IRIX - Earnings call transcript Q2 2022

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Operator

Good day and thank you for standing by. Welcome to the IRIDEX Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. to Relations. conference like Salvo to now Investor with would hand over the Leigh I ahead. go Please

Leigh Salvo

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

Fuad of Officer. website. are Interim quarter financial the ended me David company's XXXX. Chief release the Officer; Joining A is X, copy on Bruce, results for Chief press today, Earlier and Financial July IRIDEX the released Executive Ahmad, available

safe Litigation you historical Any and statements that that XXXX. Accordingly, uncertainties or harbor forward-looking call we strategic to the the including, the provisions and management make this risks not to are of limited begin, Before statements Private our fact, Securities estimates this actual these Reform to forward-looking sales events involve I'd Act place call concerning during These by implied goals those markets All development or statements. differ results statements based made made statements Securities in the but Federal and upon of from of should priorities, that and on of remind forward-looking statements include are matters, materially these operate. current anticipated our pursuant not assumptions. not statements statements within reliance statements. are we that like trends meaning during which will product various you laws, could to which cause material

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

David Bruce

expanded have of disease. monitoring our outcomes to expanding maintained approach over patient treating experienced from as to for joining and during in pressure doctor, to headwinds Surprisingly, strong inflationary procedure patients. dosing building retinal us summer experience of sales non-incisional factors. to all customers driven headwinds high, and customers ran focus and second this year's thank led retina our foreign continued believe and system by to appears the of This and weakness high and afternoon, combination relative in top slowdown has We May unusually quarter. dampened across our pressure quarter. due and segment, increasing many quarter dollar physician deliver adoption and reduced our inflation capital rates procedures. attributable June. year this, has patients headwinds capital But on did time to vacations team to COVID our These is delayed capacity and pricing proven wider exchange result, build our volumes. market result are largely enhanced to Difficulty] purchase total patient combined on Macro softness today. you strength late these center procedure in and Good a [Technical relative up appetites. as and of we guidance and glaucoma OUS US prior short-term international in from on Clinicians the steady assess they and second glaucoma from segments, In the the some temporary, our them procedure their a indication on toward has experienced a receptive spending market comparable surgi we the to usage impacts to strong volume be staff added

to lead Glaucoma we're that we is the confidence longer that versus While quarter-over-quarter, demonstrating year. X% taking like, our high will volume remains increased probe prior adoption. process improved broader declined but sales X% than this outcomes

pleased we OUS the from quarter. quarter, before the and discussed, challenges, Topcon probe of our Japan, territories. distribution quarter the for of I quarter OUS market placed took stems over second second transitions. large distributor quarter last second completed that orders we partnering strong, decline the over that last XXXX ever, behind beginning year's sales sales probe of only were highest at particularly second half attained final international our the second sold Despite In our As as these transition marking distributors

scale of our leverage well us sales of physicians, sites from to we and support the to our in broadening continue IRIDEX, internationally. of distribution this sold comparable anticipate receive partners the We then orders sales awareness US. We in platform Increase our XX reach growing GX inventories with in expectation product in onsite. sell the the China exceeding minimal market. two US sales and focus we pleased to China. Clinico This systems XX can Vice to awaited new strong pilot contribution team presence our and were To enables and that geographic as launch and placed commercial build latter the with up to to opens launch a we our Topcon experience the for of the of estimated our with members, probes to an expanded Topcon the China team significantly the clinical in Glaucoma receive market million part transition the three penetrate our June, the regulatory and team XX support going our addition patient conducted our initial we As and year are from broader in that Cyclo meetings the the launch, China market new that TLT a as region with renewed therefore to President quarter. forward. will in together important the long from partners X.X clearance a prior milestone afflicted half distributor of significant with glaucoma in begin our Together initial and of initial Marketing, market and efforts. adults In we over of

this position and secure, quarter our reduction chain million remains again continue cash potential Year-to-date prepayments $X.X cash $X.X some to mitigate so assets lingering capital current chain to mitigate challenges. shifted long-term is deployed secure approximately we to our about growth. supply with and Lastly, initiatives million and inventories investing cash impacts in in supply that we of to

of the front, On of the supporting work sweep results. that notable to optimal secure we the importance put [indiscernible] the dosing outcomes the awareness clinical techniques are and over industry and on presentations several speed quarters, previous impact on had update article methods increasing

paper be been TLT submission the guidance and is in has same our journal. committee clinical half which from will for Group second consensus first the the paper, published The the of published the finalizing

physicians. these to serve introduce to more more and expect and TLT this proof We critical point as as papers of technology adoption continue we drive to

