IRIX - Earnings call transcript Q4 2023

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Operator

Hello, and thank you for standing by. Welcome to IRIDEX Q4 2023 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Philip Taylor.

You may begin.

Philip Taylor

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

Argus Ahmad, David Interim [ Officer; Chief from Fuad and Chief me ] Bruce, are Executive Joining Financial Officer. released IRIDEX December today, financial the for Earlier quarter XX, XXXX. results ended

on the release of website. copy A is available the press company's

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

estimates Any but statements are priorities, fact, strategic statements operate forward-looking. trends call uncertainties statements All not we these be materially implied that and risks and involve which forward-looking could sales These that differ should or made during not forward-looking or and material statements this from statements considered and of historical assumptions. are in the events current product goals concerning including, development by actual statements. matters, our various results cause anticipated to to, markets limited those our based upon

should Accordingly, statements. reliance these on place not you

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

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

David Bruce

with open Fuad bankers, Then process questions. In call overviews for detail a intent will options XXXX, for the financials, numerous unlock for of engaged business prepared of in value. the we strategic on our the transaction call, each discuss our sale providing We're parties. all we've On process you thank discussions product by us. details IRIDEX believe introductory business with our everyone, update reaching and soon quarter review announced our multiple progress the recent to exploring strategic out start then relating on priorities To first lines toward we review in will August today's Good afternoon, or and all on an in product certain and I'll and and future agreement fourth joining on XXXX. and are parties assets. of for to track engaged the with currently shareholder lines date, of more specific discussions provide

of that to Additionally, transactions we to shareholders. open continue our will transaction benefit be series a or any

to business Along review prioritization we cost-effective our process, of building financial each pursue this line on Given and at with priority XXXX business this value alternatives and advance growth high strategies process our this the of time. of for strategic to line not focused we pursuing year, are providing strategic intend our assets guidance remain value our realization with plan.

factors While retina our business confluence our a both strong. business results, quarter opportunities remain we had glaucoma fourth of and impacting

macroeconomic The U.S. encouraged dissipating. largely impacts to normalized. inventory adjustment purchase market capital reimbursement be we're appears XXXX, into is procedure Heading distributor Uncertainty the us. regarding glaucoma our environment stabilizing environment behind is are

turn results the pursuing. year full about opportunities me fourth Let we talk quarter our and to are and

$XX.X impacted coverage a restricted culminating to impacted continued temporarily revenue this for For capital caused in defer of generated and that adoption deferrals probes systems in glaucoma, a costs LCD Mac reduce our typical determination glaucoma beyond of by in glaucoma chain moderate backlog system orders quarter totaling U.S. financing which the pushed then first limitations XXXX, strong quarter larger million million. revenue end. and a revenue revenue of quarter, combination related unique reimbursement retina both for half, the softer than we local fourth laser included a experienced we which year, procedure and In laser impacted that by $XX.X surgeons full the the sales, the half, we and fourth our These or quarter. created treatments led in experienced second supply higher to Medicare equipment for purchasing the events

aggregate And the our largest likely weaker-than-expected distributors overall review in decline previously and inventory 'XX lower the in options from strategic they impact quarter announced effect reduced in as reaction key upcoming a to from revenue platforms. quarter transition finally, to orders the new was significantly double-digit international and performance. The was in

saw focused the orders more We're back business, the During trends, retina purchasing consistent equipment of the distributor consistent XXX that Retina systems, Hawaiian our continuing flows PASCAL of our prior stabilizing and awareness on in to and drive improving issues advancing January, first specifically PASCAL been platform seeing business orders. our and to the glaucoma have platform scanning adjusted of beyond supply the chain capital especially we're and the pipeline XXX scanning we Eye and laser for spot interest LCD with lasers. resolving factors introduced levels, new laser quarter history. and U.S. IRIDEX seasonally with addressing the withdrawals new XXXX, of single at Conference, impacting In

expectations. internal presence our be the for by Cycle glaucoma made we impacted of GX rising the business these factors DLT by highlighted clinical Throughout family. demonstrating below product our and posters XX headwinds, that Congress with at significant year, a in to the transient, was World caused MicroPulse Despite and segment, interest progress 'XX series strong the external growth Glaucoma

large-scale post-market safety cataract post and clinical completed with on efficacy DLT study, focused multicenter of and the launch proving MicroPulse for We patient population. toward the of protocol our first glaucoma engaged study a sights runway our prospective

delivery discuss complement in launched FDA in business registry systems single to have in we with and program and refreshed devices we've new In recently IRIDEX earlier full 'XX, When past XXX the I'll combined received a worldwide in leadership platforms and IRIDEX the our new our platform treatment. retina two commercial a for the PASCAL launch. XXX positioning In which systems U.K., a advance in laser-based laser with for our clearance addition, spot we launched year of platform commenced moment. the the retina,

