Earnings call transcript Q2 2023

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Operator

Good day, and thank you for standing by. Welcome to the Second Quarter 2023 IRIDEX Earnings Conference Call. [Operator Instructions].

I would now like to hand the conference over to your speaker today, Trip Taylor, Investor Relations.

Philip Taylor

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

Bruce, Officer. Officer; David Interim Fuad are Financial Chief me Chief and Executive Ahmad, Joining

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

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

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

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

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

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

David Bruce

financials, progress for details then and questions. the updates thank I'll our and on and business provide call open provide all you for Today, will us. we'll . afternoon, Good second quarter joining Fuad on

quarter $XX.X of total XXXX, of a year's last million In reduction in second generated quarter. second the $XXX,XXX versus revenue, we

our licensed previously revenue resulting by expiration offset of reduced quarter And medical and retina. glaucoma in patents. this discussed growth income from moderate declines the surgical first in was experiencing Continued was royalty

execute behavior, across our our systems to X are traction glaucoma continue to customer customer that cycles we have managing We the initiatives Also, lengthened sales. through accelerate and our which to dynamics purchasing strategy, gain longer As cautious taking we're procedure adoption growth. base. capital more our impacted experienced softened

half of the result, a now base installed the performance million our range by are XXX expansion of year to $XX first for million. with year and revenue expectations, XX,XXX of the below units systems. XX,XXX of the to As system Cyclo updating and to our full in be expect to XXX probe GX guidance XXXX sales GX $XX Cyclo we

long-term ahead, treatments based of clinical well non-incisional laser we growth platforms. propositions glaucoma on differentiated as the Looking our believe our refreshed our market-leading strong retina launching opportunity as value is uniquely

strategy growth While have believe technology, our currently mid-single our here. rate digits, we the in team glaucoma accelerate we from to procedure the growth is and

base is Glaucoma the posters implementing clinical as TLT in recent drive optimism multiple the our and highlighted World -- XX at the platform, user presented with utilization. MicroPulse Our heightened interest across to GX by -- Congress is by shown we're the substantial levers and Cyclo increasing

clinical the suite MicroPulse supporting These clinical include through adoption of ophthalmologists patient large-scale management education TLT comprehensive and a targeting expanding evidence most on selection, multicenter among proper notably and dosing rollout prospective software, trial.

for patient. longer-term reach glaucoma capital but to treatment in this These space become the larger together stage choice moderate In a represent recognize parallel, to need we to steps key crowded device opportunity runway goal. are necessary retain attention preserve to a glaucoma the a our scale

inventory are additional decrease $X.X controls to the about coming usage call, usage cost cash last we our On in and quarter's actions reduction in taken further to and to million our reduce steps operating quarters. talked this usage, cash and declined place

cash disposable operations usage higher-margin our meaningful of rate until initiatives current traction and continue our the growth. reducing at and accelerate is bridge to growth Revenue probes gained expected

$X.X our second increased by of business, Cyclo Looking closer to continued systems the X% increases Probe year-over-year units adoption revenue increased X% X% installed increased quarter in quarter. by by of GX Global as growth. XX by year-over-year, the revenue million. volume base we driven glaucoma our and at GX platform ASP

business. in While of progress was the several the we're XX,XXX in probes below sold our aspects expectations, quarter encouraged by the

with dose. Our large TLT MicroPulse the ensure IOP current and achieve top reductions updated surgeons safety initiative treatments, is and systems clinicians software, strong aid with using reliably recommendations of suite the educating profile to proper customers our dosing glaucoma a management on delivery

slower panel year over ago dosing a consensus recommendations on more highlight then, through were training team. through dosing baseline speeds studies, studies surgeons software the dosing guidelines, technique time. ensuring on and I'll have outcomes, our upgrading clinical by patient high-touch dosing higher based that Since system a shown sweep support case improves our that effort were later, requires proper The issued which at from published

