Right. Good afternoon, everyone. I'm Larry Biegelsen, the medical device analyst at Wells Fargo. And it's my pleasure to host this fireside chat with the management team from RxSight. With us, we have Ron Kurtz, the CEO, Shelley Thunen, the CFO, and Alex Huang, Senior Director of Investor Relations. As I mentioned, it's a fireside chat. If anybody has a question they want me to ask on their, or if they want to ask, just raise your hand. So Ron and Shelley, thanks so much for being here. Thank you. So, Ron, you know, I wanted to start with a big picture question. You've launched a number of new technologies in the ophthalmology space, I believe. Yes. Where are Light Adjustable Lenses in the adoption curve right now? Well, I would say we're at the good part of the curve, which is, you know, early but not too early. You know, by some of the numbers you've quoted, we're, you know, kind of mid-single digits of the premium IOL market in the U.S. So we have a long way to go, but we also have, you know, a lot of successful practices that have adopted or are adopting the technology and seeing outstanding clinical and financial results with the technology. That's good to hear. You had a strong first half with growth about 90%, with both LALs and LDDs growing nicely. What's driving that growth? So, you know, as always, clinical outcomes drive the growth. This is a patient-driven field, and our clinical outcomes are second to none. We deliver the highest rates of 20/20 vision than of any intraocular lens. We deliver high quality of vision, or doctors deliver high quality of vision using our technology. And patients have this unique ability to customize their vision themselves after the surgical procedure has been performed, the cataract has been removed, and they have the ability to modify their the focusing power of the lens to fit their specific requirements and desires. And because of that, they get kind of a double wow factor. They get the initial wow factor of having their cataract removed, and then, after the light adjustments, they're able to see even better than after their initial surgery. So that's, you know, always number one. Obviously, there has to be a financial return to the practice as well, and what we've been able to show with our customers is that we're seeing more patients adopt a premium lens with our technology. In our surveys, about 40% of patients who get an LAL would have gotten a monofocal IOL, so that is brand-new revenue to the practice. And, you know, at average kind of LAL pricing for the LAL procedure, that's $several thousand in additional revenue to the practice for those patients. Then, about a third of the patients are coming from patients who otherwise would have gotten a toric IOL, which is typically priced at the lower end of premium IOLs procedures. Again, because of the higher pricing for the LAL, that delivers additional revenue as well. That's helpful. What type of physicians and patients are you seeing the most success with? You know, it's really a broad spectrum of practices and patients. You know, from the patient's perspective, it's really anybody who wants to have excellent vision without glasses, and obviously is willing to pay extra for that. But that's a broad swath of the population, particularly here in the U.S. You know, about 20% of cataract surgeries in the U.S. make use of a premium IOL currently. Some of the numbers that others have thrown out are that that could grow to 35%-40%, given the demographics in the U.S. So, you know, we think that really there are relatively few patients who aren't good candidates for the LAL, and that's actually a differentiator with other premium technologies, particularly multifocal lenses, which, because they reduce quality of vision, contrast vision, are generally not recommended for patients who have concurrent ocular morbidities, which represents about 40% of patients who undergo cataract surgery. And that correlates pretty well with that 40% of patients who otherwise would have gotten a monofocal IOL who are getting an LAL. What's an example of an ocular morbidity? Patients who have glaucoma, which represents about 20%, and, you know, who may have compromise of their vision already. You doctors often don't want to throw a lens into the eye that's gonna further compromise their vision. Patients who have undergone previous corneal refractive surgery, who similarly may have compromise to their quality of vision already, and are more difficult to predict their outcomes in cataract surgery. Patients with mild retinal disease. Again, these are the large blocks of patients. That's helpful. And what we have heard that the sweet spot for you guys is these post-refractive patients or really the low-hanging fruit. What% of your patients are post-LASIK patients? So we don't, you know, we don't obviously gather that information on all our patients. We have been doing a post-marketing study for the last, and in that population, it represents about 20% of our overall volume is post-refractive. If you look at, you know, refractive surgery has been practiced in the U.S. over the last 20 years in high volumes, and, you know, looking at that, at the patient population, it probably represents around 5% of patients who are undergoing cataract surgery. You know, because those patients have had high expectations for their vision, they tend to be more likely to adopt a premium IOL, so they're probably higher percentage than that of the premium IOL population. And because, again, we tend to work well with those patients, provide them the same level