LENSAR (LNSR) 8 Aug 242024 Q2 Earnings call transcript

Good morning, and thank you for your participation. [Operator Instructions] As a reminder, this conference call will be recorded. I would now like to turn the call over to Cameron Radinovic of Burns McClellan.

Thank you, Operator. Good morning, and welcome to the LENSAR's Second Quarter 2024 Financial Results Conference Call. Earlier this morning the company issued a press release providing an overview of its financial results for the quarter ended June 30, 2024. available at Investor www.lenzar.com. is the section release website company's press on Relations the of This

review business Joining Nick Officer will Curtis, on Chief company's me the Executive of call LENSAR, operational progress. and today is the recent who

materially forward-looking questions Officer future information and/or to call or results and to well Tom an including and the achievements will unaudited facilitate the forward-looking statements, the financial financial operator Financial or of different will the as expressed turning unknown performance any be LENSAR, highlights results, and These as who to uncertainties, Following in subject from the his are before regarding Chief any you call actual this statements company's may presentation. of conference future comments, company's Staab, cause contain may provide or company's performance future statements have. Today's overview which implied back those risks achievements. performance known answering over to results,

should undue You reliance forward-looking statements. not on these any place

information, additional accessed please of with the filed documents Exchange detailed including Securities discussion factors, and company's to website. the which the can refer on Commission, company's be risk a For

date it that call. With Nick August obligation call circumstances conference the call the addition, time-sensitive pleasure In to events of to live statements or live reflect update accurate over revise my date Curtis. Nick? this that, X, or to after this information to contains as only the XXXX. this LENSAR no of of broadcast, is is undertakes turn any forward-looking

us quarters second XX a newly revenue. exceeded $XX without to XXXX, new fourth record period remarkable quarters the of the typically of QX we System strong which outside in revenue, terms you Taiwan from and remainder the ALLYs the XX% of share From as the Systems, ALLY good clearance are we second increase our of LENSAR. second procedure in XXXX. a and and given quarter a the perspective, we In is clearances, system the an standpoint, U.S. With with million are morning past growth to ALLY about excited EU on however, possibilities increase sell excited strongest these over to as Thank We in historical mind quarter quarter year. achieved each for a received for and I placed update second of performance this Remember, well everyone. you and was you, joining LENSAR. Starting appreciate Cam, an an in $XX.X placement X%. unprecedented this million in market the XXXX, for I'm

In usage addition placed as additional systems ALLY X quarter Systems, with on well to ended agreements installed to Systems. of ALLY the previously as XX the converted we a backlog sold systems an XX

of high. In placed in satisfaction to resilient cataract despite conversion refractive customer in has surgery. XXXX. The these is and these and We second be ability face interest in overall LENSAR remaining rental expect half ALLY of with ALLY validation systems systems capabilities for systems the versus placed to ALLY's sold LENSAR's competitive Demand marketplace. the further of significant to demonstrate our the expand the with some Systems laser in weakness proven economy growing rates of our strong meaningfully headwinds, macroeconomic footprint uncertainty and provides in

procedure field XX installed I'm we XXXX. our LENSAR saw months really in the proud base over QX installed impressive half of worldwide. with systems XXXX growth volumes In had XX% up progress. first the XXX in and XXXX addition of X procedure also first number XX% to our and record this ALLYs of increase XX% Furthermore, volume over a a placements, impressive increase with

the first-time surgeons' the trajectory competitive users. going in XX% In forward. half into of choice and to another new ALLY ALLY systems and and our over of placements penetration This our procedures the more the growth is than directly is placed metric of systems performance year were were customers second example of with with growing the XX% important use new Another first practices. quarter, impacts our U.S. of LENSAR clear recurring revenue

we have to Given that those to I in EU where clearance base. replace worldwide begin deal to practices these executing already successful confidence attract further is efforts as installed in devices there ALLY in the our ALLY interest and and competitive LENSAR can OUS and will Taiwan, begin U.S. new from a older regions the of commercial they great strategy our thus have far prove significant increase