proctoring, entails of our they to XX- tracking process the at with the initial outcomes cohort an treating With confirm clinicians XX-day follow-up. patients then desired results achieve this and approach,

contribute their procedure growth outcomes choose to and this of in as our treat a confidence TLT. believe some patients over lower-volume profile MicroPulse the We to time can with broader considerably process of accounts increase

see users. only severity the for they a those and diagnostic Retaining ophthalmologist SLT treated patients area to the We to drops. patients mild glaucoma treating have provide future in moderate referring Another deliver their mild for visits opportunity specialists. can regular population, medication patient before and patient per provider revenue represents is patients which continuum $X,XXX over by patients longer focus otherwise practice additional largely to of primarily at referred second glaucoma to the business disease approach opportunity is the targeting pool, with This a in on. practices would MP-TLT stage to patients and manage year and years. test per significant a a these clinical see They earlier manage generally larger through stage comprehensive and

population the average comprehensive proctored, seeing we're by patients. surgical volume higher than can our XX% significantly specialists. be team procedure recent glaucoma being the pre-incisional cases, is users In Furthermore, we're traditional about observing is treated

eyes clinical expanding supporting patient various TLT. Glaucoma demonstrating There recently MicroPulse and All was contained I'll the XXX cover continuous in these last in physician-sponsored over studies clinical XX today with adjacent to represents types The studied topics Conference. World TLT. dosing safety These glaucoma interest applications of presented data various initiative structural the and combined treatment broadening the but posters at one from growth MicroPulse tissues, traditional is the MicroPulse discuss wave parameters. and were cohort

XX% with greater slower patients topic studies. excellent I'd profile while patient sweep like to delivering efficacy in these from of the escalation, studies -- demonstrated X reduction findings speeds IOP, from over a a highlight different On dose profile. totaling few same safety XXX

prospective treatment. The randomly single-center target patient these studies inclusion Patients needing cohort a ours, assigned cataract post patients key of randomized was was criteria were One mix XX-patient further and of study. a failed escalation by dosing different tissue accomplished of sweep X speed, thereby additional adding the energy time Dose protocols. increasing dwell the to probe. was temperature slowing target the extending probe passes or by and of

were the safety with These efficacy while highest higher reductions pursue achieved dosing each the types be profile the that average confidence all reduction safety the maintaining with XX% can of at doses. an IOP Higher provide still findings comfort escalated surgeons will across same for maintained. dose to by

trial The the identifying safety prospective the multicenter a group stage TLT study in glaucoma be a IRIDEX studies patients centers larger participating. trial. confidence investigational to positive scale invest results with small protocol to moderate the guided of of as of We're and for effectiveness provided goal statistically these dose demonstrate of of has MicroPulse the designing in by We're volumes. and of will The selection KOLs. the patient escalation powered finalizing in final CRO interested stages the the influential

right first confident study powerful would enrollment adoption GX utilization glaucoma clinicians. successful increase A by We We're of our strategy to year-end. have provide an to support market we by product over and remain patient cost-effective still penetration for a time. the increasing number and the targeting

declined million now the second Revenue year from focus $X.X retina prior period. the business. million in our Shifting on update to to quarter the in $X.X

our platform, in growth continue systems. While strong surgical retina was its medical we offset PASCAL and softness by see to in interest

As in difficult equipment sales for second That recently, we rate environment. stabilizing macro call, our cycles quarter, we rebound timing. mentioned uncertainty be to interest capital the forecast remains but rising last during to on amid the seems saw lengthening

spot We are tracking platform with of XXX single new toward our quarter. laser versions IRIDEX our and XXX new the U.S. fourth launch the in

until these available. exhibited of can the start and slower any new cycles quarter the are new product capital with second our soften can inventories As volumes when products prepare with that. distributors demand order purchase soften and results generally international coupled This, cycle, transitions, for

should challenges or growth As economic a international fears XXXX. these and regulatory subside tailwind product new to in turn approvals,

execution that and top strategy our our continue visibility. constant will on runway with to multiyear preserving cash focus We execute initiatives a provides

our the are and steps project quarter, our to runway tempering took extend reduce forward. our second spending In we going expenses operating and

