Iridex Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

Iridex (Nasdaq: IRIX) announced its Q2 2024 financial results. The company reported total revenue of $12.6 million, marking a 7% sequential growth from Q1 2024. The Cyclo G6 product family revenue increased by 13% sequentially to $3.3 million. Retina product revenue grew 8% sequentially and 6% YoY to $7.3 million. The company sold 15,100 Cyclo G6 probes and 28 Glaucoma Laser Systems.

Gross profit was $5.1 million with a 40.7% margin, down from 41.7% YoY. Net loss stood at $2.7 million, or $0.16 per share. Operating expenses decreased to $7.8 million. Cash and equivalents were $4.1 million as of June 29, 2024, reduced by $1.3 million in the quarter, and excluding $3.4 million from a convertible note offering on August 7, 2024.

CEO David Bruce emphasized the company's focus on strategic review processes and achieving a transaction this fiscal year. A webcast and conference call were scheduled to discuss these results.

Positive

• Sequential revenue growth of 7% from Q1 2024.
• Cyclo G6 product family revenue grew by 13%.
• Retina product revenue increased by 8% sequentially and 6% YoY.
• Operating expenses decreased by $0.5 million YoY.
• Net loss reduced to $2.7 million from $2.8 million YoY.

Negative

• Reduced gross margin to 40.7% from 41.7% YoY.
• Cash and equivalents down to $4.1 million, reduced by $1.3 million in the quarter.
• Other revenue decreased by $0.3 million due to expired patent licensing.

Insights

Financial Analyst

Iridex's Q2 2024 results show mixed signals. While the total revenue of $12.6 million represents a 7% sequential growth, it's flat year-over-year. The Cyclo G6 product line saw a 13% sequential growth to $3.3 million, but probe sales are down year-over-year. Retina product revenue grew 6% YoY to $7.3 million, indicating some strength in this segment.

The company's cash position is concerning, with only $4.1 million in cash and equivalents, down $1.3 million from Q1. The recent $3.4 million convertible note offering provides some breathing room but also increases debt. The ongoing strategic review process and potential transaction could be important for Iridex's future. Overall, while there are signs of stabilization, the company's financial health remains precarious.

Medical Device Industry Expert

Iridex's performance reflects broader trends in the medical device industry. The 14% sequential growth in glaucoma probe units suggests improving market conditions, possibly due to stabilized procedure reimbursement in the U.S. However, the slower growth in Cyclo G6 Glaucoma Laser Systems (28 sold vs. 41 in the prior year) indicates ongoing capital purchasing constraints in healthcare facilities.

The company's focus on retina products is paying off, with 6% YoY growth. This diversification is important in a challenging market. The mention of "elongated cycles" in equipment sales is a common theme in the industry, reflecting cautious spending by healthcare providers. Iridex's strategic review process could lead to significant changes, potentially reshaping its position in the competitive ophthalmology device market.

MOUNTAIN VIEW, Calif., Aug. 08, 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 second quarter ended June 29, 2024, and provided a business update.

Second Quarter 2024 Financial and Recent Highlights

• Generated total revenue of $12.6 million, representing sequential growth of 7% from the first quarter of 2024
• Cyclo G6^® product family revenue was $3.3 million, representing sequential growth of 13% from the first quarter of 2024
  • Sold 15,100 Cyclo G6 probes, compared to 13,300 in the first quarter of 2024 and 15,500 in the prior year period
  • Sold 28 Cyclo G6 Glaucoma Laser Systems, compared to 22 in the first quarter of 2024 and 41 in the prior year period
• Retina product revenue was $7.3 million, representing sequential growth of 8% from the first quarter of 2024 and growth of 6% from the prior year period
• Cash and cash equivalents as of June 29, 2024 was approximately $4.1 million, a reduction of $1.3 million in the quarter
• Strengthened balance sheet with net proceeds of $3.4 million through convertible note offering funded August 7, 2024
  

“Our second quarter results demonstrate stabilization of the business. We drove solid year-over-year growth in our Retina business while growing glaucoma probe units 14% over the first quarter. We have observed a firmer capital environment as we closed on more extended-cycle equipment sales but in general cycles still remain elongated. In glaucoma, stabilized procedure reimbursement in the U.S. supported sequential improvements in glaucoma probe shipments as expected,” said David Bruce, CEO of Iridex.

“I want to reiterate we are prioritizing pursuit of our strategic review process and seek to reach a transaction this fiscal year. The recent convertible note funding provides discounted prepayment options that can be utilized in the event of transaction completion, and when combined with further prudent expense reductions, maintains solid liquidity runway to continue growth recovery and reach completion of our strategic process.”

Second Quarter 2024 Financial Results
Revenue for the three months ended June 29, 2024 was $12.6 million, representing sequential growth of 7% from the first quarter of 2024, and generally flat compared to $12.9 million in the same period of the prior year. Retina product revenue increased to $7.3 million, representing growth of 8% compared to the first quarter of 2024 and growth of 6% compared to the prior year period, primarily driven by higher Pascal system sales and conversions from longer purchasing cycles experienced in the first quarter of 2024. Total product revenue from the Cyclo G6^® Glaucoma product group was $3.3 million, an increase of $0.4 million compared to the first quarter of 2024, primarily driven by 12% growth in probe sales, and a decrease of $0.3 million compared to the second quarter of 2023, due to softness in system sales impacted by the ongoing capital purchasing constraints. Other revenue decreased $0.3 million to $2.0 million in the second quarter of 2024 compared to the prior year period, primarily driven by reduction of royalty revenue from expired patent licensing.

