LENSAR, Inc.

proud of what we've accomplished to date, and I believe this is the start of a strong quarterly growth in placements and procedure revenue. Heretofore, Ally has only been marketed in the U.S. as we await additional regulatory approvals. Despite selling into a single market, Lensar has been able to achieve strong top-line growth and gain significant market share based on the compelling value proposition of Ally. U.S. sales pipeline activity and system utilization have steadily increased, and we look forward to offering Ally in other markets, especially Europe. Although Ally is not widely available outside the US, surgeons in Europe, South Korea, Taiwan, and Hong Kong are awaiting regulatory clearance and commercial availability in their home countries, and our distributors are preparing to make Ally available quickly after receipt of marketing authorizations. We expect additional regulatory clearances before the end of 2024. At the recent ASCRS annual meeting in Boston, We had our highest level of surgeon engagement in the company's history, completing nearly 100 Ally demos. In the femtosecond laser cataract session, eight of nine presentations were from Lensar surgeons, including one which was voted best presentation of the session. Many of the presentations in the session highlighted the clinical outcomes associated with managing astigmatism and increased efficiency-related benefits of Ally, and overall enthusiasm toward the technology is continuing to grow. We presented 14 papers in total at the conference as we continue to be recognized as the innovation leader in laser refractive cataract surgery. As we've described in the past, Lensar's focused on three key aspects in the delivery of Ally. We're focused on delivering technology that enables much higher efficiencies, better outcomes, and enhancing the experience for surgeons, staff, and their patients in the refractive cataract procedures. By delivering on these objectives, Lensar is empowering surgeons to either significantly increase their revenue and EBITDA opportunity or decrease their overhead costs while improving staff and patient satisfaction. At the same, profitability of cataract practices is under pressure, given significant reduction in standard cataract surgery reimbursement and the next CMS reevaluation coming in 2025. With patients paying for a portion of surgery out of pocket, they increasingly demand and expect superb service and outcomes. The ability to maximize productivity and increase patient throughput is becoming more important than ever, while also continually producing better outcomes and happy patients. Recently, we published data from several time and motion studies demonstrating the potential for significant allied time savings to physicians, staff, and patients resulting in up to an additional half a million dollar annual revenue opportunity to the ASC, as well as an approximate $350,000 increase in annual revenue to the physician. In addition, the potential to have improved surgical outcomes and almost an hour time savings to the patient's total time spent in the ASC for their cataract surgery generates happier patients to accompany the financial benefit realized by the surgeons and facilities. The Ally value proposition provides a win-win for both the patient and the increasing number of practices that are choosing to integrate Ally into their surgical armamentarium. For example, one of our practices reported that comparing conversion rates during their first eight months of using Ally system versus the eight months prior using an older competitive device, femtosecond laser-assisted cataract surgery procedure conversions at their practice increased more than 4x. Based on MarketScope data around average surgeon charges for femtosecond laser-assisted cataract surgery to the patient, we forecast that Ally contributed approximately three quarters of a million dollars in additional revenue for this practice in just eight months. Better efficiencies, outcomes, and improving the experience are yielding more satisfied patients and higher revenue for the practice. As we disclosed in this morning's press release, according to MarketScope, Ally adoption and utilization led to an additional 1.5% gain and lends our share of the US femtosecond laser-assisted cataract surgery procedure market in the first quarter. We have gained share each quarter since the launch of Ally, picking up a total of 4.3% in the US procedure share market share since launching Ally. Our market share gain in Q1 2024 marked our highest ever single quarter increase. While we have clearly been successful in capturing a larger piece of the femtosecond laser-assisted cataract surgical procedures performed by taking market share from our competitors and increasing conversion rates, our longer-range objective is to also grow the overall femtosecond laser-assisted cataract surgery market by converting more femtonaive practices, an ally representing a much larger percentage of the 31 million annual cataract procedures performed. As we continue to replace the older end-of-life competitive laser systems in the market, we expect to see these phenomena continue to grow over time. The cataract surgery market is undeniably large, yet femtosecond laser-assisted cataract surgery continues to account for a small percentage of total procedures. There are several contributing factors, but the inherent limiting inefficiencies and lack of compelling outcomes data in managing the stigmatism associated with the legacy technology are the most influential factors. Lensar's committed to be a surgeon-centric technology company, and Ally was specifically designed with these factors in mind. As I speak with you today, I have a deep confidence that in discussions with many surgeons, Lensar is indeed receiving their nod of approval that we are addressing to continue to mitigate previous issues and concerns they've had with other first-generation technologies. Lensar, with our next-generation system, Ally, has clearly demonstrated practice's increased utilization of femtosecond laser-assisted cataract surgical procedures as compared to practices previously using first-generation technologies. Our increasing market share is also further validation. We're successfully converting previously loyal competitive system users, as well as introducing femto-naive surgeons and bringing back surgeons who had abandoned or lost interest in femtosecond laser-assisted cataract surgery. due to limitations in first-generation technology. We believe the conditions in the ever-evolving cataract surgery market are creating a perfect storm for Ally that will drive growth in femtosecond laser-assisted cataract surgery as a percentage of total procedures, and Lensar is optimally positioned to accelerate its market share gains in parallel with this anticipated broader market growth. Now let me turn the call over to Tom to cover our financial highlights for the quarter.

