RxSight, Inc. ($RXST)

medical devices here at Bank of America. And next step as part of the health care conference, we have RxSight. We have Ron Kurtz, CEO; and Mark Wilterding, CFO. So thank you both for being here today.

Thanks for having us, Stephanie.

Maybe we can just start out with Q1 results since you just reported the other week. Results came in above the Street and the revenue guide was reiterated. So maybe you can just talk about the drivers of the Q1 performance and decision to maintain the guidance at this point.

Yes, it was a good start to year in line with our expectations, maybe a little bit ahead. I think what was the most encouraging from our perspective was the stability we saw in LAL sales. And so that's something we've been looking for, for the last several quarters, and we saw some signs of that, both in the unit volumes themselves, but also in the utilization rates. I would say in terms of the last part of your question, the decision to not raise guidance, it's still pretty early in the year. And so I think we want to just be mindful of that and took that into consideration when deciding what to do with the guidance. I will say the guidance, the range that we gave was a large one for a reason, and we think it can accommodate both positives and negatives over the course of the year. And for that reason, we chose to keep it intact.

Makes sense. And then just thinking about the growth rate for the rest of the year. You expect it to improve. So maybe you can just talk about the drivers and sort of the underlying assumptions of the full year guidance and cadence.

I think that's right. From a growth rate perspective, we mentioned that we anticipate growth rates to improve sequentially by quarter as we go through the year. So part of that is driven by the expectation of improving fundamentals, but a big part of it is also driven by the fact that we'll have easing year-over-year comparisons, especially as we get into the back half of the year. So our expectation is for LAL growth and continued stability, I'd say, as we go through the year.

And then maybe just a higher-level question of just how you would describe the level of adoption with LAL therapy over the last few years and maybe what's been surprising, I guess, both to the positive and negative over the last few years.

Yes. I think that if we go back to introduction, really when we started to -- after our IPO in '21, we saw steady and then a really rapid adoption to where we -- on a volume basis, have come up to about 10% of the overall premium market by volume, about 15% by revenue. So that's been on the good side. Obviously, more recently, the rate of growth has slowed primarily as we have transitioned from rapid increase in the installed base to having growth more driven by same-store sales, and that's obviously been the focus more recently.

Yes. And then you recently decided to make changes in your commercial approach to deepen practice engagement and drive utilization versus focusing on LDD placement. So how are these changes going relative to your expectations? And what types of benefits are you seeing from them?

So absolutely. It's a natural transition to make, and we've made changes both programmatic and organizationally structurally to accommodate those. I think that we've had good progress. We continue to refine the engagement programs that we have with our customers to learn from what we've done, measure and then refine as well as to strengthen the team as we identify potential areas of improvement so that we can continue to leverage the installed base that we have, which is quite large to drive overall utilization.

And what's the receptivity been like from practices as you make these changes?

So generally very positive. I think that if we get into a little bit more detail, practices who purchased our technology but may not have adopted it fully, there's generally a reason for that, either they weren't fully -- haven't reached clinical -- full clinical expertise or the way to integrate it in their practice. We've been able to take the learnings from some of our more successful practices and transmit those to practices that have continued room for growth. We've also been able to drive engagement by simply connecting the different parts within the different personnel within a practice to the clinical results that they're achieving. With our technology uniquely, the care is distributed typically between a surgeon who's implanting the LAL and then typically an optometrist that's employed by the practice to do light adjustments after surgery. And sometimes the connection between the information flow between the post-op care to -- back to the surgeon and the surgery counselors aren't perfect. And so the unique thing about our technology is that we have the ability to capture data on our Light Delivery Device after the procedures are done. And then we can take that data and present it to the surgeon, to the surgery counselors, the rest of the practice. And given the stellar clinical results, that's very invigorating to the practice. So that's an example of the sort of engagements that we've put in place.

Got it. And then maybe it sounds like you've made good progress, but I guess there's still work to do on the expansion of these changes. So I guess, how long just sort of rolling that out more broadly among your existing base of users take?

