respect to the very high tariffs that will remain in effect with respect to China. As indicated in our prepared remarks, Iridex products remain overwhelmingly sourced from and manufactured in the United States. Our products are assembled from raw materials and components sourced from suppliers, operating in many parts of the world, but the final assembly is done in the U.S. This does not mean, however, that the bulk of the manufacturing work is done within our Mountain View headquarters building. All of our disposable products and a growing percentage of our hardware products are manufactured by a third-party OEM.

Speaker Change: Operating expenses were $5 3 million in Q1 2025.

unknown: Total product revenue from the <unk> glaucoma product family $3 2 million, an increase of <unk> 2 million or 8% year over year, primarily driven by higher probe sales.

Speaker Change: The substantial decrease of $2 5 million compared to $7 8 million in Q1 2024.

Speaker Change: The decrease was due primarily to expense reduction measures taken in late 2024, driven by a reduction in workforce, resulting in lower head count related expenses and lower lower discretionary spend.

unknown: Other revenue increased <unk> 1 million to $2 1 million in the first quarter of 2025.

unknown: Prior to 2.0 million.

unknown: The first quarter of 2024.

unknown: Driven primarily by an increase in service and in certain legacy product revenue.

During the quarter, we settled in the note payable which resulted in writing off the associated capitalized loan origination costs of approximately $1 5 million.

unknown: Switching to cash as the gross profit expenses and cash.

unknown: Gross profit for Q1, 2025 was $5 1 million or a gross margin of 42, 5%.

Speaker Change: Consequently, net loss was $1 7 million or <unk> 10 per share for Q1 2025 compared to a net loss of $3 5 million for 21 per share the same periods of the prior year.

unknown: The increase compared with $4 5 million or a gross margin of 37, 9% Q1 2024.

Patrick Mercer: And these OEMs are primarily located within the United States. This is the explanation for why we have reported. Expecting minimal direct exposure to the most recent implemented tariff-related policies. Many of our competitors who rely on imported, fully manufactured products into the U.S. are facing higher costs, longer lead times, and significant business uncertainty. This gives us a pricing and supply chain advantage, making our U.S. made products more attractive to customers, seeking more stable pricing and reliable availability.

unknown: The increase in gross margin was driven by favorable product mix and lower manufacturing expenses.

Speaker Change: Total adjusted EBITDA for Q1, 2025 was <unk> 4 million, an improvement of $2 9 million compared to adjusted EBITDA loss of $2 5 million for Q1 2024. The improvement is driven primarily by the expense reduction measures implemented in late 2024.

unknown: Operating expenses were $5 3 million in Q1 2025.

unknown: A substantial decrease of $2 5 million compared to $7 8 million Q1 2024.

unknown: The decrease was due primarily to expense reduction measures taken in late 2024, driven by a reduction in workforce, resulting in lower head count related expenses and lower lower discretionary spend.

Speaker Change: Onto the balance sheets.

Speaker Change: In March 2025, we had a cash infusion of $10 million from novel inspiration.

Patrick Mercer: On the impact of reciprocal high tariff rates imposed on the U.S., our shipments of products to China currently are not material.

Speaker Change: Concurrent with the close of this investment.

Speaker Change: Settled the note payable and use a portion of the proceeds to liquidate the debt.

unknown: During the quarter, we sell them note payable, which resulted in writing off the associated capitalized loan origination costs of approximately $1 5 million.

Speaker Change: We believe the conversion of convertible portion of Marvell investment represents a lower cost of capital and more favorable terms for the company.

Patrick Mercer: Second question. is about our product extension discussions relating to novel investment.

Patrick Mercer: Specifically, is Iridex looking to buy companies or distribute more products through our existing channels? Iridex has established long-term relationships across a global customer base to become known as a leader in laser-based medical equipment for ophthalmology. To leverage these relationships and generate increased sales, we're working with Novel to identify opportunities to expand our portfolio products to offer these customers more products they need to treat their patients. We believe this is one of the most capital efficient ways to expand our revenue. This could include distribution agreements, partnerships, or smaller tuck-in accretive acquisitions that are synergistic.

unknown: Consequently, net loss was $1 7 million or <unk> per share for Q1, 2025 compared to a net loss of $3 5 million or 21 per share the same periods of the prior year.

Cash and cash equivalents totaled $7 2 million. Okay ended the first quarter 2025.

