IRIX - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Q2 2018 IRIDEX Earnings Conference Call. At this time, all participants are in a listen-only mode.

Following management's prepared remarks, we will have a question-and-answer session and instructions will be given at that time. [Operator Instructions].

As a reminder, today's conference is being recorded for replay purposes. pleasure Salvo, the Head my your over now Leigh host of is to conference turn to It Investor Relations. ahead. go Please

Leigh Salvo

Thank for all thank today's And participating call. you. in you

Will IRIDEX released the is results Atabak are Joining XXXX. Officer; June quarter available company's financial Chief the A Officer. today, Financial on copy for and of me Earlier Mokari, Moore, ended Chief XX, the website. Executive release press

and that not to statements that include or like to trends, estimates statements remind and you goals to should statements to are involve that statements China; fact, could our forward-looking during Before cause Accordingly, Act overall meaning this made of undue including materially in Any on including upon make by backlog concerning place statements. federal matters; public and various the LIO convert recall plans which to product are call orders; Harbor but to South sales results line material historical of from on our statements and we laws, return I'd we priorities; begin, probe events forward-looking not operate, matters. our statements on anticipated Reform secure and for differ the of our and our during shipment product, to current from of forward-looking to surgery presence system clinics management you our and reliance guidance statements of and Securities the results the including marketing these including updates plans within events; those our which or revenues will call including Litigation market; this markets strategic these impact our industry this sales and provisions the its are business our matters of All development not any statements. provide actual for expectations XXXX. Private Korea assumption. ambulatory ability these These product uncertainties securities hospitals, levels; implied and made centers; Safe and product pursuant GX ability XXXX, orders risks future that based our on at limited to

contains For accurate associated disclaims because broadcast with or call the our obligation, and most please X, risks or and SEC. required new the of a our any information, the call only Form or business, events information intention and Will. projections forward-looking IRIDEX discussion turn by conference of future Form whether with filings is the as uncertainties otherwise. to I'd like revise statements, XXXX. recent time-sensitive with of except financial see any to to XX-Q update law, live that, And This or as over August XX-K today,

William Moore

improve the you and new entire new Thank introduce And GX you, improve existing potential joining for first, quality, of all systems XXXX; globe. X shipments have us. installed thank for to afternoon, Probes the and second, our that cost while Leigh. continuing We through base the products our to set Good across manufacturing GX reliability priorities from portfolio.

platform. progress glaucoma quarter a provided disposal-oriented objectives towards business second the continue Our shift our by execution of as in both we demonstrated GX model these

revenues the quarter, I'd XXXX, and our XXX our nearly published were we markets MicroPulse X,XXX In and GX. Second GX and new systems GX by our probes. GX of our safety year-over-year driven Financial business new in market for highlights quarter product and intended XX,XXX the one the increase the probes Korea, XX,XXX guidance to the systems quarter then primarily drive highlights opportunity to quarter included for in nearly million, to over turn in minutes our call in the data like we take broaden development, placements for for GX year. and system shipped GX second the regulatory recent $XX.X particularly of XX% cover advancements Since continue on expansion; included additional shipments; therapy probes. Total March of utilization. our further next results Atabak to on probe shipped utilization. a revenues South have for momentum approval we'll some the to global highlighting in and the financials system few provide and increased target probe GX GX laser and launch remainder and detail key efficacy

with to well commercial X,XXX Our customers. one as progress announce made system in delighted expanding GX We shipment with placements existing customers, customers new our to the of as recently teams have Japan. were systems our placing GX of

well have execution the specials the the Shipments KOL priority. in U.S. awareness and improvements tenure marketing in strong platform. activities of we opportunity U.S. a from in number, sales-force deployment driving productivity traction training our utilization acceptance our While the a made GX are QX, worldwide from reflecting the marketing of positive gained the sales the worldwide and we to utilization highlighted In support. grow milestone clinical extending have that as Moreover, growing improved exceeded probe were and growing and resulting an high now impact we probe better have we GX this through installed field we investments on and through and the pull in seeing and improved and from remains utilizations and base. systems a

field received our sales the and our are feedback the early entered by We as specialists key accounts. we clinical reps to support encouraged

new partner. launch distribution in growth clinical of in a positive our In and well our more consistent shipments of a progressing well continued efforts am confident of While training very Japan, and this these a enhanced our as because should customer our as GX KOL probes and saw still to ensure process markets. systems is better GX the outcomes. existing is Internationally expected stages, expansion in data; in support; given early physician strong service benefits markets we its improve the probe utilization I that

as may for in building Germany, Japan a provide In model plan organization sales our planned. continued commercialization in and prove OUS expansion direct other countries. Our out we

