RxSight Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 7, 2025
Skip to Participants
Operator

Thank you for standing by. At this time, I would like to welcome everyone to the RX Sight First Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would now like to turn the conference over to Oliver Moravzsevich, Vice President of Investor Relations.

Operator

Please go ahead, sir.

Oliver Moravcevic
Oliver Moravcevic
VP - Investor Relations at RxSight

Thank you, operator. Presenting today are RXI President and Chief Executive Officer, Doctor. Ron Kurtz and Chief Financial Officer, Shelly Tunin. Earlier today, RXI released its financial results for the three months ending 03/31/2025, and reiterated its full year guidance. A copy of the press release is available on the company's website.

Oliver Moravcevic
Oliver Moravcevic
VP - Investor Relations at RxSight

Before we begin, I would like to inform you that comments and responses to questions during today's call reflect management's view as of today, 05/07/2025, and will include forward looking and opinion statements, including predictions, estimates, plans, expectations and other information. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued today and in our filings with the Securities and Exchange Commission or SEC. Our SEC filings can be found on our website or the SEC's website. Investors are cautioned not to place undue reliance on forward looking statements, and we disclaim any obligation to update or revise these forward looking statements.

Oliver Moravcevic
Oliver Moravcevic
VP - Investor Relations at RxSight

We will also discuss certain non GAAP financial measures. Disclosures regarding non GAAP financial measures, including reconciliations with the most comparable GAAP measures, can be found in the press release. Please note that this conference call will be available for audio replay on our Investor Relations website. With that, I'll turn the call over to our President and Chief Executive Officer, Doctor. Ron Kurtz.

Oliver Moravcevic
Oliver Moravcevic
VP - Investor Relations at RxSight

Ron?

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Good afternoon, everyone, and thank you for joining us. As we discussed during our preannouncement just over a month ago, the first quarter brought an unusual combination of macroeconomic headwinds and competitive disruptions that led to our first top line miss since becoming a public company in Q3 twenty twenty one. Although interest in our technology remains high as evidenced by continued strong LDD demand, we experienced a first time year over year drop in the LALs per LDD metric. I'd like to now share some of our recent analysis, which has helped us develop targeted programs focused on same store procedure growth, while also continuing to develop the broader opportunity via the addition of new customers and markets. Unsurprisingly, the vast majority of respondents to our customer survey conducted in early April cited negative macroeconomic headwinds as the key reason for reduced LAL procedure volumes in Q1.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

These findings are consistent with preliminary reports from third party data aggregators that also suggested reductions in overall cataract procedures and trade downs to lower priced premium procedures. Given that approximately 75 of LAL patients are drawn from candidates who would otherwise consider lower cost options like monofocal or toric lenses, it's not surprising that LALs were also affected by temporary negative wealth effects and uncertainty. While macro trends worsened in early April, there were signs of improved stabilization later in the month, which were also observed in our procedure volumes. Competitive trialing was also commonly cited by customers with many commenting that the major multifocal offerings were now essentially equivalent across manufacturers. Even though we expect these competitive pressures to persist over the next several months, we also believe they signal an opportunity for the LAL to offer a compelling alternative to what is rapidly becoming a plethora of undifferentiated multifocal offerings.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Finally, even though almost all practices expressed a desire to expand their LAL and LAL plus volumes, workload challenges and a desire for additional clinical and marketing guidance were also noted. To address this, we are refining our clinical education and marketing support to better meet existing practice and doctor requirements to drive procedure growth. As we invest in these efforts, we also remain focused on advancing innovation to drive greater clinical value and customer engagement. We are pleased to share that we are ahead of schedule in launching a previously announced software update that includes both the unique spherical aberration treatment option as well as new LDD procedure monitoring features, both of which support our enhanced clinical education and marketing efforts. While the ability to customize spherical aberration and other so called higher order aberrations has been available in corneal refractive surgery for nearly two decades, this new LDD capability represents the first such application in cataract surgery, opening the door for further improvements in clinical results compared to fixed IOL technology.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Although perhaps less groundbreaking, the additional LDD procedure monitoring features provide surgeons with new tools to ensure adherence to best clinical practices. Such upgrades enable us to not only to reconnect with our customers and showcase new functionalities, but also deepen relationships, identify growth opportunities within existing practices, and embed our technology more fully in their clinical workflows. Looking ahead, our product innovation pipeline remains robust. Recently, we secured approval for very low diopter LAL powers that will now match those already available for LAL plus We look forward to continuing to develop the LAL family of lenses along with continued software and LDD enhancements that broaden the patient populations that can benefit from customization customized visual outcomes. We believe these innovations are also key to enhancing productivity at new customer sites as surgeons and practices are more likely to recognize RxSight's adjustable technology as a significant long term growth driver.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

By capturing these strategic placements promptly, RxSight ensures a strong foundation for sustained future growth, while the practice sees faster revenue and practice appreciation. Though these placements have traditionally been to individual offices, we are also encouraged by the growing third party light treatment service center business models that those still modest contributors to our total procedures have significant potential to expand access and utilization of our technology, ultimately benefiting more surgeons and patients. On the international front, we recently received regulatory approval for our LAL, LAL plus and LDD products in South Korea, a market we believe can become highly engaged with our technology. Additionally, following last month's announcement of EU, LDD and LAL approvals, we now expect UK approval in the second quarter and have multiple additional international regulatory submissions in process. As always, the near term focus remains on delivering excellent clinical outcomes, laying the groundwork for expanded commercialization, both internationally and in The U.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

