RxSight Inc Stock

Thank you for standing by and welcome to the RxSight second quarter 2026 earnings conference I'm lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to redraw your question, press star 1 again. I would now like to turn the conference over to you. to Oliver Moravchivic, VP of Investor Relations. Please go ahead.

Thank you, operator. With me on the call today are RxI President and Chief Executive Officer Aziz Motivala and Chief Financial Officer Mark Wolterding. Earlier today, RxI released financial results for the three months ended June 30th, 2026. A copy of the press release is available now. company's website. Before we begin, I would like to remind you that comments and responses to questions during today's call reflect management's views as of today and will include forward-looking and opinion statements, including predictions, estimates, plans, and expectations. Actual results may differ materially from those expressed or applied 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 Security and Exchange Commission or SEC. Our SEC filings can be found on our website or the SEC's website.

Investors are cautioned not to place undue reliance statements and we disclaim any obligation to update or revise these forward-looking statements except as may be required by law. We'll 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 Relations website. With that, I will turn the call over to Adi.

Thank you, Oliver, and thank you and good afternoon, everyone. I'm delighted to be at our site and to be speaking with you today. I've spent most of my career in eye care, an area of health care that represents a significant opportunity to make life-changing differences in the quality of patients' lives. Joining a company dedicated to improving people's visions is a tremendous privilege, and in a large part is what attracted me to ArcSight. Most recently, as Chief Commercial Officer of Tarsus Pharmaceuticals, I helped build and lead the commercial strategy for one of the most important category creating products in eye care. That experience reinforced the importance of differentiated innovation, disciplined execution, and strong customer engagement. I look forward to leveraging those experiences as we work to strengthen execution and create value for physicians, patients, employees, and shareholders.

I'd like to thank the board of directors for placing its confidence in me, and I also want to acknowledge the entire RxSight team. Over the past two weeks, everyone has been incredibly welcoming, and I've been impressed by the spirit of innovation, level of commitment, and problem-solving mindset across the organization. That doesn't surprise me, given what this team has accomplished, but it has reinforced my excitement about the opportunity ahead. I also want to take a moment to recognize Ron Kurtz for his leadership in helping to build ARC site and establish the only commercially available adjustable IOL platform in the world. I'm pleased that Ron will continue to contribute his clinical expertise, product knowledge, and physician relationships as chief medical officer, and I look forward to working closely with him as we advance the platform. The RxSight team has developed a highly differentiated technology and pioneered an entirely new category in cataract surgery. The ability to adjust and personalize a patient's vision post-surgery is truly unique and addresses one of the most important goals in cataract treatment, helping patients achieve the visual outcomes that they desire.

Along the way, he's developed a robust base of dedicated physicians and practices that strongly believe in our technology and have experienced firsthand the benefit it provides to the patients. Having only been with ArcSight for a short period of time, I want to offer some initial thoughts and observations. Over the last few weeks, I've spent considerable time listening, learning, and meeting with leaders across the organization, as well as key customers in the ophthalmic community. Before I can drive change, I need to develop a thorough understanding of the business, identify the underlying challenges, and determine where we can have the greatest impact. With that said, my initial conversations have reinforced that the value of adjustability remains compelling and that physicians recognize the technology's differentiation and its ability to deliver more precise and personalized vision for their patients. I've also learned that most surgeons prefer LAL for their most important patients, including members of their own family. For example, at a recent dinner here in Orange County, an ophthalmologist shared that she had chosen LAL for both her brother and her sister.

I also recently spoke to another ophthalmologist in Florida who implanted LAL in both of his B, those decisions reflect the high level of confidence decisions across the ophthalmic community have in our technology. This level of physician confidence is supported by an extensive body of clinical and real-world evidence demonstrating the precision, consistency, and versatility of our technology. One recent example is a phase four registry published in the Journal of Cataract and Refractive Surgery. The study involved more than 1,100 patients across 126 sites and reported strong refractive and visual outcomes in patients with and without prior corneal refractive surgery. The breadth and consistency of findings like this reinforce the strength of RxSight's clinical proposition and the value that adjustability offers to physicians and patients. In addition, our recently announced collaboration with Alcon is a major milestone for the company. It provides further external validation of the technology and its broader potential.

It also provides meaningful non-dilutive capital through the $200 million in upfront and potential future milestone payments. along with the potential of significant long-term royalties. Most importantly, this collaboration reinforces our belief that adjustability is the future of cataract surgery. Nevertheless, we have considerable work ahead of us to translate this opportunity into broader adoption. As I continue my assessment, I want to ensure that we have the flexibility to evaluate the business thoroughly and to make the decisions we believe are in the best long-term interest of the company and our shareholders. While underlying trends remain generally consistent with what we previously guided, this work will require time and we should not allow our prior outlook to constrain actions we may ultimately determine are appropriate. For that reason, we have decided to withdraw our previously issued full-year financial guidance. We recognize the guidance was provided recently and we did not make this decision lightly.

We believe that this is the appropriate step while we complete our assessment. We will resume formal guidance in early 2027. Before sharing my initial priorities and perspectives on the path forward, I will turn the call over to Mark to review our second quarter financial results and provide some directional commentary on the remainder of the year. Mark? Thank you.

Thanks, Aziz, and good afternoon, everyone. Consistent with the revenue range we preannounced last month, second quarter total company revenue was $33.7 million, including $6.5 million recognized in connection with our strategic collaboration agreement with Alcon. This amount represents the portion of the initial milestone payment allocated to our licensed intellectual property. Excluding revenue related to Elkhorn, our second quarter product sales were $27.2 million, down 19% compared to the prior year period, reflecting heightened competitive trialing as well as broader marketplace headwinds. Second quarter LAL unit volumes were 24,917, down 9% compared to the prior year period. LAL procedure volume translated into second quarter sales of $24.5 million, representing 90% of RxSight product revenue. During the quarter, we placed 12 LDD units, which accounted for $1.3 million of quarterly revenue.

We exited the quarter with an installed base of 1,166 LDD units. Excluding the benefit from the partnership, second quarter gross margin was 71.2% compared with 74.9% in the prior year period. The year-over-year decline primarily reflected higher inventory-related costs due to slower-than-expected inventory flow-through, including the favorable contribution of collaboration revenue. Second quarter gross margin was 76.7%. Second quarter 2026 SG&A expense were $30.4 million, up 5% compared to the prior year period, primarily reflecting legal and consulting expenses associated with the collaboration. Second quarter research and development expenses were $9.2 million compared to $10.2 million in the prior year period. This year-over-year decline was primarily due to lower personnel-related expenses.

We reported a net loss in the second quarter of $12.1 million, or 29 cents per basic and diluted share, based on 41.5 million weighted average shares outstanding. based compensation with 7.5 million dollars resulting in the in an adjusted net loss of 4.6 million dollars or 11 cents per share We ended the second quarter with cash, cash equivalents, and short-term investments of approximately $209 million. This amount does not include the $60 million upfront payment related to the partnership agreement that was received after quarter end. As Aziz previously mentioned, while current business trends remain generally consistent with our previous expectations, we have decided to withdraw our formal full-year 2026 financial guidance as we complete our assessment of the business. That said, we would like to provide some directional commentary on the key factors we expect to influence performance over the remainder of the year. We continue to expect to recognize between $30 to $40 million of revenue associated with the Alcon Strategic Agreement. Revenue will be recognized as certain performance obligations are achieved, so the timing by quarter will be variable. Based on our current expectations, we anticipate limited revenue contribution in Q3 with the balance of the $30 to $40 million recognized in Q4.

With respect to the core business, we are encouraged by quarter-to-date trends, particularly the continued confidence physicians have expressed in our technology. At the same time, we expect continued competitive activity and ongoing product trialing, along with typical Q3 seasonality and broader marketability. trends to influence performance through the remainder of the year. As Aziz noted earlier, we will resume providing formal financial guidance when we report our fourth quarter 2026 results in early 2027. With that, I'll turn the call back to Aziz.

Thanks, Mark. Our second quarter results underscore the work we have ahead of us. Competitive launches, market conditions, seasonality, and patient affordability are all real factors, and each can affect quarterly performance. However, based on what I've seen so far, I believe there's an opportunity to significantly enhance our strategy and execution. We've built a substantial install base and established strong belief in the value of the technology among our customers. However, we are not yet driving the level of procedure volume and utilization that we believe this platform is capable of achieving. We need to ensure that we have the right commercial strategy, customer support model, and capabilities to help practices more fully integrate the light adjustable lens into their workflows and make adjustability an increasingly prominent component of their cataract surgery offering. My immediate priorities are straightforward. First, we'll complete a thorough assessment of our business and commercial model.

Second, we'll work to strengthen our commercial team and build higher utilization across the install base. As part of this growth strategy, we've approved plans to double our US sales team over time. allowing us to expand our reach while continuing to support existing customers. We expect to fund this expansion primarily by reallocating resources within the organization and without meaningfully increasing overall operating expenses. Third, we will elevate execution and operating discipline. This includes improved forecasting, driven by greater visibility into the underlying drivers of the business, in addition to enhanced agility needed to adapt quickly to changes in the marketplace. Finally, we will continue to advance our internal pipeline of next generation adjustable lenses, which are designed to improve workflow, enhance performance, and expand the range of patients who may benefit from adjustability. We will also establish the processes and capabilities to advance our collaboration with Alcon, which represents important strategic validation of our platform.

Our focus will be on achieving the development milestones and advancing these next generation products to commercialization. The collaboration is expected to generate meaningful long-term value through future royalties and bring the power of adjustability to as many cataract patients as possible. This work will take time. Completing the assessment is the first step. We must then translate those insights into actions, execute them consistently across the organization, and ultimately influence physician and practice behavior. We'll make disciplined decisions, establish clear priorities, and deliver measurable progress. As this work advances, we will provide greater clarity regarding our strategic priorities, the actions we're taking, and the milestones we will use to evaluate progress. We will also communicate openly about what is working, what requires further attention, and how our perspective is evolving.

We expect to provide more specificity in our next quarterly update. I knew when I joined our site there would be significant work ahead. I joined because our technology matters. The market opportunity is significant, and I believe we can translate the potential into meaningful results for patients, customers, and shareholders.

With that, I'll ask the operator to open it for questions. Thank you. Thank you. We will now begin the question and answer session. To ask a question, you will need to press star, then the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. We do request for today's session that you please limit to one question and one follow-up. Thank you. Your first question comes from the line of Robbie Marcus with JP Morgan. Your line is open.

Oh, great. Aziz, welcome, and congratulations on the new role. You touched on this a little bit, but, you know, two for me. First off, you can talk about your role. give a little bit of what what made you step in here what was it about our excite and the company and the product and the opportunity that that made you step in here and then i have a follow-up.

Sure, thank you for that. You know, RxSight's a really unique company. I've been in the eye care space for quite some time. And one of the things I always consistently hear is that this is one of the biggest breakthroughs in cataract surgery technology. I've talked to a lot of thought leaders, key opinion leaders, and you hear this very consistently. So that was very intriguing. As I've dug into the business and obviously assumed the role, it's really solidified my belief that this is the future of cataract surgery. The other aspects I looked at is there's a lot of similarities to what I've recently done. Spent a lot of time building a new category in eye care, and this is still a nascent category in my mind in eye care.

An area where we're building the value of adjustability, the ability to tailor results for patients and really transform cataract surgery. And if you think about it, there's a lot of things that are similar. We're changing physician behavior. We have to adjust practice workflow. But we're dealing with a technology that delivers great outcomes. So there's a lot of similarities between what's going on here at RxSight and my past experience. And it's an area that if I'm in eye care, I'm hearing my physician colleagues really excitedly.

and that gets me excited about the future potential here as well. And I know it's still very early days. We're talking days into the role here. Any preliminary views on what do you think happened that led to the deceleration and growth and and the lower utilization, and any early thoughts on how you might be able to go and address this and, you know, re-stimulate the business after a slowdown? Thanks a lot.

No, it's the right question to ask. And obviously, we're in the process of doing a thorough business assessment to really come back with what is the right strategy and direction to guide the company to really maximize what we think the long-term value of this is. And maybe I'll start with a couple of things I'm hearing from physician colleagues. I'm spending a lot of time talking to doctors to really understand the dynamics. And what I can tell you is doctors. continue to believe that this is one of the best technologies. Nobody I've talked to said that they've capped out their ability to do LALs. They've all said they could do more.

It's really about us putting the right strategy forward. And I think, you know, what happened, I believe that you go into a market like this, you establish that initial user base, and candidly, I think what we're doing is pivoting now to drive depth, right? So we've established a broad user base and pivoting to depth takes a little bit of time, takes a little different strategy. So I think what you're going to hear from us is an assessment that gives us what are the levers, what are the strategies we can employ and how we can execute to really drive that depth of utilization. So, you know, the short answer to your question is this pivot from breadth to depth and what really encourages me about what we can do here is the feedback we're hearing from doctors that they still believe this is the best technology and that not a single doctor I've talked to said that they've capped out on what they can do with LALs. It's just a matter of us working with those practices to improve workflow, help identify the right patients, and really partner and get the education out there on the results that this technology delivers, it does very consistently. Thank you very much.

Thank you. Your next question comes from the line of Ryan Zimmerman with BTIG. Your line is open.

Hi, this is Jacqueline on to Ryan. Thank you for taking the questions. So, LDD placements came in at 12 units in Q2. With the placement of your first LDD rental unit, moving forward, how much of your LDD pipeline do you anticipate shifting toward rental units versus capital purchases, particularly as you target international markets to lower the barrier to entry?.

Mark Benthien Hey, Jocelyn, it's Mark. Thanks for the question. Yes, we were excited about our first rental contract in the second quarter and it's something we'd be open to more of, especially as, like you said, we look to go more into the international markets. I don't have a figure for you or a level of what you would that we're targeting per se. I think what we want to do is offer a range of solutions and opportunities for customers and really allow them to partner with us and pick the direction that makes the most sense and that's mutually beneficial. So it's something we'll continue to pursue. I don't have a way to, like, I said, put an exact number behind it though, but we're excited about the potential of them.

Thank you. And also with the recent regulatory approvals in markets like New Zealand and ongoing commercial efforts in Europe and Asia, has the Alcon collaboration altered your standalone OUS commercial strategy at all?.

No, I think the way I think about that is broadly, right, when we look across the world, The value of cataract surgery continues to be high. Adjustability continues to be a technology that we're hearing from thought leaders and surgeons from around the world that they're very interested in. So we see that as a continued opportunity. I think we need to be really thoughtful about going into markets where there is real potential, where we have access to customers, where we can get real traction. So we're being thoughtful how we expand in a really thoughtful and methodical way. And that's really a unique and separate strategy than what we see with Alcon, which is to really expand the offering of adjustability across a wider range of lenses. And of course, what that means is being able to offer to a broader array of patients.

And in my mind, there's a world where every premium lens has a value of adjustability, which would be tremendous. So I look at those as connected but sort of discreet in how we approach it from a strategy perspective.

Thank you. Your next question comes from the line of Larry Beagleson with Wells Fargo. Your line is open.

Good afternoon. Thanks for taking the question. Welcome and congratulations, Aziz. What can you share about your success in your prior roles or the key success factors or your prior companies in the ophthalmology space that you think might be applicable to RxSight?.

Yes, thank you for that question and thank you for the kind words. There's a few things I think really help us here. I think there's some things in terms of how we operate. I think operating discipline, which I know Mark has started to institute in his tenure here so far, we continue to refine that. I think getting really close to the customer as well, creating that connectivity, it's one of the things we really prided ourselves on in multiple areas that I've spent my career in. in eye care. The connection with eye care doctors tends to be very collegial, they tend to be very collaborative. And as I mentioned earlier, they love this technology and they really want to find ways to expand utilization and it's incumbent upon us to channel that enthusiasm.

So operating discipline, customer connectivity is two. And then third is just a really thoughtful way of continuing to educate and propagate the data and real-world results that technology offers. In every market that I've helped build in my career, education and thoughtful education to the community has always been a critical pillar. And I think we can do a lot more here to extol the virtues of adjustability. Doctors have case studies. they have real world as well as in the clinic. So I think there's opportunities to expand and double click on the value of education. So I think how we operate, getting really close to the customer and really leveraging the surround sound education and experience doctors have are some examples.

There's probably more, but we're obviously assessing where else we can leverage things and do what's right for this business because there's, a lot of translatable things, but this is also a unique opportunity. So we want to be thoughtful about tailoring our approach to what's going to maximize the value for LAO.

That's helpful. And just one on the Alcon collaboration. Well, it's actually not on the Alcon, but the Alcon deal was not exclusive. Could you envision doing similar agreements with other companies? Thanks for taking the question.

I think we've been very thoughtful. The management team work with Alcon. Alcon is a leader in the industry. They have great capabilities. And certainly, we bring a lot to the table here when it comes to adjustability. So our focus right now is how do we make this partnership really come to fruition, realize the milestones, which are very significant for us in terms of the cash that can add over the next few years and then the royalty so it's not exclusive but as we sit today I like to focus on what's right in front of us which is a really valuable opportunity with a great partner to expand the use of this technology to a broad base of patients and across multiple platforms in IOL so it's not exclusive obviously that gives us options long term but if you ask what our focus is today it is to maximize the value of our relationship with.

with what a great partner today. Great. Thanks for taking the questions. Your next question comes from the line of Stephanie Elgazi with Bank of America. Your line is open.

Hi, thanks for taking the question. I have a question for Aziz, and I'll echo congrats on the new role. You laid out some of your areas of focus, which sounded aligned with some of the recent initiatives that have been talking about for a few quarters like improving utilization and expanding the sales force. So maybe you can just help with your vision or plan for the company and what's similar and or different. And I guess I'll just ask my second question up front. Just how you're thinking about that in the context of the guide being withdrawn to maintain flexibility and if that suggests some bigger changes on the horizon. Thank you.

Sure, so let's maybe just talk about the guide first, right? I think you heard Mark say in the prepared comments, the overall business is doing a little bit better than the prior quarters. The beginning of third quarter, we're seeing some better trends. I think that's great. So fundamentally, that tells me, hey, we're making some right moves. With that said, I want to make sure that we're able to do a thoughtful assessment. If we do need to make decisions, we can do them in a very quick time period here and course correct the business, not just to hit the end of the year, but really to orient the business for the next several years of growth. dovetails into your next question is what's the same, what's different? I think fundamentally you're hearing a strategy here, right? We're going into depth with the accounts. We're going to get closer to the customer. We're going to have a broader sales force to get in front of the customer often.

These are fundamentals. I think there's a lot more to peel back here to really elevate this organization to drive the full potential of LAL. Sort of goes back to why I decided to come here. I really believe that this has tremendous potential and that we've just scratched the surface. It's really about orienting a bigger overarching strategy. I think there's things that we're doing that are right on the path. I think that there's more that we can do. And I think you hit the nail on the head with this is not about any signal around how the business is performing today vis-a-vis the prior guidance.