We also that inventory meaningful the fourth to further built of see by quarters in challenges. recovery was cash supply and third mitigate chain reducing up

to balance maintain current multiyear against support usage plans growth runway our spending a We cash continue to resources. to the with rate

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

Fuad Ahmad

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

from second half royalty decrease of last loss quarter. GX Cyclo the Roughly of quarter decline was representing product the to was revenue by also due previously second the growth a the total the compared to Our offset quarter for declines of $XX.X in line. Modest product million, the retina X% revenue in is of reported family year. approximately

from quarter, the in GX product the X% the growth X% up revenue growth same GX in on $X.X 'XX. Cyclo the year to revenue probes revenues. to sold quarter in Cyclo product unit from million, XX,XXX of We X% prior was Moving period second Total representing period. family second

XX prior quarter systems to also We in compared XX in period. the year sold GX Cyclo the

million royalties, from previously royalty period second uncertainties period. was product retina XX% 'XX. million, license Other in the quarter of This reported. services revenue, and to a patents a the result same as XXXX to high rate by the of interest other decreased revenue from $X.X quarter legacy second which environment. of a prior reduced X% macroeconomic decline $X.X driven we This in the includes products compared is primarily decline, in of believe, revenue and Our expiration

to current of second million a the to of compared decline gross period. 'XX year compared The margin Gross period million compared $X.X the period. million, $X.X in absorption lower for the small decrease second of was in margin $X.X million year. profit was for second Gross $X.X Operating last prior expenses a the in to in XX.X% in were was the overhead same result 'XX. XX.X% the quarter quarter quarter

period the implemented reductions separation over $XXX,XXX current in expense of Note the to that includes quarter. related costs

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

and usage expense operating efficiencies expect We equivalents management from as on coming ended million, cash $X.X and recent to improvement investments million expense execute $X.X the strategy. remain improvement of during a of representing we We with management substantial and continue cash the cash quarters. in unwind quarter, on quarters prudent focused prior and steady quarter inventory-related a

XX,XXX To fiscal from to expectation GX wrap half revenue a XXX $XX $XX to range from XXXX to to system expand and systems our are expect to million. expected results up, million installed compared first XXX expected unit for $XX is to XX,XXX lowering compared now to year, softer the million laser XX,XXX fiscal of we base XXXX. Cyclo in for to previously. million XXX be XX,XXX the prior We GX XXX by sales guidance of now are given to systems glaucoma $XX to the to now previously total

would over turn the questions. that, for and With call I like to Dave operator the to

Operator

Instructions]. [Operator

ROTH Our first Henry from with comes question Scott Capital.

Scott Henry

So I'll micro-oriented start questions. I've the questions got with a few

to look seems second correct? when of the not I look half trend expecting I at quarter, rebound expect little that least QX you're guidance to Or First, like in year, this the at retina. at maintain? a Is it you your and the bit

David Bruce

as And referred seems you hear as that see we well. right, -- cancellations. the we in The Scott. to But economy That's coming. didn't it greater to you be stabilization see it,

took to that like feels deferred this coming much just processes decision rate that order. plans. just And people And quarter I And in think are pretty think quarter. their their that's general stabilizing. improvement topped are people Just sentiment. a orders deferrals, to perceiving moving we appear Those Interest increases were forward there's in with in last out. longer have

first but need expectations, that closer the in to year think year half half we down we the really the So enough to of the second we can guidance. that full adjust of were be year

Scott Henry

you seems just like GX. that little expected. then seems have shifting it for strong. more accurate? I I price mean Is a to And kick would like prices are than Okay. It get

