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    RxSight (RXST)

    RXST Q4 2024: Targets 80%+ margins as LAL implants grow

    Reported on Feb 25, 2025 (After Market Close)
    Pre-Earnings Price$29.21Last close (Feb 25, 2025)
    Post-Earnings Price$27.44Open (Feb 26, 2025)
    Price Change
    $-1.77(-6.06%)

    What went wrong

    • Seasonal volatility and inconsistent quarterly growth: Management acknowledged that certain quarters (specifically Q1 and Q3) tend to be seasonally weaker, making sequential growth harder to sustain as revenue numbers grow.
    • Competitive pressures in the premium IOL space: There is potential risk from competitive trialing and launches in the presbyopia-correcting segment, which could impact market share even if indirectly.
    • Variability in LAL utilization metrics: While the absolute number of LALs implanted is growing, the LAL per LDD ratio fluctuates due to new account dynamics and seasonality, which might limit predictability in performance.

    Q&A Summary

    1. Top-Line Guidance
      Q: What sequential revenue trends are expected?
      A: Management expects weaker Q1 and Q3 due to seasonality with Q2 and Q4 driving higher sales, reflecting a mature revenue cadence as numbers grow.

    2. Gross Margin Outlook
      Q: What margin improvements are forecast?
      A: They expect a consistent cadence of margin expansion, with gross margins aiming at 80%+ in the long run as the high‐margin LAL mix grows, though quarter-to-quarter results may vary.

    3. LAL Utilization Growth
      Q: How are LAL per LDD metrics trending?
      A: Utilization remains solid, with recent quarterly figures of 11, 8.7, and 10.9 implants per LDD, indicating steady growth despite some seasonal fluctuation and no evident ceiling.

    4. Commercial Investment
      Q: How is SG&A spending evolving?
      A: They are significantly boosting sales and marketing investments—expanding a commercial organization from 10 to over 200—to support customer education and market expansion.

    5. Pipeline Advancements
      Q: What are the new product innovation plans?
      A: The strategy centers on enhancing customization through additional LDD functionality and iterative LAL upgrades to further improve clinical outcomes and differentiate the technology.

    6. Competitive Impact
      Q: How will competition affect performance?
      A: While competitive launches are noted, any impact is expected to be modest as competitors target similar technologies, and the company’s unique offerings continue to drive premium IOL growth.

    7. R&D Allocation
      Q: Where is the planned R&D spend directed?
      A: The anticipated $40 million R&D budget is set to be used for technology upgrades and field enhancements, ensuring ongoing product evolution and long-term innovation.

    8. Buyer Adoption Profile
      Q: Who are the current adopters?
      A: Adoption spans a broad cross-section of ophthalmologists and practices, with both established and new users showing similar growth trajectories in embracing the technology.

    9. Patient Segmentation
      Q: Are aspheric lens patients mostly younger?
      A: Both the LAL and LAL+ are inherently aspheric; management noted there isn’t a distinct difference with younger or myopic patients, as benefits extend across various demographics.

    10. Business Model Replication
      Q: Can innovative treatment models be replicated?
      A: Unique business models seen in select centers are expected to eventually be replicated across more practices, enhancing overall market access and efficiency.

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