Speaker Change: Before turning it back to Patrick I'll touch on the recent global trade policy contemplated by the U S government.

unknown: Total adjusted EBITDA for Q1, 2025 was <unk> 4 million, an improvement of $2 9 million compared to adjusted EBITDA loss of $2 5 million for Q1 2024. The improvement is driven primarily by the expense reduction measures implemented in late 2024.

Speaker Change: You want to highlight that we manufacture and source our products, primarily within the United States and as such we expect minimal direct exposure to the most recently implemented tariff related policies.

Speaker Change: We will continue working areas that we control that as reducing operating expenses and generating additional efficiencies to improve our gross margins and with that I will now turn the call back to Patrick.

unknown: Onto the balance sheets.

unknown: In March 2025, we had a cash infusion of $10 million from novel inspiration.

unknown: In current with the close of this investment.

Speaker Change: Thank you Romeo.

Speaker Change: As you can hear we are extremely proud of our progress over the past two quarters growing revenues and generating positive adjusted EBITDA.

unknown: Settled the note payable and use a portion of the proceeds to liquidate the debt.

Patrick Mercer: Now who's supportive of this strategy and we're actively working together on this initiative.

unknown: We believe the conversion of the convertible portion of Marvell investment represents a lower cost of capital and more favorable terms for the company.

Patrick Mercer: Last question is about the change in our cash firm, specifically we We are really done. Are we really done burning cash? And can we really adjust to operating that better than cash flow breakeven?

Speaker Change: We have stabilized our business and improved our balance sheet, we will continue to focus on driving adoption of our differentiated glaucoma and retina technology platforms, enhancing our global customer relationships and improving operations to advance our path to profitability.

unknown: Cash and cash equivalents totaled $7 2 million ended the first quarter 2025.

Patrick Mercer: The simple answer is yes. When I was named CEO in late 2024, that appointment came with the mandate from the board of directors that AirDex immediately take the steps necessary to end the cash. As our last two quarters results have shown, not only have we reduced our operating expenses, but have continued to remain disciplined and further reduced costs. From a cash flow perspective, in Q1 2025, net cash used in operating activities was $1.1 million. a decrease of $0.5 million or 31% compared to Q1 2020. We reduced our APEX 32% and 14% versus Q1 2024 and Q4 2024 respectively.

Patrick: Before turning it back to Patrick I will touch on the recent global trade policy contemplated by the U S government.

Speaker Change: There is a massive opportunity ahead for Iridex and we believe we have the team and strategy in place to create a durable value for iridex shareholders.

Patrick: You want to highlight that we manufacture and source our products primarily within the United States.

Patrick: As such we expect minimal direct exposure to the most recently.

Speaker Change: Now I'd like to address some questions. We have recently received from <unk> shareholders.

Patrick: <unk> tariff related policies.

Speaker Change: Question number one.

Patrick: We will continue working on areas that we control that as reducing operating expenses and generating additional efficiencies to improve our gross margins and with that I will now turn the call back to Patrick.

Speaker Change: First people are interested in hearing more about the impact if the tariffs remain in place.

Speaker Change: With respect to the very hot chairs that will remain in effect with respect to China.

Thank you Romeo.

Speaker Change: As indicated in our prepared remarks, iridex products remain overwhelmingly sourced from and manufactured in the United States. Our products are assembled from raw materials and components sourced from suppliers operating many parts of the world, but the final assembly is done in the U S.

Patrick: As you can hear we are extremely proud of our progress over the past two quarters.

Patrick: Growing revenues and generating positive adjusted EBITDA.

Patrick Mercer: While we have reduced our costs and expenses, we continually are looking for additional savings as we monitor expenses. We intend to continue running the business with this same level of financial discipline going forward. We're planning to achieve positive adjusted EBITDA and cash flow breakeven this year on revenue generation consistent with 2020.

Patrick: We have stabilized our business and improved our balance sheet, we will continue to focus on driving adoption of our differentiated glaucoma and retina technology platforms, enhancing our global customer relationships and improving operations to advance our path to profitability.

Speaker Change: This does not mean, however that the bulk of the manufacturing work is done within our mountain view headquarters building all of our disposable products and a growing percentage of our hardware products are manufactured by a third party Oems.

Patrick: There is a massive opportunity ahead for Iridex and we believe we have the team and strategy in place to create a durable value for <unk> shareholders.

Speaker Change: And these Oems are primarily located within the United States.

Unknown Executive: Thank you all for joining. This concludes today's conference call.

Speaker Change: This is the explanation for why we have reported.