Turning to XX. product we're within include a launch and laser gains the new we connectivity retina but platform treatment to portfolio, upcoming platforms can cost IRIDEX not for new and manufacturing, capability, lower provide will our only drive systems use main they launches, Conference, which to ultimately share three laser launch deliver beginning the modernized excitedly to suite margins. of September of the a This preparing AAO at improved with architecture products

next launches out to approvals over those in We QX followed quarters begin by come market in international several OUS US expect the will initial shipments and roll us. as the

revenue of we half look affecting performance for from the for and impact second prevalence at prudent expectations and the year, plus full-year the year-to-date we headwinds the conclude guidance our of it's As the ‘XX year. probe our the and that our assessed lower COVID, extended to macro

full-year we $XX to XX,XXX now of to follows: to expect Our year-over-year. And growth X% XXXX X% revenue $XX total outlook reflecting over probe million sales million, updated growth XX,XXX, X% of is XXXX. as to X% of of

place units the unchanged a commercial to we we and in executing but Glaucoma based focus confident with we're succeed us as and system build product long-term continue and that, treatments turn that IRIDEX With as ophthalmology units. laser allow in typically will sales, year and our to half strategy challenges like growth call enhanced the of expectation quality year the to second XXX fiscal momentum network, to our remainder in remains XXXX. that of perceive runway growth our distribution we in Our confident the ability the capital on of the position portfolio to non-incisional ‘XX, the have over sales market. provider high combined summary current are multi-year energized team, In We'll Fuad. to for leading when impacting I'd XXX through catalysts stronger at

Fuad Ahmad

-- of starting review quarter decline you, of second sold million, quarter Dave, probes our everyone. Total the and up of increase revenue the prior X% quarter second quarter-over-quarter. XX,XXX for and Cyclo performance will in I good a financial $XX.X second was X% the quarter, period for XXXX, now million Thank revenue. with We the from fiscal afternoon quarter a from X% year. of GX the $XX.X in last second second

compared expectation we installed for experiencing sold orders move of in also are decline was of worldwide in of GX in full from the the Cyclo Cyclo primarily X% of have our $X.X Year-to-date systems of distribution. the adoption second broadening expansion headwinds initial us priced to the stronger revenue XX for our from XXXX. prior product revenue in a GX We distributors earlier, was majority also a As noted highlight including the year and for period we of XXX result quarter as Total Cyclo year-over-year the quarter some treatment by base Dave glaucoma. million family prior our compared USD. exclusive our final down XX product the Moreover, GX sold the systems, to advance goals tracking XXXX. It dollar validating vast Topcon’s is period. to TLT

of offset the registered that relative our Product ahead the the retina revenue revenue, same million, to in IRIDEX Japan as our extra rights Strength The legacy to retina period. distribution royalties, prior QX million building to units XXXX for shipped legacy XX% $X.X $X.X second PASCAL. was other in as of inventory of compared higher PASCAL amortized products last Recall and to Topcon. quarter compared year year start revenue. includes substantial from and we XXXX. blackout in shipment resulted was to manufacturer Turning the recognition business. to Other softness by revenue period flat QX a increased of in in revenue we in sale from which services increase service IRIDEX products and higher record the

second in We this expect reflected the million year. XXXX. to the profit gross Gross level $X.X XX.X% of quarter XX.X% the in of the margin compared of for quarter to sustain of balance

capability Operating future. We from the million product investments year. second laser the sale to and the higher place of they of our in $X.X expenses further increased on compared existing quarter R&D the and the in expect the product of that result volumes of for was take probe margin million the developments same PASCAL was additional new as will come R&D systems $X.X from period of prior line. The new planned increase acquisition the expansion spend platforms in

as $X.XX same period R&D $X.X last clinical Additional for was in the marketing expense per planned compared expense in higher loss income loss XXXX an $X.XX to share marketing second also the period. to and period of investments operating net was organization, share partially or offset Net quarter year. XXXX well Higher potential a activities gain million and bottlenecks $X.X quarter million loan. lower with sales cash inventory these cash as the the in from the G&A by of the We included and representing to a $X.X forgiveness Please contributed million, XXXX. in expense the usage We expanded $X.X of of in of same the sales and per future. mitigate and $XX of related second necessary included period million in investment cash million PPP ended in chain Cash during are quarter note, materials our the in of of the equivalents quarter. pre-orders. approximately investments inventory usage believe and one-time versus supply