This is really about us saying, hey, look, we may need to make some more changes, and we just want to account for any disruption in the business that might happen in that acute period. But the ideal is that we do that in an acute period, orient the business. business back on track, get it to a growth trajectory for the long term, and then give you guys and gals a good visibility line of where we're headed in 2027.

Again, everyone, if you would like to ask a question, press star and turn the number one on your telephone keypad. Your next question comes from the line of Young Lee with Jefferies. Your line is open.

All right, great. Thanks for taking the questions. Welcome, Aziz. Looking forward to working with you and congrats on the new role. I guess first question is in terms of your assessment, Joe, since when you think you'd be able to finish it, I know we'll hear more on the next earnings call. largely be finished by then. And then if you can, just in general, if you can talk a little bit about the type of KPIs you focus on as well as your approach to guidance.

Sure thing. Yes, so, you know, obviously we want to be thoughtful about how we did the assessment, but we want to be pretty thoughtful about doing it quickly and in a really disciplined manner so we can kind of get past that and move to orienting the business to growth. In terms of a specific timeline, I think you'll hear updates on the next quarter. I think a good way to think about this is we're committing to giving 27 guidance. when we do year-end earnings. So that's a great point to say, hey, here's all the changes we made, here's how we're orienting the business for the targets for 27, that's likely going to have some implications of how we think about the business in the future as well. So I think that that's kind of the time work and the timeline and framework we're thinking. In terms of KPIs, you know, the obvious one is the number of LALs we can get in the patient's eyes That's obviously the first and foremost. And in terms of other indicators, part of the assessment is, are there other KPIs that really align to where we're heading the business? So that's part of the assessment will be part of the plan.

You can think about, hey, here's the strategy. Here's how we're going to execute. Here's how we're going to measure. And here's what you can expect to see. So that's sort of the recipe we want to deliver externally. the coming months and certainly as we get in line to give guidance again for 27.

Yes, that's pretty helpful. And then, you know, you met with some of the certain customers already and it sounds like there's been a lot of positive feedback and on opportunities and the potential there. Just maybe on the flip side, you know, what were some of the the issues or frictions or challenges they highlighted to you?.

Sure. I mean, I think this is an area where it's been really remarkable because we're hearing a lot of positive feedback and even some of the challenges we hear from physician colleagues, some I've known for many, many years, almost all of them are approaching it with a very solution-oriented attitude, right? Hey, I want to use more LALs. I'm just trying to figure out how to optimize workflow, for instance. Hey, I would love to use more. Let's figure out who are the ideal patients. Where do I use a multifocal? Where do I use this and how can I expand my utilization or broader patient offering? So these are the things we're hearing. Who's the ideal patient? How do we integrate it in a workflow? Those are really easily addressable over time. This is about education, this is about sharing best practices across clinics.

And these are areas that I think you're going to see a lot more depth of from us in terms of a broader strategy. But to me, it's actually very reassuring, right? There's not a significant major obstacle to opening this up. It will take some time to make sure we get those messages right, the positioning right, we get buy-in from the physicians and really understand what's going to represent. resonate with them, but I think that's where, when we mentioned earlier in one of the prior questions, the value of education, educating them on this is how you can maximize it in your practice. This is how you pick the right patients. I mean, I talked to one doctor who's done his 3,000th eye. So there are people that have gotten this down to a science and if we can leverage those experiences and replicate those broadly, I think that's going to address a lot of these perceived barriers. All right, great. Thank you.

Your next question comes from the line of Tom.

Stephen with Stifel, your line is open. Great, hey guys, thanks for taking the questions and Aziz, congrats on the new role. And Aziz, just one question for you. Sort of as we think about your pharma experience, It would be great if you can talk about just the anterior segment landscape more broadly from a physician or from a practice standpoint. would love to hear your views on call it the intersection between drugs and devices in cataract and refractive surgery and for these anterior segment surgeons you know what areas is focus increasing at the practice level where is kind of the puck going.

as we think about the customer? Thanks. It's a great question and one I'm really passionate about, having been in this space for so long and really purposely thinking about where areas I can contribute to exactly where the puck is going, right? That's part of the science and the art here. I'd say the biggest overall trend I'm seeing, and this is relevant to my prior experience and I think is highly relevant here at ArcSight, is patients are becoming more and more demanding, and the expectation is the physician is able to deliver real results. Good enough is no longer good enough, if that makes sense. Right? People want perfect vision. They don't want any aspects to come in the way. Think about the demographic of a person getting cataract surgery today versus say 15 years ago. It's very different. People are living much more active lifestyles.

They want to be able to do everything that they were able to do in their younger years as they're in their post-cadaract years. So I think the physicians are looking for ways to optimize that value to the patient. The satisfaction expectation is increasing. And the doctors want to meet that need. They really genuinely want to deliver amazing outcomes. So I think there's a higher premium in terms of technologies and products, whether it be on the pharma or device. side that offer real meaningful outcomes. So if you're thinking about therapeutics, marginal therapeutic benefit, unless it's a very sight-threatening disease, obviously, is not going to cut it. They're really looking for products that really make a difference.

And I think the same thing on the surgical realm. A little bit better is not going to cut it. They're looking for, hey, can I get out of glasses? Can I really nail the outcomes? And that's where, when I looked at the opportunity here, I said, this is the technology that does this in surgery. We have that ability and I think we can really double click on the trend of patients wanting better and better outcomes and demanding perfection and our ability with our technology to actually meet that need. I think that intersection is somewhere we can play really, really nicely. That's great. Thanks, Aziz. Congrats again.

Thank you. There are no further questions at this time, and that concludes today's call. Thank you all for joining. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Hello, and thank you for standing by. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the RxSight preliminary second quarter financial results and product pipeline updates following collaboration agreement. [Operator Instructions]

I would now like to turn the conference over to Oliver Moravcevic, VP of Investor Relations. Please go ahead.

Thank you, operator. With me on the call this morning is RxSight President and Chief Executive Officer, Dr. Ron Kurtz, and Chief Financial Officer, Mark Wilterding. Yesterday, RxSight released a pair of press releases, one reporting a new collaboration agreement with Alcon and the second reporting preliminary revenue results for the 3 months ending June 30, 2026, updated product pipeline and revised full guidance, copies of both press releases and corresponding 8-Ks are available on the company's website. .

Before we begin, I would like to inform you that comments and responses to questions during today's call reflect management's views as of today, July 7, 2026 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 yesterday and in our filings with the Securities and Exchange Commission, or SEC. Investors are cautioned not to place undue reliance on forward-looking statements and will disclaim any obligation to update or revise these forward-looking statements, except as may be required by law.

During today's call, we will discuss certain non-GAAP financial measures. I would also like to remind you that the preliminary results discussed on our call today are estimates and did our complete unaudited financial results for the second quarter of 2026, which are subject to the review of our independent auditor, are expected to be announced on Wednesday, August 5, 2026. Please note that this conference call will be available for audio replay on our Investor Relations website.

With that, I'll turn the call over to Ron.

Good morning, and thank you for joining us. Over the last several years, the RxSight team has been developing proprietary hybrid IOL materials for next-generation light adjustable technology that can support a full suite of adjustable lenses across all premium categories, designed to enable expanded patient choice and customization along with the reduction in required postoperative treatments, these developments are being pursued both via our stand-alone product pipeline and through our collaboration with Alcon.

Rx Sight's next-generation adjustable IOLs will build upon the quality of vision that has been a key attraction for LAL patients for many years. Our partnership with Alcon aims to leverage each company's expertise to develop adjustable presbyopia-correcting IOLs. That, for the first time, will enable doctors to refine visual outcomes noninvasively after surgery for patients who choose a PCIOL. Taken together, these technology-driven strategic initiatives solidify RxSight's position as the leader in postoperative adjustability, create a platform for high-margin future growth and accelerate expansion across a wider base of patients. While we believe these strategic developments will be key multiyear growth drivers for RxSight, last night's announcement also detailed the near-term challenges we experienced in the second quarter after several quarters of relatively stable utilization trends.

Although we do not yet have Q2 data from other premium IOLs, we believe this retrenchment is linked to widespread competitive trialing activity associated with new product launches. While the LAL value proposition remains highly differentiated, these trial programs provide a significant short-term incentive to an already strained practice environment. While the effects of competitive trialing tend to wane as doctors determine the true value of a new offering based on their own clinical experience, we expect the heightened competitive environment to remain active through the end of the year. We also note that consumer sentiment remained under pressure, which we believe could have contributed to more deliberate patient decision-making and softer overall procedure activity. While cataract surgery typically cannot be deferred indefinitely, unusual declines in overall cataract volumes were observed in Q1 with patient confidence and the broader economic backdrop being 2 potential factors.

We believe we can overcome these challenges by accelerating customer reengagement efforts that have shown success in targeted rollouts, and we are excited to be making additional investments in our U.S. LAL sales force to expand our depth of penetration within accounts. Coupled with our technology's unparalleled clinical outcomes, we remain confident in our team's ability to navigate these headwinds successfully.

I'll now turn it over to Mark to provide select financial metrics related to our second quarter performance and updated thoughts on our full year 2026 outlook.

Thank you, Ron. As outlined in our pre-announcement press release last night, second quarter total company revenue is expected to be approximately $32 million to $34 million, including $5 million to $7 million related to the RxSight, Alcon strategic collaboration agreement. The final amount of revenue from the agreement that will be -- that we will recognize in Q2 remains subject to the completion of our quarter end close procedures and accounting assessment. We expect these actions to be finalized prior to reporting second quarter results in August.

Preliminary total company sales, excluding revenue related to the agreement were approximately $27 million in Q2, down 20% versus the year ago period. During the quarter, we sold 24,917 LAL units, down 10% year-over-year, reflecting the headwinds that Ron outlined earlier. The company sold 11 LDDs and placed on LDD rental unit, growing our installed base to 1,166 units. Based on revenue implications from the collaboration agreement and preliminary second quarter sales, we are revising our full year 2026 outlook. We now anticipate 2026 full year revenue of $140 million to $160 million. This range reflects RxSight sales of $110 million to $120 million and revenue recognized from the RxSight, Alcon strategic collaboration of $30 million to $40 million.

Our RxSight sales guidance assumes the continuation of headwinds experienced in the second quarter. Collaboration agreement revenue is subject to the terms and conditions described in the 8-K we filed with the SEC last night. Based on the favorable mix of LALs versus LDDs sold in the second quarter and our belief that this trend will persist for the remainder of 2026. We now expect full year gross margin in the range of 73% to 75% versus previous guidance of 70% to 72%. Despite the accelerating investments in our LAL sales force that Ron mentioned earlier and significant expenses related to the recently announced collaboration agreement, we continue to anticipate operating expenses at the high end of the $150 million to $160 million, in line with previous guidance. We ended the quarter with cash, cash equivalents and short-term investments of approximately $209 million.

And with that, I'll turn the call back to Ron.

Thank you, Mark. Before taking questions, I want to thank my RxSight colleagues and our many partners in clinical practice who are improving cataract surgery outcomes every day by empowering patients to optimize and personalize their vision after surgery. Today's announcements highlight 2 ways we are continuing to advance that mission. In the near term, by redoubling our commercial and clinical reengagement efforts, so more patients can achieve the high-quality, precise customized clinical outcomes that have now been documented in multiple real-world and clinical study settings using current generation LAL technology. In the intermediate to longer term by continuing to innovate adjustability, which has been a long-standing focus for our team.

In addition to next-generation LAL and LAL+, we are also working on LAL Toric, a new lens designed to combine built-in toric correction with postoperative refinement of residual sphere and cylinder. Each of these IOLs is designed to maintain the highest levels of visual quality and adjustability while also providing for improved workflow and fewer required postoperative treatments. Our collaboration with Alvin opens up a new path for innovation in the PCIOL space, offering doctors and patients a higher level of precision and confidence. While there are both near-term and long-term financial benefits associated with the agreement, we believe this collaboration also represents additional validation of our technology platform and intellectual property as well as the broader opportunity for adjustability in cataract surgery.

Taken together, these development initiatives demonstrate our continued commitment to doctors and practices. By developing a family of adjustable premium IOLs that can be tailored to the needs of patients, our customers can leverage both the knowledge investments that they have made to become experts in postoperative adjustability as well as their capital investments in the light delivery device or LDD. RxSight entered the cataract market with a fundamentally different approach and a truly novel technology in a relatively short period of time, we established the clinical value of adjustability and a strong presence in the premium cataract market. Building on that base, these next-generation developments and adjustability represent significant opportunities for further growth.

And with that, I'll ask our operator to open the call for questions.

[Operator Instructions] Our first question comes from the line of Larry Biegelsen with Wells Fargo.

Could you hear me okay, Ron?

Yes.

Great. I wanted to ask just 2 on the technology, the new technology, one on Alcon and one on the internal products you talked about. So starting with Alcon, it sounds like you're basically marrying your light adjustable technology to their trifocal and EDOF lenses. So my question is what are the technology challenges with that? In other words, what needs to be done to accomplish that? And what will the benefits be? What do you see the benefits being? And any color on the time lines? And I had one follow-up.

So let's start with the benefits. The reason why we both feel that this is a good idea. I think if you look at reasons for why outcomes or patients may be dissatisfied after PCIOLs at the top of the list is residual refractive error. So the ability to optimize visual acuity after surgery with a noninvasive light treatment, we believe will be a significant add to PCIOL technology.

In terms of the time frame, we haven't laid that out other than to say that we believe it's within our planning period, which is typically in that 5-year period. I there are a number of technical and regulatory efforts that will be part of this collaboration. Those -- obviously, we've done some prework to get us to this stage, and we feel good about our ability to deliver on the promise of this collaborative effort.

That's helpful. And then, Ron, your internal products that you talked about, what's the time line for the next-generation LALs? And what does improve workflow and fewer required post-op treatment mean specifically, like how much do you think you can reduce the post-op treatments?

So what we've -- the way we've positioned this is that we would expect these developments to occur in the mid-range of our planning period. So that's -- that will continue to refine that over time. And there will be individual time lines, obviously associated with each of the efforts. In -- and I'm sorry, your second question was...

Well, how much -- what has improved workflow and fewer required postoperative treatment means? How much could you reduce the post-op treatments?

So if we look at the number of treatments that are currently used. On average, there's about 1.5 to a little bit more adjustments and on average, about 2 walk-in treatments. By -- we believe that by providing the potential for a single lock-in we obviously would have a significant reduction in required treatments. In addition, the times that we require more adjustments often are associated with higher levels of the stigmatism. And so being able to provide some built-in astigmatism potentially also reduces that. So we think there can be a very significant reduction in the number of required treatments.

Our next question comes from the line of Ryan Zimmerman with BTIG.

I want to follow-up a couple on Larry's question just on the technology. But when you think about the lens and the collaboration with Alcon, RxSight went through a PMA. There was clinical trials associated. Do you anticipate needing that with their current batch of lenses in order to bring a technology to market that would combine both years and their technologies?

We haven't commented on the specific regulatory path that we'll be taking. Obviously, we'll be collaborating with Alcon on that. And again, we think that there's a good history of both technologies. And obviously, we would plan to leverage that strong background as well.

Okay. The other question, Ron, is -- and again, maybe putting the cart before the horse here, but pricing in the PCIOL space. I mean if we think about the price points right now to physicians of PanOptix and I think about the price point of the LAL today, they're at the upper bound of kind of where PCIOLs can go. If you marry those 2 technologies, I would imagine that you would maybe bring the ceiling, if you will, on pricing. And so I'm just curious kind of your thoughts on if that's feasible, what combined technology would be from a value standpoint and how you think about preliminary pricing relative to kind of the price point in the PCIOL market today?

Well, obviously, those are great questions. I think they are questions for the future and primarily for Alcon. But the -- I'll concentrate on what the value proposition would be, which will be that the we would be presenting to patients top-of-the-line optical designs with the ability to refine refractive error postoperatively, noninvasively. That's really a level of confidence that doesn't exist today. what is the value of that to both doctors and patients. I think that's something that the market will determine. But it's usually listed as the topic for PCIOLs is residual refractive error.

Our next question comes from the line of Stephanie Algazi with Bank of America.

Just wanted to ask on how you decided that a strategic collaboration agreement with the best approach versus other strategic options like selling and maybe just how you think about the partnership opening the door for additional collaboration with Alcon or potential acquisition.

Well, we think that this is a great way for us to build value in RxSight right now, leveraging not only our technology for our own pipeline, but also leveraging it for an area that we don't currently participate in, namely the PCIOL space. And doing that with a market leader and without doing it well, we're able to continue to have a very positive balance sheet. So these are all, I think, positive for the collaboration. Obviously, we need to execute on all these efforts and with the collaboration with Alcon but we feel confident in our ability to do that and also in building our core LAL business as well.

Got it. And then, just wanted to follow up on the preliminary Q2 results. I think you had expected sublevel of competitive trialing. So what are you seeing from the trialing that made the headwinds maybe worse than expected? And then just what's factored into the guide overall from the competitive trialing and some of the other factors you mentioned like consumer sentiment?

Well, I'll start maybe at a higher level and then Mark, feel free to comment. But the -- I think that there has been a level of competitive trialing programs that we may not have fully anticipated. Some of that may be linked to the fact that now we have a second large company that has offerings in both the trifocal and EDOF space, and that can raise overall competition in the space, and we expect that to continue for the rest of the year. At the end of the day, the differentiating factor of the LAL is that we can fine-tune the vision to optimize binocular vision in patients in a way that just is not possible with these other technologies. And we think that in the end, that is going to be a significant differentiator and key to our success. And Stephanie, with respect to guidance for the remainder of the year, Ron alluded to it just now, but I think our expectation is for that competitive environment to remain active through the end of the year. And so that's what we factored into the guidance that we provided today.

Our next question comes from the line of David Saxon with Needham.

Maybe just a follow-up on guidance, specifically around LDD expectations. I think previously, you were thinking [ 25 ] per quarter, came in at [ 12 ]. So -- and hear the comments around competitive trialing. But what are you seeing around the LDD pipeline? Anything meaningfully changed in May and June on that front?

So in the short term, I think that competitive trialing can and probably has impacted just in that when a practice is -- is given the opportunity to utilize the number of lenses that may not be something that they name being be as focused as incorporating a new technology like an LDD that may delay that decision. We still see a lot of interest in acquiring the technology but we think that there was some impact from that. And then we did note in our report that we did have one rental of an LDD. That's the first time that we've done that. And we think that, that can be an effective way to introduce the technology, especially outside the U.S. That, of course, delays revenue recognition but it can be a way that we can further drive our OUS opportunity.

Okay. And then just on the commercial pivot or strategy there. Maybe just give an update on that with this heightened competitive trialing? Is there anything you need to change to that initiative. And then the commercial investments you talked about in the script, I mean, is that just adding headcount? Or is there anything else you're doing there?