David Bruce

increase So we middle implemented a of around year. price last the

-- in we in the having that so marketplace. successful And we're hold

equivalent revenue fourth so lap will that and the increase XXXX. was by And to U.S. less timing price. so to of of quarter in a that the quarter was a demonstrated as quarter But unit much go as start primarily forward pretty to increase second subside gap and than event in internationally. third and and a bigger as beginning increase. more And feedback the onetime that the in it of continued increase opposed That we start we first market

Scott Henry

getting compounding has been This maybe how is? trial the do And currently probe question. probe will growth. the utilization help guess, to this you that I system higher adjustments, hook micro-oriented per getting And now, numbers to Okay. utilization get it but than final made you've always

David Bruce

Yes.

pursue So the patients. driving of the a the to of find procedure set but There's sought. point we the as and glaucoma. group those these What patients outcome challenge are the of is you happy percentage root just patients maybe through where in on results, you a advising that is come a recommending and the get that they of clinicians confidence broader any our with be in is treatment they'll don't with just treatment as

a And of our if consolidated on let's And there well, patients not patients. ask and the look that data like reinforce what customers or to that's off the to, with. it we're situations even dealing And question to just to I procedure. smaller can those recall feel they we've them at group tend been your back

But various directly space. mix perception. means higher reps particularly evidence that with Even we in that because achieve the continued suite the out with environment. competing of companies pursuing devices why have it it the safety coupled actually to have for it's the them, a other worked clinical has that more device noisy plus to attention So in our the investigators not though change are profile a using focus efficacy that's drive sales, sales lot a we're in on There management competing with hands. are are of Those software with in you with some there, their doctors. we're tools to

the so an our street down effort target effort. focus it's And move to accounts on on feet It's them and that pathway.

to, And So broaden. prevail aspire the we and slower that being then the of confident as But adoption year. it's that's the going quite we mechanism. achieved we've reported, put are say, results as out the beginning are I'll will guidance to that our the we continue ultimately will at

Scott Henry

guys -- one done out have -- the kind Okay. look question. guess thinking just Great. apologize And of if just I I good job. you at advance. I'm company, picture I pretty When seems loud big And like in it a

X the You the and $X one of toughest in had only you just quarters, million. lost past still you've quarters had

has the I months run when acquisition been fantastic. was to profitable. don't fast can't. can grow you business if to I But maybe you think retina The So XX enough know XX turn out, Maybe can, you well.

it's everything But -- that is I and to a scale to at point, that's we're time And in lose find profitability company buyer how to profitable. money. can't you're best mean, environment the meeting or you you want think and in I going expensive, situation. either to anything to great to across X. too I the deal seller hear think some now. want -- order buyer, that wanted be of would sometimes you given But not at bring a find would sure just the ideally, scale I board lot of sell. You're a a to if just and brings right another a whole But economic bring because you're you curious come or to I'm

David Bruce

what's question that's whatever add point a go And change, to strategic cash right look, Yes. different directions. monetize or the as generation, in usage -- either you leverage cash yourself rate, or directions or constant company, growth the to manage your different

not us, to make and at the some opportunities but to look that direction, table right constantly, and a the opposed the but on us for regular try we So on of come evaluate both not basis along. decisions. has We're availing either to sides opportunity

to And terms quite business collaboration Topcon in us So out be to transaction good capital. to took it found and for get a XXXX the to those kinds of in consummation it we'll of open to both things. be we us while that, that in a but and continue turned

Obviously, to go public in when particular. announcing a made with not And anything we're such decision. it we we have

say your So particular are anything I'm to that come kinds aware to on at that right and question, focused there's when the of point thing. an really we more be for and moment a we're communicate not this for cause us points going to such decisions ready answer we'll that those at but

