Iridex Reports Third Quarter 2024 Financial Results

IRIX 11.12.2024

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  • 01.14.2025 - Iridex Announces Preliminary Operational and Financial Results for Fourth Quarter and Full Year 2024
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MOUNTAIN VIEW, Calif.,Nov. 12, 2024(GLOBE NEWSWIRE) --Iridex Corporation(Nasdaq: IRIX), a worldwide leader providing innovative and versatile laser-based medical systems, delivery devices, and procedure probes for the treatment of glaucoma and retinal diseases, today reported financial results for the third quarter endedSeptember 28, 2024.

Third Quarter 2024 Financial and Recent Highlights

  • Expects to achieve EBITDA breakeven in the fourth quarter of 2024 as a result of actions to reduce costs and improve profitability
  • Generated total revenue of$11.6 million, representing a decline of 8% sequentially from the second quarter of 2024 and a decline of 10% over Q3’23
  • Cyclo G6®product family revenue was$3.1 million, representing growth of 3% from the third quarter of 2023
    • Sold 13,600 Cyclo G6 probes, compared to 13,200 in the prior year period
    • Sold 26 Cyclo G6 Glaucoma Laser Systems, compared to 27 in the prior year period
  • Retina product revenue was$6.5 million, representing a sequential decline of 12% from the second quarter of 2024 and a decline of 18% from the prior year period
  • Strengthened balance sheet with net proceeds of$3.4 millionthrough convertible note offering fundedAugust 7, 2024
  • Cash and cash equivalents as ofSeptember 28, 2024, was approximately$3.9 million.

Recent Corporate Highlights

  • AppointedPatrick Merceras Chief Executive Officer; previously, Mr. Mercer served as the Company’s Chief Operating Officer and President. In addition,Scott Shuda, who had previously served as Chairman, was appointed Executive Chairman of the Company’s board of directors.
  • Company’s strategic review ongoing with multiple parties.
  • New Local Coverage Determinations (LCDs) for Medicare Administrative Contractor (MAC) reimbursement taking effectNovember 17, 2024position Iridex’s glaucoma products for increased use.

Patrick Mercer, who was elevated from President and Chief Operating Officer to President and Chief Executive Officer onIridexeffectiveOctober 1, 2024, commented, “While the third quarter has traditionally been the quarter subject to the most seasonal softness, we were disappointed to see a return to extended sales cycles in our retina business. Glaucoma though was a highlight, being less dependent on capital equipment sales, with a majority of its revenues comprised of single-use consumable probes, the business experienced stable demand and generated growth over the prior year period in an overall challenging quarter. Moreover, we experienced some shipment delays for certain products due to regulatory hurdles in some territories. However, we expect these regulatory issues to be resolved in the fourth quarter and to begin shipments.”

Scott Shuda, Executive Chairman ofIridex, commented on the Company’s strategic review, “I am pleased to report that we have recently achieved meaningful progress and are currently in discussions with multiple parties relating to transaction opportunities. Among other things, the changing reimbursement landscape for glaucoma treatments is bringing favorable attention toIridexand the value of our efficient and efficacious laser procedures.”

New LCDs Reshaping Glaucoma Reimbursement Landscape

The future potential for Iridex’sMicroPulse®and Continuous Wave laser therapies for glaucoma received a noted boost during the third quarter with the publication of the updated Local Coverage Determinations (LCDs) for Medicare Administrative Contractor (MAC) reimbursement relating to Micro-Invasive Glaucoma Surgery (MIGS).

“Last year, we reported on how Iridex’s glaucoma products had inexplicably become caught up in an earlier LCD, subsequently withdrawn, that was widely interpreted as seeking to limit and likely reduce MIGS procedures,” saidMr. Mercer. “This year, we are pleased to report that Iridex’s glaucoma products are unaffected by a replacement LCD, which again places limitations on reimbursement for MIGS procedures. The final LCD, which goes into effect onNovember 17, 2024, indicates that MIGS is not considered a first-line treatment for mild to moderate glaucoma, and simultaneous performance of multiple MIGS procedures is not permitted.”

“This new reimbursement paradigm has the potential to increase physician adoption ofIridex'sglaucoma products,”Mr. Mercercontinued. “Our strategy has focused on promoting the use ofIridextechnology as a post-combination MIGS procedure. The new LCD opens the door to engaging with physicians to reassess applications for our technology and discuss its potential earlier in the treatment pathway. Particularly, we will encourage clinicians to explore the opportunity to perform cataract surgery in combination with MicroPulse Transscleral Laser Therapy (MPTLT). We believe this represents a compelling treatment option that emphasizes the synergistic benefits of MicroPulse TLT to offer significant clinical advantages, particularly for patients seeking to achieve low intraocular pressure (IOP).”

Actions to Reduce Costs and Improve ProfitabilityIn the fourth quarter of 2024,Irideximplemented a series of additional operating improvements and cost-cutting measures designed to improve its financial performance and increase its balance sheet and working capital efficiency. These initiatives include significant cost reductions across all departments, renegotiating supplier contracts to free up capital, and reducing inventory levels. Additionally,Iridexwill engage with global contract manufacturing partners to improve gross margins through increased outsourcing. As a result of these initiatives,Iridexexpects to achieve EBITDA breakeven in the fourth quarter of 2024.