In XXXX fiscal current start assets to in essential starting our provide We in XXXX. supply of our an management part fourth expect update I'll are to the in down XXXX. We for environment. into strategy chain shifts the reiterate fiscal and an that of these the current inventory guidance conclusion, bringing quarter

With are for million expect GX $XX As remains now the Laser to base $XX turn to Dave for growth year million XXXX that, Dave sales over questions, be at unchanged mentioned, our XXX like Cyclo XX,XXX previously. to from to the revenue now to operator? expectations growth XX,XXX operator $XX million total to we XX,XXX XXX $XX to compared range And million to compared XX,XXX to for previously. call to to a of for units. GX range would finally, expected and probe systems fiscal installed Glaucoma I

Operator

Our the Instructions] from Please question Stifel. Stephan comes Thank Tom you. proceed. [Operator first line of with

Tom Stephan

thanks placement would impacted, guide may just be Great. questions. start in If inflation think macro, GX which which GX, portion systems maintain I guys, retina on came I the the meaningfully guidance the would guidance, Hey with for impacted think the side can you but shipments probe think I from be the you on is said XH. for then down somewhat where I

it would Just on Dave, would what just least are that be to competition? to procedure volumes sense guess, would be else Is color beyond bit you macro, helpful. trying guess probe this macro, side I be there, because resistant So any the make more dynamic. a of seeing I

David Bruce

would that was a of in the I macro is softness we Yeah, and shifted Tom. shifts. some factor second quarter Hi, say distribution, as the Sure. then inventory

I For Japan, in example, as mentioned.

think Going on the those recover items and forward, we reestablish growth we'll trajectory.

Our was XX% year. original course probe been guidance versus the year we've growth and of relatively through last year-to-date flat about the

got grow we why again half, down. carry the in second first half the of start to growth as lack to the that's are that So and in numbers the we've

going base expected that a than year. at rate of we're -- second starting a at So we're we lower have half for would grow the the to

is of pleased sales when that you than in range. So feeling the expect. guidance Those and when hide indicates is I we pretty our demand you actually do it we're that that would math, adapt think coming that such there $XX,XXX, comfortable for the there. is still system with capital equipment it to points visibility not appetite there lower that price We're see $XX,XXX to or you --

continue $XX,XXX the laser easier So that's between for that forward might a bit? set. and retina system things depending you purchase $XXX,XXX to capital Does clarified then with, be on feature the that

Tom Stephan

I Actually helpful. question. really That's good second Yeah. think into my a segue that's

guidance trajectory guide of kind I'm current on is on medium-term implies in stage. transitory, utilization think Because going should for thinking XXXX, Just to the like but XXXX, that your headwinds sounds get business. what about back are the term the you think Not flattish at normal year you'll to It of you again, next some XXXX GX. outlook? do I do growth this of it for versus sounds medium like but how we ask be curious

next So for XX% it about think fair of back XXXX, rates is to GX we growth plus kind getting to enter to the as year? XX%

David Bruce

nice kept growth I think of in thought but and to the than was COVID this in couple think year. first growth I that in as We half continues, longer are of half a established growth. think second the And persisted accelerate the catalyst to that going of it think this us that of year to there be opposed many level the case I so. I this a anticipated. And We year.

speed sales number and customers which really take coming KOLs confidence newer and going on and our really cause clinicians that one consistent teams papers, based the results call high use and sweep patient from Now the start our dosing durable to our and broaden our to communication they give to on it. capture start -- with traction have very is

But patients. that the before about profile, and safety got For especially we're that moderate get expanding and think you've that to confidence more now. and you the the talked stage we building longest we've the to time, get durability

current and along in from also profile dosing of that are are studies half as probe I with and outcomes year. the those the come demonstrate ongoing think out will that safety the the the that. some we current will So things move second There

come I gives So think as the confidence the selection to and greater on newer that existing emerges, greater board. patient it to broaden and of users, users

So do and we ability effect yes, other on usage events trajectory, ‘XX now barring to and think kinds should things. higher growth we that those to a volumes of any start [indiscernible] procedure be

Tom Stephan

one talk sales businesses? strategy be of just is And force. us helpful. between it the here on That's reps different between just the now last segment? about me, where you Maybe large the it. new rationale these from and remind the kind each will Got Can how focused

David Bruce

Sure.

the adds retina to a we territories, of of in the business. plus team on about So US, have side support six that team XX the up