surgeons an have replacement aging approaching industry-wide to LENSAR, our better competitive of of however, suboptimal, delivering is been majority as U.S. thus improved outcomes the These systems upgrading still a end conversions a they're significant nearing decade-plus-old currently of cycle while are still ALLY capable use and to With And usable on systems We're functional, inefficient new technology. than in are based far option patients. lack clearly life. features laser. for

from in reliability of companies slow challenges. space, Given system innovation beginning our and largest pace create servicing to the rapid care the competing eye are

we capital upgrading we're is the The in invest conversions. they factors, conditions it surgeons if of of rate more calls, matter Adoption see ability significantly make an earlier, increase have enhanced challenging System efficiency into a ALLY believe I substantive growth, shared a to not placement as these facilities perfect throughput is beginning of commercial acceleration practice surgeon's and revenue current in meaningful to patient and economic EBITDA their on when, thanks can equipment. to well previous technology. to ALLY creating an in outcomes. Because opportunity as in of for this our a As result or a reality we its mentioned adopt for ASC LENSAR. it and And

which demonstrate peer-to-peer during the adopting speed studies medical system, the is of our challenges overcome this helping being number discussed efficiency ALLY, of in and an and financial However, of quarter's surgeons surgeon-initiated face. benefit meetings discussed the economic case to studies increasing communications,

age market provide continue perfect to for continue quarter-over-quarter as see to significant overall and in expect the as such overall plays important into equity of systems the with private catalysts Accordingly, channels, groups, we this ALLY market will growth out. the customers share combined penetration competitive storm new adoption. Additionally,

announced continue placing new ALLY become belief that with we new will major and increase in associated a parallel. We evidenced volumes and as by an milestone confident had the recurring U.S. experience of revenues further growth for and As laser revenue European exceptional to for which LENSAR, with the number Mark commercial is the the into continued step sets ALLY's we're and users of take approval This approval receiving the of more in working quarter to CE reinforces our critical toward procedure scale. There these important with a the the European way advanced level LENSAR surgery. ALLY, with placement we next expanding familiar global paving surgeons yesterday their The strategic advantages surgeons stage on our systems and a ALLY. that to eager EU is market. capabilities are objective a reach regulatory cataract revolutionize expansion for the ALLY clearance

that to with already the distributor have surgeon's all to launch. the users have have an you EU first approvals solid on recently in installed our service and forward ALLY approval available support clinical this to share of first we we with a Europe. European replicate distributors Taiwan To to efficient our I'm ALLY to deploy. ALLY LENSAR already week. field that launch to elsewhere and progress was we And having Europe, the performed shipped have training TFDA of facility the support have on shipments closely look in cases We OUS And initiated and and systems pleased received in partners application also world. also to Taiwan the horizon. success working additional to next I the to updating network ready quarter. I commercially our Asian its story And Southeastern a markets Kong. U.S. end, first regulatory key been like is we been like in make Hong report, we've poised

key team of We and to and LENSAR community it's we're our European medical demos forward. DOC at positioned ALLY further but the AECOS details leaders with evangelize conducted is the an commercial actively well Europe the the since a number how systems. our FDA ago. Gaining market both ability presence of to rest Nuremberg. U.S. come in the utilization share ALLY we an to of continued of footprint, in points over actively clearance incredibly ALLY's in Symposium X a interacted the market fortuitous gratifying with clearance. With Meeting U.S. share procedural encouraging And accomplished Prague We as regulatory the highlighting and date. the first-generation receiving has what shortcomings just into years within ALLY since start. This of increase to share thought world in on launching ALLY our perfectly positive some expanding base, of on LENSAR incredibly EU I'm we've proud strong the international the trends both milestone, it's the and the and of unique X installed to differentiators heels far move growing launch address dovetailed the just

view transformative We this the out, potential with continue to cataract sprint. this ALLY believe future positively not the impact see that starting but to a laser a of a technology play We're is market. to as marathon, the

pace. will that available outside for I additional can the begin ALLY coming that expect in potentially us we with Now market at momentum the to a U.S. building markets sell LENSAR quicker and the months, positive

turn call to over highlights our for Tom? to me the financial Tom let the Now cover quarter.

