Good afternoon, everyone. I'm Robbie Marcus, the MedTech analyst at JP Morgan. Really happy to have RxSight as our next presentation. CEO Ron Kurtz will do a presentation followed by some Q&A. Ron?
Thank you, Robbie. I appreciate being here again this year. These are our forward-looking statements. RxSight is focused on transforming cataract surgery outcomes via the power of adjustability. And adjustability is a new capability that hasn't existed in ophthalmology. We pioneered that over the last five years, and I'll talk a little bit about how that is transforming cataract surgery, and particularly premium IOLs. If we take a snapshot of RxSight today, over the past five years, we've grown to about 500 employees. We've performed about 300,000 LAL procedures. We're in about 1,100 ophthalmic offices with our piece of equipment that does the adjustment, the Light Delivery Device . We've trained over 2,500 surgeons and attained a market share of approximately 10% in the U.S. premium IOL market. And we have a strong balance sheet as well.
We did issue a press release now on Sunday and had a strong performance, a good way to end the year. Finished the year with about 12% year-over-year growth in procedures, an increase in our installed base of nearly 20%. And perhaps most importantly, we announced our new Chief Financial Officer, Mark Wilterding. Very happy to have Mark on board. He comes with a wealth of experience across different disciplines in MedTech and banking. And he has hit the ground running here at JP Morgan. So welcome, Mark.
Thank you.
Just a little bit about our market. I think people are familiar with cataract and lens replacement surgery. It's one of the most, if not the most, common surgical procedures. In that procedure, the cloudy cataractous lens is removed and replaced by a plastic lens, which is sometimes called an intraocular lens or IOL. There are many, many procedures globally, about 5 million in the U.S. annually. Over the last 20 years, the focus of practitioners and industry has shifted to the so-called premium IOL market, which is a unique area in medicine, especially in the U.S., where patients can pay an extra amount above and beyond the reimbursement and have a higher level of service, in this case, to reduce their dependence on glasses. There are a number of different types of premium IOLs. The two broad categories are toric or astigmatism-correcting and presbyopia-correcting IOLs.
But they all feature the same basic structure as standard monofocal IOLs in that they're fixed optics. So the patient and the doctor choose a lens. The doctor makes some measurements on the eyes and chooses a power, and then performs surgery and implants the lens. And the outcome is whatever that is after that process. Five years ago now, we introduced the concept of adjustability, where that same initial process through surgery occurs, but after the surgery is performed, the patient can come back three, four weeks after surgery and undergo an office-based light treatment to personalize the optics of the lens. And that can be based on both reducing the patient's need for glasses in each eye, but also to personalize the binocular vision of the patient so that they can reach their full visual potential.
And the patient has the unique ability to trial these things, these choices, in a real-world setting before they finalize their choice. So adjustability offers really a host of benefits that are fast becoming a foundation for premium outcomes. The first I'll talk about is refractive accuracy. But just as important is the customization and the high quality of vision that the technology affords. This is data from our original PMA study. Again, I won't go into the details of this, but you can kind of see a snapshot of a fixed IOL on the left-hand side, which shows a pretty broad scatter of refractive outcomes, which, with the LAL, has almost as though you've taken a dartboard and pulled out the darts and then put them in the bullseye.
That's really an analogous situation to what we do by being able to treat the lens after it's been implanted to refine the refraction of the patient. We've got one of the largest registries for real-world data. The data that we have collected very much reproduces our clinical trial data, with more than 90% having extremely high refractive accuracy and patients being able to achieve excellent distance and near vision with their binocularity. In addition, doctors have largely accepted the value of the technology. When we poll our customers, 90% of them believe that the LAL provides the highest quality of vision, and nearly 8 out of 10 would select the lens for their own eyes or for that of a family member. Just as importantly, adjustability drives superior practice economics.
