Nova Eye Medical Limited (EYE.AX) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining us today. This session will cover Nova Eye Medical's December 2025 quarterly sales results. And as we've stated in our ASX releases, it was a record quarter for the company, which we're very proud of. We run through our performance highlights, what drove the result and the priorities of the year ahead. As always, you're welcome to submit any questions. I have received many already. Tom and I will look to address at the end of the session. But now I'll just pass straight over to Tom Spurling, our Managing Director, and he will take you through our potential sales performance and also the outlook for this year. So over to you, Tom.

Thanks, Mark. So welcome, everybody. Thanks for tuning in. 90 registrations as of this morning, which is wonderful. It's -- our mission is to -- well, what we're aiming with this session is to keep our shareholders right up to date with what's going on because we are a fast-growing company, and the news is good. So we'll get right into it. Here's our disclaimer. Just some of you would have seen this slide before, I don't want to underestimate the importance of the market we're in. Interventional glaucoma. The idea is that the active engagement or surgical engagement to change the disease trajectory earlier in the disease state and trying to get people off drops, which generally result in a poor quality of life outcomes. The data we have shows pharma spend is falling slightly. It's a big market, but it's falling slightly. And surgical devices are growing. We've -- I've jumped the gun a bit here with this slide talking about our own growth as well, which is well in excess of the market rate. Earlier intervention with very safe surgeries. That's what our pitch is, and iTrack is very safe. Next slide. Once again, why the surgeons choose iTrack Advance? Well, it restores the natural drainage system without the use of an implant or without having to cut any tissue. We have the world's smallest catheter, and it enables the surgeon to clear the pathways in -- the irrigation pathways of the eye that have been blocked due to disease. Very importantly, the reimbursement structure in the United States, which has been confirmed to 2026, gives all the parties to the transaction, us, the surgeon and the facility a good return. 3.9% is our current share of the market. We think in the United States by our calculation. And we think that there are about 17,000 U.S. procedures per month, at least 17,000. Okay. Once again, recapping the value of our company. We have a strong foundation. We have good reimbursement. We have good clinical data. We have a product with a very unique and efficacious method of action that's safe. 180,000 procedures attest to that. We have inventory managing quality system that will enable us to deliver in full on time to customers every day. Out of our Fremont business -- out of our Fremont factory, we deliver every day. Order today and get today. And maybe if you've got an order by 3:00 p.m. Pacific, otherwise, you don't get the order until the next day. The capacity we have at that site is 100,000 units. We are currently utilizing about 25,000. We -- our mission is obviously to scale our production without creating bottlenecks, without hassles. But that is what we do, that is our job, to grow both sales and top line and deliver them in full on time with high quality. Our sales reps are out there in Germany and the United States, and our distribution partners elsewhere getting in front of doctors. And we use -- we spend money on marketing to excite the market. So foundation, excite the market, execute. That's our story. Next slide. And here is our execution record so far this -- we announced in December quarter, record sales. Growth is primarily driven in the United States, and we can now report that there have been 6 consecutive halves of U.S.A. sales growth at a compounded annual growth rate of 40%. Our last 12 months, the 12 months to December, our sales are up 24%, which is 3x higher, that -- which has been reported by Marketscope, the standard of -- the market growth standard. And I'm restating here, 180,000 surgical procedures through our history with iTrack, attest to its longevity, safety and efficacy. We can't underestimate the importance of that number to doctors. When they make a choice about what to use, will the doctor -- will the patient be hurt? And our safety record and all those procedures over a long period of time helps us sell a lot. Next slide. So here is the detail of our half sales for the half to 6 months in the quarter and the growth. It's all pretty strong, continued strong demand in the United States. 35% growth in the pcp. 32% on a half, pcp. We're all very proud of it. They're great numbers. I do prefer to look at the 12-month numbers, which is the next slide, which shows the real trends over a longer period of time, and it shows that our trailing revenues are now USD 21 million over the last 12 months. And then there's growth in every territory, of course, led by the U.S.A. We have a very -- we've made a strong investment in the U.S.A. We continue to make investments in Germany, and that is coming along nicely, too. And our recent approval in China gives us growth opportunity there. The $21 million of revenue is a good number. And we're very pleased to report it -- what is at AUD 32 million. Next slide. This is to reinforce the 6 consecutive halves of growth in the United States. Now the scale of that starts at 0, so we're not cheating with some sort of dodgy scale on the left-hand side. That is a consistent I'd like to think workman-like performance as we improve our sales every half in the United States. We always want it faster, but it's been consistent, and the repeatability and the consistency of that growth enables us to go confidently forward because it's such a strong history of growth. Our growth is a combination of increased utilization as well as new doctors coming on board. People often ask that, but it's as simple as that. It's both. Next slide. This is a new slide we've put out today. Since we have been reporting -- we commenced reporting quarterly sales in September 2025. And so those quarters, we now show the number of reps that we have on the right-hand side. They've been consistently calculated over that period of time. And the revenue per rep is the blue line running across, which is a continuum. So it's the average reps for the quarter. And you can see that our per rep is running up to nearly USD 2 million during that quarter. And that makes, we have to say, is a key driver of the company's bottom line operating results. Our understanding is that it's an industry-leading statistic. And I know sometimes it worries me to put these statistics out because it's for all our competitors to see. And I know they study all these statistics, but it's a great result, and it shows and is a key metric as to how our results will look when we talk about them later in January. Next slide. A few words on our OUS sales in Germany. We have a team that trains and sells directly to surgeons and helps with our distributors in Europe. We're very selective about the territories that we sell into. We are focused only on those high-value opportunities. Our mission is to not spend too much time and effort on small markets. In China, we have our approval in September and provides a significant growth opportunity. And I restate the great growth opportunity we've said a couple of times now. In the long run, that market will be larger than the United States. We have not given any guidance on what iTrack Advance sales will be in the second half. We choose -- there is always uncertainty associated with -- mainly because there's always uncertainty associated with between the United States and China. Some may say that's settled down, but some may also say, it hasn't settled down. So we choose not to give any guidance. And I know there's been a few questions, but we prefer just to talk about our sales excluding China at the moment. Next slide. Just on that trade, remembering, for those that may not know, we are selling from the United States to China. It's not about trade between Australia and China. It's about trade between the United States and China. These are the messages we'd like you to take away. Record revenue again. Growth driven primarily by U.S.A. market with high sales rep productivity driving bottom line improvement. 6 consecutive quarters of growth, long-term -- last 12-month sales, 24%, 3x higher than anybody in the market. Safe procedure that gives the doctors 180,000 gives the doctors confidence that they will have a device that will cause no harm and is efficacious. We remain on track to retrieve our sales guidance, so iTrack is on track is our message. Thanks, Mark.

