00:05 Good day and thank you for standing by. Welcome to RxSight Third Quarter Twenty Twenty One Earnings Conference call. At this time, all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. [Operator Instructions] 0:31 I would now like to hand the conference over to your first speaker today, Malcolm MacLeod. Please go ahead, sir.

00:40 Thank you, operator. Presenting today are RxSight, President and Chief Executive Officer, Ron Kurtz and Chief Financial Officer, Shelley Thunen. Earlier today, RxSight released financial results for the three months ended September thirty twenty twenty one. A copy of the press release is available on the company's website. 1:00 Before we begin, I would like to inform you that comments and responses to your questions during today's call, reflect management's views as of today November ten twenty twenty one only, and will include forward looking statements 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 earlier today and in our filings with the Securities and Exchange Commission. Our SEC filings can be found on our website or on the SEC's website. 01:39 Investors are cautioned not to place undue reliance on forward looking statements. We disclaim any obligation to update or revise these forward looking statements. We will also discuss certain non-GAAP financial measures. Disclosures regarding these 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 website at rxsight.com on the Investor Calendar page and the news and events section on our Investor Relations page. 02:10 With that, I will turn the call over to CEO, Ron Kurtz.

02:16 Thank you, Malcolm, and good afternoon, everyone. I'll begin today's call with a brief overview of the quarter along with some general observations. Shelley Thunen will then go into more of the financial details and will then take questions. In the third quarter, our light delivery device and light adjustable lens sales generated five point eight million dollars in revenue, representing thirty nine percent growth compared to Q3 twenty twenty and eighteen percent growth compared to the second quarter of this year. For the nine months ended September thirty twenty twenty one, revenue was fourteen point two million dollars representing a forty five percent increase compared to the same period twenty. 02:58 With the addition of thirty one Light Delivery Devices or LDDs, our installed base grew to one hundred and sixty one by the end of the quarter, while ophthalmic surgeons also implanted one thousand nine seventy seven light adjustable lenses or RxLALs during the quarter. Bringing the total since our U. S. Commercial launch to almost eleven thousand. Since the premium channel was created in two thousand and five, enabling doctors to collect an additional fee above and beyond standard reimbursement for advanced technology intraocular lenses or ATI LALs, doctors and patients have been seeking a premium solution that consistently delivers excellent quality of vision without glasses. 03:41 The LAL uniquely meets this challenge by letting doctors optimize a patient's vision after surgery to achieve excellent vision over a range of distances at rates that are nearly doubled out of competitive products, but without reducing quality of vision or increasing unwanted effects such as glare or halos. In the third quarter, we also rolled out in important update to our technology called ActivShield, which protects the LAL from ambient UV light, providing additional scheduling flexibility for patients…

05:34 Thank you, Ron. Good afternoon, everyone. As Ron noted, total revenue in the third quarter was five point eight million dollars an increase of eighteen percent sequentially compared to the quarter ended June thirty twenty twenty one and thirty nine percent increase compared to the third quarter of twenty twenty. Looking at revenue by product, we sold thirty one LDD systems in the third quarter of twenty twenty one, generating three point seven million dollars in revenue compared to twenty five LDD is driving three million dollars of LDD revenue in the second quarter of twenty twenty one and nineteen in the third quarter of twenty twenty or two point seven million dollars in sales in the prior year period. 6:21 As expected, in our early stage of commercialization, LDDs continue to dominate the sales mix, representing sixty three percent of our revenue in the third quarter and sixty one percent in the second quarter of this year. We sold one thousand nine hundred and seventy seven LALs in the third quarter of twenty twenty one generating revenue of one point nine million dollars compared to one thousand eight hundred and twenty five LALs driving one point eight million dollars on LAL sales in the second quarter of twenty twenty one and one thousand five hundred and thirteen LALs for one point four million dollars of LAL revenue in the third quarter of twenty twenty. 07:08 Third quarter gross profit was one point three million dollars, or twenty three point two percent of revenue compared to a gross loss of eight hundred thousand dollars in the second quarter ending June thirtieth twenty twenty one and a seven hundred and twenty thousand dollars gross profit in the third quarter of twenty twenty two or seventeen point three percent of revenue.…

11:36 Thank you, Shelley. To conclude our prepared remarks, our message to surgeons and patients is clear, the LAL system provides optimal visual outcomes for patients after cataract surgery. We are actively sharing the clinical data and best practices that define this value, including at the American Academy of Ophthalmology Meeting in New Orleans, scheduled for November twelve through the fifteenth. 12:01 With our growing number of implant surgeons and installed base of LDDs, our expanding commercial capabilities and the potential for additional product enhancements, we believe, we are well positioned to execute on our opportunity to meet and exceed the progressively higher expectation of premium cataract patients and doctors. 12:21 And now operator, please open the call for questions.