Operator

question Stifel. Tom next Stephan from with comes Our

Thomas Stephan

I maybe with And I'll weakness. the is I terms here exiting zero other think mainly -- the talk in I and when that can burn sort to little currently the comfort of color way just question, you the the Is guess, be guess will, sheet. sort the give might about you rough And corner off just of the off any of the balance what on you just then Just that of the think drivers that? you us last corner profitability, on Can come mix? sort it Is when bit. that piggyback turn reverse sheet where have Great. it expectations where are do a that turn guys year? given of in profitability to of further maybe kind to around balance key is, reductions? balance might And sheet of fairly soon. strength cost piggyback, some

David Bruce

Yes.

of inventory. the keep for adjustments to an impetus opportunity one continuing the to eye in reduce and second quarter, been So our we've the on

we larger to do a So chain see reducing. carry need softening. supply inventory challenges amount of the And our

million put that, And to in some a we've pre-COVID there's of fair more amount but place inventory go. from $X we unwound of So additional upwards periods.

and can a -- well usage reduced that next that's looked So we capital at quarters. extended think we've a of it the extract tailwind And growth from still cash growth growth. we sheet lower cash over multiyear as operating cash And actually is continue and see to as continued mid-single-digit our we balance a reduce rates. the usage have and some and -- runway.

not on as we year, So downward, something a ultimately keep the achieve achieve this we quarter that. $X is and reducing give to and -- we're on we continue something below a go guidance exiting don't that can representative we think the But quarter quarter path million forward.

on at side can the to we softness to have kind capital increase sold ultimately predicated successful a we that rate, And X on this that's cash cost reductions do the least with And challenge can growth in the cost but think of back Now we first be of And pretty consider glaucoma us then goods we've been the that help can as quarters get of flow. front. demonstrated things sales. and year. the that we of we it's also on growth incremental temporary,

several execution capability capital we expense of have years year XXXX. and to ability here we've excess but to we of of maintain in the that not the it's as middle done So manage build, breakeven the cross have and side the that an and

Thomas Stephan

just second growth And XH comps. first then guide was, -- X easier Got it and first In think, single-digit just for color. of, in still probes, what XH I essentially think, GX the part. high on first for part, my glaucoma. the year-over-year, U.S. OUS. on was flat And one. growth maybe last but That's I the probe the guess against the the the I quarter, implies it. Helpful will And quick be percent

look be confidence, it year-over-year the you of even flattish mean maybe the down I gives really a consistently I guide has what if of when declined think is I in it's at for to reset utilization, number XH expected enough a today quarters So now.

So in probes, And guidance just add? can X-parter confidence number quarter? then OUS probes you rates there U.S. on the a growth versus that is yes, that

David Bruce

Yes.

variation, about, So split the think, talk I about particular periodically, highlight this even. quarter but normally we don't extra was we'll an

think, of first on I that range both, mid kind internationally. did they in that units. the think we So particular single-digit out And call in grew I weakness quarter

second to of okay, you're well second the look the half performance in So to decline believe we year when kind in repeated expectation Part subsequent intended first won't growth were quarters. of your it the yet year. be at your you a first is what that of below and we question, more half well, the at, X look onetime you of in when rate of the back quarter is of your --

feeling running of bring backed practices we're on usage. They the think current and they was users message accounts their that and them they assuring And either We getting and that there, results also technique are declined they rate of and have we any the our is you second piece that's results we're rate them the continue speed up not And adoption. and and with programs get procedure that the reducing that and one or stronger, are achieving to weren't the out time that one that stronger and and some proliferate it's on people technique itself will questionable. we'll where device to delivering that we the off decline Maybe understand dosing they're succeeding about spent itself is that the declined. didn't that to intended. net frankly, incremental at hadn't growth getting several then

was are of seeing a come on where do will that the around not what not question And of because just if conversations that kinds say, And these results I seeing results example, doing am getting to studies, for years, from, I to trade the I'm them. there we're anecdotally the people show booth. a that I'm differently? need is prior And tone that reported wrong, being our front what real in do