Thanks, Tom. Questions coming through thick and fast. So some of these that you have answered here, but I just want to try and reiterate some of these questions. Looking at the key drivers behind the record December quarter, what were they? And which areas are really executing well?

So as I said, I mean, we are selling more devices in the United States. There are more doctors using iTrack in the United States. We -- there is some evidence of high utilization per surgeon and there's also -- we have growth from new surgeons and new facilities.

Just for some people new to Nova Eye. I've got to remember that not everyone has been following us forever, but one of the -- what's the key differentiation as the MIGS market is obviously ultra-competitive, what's -- going back to the basics on Nova Eye, what's our key differentiation of our product?

So just go back to the cover slide, Mark. I will just talk with that visual, the cover slide of this deck. Down there. So we're talking about the world's smallest catheter, 200 microns. It is gently inserted into that main irrigation canal of the eye as shown in that diagram. And it is pushed around with that slider, the blue slider on the device pushed around and it clears blockages. We then -- we gently withdraw the catheter and pump in biocompatible hydraulic fluid. It's not called that, but that's what it is. And it flushes the system. And then we remove the whole catheter. We remove all that device from the eye, and we let that biocompatible hydraulic fluid do its job. And the patient is left with nothing in their eye and no tear of any of the structures. Other devices leave an implant behind or tear tissue. That is the essence of our offering to doctors, leave the tissue in place and don't leave an implant behind.

New slide today, Slide 10, up now. Probably just for all of us a little bit more on this one, obviously, showing average full-time equivalents for the quarter. How do you expect this chart to change, either obviously, the green bars of the FTEs and obviously, revenue per rep? It's obviously on a good trend. But how do you see the green bars changing?