of accuracy as LASIK provides, we're the only IOL that does that. It represents a larger percentage of our population, but still a minority of the patients. Got it. What are some of the reasons for physicians not adopting yet, and what are your strategies to convert them? You know, the biggest reason is time. You know, I've been through this before with other technologies, and it just, you know, there, as with them, there's a certain amount of time, where the field has to incorporate a technology clinically as well as from a business practice. You know, the clinical results for the LAL are becoming more well known, both through our efforts, but more importantly, through just the clinical results that patients are receiving, that doctors are hearing from their colleagues who already have the technology. And that is, you know, the getting those results out there and having those same experiences is our job number one. And then, you know, making the financial success of practices clear as well. We've, you know, got over 500 LALs in the U.S. currently. So we've been able to build up a body of data that has really been able to demonstrate that practices typically are even at average volumes, are able to pay for the device in a relatively short period of time, 6-9 months, after which, you know, the additional revenue that they're receiving is additive. So those two messages are critical. And then, of course, you know, we continue to drive improvements into the technology, and that continues to address, you know, whatever remaining impediments there are to adoption. Some of your competitors have called out, or larger competitors have called out, softness in the premium IOL market. What have you seen? Well, I think that, you have to be. You know, because, and you're well aware of this, there's some of the nomenclature. I think when they're talking about that, they're primarily talking about the PC IOL market or the presbyopia-correcting IOL market, which, from their perspective, is the highest margin market, and so that's the one that they're focused on. But, you know, when you look at the larger market of premium IOLs, which of course, is more than, you know, 50% or more are toric IOLs, and of course, for us, we have a large percent of our patients who are new to the premium IOL market. We overall think that the premium IOL market is continuing to grow. But, you know, the PC IOL market may be affected by competitive pressure, as well as just, you know, a phenomenon that has been going on really since the beginning of the premium IOL market, where the predominant presbyopia-correcting IOLs are multifocal IOLs, and while they can provide some improvement in intermediate and near vision, they also come with a downside: reduction in quality of vision, lower contrast vision, glare and halo. And so what you've seen over the last, you know, 15 years since the original introduction, is a reduction in the amount of multifocality that the most common PC IOLs use. And now, you know, the end result of that are the EDOF lenses such as Vivity and some of the lenses like Eyhance from J&J, which have very little multifocality. Therefore, they have less side effects, but they also provide very little, or relatively little near and intermediate vision improvement. So they typically have to be coupled with some degree of myopia or nearsightedness to provide a benefit to the patient, and that's difficult to do with a fixed IOL. The LAL, which also provides a broadened depth of focus, the doctors are able to customize the vision in both eyes, really to the quarter diopter level, the same degree as what you can make glasses. That's what gives patients the ability to try out their vision with different strengths in their lenses in both eyes and really optimize their vision, both for distance and for near. That's helpful. You know, we talked about penetration or share. You've captured about 6% of the U.S. premium IOL market. Is that accurate? And where can that go over time? What kind of resources do you need? You're competing against, you know, much larger competitors. Do you have the resources to kind of get to where you want to go? Well, of course, where we want to go is we want to be the standard for premium IOLs. And generally, you know, that's defined as, you know, 50% or more of the overall procedure volume. We've got a ways to get there, obviously. But the first step is to have practices adopt the Light Delivery Device, purchase the Light Delivery Device, and then once they have access to the technology, to grow their LALs, their LAL penetration. And so that's what we're focused on. We've invested heavily since our IPO in our commercial organization. It represents about half of our company right now. We have a team that's focused on LDD sales, our capital equipment sales. And we have a team that takes the handoff from that once that LDD is installed and quarterbacks the onboarding and growth of adoption of the LAL within the practice. And that... Those, especially that second group, will continue to invest as our installed base grows. And we've, you know, been fortunate enough to be able to raise the resources that have allowed us to continue to expand that group. That's helpful. So Shelley, you know, 90% growth in the first half, the guidance implies about 60% in the second half. Is there anything in particular you're seeing or expecting that's making you cautious here? I don't think it's caution. I think if you look at the first half of the year, we, revenue was $38.3 million. Our guidance of $81 million-$85 million