Earnings call transcript Q1 2023

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Operator

Thank you for standing by, and welcome to IRIDEX First Quarter 2023 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]

I would now like to hand the call over to Trip Taylor, Investor Relations. ahead. go Please

Trip Taylor

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

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

are trends statements Any will made strategic made Private securities the this call during statements our not we I'd we to which like statements XXXX. safe federal of the Act markets begin, to Securities are including, to, that of limited this goals remind not include pursuant make and Reform in within forward-looking harbor Before historical laws the meaning but which you and that fact management of statements sales the operate. during that priorities, provisions concerning call product statements of matters, Litigation development

statements involve by to place various from these our statements. are or on events anticipated current materially All and upon you should cause Accordingly, results forward-looking reliance statements. and could implied or risks that material those estimates based actual forward-looking statements these differ These not assumptions. uncertainties

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

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

David Bruce

first today. updates good for financials, progress, for quarter questions. call joining our I'll the and provide will you, Trip, business afternoon. details will we the Thanks on Thank open provide and then Fuad on us

Growth decline the was of laser offset revenue, compared GX Cyclo the driven total period. glaucoma quarter a sales. growth generated by $XX.X platform the to in In slight prior retina XXXX, X% of year our first we and million in by

business, our year-over-year Cyclo X% by $X.X glaucoma increased In million. GX revenue to

to in year. We technology sold XX by pleased glaucoma quarter GX increase solid by Worldwide probe in decrease revenue, worldwide. of year. X% units the to and the in adoption GX a X% XX a a prior in growth. the in were probe decline first quarter increases to X% the the driven revenue a U.S., we from compared grew XX% last continue systems volume XX,XXX the despite probes achieved In have were experience quarter, to of ASP

Quarterly, International probe volatile. volumes remained

So this volatility quarter adoption opportunity for a returning in and is will its large, fourth first growth this efficacy volumes our to MP-TLT, Embedded drive partners. transscleral is high dipped laser We're internationally record focused multi-quarter through volume on trend. quarter. flat believe very long-term safety the MicroPulse we relatively and therapy, International in that's following solid penetration.

strong, GX of order the for saw in as reopening in international system sales, growth the shown from expect late and rollout in quarter. COVID return the remains Underlying benefit continued Cyclo to probe China international the activity with markets the rest We year. of by to strength first demand we increasing

growth We execute opportunity we continue the the patient. glaucoma will on moderate to have significant GX confidence severity for in

initiatives. key we and utilization adoption, GX continue focus propel to To on four

dosing awareness patient and First advancing physician education of by proper selection. is increasing

targeting most ophthalmologists moderate-stage is to identifying of patients. comprehensive and the Second preincisional see

current growth. And to have adoption Third, address MP-TLT. initiative GX expanding on those to clinical These at to the systems. that greater targeted initiatives surgery already by barriers adding evidence and centers of capitalizing drive the final is users adoption are

address profile. TLT conclusions there's originally patient have production technique around forming variability the of technology procedure fluid, applicable we perception that the patient Since perception reduce the recommended treatment dosing from results, a and suboptimal User the to these and evolved the MicroPulse late-stage is clinical in and to can on lead protocols cyclophotocoagulation a aqueous limited by and this methodology appropriate that procedure intended of still sponsored views, group. educating market panel the are To the consensus role.

is that challenge long-lasting underdosing procedures, the inclination Another leads we too is which found best is surgeons' to to outcomes. sweep natural fast during to and counter

will proper durability, we improved the our and simplification suite improved confident be across Surgeon and and on management feedback that leading GX can clinical to and aid speed procedures. launched clinical our greater to roll very software out optimization reproduced any generate We're positive. of to sweep consistent ultimately continue generated outcomes So user. outcomes for are systems using technique software in utilization

educating Additionally, use benefits on focus preincisional, patients technology and the volume, on it to have of post-cataract we continue broader concomitant a patient may had or pertains specifically a patients not treatments may treat within all higher-risk surgery providers moderate-stage and or MicroPulse this aggressive, deferral as interventions. progressive who eventually to pressures. additional glaucoma durability avoidance It intraocular requiring of TLT in rise surgical MicroPulse happens used device enables more treatment. MIGS their with significant pressures repeatability to disease,

and and for ophthalmologists. opportunity stages of are times moderate the treat There by five comprehensive patients ophthalmologists market is adoption in stage further than more to GX specialists comprehensive This glaucoma more group penetration glaucoma providers, XX usually glaucoma. advanced with than of Another drive times diagnose earlier patients.