So we are managing having a high revenue per rep generates bottom line -- trends us -- our guidance is we're improving our bottom line. The high revenue per rep is a big part of doing that. So we bring on reps at a rate that we can afford them, afford to into territories that we think are prospective and that we don't want to see too much of a diminution. You can imagine when you add another rep and there was 1 rep added in January that there could be a little drop for a minute. But our mission is across the 3 months, 4 months following that rep, we keep that rep contributes to keep or to hang us at that high revenue per rep. So we are carefully balancing -- our growth depends a lot on the United States, there's no doubt, carefully balancing the recruitment of reps with our commitment to growth and bottom line operating improvement. And so it is quite -- it is a juggling act, and there's lots of Excel spreadsheets and lots of discussions, but that's what we do.

The -- that pace of the U.S. sales rep expansion. I know it's hard to comment, but is it -- what's in the works now and what's for this year?

So I mean, I just want to -- we have reps that want to join us. We have, as I've said, hired a rep in January. We -- you can see our reps go down. It is an important thing to manage your total rep numbers. We've got to -- reps cost a lot and they need to perform. So we manage it -- we do manage it aggressively. So we're not forecasting the number of reps we're going to have. We are forecasting bottom line operating result improvement and continued sales growth. A number of reps is just an input, and it's providing our shareholders with the ability to do their own multiplication if they choose to.

And so that expected productivity from your side in U.S. dollars from a mature territory, what are your expectations there?

Well, that's what we're showing there. That's what the blue line is. That's what the blue line is.

Okay. And with the new rep coming on, what's the payback period do you expect?

So I think we have a very clear vision of how many units of rep has to sell a month in order to break even, and it's not very many. So it's -- generally, we can make sure that they're not costing us money for the month for month 1 or month 2. Where the -- you can -- the history of acquisition and the relationship between revenue and reps is represented by the blue line. So we now have provided enough information to our shareholders for them to perform their own calculation metrics on what you're asking.

Okay. Back to the market share in the U.S., which we sort of -- can you estimate -- obviously, with these great sales results and some of our competitors' results that have been put to market. Could you estimate that MIGS market share in the U.S.?

So I mean, currently, with the way we measure it, it's 3.9% growth, which is up from 2% or 3%. Market share on its own doesn't really excite me. Revenue does. So we -- market share is an output. It's not an input. It shows shareholders some idea of how we're performing in the whole market. I think that -- but what I do want to get across is that 3%, 4% market share is a tiny market share of a large market. And so for our company, we have $21 million revenue or $16 million in the United States. And they can say, well, if they've got that from 3% or 4%, imagine if we're 7% or 8%. And that's how I look at this -- the market share just proves that we have plenty of room to grow. That's what's exciting about market share. It's not an input. It's an output and an indication that we've got room to grow.

Just a question on sales, which has just come through. So on revenue, and how concentrated? And obviously, we look at all of our spreadsheets and our doctors and everything, how concentrated is it amongst our, call it, top or top 20 or top 100 customers. What's the split?

It is very broadly based. It's broadly based. It will be not -- you could say there's 80-20 rules, and then people said, then you just have to cut the people can start thinking about, well, why don't we just focus on the top customers and grow them and get rid of all the sales reps? No, it's a broad-based growth across a number of sites.

Okay. And you're confident in the repeatable of this -- the repeat of these sales results.

So we're a little company, which is forecasting sales guidance. We're providing sales guidance. And so our confidence is embedded in the fact that for now for the last 12 months or for -- well, since June whenever we announced last that we provided sales guidance, and we haven't changed that sales guidance. Some may say, "Tom, you've given a very broad range that's easy to hit." No, it's not easy to hit. Nothing is easy, but we are as confident we maintain our guidance. That's our story for our shareholders today.

Jumping around a bit, but a good question here. Is it a once-off surgery going back to the basics? Is it a one-off surgery for a patient? Or when does it need to be repeated?

Glaucoma is a degenerative disease. So you -- and there are -- it doesn't -- and there's ongoing procedures that can happen. We have plenty of surgeons that have performed 2 or 3 surgeries on individuals over time. And that's the beauty of our device. It can be used again because it leaves nothing behind. There's nothing in the way. We haven't created scar tissue from tearing tissue. We haven't put any implant in the way that will get in the way of the catheter. We have data that -- on the other side of that, people don't want have surgeries all the time. So we have data that shows patients very happy good data out to 6 years. But some patients may need a follow-up in 1 year or 2 years. That is the nature of glaucoma, the disease and the management of that.

Substantial and growing sales results. Questions have come in on the manufacturing capacity. I know we covered it a little bit, but can you comment that? Obviously, with this high demand and growth, how is Nova Eye positioned to cope with that?

