STAAR Surgical Company (STAA) Q2 2021 Earnings Report, Transcript and Summary

Good day ladies and gentlemen. Thank you for standing by. Welcome to the STAAR Surgical Second Quarter Financial Results Conference Call. [Operator Instructions] This call is being recorded today, Wednesday, August 4, 2021. At this time, I would now like to turn the conference over to Mr. Brian Moore, Vice President, Investor, Media Relations and Corporate Development for STAAR Surgical.

Thank you, operator and good afternoon everyone. Thank you for joining us on this STAAR Surgical conference call this afternoon to discuss the company's financial results for the second quarter ended July 2, 2021. On the call today are Caren Mason, President and Chief Executive Officer; and Patrick Williams, Chief Financial Officer. The press release of our second quarter results was issued just after 4:00 p.m. Eastern Time and is now available on STAAR's website at www.staar.com. Before we begin, let me quickly remind you that during the course of this conference call the company will make forward-looking statements. We caution you that any statement that is not a statement of historical fact is a forward-looking statement. This includes remarks about the company's projections, expectations, plans, beliefs and prospects. These statements are based on the judgment and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The risks and uncertainties associated with the forward-looking statements made in this conference call and webcast are described in the Safe Harbor statement in today's press release, as well as STAAR's public periodic filings with the SEC. Except as required by law, STAAR assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. In addition, to supplement the GAAP numbers, we have provided non-GAAP adjusted net income and adjusted earnings per share and sales in constant currency. We believe that these non-GAAP numbers provide meaningful supplemental information and are helpful in assessing our historical and future performance. A table reconciled in the GAAP information to the non-GAAP information is included in today's press release. Following our prepared remarks, we will open the line to questions from publishing \s. We ask analysts limit themselves to two initial questions, then re-queue with any follow-ups. We thank everyone in advance for their cooperation with this process. And with that, I would now like to turn the call over to Caren Mason, President and CEO of STAAR.

