Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IRIDEX Corp (IRIX, Financial) has accelerated its strategic review process, with strong interest from multiple entities in its global brand and industry-leading products.
- The company has adopted cost-cutting measures to eliminate cash burn and aims to achieve breakeven operations in the fourth quarter.
- There is increasing momentum in the glaucoma products segment, with both probe and console sales up compared to the previous year.
- The introduction of the new IFI Laser platform at the American Academy of Ophthalmology meeting generated promising leads and orders.
- The revised LCD reimbursement change for glaucoma is expected to encourage more procedures using IRIDEX Corp (IRIX)'s laser consoles and probes, potentially increasing adoption.
Negative Points
- Revenue for the third quarter was lower than anticipated, primarily due to challenges in the retina business and shipment delays.
- The company experienced a 10% decline in total revenue compared to the same period last year, with a significant drop in the retina segment.
- Gross margin decreased to 37.3% from 43.7% in the prior year, attributed to a shift in product mix and lower overhead absorption.
- Operating expenses, although reduced, still resulted in a net loss of $1.9 million for the third quarter.
- The strategic review process has been ongoing for an extended period, necessitating a change in operating approach and cost management.
Q & A Highlights
Q: Can you provide an update on the strategic review process and any potential transactions?
A: Scott Sa, Executive Chairman, stated that the strategic review process has been accelerated, with strong interest from multiple entities in Iridex's global brand and products. An announcement regarding potential transactions is possible and desired before the end of the year.
Q: What were the main reasons for the revenue decline in the third quarter?
A: Patrick Mercer, CEO, explained that the revenue decline was primarily due to timing issues in the retina business and shipment delays caused by regulatory hurdles. However, these issues are expected to be resolved in the fourth quarter.
Q: How is the company addressing its operating cash burn?
A: Scott Sa mentioned that the company is adopting a less tolerant attitude towards cash burn, with cost-cutting measures underway to align expenses with operating cash flow. The goal is to achieve breakeven operations in the fourth quarter.
Q: What impact will the new LCD reimbursement change have on Iridex's glaucoma products?
A: Patrick Mercer highlighted that the new LCD reimbursement change, effective November 17th, is expected to encourage more glaucoma procedures using Iridex's laser consoles and probes, potentially increasing physician adoption.
Q: What steps are being taken to improve gross margins and reduce costs?
A: Patrick Mercer outlined initiatives such as renegotiating supplier contracts, reducing inventory levels, and increasing outsourcing to improve gross margins. These efforts aim to achieve EBITDA breakeven or better in the fourth quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