implies that the second half would be overall about $42 million-$46 million in revenue. That's a nice upstep, upstep overall. I think just the differences in percentages are not as representative as sequential growth, you know, between the two quarters, to, to have. As you know, we also had a very strong quarter in the, second half of 2022, and just the denominator, you know, gets bigger and so it makes it drives down the overall percentage. Quarterly cadence, you know, how should we think about seasonality? Yeah. You know, we have talked about seasonality quite a bit, and, you know, it's been the perception that we don't have seasonality. And in part, it's because we grew through it, right? Our revenue increased, we continued to sell more LDDs, and our absolute number of LALs went up. But if you look at the sequential increase that we've had in 2021 and 2022, you'll see that, for instance, the third quarters tend to be sequential increases of, say, 6%-11% sequentially, whereas your second and, you know, fourth quarter is coming off, where you're the strongest will have, you know, 20%-27% of sequential growth. So I think that that's important to keep in mind. Really, you know, the third quarter, as we think about it, is that seasonality is like we used to have in the past, pre-COVID, is that doctors are on vacation and patients are on vacation. That's part of the reason the fourth quarter is also so strong. So what we have said in our last call is we would expect the absolute number to go up, but the number of LALs per LDD or the sequential increase may not be as strong, and that's just math on that piece as well. Got it. And Shelley, you know, how are you thinking about 2024? Just kind of some of the puts and takes. Yeah. You know, we haven't yet given guidance on 2024, but I think overall, our strategy is the same as we had in 2023. And so the first part is to, you know, sell LDDs and sell more LALs, both, in absolute numbers, as well as increased penetration in the accounts that we have, which drives up a metric the street looks at, but not the way we run the business, which is the number of LALs per LDD, but it's representative of the penetration. On a micro basis, we really have our LAL salespeople look at each of their accounts and say, "Okay, why is that account going up? What can I do to help them to do so?" If you've got an account that's a little bit flatter, then they'll go into the account and say: Where do you need help? Do you need another OD trained? Do you need something, you know, from us, more marketing help or something like that? So I think it's a very similar approach. You know, it's blocking and tackling. On the R&D side, we continue to spend in R&D, which also includes our regulatory and clinical teams, and that's an important part of our strategy, is this continuous improvement in the product. And Ron, maybe you would talk about, you know, what we do because we've had over 30 PMAs approved since our initial approval, and so that's a pretty continuous and torrid stream as we look about the value of our technology and continuing to improve it. Would you add anything on that, Ron? Yeah, no, I think it's, as Shelley mentioned, you know, we're part of penetrating that or driving up that adoption curve is product improvements. It's one of the reasons why we early on decided to do all manufacturing in-house, both for the LAL, the intraocular lens, as well as the Light Delivery Device, as well as our injector and other components, so that we have full control and can implement improvements as we get approvals at our own pace. So that's something that we'll continue to do. You know, a good example of that is our reconfigured Light Delivery Device, which we've talked about in the past. We recently started shipping that device. You know, our it has the same functionality as our current device, which has been a great workhorse. It's had great uptime, but this is you know, an update to that and has you know, slightly smaller footprint, and you know, which is going to be helpful, especially in you know, some practices, especially outside the U.S., that have smaller real estate. And then improvements within the device in terms of software and hardware, as well as to the LAL itself, adding to you know, different functionality and ease of use, all of which help to drive that adoption. So, Ron, on product enhancements, what are the customer pain points or requested features for the LDDs or LALs that could potentially be addressed in future product versions? So, you know, I think that the strength of an adjustable lens is that it can be adjusted postoperatively. So we always want to retain that strength, but we also want to do things that reduce the requirements for adjustments. So there are different things that we can do to make nomograms more efficient, to expand the powers of intraocular lenses that we have, to provide you know, additional functionality. All of which can retain the core benefit of the technology, which is the patient gets to decide what they want, but can also reduce the number of required treatments or make those treatments more efficient. Got it. And the ActivShield, you know, you talked in the past about changing the label. It sounds like that's something that you're not pursuing anymore. You're not... You don't feel it's a need. Well, I think, and just to clarify for those, ActivShield was an advance that we introduced a couple of years ago. It was a UV protective layer on the front surface of the lens, where it is a UV protective layer on the front surface, that protects the