As always, there'll be a 30-minute presentation. There should be a time at the end for Q&A. So if you have a question, you can type that into the Q&A tab at the bottom of your screen. And with that out of the way, it's all yours, Patrick and Romeo.
Thank you.
Good morning, everyone, and thanks for joining us. Appreciate your time today and look forward to you learning more about IRIDEX. As always, we may be making—we'll be making forward-looking statements, so I'll put this here for us. Okay. I'd like to start with a vision and our mission statement for IRIDEX. Our vision is to transform laser-based eye care to preserve sight and improve quality of life for patients suffering from ophthalmic conditions globally. Our mission is to deliver innovative, clinically proven, non-invasive laser technologies that safely and effectively treat glaucoma and retinal disorders. IRIDEX has a long-standing reputation in the ophthalmic lasers. We're supported by strong clinical evidence, and we have a loyal global customer base. Our portfolio covers both retina and glaucoma products, giving us a solid reach across two major markets.
Our retina business is primarily a capital equipment business, while our glaucoma business is reoccurring revenue. In 2024, our revenue was $49 million, with $28 million from retina. Our glaucoma business has 71% margins, and our retina business is 41%. Our retina product portfolio is one of the most comprehensive in the market. It spans from our pattern scanning laser systems of Pascal to our IQ platforms. This includes our MicroPulse technology, and that's what really sets us apart clinically. Together, these products support both surgical and medical retina needs, and they deliver consistent outcomes with minimal collateral tissue damage, and then when you add in our disposable probes on the retina side, we have a full suite of products and really, in the end, solutions for our customers.
On the glaucoma side, our CycloG6 platform, paired with our full suite of MicroPulse and continuous wave probes, has become an essential part of how clinicians manage patients across the continuum of care. Our MicroPulse TLT, in particular, is gaining momentum as the preferred approach because it offers a rare combination of safety, predictability, and the ability to repeat treatments as the disease progresses. When you look at our commercial footprint, we have a strong global presence with direct sales in the U.S. and wide distribution around the world, reaching over 40 countries. This sets us up nicely to scale efficiently while supporting growth in both our capital equipment sales and our disposable probes. Taking a look at our retina product overview of our products on the retina side, our U.S. retina install base is aging, particularly our Pascal line of products and our IQ line of products.
Nearly half of those systems are approaching end of life and end of service. This creates a significant replacement opportunity for us, which is particularly timely as we introduce our new product platforms, particularly our new IRIDEX Pascal platform. We provide clinicians with a full range of tissue-sparing laser options with our Pascal system. Users can add three software options. They can add MicroPulse, an endpoint management software, which is sub-threshold treatments, and we have the PSLT, which is a pattern scanning laser trabeculoplasty for glaucoma. These advanced technologies enhance both the safety and efficacy of our devices. They enable precise minimally traumatic treatments for both the retina and glaucoma patients. The global retina market is big and growing. It's fueled by the rise in diabetic eye disease and our aging populations.
We have 8 million. There's an 8 million retina procedures each year and more than 55 million patients with particularly diabetic conditions. The demand for safe and predictable laser therapy is only going up. We feel strongly that our MicroPulse technology puts us in a strong position to meet the demand. We also have a DAME trial that's going on that looks to extend visual acuity in the DME patient population while also addressing the economic burden of a patient receiving repeated pharmaceutical injections, which can be expensive and not very pleasant for the patient. This comparison here simply illustrates the clinical advantage of MicroPulse over traditional laser therapy, which can leave visible scarring and can impact visual function. MicroPulse, because it turns on and off the signal, it minimizes thermal damage.
It allows the temperature within the tissue to cool, and it causes minimum, no tissue damage, really. We also have a portfolio of EndoProbes. Our EndoProbe line continues to be a strong contributor, offering precise surgical tools that integrate seamlessly into vitrectomy procedures or other similar procedures. These single-use devices enhance the control of the surgeon, and they also generate revenue, recurring revenue with each case. Now, shifting to glaucoma product overview, we have a real opportunity here. The U.S. market offers substantial room for growth. When you start talking about TLT and MicroPulse and our G6 probes, we're really just scratching the surface here. There's a huge opportunity, particularly in the moderate patients and even moving towards the mild patients, to use our probes earlier in the continuum of care. We are not a mixed device. We have a different mechanism of action that we use, and it's very effective.
We are just now beginning to move more into the moderate patients and being used standalone, but that's really where the real opportunity for us. Our G-Probe has been used for quite some time in the late stage in advanced glaucoma, but the real opportunity is in those moderate patients. Same thing, OUS, a huge market there outside the U.S. We estimate that to be about a $700 million market. When you look at where we have approvals and you look at the developed countries and what we're doing today versus where we could be, that's a huge market for us as well.