S. With that, I'll turn things over to Shelly to take us through the financial results for the quarter and reaffirm guidance.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

Thank you, Ron. Good afternoon, everyone. Consistent with our 04/02/2025 preannouncement, RxSight generated first quarter twenty twenty five revenue of $37,900,000 up 28% compared to the $29,500,000 in the year ago quarter and down 6% compared to $40,200,000 in the fourth quarter of twenty twenty four. During the quarter, we sold 27,579 and generated $27,200,000 in LAL revenue, up 37% compared to the first quarter of twenty twenty four and down 5% compared to the fourth quarter of twenty twenty four. In the first quarter of this year, LAL revenue represented 72% of total revenue, an increase from 6771% in the first and fourth quarters of twenty twenty four, respectively.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

During the first quarter of twenty twenty five, we sold 73 LDDs, up 11% compared to the 66 units in the year ago quarter. On a sequential basis, our LDD units sold during the first quarter were down 12% compared to the seasonally strong capital equipment fourth quarter with the sale of 83 LDDs. During the quarter, LDD sales generated revenue of $9,400,000 up 8% compared to the first quarter of twenty twenty four, and down 12% versus the strong fourth quarter of twenty twenty four. As of 03/31/2025, our LDD installed base stood at ten forty four units, up forty three percent and eight percent versus the first and fourth quarters of twenty twenty four, respectively. Gross margin in the first quarter of twenty twenty five was 74.8%, compared to 70.171.6% in the first and fourth quarters of twenty twenty four, respectively.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

The increased gross margin was primarily due to lower LAL costs and mix. Because we can sign LAL inventory, we recognize the LAL cost of goods sold about nine months after we build product. Throughout 2024, we ramped up production to stock LAL plus inventory at ASCs. Because most of the LAL cost is fixed overhead, the higher volume production benefited gross margin at the end of twenty twenty four and the first quarter of twenty twenty five. In addition, the shift in product mix benefited the first quarter of twenty twenty five, with a higher margin LAL revenue advancing to 72% of revenue from 67% in 1Q twenty twenty four and seventy one percent in 4Q twenty twenty four SG and A expenses in 1Q quarter of twenty twenty five were $28,600,000 representing an increase of $5,300,000 or 23% versus $23,300,000 in the year ago quarter.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

This year over year increase was primarily due to an increase in personnel costs, expanded collection of registry data with the full rollout of LAL plus during 2024, and increased stock based compensation expense. On a sequential basis, SG and A expenses increased 2%, primarily due to higher personnel costs. During the first quarter of this year, R and D expenses rose 29% to $10,400,000 compared to 8,000,000 in the first quarter of twenty twenty four. This year over year change primarily reflects an increase in salaries and stock based compensation. Compared to the fourth quarter of twenty twenty four, R and D expenses in the first quarter rose by 13%, also primarily driven by increases in salaries and stock based compensation.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

We reported a GAAP net loss in the first quarter of twenty twenty five of $8,200,000 or a loss of $0.20 per basic and diluted share using weighted average shares outstanding of 40,500,000.0 shares. This compares to a GAAP net loss of $9,100,000 or $0.25 per share on a basic and diluted basis in the first quarter of twenty twenty four. Note also that stock based compensation in the first quarter of twenty twenty five was $7,100,000 resulting in a non GAAP loss of $1,100,000 or a loss of $03 per basic and diluted share. Please refer to the unaudited non GAAP reconciliation and disclosure included in today's press release for more comparative information. We ended the quarter of twenty twenty five with cash, cash equivalents, and short term investments of $229,300,000 compared to $207,200,000 on 12/31/2024.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

First quarter cash use is generally high as our employees earn a portion of their compensation in performance based bonuses, which are accrued during the year and paid in the first quarter of each year. Moving on to our 2025 outlook, we are reiterating our full year 2025 guidance for revenue, gross margin, and operating expenses that we provided on April 2 as follows: Revenue of 160,000,000 to $175,000,000 implying year over year growth of 14% to 25%, and assuming recovery of LAL volumes in the second half of the year. While the early signs of stabilization in April, along with our continued clinical and marketing efforts, as described by Ron, are encouraging. We expect macroeconomic pressures and competitive trialings to persist through the second quarter, with stronger recovery in LAL procedure volume anticipated in the second half of twenty twenty five. Gross margin of 71% to 73%, representing an implied increase of 30 basis points to two thirty basis points compared to 2024.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

We are maintaining our gross margin guidance of 71% to 73%, despite gross margin of 74.8 reported in the first quarter. Because a significant portion of our LEL cost of goods sold is fixed, the anticipated benefit to gross margin from higher production LAL volume in 2025 will now be reduced given the revised revenue outlook. Operating expenses of 150,000,000 to $160,000,000 representing an increase of 10% to 18% over 2024. As Ron already indicated, our spending will be centered on strengthening our clinical education and marketing programs to better support practice needs and drive higher LAL procedure adoption and continued investment in R and D. Note that the operating expense estimate includes non cash stock based compensation expenses between $27,000,000 and $30,000,000 While our guidance includes targeted investments aimed to support and reinvigorate LAL procedure growth, we continue to be committed to carefully managing operating expenses.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

