David Saxon

David Saxon asked about the anticipated impact of direct fabrication on Align Technology's gross margins as more products are rolled out using this method, and the expected cadence of this impact on the P&L.

Answer

President and CEO Joseph Hogan clarified that direct fabrication will initially be margin dilutive as it begins to roll out in 2026, but as the company scales production into 2027, it is expected to become margin accretive by the second half of 2027 and into 2028. CFO John Morici added that the 100 basis point operating margin improvement guidance for 2026 already contemplates the initial dilutive impact of direct fabrication.

David Saxon asked about the expected impact of rolling out more direct fabrication products on gross margins and the cadence of how this would affect the P&L.

Answer

President and CEO Joseph Hogan stated that direct fabrication will be somewhat margin dilutive as it begins rolling out in 2026 due to the need to scale production to millions of units. He expects margin accretion to begin in the second half of 2027 and into 2028. CFO John Morici confirmed that while direct fab is margin dilutive, its impact is already contemplated within the overall 100 basis point operating margin improvement guidance for 2026, emphasizing the need to scale resin and manufacturing utilization for profitability.

David Saxon asked for a regional breakdown of the Clear Aligner volume growth guidance and sought clarity on the ASP cadence throughout 2025, given the Q1 decline and a planned Q2 price increase.

Answer

CEO Joe Hogan confirmed the 2025 forecast implies slower growth in the U.S. compared to international markets, projecting forward the trends seen in 2024. CFO John Morici explained that Q1 ASPs are most heavily impacted by unfavorable FX year-over-year, and this headwind should lessen as the year progresses and the comparison basis normalizes.

David Saxon asked about the growth outlook for the iTero business given the Lumina rollout and upcoming restorative workflow, especially in a high-interest-rate environment. He also sought to identify the source of clear aligner weakness in the U.S., specifically between the ortho and GP channels.

Answer

CEO Joe Hogan stated that Lumina is a brand-new platform, not an iteration, and its unique technology is driving sales despite capital equipment pressures. CFO John Morici added that flexible leasing and rental programs are helping adoption. Hogan confirmed that the weakness in the U.S. is being felt almost equally in both the orthodontist and GP channels due to challenged patient traffic.

David Saxon followed up by asking for a characterization of customer conversations in the academic and government segments regarding capital spending during the quarter, and the level of confidence in improvement driving North America demand and growth.

Answer

President and CEO John Marotta reported positive conversations with academic and government customers, noting strong momentum in Europe and the Middle East. He expressed cautious optimism for the U.S., citing 'green shoots' and confirmatory discussions that suggest a bullish outlook for the second half of the year in North America.

David Saxon with Needham & Company inquired about Azenta's fiscal 2026 guidance, specifically asking about the anticipated market growth rate, the drivers behind the projected Q1 decline (1-2%), and the expected impact of NIH funding dynamics. He also followed up on Sample Management Solutions (SMS) growth, seeking an update on the Consumables and Instruments (CNI) backlog and its contribution to mid-single-digit growth, along with expectations for Sample Repository Solutions (SRS) for the year.

Answer

CEO John Marotta and CFO Lawrence Lin explained that the macro slowdown in capital expenditures, particularly for stores and cryo, and the recent government shutdown were key drivers for the Q1 decline, with the market growing at 1-2%. Lawrence Lin detailed confidence in SMS growth, citing commercial investments, a strong CNI backlog, and robust growth expectations for SRS driven by new leadership and price optimization, noting recent significant deals.

David Saxon inquired about Azenta's fiscal 2026 guidance, specifically the 3-5% growth target, market growth expectations, and the drivers behind the anticipated Q1 decline. He also asked about the impact of NIH funding dynamics and the confidence in mid-single-digit SMS growth, including the CNI backlog and SRS performance.

Answer

CEO John Marotta and EVP and CFO Lawrence Lin explained that the 3-5% growth guidance reflects a 1-2% market growth, with Azenta aiming for outperformance. They attributed the Q1 decline to a macro slowdown impacting CapEx decisions (two-thirds of impact) and the government shutdown affecting new grant reviews (one-third of impact). For SMS, Lawrence Lin highlighted confidence from CNI performance, new commercial investments, and price optimization in SRS, noting recent significant deals.