second experienced approval. GX by a international China of the Korean's in activities and have expanded customers hospital finally, Our can Food cycle. Korea target the networks penetration approval navigated early Ministry target once priority and key in during hospitals development expand we are And we received to believe was as GX have Drug the South and procurement a and ultimately approval XXXX remains Safety our regulatory for market begun and We successes. KOL primary sales we awaiting goals we South the had have lengthier where some major delighted last quarter. large are

stages shows are products significant Vision to cadence podium front glaucoma. a in X profile trade On raise we high and technology and that MicroPulse and presence in papers Congress. MicroPulse presented XXX in Glaucoma XX attendees. industry the Surgery; Ophthalmology is held quarter Research the continued of benefits key World of marketing European covering events a MicroPulse X,XXX second encouraging. Cataract busy glaucoma At Society; X physician eyes the at with GX presentations with over treating had and shows major maintaining and at conferences, technology, were data at all events these Ophthalmology; for of were technology Society our regarding support Overall, our awareness American participation including and X trade We of worldwide Association scientific global our Refractive posters

steady front On advancements probe of product outcomes working use, and in consistency the entire quality; costs. designs making the if towards progress product I'm to our product enhancement that provide portfolio made progress procedure. towards features; we GX the and In these by of the will our ease are have encouraged particular across commercializing improve additional improve reduce enhancements. costs is of we team manufacturing very

retina we premier model products, sales and as retina a to have our the continued to impacted accessories, business recall by have to declined. laser LIO a transitioned Turning be voluntary glaucoma-focus our

strong We resolved. our opportunity surgical and for recall expect to is overall continue medical see products and of this realize retina the LIO to more when demand

waiting U.S. our the outside the sales In second the quarter laser which the we resumed to quarter. are response FDA's fulfilled LIO in the XXX-K the filed accessory During U.S. backlog. of we the we and

in this upon At Atabak We the continue to call on the provide share Atabak? remainder and to financial then results I for the of turn the remarks detail closing the fill XXXX. and are over to to shipments expect like further prepared to to open I'd our backlog. for guidance for resume call will quarter and point, U.S. clearance questions. the some

Atabak Mokari

period. business. the relative second of of GX you, compared to quarter a Thank quarter declined XX% System compared of our XX% begin we XXXX, the second shipped quarter the revenues sales in In up the XXXX. to quarter was to the increased portion year to of XXX to XXXX update due systems XX second with program. purchase prior In the XXXX relative an probe first GX greater will to and the sequentially under quarter I approximately on of ASP first Will. GX

approximately $X.X $X.X XXXX in domestic in the quarter revenues to our the a to XX% the From by revenues of Will were second XX% while geographic XX,XXX the probes described. revenues, second of XXXX, $XX.X in the was shipped U.S., due our ASP GX XXXX. quarter of in $X.X million, On X% Total XX% second of probes offset flat X,XXX GX retina of XX%. sales quarter from in the recall to the million system an side, relatively LIO the GX of in first compared were second the was the million quarter. U.S. in in increased XX% prior product our compared to were second probes the an while million GX of compared modestly year international quarter sales of perspective, our in period, quarter. the decrease quarter to the and increase in from XXXX the In we to system shipped comparable Probe systems issues partially decreased approximately Growth quarter for of second that XXXX, a million primarily U.S. increase increased U.S. $X.X of

the impacted our a that Will manufacturing was quarter offset product of higher to growth second million to Gross the by GX decline described. legacy the probes sales of decrease in compared compared in in margin the in impacted GX and second prior quarter domestic in offset year XXXX. Recurring the primarily by was system Our XXXX mix, given at margin were XXXX geographic margin in $X.X a partially XX.X% retina quarter probes. by by were spending. of benefit primarily decrease a dynamics XX.X% our revenues overhead unfavorable was second revenues period flat Gross revenues as of in the

investments growth approximately second Consequently, of expanding contribution expenses and XX%. the of million our up reflects from million, debt. $X.X operating second and in marketing a to were operating increased in From was infrastructure, loss our our with Operating $X.X $X.X with GX XXXX in The quarter second support the Our operating expenses. ended including year's sales quarter expenses in QX margin in of our no level $X.X million prior XXXX XXXX. million was loss million quarter. for QX second the $XX XXXX sheet the we perspective, cash of balance an compared quarter commercial

GX This GX our for XXX. XXXX and XX,XXX probes compares system XX,XXX of of of XXX range of of to to XXXX, XX,XXX for expect Turning shipments to to GX probe GX now and system systems. XXX guidance guidance shipments XXX. previous shipments GX and to XX,XXX GX we We increasing our to are probes shipments

of This historically We compares both million. are $XX when to prior and to seasonality the has revenue our been of revenue lower summer total by range patients end a guidance our $XX QX million total million also physicians to million. to vacations. impacted $XX take raising of $XX guidance

higher the As we for some sales QX. closing I'll typically over result, that towards remarks. to With a call back experience trending Will turn

