STAAR Surgical Company

Greetings, and welcome to the STAR Surgical Third Quarter 2024 Earnings Webcast. As a reminder, this event is being recorded today, Wednesday, October 30, 2024. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the call will be open for questions. If you have a question, please press the STAR key followed by 1 on your touchtone phone. If you are using speaker equipment today, please lift the handset before making your selection. I would now like to introduce your host, Brian Moore, Vice President of Investor Relations with Star Surgical. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and thank you for joining us to discuss the company's financial results for the third quarter ended September 27, 2024. Today's speakers are Tom Frenzy, Chair of the Board, President and CEO, and Patrick Williams, Chief Financial Officer. The press release of our third quarter results was issued just after 4 p.m. Eastern time. We have posted copies of today's earnings release and earnings presentation to the investor relations section of STAR's website at investors.star.com. Before we begin, let me quickly remind you that the company comments during this call will include forward-looking statements. We caution you that any statement that is not a statement of historical fact is a forward-looking statement. This includes remarks about the company's projections, expectations, plans, beliefs, and prospects. These statements are based on judgment and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results different materially from those expressed or implied by such forward-looking statements. The risks and uncertainties associated with these forward-looking statements are described in the Safe Harbor Statement in today's press release, as well as SAR's public periodic filings with the SEC. Except as required by law, SAR seems no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. In addition, on this call and in the press release, we discussed certain non-GAAP financial measures, including adjusted EBITDA, and adjusted EBITDA per share. We also provide sales data in constant currency. Definitions and reconciliations to GAAP are included in today's press release. For brevity, unless otherwise specified, all comparisons on today's file will be on a year-over-year basis versus the relevant period. Following our prepared remarks, we will open the webcast to questions from publishing analysts. Publishing analysts, please ask your initial two questions when your line is unmuted, then re-queue with any follow-ups. Finally, we intend to use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosure will be included on our website in the investor relations section. Accordingly, investors should monitor our investor website in addition to following our press releases SEC filings, and public conference calls and webcasts. And with that, I would now like to turn the presentation over to Tom Frenze. Tom?

Thank you, Brian, and good afternoon, everyone. In the third quarter, we achieved net sales of $88.6 million in double-digit sales growth against the macroeconomic environment that softened in the second half of the quarter, particularly in China. Our results reflect the increased global adoption and market share gains of Evo ICL lenses, the positive returns on our investments in commercial programs, our customer-focused initiatives, and the global diversity of our business. For fiscal year 2024, we are maintaining our financial outlook and continue to anticipate net sales of approximately $340 million to $345 million. During the third quarter, We celebrated the grand opening of our new EVO-ICL Experience Center at our Lake Forest, Southern California headquarters. Importantly, this new center includes cutting-edge technology and workstations for approximately 60 individuals, nearly 10 times the capacity of our previous center. Designed as a state-of-the-art learning environment for surgeons, healthcare staff, and star employees, our goal is for the center to help facilitate practice efficiencies, enhance patient care, and increase ICL adoption. We will be offering a number of training and education programs, including lens size selection and preoperative case management, patient acquisition and practice development, with capabilities to livestream surgeries from key sites. In October alone, our teams hosted a Getting Started program as a comprehensive ICL boot camp for newly trained surgeons in the U.S. and Canada. A group of surgeons from Japan, and a summit for approximately two dozen optometrists employed within our U.S. Highway 93 customers. By year end, we will launch at least 10 programs at this new center of excellence. Earlier in the quarter, we attended the 42nd Annual Congress of the European Society of Cataract Refractive Surgeons, ESCRS, in Barcelona, Spain, a key meeting attended by leading surgeons from around the world. We were encouraged by the more than 80 papers and presentations that were presented relating to ICL technology, and even more pleased to find that a number of surgeons shared that they view EVO-ICL as the choice for minus six diopters and above. This increased confidence is a direct reflection of the investments we have made throughout 2024 to advance the education, training, and ICL understanding of our surgeon customers. We are confident that this positive feedback from surgeons will help position ICL as the preferred choice among patients, especially as we advance our lower-diopter strategies to expand our total addressable market. Now turning to our performance by region. In the Americas, we generated sales growth of 14% in the third quarter. The U.S. refractive market was much more challenging than we anticipated in the quarter, down 18% year over year. Starr significantly outpaced the market, growing U.S. sales 16 percent year over year. In the third quarter, we signed three additional fast lane agreements as part of our U.S. Highway 93 commercial strategy. We now have 12 fast lane customers, and these fast lane customers commit, on average, 23 percent of their refractive procedure mix in the first year of the agreement. For the third quarter of 2024, the eight fast lane customers with at least one full quarter of sales under their belt, delivered 61% ICL sales growth. In EMEA, we generated 12% sales growth in the quarter, driven primarily by the Middle East and European distributor markets. We are energized by the outperformance of our EMEA region this year, in particular relative to our initial outlook, and believe we will continue to benefit from our investments in this important market. In APAC, the largest market in the world for refractive procedures and our largest region for sales, we generated sales growth of 9 percent in the third quarter. China sales were up 7 percent, and ICL unit growth was positive. However, the high season started strong, but the macroeconomic climate in China declined following our Q2 earnings report in August. We continue to outpace the market and deliver sales and unit growth in this key market But the momentum that we saw early in the quarter certainly tapered as we moved through Q3. Turning to Japan, we continue to gain share with sales growth of 15 percent. Our Japan business has generated double-digit unit growth in 32 of the last 35 quarters, which we believe is a testament not only to the talent of our team, but the support we continue to receive from key opinion leaders in the region. In South Korea, we generated 11% sales growth in the third quarter, boosted by the strength of South Korea's first ICL-only clinic, which is on track to implant over 2,000 lenses this year. I would now like to turn the call over to Patrick to review our financial results. After Patrick discusses the financials, I will update you on our additional growth initiatives and outlook. Patrick?