David Saxon of Needham & Company inquired about the key drivers for the implied Q4 revenue step-up, the early outlook for fiscal 2026, and whether the weakness in SMS core products was due to order timing or cancellations.

Answer

CFO Lawrence Lin attributed the Q4 confidence to momentum in NGS and stores, a significant C&I order that shifted from Q3, and improved on-time delivery. For fiscal 2026, he referenced the long-range plan of 5-8% CAGR. CEO John Marotta confirmed that the SMS product weakness stems from capital purchase pauses by pharma clients, not order cancellations.

David Saxon inquired about the expected cadence of organic growth for the second half of fiscal 2025, questioning why the guidance wasn't raised despite strong first-half performance and easier comps. He also asked about currency assumptions and the recent leadership transition in the Sample Management Solutions (SMS) division.

Answer

CFO Lawrence Lin stated that the 2025 quarterly revenue profile should be similar to the prior year, with second-half EBITDA acceleration driven by revenue drop-through and restructuring savings. CEO John P. Marotta addressed the SMS leadership change, confirming he is stepping in to directly run the division, which he described as the "crown jewel of the company," and is focused on driving growth by looking at its sub-segments individually.

David Saxon from Needham & Company asked about the implied deceleration in the Multiomics guidance after a strong Q1, the drivers behind the back-half margin profile, and the updated timeline for the B Medical Systems divestiture.

Answer

CFO Lawrence Lin attributed the Multiomics outlook to timing and noted Q1 EBITDA was over 10% excluding one-time costs, supporting the full-year margin expansion goal. CEO John P. Marotta added that the B Medical sale process is being accelerated by the Board's Value Creation Committee, which is focused on maximizing value, and noted there is significant inbound interest from potential buyers.

David Saxon questioned Azenta's fiscal 2025 organic growth guidance of 3-5% (ex-B Medical), asking how it aligns with the more aggressive fiscal 2026 long-term targets. He also inquired about the dynamics behind the fiscal 2025 EBITDA margin guidance, which appears flat compared to the second half of fiscal 2024.

Answer

CFO Herman Cueto explained that the 3-5% growth guidance assumes the current challenging macro environment persists, but the company remains confident in its long-term plan, including the 15-17% EBITDA margin target for fiscal 2026. He noted the FY25 margin guidance accounts for necessary investments. CEO John P. Marotta added that the guidance is focused on demonstrating improved execution and capability on the top line, an area of past struggles.

David Saxon inquired about the CooperSurgical Paragard guidance for fiscal 2026, specifically if it embeds any impact from a competitive IUD launch, and whether Paragard's margin profile has meaningfully changed. He also asked about residual impacts from Asia-Pac e-commerce dynamics, distributor channel inventory, and private label conversion from clariti to MyDay for fiscal 2026.

Answer

President and CEO Al White confirmed that Paragard guidance of flat to low single-digit growth for fiscal 2026 includes conservatism for a potential competitive launch, noting Paragard grew 7% this year. He mentioned a slight, non-material decline in Paragard's gross margins due to the single-handed inserter launch. For Asia-Pac, he expects some residual noise in Q1, which is factored into the guidance.

David Saxon from Needham & Company asked about the $2 billion free cash flow target over the next three years, inquiring what this implies for free cash flow margin and the expected ramp-up period. He also asked if the distributor inventory dynamics mentioned last quarter have normalized or if they will impact Q4 and fiscal 2026.

Answer

CFO Brian Andrews explained that the free cash flow improvement will be a 'stair step' progression each year, driven by lower CapEx, operating margin improvements, and working capital initiatives, aiming for margins closer to the historical low-20s percentage. President and CEO Al White added that some U.S. distributor inventory reduction is factored into Q4 guidance but is not expected to be an issue in fiscal 2026. He noted the Asia-Pacific e-commerce issue may persist in Q4 but should annualize thereafter.

David Saxon asked to quantify the expected Q3 impact from the MiSight promotional activity and inquired about the current and long-term profitability of the overall myopia management portfolio.

Answer

President & CEO Albert White projected MiSight growth of 25-30% in Q3, followed by an acceleration to over 40% in Q4 as the promotion drives fittings. He stated the myopia portfolio has good gross margins and is expected to be margin accretive long-term, though operating margins are currently lighter due to ongoing investments in commercial infrastructure.

