IRIX - Earnings call transcript Q3 2019

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

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2019 IRIDEX Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Leigh Salvo. Thank you. ma’am. ahead, go Please

Leigh Salvo

thank for and call. in you you, participating all today’s Thank

me Executive Finance. President Chief Dave and Joining Bruce, Vice Officer; are Romeo Dizon, of

today, available on ended company’s the website. copy results released the the XX, of is XXXX. A Earlier quarter release press IRIDEX financial September for

provisions Before I’d which the meaning the of remind securities laws, like the you make to management will of within we during forward-looking this Litigation Harbor of statements made Securities begin, are Safe pursuant statements XXXX. call to Reform that that Private include federal Act

are Any of not statements XXXX and made operate, these not our product during any statements to statements the plans to, our sales historical this strategic but we public call markets including, matters, guidance and updates which on priorities, that matters. development our fact, for concerning provide goals of limited trends, in

could statements events assumptions. All risks or and forward-looking and those from these estimates statements implied that various actual current anticipated are by upon forward-looking material involve materially our differ cause statements. results These based uncertainties to or

place should reliance these statements. not you Accordingly, on

otherwise. IRIDEX obligation, For because XX-Q our law, please new with any and most XX-K whether of revise or uncertainties of Form risks or to except or information, any disclaims as SEC. or with required see statements, our update recent the intention the a associated future projections forward-looking discussion business, filings and by events financial

information and November contains accurate time-sensitive today, X, the conference This broadcast as call is only of XXXX. live

over Dave. turn call the And I’ll to with that,

Dave Bruce

and thank you Thank for you, us. all afternoon, Leigh. joining Good

tremendous superior MicroPulse as laser glaucoma encouraged to I’m a treatment with as value. deliver as and quarter full opportunity Following alternative my first IRIDEX, of therapy, result, shareholder deliver as ever have this long-term we a our transscleral by CEO

procedure our long-term laser top drive of the highlighted physician deeper support I a key and managing cash long-term MicroPulse this to our adoption in to transscleral second, addressing, believe and to Transitioning we call, glaucoma retina burn. are mainline priorities strategic third, These last our include: our for our success. which business; outcomes I glaucoma therapy. that are On strategies First, identify patients; laser on tool execute reduce

third the our priorities, I’d of today. share some and highlights to like on progress the these made each of quarter, call During we during

noted I our As advanced immediate opportunity that have diagnosed last to patients X on with million medications market our and disease consider the to call, and to surgeries. glaucoma is therapies from direct need eye-drop moderate moving worldwide

non-incisional manage directly procedure MicroPulse this only intraocular of alternative repeatable segment the addresses Our pressures. to market and significant with the

focus worldwide worldwide now installed Our drive leveraging on sustainable significant growth than initial is our Cyclo to X,XXX more has to utilization, and sites ultimately, long-term adoption system base, for IRIDEX. increased GX grown which

increase. a year-over-year During $X family Cyclo revenue was product quarter, million, X.X% the GX

signaled last experience discontinuation discounted we As in systems of growth our on and this flattening did call, segment following of and the of we packages. our pro bundled business

As probe systems. the a GX with were of reduction system initial in coupled saw the reduction that recognized with in result, associated shipments, shipments a we volume those

and shipments, probe pleased package and compensated lost in reorders we’re for increase XX% a new posted still that we Encouragingly, users volume.

of glaucoma However, improved impacted probe usage our has combination rollout of the of probe overall volume current in packages and anticipation reduced growth. temporarily inventory

midpoint year to full the our adjusted growth at we’ve year-over-year which guidance reflects Accordingly, probe XX,XXX to XX%. shipment XX,XXX, downward of

revenue for make reduction for million, year retina for up performance $XX million total Cyclo XXXX $XX probe revenue. and guidance end systems will previous of our GX business of any we of the expect to maintain in the We and

are and activities. In sales metrics, tracking assess to move growth. convincing complete it’s initiated procedure our appropriate has validations forward conversion numerous MicroPulse base. on initial transscleral data with beginning sales their therapy sales the quarter, that our focused are doctors patient third laser demonstrating process started glaucoma sales to to in result too introduced we process and our while adoption team And them, new early to We’ve physician patient

