IRIDEX Corporation (IRIX) Earnings Call Transcript & Summary

[indiscernible] President and CEO, Dave Bruce. This will be a fireside chat, and we'd like to make it interactive. So if you have questions, you can shoot me an e-mail or you can message the Q&A here on Zoom.

Dave, I think I'm going to dive right in, if that's okay with you. And I want to start big picture with 2022. We're almost wrapping up the year, which is kind of crazy to think about. But maybe if you want to start off with just a high-level overview of your goals and strategic priorities coming into 2022? And then where you've been able to execute, if we want to start there?

Sure, sure. And thanks for having me. I really appreciate the opportunity to talk to investors and talk with you, so it's really a pleasure to be here. We started the year with goals of glaucoma growth and really reinvigorating our retina product line. We had made changes in 2021 where we established a collaboration and broadened our product line with Topcon, as well as capital. That gave us some scale and a product that was partway through development, but a new platform at the PASCAL level, which we had intent to finish launch this year, and we are -- we did finish it. We announced the clearance for the PASCAL in last month, and we announced that we expect orders and shipments here in this quarter. So we're in the process of getting that into the marketplace. And then our single spot platform is also about to be approved and launched in the early part of next year. So on the retina side of things, two-pronged approach. Focused teams on sales and new product completion and launch at the end of the year, and that's gone extremely well. We have done well on the retina side of the business, and we have succeeded in completing and starting the launch of those products. So despite a lot of international turbulence that potentially can affect capital equipment demand, interest rate moves, dollar moves, et cetera. So far, we've tracked well on the overall business of retina and track particularly well in the U.S. on the retina side of the business. On the glaucoma side of the business, we had plans for growth. I think our guidance was in the high teens when we started the year, and we came in short on that. We had, I think -- it seems like a long time ago, but first half of the year, we had some challenges, and I think the industry reported similar results with procedure volumes essentially being flat, a combination of COVID and other opening -- reopening challenges like vacations and other things that happen to keep both doctors, staff and patients at a lower level of procedure volume. So instead of growth in the first half of the year, we were essentially flat. And that caused us after the second quarter to lower our guidance on probes, and then a commensurate amount on revenue through the first half of the year. Since, we've seen a reestablishment of growth in the third quarter in the U.S. on glaucoma, and our guidance implies a continuation of that increase in growth here in the fourth quarter. So we feel like the first half of the year was a little more suppressed. We didn't anticipate as much of the impact. And looking forward, we believe that we've really got the elements in place, obviously for the retina side of the business to continue to perform well, and the glaucoma side of the business to accelerate growth.

Got it. So maybe just to recap that. On the retina side, it sounds like coming into the year, refreshing the portfolio establishing maybe a solid cadence of product launches was a priority, and you guys have executed on that well. Can you talk about those initiatives in the backdrop of -- and you mentioned this, a more difficult capital equipment environment? I think interest rates and the stronger dollar, maybe impacting some of the OUS markets. But that business has been resilient. I think, year-to-date, it grew, I want to say low teens last quarter. What type of moats do you guys have? And what's your level of confidence in continuing that growth in 4Q and moving forward into 2023?

So the retina business was what IRIDEX was founded on long ago, and has a history of innovations and has had really a premium position in the marketplace. So we have -- essentially got the largest installed base in the U.S., and it may be the largest installed base worldwide. Combination of a strong position and just longevity in a dominant part of the marketplace. And so we think that there's a number of things that kind of make the IRIDEX brand a particularly attractive and really, a lot of the market is replacement, that people want to return and upgrade to the newer platform or replace their older products. It's a combination of the reliability, the performance. MicroPulse technology, which IRIDEX pioneered in the retina side of the business, is still a significant clinical advantage. And then in addition now, the boom in diabetic macular edema and anti-VEGF treatments with monthly injections swamping the medical system, really has caused clinicians to look for some alternatives. There are ways to go. For example, there's already a plug implant that can meter drug over time and reduce the number of injections. But also in the laser side of the business, there's a study that we sponsored, the [ late ] study that demonstrated that the equivalent of MicroPulse versus traditional has helped reduce the need for injections. So you do injections, you can extend the period without the second injection from one month to 3, 4 months. So a combination of those two is really something that we think will drive procedure volume on the retina side of the business for diabetic macular edema. Now that's achievable on other systems, but we've had a history of leading the clinical evidence base as well. And so we think those areas, as well as these new platforms allowing us to reduce our costs on the platform, potentially be more aggressive on pricing or gain margin, or a combination of those two. So we feel like the retina business is in a strong position. And while that's a more mature marketplace, we feel the position of the retina business is quite solid.

