Financial Data and Key Metrics - Revenue for Q1 2023 was $8.3 million, down from $9.3 million in Q1 2022, primarily due to a $1.5 million decrease in revenue from South Korea [22] - Gross margin for Q1 2023 was 52%, up from 50% in Q1 2022, driven by higher-margin procedures in the US and Europe [25] - Net loss for Q1 2023 was $4.3 million, or $0.40 per share, compared to a net loss of $6.7 million, or $0.67 per share, in Q1 2022 [29] - Cash and cash equivalents stood at $8 million as of March 31, 2023, down from $14.7 million at the end of 2022 [29] Business Line Performance - The company installed five ALLY systems in Q1 2023 and four more since April 1, bringing the total install base to 19, with an additional 13 systems in backlog [8] - Procedure volumes in the US increased by 13% compared to Q1 2022, driven by the growing adoption of ALLY systems [23] - In South Korea, procedure volumes decreased by approximately 9,900 procedures, contributing to a 19% overall decline in procedure volumes compared to Q1 2022 [18][24] Market Performance - The US market accounted for 15% of all femtosecond laser-assisted cataract surgical procedures in Q1 2023, up 100 basis points from Q2 2022 [11] - Procedure volumes in Europe increased by 5% compared to Q1 2022 [23] - South Korea's market challenges, particularly with third-party payors, led to a significant decline in procedure volumes and revenue, with no clear resolution timeframe [18][19] Strategic Direction and Industry Competition - The company is focused on expanding the reach of its ALLY system, which has been well-received by the ophthalmic community, with early adopters reporting significant productivity improvements [10][12] - LENSAR has secured its first multi-system agreements and is working on additional contracts, indicating strong demand for ALLY [16][17] - The company is leveraging its advanced technology and marketing efforts to maintain a competitive edge, including active participation in major ophthalmic congresses [15] Management Commentary on Operating Environment and Future Outlook - Management highlighted the positive reception of ALLY, with early adopters reporting time savings of 1.5 to 2 hours per surgical day, leading to increased productivity and ROI [37] - Supply chain issues are easing, with greater availability of raw materials expected to improve ALLY manufacturing efficiency in the remainder of 2023 [26] - The company completed a $20 million private placement, extending its cash runway and enabling strategic investments in inventory, sales, and marketing to capitalize on ALLY's early success [20][30] Other Important Information - The company expects R&D expenditures for 2023 to approximate $7 million, consistent with Q1 2023 levels [28] - LENSAR's remote diagnostic capabilities and service infrastructure are key differentiators, ensuring high system uptime and customer satisfaction [55] Q&A Session Summary Question: Productivity improvements from ALLY adoption - Early adopters of ALLY have reported significant time savings, enabling them to perform 3-4 additional cases per day or reduce overhead costs [37] - Transitioning from previous-generation systems to ALLY has resulted in a 20% increase in procedure volumes among early adopters [38] Question: Customer preferences for ALLY acquisition (leases vs. outright sales) - Customers are increasingly opting for operating leases or outright purchases, depending on their accounting practices and access to tax benefits [40] - The company has seen a higher percentage of systems being purchased outright or through operating leases, with per-procedure fees remaining a consistent component [40] Question: Revenue growth expectations for 2023 - The company anticipates at least 20% revenue growth in 2023, despite challenges in the South Korean market, driven by strong demand for ALLY in the US [48] - Gross margins are expected to remain around 50-52% for 2023, with potential for improvement as supply chain issues abate [50] Question: Cash runway and private placement terms - The $20 million private placement significantly extends the company's cash runway, enabling investments in inventory and sales/marketing to support ALLY's launch [30][52] - Management considered alternative financing options but opted for the private placement due to favorable terms and the need to address immediate liquidity concerns [61][62] Question: Margin improvements and future expectations - Gross margin improvements in Q1 2023 were attributed to higher-margin procedures in the US and Europe, offsetting declines in South Korea [25] - Margins are expected to remain stable in the low 50s for 2023, with potential for further improvement as supply chain challenges ease [50]
LENSAR(LNSR) - 2023 Q1 - Earnings Call Transcript