With $229,300,000 in cash, cash equivalents and short term investments, we remain well capitalized and our strong cash position supports our continued progress toward cash flow breakeven. And with that, I'll turn the call back to Ron.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Thank you, Shelly. We believe that the actions we have and will be taking position us to reaccelerate LAL growth, which has been mostly responsible for expanding the premium IOL category over the past several years. The ability of our differentiated technology to meet the needs of doctors and patients was on full display at recent meeting of the American Society of Cataract and Refractive Surgery, which also provided us with a timely check-in with many of our current and future customers. Both in the scientific sessions and on the Exhibitor floor, the more than 40 physician presentations and too numerous to count informal references to the light adjustable lens strongly reaffirmed the distinct position our technology continues to hold within the premium IOL market and within cataract surgery more broadly. While there were many highlights for the LAL and LAL plus we noted a study by Lee et al, that retrospectively compared visual outcomes of cataract surgery in over one hundred and fifty patients implanted with either the LAL or LAL plus or a multifocal IOL at a large academic ophthalmology department.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

While about three times as many LAL and LAL plus patients had had previous corneal refractive surgery compared to the multifocal group, both binocular distance and near visual acuity without glasses was found to be statistically better with an adjustable lens. With more than twice the number patients attaining twentytwenty distance and J1 reading vision than with the fixed multifocal IOL. When coupled with the growing body of data now being collected and experienced by numerous clinicians, these results and the overall excitement and engagement we observed at the meeting reinforce our conviction that the precision and customization afforded by postoperative adjustability are shaping both the present and future of premium cataract surgery. In closing, although the first quarter presented meaningful challenges that may persist in the near term, our confidence in RxSight's long term growth trajectory remains unwavering. We believe the premium IOL market is undergoing a structural shift with commoditized fixed IOLs competing in a relatively stagnant market, while our differentiated customized solution drives expanded premium volumes and in turn greater surgeon focus.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

As we move through 2025, our team remains highly focused on executing our plan, energized by the opportunity ahead and committed to delivering lasting values for patients, surgeons and shareholders alike. With that, I'll ask the operator to open the call for questions.

Operator

Thank you. We will now begin the question and answer session. And we do request for today's session that you please limit to one question and one follow-up. Thank you. Your first question comes from the line of Ryan Zimmerman with BTIG.

Operator

Your line is open.

Iseult McMahon
Equity Research Associate at BTIG

Hi, Ron and Shelley. This is Izzy on for Ryan. Thanks for taking the questions. I was hoping to start out discussing the pacing and scale of your redoubled commercial efforts. I was curious when we might start to see contributions from these start to pay off.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Yes, I think as we discussed, taking into account the macro environment and the competitive trialings, we expect those to be in the back half of the year that we would start to see impact from those.

Iseult McMahon
Equity Research Associate at BTIG

Understood, thank you. And as we think about the broader macro environment, I understand that the focus is still on The U. S. But I was curious how you're thinking about the pacing or the timing with which you want to expand internationally?

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Yes, I don't think that the macro environment impacts our pacing internationally, which obviously is initially focused on continued regulatory approvals and then initial market experience. We're starting from such a low base that we expect to see significant impact from the macro environment, except for there may be special cases in certain markets that we'll stay attuned to.

Iseult McMahon
Equity Research Associate at BTIG

Understood. Thanks for taking the questions.

Operator

Your next question comes from the line of Young Lee with Jefferies. Your line is open.

Young Li
Young Li
Senior VP - Equity Research at Jefferies

Alright. Great. Thanks for taking our questions. I guess I wanted to ask a little bit about the comments you made on April. You know, it sounded like early April trends were still pretty choppy and rough, but it got better later on.

Young Li
Young Li
Senior VP - Equity Research at Jefferies

Can you maybe talk a little bit more about what you're seeing sort of in more recent periods?

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Yeah, I don't think I would go too far beyond what we've already commented. I think that obviously April was, there were a lot of things going on at the macro level in April. But overall those by the end had roughly stabilized and that was something that we also saw in our numbers. You want to add anything, Sheldon? No.

Young Li
Young Li
Senior VP - Equity Research at Jefferies

All right, great. That's very helpful. I guess I wanted to ask a little bit about the guidance. There's a lot of moving parts here with competitive trial and 2Q dynamics versus second half. Is there any incremental color you can provide just on the quarterly cadence for the rest of the year?