David Saxon of Needham & Company asked about the recent sales force realignment in the myopia management business and questioned the company's ability to continue taking price on PARAGARD with a new competitor entering the market.

Answer

CEO Al White explained that the myopia sales force realignment, which is already complete, puts the product more directly into the hands of the strong traditional sales force to broaden coverage and is already showing benefits. On PARAGARD pricing, he noted that IUDs are a fully reimbursed category and the company is proceeding with an inflationary-plus price increase, suggesting confidence in its pricing power.

David Saxon asked about the drivers of the ortho-K business recovery and the status of commercial payer coverage for MiSight. He also requested an update on PARAGARD's full-year outlook and more granular detail on growth in the stem cell storage and medical devices businesses.

Answer

CEO Al White clarified that myopia management growth is being driven by markets outside of China, which remains weak. He described progress with MiSight insurance coverage as "slow but sure." He confirmed PARAGARD is expected to be up slightly for the year, and that the stem cell storage business grew about 4% organically.

David Saxon from Needham & Company asked about the launch strategy and revenue ramp expectations for the new dry eye treatment, Tripteer, and requested an update on the timing for data from the Vision trial.

Answer

CEO David Endicott detailed a comprehensive launch strategy for Tripteer, including a dedicated sales force and patient access programs, but was cautious on the revenue ramp pending full reimbursement, which is expected in about 18 months. He stated that data from the Vision trial is expected by the end of the year.

David Saxon asked about the launch strategy for PanOptix Pro, considering a competitor's recent recall and the weaker U.S. market. He also inquired about the launch timing for the dry eye candidate Acultroman following its PDUFA date and any associated investments.

Answer

Chief Executive Officer David Endicott highlighted PanOptix Pro's key feature of 50% less light scatter to reduce halos and glare, expressing confidence in its uptake while declining to comment on competitors. For Acultroman, he anticipates a launch late in the third quarter of 2025, with related investments, such as an expanded sales force, already factored into the company's guidance.

David Saxon inquired about the performance of Alcon's U.S. Advanced Technology IOL (AT-IOL) business amid competitive launches and asked for clarity on the expected cadence of operating margin expansion in 2025.

Answer

CEO David Endicott acknowledged that while the U.S. AT-IOL market saw slight growth, competitive trialing and sampling created noise in the data. He noted that Alcon's overall AT-IOL share growth was driven by international markets, with a slight, expected share loss in the U.S. CFO Tim Stonesifer added that operating margin expansion would likely begin in the second half of Q2 2025, as Q1 faces tough comparisons and significant investment pressures for new launches.

David Saxon asked about the performance of the glaucoma portfolio, including Hydrus trends, the timing of the BELKIN Vision launch, and a new drop in the pipeline. He also inquired about the drivers behind the slowdown in global cataract procedure volumes.

Answer

CEO David Endicott stated that Hydrus is performing well with double-digit growth and that the BELKIN DSLT product is expected to launch in Q1 2025. He clarified the pipeline product was likely a reformulation of Rocklatan. Regarding procedures, Endicott attributed the low-single-digit growth to softness in the U.S. market during the quarter, noting that international markets were stable and that such fluctuations tend to even out over time.

David Saxon of Needham & Company inquired about the timeline and key milestones for achieving the mid-70s gross margin target through manufacturing initiatives. He also asked about the progress of cross-selling Enabling Technology into legacy NuVasive accounts.

Answer

President & CEO Keith Pfeil explained that the gross profit expansion is a year-three benefit of the NuVasive deal, with benefits expected to materialize in 2026 as lower-cost inventory flows through the P&L. SVP & CFO Kyle Kline added that the Nevro business, with a similar margin profile, will be a subsequent focus. Regarding cross-selling, Pfeil confirmed they are actively and successfully selling robots to legacy NuVasive accounts, aided by the availability of the Reline system on the robotic platform.

David Saxon from Needham & Company asked about the Nevro integration pace and SG&A reduction timeline. He also inquired about market interest and implant pull-through for the ExcelsiusFlex (ePlex) system.

Answer

COO and CFO Keith Pfeil stated they are in the early stages of Nevro integration and will 'aggressively' target OpEx reduction in 2025. CEO Dan Scavilla reported that the ePlex order book is building well and expects to enter the market in Q2, with implant pull-through ramping up in subsequent quarters.

