LENSAR, Inc. Q3 FY2023 earnings call

• Maintained momentum with 11 new ALLY systems installed in Q3 and 29 in the first 9 months of 2023, with a backlog of 8 systems pending installation.
• Revenue increased 26% due to robust system sales and growth in lease revenue.
• ALLY is driving efficiency, with time savings of up to 7 minutes and staff time savings of up to 18 minutes compared to competitive systems, leading to increased market share.
• Participated in the American Academy of Ophthalmology Congress, conducting 66 demos across 54 practices, etc.
• Hired additional sales managers and sales development representatives (STRs) to scale the business and expand ALLY's footprint, with STRs responsible for generating qualified leads.

In the third quarter of 2023, LENSAR's revenue was $9.8 million, a 26% increase compared to $7.7 million in the third quarter of 2022. Gross margin for the quarter was $4.9 million, representing a 50% gross margin, matching the previously issued guidance of the low-50s. In terms of ALLY systems, 11 new ALLY systems were installed in the third quarter, with 29 placed in the first 9 months of 2023 and a backlog of 8 systems pending installation. In the U.S. market, procedure volumes increased 16% over the third quarter of 2022, and LENSAR's market share in U.S. femtosecond laser-assisted cataract surgery procedures was 16.4% in the third quarter of 2023, up from 14.1% in the third quarter of 2022.

• Expect to receive first ALLY marketing authorizations and begin international launch outside the U.S. in the coming months.
• Gross margin expected to remain in the low-50s for 2023.
• Intend to expand the selling organization to drive continued ALLY growth.

• Third-party payer reimbursement issues in South Korea have driven revenue in that region to zero.
• Uncertainty in the timing for South Korea to return as a significant revenue contributor due to ongoing reimbursement disputes.
• Dependence on FDA clearance for international expansion, particularly in Europe, and uncertainty regarding clearance timelines.

Q: Feedback on ALLY from the field and how users think about it compared to other systems A: About half of business is from new users to LENSAR, mostly from competitive systems. Time and motion savings lead to higher efficiency, with some accounts already having multiple ALLY systems in use. Competitive users are anxious and evaluating economics for switchover Q: Lease health and customer base capital demand A: Macro environment for large capital purchases is sour due to interest rates. Leasing is expected to be a higher part of the ALLY mix, with cross-pollination from existing users driving demand Q: Oertli's 510(k) for Faros device and impact on LENSAR A: Faros is the predicate device for phacoemulsification option to ALLY. FDA has 180 days for clearance, with LENSAR expecting to use Oertli's data in its own 510(k) submission for ALLY after clearance Q: Cadence of hiring additional salespeople and their productivity A: Expect to have new hires in place between now and the end of the first quarter of 2024. STRs are generating qualified leads, helping shorten the sales cycle and set up appointments for sales managers