Good morning and thank you for your participation. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. As a reminder, this conference call will be recorded. I would now like to turn the call over to Cameron Radinovic of Burns McClellan, Mr. Radinovic, please go ahead.

Thank you, Operator. Good morning and welcome to the LENSAR Fourth Quarter and Full Year 2023 Financial Results Conference Call. Earlier this morning, the company issued a press release providing an overview of its financial results for the quarter and full year ended December 31st, 2023. This press release is available on the Investor Relations section of the company's website. Joining me on the call today is Nick Curtis, Chief Executive Officer of LENSAR, who will review the company's recent business and operational progress. Following his comments, Tom Staab, Chief Financial Officer of LENSAR, will provide an overview of the company's financial highlights before turning the call back over to the operator to facilitate answering any questions you may have. Today's conference call will contain certain forward-looking statements, including those statements regarding future results, unaudited and forward-looking financial information as well as the company's future performance and/or achievements. These statements are subject to known and unknown risks and uncertainties, which may cause the company's actual results, performance or achievements to be materially different from any future results or performance expressed or implied in this presentation. You should not place undue reliance on these forward-looking statements. For additional information, including a detailed discussion of the company's risk factors, please refer to the company's documents filed with the Securities and Exchange Commission. In addition, this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, March 4th, 2024. LENSAR undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this live call. With that, it's my pleasure to turn the call over to Nick Curtis. Nick?

