Iridex Reports First Quarter 2024 Financial Results

Rhea-AI Summary

Iridex (Nasdaq: IRIX) reported first-quarter 2024 financial results, showing a decline in revenue to $11.8 million from $13.7 million in Q1 2023. The Cyclo G6 product family revenue fell to $3.0 million from $3.7 million, despite selling more probes. Revenue from retina products decreased by 6% to $6.8 million. Cash and cash equivalents dropped to $5.4 million, a reduction of $1.6 million. The gross margin narrowed to 37.9% from 43.3%, and net loss widened to $3.5 million, or $0.21 per share, from $2.1 million, or $0.13 per share. CEO David Bruce noted longer sales cycles and end-of-quarter purchase deferrals but remains optimistic for the second quarter.

Positive

• Sold 13,300 Cyclo G6 probes, an increase from 12,700 in the prior quarter.
• Operating expenses reduced to $7.8 million from $8.3 million due to cost-cutting initiatives.
• Solid growth in Pascal scanning laser systems and international G6 probe sales.
• Customer interest in new Iridex 532 and 577 laser platforms.

Negative

• Total revenue decreased to $11.8 million from $13.7 million year-over-year.
• Cyclo G6 product family revenue dropped to $3.0 million from $3.7 million.
• Sold only 22 Cyclo G6 Glaucoma Laser Systems, down from 61 in the prior year.
• Retina product revenue decreased by 6% to $6.8 million.
• Gross profit fell to $4.5 million with a 37.9% gross margin, down from $5.9 million and 43.3%.
• Net loss increased to $3.5 million, or $0.21 per share, from $2.1 million, or $0.13 per share.
• Cash and cash equivalents decreased by $1.6 million to $5.4 million.

Financial Analyst

Iridex Corporation's financial results for Q1 2024 present a mixed picture for potential investors. The company reported a $11.8 million revenue, down from $13.7 million in the same period the previous year. This represents an 13.9% decrease. A key factor contributing to this decline is the decreased sales of their Cyclo G6® Glaucoma Laser Systems and probes. Notably, revenues from the Cyclo G6 product family decreased from $3.7 million to $3.0 million, with system sales evidently taking a hit.

The decrease in revenue is partially attributed to longer sales cycles and deferred capital equipment purchases. These headwinds resulted in a lower gross profit of $4.5 million and a decreased gross margin of 37.9%, compared to $5.9 million and 43.3% respectively in the prior year. This indicates a significant impact on the company's profitability, with a 5.4% drop in gross margin highlighting challenges in overhead absorption due to reduced revenue.

Despite cost reduction initiatives leading to a decrease in operating expenses to $7.8 million, the company's net loss increased to $3.5 million from $2.1 million in the same period last year. This reflects a per-share loss of $0.21 compared to $0.13. Such financial results may raise concerns among investors regarding the company's ability to navigate the current market environment effectively.

On the balance sheet, cash and cash equivalents at the end of March were $5.4 million, a reduction of $1.6 million over the quarter. This cash usage signals liquidity constraints and highlights the importance of securing additional revenue streams or capital to support ongoing operations and strategic initiatives.

Medical Market Research Analyst

The performance of Iridex's Cyclo G6® product family and retina products suggests a mixed outlook for the company in the medical device market. Sales of Cyclo G6 systems have significantly dropped, with only 22 units sold in the current quarter compared to 61 units in the same period last year. This notable decline highlights potential competitive pressures or market saturation issues. However, the increase in probe sales, from 12,700 in the prior quarter to 13,300, suggests a stable demand for consumables, even if capital equipment sales are facing challenges.

International sales growth for Pascal® scanning laser systems and G6 probes provides a silver lining, indicating potential robust demand outside the US. This could be important for offsetting domestic sales difficulties. Additionally, the introduction of new products like the Iridex 532® and 577® single spot laser platforms is generating customer interest, suggesting potential for future revenue growth.

The strategic review process and ongoing discussions about potential transactions could significantly alter Iridex's market positioning. While the cancellation of an anticipated asset sale might seem negative, continued negotiations signal ongoing efforts to optimize the company's portfolio.