12:41 Thank you. [Operator Instructions] Your first question comes from the line of Robbie Marcus from JPMorgan. Your line is now open.

12:50 Hey guys. This is Alan on for Robbie. Just want to start by saying congrats on a good quarter. And I think it was a bit refreshing to not hear COVID-19 brought up as kind of an important dynamic as you track going forward. But just to dive a little bit deeper into it. Was there any meaningful impact on the quarter from the pandemic and Delta, you mentioned that you saw acceleration continuing through the quarter and in October, which is great to hear. But just in terms of the impact of pandemic, the kind of hospital staffing issues that we heard of any impact from those that we should keep in mind going forward?

13:28 Yeah. Thank you for your question, Alan. Obviously, COVID is still a factor at both the macro and practice level. And the rates for COVID did increase over the quarter but ophthalmic practices largely have been relatively less affected by the by the primary effects of COVID and more from secondary effects, how people take vacations and staffing levels primarily at ASCs, which can limit the throughput of ASCs. So, we certainly see COVID effects, but at our stage of development, we're still primarily impacted by factors related to our technology and our ramp.

14:32 Got it. And then just as a quick follow-up. I think in this quarter, we saw you guys relative to our own forecast putting in a bit more LEDs than we and forecast that really drove a little bit about performance versus our model. So when we think about this momentum going forward, should we expect that fourth quarter will be driven by kind of another similarly strong quarter from LDD placement, especially with capital budgets generally seeing more purchasing at the end of the year and coupled with some more modest improvements in LALs as right now, as you said, the focus really is expanding the base and then going deeper later. Thank you very much.

15:14 Hi, Alan. This is Shelly. You do have both those things right, that you talked about. Our focus is on LDD sales because that does drive procedure growth. Fourth quarter historically has been strong for capital equipment for the same reasons that you earlier because people want to get their accelerated depreciation on any capitals they buy in the fourth quarter and fourth quarter tends to be good for procedures as well, that's a macroeconomic kind of look. I think it really depends on what our particular doctors decide to do for us, but we are very pleased with the momentum that we have on LDD sales.

16:10 Your next question comes from the line of Daniel Antalffy from SVB Leerink. Your line is now open.

16:19 Hi. This is Aaron on for Daniel. Thanks so much for taking questions. I was just hoping Thanks for providing guidance. I was just hoping you could maybe walk us through some of the assumptions included in, the upper and lower end of the range and kind of what we can expect and what it might take to hit the lower and upper ends of the range. Thanks so much.

16:45 Yeah, the range is pretty narrow at seven point one million dollars to seven point four million dollars. I think the difference in the range will necessarily primarily be about the number of LDDs we sell during the quarter and that really is also why we have some range in the gross margin as well, because the gross margin on the LDD is lower, quite a bit lower than the LAL.

17:18 Okay, great. Thanks. And then just maybe if you could talk about what you're seeing in terms of utilization and how kind of new surgeons and once you place the LDD and how new surgeons are ramping and how we should think about utilization heading into the fourth quarter and looking ahead into twenty twenty two?

17:45 Yes. Thank you, Aaron. We see a wide range of initial utilization and ramp, it really depends on the practice and our focus really is on educating the practices and that includes doctors, optometrists, other people in the practice about the value of the LAL and its unique ability to provide high quality vision and an extended range of vision, and that's something that is just not that combination is something that's just not available with other competitive products. 18:29 And some practices pick up on that very early and ramp more quickly. Others, they take a little bit a slower approach also we do see that's one of the reasons why we've initiated the new sales position focused on LAL sales and ramping is to be able to accelerate that educational process.

19:06 Okay, great. Thanks so much.

19:13 Your next question comes from the line of Ryan Zimmerman from BTIG. Your line is now open.

19:19 Hey, Ron. Hey Shelley. How is everyone doing. Congrats on the quarter.

19:25 Good afternoon.