Unknown Executive: Thank you all for joining and you may now disconnect.

Patrick: Now I'd like to address some questions. We have recently received from Iridex shareholders.

Speaker Change: Expecting minimal direct exposure to the most recent implemented tariff related costs.

Patrick: Question number one.

Patrick: First people are interested in hearing more about the impact if the tariffs remain in place.

Speaker Change: Many of our competitors, who rely on imported fully manufactured products into the U S are facing higher costs longer lead times and significant business uncertainty.

Patrick: With respect to the very hot chairs that will remain in effect with respect to China.

Speaker Change: This gives us a pricing and supply chain advantage, making our U S made products more attractive to customers seeking more stable pricing and reliable availability on.

As indicated in our prepared remarks, iridex products remain overwhelmingly sourced from and manufactured in the United States. Our products are assembled from raw materials and components sourced from suppliers operating many parts of the world, but the final assembly is done in the U S.

Speaker Change: On the impact of reciprocal high tariff rates imposed on the U S. Our shipments of products to China currently are not material.

Patrick: This does not mean, however that the bulk of the manufacturing work is done within our mountain view headquarters building all of our disposable products and a growing percentage of our hardware products are manufactured by a third party Oems.

Second question.

Speaker Change: It's about our product extensions discussions relating to novel investment specifically.

Speaker Change: Iridex looking to buy companies or distribute more products through our existing channels.

Patrick: These Oems are primarily located within the United States.

Speaker Change: Iridex has established long term relationships across a global customer base to become known as a leader in laser based medical equipment for ophthalmology.

Patrick: This is the explanation for why we have reported.

Patrick: Expecting minimal direct exposure to the most recent implemented tariff related products.

Speaker Change: Leverage these relationships in general rate increase sales, we are working with novel to identify opportunities towards spanned our portfolio of products to offer these customers more products they need to treat their patients. We believe this is one of the most capital efficient ways to expand our revenue.

Patrick: Many of our competitors who rely on imported.

Patrick: Fully manufactured products into the U S are facing higher costs longer lead times and significant business uncertainty.

Patrick: This gives us a pricing and supply chain advantage, making our U S made products more attractive to customers seeking more stable pricing and reliable availability.

Speaker Change: This could include distribution agreements are.

Speaker Change: Ships are smaller tuck in accretive acquisitions that are synergistic.

Patrick: On the impact of reciprocal high tariff rates imposed on the U S. Our shipments of products to China currently are not material.

Speaker Change: Navajo supportive of this strategy and we are actively working together on this initiative.

Patrick: Second question.

Speaker Change: Last question is about the change in our cash burn specifically.

Patrick: It's about our product extensions discussions relating to novel investment.

Speaker Change: We are really done are we really done burning cash and can we really adjust to operating better than cash flow breakeven.

Patrick: Simply as Iridex looking at by companies or distribute more products through our existing channels.

Speaker Change: The simple answer is yes, when I was named CEO in late 2020 for that appointment came with the mandate from the board of directors at Iridex immediately take the steps necessary to end the cash burn.

Patrick: Iridex has established long term relationships across a global customer base to become known as a leader in laser based medical equipment for ophthalmology.

Patrick: Leverage these relationships in general rate increase sales, we are working with novel to identify opportunities towards spanned our portfolio of products to offer these customers more products they need to treat their patients. We believe this is one of the most capital efficient ways to expand our revenue.

Speaker Change: As our last two quarters' results as shown not only have we reduced our operating expenses, but have continued to remain disciplined and further reduce costs.

Speaker Change: Cash flow perspective in Q1 2025 net cash used in operating activities was $1 1 million.

Patrick: This could include distribution agreements.

Speaker Change: The decrease of <unk> 5 million or 31% compared to Q1 2024.

Patrick: Our newest ships or smaller tuck in accretive acquisitions that are synergistic.

Speaker Change: We reduced our opex, 32% and 14% versus Q1 2024 in Q4 2024, respectively.

Patrick: Navajo supportive of this strategy and we are actively working together on this initiative.

Patrick: Last question is about the change in our cash burn specifically.

Speaker Change: While we have reduced our costs and expenses we continually.

Patrick: We are really done are we really done burning cash and can we really adjust to operating better than cash flow breakeven.

Speaker Change: Are looking for additional savings as we monitor expenses.

Speaker Change: We tend to continue running the business with the same level of financial discipline going forward.