That's helpful. And so to push you a bit more on kind of the state of the business, and I kind of want to tease out what type of impact some of these new systems can have, how should we be thinking about the growth profile either next year or just longer term for retina? Maybe if you want to start within the context of the market, and what you think your ability to potentially grow above that is and gain share?

Yes. So in the short term, we have U.S. clearance and we will roll out, across 2023, the international clearances. So regulatory hurdles have risen over the past few years so the rate at which you can get things approved has been slowed, so it gets pushed out. So it's going to take a period of time through 2023 for the international penetration to occur. So in the U.S., we believe that we can grow above the market rate. The challenge for '23 is what is the market rate, if there are capital equipment headwinds and other things. But our strong position and installed base of our systems that there are -- there's a significant number of PASCAL systems still in use that are actually past end of service. So now, there's a catalyst for those system owners to upgrade to the latest platform, and there are some programs we can put in place. So we think we can exceed. Whatever that growth rate might be in the U.S., we think we can exceed that. Internationally, it will take time to get those clearances, the existing PASCAL platform, the synthesis model has performed quite well internationally. But I think the international headwinds are stronger because not only do you have interest rate challenges, but you also have dollar strength challenges. And we're working with our distributor teams to mitigate those things, but a number of competitors have the cost advantage of either producing in euros or other currencies that haven't taken the hit that a dollar-based structure has. So we're going to count on our improved cost position to help us there, but I think there continues to be a trade-off between how much margin and how much business. And that's kind of the tight rope that you walk in a mature capital equipment industry. So to roll it all up, I think international growth is possible but industry rate would be good, now whether it's a 3% or if it's -- because of -- capital equipment headwind is a little softer. We're not necessarily worried about those quarter-to-quarter. We want to maintain our place and build, and in conjunction with our partners, continue to win the premium segment of the marketplace.

Got it. And so I know you just said you don't want to focus on the quarter-to-quarter, but I'm curious on just the trend you're seeing around capital equipment appetite. I think especially for 4Q, it's heavy capital equipment. Maybe relative to 3Q or even relative to your earnings call a couple of weeks ago, what's the pulse out there for capital equipment in general? You can talk about both retina and glaucoma or focus on retina if you'd like, and then we can pivot to glaucoma. But just capital equipment appetite, what's the trends? Sort of help us think about what type of optimism or potentially pessimism you might have heading into next year?

Yes. So it's probably a tale of two markets, right? There's the U.S. market and then the rest of world market. Rest of world where the dollar strength, we're starting to see some pushback on that. We look hard at it as we set our adjusted guidance in the third quarter and we held our revenue targets, which implies some confidence in the quarter in the capital equipment side of the business. And we're feeling good strength in the U.S. We believe that there is still, I'd say, a short-term tailwind for capital, and that is the tax policies. Current tax policies allow 100% expensing of capital equipment purchases this year. So we see practices deciding let's make the investment and take the credits this year, who knows what there will be next year. So in the short term, we think that supports our guidance for the fourth quarter on the capital equipment side and in retina. In the U.S. side of the business, that same capital equipment tail for glaucoma exists. And we are seeing -- we reported, I think it was a 30% improvement in systems placements versus prior year in glaucoma, which is a leading indicator of interest in adopting the procedure. So we're very encouraged by that and pleased that it hasn't become a headwind on that. Looking further out, we do have visibility on a pipeline of business that is solid. Fourth quarter for our partner, Topcon internationally, that has about half of our OUS distribution through their direct and sub distributors. That's their fourth quarter, so they will be motivated to drive business during our first quarter, and we'll see how the year unfolds. Our sense so far is that interest rates have caused people to think twice, but not necessarily created a significant cutback. When the economy soften, capital equipment can be affected.

Got it. Got it. That's helpful and maybe to pivot to glaucoma, to G6, to TLT, and you sort of mentioned that the strong box placements on the G6 side, maybe as a leading indicator for probe growth. And yes, like retina, we've seen resilience in those placement figures. How should we be thinking about those solid G6 placement numbers? Are you starting to see it play out on the procedure side, that these new docs are contributing kind of incremental outside growth on the probe side of the business? If you just want to talk about how those two dynamics sort of feed off each other?