Thank you, Brian. Good afternoon, everyone, and thank you for joining us on today's call. This afternoon we reported record results for the second quarter of 2021 as business momentum in all of our major markets globally accelerated from the already robust levels in the second half of 2020, and the record-breaking levels we reported to you on our call for the first quarter of 2021. My thanks once again to the entire STAAR team and particularly those in manufacturing and our commercial organization for tremendous results in the second quarter and first half of 2021. In the second quarter of 2021, we continue to significantly outperform industry averages by achieving strong ICL unit growth globally, including China up 65%; Japan, up 95%; South Korea, up 57%; APAC distributor markets up 88%; India up 173%; Spain up 118%; Germany up 65%; European distributor markets up 81%; the Middle East and North Africa up 378%; and the U.S. up 255%, all as compared to the prior year quarter. All told, global ICL unit growth for the second quarter of 2021 was up 79% year-over-year, which drove company net sales growth of 77% year-over-year to $62.4 million. In China, the largest market for refractive surgery in the world, the busy implant season began in earnest in June. We kicked off the season with new, exciting and innovative marketing campaigns. The marketing campaigns were designed to amplify the message of glasses free visual freedom with our lenses and to increase EVO ICL brand awareness among our target demographics. One marketing campaign, where we supported our largest customer with an EVO 5K running event co-branded with a popular video game theme. Several weeks of mall-based advertisements and other promotions, led up to and surrounded the 5k run, which was held at the Oriental Sports Center in Shanghai. Today 5K, our customer had onsite EVO patient education supported by us and ophthalmology consultations, including eye exams available to the runners and spectators. This 5K run marketing campaign in China resulted in more than three million media impressions, further elevating awareness of our EVO lenses. Our China business is also benefiting for many of our customers who have created or plan to create additional EVO operating rooms and train additional surgeons to increase ICL implantation capacity. As an example, there are now five WOW! Visian Evo clinics in China, which only offer EVO ICL lenses to their patients. The operator of the clinics has a stated goal of opening at least five new EVO only clinics each year as we move forward. In Spain are EVO ICL lenses that achieved record-breaking levels of units sold with unit growth of 118% year-over-year for the second quarter. We observed certain refractive femtosecond laser vision correction procedures being deemphasized by surgeons despite the fact that several LVC companies and providers discounted their offerings at levels greater than we have previously observed. In contrast, our premium EVO family of lenses allowed our surgeons and their clinics to maintain premium pricing during the second quarter, due to the differentiation and benefits associated with our lens technology, removability, excellent night vision and no dry eye syndrome, just to name a few. We anticipate surgeons in Spain and globally will increasingly focus on premium lens-based business and greater revenue per procedure. During the quarter, we continued the controlled rollout of our EVO lens as select surgeons implanted more of our lenses in our targeted early presbyopia market for patients who are generally ages 45 to 55. They believe that surgeons’ efforts to define best practices in terms of patient education, selection, and implantation will serve patients, surgeons, and us well in the future, as we prepare for broader commercialization. Regulatory pathway work towards marketing approval of the EVO lens outside of European geographies also continues. In the U.S., trade shows are resuming in early July, STAAR leadership attended and participated in the Octane OC Ophthalmology Technology Summit in Southern California. It was the first in-person conference for many of those in our industry since the first quarter of 2020. In July, we attended the American-European Congress of Ophthalmic Surgery, AECOS meeting, the ASCRS Annual Meeting and the Eyecelerator conference at ASCRS. As many of you know, these in-person meetings and trade shows are an important component of advancing our commercialization strategy. It is encouraging that these meetings have resumed and even more encouraging that STAAR’s lenses were highlighted at these events, prominently and positively. Also in the U.S., the FDA received in late April our U.S. clinical trial data for marketing approval of our EVO family of myopia lenses. Our submission is now under customary, interactive FDA review. We will not provide further comment on the process with the FDA until permitted and prudent to do so. We continue to anticipate pending FDA approval that our EVO family of myopia lenses will be available to the U.S. market in the fourth quarter of this year. As we look ahead, the growth opportunity for STAAR remains significant. In June, a third-party independent research firm named STAAR, the fastest-growing company in ophthalmology among a list of peers, including all of the publicly traded ophthalmology companies with which many of you are already familiar. We anticipate surgeon focused globally on higher dollar patient pay procedures, such as our ICL may grow particularly as we consider the recent headwinds associated with reimbursed ophthalmic procedures. If we are correct, our sales opportunity may broaden to the large number of cataract surgeons but in the U.S., for example, is more than double the number of refractive surgeons we currently target. As we look to the second half of 2021, we are mindful that COVID-19 is still with us and that we have an upcoming cold and flu season in the Northern Hemisphere. However, we remain confident our surgeons and their patients will want to secure visual freedom with our EVO lenses similar to our experience since the pandemic began. Further, given the accelerating sales momentum we achieved once again in the second quarter and our visibility into the key drivers of growth in several major markets in the second half of 2021, we are today increasing our net sales outlook for the full year fiscal 2021. For the full year fiscal 2021, we now expect total net sales to be in the range of $227 million to $230 million, up from our previously provided outlook of $215 million to $217 million that we shared on May 5. The higher sales outlook we are introducing today represents a growth rate at the midpoint of approximately 40% year-over-year. I will now turn the call over to Patrick to discuss our financial performance in more detail. Patrick?

