RxSight, Inc. (RXST) Earnings Call Transcript & Summary

My name is Craig Bijou. I'm one of the analysts here, med tech analysts here at BofA, and it's a pleasure to present RxSight. And from the company, it's -- I have Ron Kurtz, CEO; and Shelley Thunen, CFO. So Ron, I'll turn it over to you.

It's a pleasure to be here, and we thank BofA for the opportunity. These are -- if I can get the slides up. Great. These are forward-looking statements. So at RxSight, we believe that every cataract patient deserves the highest quality of vision, a vision that is customized to a person's specific requirements and preferences with LASIK-like precision, and without the visual compromises such as glare, halo and loss of contrast vision that are seen with other IOL products. This better medicine approach also enables a better business value proposition for our customers as they can convert more of their cataract patients to a higher level of care for which they are compensated directly by the patient. Our razor-razorblade business model is one that our team has used successfully with multiple ophthalmic products and which is now driving growth at RxSight. Our unique product is the world's first and only intraocular lens or IOL that can be adjusted after it's been implanted into an eye, unlike every other IOL on the market whose optical properties are fixed prior to implantation. Now cataract surgery is the most common surgical procedure globally, affecting most people by the age of 60, usually in both eyes. And during cataract surgery, the cloudy or cataractous lens is removed and replaced with a plastic intraocular lens, also known as an IOL. That replacement lens can either be a conventional IOL, which almost always requires patients to wear glasses for their best vision after surgery or a premium IOL, which is intended to reduce the dependence on glasses and for which patients pay an additional out-of-pocket fee to the practice that can range anywhere from $1,500 to $6,500, depending on the type of IOL that's used and the geographic location of the practice. Most of that out-of-pocket fee stays with the practice and significantly outweighs the approximately $500 surgeons receive from Medicare and other third-party payers for a conventional IOL procedure. The premium IOL market is growing at about 11% CAGR in the U.S., a similar global growth rate. And that's being driven by demographic trends that are increasing the overall cataract surgery volumes, the increasing desire on the part of patients to be free of spectacles after surgery and the much more favorable practice economics relative to conventional cataract procedures for which the doctors are reimbursed only a fraction of what they can earn from a premium procedure. By 2026, Market Scope projects that there'll be 4.3 million premium global procedures, which translates to over $4.3 billion TAM at RxSight pricing. The premium -- now fixed premium IOLs force doctors and patients to make critical decisions before surgery when their vision is still affected by a cataract and when they really don't know how close they want to hold their phone or how much they're going to be bothered by glare or halos, particularly at night. Doctors, therefore, are forced to guess both the type of IOL and the power of the IOL that will work best for a particular patient. And that often leaves patients suffering with the consequences of a bad decision after surgery when there's limited flexibility to address these issues, except with a second surgical procedure like LASIK. The Light Adjustable Lens simplifies the preoperative and intraoperative process for both the patient and the doctor without the need for lengthy discussions about trade-offs. In fact, it progresses exactly like a conventional IOL procedure with no special preoperative or intraoperative measurement steps or tools. And then approximately 2 to 3 weeks after surgery, the patient returns to the office for a series of light treatments that customize the focusing power of the LAL. This process empowers both a wider group of patients who might otherwise not be good premium IOL candidates as well as a wider group of doctors, including those who don't perform LASIK and, therefore, have been less able to offer premium IOLs in the past. The focusing power of the LAL is able to be adjusted because it contains light-sensitive elements that can be modified with very high precision by the RxSight Light Delivery Device, also known as the LDD. The lens has a special layer at its front surface called ActivShield that blocks UV light, except during treatment with the LDD. A specific pattern of UV light delivered from the Light Delivery Device induces a precise change in the focusing power of the Light Adjustable Lens. And light treatments can be repeated. They can go back and forth in power until the patient and the doctor are satisfied and the entire lens is polymerized to provide a stable long-term correction. The light treatments are painless, noninvasive. They take about 3 to 5 minutes to complete, and that includes a setup time by staff and approximately 30 to 90 seconds for the doctor, either an ophthalmologist or an optometrist, to deliver the treatment. Using the LAL, doctors can deliver superior visual results with about 70% of eyes attaining 20/20 or better visual acuity in our pivotal FDA study, which is about twice as many compared to competing fixed premium IOLs during their respective studies. Our more recent real-world data indicates even better results with over 82% 20/20 or better and with about 75% of patients choosing to customize their vision in both eyes. Using an adjustable version of blended vision, patients achieve excellent vision with both eyes at distance and near at about twice the rate of leading multifocal IOLs but without the visual side effects that are associated with all such lenses and which compromise on visual quality. Our initial focus is the U.S. market, which, though still underpenetrated, is the largest premium IOL market with well-established private pay mechanisms and highly incentivized doctors. We sell the LDD to physicians for approximately $125,000, which is a relatively modest amount in the context of what ophthalmologists are used to paying for capital equipment. The LDD can be financed via third party so that revenue from just 1 or 2 LAL procedures can cover the monthly charge. Like all premium IOLs, LALs are consigned at the ambulatory surgery centers where most cataract procedures are performed and are billed at the time of use at approximately $1,000 each. Based on this third-party economic impact study, each LAL case, on average, increases net revenue by over $1,600 due to the higher pricing and an expanded premium patient pool. For a practice, this results in a payback of the LDD cost in about 5 to 17 months, depending on the specific pricing and volume of LAL procedures for that particular practice, after which, of course, the additional revenue accrues to the practice. Our goal is to build a large and durable installed base to drive substantial LAL procedural growth. And to accomplish this over the last 9 months since our IPO, we've expanded each of the 3 main functional components of our commercial team. Our LDD sales force is focused on driving acquisition of the LDD, thereby gaining access to the approximately 3,000 cataract surgeons who perform 70% to 80% of U.S. premium IOL procedures. Once an LDD is sold to a practice, our clinical trainers and field support engineers ensure that the practice is able to offer the LAL with confidence. And then our LAL account managers are responsible for driving LAL utilization within each practice by engaging doctors and staff with patient education programs, optimizing efficient patient flow and ensuring superior LAL outcomes. Using similar methods in the past, our team has brought some of the most important innovations to the ophthalmic private pay market, including the development and commercialization of LASIK, all-laser LASIK, premium IOLs themselves and laser cataract surgery. And since RxSight's began U.S. commercialization in late 2019 and despite operating under COVID for most of that time, we've seen progressive growth in our installed base to nearly 250 today, with LAL utilization growing to over 4,100 in Q1 of 2022 and over 17,000 overall since commercialization. First quarter 2022 revenue was $8.9 million, and we recently raised our 2022 full year revenue guidance to a range of $41.5 million to $45.5 million, which implies an 84% to 100% growth rate versus 2021. We see long-term growth driven by continued penetration of the U.S. premium market, continued technology advancements and expansion OUS. We believe RxSight is well positioned to expand and lead the fast-growing premium IOL market by delivering a customized, high-quality solution that meets the expectations of premium cataract patients, increases practice revenue and profits and drive sustained high-margin LAL procedural growth. Thank you very much.