Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the RxSight Second Quarter 2025 Earnings Conference Call. Operator Instructions I would now like to turn the conference over to Oliver Moravcevic, Vice President of Investor Relations. You may begin.

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 June 30, 2025, and reiterated 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 view as of today, August 7, 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. On today's call, we will outline the actions we have taken to address recent LAL utilization trends and declining growth in both LAL and LDD sales. Our top priority, of course, is to provide our customers with exceptional support that enables successful adoption and long-term growth with our technology. To achieve this, we have unified our LAL sales and clinical support personnel into a single customer success organization. Using a standardized framework to both identify and close any gaps that could limit LAL growth, each regional team is responsible for a defined group of doctors and practices, managing the customer experience from onboarding through long-term utilization growth. These teams leverage proven best practices derived from customers who have already demonstrated strong clinical and commercial success with our technology. We have paired these changes with coordinated investments in clinical affairs and education to accelerate feedback loops and support the mastery of postoperative vision optimization across the global LAL user base. This includes expanded engagement, not only with RxSight representatives, but also via surgeon, optometric, and clinical staff focused peer-to-peer programs. By aligning and redeploying our existing field resources, we have strengthened clinical and practice support for current customers, directly addressing challenges that arose during the rapid growth of our installed base. These expanded in-person and point-of-care interactions make use of new user-friendly education and marketing resources, which were designed by leveraging our experience with more than 1,000 practices. While our immediate focus is on driving adoption and maximizing utilization with existing LAL practices, our LDD sales team remains focused on bringing new high-potential accounts into the platform. Once onboarded, these customers transition to our customer success organization, which drives clinical execution and supports sustained growth across the entire account base. With these coordinated efforts, our more than 200 field-facing employees are intensifying RxSight's commitment to execution. Combined with the flexibility to expand specific programs as needed, we are confident these changes will have a positive impact on adoption and unlock the long-term clinical and commercial potential of the LAL platform. With that, I'll turn things over to Shelley to take us through the financial results for the second quarter and reaffirm guidance.

Thank you, Ron. Good afternoon, everyone. Consistent with our July 8, 2025 pre-announcement, RxSight generated second quarter 2025 revenue of $33.6 million, down 4% compared to $34.9 million in the year-ago quarter and down 11% compared to $37.9 million in the first quarter of 2025. During the quarter, we sold 27,380 LALs and generated $27 million in LAL revenue, up 13% compared to the second quarter of 2024 and down 1% compared to the first quarter of 2025. In the second quarter of this year, LAL revenue represents 80% of total revenue, an increase from 68% in the second quarter of 2024 and an increase from 72% in the first quarter of 2025. During the second quarter of 2025, we sold 40 LDDs, down 49% from 78 units in the prior period and down 45% from 73 units in the first quarter of 2025. During the quarter, LDD sales generated revenue of $5.1 million, down 50% compared to the second quarter of 2024 and down 45% versus the first quarter of 2025. As of June 30, 2025, our LDD installed base totaled 1,084 units representing a 34% increase year-over-year and a 4% increase quarter-over-quarter. Gross margin in the second quarter of 2025 was 74.9% compared to 69.5% in the year-ago period and 74.8% in the first quarter of 2025. The increase primarily reflects a shift in product mix with higher-margin LAL revenue rising to 80% of total revenue, up from 68% in the second quarter of 2024 and 72% in the first quarter of 2025. SG&A expenses in the second quarter of 2025 were $29 million, representing an increase of $4.7 million or 19% versus $24.3 million in the year-ago quarter. This year-over-year increase was primarily due to an increase in personnel costs, elevated stock-based compensation expense, and additional expenses related to post-market studies. During the second quarter of this year, R&D expenses rose 23% to $10.2 million compared to $8.3 million in the second quarter of 2024. This year-over-year comparison primarily reflects an increase in salaries and stock-based compensation. Sequentially, both SG&A and R&D expenses were within 1% of the first quarter levels. We reported a GAAP net loss in the second quarter of 2025 of $11.8 million or a loss of $0.29 per basic and diluted share using weighted average shares outstanding of 40.7 million shares. This compares to a GAAP net loss of $6.1 million or $0.16 per share on a basic and diluted basis in the second quarter of 2024. Note the stock-based compensation in the second quarter of 2025 was $8.5 million, resulting in a non-GAAP loss of $3.2 million or a loss of $0.08 per basic and diluted share. Please refer to the unaudited non-GAAP reconciliation and disclosure included in today's press release for more comparative information. We ended the second quarter of 2025 with cash, cash equivalents, and short-term investments of $227.5 million, a decrease of approximately $1.8 million compared to $229.3 million as of March 31, 2025. Moving on to our 2025 outlook. We are reiterating our full-year 2025 guidance for revenue, gross margin, and operating expense that we provided on July 8 as follows: revenue of $120 million to $130 million, representing an implied decrease of 14% to 7% from 2024. This outlook assumes a slower second half due to continued softness in LAL adoption and fewer expected new LDD sales. Gross margin of 72% to 74%, representing an implied increase of 130 to 330 basis points compared to 2024. Despite gross margin in the first half approaching 75%, we are not adjusting our gross margin guidance higher because we expect lower gross margin in the second half of this year due to higher costs and lower production volume as we have right-sized production quantities consistent with our lower revenue guidance. Operating expense 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 in sales, customer support, and marketing to support long-term growth in LAL adoption and support the continued expansion of our LDD installed base. Also note that the operating expense estimate includes non-cash stock-based compensation expense between $27 million and $30 million. And with that, I'll turn the call back to Ron.