Thank you, Caren, and good afternoon, everyone. Total net sales for Q2 2021 were $62.4 million, up 77% as compared to $35.2 million of net sales in Q2 2020, and up 23% on a sequential basis from Q1 2021. The year-over-year increase in net sales for Q2 2021 was attributable to global ICL sales growth, which was up 93%. We anticipate robust levels of ICL unit growth in Q3 and Q4 that will exceed 30% year-over-year when combined with our strong first half results for 2021 and formed the increased sales outlook for full year fiscal 2021 that Caren just outlined. Looking at historical pre-COVID sales trends, we now expect Q3 total net sales to be in the range of $57 million to $58 million. In terms of product mix, ICL sales represented 95% of total company net sales for Q2 2021. And other products represented 5%. As a reminder, our other product sales primarily consist of Phakic or cataract IOLs and injectors' business, which serve only certain markets globally. The mix of ICLs for Q2 was higher than recent trends due to $28.5 million higher ICL sales in the quarter and approximately $1.3 million of lower other product sales, which are primarily low-margin injectors. We continue to anticipate other product sales will be approximately $15 million for the full year 2021, which has contemplated in our full year sales outlook. Gross profit for Q2 2021 was $49.2 million or 78.9% of net sale as compared to gross profit of $24.4 million or 69.4% of sale for Q2 2020 and $39.1 million or 77.1% of net sales for Q1 2021. The year-over-year and sequential increase in gross margin is due to the higher mix of ICL, which command a higher margin than our other products business. In addition, for the year-over-year comparison, there was $1 million of period costs recorded in Q2 2020 as a result of our voluntary COVID-19 related manufacturing cost which concluded on April 26, 2020. For the second half and full year 2021, we now expect gross margins to be in the range of 75% to 77% due to a higher mix of other products sales. Moving down the income statement. Total operating expenses for Q2 2021 were $38.6 million or 69.8% of net sales as compared to $25.5 million or 72.4% of net sale in Q2 2020 and $31.7 million or 62.4% of net sales for Q1 2021. Taking a closer look at the components of operating expenses G&A expense for Q2 2021 was $11.4 million, compared to $7.8 million for Q2 2020 and $10.2 million for Q1 2021. The year-over-year increase in G&A is due to increase compensation-related expenses, corporate insurance and facilities costs. The sequential increase in G&A expenses was primarily due to compensation-related expenses. We expect quarterly G&A to continue to be between $10 million and $11 million a quarter for the balance of 2021. Selling and marketing expenses were $18.9 million for Q2 2021, compared to $10.3 million for Q1 2020 and $13.2 million for Q1 2021. The increase in selling and marketing expense from the prior year was due to increased compensation related expenses, advertising and promotional activities, trade shows and travel expenses. The sequential increase from Q1 2021 was due to advertising and promotional activities and compensation related expenses. We expect Q3 and Q4 2021 selling and marketing to be approximately $17 million per quarter. Research and development expense was $8.3 million in Q2 2021 compared to $7.3 million for Q1 2020, and flat with $8.3 million for Q1 2021. The increase in R&D expense is primarily due to compensation related expenses, partially offset by lower expenses associated with the U.S. EVO clinical trial. We continue to expect R&D for 2021 to be approximately $9 million per quarter for the balance of 2021. Operating income in Q2 2021 was $10.7 million or 17.2% of net sales as compared to the operating loss of $600,000 or negative 1.8% of net sales for Q2 2020. The improvement in operating income is due to higher sales and leverage on fixed and variable operating expenses during the quarter. Net income in Q2 2021 was $8.6 million or $0.17 per diluted share compared to a net loss of $1.2 million or negative $0.03 per share, or a loss of $0.03 per share in Q2 2020. The company's effective tax rates for Q2 2021 and the six months ended July 2, 2021 was approximately 20%. For the second half of fiscal 2021, we expect our effective tax rate to be approximately 25% to 30%. On a non-GAAP basis, adjusted net income for Q2 2021 was $13.5 million or $0.27 per diluted share compared to adjusted net income of $1.4 million or $0.03 per diluted share in Q2 2020. A table reconciling the GAAP information to the non-GAAP information is included in today's financial release. Turning now to our balance sheet. Our cash and cash equivalent as of July 2, 2021, totaled $173.1 million, up $20.6 million compared to $152.5 million at the end of the fourth quarter of 2020. The increase in cash from the fourth quarter is attributable to $13.1 million in cash generated from operations and approximately $14.1 million in proceeds from the exercise of stock options, partially offset by $5.7 million in capital expenditures. For the full year 2021, we continue to anticipate total CapEx spending to be in the range of $15 million to $20 million. Finally, STAAR will be participating in several investor conferences and events in the coming weeks, including the Canaccord Growth Conference on August 10; the UBS Med Tech Investor event in Laguna Beach, California on August 12; Stephens Non-deal Roadshow on August 17; the Piper Sandler West Coast field trip in Dana Point, California on August 24; and the Morgan Stanley Annual Global Healthcare Conference on September 14. We look forward to speaking with many of you at these events, and this concludes our prepared remarks. Operator, we are now ready to take questions.