fourth We million lowest limit used We look to cash in the new reduction XXXX. orders and events. international regional levels. experience distributors did probe sales and quarterly system the significant announce our a to the cash at inventory the glaucoma during also during reductions glaucoma as replenish exercised a $X suppressed LCD not in U.S., did reimbursement key closer usage discipline probe In the Taking quarter. system fourth operational quarter, Medicare

quarter in these revenue of GX XXXX. factors, As $X.X to the million of Cyclo fourth a was compared result $X.X two million

probes to We In GX prior Medicare withdrawn, saw laser Both XX we procedures the reverted late the systems. This withdrawal significant represent Medicare to increase provider to compared community coverage prior too and late begin for to transscleral XX,XXX and first the usage GX in the patient access but quarter. affect were sold December, unrestricted LCDs decreases year period. the quarter. the

the growing on updates portfolio. clinical to glaucoma Turning

previously, any LCDs. what LCDs, that led protocol and As we as in of we the assessed our in to modest the future reimbursement coverage detail we to understanding with have a benefit criteria coverage launch in delay our for have of adjusted criteria outlined the was align uncertainty methods anticipate best requirements in could discussed meet and the the we the runway study

initial patients evaluate now, The sites. As patients X-year glaucoma we've engaged safety safety of and increasing and and MicroPulse post-cataract among and completed physician This X-month XXX instrumental and approximately designed XX confidence effectiveness IOP years with in centers readouts built protocol clinical DLT of the will is over community. of study to at the for study X be follow-up in. the further validating measuring the

is Additionally, in with the registry College in multicenter research support currently United build large-scale focusing on NHS the of structured enrollment for participation, patient XX Cycle laser expanded Trust GX TLT patient first a January, in using large Kingdom. was The providers for the in Healthcare other cohorts. allows valuation registry collaboration the to MicroPulse Imperial U.K. enrolled X-year and

of secure and a of the to agreed the management design system. collaboration, components support we've As and database fund study created custom part

for patients of volume expand U.K. will Altogether, data to we increase evidence stage further in patient place and and worldwide. installed have to base. growing our patients moderate continue and strategies across allow clinical business the build the and across glaucoma large base population this and believe of be adoption excited physicians offerings investigators in existing additionally to glaucoma We and usage drive for large the U.K. utilization

assist cementing, the the delivering levers patient Specifically, our post-cataract to in our include speed comprehensive adoption and and proper of for glaucoma dosing among utilization sweep usage patients. targeting of technique software management growth ophthalmologists dosing the proper selection,

distributors we experienced Outside causing revenue the Shifting also business retina X% and increased chain the product was strategic headwinds from order of faced leading business. segments, both in shipment potential quarter. review a decrease delays, platforms in our backlog International compared fourth laser $X.X to destocked Product in inventory XXXX. Performance the broader an our the of to supply process. anticipation exiting limitations impact to the new quarter. million,

in single year. meeting now new further PASCAL At and last the interest U.S. our the our saw new Hawaiian position. underway strengthens our we introduced scanning spot platform platform, January, market the showcased continued Eye in of new in The laser retina leadership launch

retina encompassing patent focused unfolds. intellectual as and markets. glaucoma launches, capitalizing devices that were granted improved We we're year across on refreshed and With recently MicroPulse these our protects on both European the new portfolio property retina two our a further

are laser this throughout significant exclusive safe patented devices technology utilizing Europe. effective We in advancement friendlier, providers of and tissue

with the business business patterns. Finally, to the summary, calendar, some given provide me In on more consistent we progress. first a color where with quarter historical we're return seeing flows are let

Following Medicare to also normalized in seasonality. typical orders We're capital normal more improvement LCD of are trends, glaucoma purchasing the proposals, trending retirement levels. seeing of U.S.

our as sell-through on have issues to orders. of about seek pursue and could year-end resolved lead are main to execute we distributor we to and we responsive lines cost-effective our excited to advance the process the leaner backlog progress strategies value XXXX And future allowing alternatives to growth two lastly, chain our for create be against business. faster positioned inventories We're for strategic shareholders supply and the that

turn I Fuad. that, call over will to With the

Fuad Ahmad

the followed quarter loss afternoon, like December fiscal financial thank I Thank XXXX for begin you, year and results Fourth fourth by persisted from to year of compared $X.X quarter the in royalty full to ended system the in for quarter, that This everyone, today. Good was joining sales you our our that system by quarter XXXX. would of fourth Dave. system impacted previously for million revenue sales the prior the the total and revenue XX we the declines performance period. glaucoma, the GX systems ended units us year the year. Starting reviewing year. XX softness uncertainty most prior million continued second down revenue by in probe equipment destocking were million, half had in represented driven with XX, compared million year overall distributor Cyclo reported $XX.X last purchases in from XX XXXX. Revenue driven was and lower $XX.X $XX significantly December million of decrease the period. a and for reimbursement XXXX, sales in to to in capital $X.X U.S. from The quarter was in decline by resulting generated The million $X in

sold for was period compared was fourth the probes quarter, $X in revenue in in product $XX.X representing Cyclo GX quarter total period. sold to probes revenue Cyclo level, glaucoma fourth prior product down to in Total a At million year XX,XXX product We compared GX million XXXX. $XX.X $X.X family same from the the substantial million, the from decline in million XXXX XX,XXX the 'XX.