If you look at the U.S. demographics and population growth that drive the glaucoma landscape, when you start looking at the different procedures that are done there and the treatments, I mean, the great thing about MicroPulse is it's the versatility of our laser technology that allows us to treat following any of these or in conjunction with any of these procedures. We could be before or after any of these procedures, and retreatments be used as a retreatment paradigm. Used to in the 1990s, glaucoma got diagnosed later in life, and people weren't living as long. But if you take a look at where we are now today, the treatment is being. The disease is being diagnosed earlier, and people are living longer. And there's no cure for glaucoma, as you know.
So there's really an opportunity for us to use our MicroPulse, non-incisional, repeatable, and our continuous wave technologies for whether it be early or late-stage glaucoma. Again, we are looking to be used along the whole continuum of care of the disease state. And that's where the real opportunity for IRIDEX is. So whether it's our MP3 probe, which is used for moderate to earlier stage or even some late stage, or our G probe, which, depending on your settings, also can be used across the continuum of care, depending on the physician preference. This slide's a little busy, but it shows the evolution of our products. IRIDEX was the inventor of the G probe.
The slide really illustrates how 810 nm laser and transscleral cyclophotocoagulation has advanced over time, beginning with the classic continuous wave, evolving to a slow coagulation process that some physicians prefer, and then moving into IRIDEX patented MicroPulse technology. It shows how physician consensus on MicroPulse and the clinical guidance and long-term clinical data have demonstrated significant IOP reduction and a good safety profile. And I'll talk more about that in future slides. If we look at the recent prospective data, it's really compelling. It shows greater than a 50% IOP reduction with an excellent safety profile. Importantly, efficacy improves predictability with dose adjustments while maintaining extremely low complication rates. This is a non-incisional therapy, and it really allows the study, really, we found that when we did five 15-second sweeps, we got really good results, but we also got good results using four 15-second sweeps as well.
And it comes down to the pigmentation of the eyes, how sick the eyes are, what the clinician will choose. But the point here is that sweep speed velocity may be an underappreciated treatment variable and can help clinicians optimize treatment parameters and their outcomes. This study goes along with what I talked about earlier. This study showed that when we looked at patients long-term, we continue to see sustained IOP reduction even after five years. In this study, we saw up to 32% IOP reduction at patients that were pre and post-cataract eyes when we looked at them five years later, which is quite remarkable. The study was done by Dr. De Crom in the Netherlands. Similarly, Dr. De Crom looked at eyes with patients from moderate to advanced glaucoma that received retreatment. And this really shows that this is not a one-and-done procedure.
Unlike other procedures, you can see the clinical data, whether it be for MicroPulse or continuous wave treatments, can be repeated with meaningful and sustained IOP reduction over time. And this really allows ongoing treatment as needed to manage the glaucoma effectively. A little bit about our reimbursement. We've had stable reimbursement for quite some time. These are the reimbursements for clinician fees, the ASC, the hospitals. And then we looked at the ROI. If you buy a laser, a G6 system, whether you're at an ASC or a hospital, particularly, you really only need to do three cases a month to pay for that laser. And then with the hospital, the economics are even more favorable, as you can see.
But certainly in a year, whether it's in an ASC or a hospital, the laser easily pays for itself if you just do three cases, whether it's a combination of MicroPulse or continuous wave. One thing that's helped our sales team in targeting, we use a system called MedScout. And really, the takeaway from this slide is MedScout really gives us granular visibility into where clinicians are performing our procedures and exactly when they are doing them. So we can see what procedures are being done, how many are being done. And this really gives our sales team better access to targeting and helping drive probe utilization. And that's really what we're trying to do: get not just our KOLs, but get those clinicians doing more cases every month, every quarter. Our current financial overview, we talked about where we finished Q4. We've made a lot of changes.
Last year, when I took over as CEO, we took immediate action to right-size the company for the revenue that we were getting. We looked at not just personnel, but every line in the expense, and we took action to reduce OpEx and our cost of goods. In doing that, we've reduced OpEx by $2.3 million. We've increased our revenue with half our sales team, particularly on the glaucoma side. We've reduced our operating losses. We've achieved positive adjusted EBITDA. We're planning on track to achieve it for the full year and cash flow positivity in Q4. We're going to continue those cost savings initiatives and planning to be operating income positive and cash flow positive in 2026. Our cash balance is about $5.6 million as of the end of Q3. Really proud of what the team's done. We're in the middle of a turnaround.
We're very excited about the future of IRIDEX. We have more to come as far as reducing our cash burn, reducing our cost of goods, and continuing to improve OpEx as we move into 2026. And if you followed us on our press releases, then you know we've done what we've said we were going to do, and we're excited about the future. And with that, that concludes our presentation. I appreciate your time today.
Great. Thank you, Patrick. So you put out a press release today. Can you just kind of highlight the importance of the independent study that was published?
