RxSight, Inc. (NASDAQ:RXST) Q3 2023 Earnings Call Transcript

Rohin Patel : Thanks. That’s really helpful. Just one more from me. I guess, utilization was also strong again in the quarter. So just wanted to dive into where kind of a lot of this growth is coming from. Is it more from kind of your top users? Or did you see it as being broad-based in the quarter? And then just to follow up, how do you expect your addition to kind of trend in 2024, if you can provide just some preliminary color there?

Shelley Thunen: So I think that the utilization and the increase in procedures comes from two areas like it always does. New surgeons who have gotten installed typically in the previous quarter and the beginning of this quarter, the third quarter, and that’s always a growth driver. But also, we look for increased utilization as well. And while the absolute number of LAL procedures went up 8% in the quarter as compared to the second quarter, typically, you do kind of see a little less sequential growth in the third quarter just because of seasonality. And so the utilization per doctor per LDD, however you want to look at it, overall is a little bit lower. But that’s just a function of seasonality, but we have the benefit of continuing to grow our overall install base, and that grows the number of procedures even in a quarter that might be considered a little weaker. But we see growth among all types of our customers.

Rohin Patel : Great. Thank you.

Operator: The next question comes from Larry Biegelsen with Wells Fargo. Go ahead. Your line is open.

Larry Biegelsen : Hey, guys. Thanks for taking the question. Maybe switching gears to the new LDD. Shelley, a couple of questions on that. How will that play out in terms of the gross margin impact? I think we have assumed that the current LDD has a gross margin of about 25%. How should we think about the gross margin of the new LDD? And you gave some helpful color here on the ASPs. It looks like the new LDD has an ASP of about $130,000. Is that a good number to use going forward? And do you expect the vast majority of new systems to be with the new LDD going forward?

Shelley Thunen: Yes. You certainly did math from my commentary as well. It was about a 10%, maybe a little bit more increase in terms of the ASP compared to our previous product overall. And if you think back to some of the commentary that we made previously, we had said that our goal for capital equipment is between 20% and 25% gross margin, and we were below that number. And that was really a function of the fact that the material costs had increased so much with chip and other component shortages as well. While we don’t break out the margin between both products, there are two things that are driving the margin up. One is the ASP, which is really nice as well as the fact that it’s less expensive to manufacture primarily because the material is less expensive.

Larry Biegelsen : And you expect going forward, the new LDD to basically replace the old one in terms of system sales?

Shelley Thunen: Yeah. We have already made that transition on the pre LDD to the reconfigured LDD and that will represent our full Q4 revenue from the LDD.

Larry Biegelsen : You got it. I’m just curious on international. Anything noteworthy in the third quarter for international sales? And how are you thinking about new international markets in 2024? Thanks for taking the questions, guys.

Ron Kurtz: Maybe I’ll comment first. We had previously mentioned that we had begun commercialization in Canada. That continues to go well. We’re very excited about our new customers in Canada and had an opportunity to meeting last week. And then we’re also excited about the global opportunity for this product. We haven’t provided a specific timeline for that, but we believe that the LAL is going to be attractive to doctors across the world, Europe, Asia, et cetera.

Larry Biegelsen : So no timeline, Ron?

Ron Kurtz: Not at this time.

Larry Biegelsen : All right. Thanks.