RxSight, Inc. (NASDAQ:RXST) Q1 2024 Earnings Call Transcript May 6, 2024
RxSight, Inc. misses on earnings expectations. Reported EPS is $-0.24699 EPS, expectations were $-0.17. RXST isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day and thank you for standing by. Welcome to the RxSight First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Oliver Moravcevic, VP of Investor Relations. Please go ahead.
Oliver Moravcevic: Thank you, operator. Presenting today are RxSight President and Chief Executive Officer, Dr. Ron Kurtz; and Chief Financial Officer, Shelley Thunen. Earlier today, RxSight released financial results for the three-months ended March 31st, 2024. A copy of the press release is available on the company’s website. Before we begin, I would like to inform you that comments and responses to your questions during today’s call reflect management’s views as of today, May 06, 2024, and will include forward-looking and opinion statements, including predictions, estimates, plans, expectations, and other information. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties.
These risks and uncertainties are more fully described in our press release issued today and in our filings with the Securities and Exchange Commission or SEC. Our SEC filings can be found on our website or on the SEC’s website. Investors are cautioned not to place undue reliance on forward-looking statements and we disclaim any obligation to update or revise these forward-looking statements. We will also discuss certain non-GAAP financial measures. Disclosures regarding non-GAAP financial measures, including reconciliations with the most comparable GAAP measures, can be found in the press release. Please note that this conference call will be available for audio replay on our investor website. With that, I will turn the call over to our President and Chief Executive Officer, Dr. Ron Kurtz.
Ron?
Ron Kurtz: Good afternoon and thank you for joining us. In a moment, Shelley will review our first quarter financial results and provide an update to our 2024 guidance, which we believe once again, demonstrates the sustained clinical and commercial performance of our light adjustable lens technology. After Shelley’s financial review, I will return with some updates from the recent American Society of Cataract and Refractive Surgery meeting, which included the full launch of LAL Plus, the newest member of our light adjustable lens platform. Please take it away, Shelley.
Shelley Thunen: Thank you, Ron, and good afternoon, everyone. RxSight generated first quarter 2024 revenue of $29.5 million, up 69% compared to the $17.5 million in the year ago quarter and up 3% compared to $28.6 million in the fourth quarter of 2023. During the quarter, we sold 20,218 LALs and generated $19.9 million in revenue, up 92% and 12% compared to the first and fourth quarters of 2023, respectively. In Q1 of this year, LAL revenue represented 67% of total revenue, an increase from 59% and 62% in the first and fourth quarters of 2023, respectively. During the first quarter of 2024, we sold 66 LDDs, up 18% to 56 units in the year ago period. As expected, capital equipment sales reflected the typical first quarter seasonality.
Therefore, on a sequential basis, our LDD units sold for the quarter were down 14% compared to the 77 units in the fourth quarter of 2023. During the quarter, LDD sales generated revenue $8.7 million, up 35% and down 13% versus the first and fourth quarters of 2023, respectively. As of March 31, 2024, our installed base stood at 732 units, up 61% and 10% versus the first and fourth quarters of 2023, respectively. Gross margin in the first quarter of 2024 was 70% compared to 59% and 62% in the first and fourth quarters of 2023, respectively. The increase primarily reflects the shift in product mix with the higher margin LAL revenue advancing to 67% of revenue. Lower costs to manufacture both our LAL and LDD also contributed to the gross margin expansion in the quarter.
SG&A expenses in the first quarter of 2024 were $23.3 million, representing an increase of $7 million, or 44%, versus $16.3 million in the year ago quarter. This year-over-year change was primarily due to an increase in personnel costs, higher stock-based compensation expense, and additional marketing study spending. On a sequential basis, SG&A expenses increased 10% due primarily to higher number of personnel and Phase IV commercial study costs. During the first quarter of this year, R&D expenses rose 11% to $8 million, compared to $7.2 million in the first quarter of 2023. This year-over-year change primarily reflects an increase in salaries and stock-based compensation. Compared to the fourth quarter of 2023, R&D expenses in the first quarter rose by 9%, primarily driven by a one-time change in allocation of certain R&D related costs.