Well, there's certainly combined efforts of both having additional resources so that we can go deeper with our large installed base. but also fine-tuning the techniques that, that team utilizes. So it's a combination of factors. And we're -- again, we -- despite the challenges that we had in Q2, we -- our team remains very confident in their ability to overcome those, and we're looking forward to that in future quarters.

Our next question comes from the line of Steve Lichtman with William Blair.

Ron, I think in the past, you've talked that LAL patients have come pretty evenly between people who would have received the monofocal toric or multifocal lens. So how would you think about positioning of Alcon collaborative lens versus the blended vision you can provide today for presbyopia correction. I'm just wondering how additive versus cannibalizing and adjustable PCIOL could be long term if it's approved? .

So I would just maybe clarify a bit, Steve. Our data has shown that the vast majority of LAL patients come from either monofocal or monofocal toric with less than 1/4 coming from the PCIOL, and that's the combination of both EDOF and trifocal. So there's relatively a small amount of overlap. It's an area that we have not participated in. And we think that by offering a differentiated product with Alcon in that space that we can not only gain access to a large number of patients. So we weren't serving before with adjustability but potentially grow that market as well. Similar to what the experience that we've had in the monofocal and monofocal toric area where we brought new people into the premium space.

Okay. That's helpful. And then just a follow-up from the prior question. I know you guys are obviously not going to talk about 2027 numbers, but what gives you confidence from the commercial initiatives that you have been putting in place that can help improve growth next year? And how leverageable is this increased sales force intensity?

Well, as we've talked about previously, we've done some targeted programs we've seen some early results of those and that's part of what we're expanding with this -- with the expansion of our sales force. So it's based on our experience and on the -- also the experience of our team and the assessment of our team at the individual account level. So again, we'll be focused on this throughout this year, but -- and into '27. But we feel that at the end of the day, the clinical results that our technology deliver which are -- I would just note, increasingly have been validated in peer-reviewed journals. We have several publications -- several publications and recent issues of the major cataract journal, Journal of Cataract and Refractive surgery. And this just continues to grow the story of quality of vision and customization of vision for LAL.

Our next question comes from the line of Young Li with Jefferies.

All right. Great. I guess just kind of curious, in terms of the ASP trends in 2Q, are there any changes to call out on the LDD side or LAL side? And is there any changes that you're assuming going forward for the rest of the year?

Young, it's Mark. No real changes in the second quarter from an ASP perspective to either LDDs or LALs. And the expectation is for LALs to remain very consistent. LDDs as we talked about last quarter, the assumption is that, that ASP could come down a little bit over time as you typically see with capital equipment and with the inclusion of some OUS sales and rentals over time as well.

Okay. Got it. Very helpful. And then I guess one on the P&L. I guess the OpEx guidance didn't change overall. But just kind of curious, just given the collaboration in terms of the R&D percentage, how much will that have to expand or change from here?

We're going to work closely with our partners at Alcon over the course of the next several months, quarters, years to get to the bottom of exactly what that looks like. But -- so I don't have perfect visibility into it at this point. This is a multiyear collaboration agreement, obviously, to develop a really truly unique product that doesn't yet exist. So there will be a significant amount of investment that goes into that, but tough for me to quantify it at this point in the agreement.

Our next question comes from the line of Tom Stephan with Stifel.

Great. First one, just on competitive trialing. I feel like it's becoming more of a recurring theme. And we have more -- obviously, more U.S. innovation on the horizon with Galaxy, WD Pro likely coming in the next 12 months. Certainly, additional lenses beyond that. So Ron, maybe for you, is there anything RxSight can do or is there anything specific you're exploring to, I guess, perhaps manage these trialing headwinds moving forward?

Well, obviously, it's not a long-term strategy for the people who are pursuing it. It does -- it's not a sustainable strategy at least. So I think it is, at some point, self-limited. However, I think that the things that we can do is just make the strongest possible case based on data with our practices with our doctors and with potential patients about the benefits of having and the confidence that comes with adjustability. There's -- each -- if you look historically at the trends in the industry, they've generally moved to less what I call, less multifocality because of the side effect profiles. And so you've got -- you've seen that both in the trifocal space and in the EDOF space. The flip side of that is that, that results in less near vision. And so the way that we're able to balance vision in both eyes. The doctors can balance vision in both eyes using our technology in ways that are really accustomed to that specific patient's daily activities to their neurological system and optical system is quite unique. And so over time, we think that, that differentiation is our strongest lever in addressing what are otherwise I think, less critical factors that are involved with these trialing.

Got it. Makes sense. And then to pivot a bit to the Alcon collaboration. I guess I get that a noninvasive correction of residual refractive error with PCIOL certainly is value. But I do think LASIK touch-ups are relatively common with fixed multifocals. So Ron, can you describe, I guess, surgeons desire for an alternative to what I think is a pretty well-established approach with multifocals and subsequent laser treatment?

Well, I would just say that people are always satisfied with the status quo until there's an alternative. And so the LASIK is a second surgical procedure. There's a whole host of complications and risks that can go along with that, including dry eye in -- which is particularly potentially bothersome in this patient population, older patient population. So I think given a choice, patients and doctors would choose a noninvasive approach, especially one that allows them to intervene at a much lower level of residual refractive error because of that lower low risk profile or lower level of invasiveness. So I think that it's a -- it provides flexibility. And then as I mentioned earlier, with the trends in PCIOL technologies, where the level of multifocality is reduced, oftentimes what you see, particularly on the EDOF side, is that those are combined with different refractive corrections in each eye. But for a fixed IOL, that has to be predetermined by the surgeon with an adjustable PCIOL that can be experienced by the patient postoperatively and optimized with the patient. So very different -- very different process, and we think potential outcome that will be of significant value.

And that concludes our Q&A session. I will now turn the call back over to the management team for closing remarks.

Thank you operator. We look forward to providing further updates on our regularly scheduled second quarter 2026 conference call in early August. Goodbye.

This concludes today's conference call. You may now disconnect. Have a great day.

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.

Hello, everyone. Thank you for joining us, and welcome to the RxSight First Quarter 2026 Earnings Conference Call. [Operator Instructions].

[Operator Instructions] I will now hand the conference over to Oliver Moravcevic, VP, Investor Relations. Please go ahead.

Thank you, operator. With me on the call today are RxSight President and Chief Executive Officer, Dr. Ron Kurtz; and Chief Financial Officer, Mark Wilterding.

Earlier today, RxSight released financial results for the three months ended March 31, 2026. A copy of the press release is available on the company's website. Before we begin, I would like to remind you that the comments and responses to questions during today's call reflect management's views as of today and will include forward-looking and opinion statements, including predictions, estimates, plans and expectations.

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 the website or on 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, except as may be required by law. 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 Relations website.

With that, I'll turn the call over to Ron. Ron?

Good afternoon, everyone, and thank you for joining us today. Before Mark takes us through the Q1 numbers, I'd like to provide an overview of our commercial progress, starting with the Annual Meeting of the American Society of Cataract and Refractive Surgery held just a few weeks ago in Washington, D.C. As the largest U.S. meeting focused on refractive and premium cataract surgery, RxSight's light adjustable lens technology continued to be a key focus for doctors.

Over 30 papers and posters were presented and numerous podium discussions highlighted the consistency, precision and versatility that the LAL brings to cataract surgeons and their patients. At the meeting, we also marked an important milestone, 300,000 LAL implants since commercialization in the U.S.

In addition, we launched our I Trust It With My Own Eyes campaign, featuring ophthalmologists who have chosen the Light Adjustable Lens for their own eyes. These doctors as patient stories reinforce what our survey data already shows. Nearly 80% of ophthalmologists and optometrists say they would choose the LAL for themselves or a loved one, highlighting the level of confidence doctors have in the LAL's ability to deliver high-quality, customized binocular vision.

Our experiences at ASCRS reinforce what we are seeing in the real-world practices, namely that when doctors experience firsthand how they can predictably leverage postoperative adjustability to achieve such outcomes, it translates into greater confidence and drives the premium revenue that is critically important for the health of the practice, especially given recent reimbursement pressures.

Entering the year, a key priority for our team was to continue to refine the customer reengagement programs launched in the second half of 2025 and to accelerate these efforts in 2026 and beyond. While we still have work to do, we're encouraged by the progress we have made so far this year. LAL volumes were consistent with prior year levels and utilization has now stabilized for the third consecutive quarter.

More importantly, we're starting to see clear early signs that these efforts are working, particularly in practices where we've reengaged with physicians and staff through clinical outcome reviews, targeted IOL counseling training, refresher education and in-person workflow support.

Internationally, we remain committed to take a measured and thoughtful approach to expansion with the goal of building a durable foundation for long-term growth outside the U.S. We are focused on establishing the optimal clinical, commercial and operational infrastructure in each market and on building relationships with leading surgeons who can help support adoption over time.

As part of that effort, we were pleased to receive approval in New Zealand last month, which represents another step in expanding the global reach of the LAL system. While we expect international contributions to remain modest in the near term, the opportunity outside the U.S. is significant and will become a more meaningful driver of growth in 2027 and beyond.

With that, I'll turn the call over to Mark, who will now go through our first quarter financials and guidance for the remainder of the year.

Thanks, Ron. Q1 sales of $30.9 million declined 18%, reflecting a year-over-year step down in LDD unit volumes consistent with expectations. During the quarter, we sold 20 LDDs, which accounted for approximately $2 million of quarterly sales. We exited the quarter with an installed base of 1,154 LDD units. Q1 LAL unit volumes of 27,472 were in line with the year ago period and down 4% sequentially. This sequential decline was consistent with typical first quarter seasonality. LAL procedure volumes translated into Q1 sales of approximately $27 million, which represented 88% of total company sales in the first quarter.

Higher LAL revenue mix contributed to a gross margin of 76.1% compared to 74.8% in the prior year period. First quarter 2026 SG&A expenses were $31.9 million, up 11% compared to the prior year period, driven by personnel-related expenses as we continue to prioritize investments in new hires and ongoing expansion of our global commercial and support teams.

First quarter Research & Development expenses were $9.5 million, down 9% year-over-year. We reported a net loss in the first quarter of $15.9 million or $0.38 per basic and diluted share based on 41.3 million weighted average shares outstanding. Stock-based compensation was $7.9 million, resulting in an adjusted net loss of $7.9 million or $0.19 per share.

Turning to 2026 guidance. We are reiterating our full year 2026 revenue guidance of $120 million to $135 million. Consistent with our February commentary, we anticipate that quarterly sales growth rates should improve throughout the year based on our assumption of improving fundamentals and easing year-over-year comparisons.

As Ron discussed, we expect our international business to be a modest contributor to sales in 2026, primarily driven by early capital placements. We will continue to expand outside the U.S. in a measured and deliberate way to position the company for sustainable long-term growth. 2026 gross margin guidance of 70% to 72% also remains unchanged. As previously communicated, the anticipated step down from Q1 gross margin reflects the flow-through of higher cost inventory manufactured in 2025. Over time, we expect manufacturing absorption to improve as production levels normalize.

We are forecasting 2026 operating expenses to be at the high end of our previous $150 million to $160 million range, reflecting accelerated investments in our global commercial organization. From a phasing perspective, we expect quarterly operating expenses to follow a pattern similar to 2025 with more pronounced spend in the first half of the year. Included in our costs, primarily in operating expenses, we continue to expect noncash stock-based compensation in the range of $30 million to $32 million.

With that, I'll turn the call back to Ron.

Thank you, Mark. In summary, the core clinical value proposition of LAL remains strong and clearly differentiated in the premium IOL market with the ability to customize vision after surgery delivering superior patient outcomes and compelling economic benefits for practices.

Despite the introduction of numerous Me-Too Fixed IOLs, nothing we are seeing changes our conviction that adjustability represents the next meaningful step forward. When I look at where we are today, the business appears to be stabilizing and our customer engagement programs are beginning to show initial progress, giving us confidence to continue refining the model and expanding it globally in a measured way.

At the same time, we're focusing on strengthening our team, improving execution and driving technical innovations that further simplify implementation while delivering best-in-class outcomes. We look forward to sharing additional details on these planned commercial introductions that can help reduce adoption friction for both clinicians and patients by streamlining the clinical workup for post-op adjustments, reducing the number of required LDD treatments and extending the range of correction.

And with that, I'll ask the operator to open the call for questions.

[Operator Instructions] Our first question comes from Robert Marcus with JPMorgan.

It was good to see that you were able to kind of find footing and deliver a modest speed against consensus here. Maybe speak to what you're seeing in the field and how some of the elements of the turnaround are taking, how the reception is? And do you see any green shoots maybe into second quarter of continued improvement here? And then I have a quick follow-up.

Yes. Thank you, Robbie. So I would say that without commenting on Q2, which we're obviously in, the feedback that we're getting both from our customers and just as importantly, from our team is very positive as we continue to roll out reengagement programs, as I described, around some very specific actions where we're able to review clinical outcomes and pearls that have been gained over the past several years as the technology has been rolled out across the U.S. And we now have confidence that continued refinement and expansion of those programs can result in further turnaround in terms of utilization with our customer base, which is quite large, as you know.

And as I look through the year, it implies basically modest sequential improvement. How do you feel about your ability to grow in 2027? And beyond some of the changes, what are you doing to really reinvigorate interest in LALs to return to a material growth rate to generate profitability again?

Robbie, it's Mark. Thanks for the question. We said that our expectation is for growth rates to improve over the course of the year. And it's a reflection of both our belief that fundamentals will improve based on some of the things that Ron just talked through as well as easing comparisons. With respect to growth in 2027, we haven't, as you know, given guidance that far out. But we think of ourselves as a growth company. We invest for long-term sustainable growth, and that includes 2027 and beyond.

Ron, anything else you'd add on that?

Yes. I think we, the things that we've commented on continued technological innovation, which will continue to simplify implementation of the LAL, both in the U.S. and then increasingly outside the U.S. where we're starting to establish ourselves. So I think both of those will be growth drivers.

I would also say that it's not that we've, I wouldn't characterize what we've experienced as a lack of interest in the LAL. I think there's still quite a bit of interest in the LAL, and we saw that, as I mentioned at the ASCRS meeting, where it continues to be a high area of interest in the medical community, but also at our booth with a lot of activity. So, I think that it's focusing that interest into growth through the programs that we've talked about.

Our next question comes from Ryan Zimmerman with BTIG.

I want to follow-up on Robbie's question a little bit. I'm curious, and this is a tough question, but how much do you think the stabilization in your, the LAL adoption is a reflection of just the cataract market holding steady, particularly on the AT-IOL side, not deteriorating versus what we saw maybe a year ago relative to the efforts you're making in turning around commercial adoption. And I don't know if you can parse it out, but I'm hoping you could kind of take a swing at that.

Well, it's always as you indicated in your question, it's always hard to parse out what are all the contributors. I believe, based on the responses that we've gotten to date that the actions that we're taking, all things being equal, are positive and are having an impact. Of course, it's always great when the market is working in your direction as well, and we certainly hope that to be the case. But under the things that we can control, we think that we're having a positive impact, and we'll continue to do so as we expand and refine these programs.

And just a follow-up, are you gated LDD sales at this point? I mean, is there interest from customers that you're holding off on when you think about LDD sales? Or is it just not prioritized amongst the sales force at this point?

I don't think that we are, I would characterize it as gating. I think that we are taking a more measured approach where we want customers to be fully ready to adopt the technology and to be successful with it. That, not that we weren't doing that before, but I think that just the novelty of the LAL in those initial several years just drove a faster pace. And so now we're into a more gradual, but still a lot of strong interest, and we anticipate continuing to add LDDs, obviously, OUS, but also in the U.S.

Our next question comes from David Saxon with Needham.

Maybe one on guidance for Mark. I think last quarter, you talked about expectations for low single-digit LAL volume growth for the year. You came in above consensus here in the first quarter. So is low single digits a good way to think about 2026? Or could we be pushing mid-singles? And then kind of the second part of the question is, where does that get us in terms of fleshing out the higher cost inventory? Like at low single digits, does that get us through all of that inventory that's on the balance sheet?

Yes. Thanks for the question. I think it was, like I said, a little bit better than expected, but not to the degree where we felt like taking up guidance was warranted. So I think your assumption based on what we said in February is still accurate with respect to LAL growth being in that low single-digit range for the full year. Again, we expect growth rates to improve sequentially by quarter as we go through the year, as I mentioned earlier. But at this point, in the year two, it's always tricky given where we're at kind of early to go out any further than that. So I think it's good to take a more prudent approach, and that's what we've done there with that LAL guidance.

With respect to the inventory, no change to our assumptions there either. And you see it primarily in that gross margin guidance that we gave. We continue to believe that we'll finish the year in that 70% to 72% range.

Q1, as expected and as communicated back in February, was not really impacted by some of those absorption issues, but we do expect them to show up in Q2 and for the remainder of this year. And we're monitoring it closely. We haven't said in terms of when that will lift and how that might look next year. But when we get closer to being in a position to give guidance longer term, we'll update that as well.

And then the second question is just on the commercial pivot or reengagement strategy. Would love to understand what percent of accounts or territories you've gone out and actually implemented that. And then once you do that and get buy-in from the account, kind of how should we think about the resulting utilization in the months or quarters to follow?

Yes. So I would say that we're still in early innings of reaching through the installed base, which is, as you know, quite large, about 1,150 LDDs, 2,500 surgeons. So that will continue throughout the year and into '27. In terms of the results that we're seeing and what you would expect, of course, it will be in the numbers that you'll see, it will be more gradual because it has to extend through the installed base. But on an individual basis, we are certainly seeing the impact and feel as though as we continue to make refinements to both the programs and how we implement them, I think that, that will continue to accelerate.

Our next question comes from Larry Biegelsen with Wells Fargo.

Ron, one domestic question, one international question. So how are you thinking about increasing competition from premium IOLs? We know a few more coming this year. You have TECNIS PureSee, obviously, from J&J. There's a BVI product. I think Rayner is coming out. I think how have you incorporated that into the guidance? And I had one follow-up.

Good question, Larry. So I think that fundamentally, there's not a lot new under the sun in terms of these new product introductions. Of course, having multiple players in the marketplace, even if they have undifferentiated product, it still means that there's more voices out there. And so we're watching it, but we feel strongly that the clinical outcomes that are achievable with adjustability are superior and ultimately will win the day, though there can be, as there have been with past introductions, some transient impact from these efforts and the overall impact they have on other competitors as well.

And then regarding international, I'd love to get an update on your international efforts. Where are you starting to see some early kind of traction, if you will? And when you say modest contribution, I think I heard modest contribution earlier on this call in '26. Is that like $5 million, $10 million?

I will let Mark comment on the dollar figure. But in terms of where, we previously said where we've gotten approvals. Obviously, that's the first step before you have commercial introduction and then traction. We've had the most recent approvals and where we've been able to start, have primarily been in Asia with Korea and smaller markets, Singapore, but an important market. We got approval in Europe more recently.

