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01/11 19:15
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlighted several concerns: a larger GAAP net loss, increased operating expenses, and weak revenue guidance for 2025. Although gross margin is expected to improve, the company anticipates lower margins in the near term. The Q&A revealed uncertainties about competitive pressures and reimbursement changes, with management offering vague responses on key metrics. Despite some optimism around international expansion and premium IOL demand, the market's reaction is likely to be negative due to financial weaknesses and unclear guidance, especially given the company's small-cap status.
Revenue $30.3 million, down 14% year-over-year from $35.3 million. The decline was attributed to a decrease in LDD sales and seasonally stronger performance in the prior quarter.
LAL Revenue $25.7 million, up 6% year-over-year. This increase was due to higher demand for LALs, which represented 85% of total revenue, up from 69% in the prior year.
LDD Revenue $3.2 million, down 69% year-over-year. The decline was due to a significant drop in LDD unit sales, which fell 68% year-over-year.
Gross Margin 79.9%, an increase of 844 basis points year-over-year from 71.4%. The improvement was driven by a higher mix of higher-margin LAL revenue and lower unit costs for both LAL and LDD.
SG&A Expenses $27.3 million, up 7% year-over-year from $25.6 million. The increase was primarily due to higher personnel costs, stock-based compensation, and marketing studies.
R&D Expenses $9.1 million, up 3% year-over-year from $8.8 million. The increase was attributed to higher overhead costs, partially offset by lower materials costs.
GAAP Net Loss $9.8 million, compared to a net loss of $6.3 million in the prior year. The larger loss was due to increased operating expenses and stock-based compensation.
Non-GAAP Net Loss $1.7 million, compared to a net gain of $200,000 in the prior year. The shift to a loss was primarily due to higher operating expenses.
Cash Equivalents and Short-term Investments $227.5 million, unchanged from the previous quarter.
Launch of new programs: Introduced MasterClass and Elevate programs to optimize LAL workflow, enhance clinical confidence, and accelerate expertise in postoperative adjustability.
U.S. market progress: Aligned clinical and sales teams to improve customer engagement and training, driving growth in LAL and LDD adoption.
International expansion: Steady progress in Asia and Europe with regulatory and commercial initiatives; added an Executive VP of International to lead expansion.
Revenue performance: Q3 revenue of $30.3M, down 14% YoY; LAL revenue up 6% YoY to $25.7M, representing 85% of total revenue.
Gross margin improvement: Gross margin increased to 79.9%, driven by higher LAL mix and lower unit costs.
Operating expenses: SG&A expenses increased 7% YoY to $27.3M; R&D expenses rose 3% YoY to $9.1M.
Strategic focus on LAL: Positioning LAL as a premium IOL option amid declining Medicare fees for cataract surgery; focus on improving patient outcomes and practice economics.
Guidance update: Narrowed full-year revenue guidance to $125M-$130M; increased gross margin guidance to 76%-77%.
Revenue Decline: Third quarter revenue decreased by 14% compared to the same quarter last year and 10% compared to the previous quarter, indicating challenges in maintaining consistent revenue growth.
LDD Sales Decline: Sales of Light Delivery Devices (LDDs) dropped significantly by 68% year-over-year and 38% sequentially, reflecting potential issues in market demand or sales strategy.
Net Loss Increase: The company reported a GAAP net loss of $9.8 million in Q3 2025, a significant increase from the $6.3 million loss in Q3 2024, highlighting financial challenges.
Operating Expense Growth: Operating expenses are projected to increase by 7% to 14% year-over-year, driven by factors such as marketing, trade shows, and stock-based compensation, which could strain profitability.
Medicare Fee Reduction: Medicare's 2026 physician fee for cataract surgery is expected to decline by 11%, potentially impacting the adoption of premium IOL options like the Light Adjustable Lens.
International Expansion Risks: The company is in the early stages of international expansion, which involves regulatory and commercial challenges that could delay or limit growth in new markets.
R&D Cost Management: R&D expenses increased by 3% year-over-year, reflecting higher overhead costs, which could pressure margins if not managed effectively.
Full Year 2025 Revenue Guidance: Narrowed to $125 million to $130 million from the prior range of $120 million to $130 million, implying a year-over-year decline of 11% to 7%.
Q4 2025 Revenue Guidance: Expected to range between $23 million to $28 million, with flat to slightly higher LAL procedures sequentially at the top end of the range.
Gross Margin Guidance for 2025: Increased to 76% to 77% from the previous guidance of 72% to 74%, driven by a higher LAL mix and strategic approach to capital sales.
Operating Expenses for 2025: Expected to remain in the range of $145 million to $155 million, representing an implied increase of 7% to 14% over 2024. Sequential increase in Q4 expected due to trade show expenses, marketing, international hiring, and stock-based compensation.
Stock-Based Compensation Expense for 2025: Estimated to be between $30 million and $32 million, revised upward from the previous estimate of $27 million to $30 million.
International Expansion: Progressing in key markets in Asia and Europe, with efforts expected to contribute meaningfully over time as procedural volumes grow and local clinical experience deepens.
Market Trends: Medicare's 2026 physician fee for cataract surgery is declining 11%, expected to drive practices toward premium IOL options like the Light Adjustable Lens (LAL).
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The earnings call highlighted several concerns: a larger GAAP net loss, increased operating expenses, and weak revenue guidance for 2025. Although gross margin is expected to improve, the company anticipates lower margins in the near term. The Q&A revealed uncertainties about competitive pressures and reimbursement changes, with management offering vague responses on key metrics. Despite some optimism around international expansion and premium IOL demand, the market's reaction is likely to be negative due to financial weaknesses and unclear guidance, especially given the company's small-cap status.
The earnings call highlighted several negative factors: lowered revenue guidance, higher costs, and execution risks in strategic realignment. Despite a strong gross margin, the decline in LDD sales and increased net loss are concerning. The Q&A session revealed a lack of specific guidance, contributing to uncertainty. Given the company's small market cap, these issues are likely to lead to a negative stock price movement, estimated between -2% to -8%.
The earnings call presents a mixed picture. Financial performance shows growth, but there are concerns over macroeconomic headwinds, competitive pressures, and supply chain issues. The Q&A session reveals uncertainties, particularly regarding workload challenges and lack of specific guidance. While there are positive elements such as improved gross margins and reduced net loss, the absence of a shareholder return plan and cautious management tone suggest a balanced outlook. Given the company's market cap, these factors likely result in a neutral stock price movement.
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