William Moore

performance I'm is increase pleased solid that executing IRIDEX to team utilization. Thank you making and GX base strategy In closing, installed on Atabak. the our expand and the with

MicroPulse are marketing and the forward quarters We to our updating to the that with and technology building increase bolster teams operator and of commercialization. the GX call Operator? benefits and questions. our I awareness worldwide beginning you to for out sales to like to and in of clinical the coming turn investment made over progress acceptance realize the in look on platform I'd

Operator

Henry Capital. comes our Instructions] from [Operator Roth first Scott of question And

Your open. line now is

Scott Henry

quarter like you. Thank I'd started end afternoon last seasonality year. looks sold; quarter. like then of a people year pretty Is about into to the part the QX good How about of should the before strong was bought systems pretty XXX the going and talking think GX kind weaker we year, that year in the get didn't. there number? just left? Good It any of they Last year but the on a congratulations XXX was number.

how number comments a get have And to the quarter? plus trying we Just QX. quarter sense any of system about that to should from of strength can think on you

Atabak Mokari

is this - So Atabak.

of from the reasons. our And business - quarter That's weakest roughly main schedule then in our end of So QX that as QX QX trend we just referenced the general be and same. a the for perspective, the seen holiday QX that to I as budgeting a seasonality year the more just strongest kind years. due our of generic we've seasonality over many see and are our to tends

you impacted And first doing but one - the built obviously as of GX, launch it that other With and we some does expansion back it's to different in last lot due year, as the sales well. those the some the a of we're there, reasons follow of of was as changes. in look was trends out we year marketing to teams and the were the efforts our stage half

think those year investments year. were half by impacted So that before, and this about the second the the last we've year, of of half as to first started in last the see half talked benefits of we first we of and into I

anomaly that it last year, I the otherwise So the it's seasonality. about path that on some - happened that follows talked explained of but more

Scott Henry

get Do a that for breakout what just the how robust made or to quarter a with number? systems, was of upside And trying international? such much the sense in Japan GX of that you

Atabak Mokari

of the U.S., outside the came as systems we XX% the so U.S. talked up GX about So came in balance the

to outside system of the that it across was was So And but OUS Korea, was continues we board, the including approvals board that some terms across GX in Japan the USA. and the really nice - nicely had - about. talked countries a quarter of really placement. trend in the on

Scott Henry

could kind looks kind just at preliminary a above And are we then But the I looks as the updating utilization as model if and of kind like what utilization we low system it of the bounced these we per and had talk may go, so point it. about of it calculate here in you there far you should year. of of Do think has kind bottom the than as it in utilization there just some in any only different about as put upside far improve utilization last you was a the from QX because as how this think as or quarter? trend -

Atabak Mokari

Yeah, no.

last of I terms from the to to fair specialist bounces that about sales-force particular because the the getting well there. both utilization in have QX of referencing you're the and U.S. trough I So way in and making bit think seasoned it of the on up utilization U.S., investments it on you talked in seems it in so in to improve we given the speed the a think is the existing U.S. clinical but our characterize and is troughed objective and utilization around outside as are the year feels - in investments more like that more, we've side. hit as trajectory we're That the - hopefully specialist Will the are certainly the that

Scott Henry

any have And do to the as then and of least far general returning final at time line the market, jump queue, expect the kind LIO sense you will the as should question the terms? we in I back in guess of

Atabak Mokari

Yeah.

shipments were quarter. I of We questions, very in received general very that minor. been to sometime the think second that Little during round FDA received give filed think the we I the authorization more you We've should in terms, they've first of questions, expect the QX. round this minor. documents to they us specifically, Scott, begin

on And a so clock we're fairly now. short winding down

expect So soon. it I pretty

Scott Henry

taking Thank my you for that great. Okay, color you thank and questions.