Sure. Yes, we believe the interest in acquiring the capital equipment so that you can start adopting procedures in glaucoma is a very positive sign. And we go after targets that are growth opportunities, that are adoption and will be probe uses. In the past, we've targeted just expanding the capacity and putting the sockets in place, so to speak, and then we'll come back later and figure out how to sell more probes through that. Our approach now is we target adoption of the procedure that drives probe utilization, and those sites that are buying systems are buying them under that context. So it does take some time to bring people up to a decent volume rate. But on the whole, the -- let's call it, the average new site should be delivering better volume than historically. And that's a combination of doing the initial case proctoring, having the clinicians see the results and start to broaden their usage on a wider and wider patient base. But I'd say, in general, our experience has been that they -- they start on a few and watch. They do a few more and watch, and then they start to build up as the confidence is there. And we think confidence is increasing because as we've talked about in the past, the combination of improvement to the probe tip with a change in the energy dosing, and it really boils down to the sweep speed of delivering our treatment, are critical parameters to get both the IoT reduction outcomes as well as the durability. And I think, in general, the industry, and we've guided people starting conservatively and then escalate. Over the -- I'd say over the past year, we've gained a significant confidence that starting at a more aggressive level is safe, efficacious and improves both the initial results and the durability. And we've sponsored a study that the single center that is driving three different dose escalation parameters and -- not completed yet, but the early indications are both the efficacy improvement and the safety is maintained, and that essentially, more aggressive dosing is just as safe and a more reliable result is achieved. So as that study comes available and published, that's going to be a catalyst for us to really push confidence in the initial dosing. So that combination of things, we think, is helping reinvigorate the growth rate. We meant -- we talked about the flatter first half of the year and then the recovery. So we've seen third quarter growth in the U.S. We see a continuation of that. We reported in our third quarter results continuation of that, at least in the first half of the fourth quarter. And we're optimistic that will drive us back up where our original guidance was for '22 and to the kind of mid-teens over time. For the overall growth rate of glaucoma, to achieve that, though, we do need to succeed in reinvigorating the international growth.

Definitely. And -- yes. We'll get more into the procedure volume side just in a little bit but I want to finish up with capital and G6 placements. Anecdotally, if you want to spend a minute, just what are you hearing around sort of the impetus and the drivers by the docs to be adopting the system? Just given it is generally a tough capital equipment environment. And then in the glaucoma market over the past six to nine months, especially on the MIGS side, has become extremely competitive. A lot of new products. Talk about just the feedback that you and your reps have been getting from these docs as to why they're bringing on the system into their practice?

So our procedure, MicroPulse Transscleral Laser Therapy is unique in this space. We are a non-incisional procedure. We generate IOP reductions at or greater than most of the rest of the MIGS that most of the MIGS procedures. And we've got a safety profile that, absent an incision, is just going to be a safer profile. So we believe that sits in front and the doctors are telling us the choice between, say, a stand-alone MIGS procedure, where you're doing the incision solely to do the MIGS procedure versus doing a MicroPulse TLT, that the preference is the non-incisional. So our adopters are really considering us as a part of their paradigm of managing patients from their 50s and 60s when they get diagnosed through the rest of their life, and trying to find the least invasive ways to keep pressure down and put off the need for incisional trabeculectomies, tube shunts which are much more severe, have higher complication rates. So we don't feel like we're competing against the MIGS players. We're not after displacing them concurrent with cataract procedure, although we have a number of users who use us in conjunction with cataract procedures and sometimes in conjunction with cataract plus a MIGS procedure. But the vast majority of their patients are either rising pressures and they don't need cataract surgery yet, or they've had cataract surgery and a MIGS procedure, and those effects are subsiding and they need to do something. So that's really our target, that -- what we call the non-incisional runway, pre-incisional before they go to those more advanced procedures. That's a wide open opportunity for us in that sense, and so that's really the conversations that we have with clinicians and what drives their adoption of the technology. In the U.S., we're up to about 900-plus sites, so it's not solely purchasing the capital equipment that is a potential growth driver for us. Now with given the installed base, moving existing users from maybe later stage procedures, understanding the safety and efficacy profile that it's appropriate for those more moderate stage and bringing additional users of that surgery center that has the capacity on as a user, and those are growth areas independent of the capital equipment. So while we're still comfortable that the combination of the price point of the capital equipment and the, ultimately, the payoff of that capital by doing procedures and reimbursements is pretty short that we think that even if there's a lull in capital appetite, let's say, in general, that we can fit the procedure volume in conjunction with that capital investment and justify it.