Those efforts are starting as well, beginning to gain traction, especially in awareness across the larger countries in Europe. And even more recently in Australia and now New Zealand. And I would say that those countries pretty well mirror where the premium IOL business has had the most success. And we often see new product introductions follow a very similar pattern of introduction in countries like the major countries of Europe, Korea, Australia, et cetera. Obviously, the countries with longer regulatory cycles that are still important, Japan, China and India, those we're working through those processes.

And just with respect to quantifying it, Larry, I know this is a question you've asked in the past. The team is working and driving hard there. Great team in place, but it's not yet in terms of dollar amounts at a point where we feel like it's material enough to break out. When that changes, and it will, at some point in the future, we'll be sure to give you an update.

Our next question comes from Stephanie Alasi with Bank of America.

A competitor just reported recently and noted softness in the cataract market. So curious if that's something you're seeing in the market overall, but maybe you see less of an impact given your premium offering. So yes, just curious any thoughts there.

Well, I think that the size of that competitor relative to ours gives them a lot of visibility on the overall market. And, but I do think that their comments were more towards the non-premium segment of the market, the traditional cataract surgery of the portion of the market and that they also noted continued growth in the premium segment, both in the U.S. and internationally. And those would be consistent with our long-term view as well based on the both clinical and economic benefits of premium IOL technology generally and more specifically the LAL.

So I don't think that we're seeing anything inconsistent. We saw some softness of the overall cataract market a year ago as well. And at that time, I think some people postulated whether those were some more macro affected because the patients in that subgroup do still have to pay co-pays, which can be relatively expensive depending on the demographic. And so it's possible that that's impacting that segment first.

Got it. And then I wanted to follow up on the OpEx guide now pointing more towards the higher end of the range. Just curious what are the main areas of investment that are increasing? And how do you think about OpEx and time to benefit the top line?

I think I'd just reiterate a little bit of what Ron had mentioned earlier with respect to the OpEx guide. We are very focused on providing what I'd say are the highest levels of clinical training and field support, both here in the U.S. and also abroad. And that requires investments, supporting new and existing customers, focused on penetrating these accounts is really key.

And so as a result, we are definitely focused on directing more resources towards things like that in addition to customer support, education, sales and marketing and also advancing our R&D pipeline, something that we've invested in for some time and not letting up there either. So those are the primary avenues of investment, I would say, as you see that OpEx trend towards the higher end of the range.

Our next question comes from Adam Maeder with Piper Sandler.

This is Kyle Winborne on for Adam. I guess, first, maybe just to continue on that thread with OpEx. Maybe could this be a good opportunity for you to just remind us where the company sits today from a commercial headcount standpoint? It sounds like the plan is to maybe continue adding headcount, if I'm correct there. So should we kind of just think about OpEx kind of running at this pace for the foreseeable future while these efforts continue? And I had a follow-up.

Yes. We have about 130 to 150 field-facing employees. And that's continued to grow with our installed base as well as with the more recent initiatives that we've talked about. And certainly, we'll be making decisions based on both the success of those initiatives as well as other priorities in the business, as to where we prioritize the additional spending, but that's always an ongoing decision that we have to manage.

That's helpful color. And I guess my second question, you talked about innovation a little bit and gave some helpful color there for things on the come. Just wondering if you could double-click on any of those, anything that's particularly meaningful. And you mentioned that we might hear about some of those from later this year. So, it sounds like we should think about this as more having impact as we look into 2027.

Yes, I would say that the things that I mentioned are all things that have been seen as benefits to the technology moving for quite some time in their areas that we've been working on. Those efforts take time. We're a Class III device. So we have to go through the PMA supplement process, which we are. But as we have visibility to commercialization, we will certainly share that and give visibility both to the investor community as well as to our customers.

Our next question comes from Xuyang Li with Jefferies.

I guess first one, just on the customer reengagement programs. I wanted to, I was wondering if you can share a bit more about what you're doing there with the practices. You called out a few examples, but what's resonating more with the surgeons and their staff? And what are the key issues that practices need your help in solving?

Well, I think it is variable, of course, depending on the practice. And that's where our team is really key in assessing and discussing with the practice, what are the most likely measures that are going to make them more successful, which is going to help them both clinically and financially.

So it has to be viewed as a mutual benefit, and that's how I think it is being viewed and appreciated by our customer base that we're continuing to invest in their success. The specific measures that I mentioned, some are, we have this unique ability to be able to track clinical results on essentially every patient. But that information is sometimes siloed in the practice.

And so making clear to the entire practice, both optometrists who might be doing the LDD treatment, ophthalmologists who may not be seeing that postoperative patient as frequently as well as the staff who may not be into the details, the clinical staff and the surgery counselors just making that information more widely available, which we can uniquely do, is very motivating to see how impactful adjustability is to the lives of their patients.

They see that anecdotally, but to see that in a quantitative way, which, again, no other IOL really can do other than doing a clinical study, which is typically not practical. The other things that we're doing really depend on the practice. So it can be workflow pearls that are, that have been gleaned from peer practices that may be similar size, similar makeup, similar socioeconomic base and how do they have patient, the postoperative visits flow, the division of labor, how patients are, expectations are set and handled throughout the process.

These are all clinical skills and practice skills that didn't exist 5 years ago. And we and our customers have figured a lot of this stuff out. And now we have to go back and disseminate that information in various ways, whether that's through our direct interactions with the practices or whether it's through peer-to-peer interactions or digital media. Those are all ways that we're engaging with our customers.

All right. Great. That's very helpful. And then I guess another question, just wanted to hear a little bit on the accounts that bought LDDs in the past year or past 3 quarters, the ones with 20 to 25 LDDs versus prior periods that bought like 70-plus per quarter. I'm just kind of curious, given there's sort of less of them, presumably more focused or more motivated buyers, do you see any differences in their utilization or adoption curve from prior periods or cohorts?

So it's a good question. I think it's a little early to, we're dealing, as you said, with the smaller end. And so we'll continue to track that. But of course, we are incorporating all the things that we're doing with the reengage practices in our onboarding as well. And so hopefully, we'll see that, those benefits in that group as well as we progress with their onboarding.

Our next question comes from Tom Stephan with Stifel.

Apologies if any of this has been asked, just jumping between calls. I'll start off on kind of competitive landscape, but more specific to adjustable. Ron, what's the latest you're hearing around adjustable competition? Any incremental updates we should be aware of? And curious if you can touch on, Perfect Lens, which I think is expanding in Europe. And then I'll have a follow-up.

I don't have any specific updates. Obviously, we follow the field. I would say that to my knowledge, there's nothing getting close to a regulatory process, certainly not in the U.S. We know how high the bar is, and we've continued to raise that bar. And then in addition to that, of course, we've got a large installed base and have got a lot of knowledge that has been developed in the community based on our technology. So, I don't want to be dismissive of competition. I just also want, I think people should be realistic about what the time scale of any potential competition could be.

Got it. That's great. And then maybe to pivot a bit to, I'll call it, sort of the long term. But as you look at or think about utilization curves, adoption interest, how reengagement is going here in the U.S. Ron, talk about your level of confidence today that LAL is a niche in the U.S. and more importantly, can perhaps durably grow above market over time and continue to gain share long term?

Yes. Well, I guess we referred earlier, I don't know if you're on the call, Tom, but somebody referred to one of the large competitor, who also reported today. And of course, we listened to that call as well. And I think that it was instructive in that they pointed out again, and they've done that before, that the premium market is incredibly important to ophthalmology.

Just the time spent on the premium market was impressive, even though it's a relatively small portion of the business for them. And they projected that their view is that, that premium market is going to go from the current 15% to 20%, depending on geography to maybe the 30% to 40%. And I think that that's probably accurate that they have a good view on that. But then where is that growth going to come from?

We've had the multifocal technology and standard toric technology for 20 years. It's got to come, there's, it's got to come from somewhere. And I think that the LAL is unique in that it's broadly applicable to patients because it does preserve quality of vision. It's very flexible and it appeals intuitively to this next generation of patients who not only are, want to maintain their function throughout many conditions, but they also want to have control and an input in the process. And those are all things that I think play well to the LAL and will help the field drive growth into that higher number.

There are no further questions at this time. I will now turn the call back over to Ron Kurtz for closing remarks.

Well, thank you all for your interest in RxSight. We certainly look forward to updating you on our progress in future quarters. Goodbye and good evening.

This concludes today's call. Thank you for attending. You may now disconnect.

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the RxSight Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Oliver Moravcevic, Vice President of Investor Relations. Please go ahead.

Thank you, operator. Presenting today are RxSight President and Chief Executive Officer, Dr. Ron Kurtz; and Chief Financial Officer, Mark Wilterding.

Earlier today, RxSight released financial results for the 3 months ended December 31, 2025. 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 questions during today's call reflect management's views as of today, February 25, 2026, 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 in our filings with the Securities and Exchange Commission, or SEC. Our SEC filings can be found on our website or 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, except as may be required by law.

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 Relations website.

With that, I will turn the call over to Ron. Ron?

Good afternoon, and thank you for joining us today. I'd like to start by both welcoming Mark to his first RxSight earnings call and asking him to kick us off today by reviewing our fourth quarter and full year 2025 financial results, including the key drivers of performance and the trends across the business. After his remarks, I'll discuss the progress our team made in the fourth quarter and outline the steps we are taking to position RxSight for 2026 and beyond.

With that, I'll turn the call over to Mark.

Thank you, Ron, and good afternoon, everyone. Consistent with our January pre-announcement, RxSight reported fourth quarter 2025 sales of $32.6 million, down 19% year-over-year due to lower LDD sales. As you recall, we had record levels of LDD placements in the year ago period, totaling 83 units globally, accounting for $11 million of sales. In the fourth quarter of 2025, we sold 25 LDD units globally and generated $3 million of LDD revenue. Despite the year-over-year decline in the fourth quarter, we exited 2025 with an LDD installed base of 1,134 units, up 17% from the 971 units installed at the end of 2024.

Turning to LALs. During the fourth quarter, we sold 28,611 LALs, down 2% from the year ago period and up 10% sequentially. Procedural volumes translated into LAL sales of $28.2 million in the fourth quarter of 2025, in line with Q4 2024. LAL revenue accounted for an all-time high of 86% of total company sales in the fourth quarter, up from 71% in the year ago period. Higher LAL revenue mix contributed to a gross margin of 77.5% in the fourth quarter of 2025 compared to 71.6% in the year ago period.

Fourth quarter 2025 SG&A expenses were $27.7 million, down 2% compared to the prior year period, primarily driven by lower personnel-related expenses, partially offset by continued investments in LAL commercial initiatives. Fourth quarter research and development expenses were $8.9 million, down 3% year-over-year and 2% sequentially, reflecting lower personnel-related expenses, partially offset by continued investment in advancing our research and development pipeline. We reported a net loss in the fourth quarter of 2025 of $9.2 million or $0.22 per basic and diluted share based on 41.2 million weighted average shares outstanding. Stock-based compensation was $7.8 million, resulting in an adjusted net loss of $1.3 million or $0.03 per share.

I'll now provide a brief recap of full year 2025 results. Full year sales of $134.5 million increased 4% year-over-year, reflecting a 48% decrease in LDD revenue, partially offset by a 12% increase in LAL sales. 2025 gross profit margin was 76.6% compared to 70.7% in 2024, primarily driven by a higher LAL revenue mix. Total operating expenses were $151.2 million in 2025, up 11% versus 2024. Year-over-year expense growth was driven primarily by higher personnel costs and continued investments in research and development as well as commercial activities to support our long-term strategy.

For the full year 2025, we reported a net loss of $38.9 million or $0.95 per share versus a net loss of $27.5 million or $0.71 per share in 2024. Excluding $31.6 million in stock-based compensation expense, our adjusted net loss in 2025 was $7.3 million or $0.18 per basic and diluted share.

Moving on to the balance sheet. We ended the year with no debt and approximately $228 million in cash, cash equivalents and short-term investments. Turning to 2026 guidance. Full year revenue guidance of $120 million to $135 million implies a year-over-year decline of approximately 5% at the midpoint of the range, primarily driven by lower LDD sales versus the year ago period. 2026 sales are expected to be the lowest in the first quarter, reflecting typical seasonality and more challenging comparisons in the year ago period.

Third quarter 2026 sales will also be subject to seasonality, although we anticipate a rebound in total company sales growth in the second half of the year as growth comparisons ease and commercial initiatives begin to gain traction. We anticipate a relatively small contribution from sales outside of the U.S. in 2026, primarily in the form of early capital placements as we take a methodical approach to expanding our international presence. The team is currently focused on building relationships with key opinion leaders and collecting country-specific clinical data to position the company for more meaningful international sales in 2027 and beyond.

Our full year 2026 gross margin guidance is 70% to 72%. This is down from 2025 levels, but consistent with the company's gross profit margin profile in 2024. We've taken a prudent view of our 2026 gross margin guidance to reflect the sell-through of higher cost inventory due to lower than originally anticipated production levels in 2025. However, we expect manufacturing absorption headwinds to ease over time. We expect 2026 operating expenses to be between $150 million and $160 million, representing a 1% decrease at the low end of the range and a 6% increase at the high end compared to the prior year and reflecting our ongoing investment in international expansion in addition to our U.S. sales and marketing efforts. We anticipate that R&D spending will be relatively in line with 2025 levels. Included in our costs, primarily in operating expenses, is noncash stock-based compensation expense in the range of $30 million to $32 million.

With that, I'll turn it back to Ron.

Thank you, Mark. Although the full year financial results were below our initial expectations, 2025 was a year of meaningful progress for RxSight, for which I want to thank our 500 employees and thousands of customers as together, we advance the delivery of our life-changing LAL technology around the world. Approximately 5 years after our IPO enabled us to broadly launch adjustability in North America, our clinical outcomes remain best-in-class with doctors and patients continuing to be highly engaged with the technology and with adjustable procedures representing approximately 10% of the U.S. premium market by volume and approximately 15% by revenue, proving that adjustability is no longer a concept but an established category with real commercial and clinical validation.

In 2025, following rapid years of expansion that resulted in approximately 25% of U.S. cataract surgeons being trained in this new paradigm, we initiated a number of strategic decisions to strengthen clinical and practice expertise across our user base, sharpening our approach to training, education and support of new and existing practices and doctors. Although we are still early in external validation of this journey, we have been encouraged by recent trends that indicate these efforts are beginning to take hold.

More specifically, and as Mark outlined, procedure volumes improved sequentially in the fourth quarter, driven primarily by LAL utilization within our customer base. With over 1,100 LDDs in the field and an even larger number of practitioners, we have more work to do, highlighting our substantial opportunity to further leverage our installed base to drive same-store sales and patient outcomes. At the same time, we have taken a more disciplined approach to capital placements with the goal of continuing to deliver sustainable execution through superior clinical outcomes, strong customer adoption and efficient practice workflows that support long-term success.

As we look ahead, our commercial focus is clear: improve utilization within our existing installed base through targeted practice engagement and new education initiatives and expand access to our technology in a measured way through disciplined LDD placement and evolving access models. We believe executing consistently across these areas will return the business to sustainable growth with adjustability uniquely positioned within the premium IOL market to address the unmet needs of both doctors and patients with the clinical thesis underlying this supported by both formal clinical studies and real-world data.

To that point, we are pleased to announce that earlier this month, data from our post-approval study were accepted for publication in the Journal of Cataract and Refractive Surgery. The paper by Dr. Jack Holladay reported that 93% of LALIs achieved both spherical equivalent and residual cylinder within half diopters of target, demonstrating statistically superior refractive accuracy compared to historical studies of contemporary toric IOLs.

Just as importantly, very similar results were identified in a more than 20,000 eye data registry of LAL cases presented at yesterday's meeting of the American-European Congress of Ophthalmic Surgery by Dr. John Doane, adding compelling big data to the growing body of evidence supporting the LAL platform and the ability of postoperative adjustability to provide unparalleled refractive accuracy across a broad patient population, thereby reducing outliers and enabling refractive customization that together raise patient satisfaction and grow premium procedures.

With conventional cataract reimbursements facing continued downward pressure, we believe that the LAL is well positioned to deliver the superior outcomes demanded by patients as well as the enhanced profitability that is increasingly important to sustain ophthalmic practice viability. RxSight remains committed to advancing adjustability to even higher performance levels as evidenced by the approximately 20 FDA approvals in direct support of product development over the past 5 years, with several new submissions planned over the next 18 months. These efforts continue to make LAL technology easier to adopt for a greater range of customers by enhancing the overall value proposition for both doctors and patients.

We believe that this historic pace of innovation presents another opportunity to engage with customers as we further the understanding and utilization of already released lens features like ActivShield, LAL+ and expanded IOL powers as well as recently added LDD capabilities and our updated LDD and insertion device platforms with even more innovation to come.

Internationally, we are building a durable foundation for long-term success with a focus over the next year on engaging with local clinicians to develop key opinion leaders in Europe, Asia and now Australia, who can generate their own early in-country outcomes and become advocates for adjustability in these major markets where the majority of the global premium IOL procedures are performed. Over time, we believe the growing prevalence of myopia and earlier cataract surgery in international markets represent meaningful long-term tailwinds for the LAL as optimizing binocular vision and refractive accuracy become increasingly important for patients seeking spectacle independence and high-quality visual performance.

We are also applying the lessons learned in North America to ensure that our teams and practices are well prepared to succeed as they introduce this paradigm to their patients.

In summary, we are encouraged by the progress we saw in the latter part of the year with early signs of improvement and an organization that is better aligned to deliver superior clinical outcomes. At the same time, we are realistic and taking a prudent approach to the durable opportunity RxSight's adjustable platform has created. There is certainly more work to do, and our focus is on delivering consistent performance over time.

With an improved commercial structure, a large installed base, continued innovation, early infrastructure in key international markets and a strong balance sheet, we believe we have the foundation in place to execute deliberately and build momentum. We are confident that the LAL platform will continue to help more patients globally, positioning the company to drive strong growth in the years to come as stakeholders increasingly recognize the significant benefits of RxSight's differentiated technology.

And with that, I'll ask the operator to open up the call for questions.

[Operator Instructions] Your first question comes from the line of Robbie Marcus with JPMorgan.

This is Alan on for Robbie. Quick question just on the 2026 guide. Curious what you're seeing so far in the underlying health of the market when it comes to both LALs and LDDs. You ended the year with a quarter a little bit better than expected on the LAL front. So curious how we should think about that progressing through 2026 and what's contemplated in the guide?

So I think that -- thanks for the question, Alan. I think that we did see a little bit of an uptick in Q4. I think that we're certainly hoping that, that continues through 2026. The guide obviously takes that into account as a potential. But maybe I'll have Mark comment further on that.