Thank you, Shelley. Our new commercial strategy focuses on maximizing utilization by enhancing every aspect of customer engagement, including support, training, and team alignment to ensure that every LAL provider is fully prepared for success. We are confident that this approach designed to strengthen same-store performance while also adding new high-potential accounts will reaccelerate our growth and positively impact the overall premium IOL market. While we are initially realigning existing assets to ensure that we are fully resourced to support these efforts, we are also actively evaluating where more investment is required to accelerate success. Our strong balance sheet, coupled with this pragmatic approach ensures that every investment is tied to measurable outcomes and long-term value creation. While our top priority is delivering on our renewed commercial execution in the U.S., we are equally focused on enabling future growth through innovation and global expansion. Regulatory approvals in key European and Asian markets have opened new doors. Building on our U.S. experience, we are now applying a similar customer success playbook to these geographies, which represent a significant opportunity for disciplined growth and modest revenue contributions over the next year. On the innovation front, we continue to advance our R&D roadmap to further enhance customer and patient experience, expand the LAL patient profile and elevate the clinical value of our adjustable platform. Our primary initiatives include refining the postoperative workflow and pursuing next-generation platform capabilities to facilitate easier adoption of postoperative adjustability, offer greater flexibility for physicians and extend accessibility to an even broader group of patients. As we shared earlier this week, we have also strengthened our strategic counsel with the appointment of Raymond Cohen to our Board of Directors. Ray brings decades of experience building and scaling high-growth med tech companies and his insights have already proved invaluable as we execute across the next phase of growth. In closing, our conviction in the long-term potential of the LAL platform has never been stronger. With a refined go-to-market strategy and a unified focus on customer success, we believe RxSight is well positioned to drive durable value across clinical, commercial, and shareholder dimensions. With that, I'll ask the operator to open the call for questions.

Our first question comes from the line of Larry Biegelsen with Wells Fargo.

Maybe just to start off, a two-parter here. Can you just provide a bit more color on what trends have looked like exiting Q2 and thus far into Q3? I think on the prior call, you had made a comment around June not seeing the usual volume acceleration, which had informed the guide down. So maybe just help us understand how those trends continued into the quarter. And then for the second part of the question there, for the people who have updated their models since the Q2 preannouncement, I'm seeing around $26 million for Q3. So are models properly calibrated now?

Thank you for your questions. They're good questions, but we generally don't provide specific guidance. We are still early in the third quarter, and we are aware of the trends from the second quarter as well as the typical seasonality of the third quarter. I don't have anything different to add as we begin the third quarter. While I don't comment on models, I want to reiterate that we made it clear in the second half of the year that revenue would decline significantly from the first half, with the third and fourth quarters expected to be lower than the second quarter. Overall, if I look at the consensus for those who have updated their models, we guided a top line between $120 million and $130 million, and the current consensus is around the middle of that range.

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

Great. Two for me. First, Ron, you said at the end of your closing remarks, you're in a great spot to take advantage of the premium IOL segment of the market. How do you get confidence that the slowdown you're seeing is market-related and not just reaching a ceiling in penetration? You've had a couple of quarters where the estimates or where the results came in a little bit below the estimates. You have a large installed base now of LDDs. How do you get comfort it's the market and not RxSight?

I don’t believe we have fully communicated our position in the market. Generally, the market will behave as it does, and it has been performing well. The premium IOL market is a focus area for doctors. As you may be aware, reimbursement rates for standard cataract surgery have recently decreased by about 11% to 13%. Other procedures that ophthalmologists rely on, like LASIK, are more affected by broader economic trends. Overall, we expect the premium IOL market to be positive in the long term. With our large installed base, we see opportunities to leverage that for growth through the changes we've already discussed. We don't solely need to rely on further market penetration, which we are confident we can achieve. We also have a substantial customer base that we believe can continue to increase their use of LAL, which is where we are concentrating our efforts with the proposed changes.