It does this by appealing to a segment of the population that may not be well served by other offerings. And our data shows that about 40% of the LAL patients would have otherwise received a non-premium lens. That means that the LAL is really growing the premium business within each practice. It does command a premium price as well. And it allows the practice to unify the care team so that it's not just based on the surgeon. It's based on other people in the practice, particularly optometrists, who are very skilled and have a key role in the delivery of post-operative adjustments. On average, when you take these factors together, every LAL inserted in the average practice yields about $2,000 in additional revenue. Over the last five years, we've seen nice growth in both the LAL units and the LDD installed base.
2025 obviously had some headwinds, but we still finished quite strongly again with 12% year-over-year growth in procedures. As we look forward and look for opportunities of additional growth, we see a number of ways that we can grow now that we have a larger installed base. One is, and the one that we've focused really the last six months or so on, is growing our utilization in same-store sales. That can be either by increasing procedures by our current surgeons or by growing the number of surgeons who use our technology, by recruiting surgeons within those practices who may not have been the initial focus of our training. We also have the opportunity to continue to place LDD systems into additional practices. Currently, we service only about 25% of the cataract surgeon market in the U.S., and obviously a much smaller percentage outside the U.S.
There are other new business models that are also developing around this technology, which we think over time can also add accessibility to the technology. We are focused on continuous improvement. We're in the early phases of the technical development of adjustability. And over the last five years, we've introduced over 40 PMA supplements that have had cumulatively a significant impact on both workflow efficiency as well as expanded capabilities. And we anticipate that this will continue as we continue to expand the footprint of the technology. Geographically, ophthalmology is a global opportunity, premium, and especially in the premium IOL space. The U.S. makes up about 20% of the global premium procedures.
With the bulk of the 80% of the remaining procedures in the major markets of Asia and Europe, we've made significant progress over the last year or so, initially with regulatory approvals and now building out the team internationally. We anticipate continued progress in 2026, primarily focused on initial target markets and within those markets, both generating domestic KOLs and domestically sourced clinical data, since doctors in those countries typically want to see success not only in the American market, which is very helpful, but also in their own local market. As we look out in the long term, we think that adjustability becomes a very key piece of the premium IOL market. To date and with any visibility, RxSight is the only adjustable IOL. We've developed a strong market and platform in a key market in ophthalmology.
We're focused on our execution and growth opportunity. And as we've talked about, we've made significant improvements recently in how we execute on that opportunity, particularly here in the U.S. And we believe that there's a large opportunity for revenue and margin expansion as we drive utilization and move more and more to the recurring LAL high-margin product. Again, as I mentioned, the company is well positioned from a financial balance sheet and can certainly support this growth trajectory. Thank you so much.
All right. Maybe we could start with the pre-announcement. You put out a release on Sunday morning. If I pull up the exact numbers here, you pre-announced fourth-quarter sales at $32.6 million, above the Street at $27.6 million, and came in even better than what we had been previewing coming into the conference by about $1 million. So maybe talk through let's take it in two parts, right? One, what you saw trend-wise, and then let's talk about sort of the progress you're making in stabilizing sales trends.
Yeah, so obviously, the bulk of that beat was focused on LALs, and that has been the focus of our efforts since our commercial pivot mid-year. We grew very fast previous to this, and I think that as we have grown that installed base, it naturally occurs that we're going to focus more and more on same-store sales since those efforts on a large installed base can have significant impacts on revenue and ultimately profitability since that's the high-margin product.
So what did you see in terms of LALs versus LDDs in the quarter? And how'd that compare versus the internal plan?
Our LALs were, again, leading the way, and LDDs were strong, but I think the focus was the results were consistent with our focus on continuing to drive LALs, which ultimately we think will reignite LDD placements as customers who are looking to acquire the technology see the utilization of their peer groups growing and therefore making the decision easier to adopt the technology.
I'll add my congratulations to Mark, newly announced CFO. So let's dig right into 2026 guidance here. Why don't you lay out the trends you're expecting?
All right. Get ready.
But seriously, though, I mean, now that fourth quarter's come in, I imagine you'll want to put a lot more thought into guidance, whether you want to take it or Ron. Just how are you thinking high-level about the business going into next year? I don't know if you want to comment on where Street is or not, but just any thoughts as you turn the quarter into 2026?
