Q1 2024 IRIDEX Corp Earnings Call

In This Article:

Participants

Trip Taylor; IR; Gilmartin Group

David Bruce; President, Chief Executive Officer, Director; IRIDEX Corp

Fuad Ahmad; Interim Chief Financial Officer; IRIDEX Corp

Tom Stephan; Analyst; Stifel, Nicolaus & Company, Inc.

Presentation

Operator

Good day, and thank you for standing by. Welcome to Q1 2024 IRIDEX earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Trip Taylor, Investor Relations. Please go ahead.

Trip Taylor

Thank you, and thank you all for participating in today's call. Joining me are David Bruce, Chief Executive Officer, and Fuad Ahmad, Interim Chief Financial Officer.
Earlier today, IRIDEX released financial results for the quarter ended March 30, 2024. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Any statements made during this call are not statements of historical fact, including, but not limited to statements concerning our strategic goals and priorities, product development matters, sales trends in the markets in which we operate. All forward-looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements.
Accordingly, you should not place reliance on these statements. For a discussion of the risks and uncertainties associated with our business, please see our most recent Form 10-K and Form 10-Q filings with the SEC. IRIDEX disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 14, 2024.
And with that, I'll turn the call over to Dave.

David Bruce

Good afternoon, and thank you all for joining us today. I'll start by extending upon the strategic review discussion in the press release. IRIDEX is actively engaged in a strategic review process and the company is committed to pursuing a transaction or series of transactions that will benefit our stockholders. Discussions are ongoing with multiple parties relating to both specific product lines or the entire company.
The initial transaction we had referred to on our last call related to the sale of certain assets will not be going forward. As a result of that process ending, discussions with other parties are now moving to the fore. Obviously, the process is dynamic and at this time, there are no further updates on the status or timing of potential transactions. As we've said before, we're committed to pursuing all available options to unlock value for our stockholders.
Our retina business continues to enjoy a global leadership position in both market share and installed base for ophthalmic laser treatment systems used by retina specialists. Over IRIDEX's 30 year history, the company has developed products that have set the technical and clinical standards in our space. We recently refreshed the portfolio with the launch of the new Pascal laser scanning platform with MicroPulse capability and have followed that with the current rollout of our new single spot platform.
In glaucoma, we've been the leading provider of non-incisional transscleral laser treatments. This began with the G-Probe cyclophotocoagulation treatment for late-stage glaucoma patients and has extended to include our MicroPulse transscleral laser therapy for moderate to advanced stage glaucoma patients. Since launching MPTLT, we have driven adoption by developing clinical evidence and real-world user success steadily expand our worldwide market presence to over 2,000 glaucoma laser consoles and delivered over 250,000 single-use probes.
Notwithstanding the current market headwinds that are impacting many capital equipment companies, we remain focused on executing our business line growth strategies to drive further adoption and utilization of both our retina and glaucoma technologies. Together, our product portfolio is globally established with thousands of ophthalmic care providers around the world using our technology daily to treat their patients. We believe this portfolio embodies significant value, and we're pursuing strategies to realize this value for stockholders.
I'll turn now to a brief discussion of business developments in the first quarter. Total revenue was $11.8 million. While we saw some of the market firming we had been expecting, generally longer sales cycles persisted into the first quarter, and we also experienced some end-of-quarter capital equipment purchase deferrals. So far, we're seeing additional firming in the second quarter as well as indications that a good portion of the orders that have been queuing up are expected to ship during the quarter.
Solid growth from the sale of Pascal scanning laser systems in G6 probes internationally was offset by the deferrals and resulting revenue declines of other products. While the period of capital equipment softness has extended longer than we anticipated, IRIDEX is positioned and our markets remains strong based on the differentiated features and clinical evidence supporting our technology.
Our refreshed retina portfolio, which includes the new Iridex 532 and 577 single spot laser platforms is generating customer interest that we expect to boost revenues in upcoming quarters plus further recovery, driven by stabilized reimbursement for glaucoma procedures supports improved G6 probe sales. In glaucoma, Cyclo G6 revenue was $3.0 million compared to $3.7 million in the first quarter of 2023.
We sold 13,300 G6 probes representing sequential growth over the fourth quarter, but a decrease compared to the prior year, which, as you know, was before the MACs created reimbursement concerns with their issuances and then withdrawals of their LCDs. Generally, we experienced some seasonality that usually results in Q1 coming in sequentially lower than Q4. US probe sales are moving back toward their prior order rates while G6 system consoles continue lighter, indicating there remains concern in the market over the possibility of another round of LCDs.
While we acknowledge the concern, we believe IRIDEX successfully defended its procedure reimbursement last year, and that's therefore less likely that any new effort to restrict makes reimbursement will set back our well-established and proven non-institutional glaucoma laser procedures. In our retina segment product revenue was $6.8 million, a decrease of 6% compared to the first quarter of 2023.
Overall, we saw strong growth in sales of Pascal scanning laser systems worldwide, offset by the longer sales cycles and equipment purchase deferrals. As I mentioned earlier, the recovery from these deferrals appears to be continuing here in the second quarter and we're seeing firming of system orders plus we're comfortable we have a supply chain adequate to fulfill them.
To conclude, we expect continued improvement in the environmental factors that have been negatively affecting the business over the past several quarters. Receding concerns around reimbursement should support recovery in US glaucoma procedures and probe sales and improving capital equipment trends, especially taking advantage of our opportunity with the new Pascal scanning and single spot systems should support a growth trajectory in our retina business.
With that, I will turn the call over to Fuad.