Thank you, Cam, and good morning to everyone. Thank you for joining us on our fourth quarter 2023 conference call. 2023 was by all measures a very strong year for our company. I'm confident that the significant momentum built throughout the year will continue in 2024. I'm excited to share with you both our achievements of the past 12 months, as well as some of the numerous reasons we're so excited for the future. As Tom will review in greater detail, fourth quarter revenue grew 18% compared to a year ago, while full year revenue increased 19% in 2023 compared to 2022, also marking our highest annual revenue in the company's history. I can safely say that since launching in the mid-third quarter of 2022, ALLY has exceeded our expectations. We placed a total of 44 systems last year, approximately 50% above our initial guidance of 30 placements in the first full year of commercial launch. It is also significant to note half of our 2023 placements were with surgeons and sites new to LENSAR, a majority that have converted to ALLY from competitive devices. Although ALLY is currently only available in the US, we grew our total worldwide installed base by 13% to approximately 305 systems, comprising both the Next Generation ALLY and our legacy LLS. The significant growth was achieved despite issues in South Korea, whereby an ongoing dispute between third-party payors and healthcare providers has resulted in premium cataract procedures being virtually non-existent in what was previously a robust market. If you focus on our total revenue growth without South Korea, 2023 revenue increased 26% compared to 2022. Once again, this growth percentage is even more impressive if you consider the fact that we're currently limited to installing ALLYs in the US. Accordingly, our US installed base grew over 23%, a strong performance in any event. Importantly, demand for the technology remains strong as we finish 2023 with a backlog of nine systems and a robust pipeline of potential ALLY customers that we are diligently working to convert in the year ahead. In addition to this strong growth in our installed base, we continue to report highly encouraging utilization trends, with full year procedure volume up 4% over 2022 and fourth quarter procedures increasing nearly 20% compared to the year ago period. Similar to the revenue story, our full year procedure growth becomes even more impressive when you exclude the effect of South Korea, which has essentially been shut down since mid-'22. Backing out South Korea activity for both '22 and '23, our worldwide procedure volumes increased 15% over last year. We continue to demonstrate with our customers the benefits ALLY offers, primarily with the significant speed, performance, the stigmatism management, and overall ergonomic efficiency compared to legacy technologies. These benefits will drive further adoption of ALLY as well as increased utilization as surgeons' comfort levels continue to grow and they see firsthand the value that our platform can create within their practice. As our installed base and utilization continue to expand, peer-to-peer referrals will become increasingly credible sources for those that are considering the right time to replace their older competitive devices with ALLY. Again, this is not really a matter of if the technology gets replaced, but when is the optimal time to upgrade. To that end, we recently completed four time and motion studies in ASCs with different model workflows and determined that surgeons can save up to eight minutes per case. Staff can save up to 19 minutes per case by streamlining workflow due to ALLY performance and efficiencies and reducing the number of staff interactions with the patient. Ultimately, this can result in patients spending up to 51 minutes less time in a surgical facility using ALLY as compared to using a LenSx laser and manually marking patients preoperatively. Using average CMS payment schedules, average conversion rates, and market scope data of the average charge per patient for performing astigmatic incisions and managing astigmatism, surgeons and staff can end their day 90 to 120 minutes earlier, saving the ASC up to $12,000 per surgical day and up to $540,000 per year. Alternatively, in very busy centers where time and OR capacity is a consideration, surgeons can choose to treat more patients, generating an additional $8,000 of revenue per day or $364,000 per year. While ASCs can garner an additional $11,000 in facility fees and staff costs per day, where $497,000 per year. This makes ALLY a very compelling value proposition, providing a solid return on investment and alternative to the big company bundles. As you can see, independent data is beginning to emerge in support of our long-standing belief that ALLY offers a better device and overall technology solution to optimize the cataract surgical experience for surgeons, staff and patients. While the growth we've delivered over the last year is exciting on its own, looking at it in the context of the broader sector tells a similarly promising story. In the fourth quarter, our US market share reached 16.9% according to market scope. This marks our seventh consecutive quarter of gains in our primary geography and representing a 2.8% gain in market share since launching ALLY in the US Additionally, there is a significant number of competitive systems currently in use that are based on data technology and approaching end of life. Demographics of an aging population and organic growth in cataract surgeries on average represent 3% plus organic growth per year. The benefits of femtosecond laser-assisted cataract surgery are contributing to a higher annual growth rate expected to be between 5% and 8%. Visually significant astigmatism for which ALLY is ideally suited, affects 70% to 90% of all cataract patients. This data, combined with the benefit surgeons, staff and patients recognized with ALLY provides strong support for our expectation that LENSAR has the potential to achieve 20% plus year-over-year growth for the foreseeable future. Our growth to date and this anticipated growth are fueled not only by ALLY's efficiencies and business opportunities as previously outlined, but also the significant clinical contribution ALLY is making for surgeons and their patients. Specifically, we now have four peer review papers demonstrating the superiority of LENSAR's proprietary astigmatic guiding technology IntelliAxis that enable surgeons to create astigmatic incisions and guide toric IOL alignment and deliver better outcomes to their patients. The most recent peer review paper was published this month in the Journal of Cataract and Refractive Surgery where renowned professors Tim Schultz, MD and Burkhard Dick, MD from Ruhr University Eye Hospital in Bochum, Germany, compared their outcomes using LENSAR Iris registration technology with the IntelliAxis Refractive Capsulorhexis compared to those using another axis of the stigmatism alignment tool from Zeiss called the Calisto to align toric intraocular lenses and found that IntelliAxis guided statistically significant improvements in outcomes for their cataract patients. Turning to our outlook for 2024 and beyond. We believe that there are multiple reasons to be optimistic both specific to LENSAR and related to the broader market. First, we've achieved this meaningful growth despite the continued freeze in South Korea. Revenue after Q2 was essentially zero for the following six quarters. We can't speculate as to when the market might reopen, but clearly, it's a matter of when and not if it happens. However, the bigger question is when it does, how significant a role will South Korea play in terms of our future growth, particularly once ALLY is available. To put it in perspective, South Korea represented less than 1% of our product and service revenue in 2023. This compares to 7.4% and 14.9% of our product and service revenue in fiscal '22 and '21, respectively. Our end market distributor stated that when the third-party payor issues are resolved, the result will be a market estimated to be roughly 50% of the size that it was prior to the shutdown. As a reminder, ALLY is currently available for use only in the United States, but we expect this to evolve in the year ahead. We submitted ALLY for CE Mark certification in the European Union in September of 2022, and we expect a decision on certification later this year. Our distributors are well equipped and excited to make ALLY available to European surgeons quickly once we receive marketing authorization. Enthusiasm for ALLY within the international ophthalmic community is significant and extends beyond our distributors to the surgeons they serve. These surgeons are witnessing the results being achieved by their American counterparts and are eager to experience the many advantages of the ALLY adaptive cataract treatment system firsthand for the benefit of their practices and, more importantly, their patients. We're approaching a perfect storm, combining an industry that has been ripe for innovation, which we're addressing through our world-class technology, the anticipation of an expanded geographic footprint to new regulatory clearances and improving global market conditions. I believe we're well positioned to translate these favorable dynamics into significant growth in the years to come. We have a clear set of objectives focused on maximizing the success of ALLY, and I'm proud to say that we are well on our way to making our vision a reality. Now let me turn the call over to Tom to cover our financial highlights for the quarter and year. Tom?