So I'm going to give Mark more than two and a half days to get his feet around that.
That's fair.
Yeah. But I think generally we're going to continue the efforts that we started in 2025. We're looking forward to additional contributions from Mark and additional members of the team. But we're focused on making our customers successful. We were focused on that previously, but as you move up the adoption curve, there are changes in the way that you need to address those new customers. And I think that we've made changes to our commercial force, making it both more streamlined and organized so that our sales and clinical teams that are focused on LAL sales are really working hand in hand. Not that they weren't before, but those organizations grew rapidly themselves and somewhat independently. And we've taken the opportunity mid-year to really re-equilibrate and make sure that both regions and customers are covered by the same people and the same team.
We see that that was working, beginning to show benefit.
Maybe before we address what's going on today, let's rewind a little bit. And I would say since the IPO, your capital placements have come in way ahead of my forecast, and I believe where consensus was if we go back to 2021. So you now have a very large installed base. And as we look to middle of last year when you had this reset, now with the benefit of hindsight, what do you think it was that hit the LAL utilization? Because you have this big, large installed base, and then we just saw a bit of a falloff on utilization. So now with a little hindsight, what do you think happened there throughout 2025?
I think you've identified that we did grow very fast. That's a good thing. We generated a ton of interest in the community, and by and large, our customers are really happy. We continue to have, when we survey our customers, extremely high ratings from them, but when you're growing at that speed, you don't necessarily, especially a young company, have everything in place, all the systems in place to support all of those customers and the different rates at which they get familiar with the technology. Because even though this is still cataract surgery, there is a component of adjustability that is new to them, new to how it's run in the office, the expectations that are set to patients, and clinical decision-making that is different than you do with traditional cataract surgery, so we, to some extent, may have run past our supply lines a little bit.
But the good news is that we've made that pivot. We've got a large installed base that we can now leverage. And again, I think that the performances in Q3 and Q4 are directionally positive, and we have more work to do. But I think that the team has responded to the changes that we made, and they will continue to show benefits.
It's interesting you talk about it's a little more than just the sale. There's a bit of process along with it, as it is a change versus what these physicians had before, where you simply one and done, you put the IOL in, and that's the end of it. Here, there's a bit more of a follow-up and a process and a workflow change, so what's RxSight doing to maybe help minimize the disruption from that? I imagine early adopters, they're willing to put in the effort on the process and the workflow change, but as you get larger, maybe there's a little less impetus from some of these physicians, so is that part of the issue, and what's RxSight doing to help minimize any friction there?
I always start out that the post-operative adjustments that are done, that is the benefit of the technology. If you want to have the benefit of the best outcomes in cataract surgery, it takes a little bit more work. The patients don't mind that because they're receiving the benefit. The practices shouldn't mind that because they're actually making more money and converting more patients to a premium procedure at the highest level of payment. The challenge is that it's different from what, and doctors and practices, they are like the rest of us. They are resistant to change a little bit. The early adopters tend to be less resistant. That's to some extent their business model.
Our focus needs to be taking all the learnings that those earlier adopting practices made and that we made with them and translating them in an efficient way to our newer customers where we saw a little bit more of the slower adoption, especially in 2025. And I think that is part of it is also just time. Those practices may be a little bit more methodical in the way they adopt technology. And time is also a factor. But we can certainly influence that by having more focused clinical support, peer-to-peer learnings, pearls that are both related to their practice dynamics as well as to the clinical procedure itself.
So when you talk about recalibrating the sales force on the LAL sale side and the capital, do I think of that as a headcount reallocation? Do I think of this as maybe more clinical specialists per account than you had before and fewer capital sales in the field? Maybe give a little more detail on that.