Yes, that's right. The guide definitely does take that into account. As you know, we don't give quarterly guidance, but year-to-date trends have been factored into our full year outlook. Remember, when we look back a year ago, Q1 2025 was our best LDD volume quarter and our second best LAL unit volume quarter. And so total company sales increased, I think, about 30% year-over-year. So it's a difficult comparison and wanted to take that into account as well with our guidance.

Got it. And then just a quick follow-up on gross margin. I think in the past, you've talked about high 70s as still being doable from a gross margin perspective going forward. Clearly, you're seeing some near-term pressure from manufacturing variances in 2026. But when I think about 2027 and beyond, is there any reason why you wouldn't be able to see that improve back up to the high 70s?

Yes. We do look at this closely, as you can imagine. Longer term, we still do believe that's the case. We've proven that it's possible. We did achieve those types of margin levels last year. Ultimately, I think it really depends on what your assumptions for the mix profile of the business will be. Historically, a lot of the margin growth came from increases in the mix of LALs. And so as they have a higher margin profile, that's obviously worth taking into account. The other thing I'd note from a margin perspective is that international is still early. And so as that ramps, that also has the potential to factor into that long-term gross margin profile of the company.

Your next question comes from the line of Larry Biegelsen with Wells Fargo.

Mark, congrats on the new role. And since this is your first as the new CFO, I'd love to hear your guidance philosophy. And specifically, how much do you expect LDD placements to be down? Is 50% to 60% year-over-year a good range? And what kind of growth are you assuming for LAL volume? Is mid-single digit a good -- mid-single-digit growth a good place to be? And I had one follow-up.

Sure. Thanks, Larry. So just starting with guidance philosophy. I think coming into this role, my focus is definitely on setting achievable guidance. It's based on a bottoms-up forecast and in the case of 2026, what we've seen year-to-date in terms of trends. I'd say, as Ron mentioned, we are seeing early signs of improvement, but we want to be realistic and take a prudent approach, and I want to reflect that in the guidance. So there's still work to do, but our focus is on delivering consistent performance over time. You asked a question on LDD assumptions. Our assumption is that we see a slight acceleration from the 2025 exit rate of about 25 units a quarter and that, that should increase through the year with the additional contribution of some OUS units as well. Q1 units, I would expect to be the lowest in terms of LDD sales. As far as LAL unit growth, I think it's fair to assume for the full year somewhere in that kind of low single-digit unit growth range for LALs.

That's super helpful, Mark. On the gross margin, maybe help us a little bit more on that. We've always been under the impression that LALs have a higher gross margin than LDDs. So how long is these manufacturing variances you talked about going to persist? And it does look like pricing was also down on LDDs in Q4, if my math is correct. So help us think about that going forward as well, please.

I think in terms of the cadence of gross margin over the course of the year, our expectation is that we will still be working through some of the lower cost inventory in the first quarter of this year. And so for that reason, I think the likelihood of Q1 gross margin being above that range is there. I think, though, as you go through the year, we do anticipate that, that higher-priced inventory will make its way through the system beginning in the second quarter. And so for that reason, we do think that 70% to 72% gross margin is, like I said, prudent place to be for the full year. The anticipated higher LDD unit sales in the second half, and that speaks to, I think, the second part of your question about mix, they are also likely to put some additional pressure on that margin -- gross margin profile.

Your next question comes from the line of David Saxon with Needham & Company.

I wanted to follow up on the gross margin. So higher cost inventory starts to flow through in the second quarter. How long does it take for that inventory to kind of flush out and for us to see kind of true underlying unit cost as it relates to LALs?

Good question. Thank you. As we said, we think it is transient. We will work our way through it over the course of the year. As I mentioned in response to Larry's question, shows up initially in the second quarter, and then it's something we'll have to contend with in the third and fourth quarter as well. Beyond that, we're monitoring it diligently and following the situation very closely. We think, ultimately, that we have positioned ourselves from an inventory level consistent with our expectations for 2026 and beyond growth. And so I think that is also taken into account in consideration with that guidance.

Okay. Great. And then my second is just on the traction you're seeing with this kind of commercial pivot. Would love to just understand what you're seeing, if you have any success stories and what's really kind of playing out that gives you confidence in kind of this back half recovery you talked about in the script?

Yes. Thank you, David. So it's just what you alluded to, we're seeing some early success stories as the teams are able to focus on individual practices and on their individual needs through a structured program. And I think that our belief is that, that will continue as we expand into a larger number of clinical sites.

Your next question comes from the line of Steve Lichtman with William Blair.

Ron, I'm wondering on the initiatives, what you're seeing so far about the durability of the initiatives you put in place. I guess I'm wondering how long the more intensive effort needs to be before things change? And when your team moves on, are you still seeing the benefits?

I think it's still early to comment on that, Steve. I think that practices are dynamic. There are changes in doctors, in personnel. And so I think that the concept that we're going to be able to go in and just have a one and done where they're back on track is probably not the correct assumption, but we're going to continue to stay close to our customers. We have other reasons to do that as we continue to add additional capabilities to the technology. And so I think that we'll continue to -- maybe not with the same intensity and it may vary, it will vary depending on the specific needs of the practice, but we're not anticipating that this is going to be a one and done.

Sure. Okay. And then just secondly, wondering how you factored in the competitive environment in 2026? And any qualitative comments you can make in terms of what you're seeing out there and again, how you're factoring that in?

Well, we certainly monitor the competitive environment. As you recall, in 2025, we had an unusual situation where we had the 3 biggest competitors all introducing new high-profile multifocal IOLs. We don't necessarily anticipate that. However, there will -- we already know that there are announcements of new premium IOLs, particularly in the presbyopia correcting space by some of the major players and some of the other players in the space. So similar to what we talked about in 2025, these things tend to be episodic and transient. They -- as marketing efforts coalesce around a new product launch. But then over time, the reality of the "new technology" is that they're essentially the same as the old technology, and that leads to a natural kind of return to baseline.

Your next question comes from the line of Aidan Lahey with Bank of America.

This is Aidan on for Travis. One question on utilization assumptions for LALs. I know you said volumes up mid-single digits, but maybe I'm doing the math wrong, that implies utilization is down. So maybe you could double-click on that.

Yes. Thanks, Aidan, for the question. In terms of LAL unit growth, up in the low single-digit range, I think, is the right way to think about it, which implies utilization stabilizes around 8 lenses per LDD per month.

Okay. Great. And then on the premium market as a whole, I think you said that 40% of LAL patients would have otherwise received a non-premium lens. So when we think about the market growth as a whole, how should we think about RSD kind of gain for an incremental point of market growth?

Yes. As we've talked about previously, if you look back over the last 5 years and look at the growth of the premium segment, a very large fraction of that was -- is attributable to the LAL, specifically for the reason that you just outlined that it appeals to patients who don't want -- who either can't or don't want to compromise on quality of vision. And we believe that, that is -- will continue, especially as trends that are going on in the market continue to play out, such as younger demographics seeking earlier cataract surgery and therefore, being less accepting of reductions in contrast vision and other measures of quality of vision that the LAL doesn't impact. So we see those trends continuing.

Your next question comes from the line of Adam Maeder with Piper Sandler.

Mark, congratulations on the new role. Two for me, one on the guidance, one on international. So on the guidance front, I wanted to ask, I guess, for a little bit more clarification just around sequencing of models for FY '26. Is the right way to think about it Q1 kind of being the low watermark and then quarter-over-quarter sequential growth for the rest of the year? And then I heard recovery in the back half, the comps are also easier. So should we take that to mean positive year-over-year growth in the second half of the year? And then I had a follow-up.

Yes. Thanks, Adam. In terms of total company sales, I think the expectation is that Q1, consistent with what we typically see will be the seasonally weaker quarter with some summer-related headwinds also in the third quarter. As far as year-over-year growth rates, we do anticipate that they will improve over the course of the year by quarter based on our assumption of improving fundamentals and also easing year-over-year comparisons. So I think the way you framed it is accurate.

Okay. Perfect. And then for international, it sounds like there is some modest revenue contribution embedded in the guide from OUS. Can you just help us understand which geographies that's coming from? And would love just the latest update on timing for Japan and China approvals.

So the -- we have -- as we've talked about before, we have received approvals in the European Union, the U.K. as well as some Asian countries, specifically South Korea, Singapore and some of the ASEAN countries and then just recently, Australia. So clearly, the revenue would most likely come from those. We've previously talked about the more lengthy review processes in -- for regulatory approval in China and Japan. We are pursuing those, and we'll have updates for that later in the year.

Your next question comes from the line of Danielle Antalffy with UBS.

Just a question just to get a little bit deeper into the international opportunity here. I'm just curious if you could talk a little bit, I appreciate it's probably early, but the go-to-market strategy you guys are thinking about there and especially from a system placement perspective, just given some of the budgetary constraints internationally and the competitive environment.

Yes. I think that just broadly, the -- as we've talked about, the international market is actually about double the size of the U.S. market and concentrated in approximately 20 individual countries. So it's certainly approachable by a company our size. We've begun to get our regulatory approvals, establish a footprint, whether that's a direct force or through a distributor in those -- where we've gotten those initial approvals. And our focus right now is developing KOLs and clinical data in those markets since we have gotten approvals without having to do a clinical trial like we did in the United States and where we had kind of a built-in I would say, KOL core of approximately 20 sites already. So we need to recreate that, of course. We do want to leverage all the learnings that we've had over the past 5 years, and that's certainly our plan.

Okay. That's helpful. And then just a quick question on the broader market. I mean, we're talking to docs sort of one at a time. So not sure how representative 1 or 2 physicians are. But it seems like the broader market environment is improving for the overall premium IOL segment. And I appreciate you guys are in your own sort of transition here. But curious if you have a view on the broader premium segment of the market? And is that, I don't know if accelerating is the right word, but re-expanding or shifting again after what feels like a '24 that was pretty suppressed from -- I'm sorry, '25, pretty suppressed from a penetration perspective.

Thank you. So I think we've heard from some of the third parties and other players in the market that there was some acceleration in the premium market towards the end in the second half of the year. That would be consistent with our observations. The premium market tends to be more resistant historically to macro headwinds. So although there are some whisperings of those, I think that -- we would hope that those historical trends would continue moving forward. And certainly, with the LAL kind of being at the higher end of the premium market that our customers would be less sensitive to those.

Your next question comes from the line of Tom Stephan with Stifel.

I wanted to start sort of on guidance. Ron or Mark, maybe if you can give us, I'll call it, the key fundamental factors or what specifically implied that gets you to the top end of that range? I appreciate the fairly wide range. Just kind of curious what sort of gets you to the top end?

Sure, Tom. I can start by taking that. Thanks for the question. I think when we look at the top end of the range or $135 million, it assumes increased traction from some of these internal initiatives that Ron has spent some time talking through and updating you guys on. So that would be, I think, the first assumption. I think beyond that, we would take into account faster utilization uplift with utilization growth especially higher in the second half of the year. And then the third factor would be competitive trialing and your assumptions for that. And so less headwind from competitive trialing would also benefit us, obviously, and lead to the higher end of that range. Anything you'd add there, Ron?

No, I think that's good.

Got it. Super helpful. And Ron, maybe to pivot to you. I wanted to ask about innovation in the pipeline. Just curious if there's anything you can discuss or provide sort of on what may be on the come in terms of updates or development progress. I feel like we haven't heard too much of late. And I guess I'll ask directly, are there any new lenses potentially on the horizon for RxSight that we can look forward to?

Well, certainly, depending on the time frame, we'll continue to innovate both on the lens side and on the LDD side as well as other -- some of the other ancillary devices that are associated with our technology. I think that the best way to answer that is to review the pace of innovation that we've had, especially over the last 5 years, more than 20 significant product-related FDA approvals. That pace is really, I think, unheard of in the industry. And we continue to have opportunities even with our already released innovations to continue to penetrate the market with those having over 1,100 systems and 2,500 customers. So even without adding additional, which we do plan to, we continue to have a lot of raw material to work with. And just to put it into more of a historical context, we're about 5 years into this. Typically, the technologies that I've been associated with have 10- to 15-year runs of significant technology innovation. So I still think there are many additional applications that adjustability is going to be beneficial for.

I will now turn the call back over to Ron Kurtz, CEO, for closing remarks.

Well, thank you, operator, and thank you all for your interest in RxSight, and we look forward to updating you on our progress in future quarters. Goodbye.

Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.

Good afternoon, everyone. I'm Robbie Marcus, the med tech analyst at JPMorgan. Really happy to have RxSight as our next presentation. CEO, Ron Kurtz will do a presentation followed by some Q&A. Ron?

Thank you, Robbie. Appreciate being here again this year. These are our forward-looking statements.

RxSight is focused on transforming cataract surgery outcomes via the power of adjustability, and adjustability is a new capability that hasn't existed in ophthalmology. We pioneered that over the last 5 years, and I'll talk a little bit about how that is transforming cataract surgery and particularly, premium IOLs.

If we take a snapshot of RxSight today, over the past 5 years, we've grown to about 500 employees. We've performed about 300,000 LAL procedures. We have -- we're in about 1,100 ophthalmic offices with our piece of equipment that does the adjustment, the Light Delivery Device. We've trained over 2,500 surgeons and attained a market share of approximately 10% in the U.S. premium IOL market. And we have a strong balance sheet as well.

We did issue a press release now on Sunday and had a strong performance, good way to end the year, finished the year with about 12% year-over-year growth in procedures, increase in our installed base of nearly 20%. And perhaps most importantly, we announced our new Chief Financial Officer, Mark Wilterding. Very happy to have Mark onboard, comes with a wealth experience across different disciplines in med tech and banking, and he has hit the ground running here at JPMorgan. So welcome, Mark.

Thank you.

So just a little bit about our market. I think people are familiar with cataract and lens replacement surgery. It's one of the most, if not, the most common surgical procedure. And in that procedure, the cloudy cataractous lens is removed and replaced by a plastic lens or which is sometimes called an intraocular lens or IOL. It's -- there are many, many procedures globally, about 5 million in the U.S. annually. But over the last 20 years, the focus of practitioners and industry has shifted to the so-called premium IOL market, which is a unique area in medicine where -- especially in the U.S., where patients can pay an extra amount above and beyond the reimbursement and have a higher level of service, in this case, to reduce their dependence on glasses.

There are a number of different types of premium IOLs. The 2 broad categories are toric or astigmatism correcting and presbyopia correcting IOLs. But they all feature the same basic structure as standard monofocal IOLs in that they're fixed optics. So the patient and the doctor choose a lens. The doctor makes some measurements on the eyes and chooses a power and then performs surgery and implants the lens. And the outcome is whatever that is after that process.

Five years ago now, we introduced the concept of adjustability where that same initial process through surgery occurs, but after the surgery is performed, the patient can come back 3, 4 weeks after surgery and undergo an office-based light treatment to personalize the optics of the lens. And that can be based on both reducing the patient's need for glasses in each eye but also to personalize the binocular vision of the patients so that they can have -- reach their full visual potential. And the patient has the unique ability to trial these things, these choices in real-world setting before they finalize their choice.

So adjustability offers really a host of benefits that are fast becoming a foundation for premium outcomes. The first I'll talk about is refractive accuracy. But just as important is the customization and the high quality of vision that the technology affords.

This is data from our original PMA study. Again, I won't go into the details of this, but you can kind of take and see a snapshot of a fixed IOL on the left-hand side, which shows a pretty broad scatter of refractive outcomes, which with the LAL has -- almost as though you've taken a dart board and pulled out the darts and then put them in the bull's eye. And that's really the -- an analogous situation to what we do by being able to treat the lens after it's been implanted to refine the refraction of the patient.

We've got one of the largest registries for real-world data, and the data that we have collected very much reproduces our clinical trial data with more than 90% having extremely high refractive accuracy and patients being able to achieve excellent distance and near vision with their -- binocularly. In addition, doctors have largely accepted the value of the technology. When we poll our customers, 90% of them believe that the LAL provides the highest quality vision and nearly 8 out of 10 would select the lens for their own eyes or for that of a family member.

Just as importantly, adjustability drives superior practice economics. It does this by appealing to a segment of the population that may not be well served by other offerings. And our data shows that about 40% of the LAL patients would have otherwise received a nonpremium lens. That means that the LAL is really growing the premium business within each practice.

It does command a premium price as well. And it allows the practice to unify the care team so that it's not just based on the surgeon. It's based on other people in the practice, particularly optometrists who are very skilled and have a key role in the delivery of postoperative adjustments. On average, when you take these factors together, every LAL inserted in the average practice yields about $2,000 in additional revenue.

Over the last 5 years, we've seen nice growth in the -- both the LAL units and the LDD installed base. 2025 obviously had some headwinds, but we still finished quite strongly, again, with 12% year-over-year growth in procedures.

As we look forward and look for opportunities of additional growth, we see a number of ways that we can grow now that we have a larger installed base. One is -- and the 1 that we focused really the last 6 months or so on is growing our utilization in same-store sales. That can be either by increasing procedures by our current surgeons or by growing the number of surgeons who use our technology by recruiting surgeons within those practices who may not have been the initial focus of our training.

We also have the opportunity to continue to place LDD placements -- LDD systems into additional practices. Currently, we service only about 25% of the cataract surgeon market in the U.S. and obviously, a much smaller percentage outside the U.S.

We -- there are other new business models that are also developing around this technology, which we think, over time, can also add accessibility to the technology. We are focused on continuous improvement. We're in the early phases of the technical development of adjustability, and over the last 5 years, we've introduced over 40 PMA supplements that have had cumulatively a significant impact on both workflow efficiency as well as expanded capabilities, and we anticipate that this will continue as we continue to expand the footprint of the technology.

Geographically, ophthalmology is a global opportunity, premium -- and especially in the premium IOL space. The U.S. makes up about 20% of the global premium procedures, so -- and with the bulk of the 80% of the remaining procedures in the major markets of Asia and Europe. We've made significant progress over the last year or so, initially with regulatory approvals and now building out the team internationally. And we anticipate continued progress in 2026, primarily focused on initial target markets. And within those markets, both generating domestic KOLs and domestically sourced clinical data since doctors in those countries typically want to see success not only in the American market, which is very helpful but also in their own local market.

As we look out in the long term, we think that adjustability becomes a very key piece of the premium IOL market. And to date and to our -- with any visibility, we -- RxSight is the only adjustable IOL. We've developed a strong market and platform in a key market in ophthalmology. We're focused on our execution and growth opportunity. And as we've talked about, we've made significant improvements recently in how we execute on that opportunity, particularly here in the U.S. And we believe that there's a large opportunity for revenue and margin expansion as we drive utilization and move more and more to the recurring LAL high-margin product.

Again, as I mentioned, the company is well positioned from a financial balance sheet and can certainly support this growth trajectory. Thank you so much.