our had introduced of in customers ophthalmologists we and on Refractive very by wet-lab benefits the San conference where and Society with the the week, customers. training opinion leaders, product Cataract prospective portfolio. educated key we a Surgery them many We encouraged of American past This comprehensive Meeting IRIDEX and at productive booth, sessions engaging were Diego, the at

by management trial patients. and launch The for using appropriate the experience effectiveness to has confidence given prospective to treatment of guided TLT safety parameters us substantial suite clinical prove a early software moderate-stage and MicroPulse larger-scale multicenter design glaucoma

excellent three in arms. strong very XX% clinical results safety escalating XX% that data a value achieved For to proposition. with three build of with example, all recent true looking to generate results early dosing to prospective study in reduction can We're substantial on validate pressure these single-center of more arms direct

of series conducting We're appropriate guidance participating. protocol in KOL and the identify group to interested preliminary study research meetings our centers identify a with

is look to to patients and clinicians range the on the targeted adoption patient enrolling target once and sharing a details significantly moderate-stage these patients. treating believe by would begin year-end forward increased multicenter the broad of study of support the definitive study Our by in study utilization We GX a formalized. right profile

we business utilization. and the at expect our we glaucoma As rate XXXX, of of look increase remainder growth improve the to

sell our representing XX% XXX probes, grow and to reiterating are installed XX,XXX expect systems. growth by base X% XXXX. to XX,XXX of guidance We continue XXX to expect compared to And to GX to to the

retina with offset first the with expectations tightly, international to Internationally, introduced U.S. in Retina on Turning growth quarter-to-quarter In inventory to performance weakness. our has was the more sales of retina distributors $X.X prior our compared volatility. line which dip business. largely by slight year, more million, quarter, our a managing modest are

promotion interest customers new we've we As in from launch limited our the strong platform, broadened platform. the of new seeing and are are responding, PASCAL

any integrated treatment half sized capabilities the in expanded technology the nearly can clinicians offers MicroPulse in fit office. that with footprint system PASCAL Incorporating

purchasing the macro decision While cycles interest decisions. causing more is of in customers we environment, signs lengthening have challenging solid, their be methodical to seen capital with

the that year clearance in progressing Our commercially achieve launch approvals to throughout additional IRIDEX single FDA the commercial our platform on U.S., the the globally. we look to or XXX other progress. launch the to international regulatory midyear on for laser, keeps major spot laser expand updates to us plans IRIDEX forward and are platform, XXX track sharing and

in To for summarize, communication GX the and further requires multi-center clinical growth. glaucoma further the Cyclo in work, and the evidence the and our long-term was activities, glaucoma trial our investments scale sustained year marketing our increased start It's year-over-year the by productive continue focused revenue, treatment clinical larger to we quarter of support paradigm, hard prospective market U.S. adoption foundation to base. XX% for of IRIDEX clinical of highlighted benefits selling first build growth and probe

cash cash remain in a call. watermark is reflected in confident quarterly detail XXXX. first our current in and cadence will sufficient specifics we Fuad On ahead, multiyear execute balance expectations for believe the increase growth quarter growth later was not to more expect rates we high our the usage our year initiatives. of the management that note, Looking to the and cash

Now to cover call Fuad like to to I'd the turn results. over the financial

Fuad Ahmad

for everyone, fiscal the thank Thank first Good begin performance of you you, reviewing and would to like for by I quarter with Dave. financial our revenue. today. Starting XXXX. afternoon, us joining

of representing $XX.X revenue was to of quarter of total growth XXXX the first for X% first a Our compared last year. quarter the million,