So I'll just back up and say kind of what our structure is. So we have a couple of hundred people in the field. The bulk of them have always been clinical trainers. And then we have a larger sales force that is focused on the LAL and a smaller capital equipment sales force. That largely hasn't changed, but the organization of that has changed in that the LAL sales force and the clinical trainers now report into the same organization and are concordant geographically and customer-wise. So the same people, which is difficult to do when you're ramping up very quickly because you don't know exactly where these customers are. And so there can be some discordance between that. I think that that was the first thing that we did that has already, anecdotally, been well received by both customers and our teams.
Now we've also started to introduce specific programs that are tailored to the exact needs of that customer.
How do you think about the impact in 2025? How much was the IOL market, which we did see slow down globally across competitors versus RxSight specific? And maybe it's a little column A, column B. But how do you think about the two? And what's your view on the IOL market, specifically the premium IOL market in 2026?
I think 2025 was a confluence of many factors or several factors that, and you've mentioned them, Robbie, the market itself, when, in the first quarter, the overall cataract market fell for the first time since COVID, and that was very unusual. There was, we talked about at the time, this unusual situation where the three major U.S. IOL companies were all introducing their premium presbyopia-correcting IOL. And that generated more competitive activity. We're not directly competing with those, but those marketing activities certainly have had an effect. We've largely passed through that, but I would not discount the factors that we already talk about that are specific to RxSight and our rapid growth curve and the requirement to make the changes to focus more on same-store sales organizationally and to take full advantage of this large installed base that we now have.
So you have a great product. It has great results. How do you take it from where you are today to 20%, 30%, 40% market share? How do you go from a really great performing niche player to a main key competitor out in the market? What do you think you have to do between now and then?
So part of it is time. I mean, I don't know that I would. We're probably the third largest premium IOL in the U.S., so it's hard to say that we're niche. And within our practices, we've achieved that with only being with 25% of the surgeons in the U.S. I think that we have a long runway ahead of us. I've introduced different technologies into this similar or same field. We're roughly on course in terms of adoption. It takes time to move a field, but we've gone pretty rapidly. We need to continue the efforts that we've talked about, both placing additional LDDs so that we attract new customers, but also more and more growing those same-store sales and leveraging the installed base, particularly in the U.S. And then that is an effort that will take time.
But at the end of the day, in ophthalmology, clinical outcomes drive all the behavior because it's a field where the patient actually sees the difference when they are in the office. It's no offense to cardiology. You don't have to do an ejection fraction to figure out whether your product has worked. The patient will tell you right away.
I think you said in the slides you're in around 25% of the practices in the country. Where do you think you are in terms of share of premium IOLs in the country?
If you look, because we're a relatively small part, we don't have that visibility. But when we look at the third-party aggregators of data, they peg us at somewhere between 10% and 11%, sometimes 12%.
Got it. If you look out on the competitive horizon, is there anything you see in the, let's call it, three to five-year timeframe on adjustable lenses or anything, other technologies that you think might be competitive with your Light Adjustable Lenses ?
So certainly our success has generated interest. I think we've established that adjustability is going to be a long-term player in ophthalmology. And again, we believe it'll be ultimately the dominant player for premium IOLs. And that certainly can attract competition. I would just caution folks that this is a really hard thing to do. It took us more than 20 years to do it. And even when somebody has proof of concept and technological proof of concept, you're looking at a typically five-year regulatory in the U.S. We don't see anything on the horizon. There's nothing that is visible through any of the ClinicalTrials.gov or that activity. So that's not typically a concern that I have. Of course, there are clever people across the world, and we never discount somebody coming up with a better mousetrap.
But now they're going to have to not only have a better mousetrap, they're also going to have to overcome the regulatory first-mover advantage and the commercial first-mover advantage that we have.
International is a small budding part of the business. Maybe just walk through the strategy and if you're willing to comment what percentage of sales it represents of the overall business today?
It's very small. So it's a great opportunity because, as I mentioned, 80% of the premium procedures are outside the U.S. We're focused on those 20 or so markets where pricing is very similar to the U.S. So that would be a typical initial market for us to go to. They're the major countries of Europe as well as the major markets in Asia. We've disclosed that we have our approval in Korea, some of the smaller Southeast Asian countries, and then in Europe and the U.K. We're working towards approval in the other countries, obviously Japan, China.