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

Yeah, we don't give quarterly guidance, just annual, and we don't break it out by LAL and LDD. But I think what we have said is we would expect the number of LDDs that we sell during the year to continue to be higher than 2024. Typically, the second quarter is a very strong quarter for us seasonally, But with everything going on with macroeconomics trialing and whatnot, what we are cautioning investors to keep in mind is the environment is so much different than it's been in past years, and that we expect the LAL volume mostly to increase in the second half of the year. That just represents a transition hopefully out of this kind of macroeconomic environment and the uncertainty around it as patients get more certain about how the economics are going to affect them personally, and that makes a difference, as well as the fact that we have to give time for some of the new marketing initiatives we're using to help our customers sell in this kind of environment. And also, we'll have opportunities, as Ron said, to touch customers as we do our new software upgrade.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

It has some really nice features. It gives us an opportunity to come in and train and offer value to our customers as we do that. And that always has some benefit to us. Would you add anything to that, Ron?

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

No. Thank you.

Young Li
Young Li
Senior VP - Equity Research at Jefferies

Thank you very much.

Operator

Your next question comes from the line of Patrick Wood with Morgan Stanley. Your line is open.

Patrick Wood
Patrick Wood
Managing Director at Morgan Stanley

Beautiful. Thanks, guys. Two quick ones. First, I'd love to dig in a little bit more on the workload challenges that you mentioned. Because I would have thought like the premium IOL side dropping a little bit might have freed up a little bit of consultation time.

Patrick Wood
Patrick Wood
Managing Director at Morgan Stanley

So like what is it that's eating up the time for the customers so much that you're speaking to? What's kind of blowing out that time that's making things hard at the moment?

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

I just want to clarify, Patrick, you said the workload challenges, right?

Patrick Wood
Patrick Wood
Managing Director at Morgan Stanley

Yes.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Yes.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

I think that this is not necessarily something that's brand new. It's something that's been going on for a while just staffing challenges in practices that we certainly picked up in our survey and that's going to be a little bit practice to practice dependent. But that was definitely, one of the items that we saw in the responses to our survey. And so that's really what we were referring to.

Patrick Wood
Patrick Wood
Managing Director at Morgan Stanley

Gotcha, that's handy. And then just as a quick follow-up, for the H2 macro factors getting better. I mean, was the sort of thought process in embedding that within the guide? I mean, is it more that, can engage with the customers so you can pull things around that side? Why not to sound sort of provocative but why would we expect that sort of 70 year old cohort to feel much better about the world in the second half relative to first?

Patrick Wood
Patrick Wood
Managing Director at Morgan Stanley

Thanks.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Well, I don't know that we're necessarily expecting that they're going to feel that much better. But I do feel that there's some normalization that probably has already occurred to some extent. Remember, cataract surgery is something that patients generally can put off for a little bit of time, but ultimately, they're going to have to do something. And, one of the things that we try to emphasize and we'll continue to do so is that this is, an investment that is for that person's rest of their life. And that there's not many things other than vision that can have a direct impact on so many aspects of the quality of life.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

So we anticipate that over anticipate that over time that will become, more apparent even if, we don't see a wholesale turnaround in the macro environment.

Patrick Wood
Patrick Wood
Managing Director at Morgan Stanley

I got you. Thanks Ron. Thanks guys.

Operator

Your next question comes from the line of Steve Lichtman with Oppenheimer. Your line is open.

Steve Lichtman
Managing Director, Senior Research Analyst at Oppenheimer & Co. Inc.

Thank you. Ron, you mentioned workflow and wanting to support your customers through education and other marketing initiatives. Can you talk a little bit more about what that entails?

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Yes. So Steve, we've learned a lot over the last four point five years of commercialization. And to some extent, we've been able to disseminate that knowledge to our customers, but we still see gaps. And we think that we can do an even better job of translating all the pearls that you learn when you develop, when there's a new technology, new, really a new clinical capability that hasn't existed before. There are many subtle things that are either clinical pearls or practice pearls, that have to be, first learned and then disseminated.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

And we continue to collect those and are now taking the opportunity to more fully compile them in a format that our customers who may not all have made use of them can to be able to be applying those best practices.

Steve Lichtman
Managing Director, Senior Research Analyst at Oppenheimer & Co. Inc.

Got it, that's helpful. And then just as a follow-up, the strong gross margin for the year, and understanding the cadence, Shelley, but for the year, as well as the balance sheet suggests you've got some flexibility on OpEx reinvestment. Any thought about adding more feet on the street or anything else in terms of being even more aggressive, especially in light of sort of the competitive trialing environment?

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

No, think it's a good question. We have rightsized the OpEx to the size of revenue, right, at the low end. I think one of the things that we did is we did not drop as much of the gross margin impact to the bottom line as we did in as a percent, as we did in our initial guidance when we expected revenue to be higher. I think that if we can continue to make progress, particularly in the second half, that any kind of additional reinvestment would be in sales and marketing. I think that the R and D line is pretty fixed to where we are expecting right now, But if we could put more into sales and marketing, we saw the benefit from that, we would as well.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

I wouldn't expect us to put more money than we budgeted into the international side just because in the initial phases of international introduction, it's very focused on key opinion leaders.

Steve Lichtman
Managing Director, Senior Research Analyst at Oppenheimer & Co. Inc.

Makes sense. Thanks so much.

Operator

Your next question comes from the line of David Saxon with Needham and Company. Your line is open.

David Saxon
Senior Analyst at Needham & Company

Great. Good afternoon, Ron and Shelly. Thanks for taking my questions. Maybe I'll start with you Shelly on the P and L. So gross margin almost 75% obviously really strong.