Yeah. Yeah. That press release was what I talked about earlier about retreatment and the studies that show that after doing retreatment, Dr. De Crom saw a 25%-35% reduction in IOP. And unlike other treatments in glaucoma, our treatment is repeatable, and that study just proves that. That's the big sign there. Dr. De Crom's been working with us very closely, and he's done several studies for us. And that's really the takeaway is that MicroPulse and Continuous Wave, you can do retreatments and still see outstanding results and the durability of those results over time.
All right. And can you talk about the last quarter? You were able to grow sales while you reduced the sales team and lowered in sales and marketing. So what worked there?
Yeah. So what we did last year, so we've done it the whole year, not just last quarter, we reduced our sales team, particularly on the glaucoma side, from 13 to 6. And we actually have overachieved on that. So there's been several things that have helped us there. It's been the LCD ruling that said you can't stack mixed procedures anymore. That has certainly helped. That was one of the catalysts. That allows us to go out and be used in conjunction with cataracts or other mixed procedures. We are not a mixed procedure. We have a different mechanism of action. We heat the ciliary body up, and that causes the collagen to shrink and therefore allows flow. So we're very different that way. That's one. We've had these studies, the Dr. De Crom study that shows the reduction of IOP at 12 months, 50% reduction of IOP using the parameters.
So in the past, quite frankly, we didn't have the settings dialed in as well as we should have. We've had the consensus panel, which has allowed us to define those settings. Now, using those settings, what are our results? And our results have been, as I mentioned, 50% reduction at a year. Not to mention, looking long-term, we've saw that reduction after five years. So it's really a focused sales team, getting them to using MedScout in the targeting. But it's not just glaucoma. Currently, the real opportunity for growth is glaucoma, but currently, our revenue is still two-thirds of retina. And our new Pascal systems have allowed us to. It has a lot of great features, and that's also growing our business as well.
It sounds like you've been in the retinal business a lot longer than you've been in the glaucoma business. How big is the installed base?
Yes, since the 1990s. [crosstalk] Yes.
How big is the installed base there? And what percentage of those systems do you think turn over in the next couple of years?
We project that in retina, we have a replacement business, and over the next five years, we are into services seven years, but every five years, we're going out and trying to replace those systems, so I would say that about 50% of our, maybe 40% of our systems are in that space, 40%-50%. 50% are getting to the five-year mark, so that's a real opportunity in the replacement business, and we've recently released a new IQ. That's an IRIDEX Pascal system on our Pascal, so that's a real opportunity for us to go out to those older systems and replacement business, but we're also placing new systems, so that is also an opportunity, and once we get NBR approval in some of the other countries that we're working through, we'll have even a bigger opportunity there.
And what other treatments do you compete with? And do you think you're picking up share?
On the retina side of the business?
For both. For both businesses.
So we compete with incisional procedures on the glaucoma side of the business. And we compete with pharmaceuticals on. I'm sticking with glaucoma. There's pharmaceuticals. There's traps and tubes, as I showed in that earlier slide, those treatments. But really, we compete in the late-stage drainage devices, traps and tubes, earlier-stage pharmaceuticals, and incisional procedures. On retina, we compete with other pattern scanning devices that are out there and other laser companies that have pattern scanning devices.
In terms of share, do you think you've picked up share in the past couple of years or stayed steady?
Absolutely. We have in the glaucoma business. We've remained pretty steady on the retina business, but we have seen growth this year. And the glaucoma business, absolutely. Particularly what we're seeing because of the LCD and the other things I mentioned in regards to the papers and the results we're seeing from our device.
Okay. Is Glaco a competitor for you?
Yes, they are.
Okay. And can you talk about where the system is used? I think you mentioned both outpatient and hospitals. Can it be used in a doctor's office? And at $33,000, is it something that has to go through a committee for them to purchase?
Yeah. So, we, I'll answer the first part of your question first. We are in ASCs and hospitals, primarily in ASCs, but they can be done in a clinic. And the answer, it depends. Yes. We don't see a lot of resistance to purchasing the capital equipment once we present the ROI to whether it be a hospital or an ASC. We don't really, whether it goes, there are some places where it does go to committees where the purchasing person is getting the quote and then running to a committee to get it approved. But we hear of no resistance to the cost of our laser platform. Not at all.
To add to that, Jim, on hospital settings where they do typically require purchase orders, we have several financing banks that we show their way so that they can get the monthly payment so that it wouldn't require capital equipment PO so that they can get, they use the product and pay it through that way.
Good point, Romeo. Thank you. Is it primarily a direct sales team that's selling the product, or do you have some distributors out there as well?
So U.S. is direct.[crosstalk]
U.S. is direct. We have distributors. OUS, we're direct in Germany and Austria.
It sounds like you're starting to migrate more to contract manufacturing. Is that going to be the trend going forward?