David Saxon of Needham & Company questioned the expected gross margin cadence for 2025 and the drivers for the guided increase in R&D spending, and also asked for elaboration on how Nevro could benefit next-gen spinal implants.

Answer

CFO Keith Pfeil stated that gross margin improvement in 2025 will be modest, with more significant expansion expected in 2026 as in-sourcing benefits are realized. He noted that increased R&D spending reflects continued investment across the portfolio to maintain new product cadence. CEO Dan Scavilla declined to detail future product plans related to Nevro's technology, stating it is a long-term strategy.

David Saxon of Needham & Company asked for clarification on the Q4 guidance's implied sequential growth, the status of the previously guided $150 million in dis-synergies, and the performance of the trauma portfolio.

Answer

COO & CFO Keith Pfeil reiterated that the company remains positive but appropriately conservative in its guidance and noted he did not reference the $150 million dis-synergy figure as it becomes part of normal business risk over time. President & CEO Dan Scavilla commented that both the base trauma and NuVasive specialty orthopedic businesses are growing well with high double-digit uptake but did not provide a specific revenue contribution.

David Saxon from Needham & Company asked new CEO Dan Scavilla about his motivation for joining Dentsply Sirona and how his past experience might be applied. He also requested more detail on the performance of the implant portfolio and related strategic initiatives.

Answer

CEO Dan Scavilla explained that he was drawn by the opportunity to apply his operational and execution experience to accelerate the company's progress. CFO Matt Garth detailed that premium implants declined about 5% due to product transitions, while value implants fell by low-double digits because of production volatility in the Middle East. He noted that the lab business was a key driver of weakness but expects full-year growth from sales force changes and China's VDP program.

David Saxon asked about the performance drivers in the Connected Technology Solutions (CTS) segment, including the impact of dealer inventory on CAD/CAM, and sought color on the performance of the U.S. implants business.

Answer

CEO Simon Campion explained that within CTS, a drop in CAD/CAM inventory was offset by a rise in imaging inventory, resulting in a net neutral impact with levels at historical averages. He acknowledged a disappointing quarter for U.S. implants, stating the company is still in a 'rebuilding phase' focused on improving the commercial team's clinical skills and customer relationships.

David Saxon asked about the performance of the U.S. Implants team, which was down in the quarter, and the expected timing for a return to market growth. He also followed up on the G&A partner, asking about the target benchmark for G&A as a percentage of sales.

Answer

CEO Simon Campion acknowledged disappointing U.S. Implants performance, outlining a plan to improve digital connectivity via DS Core, refocus clinical education to a local level, and simplify messaging. Interim CFO Herman Cueto declined to give a specific G&A benchmark but confirmed the company is over-indexed relative to industry averages, presenting a value-unlock opportunity.

David Saxon inquired about the Byte business, asking for the potential duration of its sales suspension, its cost structure, and how much of its operating expenses could be reallocated. He also asked about the implant business's performance, specifically the value versus premium segments and the outlook for China.

Answer

CEO Simon Campion explained that the Byte review is a complex, multifactorial assessment and could take time. He noted that the company has already ceased marketing and is redeploying assets. CFO Glenn Coleman added that Byte generated about $40 million in Q3 revenue, was dilutive to EBITDA margin, and operated at a loss in the quarter. Regarding implants, Simon Campion acknowledged a decline in the value segment and attributed underperformance to internal execution issues, which new leadership changes aim to address.

David Saxon from Needham & Company asked about the expected growth trajectory for the second half of the year, any early outlook for 2026, and the company's capital allocation strategy following the CryoPDP sale.

Answer

CFO & Treasurer Robert Stefanovich indicated that Q4 is typically stronger than Q3 and highlighted significant improvements in gross margin and adjusted EBITDA. President & CEO Jerrell Shelton stated that capital deployment will be prudent and opportunistic, with a focus on share buybacks due to the stock's perceived undervaluation. He added that while M&A is not a current focus, compelling deals would be considered. Thomas Heinzen, VP of Corporate Development & IR, noted the company repurchased one million shares.

David Saxon asked for specificity on the timing of reaching positive adjusted EBITDA in 2025 and whether the Q4 MVE revenue of $20 million is a good quarterly run-rate.