19:26 Thank you. So first off, I'll see you guys in a few days at LAL. So I just want you answer my question on the increase in the LDD sales force. I guess, what are you seeing in the account that kind of accelerating that process. I think it's a good signal, but I would imagine, there's something underlying at the – how can you think about that. And then certainly with the LAL rapid and expanded force that increases utilization and also my other question to that is what do you expect when you put these people in place in terms of uptick? And how fast that could start to generate kind of consistent LAL usage? Thank you.

20:12 Thank you, Ryan. Maybe I'll take the first part of that question and Shelley will take the second. One factor in the rate of our hiring of sales folks is just the success that we've had in finding extremely qualified and interested people in joining RxSight. And so that's something that we have opportunistically take an advantage of to accelerate our hiring and also we're obviously this is a very large market and there's an established pattern of relatively smaller territories within that. Where salespeople can really go deep into their territories and again educate the field on the benefits of RxSight technology, again, that combination of quality and range of vision. 21:12 So, I would say those are the main factors in determining the pace of hiring.

21:17 We just started hiring for our LAL sales team. We have five on now and expect to have eighteen by the end of the second quarter. Again, we expect that pace to come up pretty quickly. One of the things that we see in terms of adoption, you can measure it, of course as we're adding LDD so rapidly, which is good, we are increasing the number per quarter. And of course, it takes a while for people to get going and we find that our clinical apps folks are really busy on training and training new doctors, as well as training new technicians even in the ASC so while they are very important in the practices of the time, we think we need the additional help with the LAL sales team. This is a relatively new case, you're just starting out, but we would expect that the efforts that they make on education about the product as well as patients flow in the practice and how to sell the product will be very important to us as we grow and get more and more LDDs. And of course, it also allows us to go back to existing customers or very high adopters and we'll be able to serve their best practices and be able to let other people know about that as well, but also to help practices, maybe have an adopted as quickly. So, I think twenty twenty two will tell us a bit more about the effectivity of that sales force, but we expect him to be effective and we are hiring really very qualified people who's done there before for other company.

23:04 Okay. That's very helpful. I appreciate that color. And then just the last question for me. I'll back in the queue. Your pricing on the LDDs and then I think higher than we are expecting and certainly the LAL too, and I appreciate the comments about fourth quarter around, into the quarter thus far in the momentum. What are your expectations around pricing? And do you expect it to be stable and just how to think about pricing [Indiscernible] components? Thanks for taking the questions.

23:33 Yeah. As we think about pricing, in the short run, that might be through the first half of twenty twenty two. We expect it to be stable both for the LDD and the LAL.

23:47 Thank you.

23:53 Your next question comes from the line of Laurence Dickerson from Wells Fargo. Your line now open.

24:01 Hi. This is Charles on for Larry. First congrats on the next quarter. It's a little bit too early for twenty twenty guidance, but I'd be curious to hear your thoughts, it looks like consensus is currently sitting at around thirty nine million dollars in revenue close to eighty six percent yearly growth. Curious to hear your initial reactions to that number and just more generally what might be driving the growth in the next year and finally puts and takes in twenty twenty two? Thanks.

24:34 Of course. As you did say that it is early for twenty twenty two guidance, we're very focused on the fourth quarter right now and we do see the macroeconomics continuing to improve a bit, procedures are overall picking up. We do think that our individual practice patterns are more important than the macroeconomics, but we're happy to see that. The other thing that other people have convenient on as well we're getting some recovery from COVID, it's more gradual and I think everybody thought and that will be limited really by ASC availability for surgeons to practice. And what we're really focused on as we get into the focus on now and it would be the same focus in twenty twenty two is one LDD sales, two increasing the number of LAL and at each center and that's our LAL sales force as well that we're growing and really underpinning all that is education about the product and benefits that we offer. So, there's no other product that compares to ours in terms of visual acuity as well as glare halos and of course excellent contrast vision. So, Ron, I think you might want to talk about that just a little bit in terms of how we were positioning in the product and what we're making sure we let people know about?

26:08 Yeah. I think you've done a great job, but you hear other products talking about their relative comparison to other premium IOLs that have either side effects or effects on visual quality and that's simply not a factor with the LAL and we're fully comparable to conventional monofocal IOL in that regard and so that is preservation of visual quality, while still delivering range of vision, that's really the reason for the product and it's the unique ability of the product due to its adjustability to achieve those results.

27:03 Thanks guys.

27:10 [Operator Instructions] Presenters, there are no further questions at this time. Thank you ladies and gentlemen. This concludes today's conference call. Thank you everyone for participating. You may now disconnect.