Speaker Change: We're planning to achieve positive adjusted EBITDA and cash flow breakeven this year on revenue generation consistent with 2024.

Speaker Change: Thank you all for joining us.

Speaker Change: As our last two quarters' results as shown not only have we reduced our operating expenses, but have continued to remain disciplined and further reduce costs.

Speaker Change: This concludes today's conference call. Thank you all for joining and you may now disconnect.

Speaker Change: Cash flow perspective in Q1 2025 net cash used in operating activities was $1 1 million.

Speaker Change: The increase of <unk> 5 million or 31% compared to Q1 2024.

Speaker Change: We reduced our opex, 32% and 14% versus Q1 2024 in Q4 2024, respectively.

Speaker Change: While we have reduced our costs and expenses we continually.

Speaker Change: Are looking for additional savings as we monitor expenses.

Speaker Change: We tend to continue running the business with the same level of financial discipline going forward.

Speaker Change: We're planning to achieve positive adjusted EBITDA and cash flow breakeven this year on revenue generation consistent with 2024.

Speaker Change: Thank you all for joining us.

Speaker Change: This concludes today's conference call. Thank you all for joining and you may now disconnect.

Speaker Change: Please wait the conference will begin shortly.

Speaker Change: Okay.

Speaker Change: Sure.

[music].

Speaker Change: [music].

Speaker Change: Ladies and gentlemen, thank you for standing by my name is desert rain I will be your conference operator today at this time I would like to welcome everyone to the first quarter 'twenty twenty-five Iridex earnings conference call.

Speaker Change: All lines have been placed on mute to prevent any background noise. Thank.

Trip Taylor: Thank you I would now like to turn the conference over to trip Taylor of Investor Relations you may begin.

Trip Taylor: Thank you and thank you all for participating in today's call. Joining me from the company are Patrick Mercer Iridex as Chief Executive Officer, and Romeo does on the company's Chief Financial Officer earlier today <unk> released financial results for the quarter ended March 29 to 2025.

Trip Taylor: Any statements made during this call that are not statements of historical fact, including but not limited to statements concerning our strategic goals and priorities product development matters sales trends and the markets in which we operate all forward looking statements are based upon our current estimates and various assumptions. These statements involve.

Trip Taylor: Material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements.

Trip Taylor: Accordingly, you should not place reliance on these statements.

Discussion of risks and uncertainties associated with our business. Please see the most recent Form 10-K and Form 10-Q filings with the SEC.

Trip Taylor: Iridex disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.

Trip Taylor: This conference call contains time sensitive information and is accurate only as of the live broadcast today May 13, 2025, and with that I'll turn the call over to Patrick.

Trip Taylor: Good afternoon, everyone and thank you for joining us today I'm excited to highlight Iridex improved financial condition.

Trip Taylor: Our first quarter business progress and developments with our strategic plans and partnership with novel inspiration.

Trip Taylor: Over the past few months, we have worked very hard and I am extremely proud of how the team has transformed iridex for the past few quarters, we've grown revenues, even while materially decreasing expenses compared to prior years. The result of these operating improvements as delivering our first two quarters of adjusted EBITDA positive.

Trip Taylor: Results in recent history are.

Trip Taylor: Our improving profitability as a result of right sizing our cost structure.

Trip Taylor: In the fourth quarter, we initiated a number of cost reduction programs the reduction of non essential spending across the business demonstrates the potential.

Trip Taylor: Patient see of our business model and positions Iridex for sustained success.

Trip Taylor: Further bolster our financial health of the business in March we strengthened our balance sheet with a $10 million strategic investment from novel inspiration.

Trip Taylor: This capital represents novels confidence near <unk> business prospects and our ability to extend our leadership position in providing innovative and versatile laser based medical systems for the treatment of glaucoma and retinal disease. These.

Trip Taylor: These accomplishments over the past two quarters represent significant progress stabilizing and improving the outlook of the business. As a result, we remain on track to deliver cash flow breakeven and positive adjusted EBITDA results in 2025 as long as conditions remain as they are.

Trip Taylor: Now taking a closer look at the first quarter, where our results demonstrate our commitment to improving operations and advancing our path to profitability.

Trip Taylor: On the topline we generated revenue of $11 9 million just above the first quarter of last year, along with that we again generated positive adjusted EBITDA of $4 million.

Trip Taylor: Representing an improvement of $2 9 million compared.

Compared to the prior year quarter revenue in the quarter was driven by an increase in our cyclo <unk> product family revenue, which grew 8% year over year and was offset by the slight declines in our retina product revenue.