Got it. And so that pre-incisional patient population you talk about sort of potentially wide open. Maybe stand-alone MIGS are taking a little longer than people expected, arguably. What percent of TLT procedures today by G6 would you say roughly are in that sort of moderate pre-incisional patient? Where do you think that could potentially go, and is that kind of priority #1 in terms of the medium-term and longer-term growth trajectory for G6?

So the actual procedure numbers are hard to get, right? Our customers just do what they do. But we do have visibility in where we're doing what we call validations. So as someone is either kind of getting a refresher and new technique or adopting procedures or considering adopting procedures, we like to do, now say, 10 or 12 cases with them, track those outcomes and demonstrate to them that on their patients in their hands, they get the outcomes. And when our team supports those, we see -- we have them report. We use tracking software, and everybody reports on their cases. So we're seeing on the order of 50% of those, what we call, validation cases, the pre-incisional patients that have not had any kind of incisional surgery. Now it's possible that they had a MIGS procedure, because we kind of separate that out, but not a dedicated incisional glaucoma procedure. So that's a good indicator for us that the appetite is there and that the adoption can be proven on those patients, and therefore, give the clinicians comfort that they can select for those patients. But I think overall, the -- still the higher number of our procedures being done are on more advanced patients. I'd say that the failed trabs and failed tube shunts and those kinds of things in the more advanced patients, it's kind of where we got started when the product was launched. It was a safer version of the late-stage cyclophotocoagulation procedure. And we've been supporting studies, doing some groundwork and demonstrating that the safety profile justifies earlier and earlier stage, and that's where it's moving. But given that, that moderate stage patient population is quite large. In the U.S., there's about six million glaucoma patients. Three million of them are in the mild, two million were in the moderate stage. So there's already a non-incisional laser-based procedure in the mild stage called SLT, Selective Laser Trabeculoplasty, that is clinically mature and has a large adoption in the U.S. and worldwide. And that's something on the order of 20% of those mild stage patients receive an SLT procedure. That kind of penetration into the moderate stage for MicroPulse TLT, again, over a more extended clinical maturity time, is hundreds and hundreds of thousands of procedures, and our current run rate is around 30,000 in the U.S. So we think there's a big growth opportunity in that moderate stage patient, and encourage that a lot of the trialing is on that patient base.

Right. Okay, got it. And so you said in the validations, about 50% are pre-incisional. If you had to ballpark among your current run rate broadly in the field, is moderate 5%? Is it 25%, somewhere in between? Anything to give us a sense for kind of what inning in that moderate patient population opportunity you guys are currently in?

We're in the very early innings because I'd say most of our usage is still with the glaucoma specialists. We are focusing on comprehensives who see most of the, call it, the more moderate patients, and they're managing those until the disease severity has moved to the point where they are not comfortable with the next level of procedure and they refer them to glaucoma specialists. So just by nature, when we're with glaucoma specialists, they're going to see they're more advanced. And so putting a percentage on what's going on out there, I think I'm with you, between 5% and 25% range. And we have not made the effort, maybe we should, to maybe do a survey of a sample of patient -- sorry, a sample of users to get precision on that number, but it wouldn't really affect our activities. Our activities are clearly focused on getting that adopted in the more -- in the earlier moderate stage patients and really, really driving volume there, and moving to comprehensives. We're in the midst of publishing an interview-style piece with a couple of comprehensive ophthalmologists in the U.S. who talk about how and why they adopted MicroPulse TLT, how they use it in their practice. And those kinds of things as a lead in to really targeting comprehensive as a bigger and bigger percentage of our usage. And their nature, they'll have many more of those moderate stage patients, and that's what's going to drive [indiscernible] in that space.

Yes. Got it, okay. And so I'm actually going to pull up one of my questions, and I think it's a better way to dovetail into some of the subtopics. But when it comes to probe growth for G6, 10% to 15%, even 15% to 20%, has been something you've talked about as sort of a realistic longer-term trajectory for that business. If you had to list the top three or four kind of drivers of that, catalyst behind that, whether it's new markets in China, whether it's some of the clinical initiatives, whether it's moving into comprehensive docs and getting more moderate patients, what would you tell investors? Or, hey, look out for these three or four things that are most important towards bringing this business back to a potentially 15% to 20% growth profile?