Thank Nick. you,

Revenue basis, in procedure from second XX% second a generated Just was our we And strong worldwide X% million from quarter me comments, growth This a in over second second XXXX, earlier performance. echo on U.S. brief million $XX XXXX. saw of compared was reflecting XX%. volume. of to a procedure quarter quarter quarter the an the increased the few on Nick's an of To of volume increase in remarks XXXX $XX.X increase. increase

to the rate. and quarters installed to an for the monthly timing rate, utilization begin sites see and culminating second in in of fourth revenue run recently the placements ramp a volume reach expect achieve time XXXX of robust third surgeons up typical recurring to and we optimal procedure when systems Given in more quarter these

are addition, that the excited to and States. have In Taiwan we regulatory to clearances EU received extremely United us ALLY sell recently outside allow

total ALLY's our recurring Systems well ALLY as now these Selling cash share, footprint. as and impact and to revenue able extremely flow. us important enables increase regions market to are increase is positively global in our We operating

significant future success. Gross We of XX% to quarter quarter was margin clearances $X.X as in margin been our these representing XX% gross a anxiously realized million, and XXXX. for the $X.X for of gross they have awaiting million are margin catalysts the second compared

the was see a United we States anticipate in decrease quarters. of anticipate outside a although margin this sales concentration gross we margin our as future higher strong a percentage and in gross slight of Our concentration quarter, higher future revenue ALLY

For of million compared percentage $X.X the the assets operating expect expenses of year, approximately one-time million second for on attributable margin to gross continue quarter XX%. Total XXXX. in of charge expenses primarily second were $X.X quarter of to XXXX impairment a a and we increase was intangible to million. The in operating the $XX.X

you our growing to selling and of with we $X.X to market marketing phacoemulsification the is collaboration charge, million, If our administrative expenses $X.X general ALLY. decreased a offset into of relates with decision United and were a million share expenses in and organization exclude largely integration States. The as operating on this Oertli terminate increased commercial expenses, total associated somewhat focus function system which impairment charge by their our the strategic

committed continue the and loss collaborating IP any other other to related The loss LENSAR the and remain with integration, a the million loss on a capabilities per of share ALLY portfolio of to collaboration eliminates have to we of robust loss potential $X million Although $X.X decided for Oertli. this quarter discontinuation and the we contractual common $X.XX manufacturers limitations an any share activities in common with phaco maintain or to we'll second future. Net combining and quarter to per was discontinue in $X.XX XXXX. compared phaco a

look which relating with the increase net in our quarters was adjusted impairment to the charge a our and EBITDA one-time included in our results. warrants, million intuitively, more an associated previously, us our second operations results both occurred stock $X.X outstanding discussed as of and in loss price. To let at charge evaluate However,

a narrowly breakeven we negative second in positive generally of having last you The and with a quarter quarter for quarter after a us $XX,XXX, the of EBITDA achieved is see breakeven second adjusted missing strong $XXX,XXX. year

Looking with forward, soon see consistency to operating some quarter of expect the starting as as we breakeven this fourth quarters year.

compared loss exclude the from of you quarter XXXX was quarter, and a If to or for million X/X ago. what loss year as the our second in second warrant for items million it $X.X the was XXXX our impairment $X.X net in

leased As compared cash inventory of in cash to million ALLY quarter supply increases as was December the dedicated fleet equivalents a our largely function XX, shipments at $XX.X cash and Taiwan of for $X.X $XX.X second XXXX, of Systems used and of EU million and to ALLY million XXXX. to had June our Cash and as Systems we are in XX, as was States. of U.S. fleet the well of These inventory uses to systems. begun building the have United which expanding in

call over we the look your to Now and I'd like questions. forward turn Marjorie? operator, to the to

