Good morning, and thank you for your participation. At this time, all participants are in a listen-only mode. Later, we will conduct 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 first quarter 2022 financial results conference call. Earlier this morning, the company issued a press release providing an overview of its financial results for the quarter ended March 31, 2022. This press release is available on the Investor Relations section of the company's Web site at www.lensar.com. 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 Nick for closing remarks. Today's conference call will contain 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, which can be accessed on the Web site. In addition, this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, May 9th, 2022. LENSAR undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this live conference call. It is my pleasure to turn the call over to Chief Executive Officer, Nick Curtis. Nick?

Thank you, Cameron, and good morning to everyone listening. Thank you for joining us on our first quarter 2022 conference call. We have achieved an impressive start to 2022 by returning to our historical growth trends, as well as delivering on our previously-promised critical strategic milestone with the submission, and the FDA subsequent acceptance for substantive review our 510(k) filing for ALLY. Our first quarter revenue worldwide procedure volumes each increased more than 30% compared to the first quarter of 2021. In addition to steady growth in procedure volumes, we continue to see increases in both system sales and lease placements for our current generation LENSAR Laser System with Streamline IntelliAxis Refractive Capsulorhexis by increasing systems placed on a worldwide basis to approximately 255 systems. This represents a 30-system increase from March 31, 2021. These additional system placements and the associated year-over-year procedure increase represent a strong foundation upon which to launch ALLY, and continued validation of the core feature technology advantages of the current LENSAR System in comparison to other femtosecond lasers available in the marketplace. Furthermore, we intend to continue leading innovation by giving refracted cataract surgeons even greater technology performance and procedure efficiencies with ALLY. Thereby, enabling them to provide highly optimized patient outcomes and provide an overall better patient experience in their cataract surgery procedures. These advancements and commitment to the continuous improvement of our device are at the heart of the reason why U.S. based LENSAR Laser Systems performed twice as many procedures as the industry average. We have also made tremendous headway in broadening surgeon awareness of ALLY, mostly recently as measured and recognized at the ASCRS a few weeks ago. I would like to highlight some metrics from the ASCRS meeting as it's arguably one of the largest and most relevant U.S. congresses…

Thank you, Nick. Our first quarter 2022 financial results are included in our press release issued earlier this morning, but I'd like to take this opportunity to expand on that information by adding some color to those remarks. Revenue was $9.3 million in the first quarter of 2022, compared to $7 million in the first quarter of 2021. All individual components of revenue, product, lease, and service increased from the first quarter of 2021. It was a very strong quarter for us with total revenue increasing 33% over the first quarter of 2021. The increase in 2022 total revenue was primarily driven by increased procedure volume. In the first quarter of 2022, there were 38,901 procedures sold, compared to 28,122 procedures sold in the first quarter of 2021. Our procedure volume increased 38% over the first quarter of 2021. Gross margin for the quarter was $4.7 million or a 50% gross margin percentage and represents an approximate $800,000 increase compared to the $3.9 million realized in the first quarter of 2021. By all measures, the first quarter of 2022 was a strong quarter for us, with a 33% increase in revenue and a 38% increase in procedures, both representing impressive performance. Congratulations to our team for such an outstanding quarter. Looking to the rest of the year, 2022 represents a transition year for us and we expect our gross margin percentage for the year to approximate 50%, with the latter part of the year having a higher gross margin percentage than the first-half of the year. The transition of our manufacturing from our first generation system to ALLY and supply chain challenges which include difficulty in obtaining inventory, and a higher cost of raw materials lead us to expect a lower gross margin percentage in 2022 than percentages achieved previously.…

[Operator Instructions] Your first question comes from the line of Ryan Zimmerman with BTIG. Your line is open.

Good morning. Thanks for taking the questions. I just wanted to start with talking about installed base and utilization a little bit. And it continues to grow really nicely, and the procedure volumes are very encouraging to see. I am just curious, Nick, if you could kind of talk about -- I mean, some of your users have been with the system for a while, kind of how their utilization looks on their system relative to newer users? And kind of what it takes for those newer users to ramp up? I think would be helpful to understand. And if you could also just comment on kind of -- I mean the procedure volume is again very encouraging, how is that trending in the April and early May?

Yes. Thanks, Ryan. Those are really good questions. So, we kind of look at things like once a customer has had a system for, let's just call it, six months because there is a ramp up period. And the ramp up period usually consists of getting into a new account, getting the staffs trained -- support staff is very important, getting the clinical operators trained, getting people comfortable with the system, getting the doctors trained to the point where they understand the features and the differences primarily between the LENSAR System and the system that they may have been using prior to the LENSAR [IN] [Ph]. And so, there is sort of ramp up period, which in that first 90-day period where we look at going from very little revenue to where we were generating good procedure volumes. After that 90-day, they start to get to the procedure volumes that they were at prior to putting LENSAR in there, and then by the time we are in that about four to six month -- four to six months out, we're usually operating very efficiently within the practice and beginning to see procedure growth. As we continue to evolve the system by adding preoperative surgical devices, and adding other efficiencies, and whatnot, we see that existing accounts as they continue to be more comfortable. They grow within that as well. They either grow organically through the 3% growth rate annually that comes just from cataract surgery in general. And then, what's been happening is that conversion rates to these types of procedures and particularly in the area of management of astigmatism continues to grow within the practice as they continue to optimize their nomograms and whatnot. You know, given any real shutdown, to your second question, any real slowdown as a result of any COVID variances or something unusual that we can't predict, we see that procedure volumes will continue to be strong, particularly as there -- it appears that there still is a backlog from COVID in just surgical -- available surgical time for doctors to be able to do their cases. So, we would expect that at least from a surgical procedure perspective that we will continue to be strong there.