Answer

CFO Robert Stefanovich stated that while the goal is to reach positive adjusted EBITDA 'during 2025,' the exact timing depends on the revenue ramp from the services business. Executive Jerrell Shelton confirmed there were no specific mix dynamics affecting the MVE business that he could point to.

David Saxon from Needham & Company asked about the profile of new surgeons, specifically whether they are recent graduates or experienced doctors, and if their utilization ramp differs. He also sought clarification on the reimbursement status for the Granite procedure and the potential for a new code.

Answer

CEO Laura Francis explained that while residents and fellows are an important long-term focus, the majority of new surgeon adds are still experienced physicians. On reimbursement, she clarified that while CMS deferred a decision on a specific DRG reassignment for Granite due to workload, it did increase related spinal fusion DRGs by 6-8%. She emphasized that they are confident in their data and view the process as administrative, while also highlighting positive outpatient reimbursement proposals as tailwinds.

David Saxon of Needham & Company inquired about the market traction for iFuse-TORQ TNT, the potential impact of its upcoming NTAP payment, and the company's path to free cash flow, including the sustainability of its EBITDA drop-through rate.

Answer

CEO Laura Francis reported that TNT adoption is ahead of internal plans and expects the proposed NTAP of over $3,900, effective in October, to be a significant tailwind. CFO Anshul Maheshwari reaffirmed the goal of achieving free cash flow in 2026, noting the asset-light model supports this. He projected operating leverage could average 1.5x to 1.75x in the coming years, allowing for continued margin expansion.

David Saxon requested guidance on the expected revenue cadence for 2025, particularly the sequential trend from Q4 to Q1. He also asked for an update on the process to secure a new, higher-paying reimbursement code for Granite once its NTAP status expires.

Answer

CFO Anshul Maheshwari indicated that historically, Q1 revenue sees a high-single-digit sequential decline from Q4 due to seasonality, which will be compounded in 2025 by one less procedure day. CEO Laura Francis confirmed that an application has been submitted to reassign Granite cases to a higher-paying code and that an update is expected from CMS by mid-year, aligning with the NTAP expiration.

David Saxon from Needham & Company, LLC posed a two-part question regarding the forecast for Q3 revenue to be down sequentially despite strong momentum, and whether a renewed innovative channel partnership would exhibit the same lumpy contribution seen previously.

Answer

CFO Daniel Wilson explained the slight sequential decline for Q3 (around 1%) is consistent with historical summer seasonality and reflects prudence given the newer, less predictable prescribing patterns of innovative channels. CEO Quentin Blackford added that the renewed partner program is broader than the previous targeted one and is expected to be less lumpy, but the company is waiting to observe actual prescribing patterns before fully factoring it into expectations.

David Saxon followed up on Zio AT's strength, asking whether it was driven more by a competitor's market absence or by gaining traction in new accounts.

Answer

CEO Quentin Blackford attributed the strength more to the latter, noting that new account additions in Q1 were near record highs and that word-of-mouth is spreading about Zio AT's quality. He highlighted that Zio AT's average wear time of 13.8 days is superior to the 12.8-day average for competitors' MCT products, providing a better patient experience and driving adoption.

David Saxon asked about motion preservation, a notable gap in ATEC's portfolio, and how critical it is to fill that gap given the company's strong focus on its lateral and PTP procedures.

Answer

Chairman & CEO Pat Miles stated that while motion preservation is a valid surgical option, ATEC's priority is to exploit its current best-in-class ecosystem. He emphasized that the company will focus on its strengths in neurophysiology, navigation, and imaging, and will let competitors pursue motion preservation for the foreseeable future.

David Saxon asked about the rate at which revenue outperformance 'drops through' to adjusted EBITDA and whether the historical 10% rule of thumb is still relevant as the company scales.

Answer

Executive J. Koning confirmed the old rule of thumb is outdated, pointing to much stronger recent performance. He cited a 44% drop-through rate in Q1 and 49% in the prior quarter, attributing the significant improvement to a disciplined focus on profitability and cash management that he expects will continue.

David Saxon asked about ATEC's progress in Japan, specifically its engagement with the JSSR society and the potential for rapid adoption. He also requested a breakdown of international sales between EOS and surgical revenue.