Thank you, Nick. Our fourth quarter and full year 2023 financial results are included in our press release issued earlier this morning, but I'd like to add some color to the information contained in the press release. Total revenue for the quarter was $12.1 million compared to total revenue of $10.2 million in the fourth quarter of 2022. The fourth quarter was a strong quarter for us, with revenue increasing $1.9 million or 18% from the fourth quarter of 2022. ALLY system sales and procedure volume represented the largest contributors to this increase. As Nick mentioned, we significantly exceeded our ALLY placement guidance for the year, having placed 44 systems with the fourth quarter of 2023, representing our highest ALLY placements in the quarter with 15. Let me also add a little color on our full year 2023 revenue. We were extremely pleased with our 19% revenue growth for the year based upon two limitations that we faced and will continue to face in 2024. One, we were limited to placing ALLYs in the United States. So all new ALLY placements and the related revenue growth was directly associated with US operations. And two, our revenue growth faced a strong headwind in South Korea, whereby premium cataract procedures have been virtually non-existent for the last 18 months due to third-party payor reimbursement issues. If you exclude South Korea from our results, 2023 annual revenue growth was more than 26% over 2022. In the fourth quarter of 2023, we sold 37,414 procedures compared to 31,400 procedures sold in the fourth quarter of 2022. Our procedure volume increased 19% over the fourth quarter of 2022. For the quarters ended December 31st, 2023 and 2022, approximately 73% of our revenue was attributable to recurring sources. As Nick mentioned, procedure growth for the year increased 4% from 2022. Once again, if you exclude South Korea in both years, procedures increased a robust 15% in 2023 which corresponds directly with the US procedure growth year-over-year. Gross margin for the quarter was $5.1 million and represented a gross margin percentage of 43%. Our margins decreased in the latter half of 2023 associated with a higher proportion of total revenue from system sales, which have a significantly lower gross margin than procedure sales as well as the roll-off of inventory charged to research and development prior to ALLY receiving regulatory clearance in the United States. Our gross margin for the full year 2023 was 50% and is consistent with our guidance of gross margins in the low 50s. Going forward, with the heavier system sales and our overall revenue mix, and with the full cost of ALLY in our cost of sales, we expect our gross margin percentage to be approximately 50% in 2024. As a reminder, Ally inventory costs charged to research and development expenses for the year ended December 31st, 2022, were approximately $3.4 million. When evaluating our aggregate gross margin, it is important to realize that our recurring procedure revenue carries an approximate 80% gross margin as the cost of a procedure sale is limited to the patient interface device, whereby our system sales generate a significantly lower margin. This is important to understand as greater success in placing ALLY units will drive benefit to our recurring revenue over time but compresses our overall gross margin at the time of sale. You can see this phenomenon in the fourth quarter of 2023 when we had 11 system sales, the highest sales volume in a quarter to date, but our gross margin percentage was below 50% that we realized for the entirety of 2023. Total operating expenses for the fourth quarter of 2023 were $8.1 million compared to $9.1 million in the fourth quarter of 2022. This $1 million decrease was largely due to less stock compensation and professional expenses, somewhat offset by higher sales and marketing costs. Noncash stock-based compensation was $0.8 million and $1.7 million in the fourth quarter of 2023 and 2022, respectively. Net loss increased quarter-over-quarter and was $3.9 million or a $0.35 loss per share in the fourth quarter of 2023 compared to a $2.5 million loss or a $0.24 loss per share in the fourth quarter of 2022. The $1.4 million increase in loss was almost entirely related to the change in fair value of our warrants which was $1.2 million in the fourth quarter of 2023. As of December 31st, 2023, we had cash and investments of $24.6 million as compared to $14.7 million on December 31st, 2022. The increase in cash between the two years is the result of $19.1 million of net proceeds received in a financing we completed in May 2023. This financing was designed and is expected to get us to positive cash flow from operations based on our current operating plan. Cash utilized was $0.4 million in the fourth quarter, $0.9 million for the last six months of 2023 and was $9.9 million for the full year. In 2024, we will continue to invest in our commercial organization, and we will work to increase our ALLY installed base on a worldwide basis. As we look forward, we expect for the investment in both our commercial organization and installed base to yield positive net operating cash flow quarters within 2025. As Nick mentioned, we also look forward to receiving European clearance of ALLY as well as clearance in some other small operating regions in 2024. If we receive clearance in Europe, we expect placement numbers to increase significantly as ALLY would then be cleared in two significant operating regions. Now I'd like to open the call for your questions. Laura?