[Operator Instructions] Your first question comes from the line of Anthony Petrone from Jefferies. Your line is open. You may ask the question.

Thank you. Good afternoon, everyone. Congratulations on another strong quarter here. I think Caren, I'm intrigued by the comments in Spain, just sort of the comparison to laser vision correction. And it looks like that ICL is sort of gaining ground in a larger way in moderate myopia patients. And so maybe across the two core regions where we've seen outsized growth, China and Europe, just to recap on the dynamics between laser vision correction, the variety of procedures that are out there for refractive surgery and ICL. And it just seems that ICL is now certainly gaining an outsized proportion of even moderate myopia patients. So just to recap there, and I'll have a follow-up.

Sure, thank you very much Anthony. We have put into play for probably three years now a focus on the more moderate miles as a real opportunity for surgeons in terms of moving them from a laser vision correction procedure, which may have some issues around night vision or dry eye syndrome and also with our lens, the advantage of removability and not in any way impacting the cornea. And so when we work with our customer base, we have now a lot of studies that support that in the lower myo, the ICL has equal or better patient satisfaction and surgeons are delighted by the patient response. So we then marry that to the fact that the economics associated with this premium procedure are outstanding. And so you put those together and what we're finding is that many surgeons around the world offer to patients the ICL regardless of a lower diopter correction need. And for the reasons I previously mentioned, the patients are excited about having those advantages. So you marry that to a business model that's superior and you get the growth we're enjoying.

That's helpful. And then a couple of follow-ups would be just on the complexion of the mix in China specifically, when you think of spheric and toric [ph] just how that played out in the quarter. It seems like that kind of shifted a bit. And then we will sneak one in on the U.S. FDA side. Just kind of curious to know that there was a know that there was a couple of dates out there, the 100-day interim meeting and now obviously it's a 100- day – 180-day limit as to a final ruling on the PMA supplement. So just kind of thinking about those two dates in particular, do you think there'll be an interim meeting just going over sort of high-level questions on submission? Or should we be thinking that looking at October as sort of the final drop that date? Thanks again and congratulations.

Thank you, Anthony. So yes, we had what I would consider an exceptional Q2 in China in terms of spheric demand and toric demand, our mix there was definitely beneficial for STAAR. And we're starting obviously to see Q3 after one month. And we had the best month in history in China, and the mix was to our advantage. So more to come. With regard to the FDA, the bottom line is that the FDA is following the procedures as required and the process as we expected. And so as a result of that, we are in a customary interactive review. I'm not going to comment on the 100 days or the 180 days at this point in time, but I can tell you that we are very pleased with the level of interaction and communication with the FDA.

Thanks again. And congrats.

You are welcome.

Your next question comes from the line of Andrew Brackmann from William Blair. Your line is open.

Hi, good afternoon, and thanks for taking the questions. Congrats in the quarter. Maybe to start here on the U.S. market and certainly appreciate all the commentary that you've provided start here on the U.S. market and certainly appreciate all the commentary that you've provided so far. That's been helpful. But I guess more specifically, as we sit here on what could sort of be the cusp of approval in Q4, can you just maybe provide us with some thoughts on how you're thinking about revenue building for that launch throughout 2022? Are there any sort of predicate devices that we should be comping against here? Just trying to get some level of framework around your expectations?