Third Quarter 2024 Financial ResultsRevenue for the three months endedSeptember 28, 2024, was$11.6 million, representing a sequential decline of 8% from the second quarter of 2024 and a decline of 10% compared to$12.9 millionin the same period of the prior year. Retina product revenue decreased to$6.5 million, representing a decline of 12% compared to the second quarter of 2024 and a decline of 18% compared to the prior year period, primarily driven by softness in system sales impacted by the ongoing capital purchasing constraints both domestically and internationally. Due to regulatory delays in certain key international geographies the Company also ended the quarter with a larger-than-normal capital equipment backlog. Total product revenue from the Cyclo G6®Glaucoma product group was$3.1 million, a decrease of$0.2 millioncompared to the second quarter of 2024 and an increase of$0.1Mcompared to the third quarter of 2023. Other revenue increased to$2.0 millionor 3% in the third quarter of 2024 compared to the prior year period, primarily driven by service and certain legacy product revenue growth.

Gross profit for the third quarter of 2024 was$4.3 million, or a 37.3% gross margin, a decrease compared to$5.6 million, or a 43.7% gross margin, in the same period of the prior year. This decrease was driven primarily by lower overhead cost absorption on lower revenue and shifts in product mix.

Operating expenses of$6.2 millionin the third quarter of 2024 decreased$1.1 millioncompared to$7.3 millionin the same period of the prior year due to ongoing cost reduction initiatives, despite higher general and administrative expenses related to the company’s strategic process not seen in the prior year period.

The net loss for the third quarter of 2024 was$1.9 million, or$0.12per share, compared to $1.8 million, or$0.11per share, in the same period of the prior year.

Cash and cash equivalents totaled$3.9 millionas ofSeptember 28, 2024.

Webcast and Conference Call InformationIridex’s management team will hold a conference call today at2:00 p.m. PT/5:00 p.m. ET. Investors interested in listening to the conference call may dial +1-888-596-4144 for domestic callers or +1-646-968-2525 for international callers, using conference ID: 3650755. A live and recorded webcast on the “Event Calendar” page of the “Investors” section of the Company’s website atwww.iridex.com.

AboutIridex Corporation

Iridex Corporationis a worldwide leader in developing, manufacturing, and marketing innovative and versatile laser-based medical systems, delivery devices and consumable instrumentation for the ophthalmology market. The Company’s proprietaryMicroPulse®technology delivers a differentiated treatment that provides safe, effective, and proven treatment for targeted sight-threatening eye conditions. Iridex’s current product line is used for the treatment of glaucoma and diabetic macular edema (DME) and other retinal diseases.Iridexproducts are sold inthe United Statesthrough a direct sales force and internationally primarily through a network of independent distributors into more than 100 countries. For further information, visit theIridexwebsite atwww.iridex.com.

MicroPulse®is a registered trademark ofIridex Corporation, Inc.inthe United States,Europeand other jurisdictions. © 2024Iridex Corporation. All rights reserved.

Safe Harbor StatementThis announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, including those statements concerning clinical expectations and commercial trends, market adoption and expansion, value-maximizing transactions, demand for and utilization of the Company's products and results and expected sales volumes. The Company can provide no assurance that it will complete any value-maximizing transactions on behalf of its stockholders. These statements are not guarantees of future performance and actual results may differ materially from those described in these forward-looking statements as a result of a number of factors. Please see a detailed description of these and other risks contained in our Quarterly Report on Form 10-Q filed with theSecurities and Exchange CommissiononMay 14, 2024. Forward-looking statements contained in this announcement are made as of this date and will not be updated.

Investor Relations ContactPhilip TaylorGilmartin Groupinvestors@iridex.com

IRIDEX Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months EndedNine Months Ended
September 28,2024September 30,2023September 28,2024September 30,2023
Total revenues$11,581$12,850$35,973$39,411
Cost of revenues7,2587,22922,05722,489
Gross profit4,3235,62113,91616,922
Operating expenses:
Research and development1,2991,5414,3365,135
Sales and marketing2,6463,8239,87912,370
General and administrative2,2481,9457,5016,343
Total operating expenses6,1937,30921,71623,848
Loss from operations(1,870)(1,688)(7,800)(6,926)
Other income (expense), net(46)(58)(202)346
Loss from operations before provision for income taxes(1,916)(1,746)(8,002)(6,580)
Provision for income taxes1787430
Net loss$(1,933)$(1,754)$(8,076)$(6,610)
Net loss per share:
Basic$(0.12)$(0.11)$(0.49)$(0.41)
Diluted$(0.12)$(0.11)$(0.49)$(0.41)
Weighted average shares used in computing net loss per common share:
Basic16,58116,23116,37416,089
Diluted16,58116,23116,37416,089

IRIDEX Corporation
Condensed Consolidated Balance Sheets
(In thousands)
September 28,2024December 30,2023
ASSETS
Current assets:
Cash and cash equivalents$3,860$7,034
Accounts receivable, net7,7809,654
Inventories10,9429,906
Prepaid expenses and other current assets1,755856
Total current assets24,33727,450
Property and equipment, net157351
Intangible assets, net1,3911,642
Goodwill965965
Operating lease right-of-use assets, net2,0342,632
Other long-term assets1,2701,396
Total assets$30,154$34,436
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$6,780$4,727
Accrued compensation1,8421,619
Accrued expenses1,0071,996
Convertible note payable, current1,314—
Other current liabilities1,5791,233
Deferred revenue, current2,3352,404
Operating lease liabilities, current995995
Total current liabilities15,85212,974
Long-term liabilities:
Deferred revenue8,75910,025
Operating lease liabilities1,1551,751
Convertible note payable1,444—
Other long-term liabilities321164
Total liabilities27,53124,914
Stockholders’ equity:
Common stock174172
Additional paid-in capital89,56588,444
Accumulated other comprehensive income (loss)2(52)
Accumulated deficit(87,118)(79,042)
Total stockholders’ equity2,6239,522
Total liabilities and stockholders’ equity$30,154$34,436

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Source: IRIDEX Corporation

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