All right. Maybe we could start with the preannouncement. You put out a release on Sunday morning. Pull up the exact numbers here. You preannounced fourth quarter sales of $32.6 million, above the Street at $27.6 million and came in even better than what we had been previewing coming into the conference by about $1 million. So maybe talk through -- let's take it in 2 parts, right, one, what you saw trend-wise; and then let's talk about sort of the progress you're making in stabilizing sales trends.

Yes. So obviously, the bulk of that beat was focused on LALs, and that has been the focus of our efforts since our commercial pivot midyear. We are -- we grew very fast previous to this. And I think that as we have grown that installed base, it naturally occurs that we're going to focus more and more on same-store sales since those efforts on a large installed base can have significant impacts on revenue and ultimately profitability since that's the high-margin product.

So what did you see in terms of LALs versus LDDs in the quarter and how that compared versus the internal plan?

Our LALs were, again, leading the way and LDDs were strong, but I think the focus was -- the results were consistent with our focus on continuing to drive LALs, which ultimately, we think, will reignite the LDD placements as customers who are looking to acquire the technology, see the utilization of their peer groups growing and therefore, making the decision easier to adopt the technology.

I'll add my congratulations to Mark, newly announced CFO. So let's dig right into 2026 guidance here. Why don't you play out the trends you're expecting?

Mark, get ready.

But seriously, though, I mean now that fourth quarter has come in, I imagine you'll want to put a lot more thought into guidance, whether you want to take it or run. Just how are you thinking high level about the business going into next year? I don't know if you want to comment on where Street is or not. But just any thoughts as you turn the quarter into 2026?

So I'm going to give Mark more than 2.5 days to get his [ head ] around that.

That's a fair enough. Yes.

But I think, generally, we're going to continue the efforts that we in 2025. We're looking forward to additional contributions from Mark and additional members of the team. But there's -- we're focused on making our customers successful. We weren't -- we were focused on that previously, but as you move up the adoption curve, there are changes in the way that you need to address those new customers.

And I think that this -- that we've made changes to our commercial force, the way -- making it both more streamlined and organized so that our sales and clinical teams that are focused on LAL sales are really working hand in hand, not that they weren't before. But those organizations grew rapidly themselves and somewhat independently, and we've taken the opportunity midyear to really re-equilibrate and make sure that regions are -- both regions and customers are covered by the same people and the same team and are -- and we see that, that was working, beginning to show benefit.

Maybe before we address what's going on today, let's rewind a little bit. And I would say, since the IPO, your capital placements have come in way ahead of my forecast and I believe where consensus was if we go back to 2021. So you now have a very large installed base, and as we look to middle of last year when you had this reset, now with the benefit of hindsight, what do you think it was that hit the LAL utilization? Because you have this big, large installed base, and then we just saw a bit of a falloff on utilization. So now with a little hindsight, what do you think happened there throughout 2025?

Well, I think you've identified that we did grow very fast. That's a good thing. We generated a ton of interest in the community, and by and large, our customers are really happy. There's -- we continue to have, when we survey our customers, extremely high ratings from them. But when you're growing at that speed, you're not -- you don't necessarily, especially a young company, have everything in place, all the systems in place to support all of those customers and the different rates at which they get familiar with the technology. Because this is -- even though this is still cataract surgery, there is a component of adjustability that is new to them. New to the -- how it's run in the office, the expectations that are set to patients and clinical decision-making that is different than you do with traditional cataract surgery.

So we, to some extent, may have run past our supply lines a little bit, but the good news is that we've made that pivot. We've got a large installed base that we can now leverage. And again, I think that the performances in Q3 and Q4 are directionally positive, and we have more work to do. But I think that the team has responded to the changes that we made, and they will continue to show benefits.

It's interesting. You talk about it's a little more than just the sale. There's a bit of process along with it, as it is a change versus what these physicians had before, where you simply, one and done, you put the IOL in and that's the end of it. Here, there's a bit more of a follow-up in the process and a workflow change.

So what's RxSight doing to maybe help minimize the disruption from that? I imagine early adopters, they're willing to put in the effort on the process and the workflow change, but as you get larger, maybe there's a little less impetus from some of these physicians. So is that part of the issue? And what's RxSight doing to help minimize any friction there?

Well, I always start out that the postoperative adjustments that are done, that is the benefit of the technology. So if you want to have the benefit of the best outcomes in cataract surgery, it takes a little bit more work. The patients don't mind that because they're receiving the benefit. The practices shouldn't mind that because they're actually making more money and converting more patients to a premium procedure at the highest level of payment.

The challenge is that it's different from what -- and doctors and practices, they are like the rest of us. They are resistant to change a little bit. The ones -- the early adopters tend to be less resistant. Their -- that's, to some extent, their business model. And our focus needs to be taking all the learnings that those earlier adopting practices made and that we made with them and translating them in an efficient way to our newer customers where we saw a little bit more of the slower adoption, especially in '25.

And I think that, that is -- part of it is also just time. Those practices may be a little bit more methodical in the way they adopt technology, and time is also a factor. But we can certainly influence that by having more focused clinical support, peer-to-peer learnings, pearls that are both related to their practice dynamics as well as to the clinical procedure itself.

So when you talk about recalibrating the sales force on the LAL sales side and capital, do I think of that as a head count reallocation? Do I think of this as maybe more clinical specialists per account than you had before and fewer capital sales in the field? Maybe give a little more detail on that.

So I'll just back up and say kind of what our structure is. So we have a couple of hundred people in the field. The bulk of them have always been clinical trainers. And then we have a larger sales force that is focused on the LAL and a smaller capital equipment sales force. That largely hasn't changed, but the organization of that has changed in that our LAL sales force and the clinical trainers now reporting to the same organization and are concordant geographically and customer-wise, so the same people, which is difficult to do when you're ramping up very quickly because you don't know exactly where these customers are, and so there can be some discordance between that.

I think that, that was the first thing that we did that has already anecdotally been well received by both customers and our teams. And now we've also started to introduce specific programs that are tailored to the exact needs of that customer.

How do you think about the impact in 2025? How much was the IOL market, which we did see a slowdown globally across competitors versus RxSight specific? And maybe it's a little column A, column B, but how do you think about the 2? And what's your view on the IOL market and specifically the premium IOL market in 2026?

I think 2025 was a confluence of many factors or several factors that -- and you've mentioned them, Robbie. The market itself when we -- in the first quarter, the overall cataract market fell for the first time since COVID, and that was very unusual. The -- there was -- we talked about, at the time, this unusual situation where the 3 major U.S. IOL companies were all introducing their premier presbyopia correcting IOL and that generated more competitive activity. We're not directly competing with those, but those marketing activities certainly have had an effect.

We've largely passed through that, and -- but I would not discount the factors that we already talk about that are specific to RxSight and our rapid growth curve and the requirement to make the changes to focus more on same-store sales organizationally as we -- and to take full advantage of this large installed base that we now have.

So you have a great product. It has great results. How do you take it from where you are today to 20%, 30%, 40% market share? How do you go from a really great performing niche player to a main key competitor out in the market? What do you think you have to do between now and then?

So part of it is time. I mean, I don't know that I would -- we're probably the third largest premium IOL in the U.S. So it's hard to say that we're niche, but we're -- and within our practices and not only we've achieved that with only being with 25% of the surgeons in the U.S. So I think that we're -- we have a long runway ahead of us. I've introduced different technologies into this similar or same field. And we're roughly on course in terms of adoption.

It takes time to move afield, but we've gone pretty rapidly. We need to continue the efforts that we've talked about, both the ones that -- both placing additional LDDs so that we attract new customers but also more and more growing those same-store sales and leveraging the installed base, particularly in the U.S.

And then that is a -- that's an effort that will take time, but at the end of the day in ophthalmology, clinical outcomes drive the -- all the behavior because it's a field where the patient actually sees the difference when they are in the office. It's no offense to cardiology. You don't have to do an ejection fraction to figure out whether your product has worked. The patient will tell you right away.

I think you said in the slides, you're in around 25% of the practices in the country. Where do you think you are in terms of share of premium IOLs in the country?

If you look -- because we're a relatively small part, we don't have that visibility, but when we look at the third-party aggregators of data, they peg us at somewhere between 10% and 11%, sometimes 12%.

Got it. If you look out on the competitive horizon, is there anything you see in the, let's call it, 3- to 5-year time frame on adjustable lenses or anything, other technologies that you think might be competitive with your Light Adjustable Lenses?

So certainly, our success has generated interest. I think we've established that adjustability is going to be a long-term player in ophthalmology. And again, we believe it will be ultimately the dominant player for premium IOLs. The -- but the -- and that certainly can attract competition. I would just caution folks that this is a really hard thing to do. It took us more than 20 years to do it. And even when somebody has proof of concept and technological proof of concept, you're looking at typically 5-year regulatory in the U.S.

We don't see anything on the horizon. There's no -- there's nothing that is visible through any of the ClinicalTrials.gov or that activity. So I -- that's not typically a concern that I have. Of course, there are clever people across the world, and we never discount somebody coming up with a better mousetrap. But now they're going to have to not only have a better mousetrap. They're also going to have to overcome the regulatory first mover advantage and the commercial first mover advantage that we have.

International is a small budding part of the business. Maybe just walk through the strategy and if you're willing to comment, what percentage of sales it represents of the overall business today.

It's very small. We -- so it's a great opportunity because, as I mentioned, 80% of the premium procedures are outside the U.S. We're focused on those 20-or-so markets where pricing is very similar to the U.S. So that would be a typical initial market for us to go to. They're the major countries of Europe as well as the major markets in Asia.

We've already -- we've disclosed that we have our approval in Korea, some of the smaller Southeast Asian countries, and then in Europe and the U.K. We're working towards approval in those -- the other countries, obviously, Japan, China. And we will -- we've started commercialization efforts in those areas, focused initially on building the team, taking the lessons that we learned in the U.S., the importance of starting with really well-trained and confident initial customers that can then disseminate in their local communities the benefits and the methodology of adjustability and generating clinical data similar to the data that I showed, which is far and away the best outcomes in cataract surgery and because, ultimately, that's what's going to drive adoption in those other markets.

In Canada as well, right?

We've been in Canada since '23, and Canada has been a really nice market for us. They -- Canada has had some hangover from COVID in accessibility just to ORs, et cetera, but it's been a nice market for us.

Maybe we can talk about down the P&L, and gross margin has gotten better just fairly -- I mean, both underlying as well as mix, right? As LDDs have stepped down, LALs have much better gross margins. How do you think about the sustainable mix going forward? I would imagine, at least in our model, we have LDD placements getting better than the second half run rate but far below what you were doing beforehand in 2024. If we think about that, what do you think is a good target of gross margin over time?

Well, if we look at the long term, of course, gross margin is going to be determined by the gross margin of the LAL and because it is a high gross margin potential product in that 80% range or so. The gross margin on the LDD is, of course, much lower. But I don't think that we would try to manage to gross margin. We -- ultimately, we want to grow top line. And if that means putting out -- satisfying the demand for LDDs across the world, we will do that because, ultimately, that's going to lead to higher total revenue and higher -- ultimately higher margins as well, operating margins.

At one point, I think you were just a small amount cash flow positive. I would imagine second half of '25, you were burning cash. Are you willing to comment on what cash burn or positivity was in the fourth quarter and how you're thinking about 2026?

So what we did say in the press release that we ended with about $225 million in cash, which I'm probably not the best person to comment on that. We'll give Mark maybe a week to get up to speed and as we close the books. But again, we've got plenty of cash to fully take advantage of this opportunity, and we use it judiciously. There are times that cash are really helpful, but there are other times where you need to put changes in place to be able to position yourself to use the cash.

And as you think about cash usage in 2026, what are the priorities throughout the business, whether it's geographic, sales force, education?

All of the above and -- but again, I think it's important, and I think this is part of the advantage of bringing people like Mark into the organization, who have been part of larger organizations that have that experience of scaling and scaling in an intelligent way so that long term operating margins are very favorable. And I think spending a little bit of time at this stage can position us really well for the future.

Great. Just quickly, any questions in the room? I'll repeat it. Go ahead.

I was just trying to figure out. It feels like or sounds like you're saying that people are more productive even, can work better, all that kind of stuff after they get this. Looks like huge difference, I would say. Economically, just [ employees ], they're happier, all of that but also they work more and they're more productive. And I'm just curious if that's been measured and do you think that's taken into account from a reimbursement perspective because I'd imagine that even core market will use this if the reimbursement was even better for the whole procedure?

Let me just repeat it quickly. Are people more productive after getting the procedure? And does reimbursement reflect that?

So there has been some work on the cost effectiveness of the LAL. There was a publication out of UC San Diego not too long ago, which was favorable. I would say that, overall, the cost of traditional cataract surgery, conventional cataract surgery is very low relative to the benefit and -- but even premium IOLs, if you compare it to knee replacements, other things that affect people in this age group, it's very cost effective.

So while I think you're correct that an argument can be made for that, and it's a strong argument, I think we also need to recognize that we live in an environment where the idea that Medicare and other insurers are going to expand payments to one of the most common surgical procedures in the world is unlikely. And quite honestly, we strongly believe that giving patients the choice to select -- to make that choice and pay for it themselves is the most direct way assess the value of the procedure.

They're pulling money out of their pocket, and they're making a decision that, hey, for the next 20 or 30 years of my life, I want to be -- I want to have the best possible vision with the best -- it doesn't mean that they won't have good vision with other technologies, but everybody can make their own decision as to where they want to put their discretionary spending.

Great. Unfortunately, we're out of time. Thanks for a great discussion, and thanks, everybody, for coming.

Hello, everyone. Thank you for standing by. My name is Will, and I will be your operator for today. At this time, I would like to welcome each and every one of you to the RxSight Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I will now turn the call over to Mr. Oliver Moravcevic, Vice President of Investor Relations. Please go ahead.

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 its financial results for the 3 months ending September 30, 2025, and updated its full year guidance. 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 questions during today's call reflect management's views as of today, November 5, 2025, 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 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 Relations website. With that, I will turn the call over to our President and Chief Executive Officer, Dr. Ron Kurtz. Ron?

Good afternoon, everyone, and thank you for joining us. During the third quarter, we've made meaningful progress strengthening our commercial execution in the U.S. while laying the groundwork for our broader global growth. We aligned our clinical and sales teams to create a more integrated approach for customers, enabling us to improve training and engagement an approach that we continue to view as the most consistent driver for both future LAL and LDD growth.

We launched the first of several new practice development and clinical engagement programs, including the MasterClass and Elevate programs that are designed to share learnings from over 250,000 LAL cases, helping practices optimize LAL workflow, enhance clinical confidence and accelerate their path to becoming experts in postoperative adjustability.

During the quarter, more than 2,000 ophthalmologists implanted the Light Adjustable Lens, representing roughly 1/5 of the estimated total number of U.S. cataract surgeons. With approximately 1,100 LDDs in the field, we have ample opportunities to expand access to the LAL to more patients, and we continue to see healthy demand and growing interest from new doctors and practices. Our focus is on strategically expanding our base of LDDs and implanting surgeons while positioning our customers for success and sustained growth.

Internationally, we're making steady progress on our deliberate and focused rollouts in Asia and Europe with key regulatory infrastructure and commercial initiatives underway to support our multiyear expansion across priority global markets. During the third quarter, we also added an Executive Vice President of International to lead this expansion. We recognize there's more work ahead, but the engagement we're seeing across our customer base gives us confidence that we are building a strong foundation for the future.

With that, I'll hand it over to Shelley, who will review our third quarter financials and updated guidance.

Thank you, Ron. Good afternoon, everyone. RxSight generated third quarter revenue of $30.3 million, down 14% compared to $35.3 million in the year ago quarter and down 10% compared to the $33.6 million in the second quarter of 2025. During the quarter, we sold 26,045 LALs, generating $25.7 million in LAL revenue, up 6% compared to the third quarter of 2024 and down 5% compared to the seasonally stronger quarter of 2025. In the third quarter of this year, LAL revenue represented 85% of total revenue, an increase from 69% in the third quarter of 2024 and an increase from 80% in the second quarter of 2025.

We sold 25 LDDs in the quarter, down 68% from 78 units in the prior year period and down 38% from the 40 units in the second quarter of 2025. During the quarter, LDD sales generated revenue of $3.2 million, down 69% compared to the third quarter of 2024 and down 38% versus the second quarter of 2025. As of September 30, 2025, our LDD installed base totaled 1,109 units, representing a 25% increase year-over-year.

Gross margin in the third quarter of '25 was 79.9%, representing an 844 basis point increase compared to 71.4% in the year ago period and a 496 basis point increase compared to 74.9% in the second quarter of 2025. The increase primarily reflects a shift in product mix with higher-margin LAL revenue rising to 85% of total revenue in the third quarter, combined with lower period costs as compared to the second quarter of 2025.

In addition, lower unit costs each for both the LAL and LDD contributed to third quarter gross margin improvement compared to the same period last year. SG&A expenses in the third quarter of 2025 were $27.3 million, representing an increase of $1.7 million or 7% versus $25.6 million in the year ago quarter. This year-over-year increase was primarily due to a rise in personnel costs, stock-based compensation expense and marketing studies. On a sequential basis, SG&A expenses decreased 6% due primarily to lower marketing studies and trade show expenses.

During the third quarter of this year, R&D expenses rose 3% to $9.1 million compared to $8.8 million in the third quarter of 2024. This year-over-year change primarily reflects an increase in overhead costs, offset by lower materials costs. Sequentially, R&D expenses in the third quarter decreased by 11%, primarily driven by a decrease in overhead costs. We reported a GAAP net loss in the third quarter of 2025 of $9.8 million or a loss of $0.24 per basic and diluted share using weighted average shares outstanding of 41 million shares. This compares to a GAAP net loss of $6.3 million or $0.16 per share on a basic and diluted basis in the third quarter of 2024.

Note also that stock-based compensation in the third quarter of 2025 was $8.1 million. Therefore, on a non-GAAP basis, we reported a net loss of $1.7 million or a loss of $0.04 per basic and diluted share compared to an adjusted net gain of $200,000 or $0.01 per basic and $0.00 per diluted share in the third quarter of 2024. Please refer to the unaudited non-GAAP reconciliation and disclosure included in today's press release for more comparative information. We ended the third quarter of 2025 with cash equivalents and short-term investments of $227.5 million, unchanged from June 30, 2025.

Moving on now to our 2025 outlook. We are narrowing our full year 2025 guidance for revenue, increasing gross margin guidance and reiterating our operating expense guidance as follows: Based on our Q3 results, more consistent LAL procedure trends and our strategic approach to LDD sales, we are narrowing our full year guidance range to $125 million to $130 million from the prior range of $120 million to $130 million.

Maintaining a conservative outlook, we narrowed full year guidance range implies year-over-year decline of 11% to 7% and Q4 revenues in the range of $23 million to $28 million. At the top end of the range, our guidance assumes flat to slightly higher LAL procedures sequentially. Gross margin of 76% to 77%, an increase from our previous guidance of 72% to 74% representing an implied increase of 529 to 629 basis points compared to 2024. We estimate gross margin improvement will be driven by a higher LAL mix and the strategic approach to capital sales Ron mentioned earlier.