Well, we just came off what we considered a very successful AECOS and ASCRS meetings, where we met with a number of key opinion leader, surgeons from around the United States and many of them in major markets with very strong and well-earned reputation for excellence. And what we are talking to them about is the transformation opportunity with EVO getting approved. And what we're hearing back from surgeons is tremendous enthusiasm to build their practices around the ICL with, of course, the EVO version. So when you think about the predicate device, we are the original and the only in terms of having an extraordinary implantable lens that provides such excellent vision. Just a quick story we just got. On the Sunday morning, I was greeted with an amazing e-mail from a doctor, who was fearful that she would have to potentially give up her ability to practice medicine due to her very severe myopia and astigmatism. And after having suffered through a lot of challenging visits with surgeons over the years and having been in a situation where she did not want to replace her healthy lens, natural crystal lens, she discovered us. She had the surgery. She was driving the next day and the headline from her was thank you for stating my career. So this is the kind of device that we so proudly are fortunate enough and blessed enough to represent. So we're very much looking forward and so are the surgeons to us getting approval for the United States market.

Hey, Andrew, if I could add, I think when we think about the contribution of revenue, we're obviously very excited about U.S. EVO as you outlined. And of course, Viva as we continue that controlled rollout. But we can't forget the fact that the bulk of our growth is really coming from where we're in the current markets right now. And that's really going to drive the revenue over the next several quarters here. And so we're excited about that. And of course, when U.S. EVO comes online, Caren and I and the rest of the management team have talked about the ability to grab market share, much like we did in China a few years back. And so we're very focused on that and how that can be a big catalyst as we move forward to the introduction of that product and commercialization in the U.S.

Thanks for all that color and really like that for Caren. Maybe just secondly, and again, sticking on the U.S. market here for a second. I think in the past, you've sort of talked about alliance agreements with centers throughout the U.S. Could you maybe just sort of describe those relationships in a bit more detail and sort of the type of customers, who those customers are? Are they more independent practices or high-volume users of Visian today? Thanks.

So our customer base that's developing in the United States is everything from the one practitioner to multiple surgeons in a practice to those that are part of the chain. And each strategic agreement is designed and developed uniquely for the needs of that particular practice. What our normal components are a strong commitment for growth, usually 30% plus, a combined effort for digitally really kind of reinventing websites, doing digital marketing working on also other types of media to promote the fact that ICL is available. We also are doing more and more around supporting the surgeons with helping them build the stories of their happiest patients. And there is also an opportunity for the practice to determine the mix. So their business models get adjusted. And then we help support them in terms of helping them get started paying potentially for marketing or advertising as well as working with them on patient education. So I think the bottom line is these strategic agreements, which we started in China in 2016 are the way we work and the way our customers are truly satisfied and happy with STAAR.

Great. Thank you.

Thank you.

And your next question comes from the line of Bill Plovanic from Canaccord Genuity. Your line is open.

Hey, this is Rohan [ph] on for Bill. Thanks for taking my questions. Congrats on an amazing quarter.

Thank you.

I just wanted to touch on EVO Viva in Europe. Any significant additional learnings that you all have had from the limited market release, how many countries are you in now? And when are you expecting a full market release? And kind of going on that, what do you need to see commercially to go FMR?

So we are making progress with the Viva rollout. We are in multiple countries. We have identified surgeons in four countries that we believe will be champions for Viva. They are going to be writing a lot of the playbook. We have experienced as have hoped a lot of interactions with multiple patient types, those who have some residual accommodation, those who are most interested in near vision, those who want to retain their inotropic distance vision. What we're trying to do is understand how to make sure the lens is properly used for each of those patient types. Because of COVID and because of the recovery work that a number of practices have been doing evidenced by our Q2 volumes, I have to say that our presbyopic program with this controlled rollout is absolutely producing for us the results in terms of learnings that we want. But we're not at a volume level yet where I feel that we're ready to go fully commercial. We have more work to do. And so as a result of that, we are weighing the merits of instead of having the full-term rollout in October, where now there are some concerns that ASCRS may be more virtual than in-person and this lens in terms of learnings and training, we want to do in-person as we've said repeatedly. So, we'll cut a hole on the exact timing of the rollout that we are very excited. Let me tell you, this is a good lens, and we have a high level, we believe, patient satisfaction with a number of surgeons, happy with the lens.

