We ready, Barry? All right. Welcome back, everyone. I'm Larry Biegelsen, the medical device analyst, at Wells Fargo. It's my pleasure to host this session with the management team from RxSight. With us, we have Ron Kurtz, the CEO, Shelley Thunen- Yes the CFO, and Oliver, I'm not gonna get this right, Muratovic, Vice President of Investor Relations. Format's gonna be a fireside chat. Ron and Shelley, thanks so much for being here. Thank you. Thank you. So, let's start off, you know, with the recent trends. Ron, you know, you've launched a number of new technologies in the ophthalmology space before. Where are we with the adoption, or where are we on the adoption curve for Light Adjustable Lenses now? I would say we're in the US, we're in early innings. You know, we represent kind of ballpark around 10% of the premium IOLs implanted as of last quarter, so we've got a long way to go to attain our goal, which is to be the standard for premium IOLs, which is generally considered to be more than 50%, but you know, we're making good progress, and we continue to work diligently towards that goal. Okay. Early innings. And Shelley, you had a strong, or Ron, you had a strong first half with growth of almost 70% in the first half. Both LALs and LDDs grew nicely. What's driving the growth? Maybe I'll start. Mm-hmm. Yeah. Yeah. So, you know, number one is clinical results. We, you know, our core technology is that you can adjust the power, both sphere and cylinder, of the lens after it's implanted in the eye. That's a new capability that didn't exist in intraocular lenses, which have been around for about seventy-five years. What is the value of that? Well, you know, prior to an adjustable lens, doctors, and they still do this, of course, they have to predict what the patient is going to need, both for spherical correction and astigmatism, which are the two numbers that, you know, if you look at a glasses prescription, the two numbers that are often written there by the optometrist or the physician. It's very difficult to do that with the precision of, say, a refractive procedure like LASIK. So, you know, oftentimes people are left with what's called residual refractive error. Our advantage is we can do the surgery, and then actually measure the patient's refraction, and make the correction based on that measurement, rather than a prediction. The other advantage, and we can make changes to that, you know, with the same precision as glasses or contact lenses. So we have increased precision, about twice the number of people achieving 20/20 or better. We also have the ability of customizing it. You know, it's not just that you have to be able to predict the target. You have to know what the target is, and each patient has a different target based on their needs and lifestyle, the length of their arms, et cetera. That's something that, again, can be trialed in the clinic after surgery with much higher precision to provide the patient with the best outcome. So Ron, how is the competition counter detailing Light Adjustable Lenses, and kind of how are you, you know, refuting their claims? You know, I don't know that. You know, I don't, I don't know exactly how the, how, the competition is counter detailing, but what I would say is that there are, anytime you introduce, a new technology, you, you have, you know, features about your technology that, have to be overcome. And in our case, you know, we're introducing, for example, a piece of capital equipment into the equation, which is the Light Delivery Device. That's what actually mediates the change in refractive power after surgery. It's a device that we manufacture, it's in the office, and, you know, we sell it, you know, at our ASP is typically about $130,000. And that's a piece of equipment that doctors didn't have to have for a non-adjustable lens. So that's something that we have to convince doctors and practices that that's worthwhile to do. You know, obviously, we go back to the clinical results, but we also go back to the ROI, the return on the investment for the practice. And our average practice, you know, doing an average number of procedures, will pay the cost of the LDD in about, often about six months. That's based on kind of average conversions of patients to the LAL. The other thing that we look to do with our new practices is to get them to efficiently deliver postoperative light treatments. Again, this is something that they did not have the capability to do beforehand, so of course, their practices are not efficiently designed to provide that service. But there are, just like everything else in clinical medicine, there's a lot of pearls and tricks that we've learned over the past three and a half years, so that practices can adopt the technology and efficiently deliver that care. One thing we've heard, people say that it's your procedure is a monovision procedure, whereas, you know, the competition is EDOF and trifocal lenses. You get a range of vision in each eye. Do you hear that? And if so, what's your reaction? My first reaction is that a monofocal lens is the highest quality vision that you can provide to a patient, so anytime, you know, for us to be able to deliver the highest quality vision, we do that by not splitting light, by not creating multifocality, but we also provide doctors the ability to tailor the vision in both eyes to optimize that. They can do it with a precision that you can't do with what people consider