David Saxon
Senior Analyst at Needham & Company

Can you quantify the benefit you saw from the volume leverage as a result from the LAL plus production last year? I guess, do you think some of that benefit might spill into the second quarter? And then just given kind of the back half weighting of the year and the guidance, I guess, why wouldn't you see similar volume leverage for the full year assuming that cadence plays out?

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

Yes, I think that's a really good question. We'll see some spillover into the second quarter, but I think the most important part of our guidance relative to the first quarter actual results is that we increased production a lot to stock the ASPs in 2024. Had we kept at our initial guidance with a higher revenue number, we probably would have produced to fulfill both orders as well as increases to new customers in their ASCs at probably a pretty comparable level, but we're also reducing the production this year in 2025, and we started that at the end of the first quarter to recognize, one, we wouldn't sell as much during the year. Also, we went into the year, because you've got to have inventory with an inventory consistent with our original guidance, so we cut back to that as well. I think will primarily be affected in the third and fourth quarters where you see the lower gross margins to come between the 7173%.

David Saxon
Senior Analyst at Needham & Company

Okay. That's helpful. Thanks for that, Shelly. And then on international, congrats on South Korea. Looks like UK is in the near term.

David Saxon
Senior Analyst at Needham & Company

So can you quantify the premium IOL volumes in those markets? I think The U. S. Is around $1,000,000 Would love to hear what the combined South Korea, UK and you can throw Europe in there. And then, I guess, are you thinking about tariffs as you prepare to launch in those regions?

David Saxon
Senior Analyst at Needham & Company

Thanks so much.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

Yes, I don't have those numbers off the top of my head, but Oliver could certainly pull those. I would say typically in the OUS market,

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

that

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

premium volume as a percent of total cataract surgery is closer to ten percent, but higher in these specific countries. That would be a follow-up we'd need to do. I'd need to pull some reports to get that to you. But the reason we think about these regions are really about their potential as much as anything else. Among the 20 countries or so that we think have potential value, a number of good countries in Asia Korea is certainly one of them as well and Japan China, ultimately and a few smaller countries within the EU, predominantly in Germany, which is very strong.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

For premium, it would be Spain, Italy, France, and then of course UK, are the most penetrated and where we'll start our penetration. I think that one of the things Ron always says to me, and I'll let him talk about that, particularly when he's in Asia, the ASCs and the doctor's offices are just superb and they are very, very focused on quality. And I think that is very important because that's what we offer to customers. Would you add anything about that, Ron, at all?

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Yes, I think that again, ophthalmology is an international field. It's very similar across the developed world in Asia and Europe. Specifically, South Korea is a little bit smaller market than overall in cataracts than Canada. But there have been some ups and downs in the market due to changes in some of the reimbursement rules in the last several years. But overall, it's a very strong private pay market in a number of fields.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

And we think that there'll be a lot of interest in the LAL there. Similarly, Europe is a large market overall. Total cataract market is somewhat larger than The U. S. But the premium market has been smaller, Shelley mentioned.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

And there'll be and we'll take a targeted approach there.

David Saxon
Senior Analyst at Needham & Company

Okay, great. Thanks so much.

David Saxon
Senior Analyst at Needham & Company

And then, just on the tariff part of the question, will the LAL and LDDs be exempt or is there some impact there? Thanks so much.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

We did have our tax accountants look at Canada because we're currently selling into Canada. Like very often, pharmaceuticals and medical devices are exempt. Now, of course, with the administration coming in and saying that pharmaceuticals coming in from China are going be subject to taxes coming into The US, I don't know about other countries yet, and of course it is a back and forth number. Whether any country would have a retaliatory tariff on med device and pharma, but where we're going so far, our products have been exempt from tariffs.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

And of course, on the other side of the tariff equation, we produce everything in The U. S. And most of our suppliers are also in The U. S.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

Yes. Thank you.

Operator

Your next question comes from the line of Adam Nader with Piper Sandler. Your line is open.

Adam Maeder
Adam Maeder
Managing Director & Senior Research Analyst at Piper Sandler Companies

Hi, good afternoon. Thank you for taking the questions. Two from me. Just one quick one on international. And just wondering if there's any update, Ron or Shelly, in terms of the commercial strategy for those geographies.

Adam Maeder
Adam Maeder
Managing Director & Senior Research Analyst at Piper Sandler Companies

Will you be going direct or partnering with the distributor? And then I had a follow-up. Thanks.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

So that'll be that's a market by market decision. Some markets, including South Korea, require a distributor. And so we do have one. The other markets where there's not, we'll make the decision whether we'll be direct or not. Currently, we use a distributor in Canada.

Adam Maeder
Adam Maeder
Managing Director & Senior Research Analyst at Piper Sandler Companies

Okay. That's helpful, Rod. Appreciate the color. And then for the follow-up, I'm admittedly newer to the story, but I just wanted to level set on the freestanding LDD treatment center initiative that you guys have. When did the initiative start?