Operator

you. Thank

Our Haimovitch Larry next from of question comes HMTC.

line is open. Your

Larry Haimovitch

Will, afternoon, I back. am good

William Moore

to Larry. Great voice, hear your

Larry Haimovitch

Thank you, will. Likewise.

things anything, other potential? any place full glaucoma So the all reaches the have perform. of really you business to this really do ensure pieces Is to kind that to Will, business there or its now, need do strategic in obviously is you starting

William Moore

the that training the get make the continuation down, the trained have base Because a well recipe sure pieces the the business expanded is to so And really first they follow-up specialist continue get and to up your they're is got think thing is sure and base. you've installed the we into approach; X-prong one have that the it's then can group piece We've of sales-force. to with installed excuse long-term I that first expansion then - to get clinical specialists. expand on do now utilization probes, the is Well, of of they could growth the that - me, preliminary the the make but clinical training. you got the so the the

we've the So of now say additional whether the and to got we'll I then see. the would clinical the down, just models into model - recipes that down have specialists turns salespeople, it's and advancement

Larry Haimovitch

just specialists, the got the clinical you a And I the number call late, of did tad clinical joined you've onboard, Will? now specialists give

William Moore

the field. X have in and the manager We

Larry Haimovitch

at point, not? to add this more likely And or

William Moore

Yeah, do the we're look upwards next. We we we to thought calls be up want field-force of said And that XX. marching still. in and would previous see then the and towards put what periscope we the

Larry Haimovitch

hearing me. lost Will, I don't if you. just I know you're

William Moore

can hear I you.

Larry Haimovitch

you Could phone there hear when can - I went you lost was for for you blank. pause now, just about I you my a what XX-second say said seconds. a just

William Moore

XX whether to and marching we - consistent right clinical specialists, now move the we the look is we'll more on the people. - up salespeople that towards clinical then forward in want put were And and still periscope with and sales add see field. to get and number and said we more are people I the XX

Larry Haimovitch

perform starting is to really that great So potential. as business

Let's going you some hate this you again? it very of the in more to will - Can some improve talk call that a growing programs place about this, disappointed it. know I'm give retina business from but us that initiatives to disappointed very sure time. we're and which about - I over it business you've declining I the detailed update to get all in our and could I got know you're know business I

William Moore

cancellation-type business the is retina request. quarter. think LIO this we positive on back it a Orders one physicians We back. last just from quite situation getting quite patient first the had I U.S. foremost stayed, first good comments the did corporate OUS and their I for market. getting have over thank this receive The with And a providing is haven't think safety profits. few was responses you being

out What some it with model the on become got is think to Diabetic next XX% to far a all is is I number from that's people on going the I the So the regards way bit That's going to rebound will that. a equipment, that people to figure million know are XXX down it's a positive little addressing find business, Macular retinal to is come do and that that. brand capital then a to talking form about And have go as as of have - mean really of edema. I'll we diabetes work we've a Edema, to with phase in receive disposal. about of business how that. to That's huge approximately captive

Larry Haimovitch

can a you family? know of retina introduce do you've you're you when on think said you next-generation that publicly. can - I working do And you course, think that when

William Moore

Yes.

Larry Haimovitch

on the of timing that, kind Will? What's

William Moore

at results, the That's I want to into dealing is don't on consistency the The so the glaucoma say call next now timing have really business, market eliminate timing for that. said try the mean discrepancy you in to this it's kind I of in to get we will really outcomes. the the probe I primary - retinal new really getting focus give give focus. right stage I'd piece more I as with any on going - be and main the to on that. hard on

Larry Haimovitch

will moment, some reuse parts And address problems jump deal glaucoma will you've new or for a in way no of the to is to world - glaucoma and seen of just the probe with back there to some that? the

William Moore

outcomes. make to want. the I trying improved it, we've eye in it's at, but to about exact that. the OUS. issues the piece for is the got designed designed reality looking to things said reusable there - do reality through to is you for to No, much mean that some the There's the sure of that spot the It's we that's is to design and the the to is consistency at with And but reduce I light of laser all what me have we're going say, deal we're that really really not to we're light not is that not summaries pricing U.S., some are how always it. worried going be looking I'm should

be pretty but is thing going As should a Atabak explained, think times, a volume up. staying worrying ASPs big it few people consistent, that's couple of are a We we use I about. to see may don't

Larry Haimovitch

Atabak, the was in quarter? glaucoma ASP for the probes what current the

Atabak Mokari

So flat was range in up relatively outside and in it's U.S. marginally the - $XXX was of the $XXXs. around then and U.S. the the

Larry Haimovitch

good would say And that building to a is a in ASP that be? forward models place $XXX you going

Atabak Mokari

pretty stable. been sir, it's Yes

Larry Haimovitch

Yeah.

I all now. that's right Thanks. have Okay, for

Operator

this William CEO, back like any for turn to and today's closing Ladies to you. gentlemen, Thank I concludes the question-and-answer would remarks. session. Moore, call

William Moore

upcoming you Thank you. our conferences We the Thank joining a today. once for many you great to and evening. call the you Operator. again Thank Have marketing of look during seeing trips. forward

Operator

in disconnect. gentlemen, participating and concludes today's a Have Ladies day. now great and thank This conference. may you you the program for

IRIDEX (IRIX) 5 Aug 182018 Q2 Earnings call transcript