Great. Maybe a quick follow-up. Shelley, with the reduction in sales, how are you thinking about the current pathway to cash flow breakeven and cash flow generation? And at the current run rate, do you think that's still possible?

Yes. Well, we hadn't previously given guidance on when we would hit cash flow breakeven. We did see that in the second quarter of last year. And even at a little bit lower gross margins, we got there. So I think that, that's kind of a good proxy for when we could get to cash flow breakeven. But I think we've got some rebuilding to do before that. I think that our most recent stall out and reduction in revenue certainly pushes it out. I haven't quite said so much for yet because we're trying to see how the changes that we're making in our sales and customer support organizations help us recover and get back to high-end growth, but you are correct. But I think that we've got such a nice high gross margin product that it could come pretty quickly once we get back into that kind of level range of revenue.

Next question comes from the line of Tom Stephan with Stifel.

I'll start with international actually. And Ron or Shelley, can you just talk a bit about the path forward OUS, maybe specifically give us a sense for potential time lines, approvals, and launches? And then, Ron, I know you mentioned maybe modest revenue contribution over the next year. But when do we think about revenue OUS starting to pick up in a more meaningful way? Is that later 2026? Is that 2027? If you can kind of just talk about the OUS path forward.

Yes. So just for background, the OUS premium market represents about 80% of the overall premium market. So while the U.S. is the largest single market, the OUS, primarily Asia and Europe, are very large markets. We've focused over the last couple of years on regulatory approvals. In Europe, that has meant going through the new MDR certification, which we completed at the end of Q1. And as we previously said, we've started to build out our European team, taking some of the lessons that we've learned in the U.S. to provide those customers with the support that they need. Similarly, in Asia, we've pursued regulatory approval in the major countries of Asia. We received approval in South Korea and launched in the quarter in Q2. That has gone well, and we see that market, which has traditionally been a strong private pay market, both in refractive as well as premium cataract surgery, and we see a strong market potential there as well as some of the countries in Southeast Asia, most recently Singapore. The large countries Japan and China have longer regulatory cycles. We're in those regulatory cycles, and we'll certainly update folks as we get additional information. But those are traditionally longer-term plays. So overall, we're quite excited about the OUS opportunity, but we're also realistic that, that will take time and hence, the relatively conservative language with respect to revenues. Do you want to add anything, Shelley?

Yes. I think in the press release, obviously, we talked about the fact that cases were starting in South Korea as well as Singapore quite recently. And those are nice accounts for us. And we think that, in particular, the South Korean market is an excellent one. But as Ron says, it takes time to develop. And would you add anything? I know you've been over to Korea a couple of times, Ron.

The Korean ophthalmologic practice is quite advanced, focusing significantly on private pay and advanced technologies. We have received a positive response there so far. However, as in all new markets, the initial phase after regulatory approval involves developing key opinion leaders and generating local data, similar to our approach in the U.S. where we successfully established a high-quality vision solution customizable for individual patients, which stands out as a unique and disruptive offering in that market. We have learned a great deal, much like we did in the U.S., about the various aspects of acquiring expertise with postoperative adjustments, and we are applying that knowledge to our commercialization strategies outside the U.S.

Got it. That's great. Super helpful. And then a quick follow-up, just pivot to guidance. I think back half revenue implies around $10 million, somewhat wide range, but understandable. Ron or Shelley, can you just give us a sense for sort of assumptions or what the drivers would be that would either kind of take you to the low end of that 2H implied guide as well as, I guess, more importantly, the high end? And what direction are we kind of trending in within that range just based on what you've seen so far in the quarter?

Yes. I assume when you're talking about $10 million, you're talking about LDD revenue. When you said about $10 million in the second half, I assume you're talking about total revenue.

Total revenue, $120 million to $130 million...

I misunderstood you. Okay, I'm sorry, the $120 million to $130 million. Yes, I think most people are sitting at the mid of the guidance. I think that where we could have down at the lower end at $120 million, it could be primarily driven by lower LDD sales rather than higher in terms of the mix at the high end of guidance at $130 million. I think it would be probably fourth quarter seasonality driving LAL sales. So it's pretty tight guidance, but I think those would be the two factors that might play into low end, high end.

There are no further questions at this time. I would like to turn the call back over to our CEO, Ron Kurtz, for closing remarks.

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

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