We therapy. as patient significant the and this meetings capture body are peer-reviewed Studies XX glaucoma of severities of our technology’s and base. in result, MicroPulse and the physicians In been global XX efficacy, benefits safety large evidence variety there types. poster Accumulatively, And confidence at have to worldwide. share of a than evidence treating of broad have that strong and provide continues to more a because presentations convert publications industry in date durability high the of part, to clinical to is expand. the target ability conducted patient profile society

Journal was One the Glaucoma. published of this quarter in

first assessing our potential that in follow-up range in validating significant that a benign the And intraocular large patients delivered demonstrating glaucoma of acuity to mild-to-severe pressure of good demonstrates with on safety earlier MicroPulse be profile glaucoma, at use procedures. alternative to on without concluded specifically loss it technology, glaucoma could offered postoperative effective in The vision was study point. This therapy an use stage visual patients. reductions patients incisional every laser effectiveness and the prior

recent profiles opinion clinical that discussed with and that their consistent with a the recent IRIDEX a hosted And therapy include five therapy. the laser MicroPulse who XXX treated Paris. efficacy ESCRS also key meeting patient practice leader highlights of of Other drew successful meeting, results transscleral in MicroPulse speakers at seminar during around seven using safety in variety presentations centered attendees

each It at our XX Ophthalmology bit Francisco. Academy Annual open a hours in volunteered did the true nearly during Meeting hear an something our to commitment flow month’s to gratifying We San American entire opinion of leaders cover the answering and interested of depth see physicians key of last booth, steady different these product exhibit spending to questions. to physician benefits of was the topics and conversations. hour encouraging

consistent simplified our we the ergonomic delivery. The resulting with MicroPulse and of completed version more quarter, third the technique probe. clinical energy initial in the intuitive, probe PX Also experience is updated and improved in

experience the cases the Initial reported users very quarter. of positive probe during in their

benefits. broader are we a training on techniques the the with result, commercial by with team a U.S. rollout enhanced in ahead and moving attention on careful our features, users As

on us utility. to gives probe factor utilization. recent publications believe update selection a physician customers broader patient opportunity also and will in supporting ergonomically-improved driving I our an be This of the key expanded introduction criteria clinical

retina Turning the Revenue business. the that which cover grew for the to third remarks. will prior adjustments his unusual after Romeo quarter were our with in in and quarter, consistent XX% quarter items in over year second

and price-competitive to segment significant of scale lower more our total contributor retina revenue, and business expenses. While our covering half of it’s a a overall and revenue than remains the margin our operating

preserve pricing allows franchise. our among achieve base, resource continued that vendor premium committed in worldwide status us this to to judicious and still preferred reputation historic strong allocations our Importantly, large customer and we’re market investments to and

systems continue attached our in of initial laser systems to laser are those improvements quarters. delivery new And the be couple we’ve We implementing rolled targeting in launch development are out devices and next identified to our that’ll mid-XXXX. and of

Finally, In burn. growth we toward are our progress in that priority third substantial cash improving XXXX. our us flexibility we objectives efficiencies the of addressing to confident cost made with provide achieve quarter, additional will

XXXX third beyond. goal results quarter operating fully clearly to success area of each growth achieve the with to and operating XX% savings, our the demonstrate expense runway. and carefully The reduction going business forward our support year-over-year We extends significant still but in examined spending our our in reduction initiatives of cost shown

in implement targeted coming We’ll potential continue In summary, IRIDEX to for quarters. remains value savings the clear.

our executed team initial Our objectives.

assure expense adoption our significantly to refocus and continue reduce First, second, plan. process operating third, on franchise; and to our execute growth; growth to enhancements our sales procedure the our retina ability

Romeo to financial Now quarter I’d like results to discuss over to our call Romeo? more detail. turn in the third