We are using contract manufacturers. A lot of our older lasers are still made in-house, and our newer Pascal, mainly to work out to build in-house first before we transfer. The plan is to, as I've mentioned in previous press releases, to move manufacturing, all our manufacturing, the contract manufacturers, as well as some other processes as well in turnover.
What's the impact on gross margin if that happens?
After all is said and done, obviously, this is going to take more than, in our planning, we're looking to benefit from this towards the latter of FY2026, early 2027, because of all the training and timing involved. By that time, we're looking at an expansion of margin anywhere from 350- 500 basis points to our current 40% margins now.
Okay. And I assume as the sales mix shifts more towards glaucoma, that'll help the margins as well?
That'll be even higher, right? Because we're getting higher margins on the probes.
Right. Right. And you've been pretty aggressive with the cost cutting since you've gotten back or gotten there, Patrick. Is there more to come?
There is more to come. There's some things I can't comment on today, but there's more to come. Look, we want to continue to reduce our OpEx and improve our cost of goods. We did take an aggressive approach. As I talked about earlier, we've reduced our sales force in half, but pretty much on the glaucoma side, but maintaining our revenue. There's other areas where we're going to continue to do cost cutting and continue to show that we're good stewards of money and continue to do what we're saying we're going to do.
But to add to Patrick's, we've discussed this in our past calls before. So we are continuously looking to reduce operating expenses. And we've told people that our lease at Mountain View, which is next door to Google, it's pretty expensive. We're going to be out of there the latter part of 2026. So we're looking to move to a different zip code that's a lot cheaper. And we've also told the investors that we're looking to move certain parts of G&A out of California. So that will be representing savings at least $150,000-$160,000 per quarter initially.
Okay. Yes. All right. How about on the reimbursement front? Do you anticipate any changes in the near future that could help or hurt probe utilization?
No. That's been steady for a long time. We don't see any changes to the current CPT code we have.
All right. And then the last one, you indicated that you'll be cash flow break-even, or I think that's what you said, cash flow break-even the fourth quarter. What's the trend there? Do you think you have enough cash at this point to keep the business going?
Absolutely.[crosstalk]
Yeah. Like Patrick said, we got $5.6 million at the end of Q3 with our reduced operating expenses as well as higher revenues. We've done, I think, four consecutive quarters now through Q3 of outdoing year-over-year growth and revenue. So that's helped. We're just collecting those receivables a lot sooner than we've been getting. So that's been funding our growth.
The company's been around a long time. Before the presentation started, I told you how long I've followed it. What's different today than what do you want to tell someone today who maybe looked at IRIDEX 15 years ago? Why today is this a better idea than maybe it was then?
Yeah. [crosstalk]
Go ahead.
No, go ahead.
Well, I was here, like I told you. I came here in 2008. This is my second stint here. But basically, back then, I had a feeling, and I was right. They were basically just trying to sell the company to some bigger company. So we were just focusing on growing sales while we're burning cash. Well, we'll come to a point now where we can't burn too much more cash or we'll be out of business. So that's when Patrick stepped in. And you can take it from there, Patrick. And then just basically, we're on this mode now of saving monies and growing the company.
Yeah. I mean, Jim, we have an exciting story now. I mean, in the past, we didn't have everything nailed down on the glaucoma front as far as settings and what our real plan and strategy was. We do now. We have a very compelling story on the glaucoma side of our business. Just looking at the versatility of our probes and how they can be used along the continuum of care, it's a huge opportunity for us, and we have a small sales force, and the opportunity is there for IRIDEX, and let's talk about the retina business a little bit. We have our flagship product, that's our Pascal product. That product is growing. It has a lot of unique features. It's a great device.
But we have products even on the retina side of the business that's a great portfolio that offers different price points, which allows us to treat many different disease states on the retina side of the business. Now, let's talk about other things we've done. That's our products and our story. But as Romeo mentioned, we're no longer a cash-burning machine. We're being good stewards of money. If you listen to my press release from Q4, we did what we said we were going to do. We got the company financially Q4 of 2024 till now. You'll see that we got the company cash flow in good cash flow position. We're not burning as much cash. We're in a company where exciting things are happening. We're making changes. The employees are excited about what we're doing. So that's a big plus.
They've done a great job responding because a lot of them we did reduce the workforce here, so a lot of people here had to wear multiple hats. I'm proud of what we've accomplished. I think we're an undervalued company that's still proving ourselves to the street. I think we're going to do that over the next 12 months.
All right. It does seem like things have really started to turn around in the last four or five quarters. Really appreciate you taking the time to talk to us today and taking the time to do the meetings with us today. We just want to say thank you to everybody for tuning in. We hope to hear from you soon and get another update on IRIDEX.
Thanks, Jim. We appreciate the time today.
Thank you.[crosstalk]