monovision. In our Phase 4 study, which has about 1,000 subjects in it, the average difference between the two eyes is approximately a diopter. That's a very small quantity, and is, you know, not typical of classic monovision. So again, the outcomes speak for themselves, and, you know, we deliver 20/20 vision, you know, at about twice the rate of any other lens. Okay. Shelley, maybe jump over to you. Just help us think about, you know, how you're thinking about the second half of this year, strong first half. What's the guidance to assume for LAL, LDD, kind of, you know, Q3, Q4? Mm-hmm. Yeah, we did have very strong first half of the year. At the mid of the range, we've increased guidance since we first guided in January of this year by about $7 million. So, you know, that was based upon our first half as well as a bit more on top of that as well. We have very narrow guidance for the year, $139 million-$140 million as well. You know, we just recently increased that after our second quarter. And as we look at the whole year, typically, your strongest quarters are in the second and fourth quarters, and your quote, unquote, "least strongest" is usually in the third quarter. You know, Q1 generally is pretty moderated, but we didn't see that in the first quarter, and we had a very strong second quarter. So how we guided for the rest of the year is obviously we have a narrow, narrow range of revenue guidance overall. And then what we did say is that, given the second quarter was so strong, is that we would still have sequential growth between the second and third quarter, but it would be nominal, right? And then, of course, then after that, you would see a very strong fourth quarter, which is very typical both for LDDs and LAL. That's helpful, and how should we think about LDDs? You placed 78 in Q2. How should we think about seasonality? Usually, Q4 is highest, and do you think you can continue to grow LDDs on a year-over-year basis beyond 2024 as you further penetrate the market? Yeah. You know, as we think about seasonality, usually, we've grown through seasonality when we were much smaller. You expect lower growth, and maybe some downward trend in the third quarter overall, 'cause you don't get the same level of sequential growth. Typically, LDDs are very strong in the fourth quarter. One, because doctors are back from their summer vacations, and they're focusing on their business again. And two, there's some tax advantages that they haven't bought much other capital as well, and so they wanna take advantage of that and start their new year with the best, solutions for all their patients as well. And so as we think about the LDD long range, is that there are about 10,000 surgeons doing cataract surgery in the U.S. today. And that number, you know, maybe 60% or 70%. I'm sorry, I got that backwards. About 40% maybe do about, you know, 60% or 70% of procedures that are premium. Doesn't mean somebody else is not, because the other 60% are still doing premium as well. So in the long run, we think that we're, you know, as Ron puts it, very early innings, and as you say, in our LDD sales strategy for the U.S. And we think in the long run, every surgeon doing cataract surgery and their patients should have access to the LDD and the LAL overall. And then, of course, there's opportunity OUS. The biggest is in the U.S., of course, because it's the largest single market in the world. We're expecting about five million cataract procedures in the U.S. for 2024. And you know, that market continues to grow, the premium market continues to grow, you know, in 6%-7% overall. And so this gives us an opportunity for a very long runway in the U.S., both for LDDs and LALs. Got it. And you guys have done a nice job on the margin side, especially gross margin. How do you see the rest of the year playing out, and what are some of your long-term margin goals? Yeah. You know, we guided between 68% and 70%. First quarter was 70%, second quarter was 69.5%. And really, the vast majority of margin is determined by mix between the LAL and the LDD. And, you know, for capital equipment, you generally get a much lower margin than you get in your implantable or your disposable. And when we look at mix, that's what's driven, you know, the vast majority of our margin this year. It'll be the same for next year, as well as the second half of the year, and we think those are very strong. You asked about long term, and as we think about maturity, that's really way out, right? Because, you know, when you get very mature, it's primarily, you know, your implantable, your IOL. We think that the company can be at maturity about 85% plus gross margin in the long run, but we would never hold back sales of LDDs in order to manage margin because that's a, you know, it's part of our three, you know, step, you know, program to increase LDD, LAL sales. I didn't hear an operating margin goal. We haven't given operating margin goals, but we do give guidance on OpEx. And, you know, during the second quarter, we raised just over $107 million net in a CMPO, which gave us more flexibility. And we did guide for an additional $2 million increase from our previous guidance in OpEx for this year. And, you know, I think that we haven't given guidance long term in terms of, you know, profitability. We have said before, we have enough cash to get to profitability, and this additional cash is giving us more flexibility on the OpEx line. But I