And kind in that so of doctor satellite our base to newer that's capital business, the has have it's older have replacement everyone to same with we although replace systems. facilities later a primarily now for facility. some it's in opportunity business the expansion that and some a and want But platforms there systems a is an overall, growth facility really equipment it’s new is as -- have

the the that's we XX from the XX. the So US. to have glaucoma And XX just retina side side so we in US, territory us brought up then in

We inside and members, management the have as some team clinical support well support. as

And so by internationally, about as to put place support the about -- that channels. glaucoma just XX drive in And the in their totals people and Pacific, US. and that's in expanded Asia on their in as Europe three exclusively in both we help distributors more team to in then well focused business Topcon --

sales manager sales So cases specialists the we reps to territories. and in added, as we train help as call clinical support well what area

with roughly And now so XX including the about under people totals that international team distributors seven covering sub-distributors Topcon. and

Tom Stephan

broadly, one if even product guidance? new And can Dave, and revised And lot helpful. the you that squeeze about to of on it's you are about more utilization? I can into what Thanks. going that know and horizon. guess And talk just competitive kind entrants recently affect landscape. extent just your to GX maybe a on perspective thinking competition the might obviously, more just glaucoma, from you is the how that's of a the factored in so back I view Great, there more ramping extent

David Bruce

treat unique order stage Sure. that to to the our don't a the an later treat. to in is to make decide stage and we incision we that can relatively need moderate need decision We think don't clinician we the non-incisional approach and

entrants and some and For if it an example, a potentially there the I preference understanding is not profile. results a technique hearing stand-alone. is the from if of delivers newer that That mix of lot trialing it approvals interest stand-alone. it new is, what satisfied think to the our for clinicians in said, avoid their decision they make can and safety and And we're they're the use

And this mindshare. at of don't so I don't that. so not Oh, really we think it's I’m some affecting, did we know that, taking I’m these now, other I that point doing a hear less, is using yours things well, hear just bunch

think there. I it's So out

it's distraction. a I think

glaucoma I think are many with a specialist all that that them in and comprehensive of large of a noise sales space competitors targeted and there's at reps. has space But number so thunderous just doing [indiscernible]. who

in And sense so of voices the one hearing. they're one that we're

we're So think we all or least Internationally, to think from it's from think that at be internationally. standpoint, noise. less a is other I of we the percentages a there's in product challenge because a less heard differentiated, think with well but adopted communication the mix standpoint, eagerly I

to dosing think we the do has training challenging. gone actual the have and probe, volumes dominant our work can that that there configuration of as approach. and position don't of a And we going maintain so clinical much that that relatively technique and we in competitors are a in and right we feel into the so support right and getting But attempting we've procedure we couple that. probe on the There is non-incisional do there's detailed, what out the

Tom Stephan

Dave. Thanks, Great.

Operator

moment question One our you. please. for next Thank

Please line Our of question next the from Henry ROTH. ahead. with Scott go comes

Scott Henry

good and afternoon. you, Thank

about couple in I time. Dave, talked and more the the first, of I it just a wanted guess, out as it Just know I and prepared well. remarks question But flush one probably to in questions. you've last

it a -- below it came don't you do on just to lot there you you're constraints. GX as they as Why expectation? of it put And things, if thing, different that you So maybe what much as main capacity happened to as the driver? things trying want What if one I've in much how and are if XQ in out heard turn just think like would? came in would the was below expectations not you do simplify thought think possible, -- made

David Bruce

can that COVID And continued I dampen the at two least procedure with very our Number to one, was look are in to think our procedures. its you things that persistence to that volume us was facilities it straightforward. volume latter June visible was we part surprised of I and this very concept the coming quite there of when procedure up. softness. kept just into vacations canvassed And that May secondly,

heard observed didn't believe So that people calls, have it, but I necessarily other I've same at conference phenomenon. first the

short I So very thing. think a that's focus term

back we to to we extrapolate and July think trend, look in that vacations. made week I proof to that it I number by did a was by two, from think at some us that, month and come or see people it's actually hard their that, hate but there And call comfortable month week did one, --- and recovery number more

Scott Henry

When -- market say procedure as softness, you're sounds much market, when denominator share as not the you it speaking equation? Dave, in the you like volume the about say

David Bruce

pretty saying yes, fewer hard sites, it's indications, that to doing notoriously procedures. share we're but many market we're Look, clear it's our get

the Our or for they We in was clinicians five know to cataract they don't sick on indicators people had happening macro or on be want us. patients vacation exposed. kinds are visibility And to is COVID things. vacation want those of don't those come have or who don't good procedures really are just staff and to because and on what

Scott Henry

Guess I mean, I – Okay.