Gross profit for the second quarter of 2024 was $5.1 million or a 40.7% gross margin, a decrease compared to $5.4 million, or a 41.7% gross margin, in the same period of the prior year driven by shifts in product mix.

Operating expenses of $7.8 million in the second quarter of 2024, decreased $0.5 million compared to $8.3 million in the same period of the prior year due to cost reduction initiatives, despite higher general and administrative expenses related to the company’s strategic process not seen in the prior year period.

Net loss for the second quarter of 2024 was $2.7 million, or $0.16 per share, compared to a net loss of $2.8 million, or $0.17 per share, in the same period of the prior year.

Cash and cash equivalents totaled $4.1 million as of June 29, 2024, not including $3.4 million in net proceeds from the convertible note offering funded August 7, 2024. Cash use in the second quarter of 2024 was $1.3 million.

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 dialing (646) 307-1963 for domestic callers or (800) 715-9871 for international callers, using conference ID: 9156340. A 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 Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 14, 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								Six Months Ended
	June 29, 2024				July 1, 2023				June 29, 2024				July 1, 2023
Total revenues	$	12,631			$	12,855			$	24,392			$	26,561
Cost of revenues		7,496				7,492				14,799				15,260
Gross profit		5,135				5,363				9,593				11,301
Operating expenses:
Research and development		1,501				1,845				3,037				3,594
Sales and marketing		3,487				4,264				7,233				8,547
General and administrative		2,785				2,148				5,253				4,398
Total operating expenses		7,773				8,257				15,523				16,539
Loss from operations		(2,638	)			(2,894	)			(5,930	)			(5,238	)
Other income (expense), net		(22	)			138				(156	)			404
Loss from operations before provision for income taxes		(2,660	)			(2,756	)			(6,086	)			(4,834	)
Provision for income taxes		19				10				57				22
Net loss	$	(2,679	)		$	(2,766	)		$	(6,143	)		$	(4,856	)
Net loss per share:
Basic	$	(0.16	)		$	(0.17	)		$	(0.38	)		$	(0.30	)
Diluted	$	(0.16	)		$	(0.17	)		$	(0.38	)		$	(0.30	)
Weighted average shares used in computing net loss per common share:
Basic		16,287				16,036				16,270				16,018
Diluted		16,287				16,036				16,270				16,018

IRIDEX Corporation
Condensed Consolidated Balance Sheets
(In thousands)
	June 29, 2024				December 30, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	4,111			$	7,034
Accounts receivable, net		8,042				9,654
Inventories		11,124				9,906
Prepaid expenses and other current assets		1,730				856
Total current assets		25,007				27,450
Property and equipment, net		209				351
Intangible assets, net		1,475				1,642
Goodwill		965				965
Operating lease right-of-use assets, net		2,172				2,632
Other long-term assets		1,421				1,396
Total assets	$	31,249			$	34,436
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,386			$	4,727
Accrued compensation		2,139				1,619
Accrued expenses		868				1,996
Other current liabilities		1,467				1,233
Deferred revenue, current		2,290				2,404
Operating lease liabilities, current		995				995
Total current liabilities		16,145				12,974
Long-term liabilities:
Deferred revenue		9,261				10,025
Operating lease liabilities		1,294				1,751
Other long-term liabilities		303				164
Total liabilities		27,003				24,914
Stockholders’ equity:
Common stock		172				172
Additional paid-in capital		89,257				88,444
Accumulated other comprehensive income (loss)		2				(52	)
Accumulated deficit		(85,185	)			(79,042	)
Total stockholders’ equity		4,246				9,522
Total liabilities and stockholders’ equity	$	31,249			$	34,436

FAQ

What were the Q2 2024 revenue results for IRIX?

Iridex reported total revenue of $12.6 million for Q2 2024, reflecting a 7% sequential growth from Q1 2024.

How did the Cyclo G6 product family perform in Q2 2024?

The Cyclo G6 product family revenue increased by 13% sequentially to $3.3 million in Q2 2024.

What was Iridex's gross profit margin in Q2 2024?

Iridex's gross profit margin was 40.7% in Q2 2024, down from 41.7% in the same period of the prior year.

What is the net loss reported by IRIX for Q2 2024?

Iridex reported a net loss of $2.7 million, or $0.16 per share, for Q2 2024.

What were the operating expenses for IRIX in Q2 2024?

Operating expenses for Iridex in Q2 2024 were $7.8 million, a decrease of $0.5 million compared to the same period last year.

How much cash and cash equivalents did IRIX have at the end of Q2 2024?

Iridex had $4.1 million in cash and cash equivalents as of June 29, 2024.

What was the impact of the convertible note offering for IRIX?

The convertible note offering provided net proceeds of $3.4 million and funded on August 7, 2024.