Lake we Capital go for to Markets. come [Operator Instructions] Street Frank will questions wait And in, while those Takkinen we next from to

mix how look develop placements? fit full or into those quarter. on were the Nick, really the big Obviously, actual those the recurring of Congrats versus placements a you stream? can on progress. talk do And prospects I more sales placement quarter. purchase a revenue versus as a the of the much little about in hoping upfront maybe of bit was a and one all with how impressive placements mix sales start just they to of stay to then

Frank, appreciate questions. the I Yes.

were of will. sold XX the So those you installs, on the leases, were X those of of XX if and

the systems of we XX% that systems additional XX. were sold of previously. been X the placed then course, about of So had converted actually systems And the

last the new to well quarter clearly, maybe I with do required asked That geographies? ALLY to you're you produce I now to couple this then confident of of it. able a Systems over you're up but makes Got about amount scaling feel you're manufacturing And too, sense. entering think shifting capacity, still demand and keep that

We actually. do, approvals. had I anticipated these

of certain comments other been inventory. as so had building And we components chips. critical buying the had inventory computer-wise laser time whatnot and remarks as lead in some parts and to some Tom and such the made here, some There's and his receiving aspect

So placing this. we've been receiving in of orders we and anticipation have been items

is the And by our speak. So that backlog to now to was good able we manufacturing be pretty ordered we parts as forward quarter, comfortable we'll get and see, orders that as was backlog. feel up that we with talking we more as people here. we're building actively this feel U.S. and And start And building the around we I move to in U.S. outside we're we've But about from into going enough quarter. systems way, deal that going actively fired are

I the just this XX% QX expectations. be think and for one. about models back can you we Help us to help maybe then And last how QX, Nice. for us with QX our the thinking comment, strongest. bridging if growth year? about heard the the for should typically maybe half expectation and QX But

Yes.

indication for third continued cataract best quarter QX So shipping of typically volumes in procedures. that on And the said, and of this from people lowest perspective, approvals we'll typically -- the we lowest overall the just the is more, the have the based the typically, European in X strongest to demand procedure quarter because reasonable extensive as systems volumes would other then a certainly fourth quarter course are surgery -- X of sort as QX a QX, early quarters traveling the the less. schedules, to U.S. the quarter, number vacation outside getting which compared overall OUS of year doing over surgery generally globally, cataract be cataract are the in quarters. be expect, interest all I

quarter really expect strong reasonable year the a then going so that to that have in at third first we've installed we've going for number quarter big second meetings certainly even that the that the suit We'll the with into of and this got I the and because us that quarter third first into finish but quarter into systems quarter. the in large more fourth So with shipments really got, between we're of quarter end expect a a quarter quarter. to backlog I and are OUS going follow fourth LENSAR, moving that

I overall of that So and level get the to into would see level as systems, capital some fourth an as quarter. numbers we both the on procedure going really strong performance on well as you're here expect

color. maybe little just And Frank, a bit of

So mentioned expect in remarks, we to in that had quarter. I increase fourth my and third procedure the volume the

right those vast If quarter. were the half you of look majority quarter the in the XX third the at split the installed and quarter of the in you the placements actually middle, and placements latter

should is significance got of they in operating those in And will in, an be and really so hopefully that quarter. quarter, at fourth you to them in third ramp kick all level the means up systems what the but optimal

thing X other And just is of started The clearances, obviously, it's systems. shipping we at order X/X the with consider to least is the done.

while So a those it get ex-U.S. should fourth kick an to from us quarter. that. in will take But in, perspective the procedures

very quarter really be of catalysts. do strong us for expect just those we the fourth very, So to because

And next, BTIG. with we're Ryan going to Zimmerman go to

Congrats to your to a see. exciting ask Nick. about bit, I on It's approvals. want all OUS the little strategy

So Just you're distributors thinking mean, that? how us there resources approaching of you you meetings? something thinking help putting the Are about kind market. just you're clinical attendance there, us beyond I but in kind talk at just have obviously, understand approaching these is markets? of about any to how