lens from ambient UV light from the sun. Prior to the introduction of ActivShield, patients had to be pretty religious with wearing UV protective glasses from the time of implantation of the lens to the time of the last light treatment. However, now that those UV protective glasses provide redundant protection, and that's what is in our current label. You know, doctors have figured out pretty quickly that you know, there aren't UV sources indoors and that the lens, you know, essentially, since we've introduced ActivShield, we've had no cases of UV damage to the lens from patients not wearing the UV glasses. So, you know, they're adopting their clinical practices as they would for any other device. The label says you should wear the glasses for three months, is it? From the time of implantation until the last treatment, the last light treatment, which is typically one to two months after surgery. Okay. But I think, Ron, also, you know, the current labeling says redundant rather than required, so it's redundant protection for UV protection. And I think that just in terms of changing the label, you know, one of the things that we have, because we have so many PMA supplements going in at any point in time, it wouldn't necessarily be a growth driver or a change of clinical practice. We've realized that, and so we've been focusing on other submissions to the FDA. And Ron, if I remember this correctly, you can only have so many submissions in at a time. On any one topic. Right. So yeah, we prioritize things based on you know, what makes sense at the time. At this point, I don't think that's a pain point for our users, and we're not- we're just not hearing that as a. Right As a driver right now. Got it. Shelley, just transitioning to margins. Mm-hmm. You talked about the LAL margins exceeding 80%. I think in LDD margins remaining in the mid-20s. Where are they today? So we don't break it out specifically, but one of the things that we have talked about since material prices have gone up so dramatically in the COVID era, and there's certainly nobody's reducing their prices still, and the LDD is primarily material. If you look at its overhead, you know, overhead and labor costs are minor compared to the material itself. So we have called out that we're not in the normal range that we like to get for capital, which is a fair price to us, but not prohibitive to the customer, which is usually 20%-30%. We've been under that for two years now. And as we look at the reconfigured LDD, and Ron had talked about that a little bit, it's got a smaller footprint. It can be. It's mobile within a practice. Those have some advantages as well, but obviously, the cost to manufacture is slightly lower, and so that helps to bring up the margin. What we have said is that we expect to get that impact in the second half of this quarter. In the third quarter, it'll be a mix and match. We'll have both, but we should get that benefit starting in the fourth quarter fully, and the real benefit comes in 2024. Also, we have, you know, initially, our list price is slightly higher for this product, as well, so that was a recent decision on our part. So it should drive up our ASP slightly for the LDD, and that will also help on the margin side. And so that's a relatively new thing as we just started quoting on that. The list price is how much higher? Actually, it was supposed to be lower initially. It's higher? It is higher. How much, Shelley? Yeah. We haven't quoted yet the amount, but we expect the ASPs to be higher based on that. 10, 10%? Won't quite give a number, right, but they are definitely higher. Okay. In terms of that. That will drive up the ASP as well. Yes, I think that the market, so far in our initial quotes, customers are excited about it, and they are accepting the little bit higher price. Okay. Of course, we have now a record of, you know, the ROI being quite. Right. Quick, and so. Mm-hmm. You know, we think we can justify that. Yeah. When we do kind of a sum of the parts on your margins, it looks like you can get to a mid-70s gross margin over time. Is that fair? I think we can get to the 80s over time. The total company? Oh, not total company. I thought you were talking about- Good. The LAL. Yes, I think the mid-seventies is achievable, right, over time. And, you know, ultimately, when you become mature, the implantable, you know- Right. the LAL would dominate. I think we're a long ways from that, but at that point in time, it would be predominantly the LAL margin. Where's the LAL margin today? We haven't quoted what the LAL margin is, today, but it continues to sequentially improve, or stay the same. It's really, most of it is fixed overhead and, and a modest amount of labor and very little material cost. And so the more you produce, the more the cost goes down as well. And so that's what we've seen over time, and that's been a big driver to margin improvement. But the biggest driver to margin improvement has been the percentage of LAL as a percent of total revenue. We've been running about 60% this year overall, and that's been a big driver to, you know, our 58%-60%, you know, guidance versus 42% last year. Got it. International, you know, right now you're in Canada primarily, I believe. What's the plan going forward? So our, you know, our plan is to continue to penetrate the U.S. market, and focus on the U.S. We have added Canada recently, which was a natural extension of that U.S. strategy. And the reason for that is, you know, obviously we're a U.S. company, it's easier for us to focus on the U.S., but also it's the