Precision Optics Corporation, Inc. (NASDAQ:POCI) Q2 2023 Earnings Call Transcript

Dr. Joe Forkey: Yes, sure. Thanks, Robert. So the question comes, I’m sure, in part, because I didn’t mention Lighthouse by name very often in the prepared remarks, and that was really by design. It’s been over a year now. The integration has gone quite well. And so we’re really pushing forward now as one combined company. So the plan going forward with these earnings calls is not to be breaking out the performance of one division or another. That having been said, I will just comment the sales and accounting teams are fully integrated now. The engineering team is working very well together. It’s fully integrated. They’re doing a really great job on the new urology program that I mentioned, both in the comments here today and in the press release that we put out a couple of months ago.

They’re working hand in hand. We had joint meetings with the customer, and there were engineers who sit in Portland and there are engineers who sit here in Gardner, all in the same room, all on the same team impressing our customer greatly. So all in all, the integration is going quite well.

Robert Blum: Perfect, Joe. Gary, I’m going to turn it back over to you if there are any further questions.

Operator: And the next question is from George Melas with MKH Management.

George Melas: Quick question on the single-use programs. Does that bring you in relationship with customers that are larger? Because it seems like you have 2 programs right now that’s beyond the POC stage, and somehow I get a sense that they are established medical device companies. Is that right? And is that a trend in the single-use space that it’s going to be larger companies rather than start-ups?

Dr. Joe Forkey: That’s an interesting question. So let me answer that, and let me give you two answers to that. So the first answer is that across the board, we’re seeing larger opportunities. So that isn’t necessarily characterized by start-up versus existing large medical device company, but the size of the opportunities in general are getting larger. I think there’s a couple of reasons for that. The first is that we’re a larger company than we were before with more resources. So I think companies are more comfortable with us than maybe they were when we were a $3 million or $4 million a year company, right? The second one, of course, is because of the acquisition, particularly of Lighthouse, we have a broader offering, and so we can deliver a more complete system.

From the standpoint of the single-use programs specifically — I’m trying to think — it is true that the majority of the programs that we’ve been involved with so far have been with larger established customers or larger established companies. There have been a couple that have come to us who have still been start-ups. So I guess I’d have to say the jury is still out on whether it’s going to break one way or the other. But the companies that we’re working with right now on the single-use programs are, in fact, larger, more established medical device companies.

George Melas: Okay. And then maybe just a quick follow-up on that. So is your relationship with these companies somewhat different? Is it more difficult for you to keep the IP? And maybe sort of — maybe in a slightly different way. Are these programs replacing — I imagine they are replacing existing devices that are not single-use. So is it large companies that have these devices and then are trying to shift to single-use space, and they already own some of the technology that’s involved with these devices. I guess I’m getting complicated.