Great. And thanks for that color. And the only other question I had was especially in China and Japan, how should we think about the potential for the COVID variants on the business?

Well, we have updates weekly with our team on the ground, in every country. And today we talked to the team from China. And what we found out is that all the 30 cities that have some type of lockdown, they are limited lockdowns and there is only one eye hospital and eye clinic that has suspended procedures for two weeks. Everywhere else in the larger provinces in Tier 1 cities in Tier 2 there is no delay. As matter of fact, as I said earlier in the call, we just were happy to have a record month for our first [indiscernible] season in China. So, it's looking good. In Japan, during the Olympics and with some of the concerns of a very conservative Japanese government in terms of fear around making sure that all appropriate precautions are taken, there has been for the first time, a little bit of less than expected lenses implanted in the last week or so, but we expect that after the Olympics and with the normal way to Japan, so well handles and our Japanese customers so well continue to do implants that that will be back to normal.

Great. Thanks for taking my question.

You're welcome.

[Operator Instructions] The next question comes from the line of Steve Lichtman from Oppenheimer. Your line is open.

Hi, this is actually David on for Steve. Thanks for taking the question. Just maybe one from me. Relative to the anticipated approval of EVO and EVO+, I'm just curious, what do you see happening to the current Visian ICL lenses, following approval of EVO? Do you expect those to be certain to switch over to new lenses following approval?

We will just continue selling the current Visian ICL lenses if and when the EVO is approved, that's what's happened in every market because the elimination of the peripheral iridotomy procedure is so valued, it's so great for patient and surgeon that usually there's very little interest in the older version of the lens.

Okay got it. Thank you.

You're welcome.

Next question comes from the line of Ryan Zimmerman from BTIG. Your line is open.

Hey, Caren, Patrick, thanks for taking the questions. Really impressive this quarter. I guess, maybe to start a few for me. Number one, Caren, you talked about the June busy season picking in China, continuing into July. What's your expectation for how long that busy season may last? And is that any different from what we've seen, maybe historically, just given some of the dynamics between COVID that we saw last year?

At this point as of this morning in our discussions August started out as strongly as July delivered. But if you look at typically your strongest month is July and then August is good and starts to taper off for the end of August, and you're pretty much done by mid-September. So, I don't think that there's going to be much variation of that this year from last year. And the last of course, there's more restrictions associated with COVID. But right now there is no visible, no predicted change in that normal cycle.

Okay. And then, the strength that you are seeing, I think, has to do is kind of hitting on this earlier, but as we think about the market and refractive surgery, how much of your growth, whether it's the U.S. or Europe or China or wherever, you attribute to converts from laser vision correction versus expansion of the market of the broader refractive market that maybe you're driving specifically.

Well, that's a great question. I'm not sure we have a full handle on it, to be honest. We know that the patients are usually as trying to con on offered their choice. If we also know that patients come in saying they only want ICL. And so, what would be important to understand is those who would say no to laser vision only wanting ICL, those would be the expansion of the market. So, I think, from our vantage point, we expect that when the U.S., the second largest market in the world has approval for EVO, you're going to have a global expansion just like China has been building a really strong EVO market. And China's numbers have gone up while laser vision was pretty much in single digits. So, I think over time, we're going to see a global expansion of these procedures that really wrap around EVO. And at this point I really can't give you what the breakdown would be.

Okay. And if I could just squeeze one more in…

Sure.

You talked about EVO a bit. And one of the comments that you made I was struck by was just marketing approval outside of the specific geographies that you're in already. I mean, I know you are still in this kind of controlled launch and gear up, but the what's giving you that confidence or kind of where are you targeting and when? If you could share with us, expanding the EVO marketing approval beyond the existing Caribbean countries today. Thanks for taking the question.

