RxSight at Needham Conference: Strategic Adjustments Amid Market Challenges

On Tuesday, 08 April 2025, RxSight (NASDAQ: RXST) participated in the 24th Annual Needham Virtual Healthcare Conference. The company discussed its strategic approach to overcoming recent financial challenges and highlighted its long-term growth potential. Despite missing first-quarter expectations, RxSight remains optimistic about future prospects, driven by its innovative Light Adjustable Lens (LAL) technology and plans for international expansion.

Key Takeaways

• RxSight revised its 2025 revenue guidance to between $160 million and $170 million.
• The company maintains a gross margin forecast of 71% to 73%.
• Economic factors and competitive pressures impacted Q1 performance.
• Strong interest in Light Delivery Device (LDD) placements indicates sustained demand.
• International expansion efforts are underway, with a focus on Europe and Asia.

Financial Results

RxSight's financial performance in the first quarter fell short of expectations, prompting a revision of its 2025 revenue guidance to $160 million - $170 million. The company maintains its gross margin guidance at 71% - 73% by managing operational expenses and focusing on educational initiatives. Despite reduced expectations for LAL sales, RxSight anticipates selling more LDDs in 2025 than the 305 sold in 2024.

Operational Updates

RxSight is actively pursuing international expansion, having obtained CE mark approval in Europe and seeking regulatory approvals in major Asian markets like China, Japan, and Korea. The company is also focusing on customer education and developing alternative access models to increase market reach. With over 1,000 installed LDDs and approximately 2,000 doctors trained, RxSight is well-positioned to drive utilization and adoption rates.

Future Outlook

Looking ahead, RxSight expects revenue growth to be more back-end loaded due to ongoing market dynamics. The company is cautiously optimistic about the second quarter, closely monitoring economic and competitive impacts. With a positive long-term outlook, RxSight sees significant opportunities in the Asian demographic, particularly in China, due to higher rates of myopia and previous refractive surgery patients.

Q&A Highlights

During the Q&A session, RxSight addressed the limited impact of tariffs due to US-based manufacturing and the challenges posed by competitive product launches. The company anticipates incentivized trialing of new lenses to continue for the next 3 to 6 months. RxSight is also monitoring macroeconomic factors, such as stock market fluctuations, that may affect patient willingness to invest in premium lenses.

In conclusion, RxSight remains focused on leveraging its innovative technologies and strategic initiatives to navigate current market challenges and drive future growth. For more details, please refer to the full transcript below.

Full transcript - 24th Annual Needham Virtual Healthcare Conference:

David Sachs, Analyst, Needham and Company: Good afternoon, everyone. Thanks for joining us on day two of the twenty fourth Annual Needham Healthcare Conference. My name is David Sachs, and I'm an analyst on the med tech research team here at Needham and Company. With me today, we have the Rx site team, including CEO, Ron Kurtz, and CFO, Shelly Tuchin. This afternoon, we'll do a fireside chat.

For those on the conference portal, there should be a box where you can submit questions. Alternatively, you can feel free to email me any questions you might have, and I'll try my best to fit them in. So with that, we'll jump into the Q and A. So obviously, a lot to talk about given the news last week. Before we get into those details of the quarter, I just wanted to touch quickly on tariffs.

So understanding you manufacture in The US, do you expect any impact from the tariffs on either chips or materials or component parts or anything like that?

Shelly Tuchin, CFO, RxSight: Ron, do you wanna take that or me?

Ron Kurtz, CEO, RxSight: Go ahead, Chai.

Shelly Tuchin, CFO, RxSight: Okay. Yeah. As you did say, David, we do manufacture all of our products, the LAL, the LDD, and some of the accessories here in The US. We do have suppliers such as board manufacturers that do source from outside The US, including China. On the LAL side, the material cost, as you know, is a very minor portion of the cost of the LAL to manufacture.

On the LDD side, material is the majority of the cost to manufacture, and, of course, we've taken those costs down quite a bit over the year. We're still assessing, but compared to others just because of our manufacturing strategy, we don't think we're we're impacted significantly at all except perhaps through three, you know, third parties and a little bit, that we might be getting direct. So I think we're in very good shape relative to the tariffs, but we're gonna have to continue to assess that just like everybody else.

David Sachs, Analyst, Needham and Company: Mhmm. Okay. Alright. And then you're in Canada currently from a commercial perspective. You'll you'll be launching in in Europe later this year.

So how are you thinking about the international launch against the backdrop of potential retaliatory tariffs?

Shelly Tuchin, CFO, RxSight: Yeah. Of course, Canada has been, you know, a lot of talk in the press. We do sell into Canada. We have had our tax accountants look at that. Medical devices are exempt from the incoming tariffs, retaliatory tariffs in Canada.