Romeo Dizon

Thank the quarter second from XXXX, revenues $XX.X million $XX.X quarter you, XX% during same from a everyone. reported IRIDEX Dave. of year but Good down afternoon, the up million the for third earlier. period of total X.X%

revenues products was our sales sales items of decrease by by last products growth offset in GX retina Modest of our revenue a in non-recurring other impacted year. and

the as driven third growth compared primarily GX of revenue This XXXX, in increase which $X.X approximately shipments, our placement. decline our an by the XXXX. increase products In GX in in Cyclo than quarter third GX million, Dave offset was was X.X% revenue more noted, of quarter with systems probe of

and of shipped probes quarter systems. third XX XXXX, we the approximately XX,XXX During placed

and with the in year This XX,XXX XXX systems earlier. same period a probes compares

the a result, as on noted call, incentive sales GX last decline experienced quarter and we As ended programs systems we discounted an in in our XXXX, anticipated the of second placements.

from however, of improved $X.X prior $X.X million in The selling quarter only the revenue system XX% business $X.X the year. to retina these in quarter versus the declined our because associated million XXXX. with million quarter and versus the third was average placements, Revenues significantly the prior of compared third in prices

retina our the XXXX. U.S. increases approximately driven in our approximately relative quarter million decline quarter the As in orders by sales XXXX. I third in distributor, indicated million pending during unusually primarily to We was of third higher of $X.X compared ahead of revenue the Chinese of the booked $X.X from tariff earlier, products

year’s of recall clearance volume LIO the last voluntary our addition, revenue FDA retina third included In the also significant following quarter products. backorders of

with at XXXX retina last outside outside U.S., quarter U.S. U.S., in the business XX% the as the In revenues and and for was was of third XXXX, the same approximately quarter third our XX% in third U.S. specifically consistent of more our Looking geographically, the Cyclo of our product XX% revenues year. GX quarter the XXXX. XX% also

was $X.X of $X.X Other X%. million which period primarily same prior revenues, royalties, million versus an the services and the year, increase of includes in

to Moving income statement. down

for million, the of year. XXXX is in to margin is decrease $X.X in margin due profit gross gross compared small gross primarily XX.X% which manufacturing period the of absorption. quarter third a overhead lower gross Our the million, $X.X prior XX.X% margin a The same was to

the period to to adjustments The reduction $X.X continue our administrative engineering focus lower sales, and efficiencies-gaining the decrease of the is million expenses, marketing and decreased third reduce a in our in compared expenses. to of headcount-related and has attributable to to been manage operating management, while we and expenses costs, operating same Reducing in quarter, $X.X prior programs, million a year.

the and such trade sales as higher European of the at a and comes and Historically, of at our fourth also the entrances year-end. exhibiting in quarter of Cataract Surgeons as commissions Society Refractive Ophthalmology in Academy higher major American result shows,

of quarter operating million with loss $X.X of in for prior was operating million year. XXXX compared third of loss period the Our the same the $X.X

had We of sheet. Now balance no and turning working million, cash $XX.X of million. the capital cash and $XX.X debt to equivalents

XXXX. commentary earlier, year-over-year Turning down XX,XXX, at midpoint, range GX from Cyclo of shipments the of to full the Dave’s a reflects to XX%. guidance summarize reducing are to XX,XXX probe XX,XXX to year which for our growth XX,XXX of we To a

States. sales impact updated The reorder transition adjustments with the customer along customers, reflects new resulting glaucoma towards in acquiring rollout the reduction probes of in and guidance United of inventory the our growth from

shipments system XXX to GX Cyclo expected in the our range confirm We of XXX.

also probe and offset $XX We our million of the to revenue the shipments. million $XX reduced guidance revenue revenue will for reiterated retina lower year anticipate from

to questions. With turn over like the that, call Operator? operator the for to I’d

Operator

Instructions] is from [Operator our And first from Stifel. Block question Jon

Your open. line is now

Unidentified Analyst

on Tom questions. for my is This Thanks for Jon. taking

care with of talk with So more we where continuum GX how mild into going? and the is initiative And moving can procedures? moving are the throughout you maybe moderate about