So manufacturing is obviously an important part. I don't want to understate we just have to deliver it. We have a tiny catheter that we carefully build that we -- to all the standards in an FDA approved an MDR-approved site, all these statistics. And we -- every week, I attend a meeting about how our production has been last week, what are the problems. And that is the job of our manufacturing team to ensure that our supply chain is right, the quality of the components coming in is checked that the process we have to build the catheter and assemble it into that beautiful handpiece. That is the essence of what our business is at Fremont and so we concentrate on that. And so once again, we show what we've done as a way of describing what we can do in the future. So we believe that we can deliver that. We have capacity, the fiscal capacity, with that means hiring people and buying a few more workstations, but we have to process that are repeatable and can enable us to meet the expected growth opportunity available to us.

Questions on the risk. What keeps Tom Spurling up at night at the moment? And is it supply chain? Is it scaling? What is it there for?

It's always -- there's -- you worry about all of that. We have great demand. You want to see the demand continue. We want to see products being delivered every day. We want to see cash coming in every day. Very broad things of what I worry about. Is our production good? Are we customers still buying and we get a daily sales report? And on that matter, people often ask me, "It's 15th of January. How's January look?" January in the United States is well up and is showing that we have a continuation of that growth range, well up on the same time last year in January, which is exciting. So every day, I check sales, I worry about that. Every Wednesday, I check production. I worry about that. And every day, we check our cash receipts at Fremont to make sure that we are managing that part of our business accurately.

Outside of the U.S.A., is there any other countries that are showing -- obviously, we've seen some growth in Germany and others? Is there some country or region that sort of excites you the most?

Well, I mean Germany is the one that we're investing in. We've thing the -- in Germany, we have good reimbursement. We have a good understanding. It's a good population, good health care system. We have key opinion leaders there. So we like Germany. We like China because it's potentially good, but we're very wary -- not wary, but we're going forward carefully and being -- as to how we're doing that. They are the two big things. And in other markets, we think the U.K. is a good market. Poland is a good market. Italy is a good market. We're very selective after that.

Okay. Back to basics again. How long does the surgery take and what immediate symptom relief does the client experience or cut the client experience and what is the recovery time?

Yes. So I mean the cataract surgery plus this is we cannot speak in time, but it's 15 minutes or less, just broadly speaking. And that surgery per patient is day surgery. So that means that they're going to the waiting room. They've had some sort of sedative they wait for the anesthetic to wear off and then they will be picked up and brought home. They probably can't drive home, but you can drive the next day. So that's sort of the recovery time.

Okay. Now your top priorities for this next 2 quarters, the next -- obviously, we have 19 days into January, but next 2 quarters, what's Tom's priority?

Is to meet all guidance that we've provided to our shareholders. That's what's important. I want our shareholders to have confidence -- we -- there -- when I had confidence that what we say, we can deliver. And so it's a very simple mission we provide a lot of visibility as to what we've done. And then I guess we'll continue -- I guess we will be providing more visibility later in the month with -- as we finish our financial statements.

And just on that, obviously, we've got that focus in our revenue projections. How are you going to protect the margins and how are you controlling costs?

So let's just wait until -- I mean, as I said, I do it every day, but -- we do it every day. But we'll probably provide an update on that later this month and in February as well.

Okay. One last question is on the U.S. reimbursement. I know we covered earlier. But U.S. reimbursement, your -- we've obviously got clarity for 2026, has that -- do you feel that, that stabilized even more now?

So reimbursement is obviously important to us. It's important to everybody. Our reimbursement has been around that mark now for as long as we've had the business. There are changes. There was a scare a couple of years ago. But the more surgeons that use your device, the more data we have. We can only look back at history and project history. So 15 years, it's been like that, and we can -- and so that provides us with a lot of confidence that it will stay that way in the future, but we can't predict the future.

Okay. Thank you, Tom, and thank you, everyone. We've answered a majority of the questions. I will endeavor to get back to others directly via e-mail, but please send them through both Tom and my details on the slide there. If any questions, please send them through, and we'll be happy to have a call or chat to you then. But thanks very much, Tom. Thanks, everyone. That's half an hour.

Thank you very much, Mark. Thanks, everyone.

No problems. Thank you, everyone, and we look forward to updating you with the quarterly report towards the end of the month.