Note probes X% up a GX year Cyclo the We sold Cyclo revenues. Cyclo year this in in that decline $X.X sold revenue quarter. the in prior Moving ordering driven the a from GC X% million, We the is distributors period versus of was of in on the to product first first international XX prior fourth systems volatility Total in quarter the quarter, our to XX,XXX GX XX record product XXXX. quarter family same following compared the period. period. from decrease by

substantially decline XX% Other same revenues, of in the services first in and the compared legacy quarter include higher first from to million, other $X.X which legacy million to products was product year retina in $X.X of revenue from Our on products. XXXX, increased the a quarter other revenue period. prior period royalties, the X% our XXXX

the $X.X slightly from Gross current XX.X% XX.X% Our in period overhead gross quarter of profit of XXXX lower 'XX, first compared absorption last relatively on for the unchanged margin in million, quarter the was same the period. first year. to was

the Operating $X.X to expenses million, year. were first last the compared period for flat quarter same

Our a in to was quarter the million same first per in million net share compared -- loss a share $X.X of or quarter of for net period loss of $X.X the XXXX of net or $X.XX per $X.XX XXXX. loss

The the $X product the representing new of capital usage M] cash equivalents quarter $X.X of ended rollout the includes our purchases of million and quarter to launched during [Gen product cash We related expenditures. cash certain quarter. million nonrecurring and in approximately inventory newly million, cash usage first the including of $XX launches, with

you into sheet. onto $X unwind of This last may manufacturing a to proactively good to build million year, As portion plan balance by thus tighter increased avoiding the recall, we interruptions. inventory inventory we the and cash that year, supply chain, manage

cycle, reduce completion retina development cost of following cash products to usage. of meaningfully product certain the the the from Additionally, of our cost expect programs, efficiencies in reduction quarterly goods we and the our introduction new cost new

cash We deliver believe XXXX. planned the XXXX in significantly lower in expenses second our of lower the $X.X inventory cost reductions, expect quarter through usage thereby we half second quarter in quarterly in an from along should of XXXX. terms half second to to these numbers, of But with half of operations $XXX,XXX result the savings per 'XX, approximately million the from of $X.X of reducing million in usage cash average per reductions

to of Additionally, second we fiscal the million inventory expect the in release from cash reductions XXXX. $X.X also half approximately of

In conclusion, our reiterate guidance for XXXX. we

to to to XXX to are sales expect Cyclo unit probe laser With units. be total that, expected Dave, the Operator? to expected continue glaucoma XX,XXX, to I XX,XXX to We for $XX base $XX questions. like would to for GX over to call expand million. and GX fiscal is system from operator revenue the XXX XXXX installed turn million range by

Operator

of first question comes Tom Stephan Stifel. of Our the Instructions] line [Operator from

Tom Stephan

and you're system selling Great. more about additions installed solid continue Dave, to the I'll utilization talk to GX can you maybe accounts profiles in post numbers start there. types the looks into, base? like their these recent with of what shipments,

David Bruce

The parameters. to categorized specifically Tom. in those of are harder international Sure, sales terms

hospitals. new distributors its to hospitals, characterize sub in some I'd -- probably we you probably As adoption general. them a in know, But sold general, new below first, then it's say center surgicenters surgicenters, sell versus XX% some customers. typically we're to end capacity and to in but distributors And

not are on The of second a yet a has digits We month site addition average. at utilization single seeing significant unit. per a is that units in still

capacity available is quite So the the is requirement high. -- still capacity

where central the satellite a example, units and office seeing offices, hasn't United in primary of do States, for either from larger those sites And might locations. different the cities, in capacity demand or We we're of parts new see, and technology available. been that the put in suburbs new systems have coming primary then to adopters it in the add general,

piece in in also focused up already, an that doesn't at users that's a systems have but we're up a laser as aside, growth sites placements on that utilization. system Just our adding can and of show show