So And is permanently is this where but giving changing, message have people's we will that it changed, the many and they the And so specialists uptick patients comprehensive guidance or we that's will there's mentality I the of good us successful really portion challenge, in category in some a and and an we incorporate continuum. optimism in provide and modest that having think be really that there takes time. think behavior a attraction can leverage. moderate delivering traction

Thomas Stephan

Got it. If I on of was the I maybe last correctly. I with the education, recommendations up patient if started think can AAO, just XXXX your I'm at physician initiatives dosing remembering follow and around mean some it just late comments selection. those

and the So amount been of consensus a decent for there panel has out initiative time. this

you just makes accounts? sense. give of of that cohorts that those any can around that first Do have these that hopefully, physicians patient things these out specific figures who you XX tangible us utilization Dave, do you provide evidence, have in So develop, any time while -- take selection. kind are any initiative question doctors, early within that maybe those around evidence is do to with for the of XXX dosing regarding field. And play accelerating you kind confidence to working interacted Maybe this to these some you're seeing maybe

David Bruce

new those until capturing pace new dosing yes. -- results a Yes, equation, And them in them. of from I is improvement anywhere through described months carrying clinicians continue with and -- the practice own X comes with yes, couple sides working they on months The patients. that and can from of longer X right? with of to their or the the see take

that can consider consensus I slow panel That's conveyed now what of coming But we're place studies to treatment. for to point. XX-second the they a say, dosing dosing the starting recommendations, was piece of a a baseline in of profile. newer be think puzzle seeing go down there that escalated maintaining That's treatment from is to they recommendation and to what sweep and outcomes, continuum a and generate clinicians to a terms durability hemisphere strong and better XX-second safety dosing what a are In better be, a we hemisphere out, the start. the speed that was, safe

So safety the and slowing by system. That outcomes through still to profile. the X/X better over its same way get work down it with has

the is demonstrates prospective dosing arms The each of better single better much study to, a I performed and success. X was of higher center a XX that of key that patients progressively and speed, reduce piece outcomes you percentage that was when you study about evidence referring get outcomes on sweep

close your where the extended done. the different of incision, of we're than procedure be just And does So you're get say, a put plug hole things -- that It's it those are ours for you seeing. an users. kind period and just by take a time make and MIGS to out, you captured or make procedure is your you your cut

and XX Ours, XX look at then days. they it at days at

proof, to slower So it's a moving so speak.

want or a receptive subtraction communicated opposite using message And either we on still it that's we choose to and they to they we may then aren't or a experience on side, fewer And stop patients experience the do use that who those haven't have the than from customers And it. growth lesser piece it. get. they

then So improve difference. we're and they about and use happy the a bringing existing our newer declines. net the And users number the patients gross them number reducing in talking can mid-single digits with and dosing success us both the on give more they so to speed net think on up broaden we sites

XX% around X% that up efforts range. can Our guidance the was those swing pretty in make of X%. quickly. tracking We're growth The success difference in

that that, And So confident it. and we're growth will the that's increase. and how we're viewing pursuing it ultimately will prevail rates

Thomas Stephan

Okay.

guess, that accelerated start kind that So still or... start kind some end driving these is of dosing your the we you to utilization? by cohorts should early of recommendations we I installed this can went TBD if of year And see the on with -- of base to evidence

David Bruce

Yes.

of traction subsets a subsets on in think those. categories and at to and us that for the users is -- how future I patients can asking on in maybe you're that report been achieved some look some sorry, We address has take calls. of various what these potentially or

Operator

over now Thank turn to the you. for like Bruce to back closing Dave remarks. call I'd any

David Bruce

Thank you call. all for joining the

confidence Looking thank the quarters, That's you for coming for in today. to reporting all your company. forward improvements in and

Operator

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

disconnect. now may You

IRIDEX (IRIX) 10 Aug 232023 Q2 Earnings call transcript