Answer

Patrick Miles (Executive) described the engagement in Japan as being in the 'pre-game' phase. While the local team is strong and key surgeons are engaged, the effort is still in its early stages and focused on a long-term, sustainable build-out. J. Koning (Executive) clarified that international surgical revenue currently contributes between 1% and 2% of total company revenues.

David Saxon asked for early feedback on the Valence system, which is in a limited launch, and the expected cadence for its broader launch in 2025.

Answer

Executive Patrick Miles shared that early cases are being performed and feedback is positive, highlighting Valence's small footprint and elegant integration into the surgical workflow. He stated the company is focused on refining the system through the middle of 2025, with the expectation to discern its readiness for a broader launch at that time.

David Saxon of Needham & Company asked if all MACs would be paying the iDose TR J-code with an established professional fee by year-end. He also inquired about the commercial rollout plan for the new Epioxa cross-linking machine after its potential approval.

Answer

President & COO Joe Gilliam stated that while J-code payment is becoming consistent, establishing professional fees is a volume-driven process and he hopes to have more MACs finalized by year-end. Regarding Epioxa, he noted the rollout will be complex, with the main driver of near-term disruption being patients deferring procedures to wait for the superior, non-invasive option.

David Saxon inquired about the breadth of commercial and Medicare Advantage coverage for iDose, reimbursement levels compared to MACs, and for an update on surgeon training progress and demand.

Answer

President and COO Joseph Gilliam stated that the company is methodically expanding commercial and Medicare Advantage access, with coverage policies already in place for over 50% of lives in those segments. He emphasized that the main gating item for adoption is not surgeon training capacity, which is ample, but ensuring the entire physician's office is proficient in navigating the claims and reimbursement process.

David Saxon inquired about the utilization trends among doctors adopting iDose and asked about its impact on gross margins and the outlook for operating expense growth in 2024 and 2025.

Answer

President and COO Joseph Gilliam noted that doctors typically start slow with iDose to build reimbursement confidence before expanding utilization. CFO Alex Thurman explained that iDose remains a modest headwind to gross margin but is improving and expected to become accretive by the end of 2025. He also reaffirmed the ~10% OpEx growth target for 2024 and deferred 2025 guidance to the next call.

David Saxon of Needham & Company asked for clarification on Dry Eye unit volumes, specifically the number of units shipped under the new, higher price point and the breadth of adoption across active accounts. He also inquired about the impact of recent competitive canaloplasty launches, asking if they are affecting OMNI volumes and whether it appears to be temporary trialing or a more durable share shift.

Answer

CFO Alison Bauerlein clarified that about 1,000 SmartLids were sold in total, with an increasing portion under the new pricing for reimbursed claims, but did not provide a specific breakdown. CCO Matthew Link addressed competition, stating it was factored into guidance and that he is confident in OMNI's market-leading position due to its clinical data and ease of use, further strengthened by the new OMNI Edge launch.

David Saxon asked for clarification on TearCare's average selling price (ASP) and inquired about the expected 2025 gross margin impact from China tariffs. He also questioned how the competitive launch of a new canaloplasty device was factored into the company's financial guidance.

Answer

CFO Alison Bauerlein clarified that the low blended TearCare ASP was due to legacy contracts, while new purchases are at a much higher price point. She noted the tariff impact on gross margin would be modest and phased, with mitigation efforts underway. CEO Paul Badawi and Executive Matthew Link added that while new competitors may cause temporary disruption from trialing, OMNI's strong clinical evidence and continuous innovation provide a durable advantage, and this dynamic is factored into guidance.

David Saxon of Needham & Company inquired about the drivers of the strong Q1 gross margin, the premium IOL market sizes in South Korea and the U.K., and the potential impact of tariffs on international sales.

Answer

CFO Shelley Thunen attributed the high gross margin to volume leverage from increased LAL+ production in 2024, noting some benefit will carry into Q2 before moderating. President and CEO Dr. Ron Kurtz and Shelley Thunen discussed the potential of the South Korean and European markets. They also stated that their U.S.-made products have generally been exempt from tariffs in target markets.

David Saxon asked about the expected revenue cadence for 2025, specifically for Q1 sequential trends, and questioned the potential impact from recent and upcoming competitive premium IOL launches on RxSight's business.