You're welcome. We definitely have been seeking regulatory approval outside of Europe in a number of markets. And when we do the full commercial release of this product, we will also release it to those markets, in addition to Europe, that have approved the product and we expect those approvals.

Thank you.

Yes.

Your next question comes from the line of Jim Sidoti from Sidoti & Company. Your line is open.

Hi, good afternoon. Thanks for taking the questions. I know you are probably a little reluctant to talk about U.S. sales once you get approval. But can you talk a little bit about what you anticipate your R&D spend will be once the approval comes through? Will that continue to be at this level, or do you think that drops off?

Yes, I think we're going to continue to see it, as I said, my premier comments around that $9 million a quarter. Although we don't have the EVO clinical U.S. trial anymore, that we talked about, other things go into R&D like the clinical, like the regulatory, we want to continue to, tout really the benefits of EVO out there through peer publications, et cetera. And then of course, as we've mentioned, many times, we continue to look at iterations of the lens, whether that be the materials in the columnar standpoint or other things that we get you to continue to enhance. So, I think we’re at a decent run rate right now, and that will continue.

And how about sales and marketing? Do you anticipate a big investment in sales and marketing, once approvals received?

Yes, I think, you can expect that as we said to the balance of this year, we set around 17-ish, maybe million dollars a quarter for Q3 and Q4. As we talked about the way that brand awareness and the direct to consumer has really evolved over the last decade or so, it's very, cost-effective now as you go down the path of influencers and things of that nature. But we’re excited about U.S. We know that it is going to lift all countries as we build brand awareness here. But I will tell you that we're also prudent about the investments we made. But yes, you can expect that we will look to increase sales and marketing as U.S. comes on board. But that will result in what we believe will be a very robust topline.

Okay. And then finally, if you could just repeat what you said about growth margin for the remainder of this year, sorry I didn't catch that.

No problem. So, we had another good quarter of gross margin, primarily due to product mix. As we started so many more of our IOLs in the second half of this year, we expect gross margin to between 75% to 77%. The reason why there is a 200 basis point range there is really it's predicated on product mix. If we end up doing more ICLs with the mix, we're sitting at 90% plus then quarterly we’ll be close to that 77% gross margin. And that's why I gave that, that large range.

Okay. Understood. Thank you very much.

Welcome.

The last question comes from the line of Bruce Jackson from Benchmark Company. Your line is open.

Hi, thanks for taking my question. Looking at the launch of EVO in the United States, one of the rate-limiting factors sometimes can be the training of the physicians. Maybe you could talk to us a little bit about – what plans do you have in place to make sure the doctors get trained quickly? And are there any – could that be a rate-limiting factor for you?

Thanks for the question, Bruce. Training of U.S. surgeons is already scoped to meet the surgeons who have the larger requirements in terms of growth and then to move from market-to-market to make sure that we get everyone trained in a timely fashion. So, all of that is done, the training materials are done, the training videos are done, the certification requirements have been approved. And so, we have, what we think a very robust plan with a really excellent team that's ready to go. So, we did not see that as a limiting factor to get the lens out to those who want it and who are prioritized by the demand needs over the initial weeks and months of the rollout.

Okay, great. And then a follow-up question if I may, you also partnered with some physicians to test out some marketing and messaging with outdoor advertising, et cetera. Do you have also programs in place to help the physicians market EVO to the patients?

Yes, we have extensive options and opportunities that surgeons can work with us on to have their patients’ profile, to have their practices’ profile, to have their websites updated and to have a full media outreach from multiple sources, some of them local, some of them national, it's all built into the way that we build the partnership. So, all of that's ready to go.

All right, super. Thank you very much.

Thank you very much for calling in Bruce.

So, there are no further questions at this time. I would like to turn the call back to Caren Mason for closing remarks.

Thank you for your participation on our call today. We look forward to speaking with many of you in the days and weeks ahead. We appreciate your interest and investment in STAAR Surgical. Please take good care. All the best to all of you.

This concludes today's conference call. Thank you for participating. You may now disconnect.