Adam Maeder
Adam Maeder
Managing Director & Senior Research Analyst at Piper Sandler Companies

How far along are you in terms of number of sites or customers that use the option, volumes that come from those freestanding sites? And just how you think about some of those metrics trending going forward? Thank you for taking the questions.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Sure. So actually, the idea of treatment centers for offering LDD services, Again, these are third parties. That idea has been around for several years and there have been a few successful ones, more individually based in certain regions. I would say it's caught more as our market awareness has grown about the light adjustable lens, certainly there's been more interest amongst surgeons on figuring out how they can get access, if they wanted to not necessarily purchase an LDD or offer the light treatment centers in their own clinics. And there can be various reasons for that.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

And certainly, we saw in, we've seen in other areas of ophthalmology, specifically LASIK where center models have been successfully implemented. So currently there are several efforts out there and we're certainly working with them and see them as good partners. But it's still early in the rollout. But we do see there's some natural advantages for certain customers and we see this as a promising area.

Adam Maeder
Adam Maeder
Managing Director & Senior Research Analyst at Piper Sandler Companies

Thank you.

Operator

Your next question comes from the line of Robbie Marcus with JPMorgan. Your line is open.

Robert Marcus
Robert Marcus
Analyst at JPMorgan Chase

Great. Thanks for taking the questions. Two for me. First, Shelly, I just want to make sure I heard you right. I think you said second quarter will be below the low end of the range.

Robert Marcus
Robert Marcus
Analyst at JPMorgan Chase

Does that mean we're looking at something less than $38,000,000 in sales in 2Q?

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

Oh, I didn't get that specific at all. I didn't give guidance on the second quarter. What I did say is that as we go through the year, I would expect second quarter to not be the type of quarter we have typically seen with a big uptick and most of the growth on the LAL side would happen in the second half. What Ron did say is that we saw encouraging signs as we exited April in terms of volume getting better. And so I'm just being cautionary on the second quarter, just given the macroeconomics and some market turmoil, and giving us time for consumers to not necessarily they haven't been harmed, but people tend to stand still until they know how something is going to affect them.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

So we think more of that will happen in the second half and also that trialing will start to abate in the third quarter.

Robert Marcus
Robert Marcus
Analyst at JPMorgan Chase

Great. I appreciate the clarification. And maybe just continue on that thought, what makes you think that trialing will abate in third quarter and sales will and the macro will pick up? Just simply, you have Bausch and Lomb who's reentering the market after a pause, I imagine they'll sample for a while, Alcon's launching. Why wouldn't it continue for a long time?

Robert Marcus
Robert Marcus
Analyst at JPMorgan Chase

And given the lower guidance, do you think it's prudent to assume a stoppage in third quarter? Thanks.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

So Ron, why don't you start and then I think I said to abate, but not absolute stoppage.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Yes. Mean, I think we're in a we've sort of exited an era when there was a single player that dominated the market. We now have multiple players with in terms of fixed IOLs, multifocal IOLs that have very similar offerings. And we anticipate that that'll return to what used to be the case where there was more competitive back and forth. But recall that three quarters of our volume for LALs comes from non multifocal IOL patients, patients who would have otherwise gotten a monofocal or a toric lens.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

And, so we would, again, we're not ignoring, that there will continue to be competition and that there is going to continue to be a more complicated macro environment. But, we think that it won't be quite as dramatic as what we saw over the last six to nine months when we had that pretty dramatic change in what had been existing in the premium space.

Robert Marcus
Robert Marcus
Analyst at JPMorgan Chase

Great. Thanks, Rob.

Operator

Your next question comes from the line of Larry Biegelsen with Wells Fargo. Your line is open.

Lawrence Biegelsen
Lawrence Biegelsen
Senior Medical Device Equity Research Analyst at Wells Fargo

Good afternoon. Thanks for taking the question. Think, Ron and Shelly, think what a lot of people are trying to understand is how derisked the updated guidance is. So for my question, you did 28% growth in Q1. You talked about and your Q4 call was in late February.

Lawrence Biegelsen
Lawrence Biegelsen
Senior Medical Device Equity Research Analyst at Wells Fargo

So March, it seems like it really deteriorated. And you said April actually worsened before it stabilized. So are you willing to give us any color on how March and April were relative to, call it, the guidance range or the midpoint of the Q2 to Q4 guidance, which is 17% or so implied? Any color on where March and April were relative to the updated guidance range? And I had one follow-up.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

Yes. So I'll start with March and then make a commentary that you made about April. In March, what we saw is that typically March approaches or is at 45% of the total volume for the first quarter. You see that uptick in March as you lead into this seasonally strong second quarter. We didn't see that in March.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

It wasn't any worse than January and February, it was certainly up a bit. But it was more a third, a third, a third. That was kind of one of the things that was unexpected in the first quarter as well. Of course, a lot more turmoil economically and macro economically in that March time period. I didn't say that April was worse.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

What we said is April, and maybe I misspoke, but we saw recovery in the April toward the April. So it was better than March, but we saw that more in the April rather than in the entire quarter. Think that was positive as well. In terms of our overall guidance, if I think about the low end of the guidance, and I'm just going to provide two bookmarks. The low end of guidance, even though we are expecting more LDD sales, which I think is very positive, the way I thought about the low end of guidance when we gave it is that we would sell more LEDs, but the same store sales would remain relatively stagnant to the first quarter, which we haven't seen that so far, so that's good news.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