Yes. question. appreciate the Ryan,

we the a the last of sort with launch, of we now interesting. and when in will. we were sort global now. are go of different So the moving into terms introducing the marketplace and kind moving the into independent luxury have the Things right able you been the leader We belief gen thereof marketplace. being because significantly laser market a ago XX introduce We femtosecond first product years lot company has of to We're smallest new surgery. the space people's years or in in lack to the if Europe had it's were didn't the XX pretty ago enhanced of everywhere product. cataract And technology were polarized the control for

And launched, in had perform and And that so the into physicians U.S. it's hearing between necessarily didn't significant better amount we've expectation We've generation the efficiencies, the when been very much benefit performance. went system. ALLY. and marketplace works. outside about systems technologies the got ramp ALLY European of high put quite and And a well -- on because improvement a for very there's of it and upgrades there first into start. been to there and continuous they frankly, substantive kind that how we've outcome the was already physicians and like handle these up cross-pollination understand U.S., certainly a now polarized a of now And

address shortcomings as to KOLs and done heretofore, the practice lasers different be types we so in U.S. -- areas. into when and in actually installed, for couple a and And the there. larger know, these talked we begun the And those out EU. larger how relationship outside LENSAR begun on really we of expect private exist we've the these we least, gen haven't that and we've I products. of first the of groups systems necessarily into in business penetrate of of lasers a U.S. get private at as the equity perspective. first lasers you reached to in a the strong with about in really channels we're peer-to-peer technologies equity first X from focused is we'll that there's of -- evolving of in EU, before. Well, one channels also And And had the gen ALLY a same group We've with

Europe we're next some be so talk at I'll with we it. doing about getting actually installs, we're ESCRS doing to quarter's those are people the And our did. call dedicated to we're Taiwan, coming be have employees how into some sending a going able up. because is the with of -- an to quicker to And putting going over to be in that uptake Hong I'll of give areas. of update Kong there. distributors and to activities we because work some don't into ESCRS there resources be in to present We're likely they you also the And to more the as going numbers

there, important, Sorry up a approach here. but it's it's to take time so much multi-process

I appreciate and color, Great that.

want Now international I you -- if ask, recall, mean, revenue. from I to in weren't quarter, contribution I a building last

the that I think is XX I heard all you backlog correctly say of U.S.

are back year to want just revenue this the understand, expecting internationally? in half some So of you

Tom on it fact, have to ship, rec, rev And site the because rev does to we users order, place in to a whether longer to get the have to system sold we when rec, then have remarks, red OUS, XXX%. it to because a on take the we in rev rec have install, it's in we visit, give rec, system in train. U.S. certified interesting the or touched we And we U.S. in takes we ship, it's his the to than have have U.S. product, whether we it's

a And the Rev system becomes outside the our U.S. works lag with the if so time there's when it distributors distributor. rec sold property, you it to that will, dock, the leaves there.

does U.S., in outside occurs rec So the than rev #X. it U.S. faster

are, there's reselling, they lower essence, start is installs you revenue pathway the procedures, in it on normal always U.S. with because and our before said, similar dock to leaves rate, procedures. to they is very will, revenue if between certified the Tom people get see productive, to to have have a of there's distributors their have contracting still they you why However, lag procedure gets to which when once because to customer. train, install the margins, the it, And to

that's process. the of And so sort

much getting shipping quarter because systems, vacations, in is -- excited quarter in we're when see just some OUS third of the revenue typically we the see as good. might because not third we'll actually revenue with I'm which approvals, So the we just regardless

sense? make does So that

the the you placements third expect in I revenue wouldn't that of quarter, United when were procedure have which be fourth the is whole then in why volume the States have the United but lot late second not States timing we'll going a into second Europe fourth but answered the quarter contribution outside on getting the question, you quarter, also Ryan, in do from until quarter, quarter. only in procedure the Frank's sales of I the

So I quarter fourth think the us. a quarter be should for nice

now, Very helpful. you What's And questions then for the growth Nick, procedure for hop then could maybe the conceivably, me back in more both XX% margins environment, year, really and just read, queue. guidance and accelerated cataracts step just X up XX% margins, consumable comp of and about appreciate we ask as a second U.S. the U.S., in upfront. then right globally? And little the materially. this revenue But the against guys with I'll I the your health year, see. recurring a question, the your revenue I'll next great more particularly all think on to Tom,

guys? the you longer opportunity maybe margin for think about us term help Just

you... Ryan, So Can was sorry, tracking I I'm gross your on margin.