largest market, it's the most developed premium market. And while ophthalmology is a global field and there's a great opportunity globally, the U.S. still tends to set the pace, especially for patient pay procedures. And so it's very important and helpful to establish, you know, not only the technology, but to establish the practice patterns in the U.S., and that can be more easily adopted. We do have our CE mark, and we've had that for some time, but as many of you are aware, there's a conversion in the regulatory system to in Europe from the MDD to the MDR. We're in the process of making that conversion, especially for our reconfigured LDD. So that'll be a, a nd there have been some delays in that overall process, due to COVID and other factors. But, you know, we think Europe can be a strong market over time. And then, you know, particularly Asia, both the developed and developing markets in Asia, where, not only are the aging demographics quite favorable, but the high incidence of refractive error means that those patients are particularly, can be particularly helped with our technology, since they're coming into cataract surgery oftentimes with baseline refractive error. So countries like Japan, Korea, South Korea, and ultimately, the larger countries, like India and China. Are there any. And no, still no plan to break out international? We will when, you know, we aren't now because Canada is obviously part of that North America. Ultimately, for SEC purposes, we would, but we're a ways away from that. Yeah. You know, how, where are you in terms of penetrating with LDD? You know, what I'm trying to understand is, can LDD placements continue to grow on a year-over-year basis for, you know, years to come? Yeah, as we think about the market today, you know, there's about 30,000 ophthalmologists in the U.S., and I'll just talk about the U.S. because we're focused there today. About 10,000 of them perform cataract surgery, and the estimate is somewhere between, you know, 2,000-3,000 perform, you know, the bulk of the procedures, and that's probably about 70%. What that doesn't tell you is the number of offices. And so if you think about LDDs, there are kind of two components. One is an LDD in an office is usually not, it's not a pacing item. Ron and I don't think there is any office that has two LDDs in the same location, right? Because that's a very efficient process. The whole thing takes, you know, three to five minutes for the patient overall, seeing them and doing the light treatments for both eyes. Where you do see multiple purchases, but it's still a minor amount of our overall LDD sales, is a doctor might have three offices or four offices in a region. They'll start with one in their largest premium practice, and then they'll start putting it in other locations to make it more convenient for patients, as well as to increase their own volume. And so, you see that as well. But the real opportunity as we think about the runway for us in terms of LDD sales, is that there are all these 7,000 other doctors, right? They could be solo practice, two or single providers, or part of a PE firm that are not doing much premium. Typically, the reason that they don't do enough premium is that there's about 1,500 refractive cataract surgeons. Historically, if you had an unhappy patient, the price includes what you need to do to get the patient happy, and that can be LASIK surgery. Those suites run anywhere from, you know, $500,000-$1 million. So you really had an advantage there. But what we have is we have an office-based system with a payback of six to nine months, and the patient comes back into the practice. You have much more reliable results, about twice as good as you get in other premium IOLs. You don't get the side effects, and you get good quality of vision, and that allows doctors who really need this in their practice to get into the premium market. You know, there are projections that it would go in the U.S. from, say, 19% of the total market today to as high as 35% or 40%. That makes sense in terms of the demographics, but also it makes sense for the cataract practices. You know, today, the doctor gets around $500 for the pre-op, the actual operation, and three months post-op. And so, you know, Ron always says when he started in practice, it was about $2,000. You know, it's been targeted by Medicare as the number one, number two line item for a long time. And so they really do need the premium procedures, not only to get better results for their patients, but they need it in order for their practice as well, for profitability. And so we think that the opportunity is not just those high volume practices, but ultimately, as we get to standard of care, of course, we still have to get to standard of care in each one of the offices where we are today, but ultimately get it out into the broader marketplace. That's great. Ron, less than a minute left. I'll give you the last word. Anything we didn't cover you want to share? No, I think we've had a good conversation. You know, maybe I'll just say that, you know, our goal is to create a new standard in premium cataract surgery. And that, you know, it's a new clinical standard, it's a new practice standard. That takes time, but it provides a durable benefit to patients and practices, and it's something that we've done with other companies, and we're, you know, we're well on our way to doing it here at RxSight. All right, great. Ron and Shelley, thanks so much for being here. Thank you. Thank you. All right. Thank you. Nice to see you. Are you done for the day?