And very encouraging -- all right.

And Ryan, just one other thing to add to Nick's comments is, outside the United States, procedure volume was really, really strong in the first quarter. As you go into May or April and early May, outside the United States is backed off a little bit, but the U.S. has picked up a little bit and the U.S. is 50% of our volume. All in all, you're seeing a slight downtick from the first quarter, but it's still a very robust procedure volume, and you'll see procedures increase from the second quarter, or we would expect you'd see that they would increase from the second quarter of '21.

Very helpful, thanks for taking my questions.

No problem, Ryan. Thank you.

And your next question comes from the line of Danielle Antalffy with SVB. Your line is open.

Hey, good morning, guys. Thanks so much for taking the question. Congrats on a really strong quarter and a strong showing at ASCRS. Nick, I was wondering as you think about ALLY, thank you guys so much for the data on number of demos and particularly new or non-current users, so, as we think about that and think about the upcoming FDA approval of ALLY, how do we think about the rollout there? I spent some time at the [booth] [Ph], I can see that the anticipation is high. So, I'm guessing a lot of these doctors are just asking, "When can we get one?" So, help us understand how you guys are approaching the rollout of ALLY once it's approved.

Hi, Danielle. Thanks for getting on the call today, and thanks for coming by at ASCRS and seeing the system as well. So, we obviously are excited, and we know that surgeons are very enthused to want to see ALLY in their practices sooner rather than later. That said, it would be imprudent on our part, particularly with a brand-new piece of technology that's moved from an R&D into a full [indiscernible] manufacturing, that we're cautious and that we control our launch. And so, we're planning on what we refer to as 10 friends and family sites when we begin the rollout with ALLY shortly after the clearance. And that will consist of, of course, some existing LENSAR users, and a few of new KLL users that we've been working with, along with our current user KLLs in sort of this whole process to begin with as we move forward. And so, we're looking at putting those 10 sites in place, and then following those sites for a few months in order to be comfortable that everything is performing exactly how we expected that we understand what we're doing from a training perspective, that the surgeons are adapting to it, that we're getting what we advertise, so to speak. And then, we'll expand into in additional phase, which from there looks to be another somewhere between 10 and 20 systems, and so, before we get into sort of full launch mode in 2023.

Got it. Okay. So, that was my next question. So, right to think about this as 2022 will be more measured, '23, you can let the [indiscernible].

Yes. Assuming that we don't have continued issues as it relates to to supply chain force, but yes.

Sure. Okay, okay. And then, when thinking about utilization, just following up on Ryan's question there, utilization on the current system versus how we should think about utilization on ALLY. And I know it hasn't launched yet, so I guess TBD, but theoretically, you have to think that utilization could move significantly higher with ALLY, given the improved efficiencies on the system. So, just how are you guys thinking about it, even theoretically or qualitatively would be helpful? Thanks so much for taking the questions.

Hey, no problem. Those are great questions, and obviously things that we're very keen on wanting to get answered as quickly as possible as well. So, we're working in a couple of different situations here, because you may recall that in past, I've said that most of these systems today, no matter what company they're from, sit outside of the operating room. And that with ALLY, you have the opportunity to move into the operating room, if you want to take advantage of full efficiency of the system to perform a sterile procedure to be able to switch even if you weren't using the LENSAR phaco system and you're using whatever phaco system, you're using today to switch from the Femto to the phaco in a sterile environment, certainly, from a flow perspective becomes much more efficient and faster. And so, we see this happening in part of what we're going to be doing in these 10 accounts is that, you'll likely have a few accounts that will continue to put the laser where they have the laser today in order to just really become comfortable with the system. And the fact that it is that much faster and efficient. And then, you'll have a few of these accounts that will put them right into the operating room. And we have a private equity group, one of the private equity groups that we're working with actually wants to study and to do some flow analysis with us, because they're interested in ALLY on a much broader basis for more of their practices, and on ORs if you will, so we'll have an experiment where we put one in each of two operating rooms. And we'll see how much faster and more efficient and better use of the human resource as well, in terms of transporting patients and whatnot that we do. I alluded to the fact that in our first clinical patients that we had done, the doctor was reporting that we were saving in the treatment time, about two minutes, and in the transport time and prepping the patient another eight minutes, or about 10 minutes with each patient in their cataract journey there, and so really, the next months are going to be in those three scenarios, really testing those things out. Does that answer your question?

It sure did. Thank you, Nick. That was so helpful. Thanks, guys.

Thank you. I'll hand the call back to Nick Curtis.

Thank you, everybody for joining our call today. As you can tell, we're quite enthusiastic about what's going on here at LENSAR. We certainly appreciate the fact that you're interested as well, and we look forward to continuing to update you as we make further progress.

All right, thank you. And that concludes today's conference. Thank you all for joining. You may now disconnect.