mentioned uncertainty experienced U.S. the headwinds quarter significant Dave in the from reimbursement LTD remarks, in we in As his the

their saw replenishment reduced international also not orders. distributors and execute inventory We did

offset higher fiscal GX However, these third partially ASPs. compared in to Cyclo the in and by quarter XXXX. sold XX% declines systems XX% were XX quarter the We in

in as backfilled expect sales the resumption behavior purchasing regular from of the the glaucoma stabilize practices. year to We throughout orders are

X% capital continue Our cycles retina elongated period. purchase we decrease segment to million, to compared destocking. the $X.X revenue was distributor the and QX In a quarter, in see year of prior

X% down retina full revenue million, year 'XX, the was to XXXX. For compared product $XX.X

purchase legacy $X.X capital baseline return where we in and to to remain other As in million from revenues, market share XXXX, includes performance XXXX. a in strong. which Other fourth domestically plans $X royalties, quarter our remains generally decreased million products customer anticipate the intact, especially services

in revenue the the For $XX.X million for the the XXXX, other decreased XX.X% Gross expiration quarter fourth 'XX. fourth million by in of to $X.X to compared Gross XX.X% $X.X year in 'XX royalty quarter of $X.X patents. in million of profit prior the year $X.X was reduction to margin compared driven compared million revenue was period. to a XXXX, of the full million from license

and that result million was revenue. 'XX compared less we the during margin full relatively in gross the a $X compared overhead expense the the saw of favorable year. were fourth new The profit The XX% Gross the review flat offset in was Gross mix prior expenses absorption quarter million, decline year. initiatives reduction million year also operating expenses. million a planning strategic decrease the in to 'XX or system was last of and implementation as and royalty planned to fourth year. product $X.X margin period for $XX.X lost to for lower quarter Operating in in $XX.X compared our XXXX XX.X% of slight ERP result cost by resource enterprise of same a

compared $XX.X were $XX.X 'XX, million 'XX. in for operating Total million expenses to

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

the million share to recorded of $X.XX For $X.X 'XX. full compared a in net we per or loss share year, or $X.X $X.XX per million

and by With as management receivables. that, cash cash the previously for aligning operator like reduction and announced was Cash more call million, XX, strategy $X position to would the the and flows. totaled questions. turn lowest I cash capital to reduce million more and XXXX $X a our the working to reduction cash to of to Operator? usage a cash initiatives in The in operating Dave and payables due over practical quarter closely December net XXXX. quarterly expenses in inventory Now equivalents

Operator

the line Our Tom first from of with comes question Stephan Stifel.

Thomas Stephan

does are to call a from I the coming in maintaining with you also it, guys rightsizing soon, while if I'll of terms value then the follow-up the the as start terms strategic transactions, of optimization and how maybe assets? sale with you of the color. that I I And that, potential how priority first higher just guess appreciate this portfolio Maybe questions. -- far be may Great. that Dave, update, garnering sheet just sort balancing in Maybe balance could guess, get ask, P&L?

David Bruce

A in Tom, there. for thanks question. the lot

focus. Let the with me business start

the lines some retina glaucoma and smaller business the their So have main to we're have strengths two and pursued. business, own lines other and lines of opportunities each be

summary and effectiveness we my those businesses, are investments as stewards And making -- continuing the that cost well I in both of forward. As to programs the of move those businesses the with I as discussed key to that's remarks.

would significant pursue In us terms assets. likely of cash most give a generate would potential to runway the transaction transactions the incremental potential that other with that associated

we of in make of those the disposition or we'll that as pathway, judgments down terms other assets. As capital needed progress cash

shareholders. the executing to be of we're those in of we're it's a fluid for elements here, about well things, business as of kinds that definitive So potential kind situation to focused hard but very on we're transactions so realize the the -- as growth both

Thomas Stephan

particular, guardrails quarter, the I the I to, Any Dave, sounds back. guess, moving about for models, things should that. business commentary quarter. say. the normal XQ here bit. other helpful. like just And sales coming about That's just I I first outlook we're XXXX or around are with flow or the appreciate appreciate coming our metrics Perfect. a the to back just done It 'XX then in

helpful we performance be for into to sort try getting just full any the I how models would quarter out update think year? of just this our as it visibility the figure additional to

David Bruce

Yes.