Trip Taylor: Let's take a look at our glaucoma probes performance for the first quarter of 2025 overall.

Trip Taylor: Overall, we are seeing very positive indicators in the business and where were above plan in the quarter, which is a strong start to the year.

Trip Taylor: We're making real progress towards our strategic goal of driving earlier and repeat utilization of mp3, CPC treatments on mild and moderate glaucoma patients.

Trip Taylor: For providers and transition to treatments using our G probes for progressing in later stage glaucoma.

Trip Taylor: Our target for the year is to sell more NP three units and G probes and based on Q1 performance. We are definitely headed in the right direction.

Trip Taylor: Mp3 probe unit sales exceeded our expectations. Thanks to a few key drivers.

We are working hard to increase awareness and train surgeons on our new treatment settings, which is driving improved patient outcomes.

Trip Taylor: We are also ensuring the glaucoma community is aware of the ongoing dose escalation study and its promising early results our focus on the clinical guidance has been essential to winning greater product adoption. We're also leveraging a new self support tool, Mexico, which has proven to be a valuable asset.

Trip Taylor: Delivering high impact provider level insights that are helping our teams execute effectively in the field.

Trip Taylor: G probe unit sales have remained steady despite our recent price increase that tells us there's still solid demand for the product.

Trip Taylor: Now I'll discuss the revenue side of the business Pascal sales were slower in the beginning of the year as we optimize some technical settings, but this was offset by strong sales of our IQ family of products.

Trip Taylor: Surgical retina sales exceeded our expectations contributing significantly to the overall retina sales.

Trip Taylor: It was a notable increase in our TFS product sales as accounts increasingly seek cost effective solutions.

Trip Taylor: This was the highest volume of <unk> sales since Q3, 2023, while SLS product sales remained steady.

Trip Taylor: There is also a very strong quarter for enterprise, which exceeded the forecast by $1 million.

Trip Taylor: So the market for this product remains volatile ship.

Shifting to our U S and EMEA regions remains our most stable revenue generator with strong growth potential in the glaucoma second.

Trip Taylor: Robust sales of Pascal systems are further driving revenue expansion.

Trip Taylor: In Asia regulatory approvals for the Iridex Pascal system are fueling strong capital equipment sales.

Trip Taylor: Particularly in India, and Japan, and China Medical retina cells are showing a healthy recovery supported by continued growth in retina approach cells.

Trip Taylor: Looking to Latin Americas business is stabilizing with clear growth momentum, particularly following the approval of the Iridex Pascal systems across several key markets.

Trip Taylor: And <unk> sales experienced a slight decline primarily due to some unresolved service issues, which remains an area of active management focus.

Trip Taylor: Now I'd like to touch on our partnership with novel and our strategic priorities moving forward.

Trip Taylor: Now I will decided to invest in iridex because of the significant value of our franchise and the potential to enhance that value by becoming a more active participant in the ongoing market reshuffling.

Trip Taylor: Together, we are focused on innovation and long term value creation and novel is open to expanding our partnership as compelling opportunities become available.

Trip Taylor: Our initial focus is to leverage our loyal base of global customers and stable revenue, while improving operations to create a self sustaining entity.

Trip Taylor: Navajo is aligned with our objective of creating long term shareholder value.

Trip Taylor: Looking ahead, we are evaluating our strategy to optimize our gross margins, especially in light of the new chair policies and ensuring improve responsiveness to customers, especially those working with iridex through an international distributor and searching for opportunities to drive revenue, which could include <unk>.

Trip Taylor: Partnerships.

Trip Taylor: Distribution agreements or small acquisitions to expand our product portfolio and leverage our global customer base.

Speaker Change: Now I'll hand, the call over to <unk> to discuss our financials.

Speaker Change: Thank you Patrick good afternoon, everyone and thank you for joining us today.

Speaker Change: I'd like to begin by reviewing our financial performance for the first quarter ended March 29 2025.

Speaker Change: As we noted in our press release and on Patrick's comments, our total revenues for the first quarter of 2025 or $11 9 million.

Speaker Change: Marginally compared to $11 8 million reported for the first quarter of 2024.

Speaker Change: Product revenue decreased 3% in the first quarter of 2025 to $6 6 million compared with the first quarter 2024, driven primarily by lower Pascal system sales.

Speaker Change: Partially offset by higher medical and surgical retina system sales.

