RxSight, Inc. Q3 FY2024 earnings call

Management Statement and Operational Highlights:

• LDD and LAL Growth: Robust growth in LDD installed base in Q3, surpassing seasonal expectations. LAL sales were in line with seasonal trends but still underscored patient and doctor value for customizable outcomes.
• LAL+ Rollout: Full rollout of LAL+ in the U.S. and approval in Canada. LAL+ delivers additional near vision lines, and both LAL and LAL+ are expected to maintain market positions with in-house manufacturing flexibility.
• Innovation: Upcoming release of low-diopter LAL+ powers, expanding spherical power range. Commitment to innovation via development and operations teams.
• Market Focus: Expansion in North American market, engagement with optometric community, and global expansion efforts in Asia and Europe with regulatory processes ongoing.

Segment Performance:

• LAL: In Q3 2024, LAL revenue was $24.2 million, up 79% compared to the year-ago quarter and 2% sequentially. LAL revenue represented 69% of total revenue.
• LDD: LDD revenue was $10.1 million, up 28% year-over-year and unchanged sequentially. As of September 30, 2024, the LDD installed base was 888 units, up 51% year-over-year and 10% sequentially. The average selling price for LDD remained stable at approximately $130,000. Average monthly utilization of LAL per LDD was 10.1 in Q3, up from 8.7 in the same period last year.

Guidance:

• Full year 2024 revenue projected ~$140 million (top of prior range), up ~57% y-o-y.
• Gross margin expected to be in the range of 70%-71%, up from prior guidance.
• Full year 2024 operating expenses at the bottom of prior range.
• Q4 2024 revenue projected ~$40 million. Q4 gross margin similar to Q3, with operating expenses at the low end of $37M-$38M range.

Risks:

• Hurricanes impacted Q3 by causing ophthalmic practices to close and lose surgery days, particularly in markets like Florida.
• General risks related to forward-looking statements and uncertainties outlined in SEC filings, including potential differences between actual results and forward-looking projections.

Question and Answer: Q: Concerns about capital and LDD placements, demand, and penetration.

A: Ron Kurtz mentioned success due to clinical results, practice benefits, and quick ROI, with practices adding LDD units to other offices.

Q: Impact of hurricanes in Q3.

A: Shelley Thunen said practices closed, surgery days were lost, hard to quantify but markets like Florida were affected.

Q: Confidence in pricing stability.

A: Shelley Thunen stated LAL pricing at $1,000 per unit with no pushback, and LDD pricing stable with demand still there.

Q: Seasonality in Q3 and gross margin sustainability.

A: Shelley Thunen attributed LAL seasonality to doctor vacations, and gross margin expected sustainable due to mix and cost reductions.

Q: Utilization trends and PE vs mom-and-pop practices.

A: Ron Kurtz and Shelley Thunen discussed utilization growth, varied practices, and innovation aiding adoption.

Q: Global expansion and PE practices.

A: Ron Kurtz outlined regulatory processes in Asia and Europe, and PE practices have varied decision-making but benefit from high-margin revenue.

Q: LAL trends and long-term share gains.

A: Shelley Thunen and Ron Kurtz discussed growth deceleration due to larger base, and efforts to remove barriers with innovation.

Q: Optometrist program and customer share.

A: Ron Kurtz talked about optometrist role in refraction and education, and sales team targeting practices without LAL.

Q: Customer base and international expansion.

A: Shelley Thunen and Ron Kurtz discussed active surgeons per LDD and market-dependent international strategies, including distributors and local partnerships.