Tom Stephan

it volatility the up the ask and probe I OUS? confidence, only unchanged wondering quarter, Got probe clearly left of and helpful. in to I only how the X% I And to level XX% year-over-year But there's maybe it. year the stick get of you of but if think to XQ in decent I'm growth, that that U.S. can stands X% the your there. growth about the Great some said clip, that versus growth how does a within is That's where was context with OUS U.S. see full then given is guidance. And above and high the and I down GX. wanted year-over-year. high the that I'm U.S. U.S. just range achievable X% in guidance grew your assuming

David Bruce

the would usage year. our anticipated that Yes. build course of guidance formulation, we we the in Well, that over

growth will the the X% it been higher we year. So have build would of course feel the than over a have to nice we U.S., like while the had in number

there's over the quarters. usage we in that, of year, degree significantly so we loading And back-end the see build of that the course and some to higher later

end has -- varying like and volatility end it but no usage and -- inventory is distributor the issues a been distributors levels at a It's their has quarter. to little or for we with example, first our customers, of the core International there the challenge at is it's one There feel it are frustrating, of fiscal predict. the little harder what year-end is. of largest

we them So can lead the cash, inventories, included, kind volatility and of most minimizing that companies, to that maximizing receivables, target see.

we're all focusing hit short can we to drive answer those that of elements we think we the progressing, and is, and adoption on the are growth think So numbers.

Tom Stephan

discuss That's space. about for landscape the wanted most MIGS view last one then you your ask notably competitive it. competition. Got to on And in helpful. me. the I Dave, glaucoma, just Maybe, can

there drug market a coming. and implant potentially Now stand-alone the stent on there's out the delivery

thinking I you about impacts the longer-term are if GX, guess, -- any? long how So potential on

David Bruce

companies selling vast are majority in the needed Yes. use new more that no an of in where We lot seen a well, we vast, it's usage. there's a We device. in procedure, think companies know what MIGS from a concomitant We're are different where hearing stand-alone they're patient customers, MIGS think -- devices. of And customers promoting sense, to their increase incision competitive with our first all, were we've of From heard there appropriate. for that out in asking and the remains cataract not because it. variety the device

we making significant, a as difference end incision up nonincisional to and incision the not The with between and safety to efficacy an for an as strong physicians. making well is patients hear to approach. And both a to preference the continue same the

than on intense. competitive is So reps we're the positioning. companies. But flow with more average, There's that information lot a comfortable this space They have, in us. of

So is about the device speaking group of type MIGS number of our reps from a the quite some contacts large. versus

territory their gaining pathway of and and of working our targets confidence And per with So procedure. targeted leads them customers, process challenge, increases be that that we of we the we them cohort taking and execution that's settled by for that us a growth on their focusing guidance year. through think and the with able should probe adopting address those specific to kinds and the we those to achieve on that the down with

Operator

line Our Roth of of the Henry next Capital. from question Scott comes

Scott Henry

talked but again. bring we've about to think Dave, GX. a I good it's time with start I'll questions. up of couple A this before, it

feel digits get go And see get can flat, kind systems of double digits, not it's got being then going we've going how past? are up the grows, to do a out we growth of to Obviously, Lately, in go But of of need compounded the high of levels system? to you you some positive going year. more. You which in noise kind systems trend but still new didn't to that there. probes good number per metric a But you plus like compounding systems hyper to rates but to in seen and the rest been there, and the it direction? that double -- you current the of it like because get in that it's utilized the looks utilization of the per up QX, to get that system, has upward probe do to think

David Bruce

Right.

adoption the So our across focus appropriate is on doctors patient by the base.

expand the then So I initial profile commented initial how procedure, people in a the toward of those the bit is grow a many, say the about application patients see adding smaller later of average who stages. can usage. to -- confidence is the And a I'll ophthalmologists moderate-stage then combination, many And cohort of the the more and more in safety group there stage gain avenue most patients. higher in moderate comprehensive where patients, are

not not profile We the procedure also the then frustration getting and say, effectively the seen, parameters not excellent, getting they if conducting they're been safety and some the and outcomes ability back usage. has if they're outcomes have from customers the I'll they're -- but from durability following away that the

to And so think what have understand accounts grow than rate, usage patients what that that. stage, well, those the combat. focus We target really net have accounts set the crosscurrents lead patient. focus are can we and driven lower really to in broader on and late we that's do who and may on may else we declined And those what of with adoption we a drive going this our to

gain to these It those higher And period get do into durability. to takes them two confidence follow them then and for But a things us time. of takes it's time for enough growth we and combination and of outcomes patients rates. think will time up It a the process.