And that most of the LAL increase in volume would come from newer customers, people who were installed in the second half of twenty twenty four and installs in 2025. So that's kind of that end of the bookmark. As we go through to the high end of the guidance, what we hope to see is two things. One is that consumers get used to the turmoil or maybe it even ends, and therefore they have more confidence in upgrading to a premium IOL rather than staying with the monofocal or even a toric. And so that is certainly a part of it, as well as the fact that the competitive pricing on the premiums in terms of trialing can't go on forever.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

That is one of our premises as well, and that we continue to see that in part because at some point in time doctors will realize that, as Ron said, the multifocal IOLs are not all that different from each other. And the reason is they go less and less multifocality as they introduce new products. And that cuts down the glare and halo, but they're all moving in the same direction as well. Would you add anything to that on trialing one?

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

No, again, think this is something that we've seen over the years in the field and there is this waning that typically is in about the six month timeframe. So that's within the timeframe that we've discussed.

Lawrence Biegelsen
Lawrence Biegelsen
Senior Medical Device Equity Research Analyst at Wells Fargo

All right. I'll leave it there. Guys, thanks so much for taking the question.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Thank you.

Operator

Your next question comes from the line of Craig Bijou with Bank of America. Your line is open.

Craig Bijou
Equity Research Analyst at Bank of America Securities

Good afternoon. Thanks for taking the questions. Just one from me. And I appreciate the comments on the LDDs and you still expect LDD growth or LDD placements to be above 24 in 25. But I wanted to get a sense for, have you heard or have you had discussions with some of the practices that are in your funnel thinking about purchasing an LDD?

Craig Bijou
Equity Research Analyst at Bank of America Securities

And if they have any concerns on a softer premium IOL market and whether that could have some impact on the timing or maybe the deferral of purchasing an LDD until they see that pick up?

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Well, I guess the way I would answer that would be that while that's certainly a possible reaction, it's given that, a large fraction of the LAL patients come from non premium. If you wanted to grow your premium that not adopting the LAL would be the opposite of what you would want to do. So we think there's a strong rationale to actually adopt the technology now and take the opportunity of perhaps a softer market to incorporate that into your practice.

Craig Bijou
Equity Research Analyst at Bank of America Securities

Okay.

Craig Bijou
Equity Research Analyst at Bank of America Securities

Thanks for taking the question.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Thank you.

Operator

Your next question comes from the line of Tom Steffen with Stifel. Your line is open.

Thomas Stephan
Thomas Stephan
Vice President at Stifel Financial

Great. Hi, everyone. Thanks for the questions. I'll start with a big picture question. I know there's obviously a lot of macro and competitive factors.

Thomas Stephan
Thomas Stephan
Vice President at Stifel Financial

But the main kind of investor concern we hear right now is if The U. S. Could be, I guess, nearing or approaching some sort of saturation point. Ron or Shelly, your reaction to that or thoughts to that, maybe notably given, Shelly, I think you've said the class of twenty twenty four's adoption curve has been a little slower than prior classes. Maybe if you can talk about that.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

So I just want to make sure I understand the question, Tom. You're talking about reaching a ceiling for LAL?

Thomas Stephan
Thomas Stephan
Vice President at Stifel Financial

Correct. LAL either on a per surgeon basis or adoption kind of within the context of the 10,000 cataract surgeons in The U. S? Either or kind of just big picture.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Yes, again, just don't have I don't see a good argument for that based on the overall penetration of the technology. We're currently sitting at maybe somewhere between 1012%. There are many, many surgeons, I would say even most who are just getting familiar with the LAL and the potential. So while I understand the concern, think that that's still something that is going to be in the later years. I think there are better ways that we can certainly address the market.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

We've talked about some of them. Some of those doctors are going to be better addressed through an open access model and some of them will be more traditional methods. But IOLs are the best way for practices to resist the continued negative onslaught of reimbursement cuts that they're seeing in all other aspects of their practice. And the LAL has been the primary mechanism for growing premium overall. So I still see that in play for a long time to come.

Thomas Stephan
Thomas Stephan
Vice President at Stifel Financial

That's helpful. Thanks, Ron. Appreciate that. And then pivoting to the pipeline, I know you keep it pretty close to the vest, but just want to ask what your view is on both a multifocal LAL and an accommodative LAL. I guess my question is, are these feasible technologies to begin with when considering, I guess, the base adjustability technology with LAL?

Thomas Stephan
Thomas Stephan
Vice President at Stifel Financial

Thanks for the questions.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

I mean, again, think that adjustability affords benefits for all types of IOLs. And my view, and I think I've said this before is that I think that the precision and customization that adjustability enables is something that will become a, if not a requirement, a very strong preference for any time in the premium space where patients have the ability to upgrade for technology. So in that context, and as we've already kind of done with LAL plus and some of our expansions into the different power ranges, we're developing a family of lenses and where that takes us is going to be guided by surgeon input and financial opportunity. Certainly multifocals have a strong place in the market and accommodating IOLs have a strong interest in the market. And I think we've seen other efforts towards accommodating IOLs recognize that in order to have a practical accommodating IOL, you likely need to have a adjustable IOL first.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

So we have a long runway of product pipeline activity for this technology. Certainly beyond my career and I think that all the things that you mentioned are certainly possible.