Thank you, everyone. We will now start the question-and-answer session. Our first question is from Ryan Zimmerman from BTIG. Please go ahead.

Good morning. Thanks for taking the questions and congrats on the strong end of the year here. Maybe just to start, we could talk about kind of how you're thinking about going into 2024. You've already alluded to the nine systems that are in process, but also a strong pipeline. And so just help us understand kind of in the context of a growing sales force and the momentum you have, how you're thinking about adoption in 2024 and any metrics certainly there would be appreciated.

Thank you, Ryan, for your question and your call. As we move into 2024, I'm hesitant to provide too many specifics at this stage. Overall, we're very enthusiastic about the momentum we're building and maintaining. As I noted during the call, the timing is more of a concern than the actual outcome; it's really about when things will happen. This is why I’m cautious at this early stage, as our activity levels are at an all-time high and we have several significant deals in progress. The initial two meetings, while national in scope, were held in more intimate settings like the Caribbean Eye and the AECOS meeting this year, where we made notable presentations about LENSAR. Some of the feedback we received was unexpectedly positive, with comments that included both anticipated and surprising elements. The interest from these high-level meetings, attended by surgeons with substantial case volumes, has been promising. I anticipate that the adoption will continue to increase, and despite the macroeconomic challenges faced by individuals in the U.S., I believe we will witness a sustained growth in the number of procedures we perform, as indicated in our comments during the call.

Okay, that's helpful, Nick. You mentioned the benefits of ALLY and the time and cost savings users are experiencing. I’m curious how this is influencing adoption and if it is helping to open doors for people as it gets published, including aspects like podium presentations. What is the plan for utilizing that data in 2024 to further spread the word?

Yes, that's a really great question. It's something that we're obviously like really well focused on. People are used to certain ways of buying. And again, I made some comment to it in terms of the big company sort of product bundles, if you will, which is like really easy and straightforward for them to understand. It's something that they've done for years and years. You do X, you get X. You do X, you get a rebate of X, of Y. This is obviously a little more nuanced and but yet, it's way more significant than any just straightforward discount here on the product in terms of what the numbers are. And like I said, with four time and motion studies with multiple time and motion studies now using different models, each one of them net-net results in a substantial savings of time, which either equates to a reduction in overhead or the ability to add more cases in that time and drive significant revenue and EBITDA. And so where some of the private equity groups that represent large opportunities for us from total number of procedures and installation base, let's say, are reticent to put capital dollars forward given the current interest rate environment. The reality is, is that they're very receptive to these. And we've done some of these studies within a couple of these private equity groups. And so these numbers make sense. And so really, it's going to be the continued education of more people at the podium peer-to-peer as our installed base expands and then being there at the right time and having set the right relationship with people so that when they're ready to grasp this and to move forward that we're in a good position to do so with them.

