IRIDEX Corporation

Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Q4 2025 Iridex earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Tripp Taylor, Investor Relations. Please go ahead.

Thank you, and thank you all for participating in today's call. Joining me from the company are Patrick Mercer, Iridex's Chief Executive Officer, and Romeo Dizon, the company's Chief Financial Officer. Earlier today, Iridex released financial results for the quarter ended January 3rd, 2026. A copy of the press release is available on the company's website Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that are not statements of historical fact, including but not limited to statements concerning our strategic goals and priorities, product development matters, sales trends, and the markets in which we operate. All forward-looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place reliance on these statements. For discussion of the risks and uncertainties associated with our business, Please see our most recent Form 10-K and Form 10-Q filings with the SEC. Buredex disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, March 26, 2026. And with that, I'll turn the call over to Patrick.

Thank you, Tripp. Good afternoon, everyone, and thank you for joining us. Today, I am proud to share our fourth quarter and full year results, which represent a successful year and a positive transformation for Aerodex. 2025, we achieved our goals to streamline our operations, reduce costs and put Aerodex on a path to sustainable profitability. For the full year 2025, we grew revenue by 8% and reduced operating expenses by 22% compared to the prior year. And this leverage helped deliver positive adjusted EBITDA for the first time in the company's recent history. Further, we closed out the year by generating positive cash flow from operations in the fourth quarter. I believe it has been made clear that we have done the work to create a new financial profile capable of generating positive cash flow from operations in 2026 and beyond. For the full year, revenue was $52.7 million, representing 8% growth year over year versus 2024. Notably, we saw growth across every major product category, Cyclo-G6, medical retina, surgical retina, as well as across both our U.S. and international businesses. Fourth quarter growth was even stronger. The 16% increase marked the strongest quarterly growth rate of the year. I want to take a moment to highlight some of the important contributors to our strong Q4 performance. On the cost side, we are continuing to right-size the business to be more in line with revenues. we have continued to make meaningful progress with the relocation of certain general and administrative functions out of California. We expect this initiative alone to generate approximately $165,000 in quarterly savings beginning in Q1 2026. We also plan to relocate our headquarters later in 2026, which will further reduce our fixed cost base by approximately $600,000 on an annualized basis. Also, as part of our continuing efforts to reduce our cost structure, we are in active discussions with contract manufacturers as part of a multi-year initiative to transition production away from our Mountain View facilities and toward lower cost, third-party manufacturing. We expect to begin meaningful transfers in 2026, which will incrementally lower our cost of goods as the year progresses. Full implementation is expected to be completed in 2027 and will prove a further meaningful reduction to our cost of goods. This initiative is expected to be a significant driver of gross margin improvement over the coming years. Turning now to take a closer look at our commercial results for the fourth quarter, beginning with our glaucoma businesses. In the United States, our strategy remains centered on leveraging our substantial installed base of cyclo-G6 systems and driving higher procedural utilization. Medicare LCDs introduced last year continue to create drivers for G6 adoption earlier in the continuum of care for mild to moderate stage patients. Our team is focused on educating our physician users on this opportunity, including highlighting our robust clinical data supporting the IOP-lowering efficacy of the procedure and updated sweep speed procedural technique. Using MedScout, our relatively new sales enablement software platform, we are identifying accounts in the mid-range of utilization to engage with clinicians and reiterate the benefits of our repeatable and scissorless procedure. In an extension of this effort, we are also now targeting high-volume mixed surgeons who, based on their case volumes, have the potential to adopt the procedure at meaningful utilization levels. Pricing tailwinds based on the enhanced value proposition of our procedure also contributed positively to Q4 glaucoma revenue. Position relocations drove a number of system sales in the quarter as the new practice locations acquired their own dedicated G6 systems. With a growing install base, Higher ASPs and increasingly effective