Legal Expert

The increase in legal expenses by $0.4 million related to Iridex's strategic review process highlights the complexity and importance of this ongoing effort. The fact that an expected transaction has fallen through could be a red flag for investors, suggesting potential hurdles in executing strategic changes. However, continued discussions with multiple parties indicate that the company is actively exploring various avenues to enhance shareholder value.

It's important for investors to monitor these developments closely, as successful transactions could lead to significant changes in the company's structure and market strategy. Conversely, prolonged uncertainty in finalizing these deals could further strain the company's financials and dent investor confidence.

MOUNTAIN VIEW, Calif., May 14, 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 first quarter ended March 30, 2024, and provided a business update.

First Quarter 2024 Financial Highlights

• Generated total revenue of $11.8 million, compared to $13.7 million in the prior year period
• Cyclo G6® product family revenue in the first quarter of $3.0 million, compared to $3.7 million in the prior year period
  • Sold 13,300 Cyclo G6 probes, compared to 12,700 in the prior quarter and 13,800 in the prior year quarter
  • Sold 22 Cyclo G6 Glaucoma Laser Systems, compared to 61 in the prior year quarter
• Retina product revenue was $6.8 million, representing a decrease of 6% year-over-year 
• Cash and cash equivalents as of March 30, 2024 was approximately $5.4 million, a reduction of $1.6 million in the quarter

“We saw some of the firming we expected during the first quarter, but longer sales cycles continued into the first quarter and we also experienced another round of end-of-quarter capital equipment purchase deferrals. Fortunately, we are seeing additional firming in the second quarter as well as indications that a good portion of the orders that have been queueing up are expected to ship during the second quarter,” said David Bruce, President and CEO of Iridex.

“In the first quarter, solid growth from the sale of Pascal® scanning laser systems and G6 probes internationally was offset by the deferrals and resulting revenue declines of other products. While the period of capital equipment softness has extended longer than we anticipated, Iridex’s position in our markets remains strong based on the differentiated features and clinical evidence supporting Iridex technology,” continued Mr. Bruce. “Our refreshed retina portfolio, including new Iridex 532® and 577® single spot laser platforms, is generating customer interest that we expect to convert into revenue in upcoming quarters, plus further recovery driven by stabilized reimbursement for glaucoma procedures should improve G6 probe sales.”

Mr. Bruce continued, “Iridex is continuing an active strategic review process and we remain committed to pursuing a transaction or series of transactions that will benefit our stockholders. While the first transaction that we had expected to announce relating to the sale of certain assets will not be going forward, discussions with multiple other parties relating to specific product lines and the entire company are ongoing and will now come to the fore.”

First Quarter 2024 Financial Results
Revenue for the three months ended March 30, 2024 was $11.8 million compared to $13.7 million during the same period of the prior year. Retina product revenue decreased 6% compared to the prior year period to $6.8 million primarily driven primarily by lower medical and surgical system sales, partially offset by higher Pascal system sales. Total product revenue from the Cyclo G6 glaucoma product group was $3.0 million, a decrease of $0.7 million versus the first quarter of 2023, primarily driven by lower system sales, while lower U.S. probe sales were partially offset by a rebound in international probe sales. Other revenue decreased to $2.0 million in the first quarter of 2024 compared to $2.8 million the prior year period, primarily driven by decreased royalties due to the expiration of licensed patents and lower service revenue.

Gross profit for the first quarter of 2024 was $4.5 million or a 37.9% gross margin, a decrease compared to $5.9 million, or a 43.3% gross margin, in the same period of the prior year driven by lower overhead absorption across a reduced revenue base.

Operating expenses of $7.8 million in the first quarter of 2024 decreased compared to $8.3 million due to cost reduction initiatives and partially offset by a $0.4 million increase in legal expenses related to the strategic review process.

Net loss for the first quarter of 2024 was $3.5 million, or $0.21 per share, compared to a net loss of $2.1 million, or $0.13 per share, in the same period of the prior year.

Cash and cash equivalents totaled $5.4 million as of March 30, 2024. Cash use was $1.6 million in the first quarter of 2024.

Webcast and Conference Call Information
Iridex’s management team will host a conference call today beginning at 2:00 p.m. PT / 5:00 p.m. ET. Investors interested in listening to the conference call may do so by accessing the live and recorded webcast on the “Event Calendar” page of the “Investors” section of the Company’s website at www.iridex.com. 