Thank you, Nick. Our first quarter 2024 financial results are included in our press release issued earlier this morning, but I'd like to make some brief remarks on certain items to provide additional detail and clarity. Revenue was $10.6 million in the first quarter of 2024, compared to $8.3 million in the first quarter of 2023, reflecting a 28% increase in strong growth. This growth was generated off a solid foundation of Ally system placements and strong procedure growth of greater than 20% in all three of our operating regions. Ally system sales and worldwide procedure volume were the largest contributors to our revenue increase, but we saw increases in all revenue lines. I do want to remind you that we are only marketing Ally in the United States until we are granted EU clearance. While our growth trajectory since the Ally launch has been impressive, we expect placement numbers to increase rapidly and significantly once we receive marketing authorization in Europe. Though any regulatory process is inherently uncertain, we continue to believe we will receive approval this year. Gross margin for the quarter was $5.7 million, representing a gross margin of 53% compared to $4.3 million and 52% gross margin realized in the first quarter of 2023. Our gross margin was strong this quarter. However, we expect a higher concentration of Ally sales in product mix to decrease our gross margin percentage in future quarters. For the year, we continue to expect a gross margin percentage of approximately 50%. Total operating expenses for the first quarter of 2024 were $8.5 million compared to $8.7 million in the first quarter of 2023. The decrease in operating expenses was primarily attributable to lower R&D and administrative costs partially offset by higher expenses associated with the expansion of our commercial team. We will continue to expand our commercial team to accelerate our recent market share gains and ally placement successes. Net loss for the quarter was $2.2 million, or 19 cents loss per share, reflecting a significant improvement over a $4.3 million loss and a 40 cent loss per share in the first quarter of 2023. Our net loss in both dollars and per share decreased 50% from the first quarter of 2023. We expect this trend to continue and expect to see operating breakeven quarters late this year and into 2025. As of March 31st, 2024, we had cash and cash equivalents of $19.1 million as compared to $24.6 million at December 31st, 2023. Cash used in the first quarter was $5.4 million. As a reminder, we are a seasonal business, and the first quarter usually represents a lower level of revenue and a higher use of cash than other quarters of the year. Now I'd like to turn the call over to the operator, and we look forward to answering your questions.

Thank you. We will now open the floor for questions. If you would like to ask a question, press star 1 on your phone keypad. Again, it is star 1 if you would like to ask a question. You may remove yourself from the queue by pressing star 2. We will take our first question today from Frank Takanan with Lake Street Capital Market.