think that if you think about our goals, first is revenue growth. You know, that's where we're doing. So if you think about our sales and marketing, our R&D efforts, you know, excellent care to patients and growing the top line. The margin increase is really just because of mix and greater size. And then we want to be careful about our OpEx, get some leverage from that, but also be careful to make sure that we take every opportunity to continue to penetrate the market and educate not just ophthalmologists, right? Which we're still in the process of doing that, right? But also start the effort to educate optometrists. And the reason for that is there are about fifty thousand of those in the US, and they're referring. They probably won't refer a specific IOL to a patient, but they will know what that patient wants and why they're unhappy, right? And so it's good for them to know the options in the marketplace for, you know, all the products that are available. And so we think that that's, you know, a portion of what we're doing to increase our sales and marketing expense, more in the education, as well as just the normal things that we do, adding to our teams, better market penetration. Would you add anything to that, Ron? The only thing would be, you know, evolution of product. Right. So we continue to drive innovation in the product. We've had about 40 PMA supplements since we launched the product, and each of those is, you know, focused on, you know, not only improving the product but also giving that next group of adopting surgeons and patients a reason to move forward with the LAL. On that theme, Ron, you recently launched the LAL+. You said on the Q2 call you're only midway through the rollout. Where are you now? You know, we've, we're continuing to roll out the product and, so that all customers have consignment at their ambulatory surgery centers or ASCs. You know, we'll have that completed, you know, relatively soon, and at that point, you know, even now, of course, doctors can order the LAL+, but it's, you know, essentially fully available. Do you see it bringing new patients into the fold? Well, obviously, that's, you know, part of the intent. It's, you know, the way I think about it is, if a doctor... One of the things that, you know, we do every year is we survey our customers about how they use LAL, but we also ask them what they would like to have in LAL, and you know, consistent feedback we got in earlier years was, "We'd like to have a broader depth of focus," and that's what the LAL+ does. So for any doctor who, you know, wasn't implanting an LAL in a particular patient because that was a concern, they now have a reason to implant an LAL+, and they're gonna get the same high-quality vision. They're gonna get the ability to adjust that patient with a slightly broader depth of focus. Ron, on that theme, you know, we modeled $34 million in R&D this year. Where are you spending that money? You know, we don't have a lot of visibility into your pipeline. Yeah. Well, it's, you know, I would say to look at the 40 PMA supplements that we've done. We continue, you know, if you go back in time, we've introduced a number of what I would term evolutionary improvements to the technology. You know, Active Shields, broader range of corrections, additional treatments, the ability to do fewer treatments, the obviously LAL+. We recently got approval for a broader range of spherical powers, which allows us to, doctors to implant the lens in a broader range of patients, who may be particularly suited for the LAL. So, you know, we continue to use the same process. We identify where the clinical need is, and then we try to efficiently introduce that into the marketplace by, you know, keeping our flexibility that allows us to continue to keep things in the regulatory hopper in the most efficient manner. All this spending is going towards incremental improvement to the LDD, LAL. Is there anything kind of like more breakthrough that you're working on? You know, it's always difficult to identify a priori what is a breakthrough. You know, you keep on making improvements to the technology, and that's what allows you to penetrate the adoption curve. You know, that's what we've seen in, you know, the other companies that Shelley and I and others have worked on in this field. You just continue to move the technology forward, and you give people a reason to adopt your technology. Typically, for a device that's evolutionary, and you know, only in retrospect can you say that that was the revolutionary change. Can you. So people have said, "Why can't you do this on an extended depth of focus lens?" Is it possible to have an EDOF lens that's light adjustable? Is that technically feasible? I would argue, if you look at the clinical results that we achieve, we have a Light Adjustable Lens that has a depth of focus that is, you know, as broad as anything on the market. So it's not needed. It exists. Okay. It does. That's- It's just that we don't need another label. Yeah. You know, one of the things that we try to do is we try to put the technology out there, get it into the product. What you call something is really immaterial. Okay. And any update on international? You know, we're continuing to work on international. Ophthalmology is a global field. You know, we have had obviously some nice success in the U.S. We intend to leverage that. Typically, the rest of the world does look at the U.S. as you