Thomas Stephan
Thomas Stephan
Vice President at Stifel Financial

That's great. Thanks Ron. Thanks Shelley.

Operator

Thank you. Your next question comes from the line of Angela Kumire with UBS Group. Your line is open.

Angela Kumirai
Angela Kumirai
Equity Research Associate at UBS Group

Hi. Thank you for taking our I'm on for Danielle. So mine is just a follow-up on Larry's question. You said hysterically March represents about 45% of the quarter's revenue and that is usually a good proxy of the ramp to 2Q but that is not something that you saw this quarter. So I was just wondering, appreciating your comment on signs of improving stability in April, what level of visibility do you have into customer case schedules?

Angela Kumirai
Angela Kumirai
Equity Research Associate at UBS Group

Just want to get a sense of your confidence in being able to reach your renewed guidance. And then I have one follow-up.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

So I just want to restate your question Angela. So you're asking how do we have visibility into April numbers? Is that what your question is?

Angela Kumirai
Angela Kumirai
Equity Research Associate at UBS Group

Yes, 2Q numbers.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

Okay, so obviously because we consign inventory, it's reported to us when the implant is made into the patient. So, we see those usually within a few days of implant as they get reported to us. We don't have visibility into a particular doctor's schedule, So we don't know what they have planned for the balance of the quarter, but we try and use some historical data, but we have stopped using it given our unique circumstances as well. And as we said, the low end of the guidance assumes virtually no recovery in same store sales. The higher end of the guidance obviously does so.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

And the only warning we have about second quarter is, while we saw improvement in April, we would expect most of the growth to get beyond the low end of the guidance would happen in the second half. Did I answer your question?

Angela Kumirai
Angela Kumirai
Equity Research Associate at UBS Group

Oh yes, that is helpful. And then my second follow-up is just also a follow-up on Todd's question on workload challenges. What types of practices are making these comments and what are you doing to relieve capacity there? Because our checks have sometimes showed doctors looking at the post operative adjustments as a barrier to do more LALs. So any color on the practice profile for those making workload challenge comments would be helpful for us.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

So I think that this is not a new observation that we've seen since we've introduced the technology. There have been kind of standard responses as people become first familiar and then start to consider adopting. Typically the initial resistance is around a piece of capital equipment and then change in practice pattern that the technology involves. But these are not new and so we've developed over the last several years not only good explanations for how practices have adopted the technology successfully, but we have many, many examples of that that we can refer new and potential practices to be able to see the benefits of making that commitment to this technology. And I would say it's not significantly different than every other new paradigm that has come into ophthalmology, which these same objections are raised and then overcome.

Angela Kumirai
Angela Kumirai
Equity Research Associate at UBS Group

Amazing, thanks Ron, Shelley, Oliver.

Operator

Thank you.

Oliver Moravcevic
Oliver Moravcevic
VP - Investor Relations at RxSight

Thank you.

Operator

Seeing no further questions at this time, I will turn the call back over to Ron Kurtz, CEO for closing remarks.

Ron Kurtz
Ron Kurtz
Director, Co-President, and CEO at RxSight

Well, you all for your time and attention today. We appreciate your interest in RxSight and we're looking forward to updating you on our progress in future quarters. Goodbye.

Shelley Thunen
Shelley Thunen
Assistant Secretary, Co-President, and CFO at RxSight

Thank you.

Operator

This concludes today's conference call. Thank you all for joining, and you may now disconnect.

Executives
    • Oliver Moravcevic
      Oliver Moravcevic
      VP - Investor Relations
    • Ron Kurtz
      Ron Kurtz
      Director, Co-President, and CEO
    • Shelley Thunen
      Shelley Thunen
      Assistant Secretary, Co-President, and CFO
Analysts
Powered by Quartr

Key Takeaways

  • RX Sight reported Q1 revenue of $37.9 million, up 28 % year-over-year but down 6 % sequentially, marking its first top-line miss since Q3 2021 due to macroeconomic headwinds and a drop in the LALs-per-LDD metric.
  • Customer surveys and third-party data linked the Q1 decline in LAL procedures to negative wealth effects and competitive trialing, prompting targeted programs for same-store growth, new customer acquisition, and enhanced clinical and marketing support.
  • RX Sight’s ahead-of-schedule software update adds spherical aberration customization and improved LDD procedure monitoring, the first such application in cataract surgery to drive deeper customer engagement and best-practice adherence.
  • The product pipeline remains robust with approval of very low diopter LALs, ongoing lens and software enhancements to broaden patient customization, expansion of third-party light treatment centers, and new regulatory clearances in South Korea, the EU, and soon the UK.
  • The company reaffirmed full-year 2025 guidance of $160–175 million revenue (+14–25 %), 71–73 % gross margin, and $150–160 million operating expenses, expecting LAL volume recovery in H2 and leveraging a strong cash position of $229.3 million.
AI Generated. May Contain Errors.
Earnings Conference Call
RxSight Q1 2025
00:00 / 00:00

Transcript Sections