Dave Bruce

Dave. call and bulk this I reflected failing we is pressures people it, conversations trade is that are the in And oriented incisional, rising. now to. drops out is as also that having Tom, moderates, Sure. were at are shows who those the who the referred much the we coming that pretty of toward that’s The more are clinical people evidence

existing really for there maybe that deliver that, now multiyear are started with safety treat opportunity even to a this is advanced profile more manage to evidence perception them period. stage, cement treatments this and an users our message come forward. really over opportunity that multiple benign is to patients with our who looking There’s further in off to the And and

the presentations see evidence, leaders, urging But process sites just the barriers experience that them and individual the the and to we’re broader benign profile of experience the need then a their are to with set it forward. to happy having it’s And and makes safety and We with that clinical where that sense. a using selecting a key don’t start outcomes people the have and than patients. evidence and are conservative move that convince other opinion

Unidentified Analyst

on guess, about I growth, And of same-store basis you versus new can a you’re sales that from seeing talk the accounts? color. helpful really consumable That’s GX the what Great.

Dave Bruce

opportunity, that Yes. incremental customers, new both We the and existing on focus also is but identifying opportunities. with

in them are see goal set obviously, a is move from easier people So let both validate and broader stage. and those then similar what the process to patients see yes, is selecting systems, broader pool hands that And have both and experience on in and in already forward, the new and desired conclude and the expected that of patients their work engage is really existing start that. to patients with with are in and And that, a of to data own really they to it results balance customers. them earlier but our

we benefits, these customers focus process target new and really The who’s then on doing validation will them. with to we around receptive that

I seeing short guess, response in users answer are to would be is new your and stage relatively question, existing relatively who equivalent, So the we’re from who technology. interested – might later users evaluating the equivalent

Unidentified Analyst

And shifting a gears OpEx. bit it. guess, quickly I just Got to

some maybe might You Can those have year-over-year. really good additional from? on made savings just come you provide color exactly progress where reducing it

Dave Bruce

Yes.

fully business. the the can we in we there. As what Starting the adjustments execute that? And about, And growth areas we we need areas process, reduce expenditures? do with and looked of across we obviously at are to we staffing, we supporting then some those made and what talked looked different

We infrastructure, functional to to production went made of the reduced all elements certain had those. areas. and product adjustments line, we with in and and we associated That outsource headcounts our production across continued

to it one I really wasn’t any area. at budget. marketing looked we mean, specific So our

at looking years are in it going We what take does the forward.

enjoy As at. have with and shows gone flow can need, booths through look that of meetings the our we for the we and various size at ability is our the those interact trade to as in them, something down much example, doctor frankly, attendances and

areas adjustments all I made opportunities. spending but the we’re where runway also fully So comfortable dollars support looking at, we’re that that and get you’re were us we’ve the the looked still growth mean, for,

Unidentified Analyst

thanks. Great,

Operator

you. Thank

from from Capital. question Roth next is Our Henry Scott

Your open. now line is

Scott Henry

you on awaiting you product? quarter. Thank from purchases in afternoon. Do guess, much impact GX customers think off probes A the and of good there’s couple I the questions. holding first, new the

Dave Bruce

customer These end of had are levels very as detailed bulk takes transitions the haven’t it’s systems data just inventory where forecast and inventory. difficult have precise we off, knowing are those purchases in or burn just had with those. what both be what to around accurately. to with associated even We those difficult don’t past And quarter – it or purchases, to

so So update with new techniques but that can them that, clinical working may past. the going on are have side-by-side that I conversions and mentioned, we we new with take has as train in we’re both data on significant customers, protocols, said, also the them to them the time the come to in probe we opportunity and that out since spent

but call, guidance of the at systems same. end guidance, predict, year And brought component the as last GX guidance the at looked the that, left of clear in I’m the the sure we and we difficult new than a the the to that during forecast was work our there’s But both existing And anticipation the beyond it conference as probes off of but higher anticipated. looked down usage, the revenue it’s probes. we guidance, to became Cyclo we our let’s probe

my might refocused still, new guy, And have on of XX% it’s last year’s second improvement last happening the and part that but and developed year. experience, that been as pretty feel given probe were counts over in that good probe the as But optimism adjustment. we’ve we – made the comparisons half shipments, a systems to are we with the high performance that’s a

Scott Henry

know Am – right the that first, by I Second, I well, probes with is guidance perhaps, using a first, math, I QX XX,XXX. when And think, the guess. involved question those And can confirm And is the I – good. correct? are numbers? XX,XXX I to I – part. pretty Okay. there’s look those implied third you GX for if second don’t my guess, correct? guess numbers

Dave Bruce

front didn’t mean, I the and back we do end. on the the math

but Scott. – believe believe you, in I So I – that

So...