Yes, that makes sense. I have a few more questions, if that's alright. I want to discuss international markets, which is a significant focus for you this year. Nick, I know you've been spending time in Europe. What markets should we watch that hold the most potential for LENSAR in 2024? I remember South Korea was once a strong market for you, but given recent developments there, I'm curious about its current status. Additionally, could you provide an update on the growth of the sales force, which has been a priority for the company in 2023? When do you anticipate it reaching your desired size, and when can we expect to see the benefits of the expanded sales force in 2024? I may have one more for Tom.

Thanks, Ryan. Let’s start with South Korea. As I mentioned, our distributor and others believe that this market will ultimately recover to about 50% of its previous size. Therefore, I don’t expect the revenue percentages that were around 14.9% for LENSAR to be as significant moving forward, particularly if the market rebounds to that 50%. However, we are working towards getting ALLY approved there and plan to enter South Korea, although we have lower expectations for the market's recovery. Regarding LENSAR's market opportunities, Europe will play a crucial role, especially since we have a strong presence and market share in Germany. I anticipate that Germany, Austria, and Switzerland will be important markets for LENSAR. If we can secure approval in these regions, which we hope to achieve later this year, we aim to expand into these markets quickly. Additionally, we expect to see some business in Southeastern Asia later this year. Although this market is smaller, we have had decent penetration in Hong Kong, Taiwan, and possibly the Philippines. You should expect to see our presence in those areas later this year.

Okay. Great. And then just expectations on when the sales force is at the level you want and when you think productivity from that could pick up?

We hired a new Vice President of Sales in December, and he has been impressive, which has eased some of my direct responsibilities in that area. This change allows me to leverage my time better, and he is performing really well. We're also introducing new processes to improve the management of leads and the collaboration between marketing and sales. We have implemented new practices in both development and digital marketing that are generating leads for sales. I believe we're beginning to see positive results in that area. We have expanded two territories so far and plan to add more as the year progresses. We are being very mindful of managing growth alongside expenses.

Yes. No, makes sense. And then Tom, I think you were very clear about margin dynamics this quarter, just given the proportion of sales and outright sales, which was really nice to see. Maybe just you talked about the guidance, 50% gross margins for 2024. But from a pacing perspective, kind of how do you think that plays out through the year, if you have any kind of crystal ball there on the recovery in margins and also the uptake of more of the consumable or razor blade portion of the business?

Yes, I believe the key point for us is managing both growth and capital usage, which can be quite different challenges. We anticipate slightly higher margins in the first quarter since, being a seasonal business, it's more challenging for us to install as many systems then compared to the rest of the year. However, margins should stabilize at around 50%. With expected volume growth and a potential European clearance in late 2024, we anticipate our recurring revenue from the razor blade segment to begin showing impact towards the end of 2025 and into 2026, which should also boost our margins. If our success continues, there will be limitations on those margins due to system sales. We have fundamentally shifted the approach in the U.S. regarding system placements versus sales, as evidenced by the number of systems sold last year despite a tough environment for capital equipment purchases. We expect this trend to persist, and with new studies and collaboration among physicians just starting, we are optimistic that 2024 will be a significant year for system sales, which will influence margins as we progress into 2025 and realize more recurring revenue.

I want to highlight something important: it takes approximately 60 to 90 days after installation for accounts to get trained and start ramping up in practice. This means we won't see the benefits of the systems we implemented in the last quarter until mid-year. As Tom mentioned, while we sell more systems, there is an initial drag on gross margins, but about 90 days later, those accounts should start generating higher gross margins. It’s a gradual process, and I anticipate improvements in the latter part of the year. If we sell a significant number of lasers again in the second half, we should see this trend continuing upward.

Yeah, that makes sense. I appreciate all the color guys and congrats on all the progress this year. Thanks for taking the questions.

Thanks, Ryan.

There are no further questions at this time. I'd now like to turn the call back over to Mr. Nick Curtis for final closing comments.

So I really appreciate everyone taking the time this morning to come in and listen to the LENSAR fourth quarter and full year results for 2023. We're really excited about the year ahead. And stay tuned with us. Thank you. Appreciate your support.

Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.