It's a good question. So I think there's -- there are several things that drive the growth rate. The backdrop that we operate under is this concept of the S-curve of penetration that early on, you're getting early adopters, you're proving it out. And soon enough, you build up a critical mass and you start to get to the more mainstream. We're clearly still on that early stage adoption. There's still plenty of -- I won't say skepticism, but hesitant to see demonstration of the outcomes, and then gradually build the usage. And the nature of our procedure is one that takes a little bit longer. They don't look at the results until about 30 days out, and then the durability is 90, 180 days, it unfolds. And pretty much, you get to 180 days, you're probably going to get to that 18 months or so and get that. So I'd say it's the adoption and the broadening of usage by our existing users that we pay close attention to. In the macro, I think it's adoption in the comprehensives, and that's the target for us. And then ultimately, when you just think about additional market opportunities outside the U.S., obviously China is a very large marketplace where we just started really in the third quarter. We sold our first -- we got approval and sold our first systems there at the end of the second quarter. That's potentially a U.S. sized opportunity over time, but it's going to unfold, so it can be a multi-quarter growth driver for us. And then I think the last piece is, as we transitioned our distribution internationally to partner with Topcon, about half of our OUS distribution is now through Topcon, either their direct or their sub distributors. A lot of those were not in the surgical space selling glaucoma procedures. They're primarily more capital equipment-oriented, and so we're having to build up that capability there. So that takes some time. We're jointly focused on it. We think Topcon is highly motivated. They bought the distribution rights and they invested in 10% of IRIDEX. So they believed strategically in the opportunity, and we need to implement stronger on-the-ground sales activities and focus to drive that OUS growth. And so I think those are the factors that will build our growth rate back up. We know the penetration opportunity is large enough. It's the rate of that adoption.

That's helpful. So a couple of quick follow-ups, and then I want to get into the clinical initiatives and some of those things that you guys have embarked on. The first follow-up is what percent of G6 systems today in the field would you say are with comprehensive ophthalmologists versus glaucoma specialists? And then the second one, going off your most recent point, how close are we towards Topcon being fully trained and up to speed so that they're out there in the field being as efficient as possible? Do we think sometime early next year, they're kind of running at full speed? Or when will we kind of hit that point?

Yes. I'll take the second one first. I think that's still a few quarters of execution. We've got a degree of focus right now. But I think collectively, when you -- when companies plan for their next year kind of -- that's where you embed that strategically, you make the commitments and those kinds of things. So I think that's probably kind of a first half of 2023 focus and effort, and we should gradually see the results given that there's a cycle time. We're going to place the systems, you've got to do the procedures, we've got to see the results and build that. So I think that's kind of a first half of the year to get the additional focus in place, and then maybe a second half of the year to see those numbers start to rise. That doesn't mean that we can't reestablish some growth internationally in the first half of the year. It's just the stronger effect of a more focused and skilled selling effort in those countries is going to be unfolding through the rest of the year. And then in terms of where the placements are, our systems are placed in surgery centers. Surgery centers generally have a variety of users, and so -- I mean, there are some that are closely held. And so it's hard to really nail down, okay, who actually has it in the comprehensive versus in the glaucoma? I would think that most of the comprehensives using a surgery center, and we've got 900 of them, have access. And so I don't think it's really an access issue as much as get their interest and adoption going. In other words, there's a lot of slots where we can bring them in. That said, the way I'm thinking just in most recent quarters, there are several placements led by demand by the comprehensive ophthalmologists. And so that as a driver, if we just go by the U.S. because we have better data on our U.S. activities, we've been in the 15 to 20 placements a quarter range. Maybe 2 or 3 of those are driven by comprehensive to get access.

Okay. Got it. Okay. And so the more comprehensives you get, probably the greater likelihood you can move downstream into the moderate patients because they don't really touch the severe. Is that kind of a very quick way to characterize sort of the ripple effect?

Yes.

Got it. Okay. And in the last five minutes we have, give or take, I wanted to spend some time just again on those clinical initiatives and some of the more recent kind of KOL backing you guys have embarked on. Maybe if you want to talk about the dosing recommendation sort of efforts you guys have put in place, what that entails? And then I'm going to maybe -- I'll pause there, and then I'll have maybe a challenging follow-up question for you.