Operating expenses are expected to remain in the range of $145 million to $155 million, representing an implied increase of 7% to 14% over 2024. We remain disciplined in managing operating expenses as we realign resources and clinical and sales teams to support long-term growth in LAL adoption and support the strategic expansion of our LDD installed base.

Despite a 6% sequential operating expense decline in Q3, we expect a sequential increase in Q4, driven by the AAO trade show expenses, increased marketing expense, initial international hiring and stock-based compensation. Also note that the operating expense estimate includes non-cash stock-based compensation expense between $30 million and $32 million, an increase compared to our previous estimate of $27 million to $30 million.

And with that, I'll turn the call back to Ron.

Thank you, Shelley. We continue to see strong global clinical and market enthusiasm for the Light Adjustable Lens. At the September ESCRS meeting in Copenhagen, the level of international interest was the highest we've seen with physicians recognizing the unique value the Light Adjustable Lens brings to achieving personalized visual outcomes. Separately, a couple of weeks ago at the AAO meeting in Orlando, the Light Adjustable Lens was again a focal point of discussion, underscoring its growing position within the global premium IOL landscape and the expanding recognition of its differentiated value for patients seeking optimal visual outcomes. As Medicare's 2026 physician fee for cataract surgery is declining 11%, we expect practices to continue placing greater emphasis on premium IOL options, especially the LAL that improves both patient outcomes and practice economics.

Internationally, we are progressing in key markets, building strong relationships with early KOLs and preparing for broader expansion. We expect these efforts to begin contributing more meaningfully over time as procedural volumes grow and local clinical experience deepens. As always, our R&D team remains focused on improvements that can simplify workflows, broaden the range of patients who benefit from our technology and continue to extend our leadership in adjustable vision correction.

Before I close, I want to thank all of my RxSight colleagues for their continued dedication and adaptability during this period of change. I also want to thank our many partners in clinical practice for their commitment and expertise, bringing a new clinical paradigm to patients worldwide. Together, we're helping to redefine what people can expect from a customized lens replacement solution. Overall, I'm encouraged by our progress with an aligned organization showing early signs of improved execution toward disciplined growth, customer success, and continued innovation to deliver lasting value.

With that, I'll ask the operator to open the call for questions.

[Operator Instructions] First question comes from the line of Ryan Zimmerman with BTIG.

This is Izzy on for Ryan. Just to start out, it looks like you guys had a nice beat to our utilization expectations in the third quarter. I was curious what other metrics you're going to be looking at that will continue to evaluate that the changes that you're implementing are starting to take hold.

I think that the key metric for us and the leading metric for us is number of LAL procedures. And that to us is an absolute number. We also look at internally the number of physicians that are implanting each quarter as well. And I know the Street has been focused on number of LALs per LDD. It is certainly a measure we continue to use, but the absolute number of LALs that we have implanted each quarter is a leading indicator because then that, of course, grows the number of LALs per LDD.

That's helpful. And there have been a couple of new entrants coming into the market. So I was curious how you're thinking about the potential impact the demand for the LAL and whether or not you expect to see similar levels of competitive trialing with these lenses, especially when we think of the broader context of reimbursement rates coming down for 2026?

Thank you. Maybe I'll take that one. So I think that the lowered reimbursement for traditional cataract surgery, standard cataract surgery will generally be a continued tailwind for premium IOLs generally. But we anticipate that there will be continued entrants into the field for the same reason. However, they're really more of the same, whether they're different manufacturers of presbyopia-correcting IOLs, they're more similar than not. While there is some impact as there's individual incentives to trial the lenses, the overall impact to us, we think, over the long term is modest.

Ron, can I add one thing to that? When we look at the numbers over the last several years of market penetration, if we go back to 2022 versus where we're at in 2025, PC IOLs have gone down by about 2%. Obviously, we've gone from no market share to about 10% and toric IOLs, which are included in the premium market, but are not as much talked about, still remain about 50% of the overall market. And so if you think about where we're going, there's still a lot of room for penetration and our focus continues to be the emphasis on total LAL procedures and helping our 1,100 customers grow their practice with the LAL.

Your next question comes from the line of David Saxon with Needham & Company.

Congrats on the improvement here in the third quarter. I guess just on the 2,000 active surgeons you called out, I believe last third quarter active surgeons per LDD was like 1.5 or 1.6. So that is a meaningful increase just considering kind of what you're seeing. So I would love to hear what's driving that? What are you seeing in terms of the sales force realignment and kind of how to think about active surgeons going forward, especially in the fourth quarter and 2026?

Yes. So I think that, yes, the number of active surgeons has gone up slightly between 1.7 and 2 depending on the time that we measure that. And if we think about active surgeons, they really come to us in several different ways. One is that we look for surgeons coming into the funnel from new LDD sales. But more importantly, we're looking for new surgeons coming in, in an existing practice that may not have been doing the LAL previously. And also, while it's still a very small portion of our business, open-access. So open-access is typically doctors that may not have enough volume that go to open-access centers. And so just like any other new customer, we train them and then they have the -- they do the surgery themselves and then LDD treatments are done at the open access center.

Okay. And then just maybe my second one is just on guidance. So I think, Shelley, you talked about the top end of the guide implying a sequential increase in LAL volumes. I mean that makes sense just given seasonality, a larger base, LDD base and benefiting from some of these initiatives you have going on. I believe that implies pretty much like mid-single-digit LDD placements. So kind of help us work through like why that would be, especially in the fourth quarter where capital placements should be stronger. How does the LDD pipeline look and kind of how we should think about that implied fourth quarter LDD placement number as we think about '26 placements?

Yes. I'll talk about the '25 guidance first. And I think that the way I'm looking at it is a little bit more holistically around the second half. And so with our initial lower guidance of $120 million to $130 million, and then now we've increased it at the mid of the range by about $2.5 million. I'm kind of looking at the mid of the guidance that the second half is around $56 million. The top end of the range is a bit higher.

And the LDD sales, I'm kind of looking holistically at the entire second half. So you're correct. They would be much lower in the fourth quarter, but I'm not reading anything into it other than the strategic imperatives that we set up as to the type of customers that we're adding and our field personnel, what they're doing. And so what we're really pushing for them to do is increase volume, right, of LALs in our existing practices. And that's important for our future growth as well. We don't want to not say that we're going to do LDDs. We placed 1,100 since we commercialize, and that's providing the basis for what we're doing. So yes, you're correct in terms of the math, but I'm also not implying something about that relative to '26 guidance, more just grounding us in the second half of this year. And then, Ron, would you add anything to that at all?

Yes. I think you've said it well, but I would just reiterate that. Our growth model is evolving. We obviously, early on, we were focused on a classic playbook that prioritize new systems to build access and awareness of the LAL. But we have a more diversified approach now, which Shelley outlined that still includes the strategic addition of new practices and doctors, but that can be through traditional LDD sales, open-access models, or as we just said, more importantly, growing the number of LAL procedures performed by our existing accounts with existing and new doctors. So it's just a much more diversified approach.

Your next question comes from the line of Larry Biegelsen with Wells Fargo.

This is Simran on for Larry. Maybe just following up with the prior line of questioning around sort of Q4 and like what this implies for 2026. Shelley, the last time we talked, you mentioned as we think about 2026, we should be thinking about sequential growth through the year from Q4. I guess I'm just trying to understand what kind of a recovery are you seeing here in the quarter? And if you can return to that year-over-year growth in 2026, given sort of the implied through in Q4?

Yes. No, that's a very good question. And while we're not giving 2026 guidance yet, I do think that in '26, what we're looking for is sequential growth, and that is really LALs with the strategic direction that we've taken on LDDs. And that would be sequential subject to some seasonality. I can't predict that a year ahead of time right now. But our goal still is to have a measured pace of growth throughout 2026.

Okay. That's very helpful. And congratulations on a really standout gross margin quarter here. I guess as we think about the business model evolving from here on out, is a high 70% gross margin sort of a baseline that we should be thinking about going forward?

Yes. I think that that's a pretty good assumption given our results in the second half, so far second quarter and third quarter. I think that it really depends on mix. In the last quarter, our third quarter, it was really heavy, LAL at 85% of our total revenue. So it will depend on that a little bit, but I think the range that we just guided, 77% to 78% is a reasonable range given that kind of mix. Now of course, mix could change a little bit. We're really heavy in the third quarter at 80%. But I think that that's generally where we want to be.

Your next question comes from the line of Patrick Wood with Morgan Stanley.

Beautiful. OUS, obviously, good to fill the role there. You've talked about a sort of a rational and sort of stable launch profile there. Any updated thoughts on like time line, how we should think about that and contribution over the next, whatever, year or 2?

Well, as we said, Patrick, we're excited about the opportunity outside the U.S. If you look broadly at the premium market, 2/3 of the premium procedures are performed outside the U.S. in approximately 20 individual markets, which we're focused on. And we've made excellent progress having regulatory access in Europe as well as some of the markets in Asia and are continuing to work on those.

And then beginning to introduce the product beyond Canada, where, of course, we've been for a couple of years. And those efforts are still at an early stage, but making good progress. And we would expect those to take a similar course to what we saw in the U.S., where we're establishing KOL relationships, the clinical value of the technology within each of those markets, data sets that local surgeons can see and experience themselves, and then build from there.

Appreciate that, Ron. I guess as a second and just a quick follow-up. Obviously, we had a bit of noise in Q1 and Q2 in the market overall with monofocal getting picked out and then monofocal toric picking up in Q2. And I know the dangers of looking at this data in a short-term time horizon. But given all that, how would you characterize the health of the underlying IOL market and the consumer within that? Have you seen anything that is kind of better or worse? Just trying to get a sense of how you feel about the consumer and the demand structure over and above the reimbursement changes, of course, that are happening in monofocal.

Well, the -- it depends which consumer we're talking about. Typically, the monofocal consumer is going to be more affected by economic headwinds. And so I think that's why we saw some of that earlier in the year. And they're still under pressure and with inflation still being relatively high. And so I think that those will still be in play. But at the higher end of the market, where we tend to play, I think that we're probably a little bit less impacted. And our -- we would hope that our demand would continue to be strong in that end of the market.

Your next question comes from the line of Robbie Marcus with JPMorgan.

This is Allen on for Robbie. I just had a quick one, again, kind of on just how to think about 2026. I fully understand you're not guiding. But given it sounds as though fourth quarter isn't exactly the right run rate to use going forward. You said you're looking at LALs and LDDs a little bit more holistically. Should we think about just the back half of the year on average as being kind of the right place to be from an LDD and LAL perspective? Just wanted to get a little help thinking about that.

Yes. I think what you're saying is that is the run rate of the second half of 2025 indicative of the start of '26. Is that what you're asking? I just want to make sure I understood.

Yes. Just like is that the right kind of baseline for us to then maybe forecast recovery or stability or whatever our assumptions on going into 2026, given you have this first half versus second half dynamic this year?

No. I think it is a good way of looking at it. And I think what it really does is provide a baseline of the way we're thinking about the business for '26, not necessarily the specifics. So the second half of this year is where we're making a shift in our business model, right, away from the leading indicator being sales of LDDs. We've built an installed base. We've been successful at that. We now need to optimize the value of that with LAL sales, right? And those coming from our existing customers with strategic approach about who we're going to add as customers for LDDs.

And so I think that approach and the philosophy will guide '26 without specifically trying to get into numbers. So I think it's going to be much heavier in LALs. I'm not so sure it will be 85% like it was in the third quarter. But I do think that, that's important to the way we'll be running the business and how we'll be measuring our own success. Would you add anything about that, Ron?

No. I think that's well said.

Your next question comes from the line of Adam Maeder with Piper Sandler.

Congratulations on the progress. I'll keep it to one. And one thing that's, I guess, come up in our physician checks is the post-refractive and LASIK patient opportunity. And it feels like that's a potentially sizable opportunity for the company to go after. And so I guess from your vantage point, how do you think about the opportunity for LALs in this patient segment? What percent of the volumes go towards these patients today? And where can that go over the future?

Well, thank you for the question. So as you pointed out, a number of physicians have recognized the benefits of the LAL more broadly, but in particular, for patients who have had previous corneal refractive procedures like LASIK, where the ability to predict the outcome of a procedure is more difficult because of the changes that have been made to the cornea and the demands of the patients are quite high since they've already demonstrated the desire to have spectacle independence. And so that's a natural population, often a place where our customers will start.

If you look at the U.S. population, it could represent about 5% of the overall cataract patients, but probably represents double that in our customer profile. When we look at our post -- I'm sorry, when we look at our Phase IV studies, we typically see post-refractive cases representing somewhere between 10% and 20% of the patient population. So it's significant, but not -- certainly not the majority. But it's a nice -- it's a natural place for doctors to begin.

Internationally, of course, that's -- there are markets where those percentages are even higher. And a nice feature of our technology is that we have the broadest range of spherical correction as well spherical powers, which from minus 2 to plus 30 diopters for astigmatism-correcting lens, which means that this can be used over the broadest range of patients as well who would be that population who likely would have undergone corneal refractive procedures.

Your next question comes from the line of Danielle Antalffy with UBS.

Congrats on making some good headway here this quarter. It's good to see. I was just curious if you could talk a little bit about what you -- I appreciate there's a lot of moving parts in the market right now. So maybe this is a little bit of an unfair question. But when you think about your penetration at your highest penetrated practices and the incremental runway you have there, I mean, how are you -- how do you feel about some of the statements you made previously thinking this will get to standard of care in premium IOLs. Do you still have conviction that, that's the case? Anything you can add to that, that gives you confidence that we'll get there? And sort of what needs to happen to accelerate towards that?

Well, just the first part of your question relating to where we sit at different practices, we've already achieved standard of care at some of our practices, where we represent the majority of their premium procedures. That means that the doctors at that practice have made the decision and the commitment to offer this maybe not exclusively, but predominantly to their patients because of the results that they see.

And I would say that this is consistent with the surveys that we've done of our doctors, which indicates that upwards of 80% of them would choose the LAL for their own eyes or for that of their family. So obviously, we're not there across our entire base, but that still remains where we would like to get to over time. But we recognize that we need to build that over time. And our first job was to get the technology out there. As Shelley mentioned earlier, we've had a lot of success for that. And now we're focused on going deeper at those accounts to achieve exactly what you were asking about.

Okay. That's helpful. And then the commentary on the reduction in reimbursement, I thought that was -- that's important, maybe something I personally hadn't been thinking about for 2026. I mean what kind of -- how much of an impact do you think that could have? I guess the question is how financially motivated are these physicians, which -- who isn't financially motivated. But I don't know, is there any -- are there any guardrails you can put around how that could swing LAL adoption one way or the other in 2026?

Well, I think this is just a continued trend that's been going on for the last 25 years. If we look at reimbursements for cataract surgery in real terms, they're down 80%, 90%. Now in 2026, I think the average reimbursement is going to be around $450. There's just -- it's just very, very difficult for practices where cataract surgery still represents the #1 surgical procedure they're doing to be able to just stay profitable at those levels of reimbursement.

And something that I try to convey to ophthalmologists -- my ophthalmology friends that there's a reason why airlines have business class and economy class. The bulk of the revenue comes from that business class, and they are able to service all their customers by servicing a broad, having a diversified offering. And so it's really a requirement to be able to offer care to all your patients to be able to offer premium IOLs to those who desire spectacle independence.

Your final question comes from the line of Tom Stephan with Stifel.

I wanted to start off with kind of the commercial changes and the new practice development programs. Ron, maybe for you, can you just elaborate a bit on, I guess, what exactly is going well and resonating with customers? And then I guess, more importantly, like how much runway do you have with these initiatives taking hold across your entire installed base? Kind of just wondering if we're maybe only in, call it, like the first or second inning with the impact of these changes in the commercial approach.

Yes. Thanks for the question. So I think if I was to put an overall definition around what we're focused on, it's really increasing the efficiency and confidence of our user base in our technology. We've introduced this new capability, a new category in ophthalmology called postoperative adjustability and we expanded very quickly. It's natural that we need to bring a level of expertise and education across our user base, and that's what we're focused on.

And the programs that we're using, they make use of peer-to-peer, primarily peer-to-peer, which is the way people learn, both digital and user groups and other efforts to convey that information that has been learned by our user base, by our doctors over the last 4 or 5 years. In terms of what that runway is, it's extensive. I mean this -- as you know, we have 1,100 LDDs out there. We have a lot of room for expansion of utilization. And I would definitely say that we're in the early innings of the efforts that we've put together most recently in order to leverage that installed base.

That's great. And then my follow-up, I guess, is just kind of on the U.S. installed base. So I think you mentioned 2,000 surgeons today. Previously, if I'm not mistaken, kind of 3,000 to 4,000 U.S. surgeons was viewed as sort of the optimal addressable opportunity, if you will. So I guess, just given, call it, the more deliberate and measured approach to LDD placements as well as surgeon trainings, is there any renewed thinking around the surgeon TAM here in the U.S.

Yes. I think that I would just refine the numbers a little bit. The total number of cataract surgeons is in the 9,000 to 10,000 range. We initially focused our efforts on doctors who were performing, a larger percentage of premium IOLs since that was a natural target for us. Those were natural practices for us to do. But quite honestly, as I was saying earlier, premium IOLs have become an essential part of all practices. And therefore, we view the opportunity to more extensive in that 9,000 or 10,000 range.

And we have a lot of those customers already. And they provide in aggregate a significant number of procedures. So whether that's through -- whether they're part of practices that are already have access to an LDD or whether they're part of a practice that will eventually acquire an LDD or they make use of an open access center, it really doesn't matter. We want to educate that physician to the benefits of adjustability and make them a customer and successful long term.

Thank you, everyone. And that concludes our Q&A session for today. I will now turn the call back over to Mr. Ron Kurtz for the closing remarks. Please go ahead.

Well, thank you all for your time and attention today. We appreciate your interest in RxSight and look forward to updating you on our progress in future quarters. Goodbye.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect. Have a nice day ahead.

I think it's probably time to kick off. Welcome. Thanks, everyone, for coming to the Morgan Stanley Healthcare Conference. Disclosures, morganstanley.com/researchdisclosures. Very excited. But what's much more excited for me is to have Ron and Shelley here from RxSight as CEO and CFO of spectrum. So thank you so much for joining guys.

Thank you for having us.

I mean why don't we start high level with the market in total maybe like what do you think you're seeing in the total -- not specific for you but the total cataract market in terms of patient volumes and how does consumer spend? Any big picture commentary would be great to start with.

So as I think everybody knows, the cataract market overall is the largest surgical market as a U.S.-focused company. We're focused on the U.S. portion of that market. And at the beginning of this year, we saw something that we hadn't seen for quite a while, which was an actual decrease in the overall cataract surgeries.