know for technology innovation. And we're in the regulatory process in the you know in the major markets where you would you know where the premium IOL OUS market is concentrated. It's a relatively concentrated market, maybe about 20 countries that represent about 80% of the OUS premium volume, which itself represents about 75% of the overall premium value. So, you know, we're working through the regulatory cycle in each of those markets, and then, you know, obviously then, commercialization. So you don't have CE Mark yet in Europe? Historically, we do have CE Mark, but the EU is undergoing a change from- MDR ... MDR MDR to MDR, and so any new changes to your technology have to go through MDR, and so we're in the MDR process. Got it. Are you going to ASCRS from here? ASCRS is going on right now. Okay. Yeah. So the answer is no. No. We came to you instead. Thank you. Okay, and Shelley, maybe the 2025 question for you. Of course. Unless Ron wants to take it. Yeah. So, I guess maybe just at a high level, what are some of the puts and takes to think about for next year? Yeah. I think as we look forward into twenty twenty-five, you know, the basic thing that we're doing is blocking and tackling, right? We wanna sell more LDDs, we wanna sell more LALs, we wanna provide the best customer satisfaction through our customers, the best results, make that known to them. And then we'll continue on this, not just going out in sales and marketing, meeting with more people, doing more marketing. That's certainly part of what we're doing. Ron talked about the R&D efforts as well. And so all of those add up to continuous improvement in the product, and another reason for our salespeople to go out and sell an LDD, right? So every doctor has a tipping point, right? You always say this better than I do, Ron, is our Chief Commercial Officer, Eric Weinberg, who we worked with for more than twenty years, selling capital equipment and a razor, razor blade model. He always says, "Everybody starts with a no, and it turns to a yes." So again, we're on that market, that march to penetration. It's largely, again, a U.S. year, 'cause we don't know when we're gonna get our, you know, international approvals. We won't start spending in an international market until we know we're gonna get the approval, right? And then we will choose which markets we go into, as well. That'll certainly be part of twenty twenty-five. But again, U.S. is just the biggest market, and premium IOLs today are 20% of all cataract procedures. We think over time that that market should be 35% or 40%, and, you know, our big players have said the exact same thing. Adjustability gives doctors who maybe weren't doing a lot of premium or are, you know, disinterested in the other technologies to enter the market, and they have more predictability, right? They can say to the patient with more confidence, "I can adjust your eyesight post-operatively so that you can get the best, the best outcome. Good. So. That's helpful. I lost my train of thought, but so Ron, I know I wanted to ask you something else, but Ron, I guess. Oh, accommodation. So Alcon, jumping around here, Alcon, Renee presented a slide on light adjustable or their whatever it was, adjustable lens. It was combination adjustable and accommodating, I believe. Are you looking at that as well, do you think you can add accommodation or, I mean, everybody's been trying for twenty years for accommodation, I know, and it hasn't gone anywhere. Are you a believer in accommodation? So people have been trying for 50 years. The FDA has a requirement that you have to show so accommodation, just so everybody knows, is the ability to change focal length from distance to near and back again in real time. And a young person can do that, you know, a 10-year-old can do that with about 10 diopters of accommodation, so they can bring things very close. As you get older, you lose the accommodation, so that's why you have to hold things further away. While that's technically accommodation, you know, the practicality of that is limited. And in order to make it more practical, you have to be able to hit the distance target really well. You know, as we've shown, the only way to do that is with adjustability. So my own view is that, you know, I would ask the question a little bit differently. In order to have an accommodating lens, I think you also have to have an adjustable lens first, and I think that's what other people working in the field have kind of figured out. Now, it's hard to do two complicated projects at the same time. It doesn't mean it can't be done, but it's a difficult problem. Do you believe that it's technically feasible? You said it's been; people have been working on it for 50 years. Where am I going with this? You said it's hard to do both, so are you working on accommodation separately with the idea of marrying the two? I mean, you're spending $34 million. You're probably doing more than just, you know, incremental enhancements to the LAL. That's but maybe I'm wrong, but you know, just trying to understand maybe where you're thinking longer term. I would just say that if you're going to develop an accommodating lens, you'd certainly want to start with an adjustable lens. Okay, and you believe that accommodation is possible at some point? I do believe it's possible, but it's going to be difficult. Okay. And maybe Ron, you know, big picture, you know, you still have a long runway for growth