Yes. I think our need for, call it, clinical endorsement and a real clinician-driven recommendation is a key element to driving adoption. And frankly, when we started, we didn't have much of that. We had some users who spoke up, but we came into the marketplace under 510(k), which is -- doesn't require that randomized, more structured trial. We have had a number of moving parts that have really prevented us from committing and executing on something like that. But I think as you want to go mainstream, you need that randomized multicenter sponsored by some significant podium level KOLs that really bring it back into the mindset of the clinical community, and we believe we're at that stage now. So what we've done over the past year was start with sponsoring a 10 clinician independent assessment of the state of MicroPulse TLT in the marketplace. And that group came back with recommendations around dosing, around patients, techniques, follow-up, complications. I mean, kind of the gamut of how to. And that's been published in the meantime in peer-reviewed articles, two different segments. One more focused on dosing in patients, and the other on the rest of the activities. And we boiled that down to a white paper on kind of a how-to that was published as well. So that information clinician-driven is out there. The second piece that we've been doing is around what we call advanced seminars, webinars. We hesitate to call it training, because a lot of our existing users don't want to -- don't feel the need for training. But a lot of information has come out. This consensus recommendation has come out. We've done a lot of groundwork in what actually is the thermal effect we're achieving and how do we assure that through sweep speed and repeat in the technique, we achieve that thermal effect, and so we want to communicate that to people. So we do that in conjunction with a webinar. We provide them the upgrade to our new suite management software, which dovetails with the technique. And so those are kind of the clinician-driven things that we've been doing. As we look to next year, we really think now is the time to start that randomized multicenter prospective study. We've got the design of the probe tip, which is very well received, and now we've got dosing. We've already sponsored a, call it, a pilot version that is a dose escalation study that looks at different dosing in those outcomes, and that can be input to a group of clinicians who could help us define that study and then put it in place. And so that's going to be -- by the time you get the results, a couple of years, and it costs a couple of millions to do that. But we're at the confidence level now that the procedure is a known, successful, safe, effective procedure, and we want to put the pieces in place for the broader adoption. Still early stage in the grand scheme of things, but we think that's a critical step along the way. And in the meantime, just embarking on it is going to bring us back into the mindset of -- yes, the clinical community.

So a good way to kind of reengage with docs and reengage with the clinical community. Sounds very interesting and exciting. My follow-ups there, kind of two separate ones. I guess, first, when it comes to the dosing recommendations and how, again, you're starting to reengage with your customers around that. Approximately what percent have you sort of tapped into that have kind of formally been -- you said don't use the word trained, but sort of trained on or educated on these new guidelines? Maybe I'll stop there, and then I just want to ask about utilization after that.

Yes. So we've been focusing on this through the year. So a lot of our -- all of our communication really. As our reps go out and meet with existing customers is around this. I think the engagement where we really proctor cases, and for example, when we upgrade a system to the suite management software, a part of that is we want to proctor half a dozen cases, half a dozen cases to really submit that. The challenge is clinicians have to go very slow. What seems slow to a surgeon, right? You're basically doing half the whites of the eye in 20 seconds. It's very slow. And the tendency, even with some of the tools that we give, is to go faster. And so that's really the challenge, is to proctor those cases and get people to adopt that. When we succeeded that, the results are quite strong. The clinicians respond quite well. It's hard for us to really precisely gauge, okay, what was the before volume and the after volume. We're getting some -- we're getting -- we believe the confidence of the clinician is going to drive more usage, and that's where when they're in the lane and patients come through and they recommend, [ Tom ], the pressures are rising and we need to do something. I recommend this at that more moderate stage patient. That's when the success is occurring when they're doing that when we're not there.

Got it. Okay. So you sort of answered my utilization question, maybe it's going to take a little bit of time to see it sort of flow through naturally into procedure volumes as they gain more confidence. Sorry to go back to this, and we can finish here.

Yes. Ask me that next quarter. [indiscernible]

I'll put it on my list. Roughly how many -- what proportion of your installed base have you kind of gone through this formal proctoring process with? If you can give us a ballpark number just to think about what inning this initiative around dosing is in? Then we can end there.

Yes, I'd say we've communicated it to, I'd say, the majority, for example, in the U.S. And then internationally, we go through our distributor team, so exactly how they've discussed or promoted. Obviously, we -- the publications and the social media or e-mail campaigns, all those communications are going all the time. But specifically engaging and going through a revalidation process with new procedure, we're probably only in the 10% range. And given that, we probably only would get to about the 30% range, right, because they don't all need it. And so that more formal process, we do want to pick up the pace of the sweep management software upgrades to those field systems because we think that really makes a difference. The audible key element is the audible tones that help them understand where they should be and the progression of a sweep really helps them slow down and hit the dosing right. And those are -- those are some of the drivers that our team does day to day.

Got it, got it. All right, Dave. Well we're at time, unfortunately, but always great catching up. A very helpful and formative conversation. Investors, if you have any questions or need any follow-up, please feel free to reach out. But Dave, best of luck for the rest of the year and look forward to speaking soon.

Thank you, Tom, and thanks for having us.

Of course. Thanks, Dave. Take care, everyone.