Release Date: May 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IRIDEX Corp (IRIX, Financial) is actively engaged in a strategic review process, aiming to pursue transactions that benefit stockholders.
- The company maintains a global leadership position in the ophthalmic laser treatment market, with a strong installed base and market share.
- IRIDEX Corp (IRIX) has launched new products such as the Pascal laser scanning platform and new single spot platform, refreshing its retina portfolio.
- The company has driven adoption of its MicroPulse transscleral laser therapy (MPTLT) for glaucoma, expanding its market presence to over 2,000 laser consoles and delivering over 250,000 single-use probes.
- IRIDEX Corp (IRIX) is seeing signs of market recovery, with firming system orders and a supply chain capable of fulfilling these orders.
Negative Points
- The initial transaction discussed in the last earnings call regarding the sale of certain assets will not be going forward, impacting potential strategic moves.
- Total revenue for Q1 2024 was down $1.9 million from the prior year, primarily due to loss of royalty revenue and continued softness in capital equipment purchases.
- There is ongoing uncertainty in Medicare reimbursement, affecting the glaucoma procedures and system sales.
- The company reported a net loss of $3.5 million in Q1 2024, which increased from a net loss of $2.1 million in the same period the previous year.
- IRIDEX Corp (IRIX) is experiencing longer sales cycles and end-of-quarter capital equipment purchase deferrals, impacting revenue.
Q & A Highlights
Q: Can you elaborate on what happened with the asset sale that is now off the table and how should we think about this in the context of other future potential transactions?
A: David Bruce, President and CEO of IRIDEX, explained that the terms were converging toward an agreement, but ultimately, the parties did not agree on the terms to complete the transaction. He emphasized that this has not changed the company's focus on uncovering strategic value and that discussions with other parties are ongoing.
Q: Can you elaborate a bit on the durability of the strength of US G6 probe sales and how should we be thinking about potential rebound here in the US?
A: David Bruce noted that there was strength in international sales compared to the previous year and quarter. Domestically, there was some relative softness compared to Q1 2023 due to initial LCD announcements. He mentioned that the company's position on reimbursement this time around with LCDs will be strong, but potential adopters are taking a wait-and-see attitude due to lingering concerns.
Q: Can you provide any guidance on how we should be modeling the rest of the year on revenue for 2024 now that we're back to normal course of business?
A: David Bruce stated that the company is still focused on executing strategic alternatives and moving discussions forward. He mentioned observing strengthened orders in Q2 and anticipates recovery if reimbursement concerns subside, potentially leading to growth. However, specific quarterly or full-year revenue forecasts were not provided at this stage.
Q: How should we be thinking about the cash balance on a quarter-to-quarter basis for the remainder of 2024, and is there anything to call out regarding the increase in accounts payable?
A: Fuad Ahmad, Interim CFO, explained that the company expects a materially lower cash burn in 2024 due to cost reduction initiatives. He anticipates a quarterly cash use in the range of $1.5 million to $2 million. Regarding the increase in accounts payable, it was attributed to inventory increases and managing payables in line with longer receivables, along with a late quarter shift in product mix.
Q: Are your customers communicating that LCD uncertainty is holding them back from purchasing new systems or using them?
A: David Bruce acknowledged that there are regions where LCDs did not have an impact, and purchases are occurring. However, in other areas, there is significant focus by administrators on procedure numbers and long-term outcomes, causing hesitation in new system purchases. The company is working to drive business forward despite these challenges.
Q: What are the closing remarks for this earnings call?
A: David Bruce concluded the call by thanking participants and reiterating the company's focus on driving the business and pursuing strategic processes, with plans to provide updates in future calls.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