with your LALs, but how are you thinking about the evolution of the company beyond LAL? So maybe you just have so much runway you're not. I don't know. I'm just curious. Well, you know, I think the way, you know, if you look at cataract surgery, cataract surgery is the largest surgical market in the world. It's obviously the largest in ophthalmology. Premium cataract surgery is the most attractive portion of that market. It's, you know, really, when I talk to physicians, you know, I show them a picture of an airplane, and I say that, you know, the premium seats pays for that airplane flight. The, you know, everybody gets to the same destination, but the economy is not providing any of the margin for that flight. And that's what they have to do for their practices. And our job is to provide reasons for why patients want to adopt a premium lens. The most important factor, and I think this is something that's overlooked, is quality of vision. If you look at the development of the premium market, it started with multifocal lenses, but the big growth has occurred with higher quality lenses. Astigmatism-correcting IOLs are now more than 50% of the market. EDOF lenses, in fact, and enhanced monofocal lenses are, you know, dumbed-down versions of multifocality that provide more quality of vision. Obviously, the Light Adjustable Lens provides the highest quality of vision. I think that, you know, that's giving a very clear reason why patients would pay extra for a cataract procedure. That is our most important function, and that allows doctors to then have a profitable business and a sustainable business model. This is the highest margin area of ophthalmology, so anything that we would do outside of that would have to be similar high margin potential. It's, you know, certainly there are things that can do that, but we're focused on, you know, right now, we're obviously focused on the biggest opportunity in ophthalmology, which is premium IOLs. So, Ron, maybe I should talk about the economics to the practice. We haven't talked about that yet. And so if we think about this largest surgical market, which makes up about 60% in an average office of the surgeries they're doing. Right now, Medicare in the U.S. pays $500 to the surgeon, and that covers the pre-op, the post-op, and the actual operation, right? Ron always says, you know, back when he started in ophthalmology 30 years ago, that doctors were getting $2,000 for that same procedure. But because Medicare has cut it, it was the number one line item on Medicare for many years, they've continued to cut over the years. So this is, you know, one doctor said to an investor: "I don't know how a doctor could stay in business without doing premium IOLs," because it is unique in medicine that the doctor gets their $500 plus the ASC, right? But the patient is paying, on average, around $4,500 per eye for the premium, and that's the patient pay portion of it. And what they get for it is all the clinical advantages Ron was talking about. But also for the practice, they need this additional revenue and this high margin in order to stay in business, and as Ron, you know, kind of gave in his analogy, to service the other half of the plane. And that's a big driver for practices, and it's unique in medicine that the doctor can collect the money from Medicare and also charge an additional amount for patient pay. And this is what ophthalmology practices need to be able to serve their patients. Our chairman of the board, Andy Corley, who's been in ophthalmology for a long time, you know, kind of harks back to when doctors were getting the $2,000 per eye for the pre-op, post-op, and operation. The golden age of cataract surgery, you know, really took off during that period of time. This is the new golden age of cataract surgery for patients and the ophthalmology practices. I would just add that adjustability, we think, is the key enabling technology to allow that to happen. Because you have to move beyond the refractive surgeons who have dominated premium IOLs because they've been able to offer LASIK to the patients who didn't hit their mark. The LAL, because we're adjusting those patients, that's not a requirement. We also, again, are not introducing, you know, multifocality into an eye, so it appeals to a broad base of cataract patients. About 40%-50% of patients who have cataract surgery have some other ocular condition, such as glaucoma, mild retinal disease. They've had previous LASIK surgery, all of which reduce their quality of vision to a patient that doesn't have that. Those are relative contraindications to technologies that are gonna reduce quality of vision further. Again, expanding the market, both on the doctor side and the patient side, is a key factor for adjustability. Got it. One last question. Shelley, on twenty twenty-five, I forgot to ask you, so just consensus, call it, you know, $183 million-$184 million, 33% growth. It's a pretty big deceleration from this year, the guidance. Any reaction to kind of consensus to next, for next year? I haven't reacted to consensus yet. I think that, you know, we're having about, you know, based on our guidance, 56%-57% growth in twenty twenty-four, and you know, I, I look forward to giving guidance as we get closer to twenty twenty-five or into twenty twenty-five. All right. Fair enough. Well, look, appreciate you being here. Sorry you had to miss ASCRS to be here, but- Anything. Thank you. Bye.