We reported a GAAP net loss in the first quarter of $9.1 million or a loss of $0.25 per basic and diluted shares using weighted average shares outstanding of 36.8 million shares. This compares to a GAAP net loss of $13.2 million, or $0.42 per share on a basic and diluted basis in the first quarter of 2023. Note also that stock-based compensation in the first quarter of 2024 was $4.7 million, resulting in a non-GAAP loss of $4.4 million or a loss of $0.12 per basic and diluted shares. Please refer to the unaudited non-GAAP reconciliation and disclosure included in today’s press release for more comparative information. We ended the first quarter of 2024 with cash, cash equivalents and short-term investments of $125.4 million, compared to $127.2 million on December 31, 2023.
Cash used in the quarter for operations was offset by $8 million of net cash received from stock option exercise. While we always have some cash generated from stock options exercises, more stock options were exercised than normal given the longer than usual open window and increased stock price. Approximately 16% of the stock option shares were exercised related to 10b5-1 transactions. We are pleased to announce that in April of this year we entered into a new lease and amended two existing leases at our campus in Aliso Viejo, California to extend the rental terms and options to ensure continued long-term access to our facilities, acquire additional square footage to expand manufacturing and align the lease end dates for each of our four facilities.
Moving on to our 2024 outlook, we are increasing our 2024 revenue, gross margin and operating expense guidance as follows. Revenue of $132 million to $137 million, up from previous guidance of $128 million to $135 million, implying year-over-year growth of 48% to 54% and assuming continued, sequential quarterly growth with normal seasonality in the third quarter due to summer vacations by both patients and doctors. Gross margin of 68% to 70%, up from our previous guidance of 65% to 67%. The new guidance is primarily driven by slightly higher than expected launch revenue contributions from the LAL and continued cost reductions to produce both our LAL and LDD along with continued pricing discipline for our LDD. Gross margin is likely to vary modestly during the year depending on the mix between LAL and LDD revenue in any one quarter.
Operating expenses of $126 million to $130 million, up from our previous guidance of $125 million to $128 million and representing an implied increase of 21% to 25% over 2023. Our spending is focused on continuing efforts to leverage our commercial momentum grow our educational efforts, develop our pipeline, and expand internationally as regulatory approvals are obtained. Note that the operating expense estimate includes non-cash stock-base and compensation expenses between $22 million and $25 million. With that, I’ll turn the call back to Ron.
Ron Kurtz: Thank you, Shelley. RxSight’s strong first quarter performance was followed by continued keen interest in our light adjustable lens technology at the recent annual meeting of the American Society of Cataract and Refractive Surgery, the second largest U.S. ophthalmic conference with over 5000 attendees. The LAL was prominently featured in over 20 formal session presentations, and its use in various clinical settings was a common topic in discussion forums. In one of these presentations, Dr. Hunter Newsom reported on data collected from approximately 1000 bilaterally implanted LAL subjects at nearly 100 practices. Approximately 90% of LAL patients attained binocular uncorrected vision of 2020 or better, while over 90% were able to read J2 or 5.5 with both eyes.
Dr. Newsom also discussed the newest member of the RxSight platform, the LAL+ presenting initial clinical data from ten practices that compared monocular distance-corrected vision in over 200 LAL+ and LAL eyes. While both groups attained excellent distance vision, LAL+ eyes exhibited more than a line improvement at near. Both groups demonstrated excellent binocular vision with comparatively high rates of patients achieving 2020 or better. Doctors now have two LALs to choose from to achieve the most customized visual outcomes possible after cataract surgery. With the growing number of doctors and practices offering the LAL and LAL+, as well as increasing uptake by patients, we believe we are establishing a new standard for premium IOL offerings in the U.S. Based on this momentum we are even more committed to reaching the full potential of RxSight’s unique, adjustable technology and premium market opportunity.
This includes expanding programs that enhance the clinical knowledge base of ophthalmologists, optometrists and other eye care professionals, thereby leading to a better informed and served public. We believe that when patients understand the full benefits of adjustability, they are more likely to choose an LAL over a fixed lens alternative and thereby optimize their vision in ways that are meaningful to them. Reaching our full potential also includes maintaining our commitment to rapid innovation, exemplified not only by the recently commercialized LAL+, but also by ongoing advancements to the LDD and LAL insertion technology. In addition, we continue to believe that the success of the LAL in both the U.S. and Canada can be replicated in most major markets and look forward to building successful international programs, particularly in Asia and Europe, following regulatory approvals.
Overall, we feel our strong first quarter results, along with a very positive reception at this year’s ASCRS, further support our vision to make adjustability the standard for premium cataract and lens replacement surgery. With that, I will ask the operator to open the call for questions.
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