Speaker Change: Total product revenue from the <unk> glaucoma product family with $3 2 million, an increase of <unk> 2 million or 8% year over year, primarily driven by higher probe sales.

Speaker Change: Other revenue increased <unk> 1 million to $2 1 million in the first quarter of 2025.

Speaker Change: Compared to 2.0 million the first quarter of 2024.

Speaker Change: Driven primarily by an increase in service and in certain legacy product revenue.

Switching our cashiers to gross profit expenses and cash burn.

Speaker Change: Profit for Q1, 2025 was $5 1 million or a gross margin of 42, 5%.

Speaker Change: The increase compared to $4 5 million or a gross margin of 37, 9% Q1 2024.

Speaker Change: The increase in gross margin was driven by favorable product mix and lower manufacturing expenses.

Speaker Change: Operating expenses were $5 3 million in Q1 2025.

Speaker Change: The substantial decrease of $2 5 million compared to $7 8 million Q1 2024.

Speaker Change: During the quarter, we settled in mid note payable, which resulted in writing off the associated capitalized loan origination costs of approximately $1 5 million.

Speaker Change: Consequently, net loss of $1 7 million or <unk> per share for Q1 2025 compared to a net loss of $3 5 million for 21 per share the same periods of the prior year.

Speaker Change: Onto the balance sheets.

Speaker Change: In March 2025, we had a cash infusion of $10 million from novel exploration.

Speaker Change: Concurrent with the close of this investment.

Speaker Change: Settled the little note payable and used a portion of the proceeds to liquidate the debt.

Speaker Change: We believe the conversion of the convertible portion of novel investment represents a lower cost of capital and more favorable terms for the company.

Speaker Change: With that cash and cash equivalents totaled $7 2 million ended the first quarter of 2025.

Speaker Change: Before turning it back to Patrick I will touch on the recent global trade policy contemplated by the U S government.

Speaker Change: You want to highlight that we manufacture and source our products primarily within the United States.

Speaker Change: As such we expect minimal direct exposure to the most recently.

Speaker Change: <unk> tariff related policies.

Speaker Change: We will continue to work on areas that we control that as reducing operating expenses and generating additional efficiencies to improve our gross margins and with that I will now turn the call back to Patrick.

Patrick: Thank you Romeo.

Patrick: As you can hear we are extremely proud of our progress over the past two quarters.

Patrick: Growing revenues and generating positive adjusted EBITDA.

There is a massive opportunity ahead for Iridex and we believe we have the team and strategy in place to create a durable value for iridex shareholders.

Patrick: Now I'd like to address some questions. We have recently received from Iridex shareholders.

Patrick: Question number one.

Patrick: First people are interested in hearing more about the impact if the tariffs remain in place.

Patrick: With respect to the very hot chairs that will remain in effect with respect to China.

Patrick: As indicated in our prepared remarks, iridex products remain overwhelmingly sourced firm and manufactured in the United States. Our products are assembled from raw materials and components sourced from suppliers operating many parts of the world, but the final assembly is done in the U S.

Patrick: And these Oems are primarily located within the United States.

Patrick: This is the explanation for why we have reported.

Patrick: Expecting minimal direct exposure to the most recent implemented tariff related products.

Patrick: Many of our competitors who rely on imported.

Fully manufactured products into the U S are facing higher costs longer lead times and significant business uncertainty.

Patrick: This gives us a pricing and supply chain advantage, making our U S made products more attractive to customers seeking more stable pricing and reliable availability.

Patrick: On the impact of reciprocal high tariff rates imposed on the U S. Our shipments of products to China.

Patrick: Currently are not material.

Patrick: Second question.

Patrick: It's about our product extensions discussions relating to novel investment specifically.

Patrick: Iridex looking at by companies or distribute more products through our existing channels.

Patrick: Iridex has established long term relationships across a global customer base and become known as a leader in laser based medical equipment for ophthalmology.

Leverage these relationships in general rate increase sales, we are working with novel to identify opportunities towards spanned our portfolio of products to offer these customers more products they need to treat their patients. We believe this is one of the most capital efficient ways to expand our revenue.

Patrick: This could include distribution agreements.

Patrick: Ships are smaller tuck in accretive acquisitions that are synergistic.

Patrick: Navajo supportive of this strategy and we are actively working together on this initiative.

Speaker Change: Our last question is about the change in our cash burn specifically.

Speaker Change: We are really done are we really done burning cash and can we really adjust to operate better than cash flow breakeven.