Scott Henry

Okay. Fair enough.

about would Can than kind the part a push the X,XXX one larger bit So end the you it other, range could probes. of third for that from you typically talk pretty one quarter, one quarter? for a of big a it’s was, because little that’s give of levers to some range

Dave Bruce

I inventory these the Well, transitions burn And in off it’s may tough to or as of around it’s mentioning, levels the versus where minus was in through plus what are, or one how carry occurs XX%, just two middle. much predict the quarter. full quarters

felt we plus So it point. range or at was to a give minus prudent XX% this

Scott Henry

question... All Okay. enough. right, final the I And guess fair

Romeo Dizon

XX,XXX right it, Romeo. XX,XXX, is we’re question, On the on This range. Scott. the on your first to

Scott Henry

All right. about I loss million and have was If well, – QX. further. $X.X them think cut pretty is been talking in Great. I question. a about the Expenses you’re back guess, cutting already the final

cash you if look you still making cash quarters hoping you’re The of have you growing and that at of can cash. still cutting is, to gives might you positive. question at at be be on I keep the If kind even, breakeven least we that run you flow a might out, with quarters you’re rate, maybe hand? are mean, you X Because costs, when the numbers, six

Just that. on thoughts curious your

Dave Bruce

guidance. not ready give we’re Well, to

And ourselves not execute at going getting of any this the goal to and attraction plan structure new adding in so runway and not by looking of give giving a our demonstrating answer transition growth the in specifically when. was a through rate I’m growth a adding customers kind. period, justifying specific be targeted to same-store But the at distracted sales cost raise and to

the cash process, we’ll our effectiveness better and a in future. So last, the as then sales the our have idea goal execute, in is adjusted to make clear becomes

Scott Henry

retina you talked think of Okay. look guess, into about QX, question. some one I And final Fair we tariffs. ahead for orders QX I slipping at enough. the When

that would – retina look mean, decline we expectation. QX? the in expect natural be a should I in Now

Dave Bruce

last quarter tariffs, was about comment the relatively so a high order. was that That’s why the year. of So large we XXXX that third got

we the compared of revenue this that year, this reasonably to retina. year had increase So quarter the third strong with retina and a in XX% quarter we’ll we also of be in second think

revenue said, reduction in we the offset probes As we’ve that came from think any will that guidance. from reduced

we guidance And on the maintained full corporate for total so year our revenue.

Scott Henry

way. coming in it pretty of Anything ask going QX, just should there it’s strong franchise is but question I like about sounds how to continue. going kind perhaps Retina different on that? going I’ll reaching that think then bottom, we finally that for and a forward? Well, mean, the making off the looks

Dave Bruce

some we a name that space it’s Well, competitive to Gross we and and space, and our have have business. to opportunities makes great we’re attractive, advantage we business. to segment a offering And that. take delivery improve have I marginally are as our of in some of devices strength, in more a lower capture of that that opportunities mentioned, and margins our trying

Scott Henry

thank Well, taking Great. the for you question.

Operator

I’m no over I time, back this questions. further for like you. to Dave Thank to At showing turn call Bruce the remarks. would closing

Dave Bruce

and operator, our will on on and you look thank We updating to focused stay we Thanks, executing you for today. everybody. growth Thanks, our plan. forward joining call all the progress,

Operator

and gentlemen, Ladies this participating. call. for concludes today’s you conference Thank

now You may disconnect.

IRIDEX (IRIX) 9 Nov 192019 Q3 Earnings call transcript