David Bruce

end of one of leave really the is we'll That's see since the Then and of that customers. about stocking it's the I of space quarter to or or internationally quarterly on the where piece enough, that, when something used Japan and we inventory collaboration the of example their is shift will distributors flat final over shift and that And beginning the QX. procedure we the of periods significantly the And inventory. place they orders timing were end QX, of really I us probe or for their where at think that from Topcon next quarter with some second occurred of that I've the with orders been to talking saw volume these have that distribution beginning in shifts basis based softer sub down. belief of international our same to kind softer volumes just significant

So to significant us, we the normal it that us flow come that come that But from and for is orders didn't expect region global. the effect of future. in to and -- a that effect -- market it's Japan,

are those clearly think two I short the they're So biggest, probably term.

I think durability. the a does even understand people take outcomes, and the that to if and quite on and though dosing speed is of while give are procedure I macro, would our sweep users receptive see a third, importance you outcome that,

percentage they reduction typically, profile. will pressure, both they also outcomes, but then a three reduction, evaluate thirty also intraocular So it of safety days, see six want months from to and

anticipate, than said, there. -- longer I the results took in we like So it it's comments, be the but to taking seem

And so that that will that confident we're broadening. get quite we'll and be confirmed adoption

think And plays from through, recovery from that that sort our accelerate so and factors growth I the we quarter. term have those as can

Scott Henry

for at some going I that is of is, time point. cycle what temporary flush of a mean, of glaucoma not contraction economic trying people sort from to all the doctor some see just perhaps where period I guess reverse this less was should away, barring the I Yes. seems out and

perhaps XXXX. to a growth expect Is in trend should to see fair You return that assumption?

David Bruce

That to you your our have every This marketing our declines, It's these of assumption. clear expectation. we every that fair we or that hat in We've expecting under rabbit were cause were quarters back very the quarter said, very look, either short it's sense elements to you're still to specific the I quarter, have is quarter, one programs they hiring, clear. work that's time. out so the evidence adoption. can't prevented didn't of exceed became achieve. to expectations there. clinicians and we're growth a that drives And continued projecting phase. is builds get those study the but think do to clinical programs both that drive level that's it and adoption, with Yes, And clinical and look, each the what base And where comfort the expand the and pull factors pushing significant engagement that term

significant So equipment at headwinds. we're still multi capital glaucoma that it's probe to opportunity we're from to going And a when new haven't because related partly on quite the comfortable as look was really We and our in it business. well to got excitement a the drive the put of we've second for capital value year the of half to that's the and in equipment we've feel and the We're recover products got we reduction because reduction like really that some proposition quarter optimistic coming continue partly you event. reduction. these guidance

Scott Henry

it it ask on another seems was And just question, but no reason it real now, my Okay, to mind. great.

what may the I'm spends that that want isn't million curious the good The is products sales of one research And R&D a side, development. where on a the $X question from Not just the some On you highlight be is, quarter amount, any I don't that company But know, of is working and if you company to stuff on? working return on? there investment? are related.

David Bruce

Yes.

significant So the cycle new opposed PASCAL of platform. particular, R&D focus our and the platform to the some through platform an platforms, level a of been -- improvement in now the has of focus launch, part current a and as it's of next getting right production

of opportunities. those out and we of having those given be and and the images investment to connectivity period longer whole various areas to offerings level and of higher are time of a is to the clinicians really other at should of of that spend there There's a to smattering the entails it opportunity. some field, a we're end that. And wave coming So And redeploy opportunity look into the bringing there. connectivity

and Our is to their in there for way be advances [Technical quite say, in create or then deliver strong the in Topcon applications glaucoma of made but between eye volume partner the a between, the of disposable, other or as think for a And Difficulty] we that the may type we company are incremental grows. and communicating space diagnostic drives equipment, a that to effect front be delivery some procedure therapeutic clinical energy have not revenue device delivering energy may

invest those in I'm disclose will our point not disclosing to we so the to ready in no those forward. competitive things and going space competitors. things And

Scott Henry

Okay, great. for thank questions. taking Well, the you

Operator

that, for will Thank to with we Bruce back our today. final I session call the you. for Debbie And end remarks. David Q&A turn

David Bruce

continue of the Thank shepherding call. quarter. you. to forward you assets growth reporting And and behalf thanks on work everyone and look of for to next We'll joining strong to the

Operator

gentlemen, And we with participating and that, you for thank today's program. in ladies

You great Everyone, have a now day. may disconnect.

IRIDEX (IRIX) 15 Aug 222022 Q2 Earnings call transcript