Even though the demographic trends would suggest that they should continue to grow kind of in the low single-digit numbers. I think it's still why that happened is still open to interpretation. What we -- when you extend that over to premium, premium has been a little bit more stable.

And so I think that one interpretation would be that the demographic of cataract surgery, which is generally 60 and above, it was -- some portion of that was impacted either in a real sense by the macro environment or psychologically perhaps by the change in administration that occurred during that time frame.

But in any case, we saw that downturn. Some of the -- we also saw a drop in our volumes in Q1. And when we asked our doctors about that. They did report some patients either putting off surgery or trading down from premium to monofocal. And so I think that, that was definitely an effect continuing through Q2.

But as we -- as you've seen and as we've heard some of the bigger players in the market comment that maybe there's some returning to what would be a normal trend from here on out. Do you want to add anything?

No.

Yes. I mean if you've given me in Q1, $1 million to the guess, I would never have guessed it would be monofocal but was soft originally rather than premium. It was a bit of -- at least to me, that was a bit of a surprise.

I think that -- I mean, of course, it's always hard to come up with a reason why you can always come up with a reason and explain something. It's not -- doesn't tell you that it's right. But in the U.S. when you have a monofocal procedure, those patients are still paying some money out of pocket, about 20%, which turns out to be $400, $500. And for a large percentage of the population, that's a meaningful amount.

So I think that you certainly -- and that would be consistent with potentially premium being less affected since that demographic is less affected. And certainly, over the last year or more, we've seen the LASIK market very significantly impacted by the macro headwinds. That, of course, is a younger demographic, which is much more susceptible to those effects. But it doesn't mean that the cataract or premium markets are impenetrable. They can also be affected especially when you have that level of impact in the other demographics.

I never know how exactly accurate a picture of the marketcope data provides. But we saw in Q2, we saw monofocal toric pick way back up again and premium was actually okay. I mean, to your mind, that monofocal toric, is that people on premium downgrading? Or is that just the delayed procedures from Q1 in monofocal coming into Q2? I know it's a very specific question, but...

I think -- of course, we love the folks at Marcoscope. I think they do a good job. But it's very difficult to make quarter-to-quarter and sometimes we see those numbers change over time. So I think I'd be cautious. But I think if I were to step back, one thing that we've seen over a longer period of time is that toric has been a strong offering.

And I think that, that is consistent with other long-term trends in premium, which have been towards higher quality of vision. So a toric lens, unlike a multifocal lens is -- provides the same overall level of quality of vision, lack of dysphotopsia lack of glare and halo than a traditional monofocal. And so there's very little downside. There's not that much upside, but there's very little downside.

And that's been an area that physicians have gravitated too. And I would say it mirrors their interest in LAL, which also obviously has very high quality. And it also mirrors the effects in the multifocal world, which have moved from high levels of multifocality, which are associated with higher levels of visual phenomenon, negative visual phenomenon towards lower levels of multifocality.

And we've seen that even in the most recent iterations of multifocal lenses where they've -- all the 3 major players have all moved in that direction again. And I think that, that just speaks to the level of importance that quality of vision plays for patients especially as cataract surgery moves into a younger demographic as patients increasingly decide to have cataract surgery.

At an earlier age, we've seen that over the last 10 years, drop about 3 or 4 years is the mean age of cataract surgery. And those patients are going to be more susceptible to quality of vision issues because they're starting with less of a cataract and therefore, more quality of vision. So they will notice a drop in quality more.

That's really interesting. I mean the other dynamic that's been happening for a long time, but it's happening again in '26 is Medicare's relentless battering of monofocal reimbursement to the point where the nerdy forms that I follow, the docs are just like this is getting ridiculous. Has that -- do you think that has encouraged people to switch a little bit -- have that little extra conversation of getting their patients into toric, but also for you guys because you get a decent amount of patients who would have been monofocal slipping into an LAL. How helpful is it that, that -- the economics of that barometer just dropped down even more?

I mean I think it's an absolute driver of premium practices simply cannot survive. Physicians cannot maintain their income levels unless they're converting patients. And the good thing about, especially, obviously, we feel with our technology is they're delivering such a better outcome.

A toric lens does deliver a better outcome for patients who have moderate to higher levels of astigmatism. But that's a relatively small percentage of the market. The percentage -- the bulk of patients who are having a monofocal lens are not going to be significantly impacted whereas by offering the LAL, which offers not only a higher degree of distance vision uncorrected that's significantly superior than what you can achieve with a monofocal lens but it also allows the patient and the doctor to titrate the vision in both eyes process called blended vision which is still the most common and we believe the most efficacious way to address presbyopia.

When you're thinking about earlier this year, when we discussed some of the macro headwinds and that side of things, do you think -- it sounds from the commentary we're towards the back end of that, maybe that there were fears around tariffs that were scaring people, but the confidence has returned. Is that something that you feel in the base business? Do you feel like the consumer is getting a little less skittish?

I don't know that we -- I don't think we can per se comment on the entire market. We follow obviously what the big players like Alcon and -- say, and that certainly seems to be their sentiment. But as a person who's in that age demographic, I mean, certainly, when you're faced with a lot of change, it's natural to kind of pull back. And then over time, people are adaptable, and they will normalize situations. And so I think we're probably in that phase.

One of the other trends that's happened in this industry for a while has been like private equity has been hoovering up a lot of clinics pretty aggressively over time. Again, as a customer base, they're pretty heavily incentivized towards patient mix. Do you see a discernible difference in the customers that you have that are private equity backed and the proportion of premium lenses there versus not? When they take over a practice, do you find that they're pushing that mix in a favor that's useful for you? Or is it just agnostic between?

So ophthalmology premium is -- I haven't looked specifically at that. Maybe, Shelley, you have, but the premium -- I'm sorry, the private equity represents roughly 20% or 30% of ophthalmic practices. They -- the traditional argument for private equity where they can ring out costs and make things more efficient, it's hard to make that argument in an ophthalmic practice. I always say that there's nothing more efficient than a single -- an ophthalmologist run practice because they don't have a salary, they're doing their own management. It's very hard to be more efficient.

And I think that that's what the private equity firms have identified is that for them to really improve profitability at these practices, they have to do the things that make sense like converting as many patients as possible to premium. And I think increasingly, those private equity-driven practices recognize that the LAL is a great way to do that because it's a way to deemphasize the individual surgeon, although the surgeon is obviously still very important, but to disseminate the responsibility for that premium growth to a wider group of people, not only the surgeon but also their optometric colleagues, the technicians and refractive surgery and refractive counselors within a practice which you can argue that a private equity run practice is perhaps more focused on than not.

That makes sense. The -- one of the things that came up in the Q2 was the newer docs on the platform for the LAL, the utilization curves were looking a little bit different from some of the original docs. Maybe to sort of level set the room, it would be helpful if you could kind of give people a sense of what's going on there, what the pathway forward is and how that looks to you guys?

Maybe do you want to give the overall picture?

Yes. And we've talked about this before. Even though this is an output number, what we saw among our classes of '23, '22 and then '21 and prior, while they are very small and as a class. Each they grew at about the same rate, '23 faster than the earlier classes that kind of made sense to us.

And then what we saw in the class of '24, but we saw it more in the first and second quarters of '25 because you have to have enough time and grade to really see a trend. And what we saw in that trend is one they weren't adopting as quickly, not nearly as quickly as, say, the Class of '23, which was pretty good.

And if you think about it, the other cohorts kind of flattened out with all the things Ronan has talked about, just the macro environment and then they started to drift down. And if you think about our procedure growth, the class or the number of LALs per LDD, we sold 305 LDDs in 2024. So that's approaching 1/3 of our installed base. So they have an outsized impact on the business overall. And I'll let Ron talk about this, but we think they're a slightly different customer, right? And we did so many installs in 2024.

If you look at what we had and where we're going, and Rob can certainly talk about that, the focus of the company was selling LDDs. And we had an LDD sales force and we had an LAL sales force, right? And they reported under the same structure. And then we have a clinical group, which is about half, almost half of the 200 people we have that are field-facing -- and they're focused on getting new customers up and running, right? And from a clinical viewpoint, training in the OR, everybody's got a little bit different injector.

And then training the practice, the ODs and the doctors on use of the LDD, right, and proctoring first cases, that focus was really on the newer customers. And what we're seeing is the newer customers needed something different, a lot more from our LAL salespeople in terms of practice conversion and practice flow and more from our clinical people, right?

And so even though that was our focus, getting the new customers up, what we have decided that -- and we'll talk about that hopefully in another bit is by combining our LAL salespeople with the exact same accounts and territories as our clinical people in our test cases that we ran in the first and second quarter, what we did see is we could grow accounts by doing that. And of course, we've made the entire change in the organization in July to do that. And we think it's a positive move, but it will take some time for that -- hence, our guidance as well. Do you want to add to that, Ron?

No. And I think it applies not only to our more recent customers, but it also applies to historical customers as well because it's been 4 or 5 years we -- that we've that they've had our system. And there's always change that goes on in a practice. Doctors retire, staff leave. They need to be newly trained.

And as Shelley mentioned, we were certainly over the last few years, definitely got into a mode of install, onboard, go to the next one, install, onboard, go to the next one. And now we certainly recognize the need to make sure that, that practice is well versed and continues to be supported as they continue to adopt the technology, which occurs over a longer period of time.

To your point, I remember when we were talking about the LDD originally and the whole reason you don't lease it, you want emotional buy-in from having broader system. To your point, if you then have churn in that customer, the new person may not have that emotional buy-in and so needs the clinical support to kind of -- is that what we're talking about?

Absolutely. And the #1 thing that we do is to demonstrate and optimize the clinical value of the product. And that requires -- it's not a difficult skill set. We're not teaching them how to do a different surgery, but it is a clinical expertise, and it's an expertise that's distributed throughout the practice.

It's a -- the postoperative adjustments or postoperative optimization of vision, is not something that people did in cataract surgery. It didn't exist 5 years ago. And so we -- there is an expertise that's associated with that. And as we -- many of our initial customers came from the refractive surgery world, they picked that up very quickly. But as their practice develops as we got into new practices, there are different levels of preexisting knowledge.

And we've learned a lot on how to optimize the process, make it efficient, make it more successful consistently. And that's something that they're not huge clinical techniques, but there are pearls of wisdom that have been picked up over the last 4 or 5 years that needed to be systematized and brought to the attention of a larger customer base.

How should we think about, therefore, the incremental investment that goes into supporting those customers? Is it just like -- is it a question of allocating to appoint the reps more effectively? Or do you think you need per account on average, if you like, a broader sales force?

Well, we certainly add to what I would call our clinical -- our customer-facing team as our installed base grows, and that will continue. So -- now what that number -- what those metrics ultimately turn out to be. Obviously, as you continue to penetrate the market, a lot of the skills that I've been talking about become part of the just broader clinical expertise of the field. But while we're still growing, which we still have this very significant potential for, we'll continue to add. I don't know if you want to add...

Yes, we're always adding clinical people. I think the organization is different as well. And if you go back to the beginning of time, we had to sell LDDs. And so we had those sales forces combined because the focus was on selling LDDs, and we were very successful at it. Now LALs are a larger percentage of our revenue by quite a bit.

And so it's a change in structure and it's more nuanced, but it also allows for better closed feedback system because you've got your salespeople for LAL matched with a clinical force that's the same, right? They're not being pulled into other territories or to other accounts. And so you're going to be able to see, but we're leaving time in our guidance for that to happen through 2025.

What programs and tactics were best for each customer. And how do we select those customers that we're going to go after first, right? Because we're not going to hit all 1,100-plus accounts this year, right? But I think that we can discern what works best in the structure. for us and learn something throughout 2025 about what's going to be most effective to grow LAL growth.

But also since LDD absolute number of installs fell in the second quarter, that's related to their peers, right?

So they're not going to go get a reference from somebody who was installed 3 or 4 years ago. They're going to go to a reference that was installed last year and say, how are your patients doing clinically? How are you doing economically? And we think that as those customers did not ramp as quickly, it did not give potential customers the same level of confidence to invest in the LDD because you can always wait, right? And so we think it's a circular argument on LDD sales.

Word of mouth is less.

Right. And so you need to get our LAL sales up in absolute numbers, that's what I look at, some people look at the number of LAL per LDD. And then going out into the future, and we've said it's nominal this year and probably pretty nominal next year is international because we'll we've gotten a number of approvals this year as well. And that will give us an expansion base, but we're also careful about providing that guidance because just like the U.S. people want to see their KOLs perform well.

And of course, we've got a lot of clinical data here in the U.S., but they want to see their own KOLs get the same results as both clinically and economically.

Makes sense.

But that's another growth factor for us out in the future.

I definitely want to hit on that. I mean as I sat here, I'm looking at the EKG little symbol behind you guys on the screen. And it sort of reminds me of the premium IOL market because a lot of the time, the new shiny exciting keys come in and people trial it and then they flip back and things like that.

How -- for you guys, how disruptive or not do you think it's been having -- there was Odyssey and then there's Endy and then BVIs got fine. like all these little different extra distractions, whereas I think there was a window where it was apart from maybe Symphony, there's a window where it was really just PanOptix and Vivity, if you know what I mean, it was quite -- there was just less noise. Is that noise really affecting you? Or am I on the wrong track?

No. I think that's a correct observation. There was this kind of tax alone for the last 4 or 5 years, which was -- which kind of tamped down competition. But as B&L and J&J primarily in the U.S., have introduced competitive products. And I think now the products are quite similar. They've all kind of gone in that same direction that I mentioned earlier. And that has made the overall space more competitive, which at the -- it's mainly between those players and you see share changes between those players primarily, but it has an impact on us.

About 25%, 30% of our patients come from multifocal patients who otherwise would have gotten multifocal IOLs. And so if you have more competition in that space, there's going to be more competition with us as well. But I think that's -- that runs a course. And we'll see how things -- you can only incentivize things for so long. At some point, you have to make money.

Yes. People try stuff and then eject after a while. I do want to hit on OUS because obviously, you guys are an extremely U.S.-focused business. I know you've done work on Canada and that side of things. But how are you thinking about that kind of midterm, the opportunity set, the investment? Because to your point, there needs to be some support.

People -- you want them to have a good experience with that word of mouth. Conceptually, I think I'm sure that they understand that the lens, you get a lot of the pulse feedback in the U.S. that probably helps quite a bit. But how do you see that -- those markets being different? Where would you focus? And what -- how you see that opportunity long term?

So we're fortunate again that we're following in the path of premium overall. And about 80% of premium lenses are OUS primarily -- the U.S. is the largest market, but 4 out of 5 lenses that are premium are outside the U.S., primarily in about 20 countries, the major economies of Europe and Asia.

And so that's where we have focused our resources for regulatory approval, as Shelley mentioned, we had to go through the EU MDR process, which we completed and have started to early commercialization in Europe. We similarly got our approval in South Korea in the spring and have started there as well. Some of the Southeast Asian countries, the Asian countries where we have -- where there's a relatively quick approval.

And then we're in the process in the other major economies. So I think they're a big opportunity. It's been the fastest-growing area of premium for other companies. And ophthalmology ultimately is a global field. So I can walk into an ophthalmology office or an OR anywhere in the world, anywhere in the developed world, and it's essentially very similar.

But as Shelley said, the -- it's important for each country to have success. And we will certainly leverage the learnings that we've had in the U.S. to support customers and develop the clinical data in those markets and develop the clinical expertise, both amongst physicians as well as our own staff so that, that can be done successfully and sustainably.

I remember when premium IOLs was trialed in Europe first because the CE mark was so easy before they put NTR and blew it all up for themselves. That actually created a very fragmented market in some ways in Europe. Is that a little bit easier to then tackle? I know the countries are fragmented, but even within them, the positioning is rather than the kind of initial monolith on the U.S. side where you had one peer that had like 70%, 80% of the share. I'm just -- that's obviously just the premium side. Is it a little easier when it's fragmented on the competition or difference?

I don't think it's easier. It will be different. But I think that Europe in particular, but they have a lot more choices of different IOLs. So it's we're definitely a differentiated product, but there's a lot more just other products out there.

So I think that, that will be -- we'll need to make that case as we did in the U.S., focusing on KOLs in an individual market, building up a set of data that they can reference both economically and clinically. And I think that we're well positioned to do that.

Is the OUS is a little less litigious to make a stereotype. Is there a difference in like risk tolerance of dysphotopsia U.S. versus OUS or ultimately, you just don't ever want your patient to be unhappy and so it doesn't really make a difference?

I think that globally, we've seen different levels of success of multifocal lenses and the same -- but the same trends, there's been this movement to less multifocality actually led OUS. And so I think that, that bodes well for us. But again, we're going to need to establish ourselves in each market.

Shelley, you have an unenviable job of providing guidance in a challenging market, challenging volatile, which makes things tricky. When we were updating our numbers, I remember looking at '26, it to be like, I have no idea what to put in here I want to do. That's not your f, have no idea.

Do you guys feel like you -- we should think about this business as base IOL market growth and then Rx can continue to take share and work on greenfield OUS and should be structurally above that, maybe to be specific in terms of LALs. Is that a fair just starting benchmark to think about the business, just even just conceptually, I know you don't want to guide '26.

I think that when we look at market share up until last quarter, where we stayed about equal 10%, 11%. If you look at the premium market, defined by the PC-IOLs, the toric IOLs and ourselves, right?

And toric, as Ron mentioned, has been 50% or greater of that overall premium market. And they've done a good job in studying it. If you pull us out, the market has been flat to a little bit shrinking, right? So we've been the growth factor in the market. And we think in the long term, we should be, right, because the -- there's an opportunity for doctors who are not doing premium or not a lot of premium to get into the market and be able to say to their patients, we have a reliable way of getting you to the vision I'm promising you rather than predicting it, right?

And then your choice, if you don't get what you want is to wear glasses in some instances, the patients opt for another procedure, which is LASIK, but that doctor also has to have LASIK in the practice in order to do that. So we think that the market -- we're a grower in the market because 40% of the patients come from patients who would have otherwise gotten a monofocal. So we think that we've got some wind at our back, right? The Medicare provides the wind at the back for all of us, right, unfortunately. And for doctors, they really do have to go to a patient pay procedure.

And LASIK, as Ron mentioned, has just plummeted, right? And that's the demographic and the fact that you can put it off pretty much forever, right? We've seen some effect, but not as much. But demographics work for us. That's definitely a wind in our back as well. And just the fact that people get 92%, 94% of patients get to 20/20 at distance and comparable at near. Well, that's a tremendous opportunity for the company and also doctors make more money with that, and they can more reliably sell to their patients and also sell quality of vision. So we think ultimately, the market should grow. And ultimately, we should be a factor in that growth.

40 years on, and I'm still dodging LASIK. So see if I can keep it going. Ron, Shelley, thank you so much. Perfect timing. Really appreciate it.

Thank you so much.

Thank you.