commercial targeting through MedScout, we are well positioned to drive meaningful G6 growth throughout 2026. In total in the fourth quarter, we sold 15,900 probes versus 13,300 in the prior year period, and 44 G6 systems versus 47 in Q4 2024. For the full year 2025, we sold 57,800 cyclo-G6 probes compared to 55,400 in the prior year, and 133 G6 systems compared to 125 in 2024. International glaucoma was also strong across multiple geographies. In Europe, Middle East, and Africa, glaucoma probe cells grew for the third consecutive quarter, supported by fulfillment of several GPI orders, a meaningful milestone for the region. It is important to note that the conflict in Iran is impacting sales in the Middle East materially today. In GMBH, G6 probe sales remain stable with existing customers, and we believe our GMBH utilization is well positioned to absorb incremental volume as we work through distributor transitions in the region. In Asia, the region continued to experience volatile and operational challenges. Despite continued demand, shifting macroeconomic conditions continue to impact our commercial activity. The evolving tariff uncertainty with China continues to challenge sales and forecasting. In Japan, current headwinds continue to weigh on near-term results. Our partnership with Topcon remains active, and we are monitoring the macro environment closely and expect conditions to improve over time. In Latin American Canada, the region showed steady utilization in G6 Pros, reflecting solid adoption of our technology in Canada and across key markets. Now turning to our retina portfolio, our top priorities continue to be capitalizing on the ongoing upgrade cycle driving Pascal adoption, both domestically and internationally, and securing additional regulatory approvals for our next-generation retina platforms to capitalize on our global distribution network. In the United States, Pascal is firmly established as our flagship system, and we are seeing consistent trends of existing Pascal customers upgrading to our newer platforms. Additionally, newly graduating ophthalmologists are choosing Iridex Pascal systems in part due to our efforts to ensure Pascal is the preferred system used in university and training programs. Medical and surgical retina revenue performed well. Surgical retina was a particular standout, feeding the plan for the quarter. Endoprobe cells held steady throughout Q4, demonstrating consistent performance. Turning to international retina, in Europe, Middle East, and Africa, the region continued to perform in line with expectations. Pascal's performance in the Middle East and Africa was somewhat softer in Q4, following the fulfillment of several large orders in Q3. We're also making progress in expanding our ENT business in the UK, with notable increases in ENT probes and IQ532 XP systems. Italy remains stable, and we continue to manage distributor quality and service in that market. Middle East sales of retina products are also being materially impacted by the conflict in Iran. In GMBH, capital equipment sales faced a slowdown, in part due to purchase order delays. However, we completed our first IQ532 XP sales in Germany. which we believe represents a promising new model for expanding our business. Our GMPH team has secured Pascal synthesis orders and continues to build a pipeline for placements with newer models, pending MDR certification. In Asia, our retina business was affected by the same macro dynamics impacting glaucoma across the region, including the China tariff situation and currency pressures in Japan. Despite these headwinds, underlying demand for our retina products across Asia remains solid, and we believe the region represents meaningful upside, and operational uncertainty is clarified. In Latin America and Canada, the region continues to stabilize, supported by consistent Pascal cells driven by renewed distribution engagement in Chile and Colombia. Representative of our comprehensive commercial efforts, it is important to call out that clinician interest in our glaucoma and retinal laser platforms was very apparent at the American Academy of Ophthalmology annual meeting where our booth location saw substantial foot traffic. We are pleased to see the growing attention to our industry-leading technology and have come out of the meeting with a large number of high-quality leads. More importantly, on the execution front, our sales team did an exceptional job converting those leads into orders, with close to one million in business stemming directly from that meeting. We expect to continue to execute on our strategic initiatives and extend our commercial momentum with our Glaucoma and Retina platforms to drive revenue growth in 2026. For the year, revenue is expected to range from 51 to 53 million, This guidance contemplates no sales in the Middle East. When adjusted to exclude Middle East revenue in 2025, our guidance represents 2026 growth of 1 to 5 percent. Now I'll hand the call over to Romeo to discuss our financial results.