Answer

CFO Shelley Thunen reiterated expectations for typical seasonality in 2025, with Q1 and Q3 being weaker than Q2 and Q4, suggesting a sequential decline in Q1 is possible. CEO Dr. Ron Kurtz addressed competition by stating that while there could be some impact, he believes new competitive launches will primarily affect other presbyopia-correcting IOLs rather than RxSight's unique adjustable technology.

David Saxon of Needham & Company inquired about the current number of active surgeons per LDD and the potential ceiling for this metric. He also asked about the planned cadence for international expansion following regulatory approvals, including commercial investment and channel strategy (direct vs. distributor).

Answer

CFO Shelley Thunen estimated the number of physicians per LDD is around 1.5 to 1.6, up from 1.3 previously, but noted it varies by market. CEO Dr. Ron Kurtz cautioned against focusing too heavily on this single metric, as practice structures vary widely. On international strategy, Dr. Kurtz stated that post-approval, the focus will be on establishing strong in-country physician partnerships to serve as reference sites, similar to the U.S. launch. He confirmed the channel strategy will be market-dependent, using a distributor in Canada but potentially going direct elsewhere.

David Saxon inquired about the cause of U.S. implant sales weakness in late December, performance trends in early 2025, and growth expectations by product category for the upcoming year.

Answer

CEO Vafa Jamali attributed the late December softness to extended holiday office closures rather than market share loss, noting that business stabilized in January. CFO Richard Heppenstall added that for 2025, the digital and biomaterials segments are expected to continue their strong performance. He also mentioned that pressure on lower-margin oral scanner sales should normalize after Q1 and highlighted a new data-driven sales strategy to boost the core implant business.

David Saxon inquired about the 2024 guidance, specifically the assumptions for a U.S. market recovery and the drivers of international performance, including the timing of orders. He also asked if the biomaterials leading indicator was translating into implant procedures and sought clarity on the sustainability of gross margins and the reasons for higher SG&A.

Answer

Executive Vafa Jamali expressed optimism for a U.S. recovery in Q4 and noted that order timing in Japan and Italy should resolve, though Europe faces macro pressure. Executive Richard Heppenstall added that the U.S. grew 1.6% ex-scanners and is expected to continue growing. Heppenstall explained that gross margin improvement is sustainable due to manufacturing efficiencies and that higher SG&A reflects strategic reinvestment of those gains into the U.S. sales force and R&D to drive long-term growth.

David Saxon of Needham & Company asked about ZimVie's strategic positioning in the dental market, the impact of the iTero Lumina launch delay, the new Medit scanner partnership, the rationale for the Q3 revenue guidance, and the expected EBITDA margin cadence for the remainder of the year.

Answer

Executive Vafa Jamali explained that ZimVie is focused on the premium implant market, leveraging its digital offerings like Implant Concierge to expand the market. He noted the Medit scanner partnership offers a better margin profile and a new price point. CFO Richard Heppenstall added that the iTero delay was already factored into guidance and that the Q3 outlook is prudent due to persistent market challenges. He confirmed the implied Q4 EBITDA margin ramp is correct, driven by fixed cost absorption and cost-saving initiatives.

David Saxon of Needham & Co. followed up on the $27.5 million unrecognized order, asking for the specific milestone required for revenue recognition—whether it's payment or another event. He also asked what level of impact from the competitor iBright is factored into the 2025 China guidance.

Answer

CEO Tom Frinzi stated that the guidance assumes a minimal impact from iBright, which is expected to generate around $5 million in its first year, and that STAAR remains well-positioned against this new competition. CFO Patrick Williams clarified that revenue for the $27.5 million shipment will be recognized upon receiving payment from the distributor, for which they have commitments by the end of Q3 2025. He emphasized this was an exceptional circumstance driven by the distributor's request for a highly extended payment term.

David Saxon of Needham & Company asked about the impact of Aier Eye Hospital's pricing strategy for SMILE/LASIK on ICL volumes in China and how Aier's M&A strategy affects STAAR's business. He also asked about the confidence in the Q4 growth acceleration implied by the Q3 guidance.

Answer

Executive Thomas G. Frinzi clarified that SMILE, not LASIK, lowered its price within Aier, but STAAR's relationship remains strong with continued EVO growth. Executive Patrick Williams added it was too early to speculate on Aier's M&A. Regarding guidance, Williams confirmed it implies a revenue reacceleration in Q3 and strong growth in Q4, reflecting the company's momentum.