We've started commercialization efforts in those areas focused initially on building the team, taking the lessons that we learned in the U.S., the importance of starting with really well-trained and confident initial customers that can then disseminate in their local communities the benefits and the methodology of implementing adjustability and generating clinical data similar to the data that I showed, which is far and away the best outcomes in cataract surgery. Because ultimately that's what's going to drive adoption in those other markets.
Canada as well, right?
We've been in Canada since 2023. And Canada has been a really nice market for us. Canada has had some hangover from COVID in accessibility just to ORs, etc. But it's been a nice market for us.
Maybe we can talk about down the P&L, and gross margin has gotten better just fairly, I mean, both underlying as well as mix, right? As LDDs have stepped down, LALs have much better gross margins. How do you think about the sustainable mix going forward? I would imagine at least in our model, we have LDD placements getting better than the second-half run rate, but far below what you were doing beforehand in 2024. If we think about that, what do you think is a good target of gross margin over time?
If we look at the long term, of course, gross margin is going to be determined by the gross margin of the LAL because it is a high gross margin potential product in that 80% range or so. The gross margin on the LDD is, of course, much lower. But I don't think that we would try to manage to gross margin. Ultimately, we want to grow top line. And if that means putting out satisfying the demand for LDDs across the world, we will do that because ultimately that's going to lead to higher total revenue and ultimately higher margins as well, operating margins.
At one point, I think you were just a small amount cash flow positive. I would imagine second half of 2025, you were burning cash. Are you willing to comment on what cash burn or positivity was in the fourth quarter and how you're thinking about 2026?
So, what we did say in the press release that we ended with about $225 million in cash, which I'm probably not the best person to comment on that. We'll give Mark maybe a week to get up to speed as we close the books. But again, we've got plenty of cash to fully take advantage of this opportunity. And we use it judiciously. There are times that cash are really helpful, but there are other times where you need to put changes in place to be able to position yourself to use the cash.
As you think about cash usage in 2026, what are the priorities throughout the business, whether it's geographic, sales force, education?
All of the above, but again, I think it's important, and I think this is part of the advantage of bringing people like Mark into the organization who've been part of larger organizations that have that experience of scaling and scaling in an intelligent way so that long-term operating margins are very favorable, and I think spending a little bit of time at this stage can position us really well for the future.
Great. Just quickly, any questions in the room? I'll repeat it. Go ahead.
I was just trying to figure out if it feels like or sounds like you're saying that people are more productive, they can work better, all that kind of stuff after they get this, which makes a huge difference, I would think, economically, just culturally. They're happy or all of that, but also they work more, they're more productive, and I'm just curious if that's been measured and if you think that's taken into account from a reimbursement perspective because I imagine that even more people would use this if the reimbursement went even better for the whole procedure.
Let me just repeat it quickly. Are people more productive after getting the procedure, and does reimbursement reflect that?
So there has been some work on the cost-effectiveness of the LAL. There was a publication out of UC San Diego not too long ago, which was favorable. I would say that overall, the cost of traditional cataracts or conventional cataract surgery is very low relative to the benefit. But even premium IOLs, if you compare it to knee replacements, other things that affect people in this age group, it's very cost-effective. So while I think you're correct that an argument can be made for that, and it's a strong argument, I think we also need to recognize that we live in an environment where the idea that Medicare and other insurers are going to expand payments to one of the most common surgical procedures in the world is unlikely.
And quite honestly, we strongly believe that giving patients the choice to make that choice and pay for it themselves is the most direct way to assess the value of the procedure. They're pulling money out of their pocket, and they're making a decision that, "Hey, for the next 20 or 30 years of my life, I want to have the best possible vision with the best." It doesn't mean that they won't have good vision with other technologies, but everybody can make their own decision as to where they want to put their discretionary spending.
Great. Unfortunately, we're out of time. Thanks for a great discussion, and thanks everybody for coming.