of and business, kinds have orders equipment are we particular, a So the of without in things. the late shipments little to the left there and in guiding quarter those and still bit quarter, and capital

at to are of this the as lifted marketplace even mentioned, restrictions of that say, But the I'll said, outlook close movement the end the some up from potential some ended we seeing stabilization is on quarter. more We're glaucoma U.S. being the recovery seeing end in cycles. quarter. as there dollar the capital I purchasing the, So equipment reimbursement

consistent we continue. their space we're think to It's our seeing with in expect and in have recent reports. -- I others that commented And recovery, what

may a judicious. sensitive that think that. that some technology, I fourth really are probes is However, being follow-on suspending I MACs we and adopt think seeing there interest to sentiment There see by in activity and people in some recovery the bit people a declines also be in to around the general, occurred reordering and we're system purchases of quarter lack orders system the the of But such.

as by. that, trend we're So the strengthen optimistic will that goes year

that position in we're discussion limitations reimbursement We to reimbursement we withdrawn, the think for good we LCDs a the aside, potential forward. any became occur. a before an if bodes think change going effective accomplished ultimately needed and well As such been

Thomas Stephan

Okay. it. Got

year maybe bit, we guess a XQ? 'XX a to fair of relative of I I days I could sort X think to arguably have of bolus X, mean, flat that consider And days XQ create know XQ. as only little just left into to XQ to a Just heading to about push is So quarter. we to one-timers up maybe up to expect it a you be for is reasonable sales the flat this lot in handful in

David Bruce

Sorry.

speak there. to Sorry over

significantly that me been first you occurs. a into that dip Typically, then seasonality bit that a prior historically little the typical years. seasonality the of year in strongest as come QX you better the has and than answer performance quarter. differently. see We're quarter against seeing Let

Thomas Stephan

Okay.

still as but guess. meaning of I much, down sort not better So down,

David Bruce

that It's in Yes. not been it's the the down degree compared down past. to

Thomas Stephan

Okay.

moving then retina. to And helpful. That's Perfect. Okay.

that Dave, the maybe of XXXX or the purchasing straight even a you with capital how factors. supply you think distributor growth long-term business. us know But maybe outlook could trends, quarter. was and help down maybe you sort on year-over-year called view some I out of I it basis fifth chain for fourth and

to in about for low long-term the any retina on growth past, you thinking percent normal is mid-single-digit the what guys? recent maybe declines, talked for I is there you of underperformance growth profile and kind but a given renewed think

David Bruce

I not think the long-term changed. has outlook

a it's opportunity. mid-single-digit think I

I think low the worldwide that overall market single digits. space is in

the few points. a primarily think even as and rate can the capital, people But the XXXX, we it's purchases, recession about year. a the cost overall percentage increases, outperform softness up if by in driven interest of performance part second you capital recall, we the year, of of only well were concerned half quite was market So in persistent in if the throughout cleared really early that as,

affect business. did it the But

are call that I think year capital cycle an I'll improvement from dynamic a XXXX. longer-term capital a of those course waves So providers also have equipment. talked about seeing them, coming -- also and throughout And saw in you equipment softness similar other talked the the into

overall of think a So platforms capital the better new the in and now equipment then consistent with And of retina IRIDEX interest think seeing solid ourselves recovery positioned the I out we've PASCAL with I we're side two already for that business the new marketplace. on platform.

think So there's major change. I any don't

I of think that softness on in impact part is general. really capital longer-term in it's multiple quarters

industry not did So segment see of kind that growth versus that digits mid-single maybe as 'XX. the and whole a 'XX in

Thomas Stephan

Got one sheet. color. it. Last on me, balance just Great the for

burn was we I burn how thereof quarter. Dave think I guess, or lack in in be thinking $X or XXXX? Fuad, normalized about, the quarterly million should

David Bruce

Yes.

some fourth singular about adjustments and and talking offset that quarter been cash those that have spending expenses we savings. in reducing the our other having achieved our to We despite rate usage,

led with performance balance quarter. outstanding the so So our inventory it usage of receivables reductions to cash and to trying fourth and terms and the in match we're managing relatively side all up wasn't days sheet better as good also in of a that dramatic, payables but on

the pursue will part reductions of things. an to with growth those eye through. effectiveness cost of to cost our carry initiatives the That's Those planning

we the with pursue potential manage for anticipate cash the And that through so we as period on hand execution can transactions. simultaneously we

Operator

to for I'm further back turn the showing would like Dave questions over call no in queue. closing to now I remarks. the

David Bruce

We for Good to reporting forward afternoon. thank and the all you joining updates they look Thank as call. you, unfold.

Operator

concludes this your call. today's for gentlemen, and participation. Ladies you conference Thank

now may You disconnect.

IRIDEX (IRIX) 26 Mar 242023 Q4 Earnings call transcript