it's base, that's the responsiveness but well terms to time going And focus build. recognizing function. that it of on step not customer we takes in that, of So the a

Scott Henry

you gears I One, X% grow? about about Shifting to the segment, term? might Okay. equipment. category about in capital Or growth? guess, the mean that? the tougher is retina. than that I short that is long two-part and you long where little term? we do the Do question. think a economic When that think And little do a term, how challenges think in slower And it long-term a see be environment then perhaps some with short the you term how

David Bruce

a that of can potentially grow our research U.S. rate publications We at mid- of Yes. across the We the worldwide as keep the worldwide we get single with the digits, rate in low single the PASCAL the it is, We're at think kind platform and platform they to long to while get that little low platform, new in growth term, scanning laser, look of about industry that higher thing, the some think kind the into second U.S. we the market proliferated opportunity. digits.

the And half of usage. broaden receiving start platform second PASCAL year, then on the we'll to the of clearances that some

So maybe share we to think grow rate. marketplace. above in opportunities But that market and we're there are substantial leader a that

their governed And are we uncertainties, year, before." by call short-term we're we marketplace. much growth I we've the budgeting in overall people intended buy we think of as capital changed for the process. it, saying, So and the seeing then what going of in not people But terms that's "yes, had the to is I'll seeing not economic, more are generally deliberate be our as

they just a extend to purchasing. the more being And and selling internationally, And on try in deliberate the out cycle seeing cycles, do inventory. yet. really we're and people the lean bit distributors their how then happened we're not That's seeing thorough

you've customers some end base, a the of their slower. being bit that puts in to little got with so a kind maybe drawdown distributor of inventory along And if dampener a sales

Scott Henry

do numbers were kind as strong to then line that? to it the we And at pretty over ever Should about that about mean you other hit, I good. that about get Great. going this we of about think and talked point? look some Okay. been. looks but Or it's we how expect roll as

David Bruce

a more of year that's the Yes, half second of phenomenon.

go that made because this reference is have the where in really guidance that patent we the revenue expiring the annual. And referring that in and income comment and But of happen guidance is down. we royalty So in included to the will the more a we portion second you're will royalties of half do year.

So we a obviously to be annual -- component the result. of that's going

that. of nature the that's so And

which kinds And over category, time of legacy the other or are royalties in discontinued those either in are that types to things items. of -- the that addition number revenue of then subside and that expect in a and some -- are items deferred the some strength the did to are see there's other we we recognition the there our in other that those are products products

quite see those So did encouraging. of which products, we some is some in strength

actually And one a is used that's products probe of glaucoma. those in

so glaucoma But that external the had somewhat we think that relatively general, a category total OUS units And we in disappointment business. -- probes. that's to glaucoma of really in offsets significant the stable the

happened were to the this one, the that have inventory shifts so And offsetting a in quarter. on positive maybe that divergence first experienced negative slightly in

Scott Henry

little Okay. high G&A was any think a we looked Great. like Any trend quarter. there that? How or about Final should the It in noise? question.

Fuad Ahmad

expenses beginning to Yes. was in ready the at that onetime typically certain and you proxy-related the IP-related for of the year. get stuff No, just some expenses corporate side, that on there legal come

expect I don't continue. trend to that, So essentially that

closer on going G&A we a be to should I run think forward. $X rate million

Operator

back like the Thank you. Sir? closing I turn for to David would remarks. Bruce to now conference

David Bruce

Thank you in Thank quarter. the and you. thank call you, for operator, and the questions, participation this everyone for thanks to

Operator

for call. conference today's concludes This Thank you participating.

may disconnect. You now

IRIDEX (IRIX) 11 May 232023 Q1 Earnings call transcript