About Iridex Corporation

Iridex Corporation is 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 proprietary MicroPulse® 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. Iridex products are sold in the United States through a direct sales force and internationally primarily through a network of independent distributors into more than 100 countries. For further information, visit the Iridex website at www.iridex.com. 

MicroPulse® is a registered trademark of Iridex Corporation, Inc. in the United States, Europe and other jurisdictions. © 2024 Iridex Corporation. All rights reserved.

Safe Harbor Statement
This 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 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 29, 2024. Forward-looking statements contained in this announcement are made as of this date and will not be updated.

Investor Relations Contact
Philip Taylor
Gilmartin Group
investors@iridex.com 

IRIDEX Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

		Three Months Ended
		March 30, 2024				April 1, 2023
Total revenues		$	11,761			$	13,706
Cost of revenues			7,303				7,768
Gross profit			4,458				5,938
Operating expenses:
Research and development			1,536				1,749
Sales and marketing			3,747				4,283
General and administrative			2,468				2,250
Total operating expenses			7,751				8,282
Loss from operations			(3,293	)			(2,344	)
Other income (expense), net			(133	)			266
Loss from operations before provision for income taxes			(3,426	)			(2,078	)
Provision for income taxes			38				12
Net loss		$	(3,464	)		$	(2,090	)
Net loss per share:
Basic		$	(0.21	)		$	(0.13	)
Diluted		$	(0.21	)		$	(0.13	)
Weighted average shares used in computing net loss per common share:
Basic			16,253				16,001
Diluted			16,253				16,001

IRIDEX Corporation
Condensed Consolidated Balance Sheets
(In thousands)

		March 30, 2024				December 30, 2023
ASSETS
Current assets:
Cash and cash equivalents		$	5,419			$	7,034
Accounts receivable, net			9,146				9,654
Inventories			11,003				9,906
Prepaid expenses and other current assets			2,010				856
Total current assets			27,578				27,450
Property and equipment, net			265				351
Intangible assets, net			1,558				1,642
Goodwill			965				965
Operating lease right-of-use assets, net			2,402				2,632
Other long-term assets			1,324				1,396
Total assets		$	34,092			$	34,436
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	7,991			$	4,727
Accrued compensation			2,256				1,619
Accrued expenses			1,112				1,996
Other current liabilities			1,265				1,233
Deferred revenue, current			2,447				2,404
Operating lease liabilities, current			995				995
Total current liabilities			16,066				12,974
Long-term liabilities:
Deferred revenue			9,708				10,025
Operating lease liabilities			1,526				1,751
Other long-term liabilities			304				164
Total liabilities			27,604				24,914
Stockholders’ equity:
Common stock			172				172
Additional paid-in capital			88,838				88,444
Accumulated other comprehensive loss			(16	)			(52	)
Accumulated deficit			(82,506	)			(79,042	)
Total stockholders’ equity			6,488				9,522
Total liabilities and stockholders’ equity		$	34,092			$	34,436

FAQ

What were Iridex's Q1 2024 revenues?

Iridex reported Q1 2024 revenues of $11.8 million, a decrease from $13.7 million in Q1 2023.

How did Iridex's Cyclo G6 product family perform in Q1 2024?

The Cyclo G6 product family revenue fell to $3.0 million from $3.7 million in Q1 2023.

What was the net loss for Iridex in Q1 2024?

Iridex reported a net loss of $3.5 million, or $0.21 per share, in Q1 2024.

How many Cyclo G6 Glaucoma Laser Systems did Iridex sell in Q1 2024?

Iridex sold 22 Cyclo G6 Glaucoma Laser Systems in Q1 2024, down from 61 in the prior year.

What were Iridex's cash and cash equivalents at the end of Q1 2024?

As of March 30, 2024, Iridex had cash and cash equivalents totaling $5.4 million.

What was the gross margin for Iridex in Q1 2024?

Iridex reported a gross margin of 37.9% in Q1 2024, down from 43.3% in Q1 2023.

Why did Iridex's revenue decline in Q1 2024?

The decline in revenue was due to longer sales cycles, end-of-quarter purchase deferrals, and reduced sales of medical and surgical systems.