Yes. What we said is that our first step was to develop the programs, organize ourselves structurally to be able to drive adoption. We're in the process of taking the lessons we've learned, refining those and now looking to scale that across our user base. And so that's a process that we're in right now and we're looking forward to continue to do that over the course of this year and beyond. But there are some very -- so I would say we're in the early innings, but have some very positive indicators.

And then thinking about utilization, which has been around 8 LALs per LDD per month. You expect that to be stable for the rest of the quarters of 2026. I guess, what does it take for utilization to return to growth and kind of thinking about the expansion and rolling out the I guess, changes more broadly?

Yes. Yes, fair question. So if you think about it, utilization is a function of 2 things, right? It's LALs. And for the first quarter, we placed and sold, I should say, about 27,500 units and divided by the installed base of LDDs the previous quarter. So for us, that was about 1,115 or so. And that's right. It yields about 8.1 from a utilization perspective. Our guidance implies that it does stay right around that range as we progress through the year. So that's the stability that we were talking about. I think just to put it in perspective, because we've got about 1,100 LDDs installed, if you were to sell just one additional LAL through those, it's 1,100 a month, roughly 3,000 a quarter. So that's what the team was driving for that direction certainly. We know that it's possible to grow that utilization. We've been there before. And so we're working with the teams to put the various initiatives in place like Ron was talking about earlier to be in a position to do that sustainably.

Makes sense. And then also just wanted to touch on sort of the health of the premium IOL market overall. Curious how you would describe that today? And just sort of what are the main factors shaping demand for LALs from both a patient and practice perspective?

Yes. Overall, obviously, we're -- we look to some of the larger players to indicate the overall market and some of -- there's generally reported to be stability in the premium market. The overall cataract market was reported to be a little bit down in the first quarter. We saw that last year as well. But premium, as you would expect, has been more stable. And we would -- that is the area where practices and physicians can offset reductions in reimbursements that have continued to hit ophthalmology practices. And so we would anticipate that, that's going to continue to be a strong focus for practitioners. And then within that space, we're offering a highly differentiated product that we would continue to drive adoption as we are doing.

Yes. And maybe you can sort of expand on that a little bit more, just how you're thinking about sort of the competitive differentiation of your LAL offering, I guess, also in the context of competitive launches in this space happening this year? And yes, I guess just any impact on your business from those competitive launches that you would expect?

Yes. We've -- there's -- the history of premium IOLs has really been one where there has been new IOLs from different -- from the major companies in the presbyopia space, providing relatively short-term or transient effects with the -- and as surgeons try new IOLs and then typically find that they are similar to what has already been in the market. The big difference with the LAL, of course, is adjustability, and we really provide a level of outcomes that can't be achieved with other technologies. So that's a differentiator. Those clinical outcomes are our chief differentiator and they're a primary focus of our reengagement with practices to be able to demonstrate and optimize how practices achieve those outcomes routinely.

So I know you expect the competitive dynamics to be transient, but do you assume any impact in your guidance or any headwind from the launches this year?

We do. We've tried our best to take that into consideration, and we watch that carefully. So back to the comment I made earlier about the range of guidance that we have given, it does take that into consideration.

Okay. And then also, I just wanted to touch on the international opportunity. It sounds like you're making nice progress there and laying the foundation for expansion. So maybe can you just talk about some of the progress that you've made and how we should think about the opportunity over the next few years?

Yes. Just to level set, the premium IOL market outside the U.S. is actually about twice as large as the U.S. opportunity. It's focused in about 20 individual markets. And we've been pursuing first regulatory approval in those markets, primarily in Europe and Asia. We've had success with our approvals in the EU as well as in some of the smaller economies in Asia, Korea, Singapore and now Australia as well as continuing to make progress in some of the larger economies. So we see that as very promising. We're obviously early in the process. So we're at the stage where we're establishing the initial users who are going to become our KOLs, generate data within the local community, which can drive further growth. But overall, we see the LAL technology as being quite promising outside the U.S., just as it has been in the U.S.

Got it. I think we are just about out of time, so maybe we can wrap it up there, but thank you both for joining us.

Thank you.

Thanks Stephanie.