Yes.

just XX% Nick, on U.S. question, First its... was accelerated

How I look at the cataract overall. market

Yes, on procedure read just cataract -- help procedures. the help your

some demand from have bit COVID, -- a didn't a perspective. of So There's now surgery of patients still is surgery because surgery. is cataract it's still from a there right? little The interesting this have kind hangover that people that pent-up

rates interest whatnot. there's and inflation hand, some and and economy the about with the talk uncertainty On other

surgery premium I -- from pressure patients think physicians perspective. so there's I And think a some on

you generation refractive investments, patients this. have age eyes significant that made cataract the have of to up had are that becoming investments On hand, and in the patients leading in other procedures also their

Doctors so the with present And very and ACOS, in do is time profitability, their was which patients interesting difficult an in pressure under offices are session. necessary there to in office. to maintain

pressure, that services hand, offer under to significant able perspective be surgeons' doctors On begin astigmatism, -- patient astigmatism with patient needs aligns to with imperative of want offering a and patients really and profit. it's to alternatives incidence and that reimbursements who those to a the they from need make certainly patients XX% visually have other of the in XX% surgical

Private you'll is higher So to rich for I relating -- equity surgery to routine management made side And astigmatism surgery. with think have pretty on the more that. also doctors in They surgery. pretty comfortable pretty deals groups feel deals. that able these Cataract to static. a do cataract as I that practices. astigmatism of continue They haven't are to some these see been paid been refractive premiums

are to the to interested be we're hearing groups technologies business have replacement improve that as in who the have that. efficiencies. They types that equity better they're to were So not the they at when on side, on the they older seeing looking technologies things patient We efficiencies, private have are to these of able throughput. deliver

So climate at not is difficult, They're look an this. this win they a is while the with macroeconomic to are this consideration. and it's having if, giving serious

is patients -- this. going So able of patients customers doctors I regardless, to to offer and do them. feel this macro And this procedures is like on want to to be need these our volume and and that need just to -- are enough coming new by percentage do LENSAR, of the types nature market, of the them the there's

up Nick's comments it's equipment about predicting we're And to -- little that's what than around the year. that a that a That difficult So macro obviously, to sales. anticipated, pleasantly what seeing had we for we're margins, capital than originally we're just market this been XX% more being and it few had anticipated. -- goes we ticked we've for little harder Ryan, economic surprised regards sales in a gross more

factors States. been question answer forward. And evaluating outside to number we're could to XX% floodgates captive your are at there. United the growing now, we a we've is, to there's well. we now, opened right done we've that have One Right take if you the easily So States XX% really in go and short that to the is of And the XX%. United

margins year. that United we now an than be the our all placements United or have or percentage. and systems make But in next will States our XX% the because reasons. are sure carry you're our One much outside States, so, carry simply to ability distributors will appropriately. motivated sales what to XX% important is outside is, obviously, carry place to even for then see lower to unlike lower that generally a States. have those margin our We States, do we And continue the very United an going But X the United procedures and compensated that's the

procedures think throughput down margin And benefit the you I margin. systems, gets that sales play associated going much and and have [ say, and little all to out, more recurring to higher systems that we in obviously pull as But overhead, bit. of of margin that I with systems Chisenbopping the a utilization XX%. with more a would is so ] associated XX% of on revenue

like to any closing to back the turn call remarks. I'd speakers for our

today. and I LENSAR. the in continued for to really of as updating for your Thank Appreciate you appreciate in further attention Thank We XXXX questions. and remainder joining forward beyond. interest look you we you make the progress today everybody for your call exciting it.

today's This conclude does participation. for program. Thank you your

any disconnect may You time. at