That could change, but at the moment, we think that that's, very low risk, unless something changes.

David Sachs, Analyst, Needham and Company: Mhmm. Okay. And then I I guess Europe kind of TBD?

Shelly Tuchin, CFO, RxSight: Yeah. I think Europe TBD, we haven't done the research as much in Europe as we have otherwise. And, of course, if we think about Asia, you know you know, China will you know, that's a longer regulatory process for us as well. But we still need to do some research in Europe. But, of course, as we go into Europe, we've always said it's a limited launch.

We will start, you know, first with the KOLs in each country and step into it gradually, very similar to what you would do in any other country. So in terms of the aggregate revenue, it it's very low risk again, and typically, you will see some carve outs for medical devices and or foreign products, and we'll just assess that as part of our analysis of which countries are best for us to go into first.

David Sachs, Analyst, Needham and Company: Okay. Alright. Let's get into the quarter. So you pronounced last week. So can you just, you know, give us an overview of what you saw in the quarter that that resulted in the miss relative to consensus?

Ron Kurtz, CEO, RxSight: Maybe I'll start that, and then, Kjell, if you don't mind adding. Yeah. I think I would back up to 2024 just where, you know, there were general reports from especially from competitors about slowing of the premium market. We were of course continuing to grow throughout the year, but if you take out the growth from RxSight then the market did slow considerably and and was flat, especially in the second half of the year. So, you know, I would say it was an overall softening of the market through the back half of twenty twenty four.

And then in addition to that, we had an unusual competitive dynamic where we had two major companies launching new products, not directly competitive to the LAL, our product, but because of the marketing and incentives associated with those sequential launches in Q3 and Q4, you know, definitely had some mindshare and doctors of course are incentivized to trial those lenses. That continued into q one, both those impacts, and then, of course, we had what I would term, you know, more of a shock to the system with the transition in administrations where that we've seen all the news reports about how people perceive their own wealth status with sudden change. And, you know, what we saw typically in Q1, we would see, you know, sequential down from Q4 where, you know, patients are coming in to the office, they're getting scheduled for, they're getting evaluated and scheduled for cataract surgery, typically in March and late in the spring when when, especially in certain parts of the country, weather improves. And so, you know, March will typically be a step up considerably for us, which we did not see in q one. We saw it more flat with January and February.

And that, you know, really is what that combination or confluence events is what led to our miss.

David Sachs, Analyst, Needham and Company: Okay.

Ron Kurtz, CEO, RxSight: Which was great. I want couple of thousand couple thousand procedures.

David Sachs, Analyst, Needham and Company: Okay. I I wanna we'll we'll touch on kind of the, you know, sequential dynamics and and outlook, but I wanted to drill down in into the competitive dynamics. So, you know, obviously, you you have one competitor who who's now off the market, but there's also an an upcoming launch from kind of a leader in the market. So how are you thinking about those two dynamics as it relates to the second quarter?

Ron Kurtz, CEO, RxSight: So, know, we think that, again, this is a continuation of a a somewhat well, pretty unusual sequence competitive launches where you have all three major companies launching new products within, you know, nine months of each other. And so we certainly view that this, you know, incentivization, competitive trialing will continue. That if we go back historically, this is not you know, we haven't seen these very sequential launches, but we have seen the impacts of just individual launches, and that's been a, you know, very common in the premium, especially the multifocal part of the market where a competitor will come in, there'll be a, you know, marketing claims regarding how this lens is somehow different than the previous multifocal offerings, and doctors will be incentivized and will trial those lenses. But over the time period that they start to do those surgeries, see those patients back, which is typically in the three to six months, people usually find that, you know, in fact multifocal lenses have the same trade offs that they always do, which is that if you try to improve the quality of vision you reduce the range of vision, so this is the two areas that that new launches try to new new products try to address.

They typically either go towards more to the quality side or more toward the range side. We've seen in the last year or so that people have moved towards the quality side, which in effect is going to potentially reduce the range. We think that's going in our direction since our primary benefit is high quality customized vision, and so we think that is a positive overall dynamic for us. But in the short term, that will lead to this incentivized trialing behavior, and we anticipate that that'll continue for a little while. We've already seen it wane in for the previous launches, and obviously there was a recall of one of those products, but, you know, it it was we still feel that that would have followed the traditional pattern that we've seen over the last twenty years.

David Sachs, Analyst, Needham and Company: Mhmm. Okay. And I I think in your answer to that question, you you talked about trialing lasting three to six months. So with this upcoming launch in May, you know, we should be thinking about three to six months. Following that, the market kind of normalizes from, you know, that specific launch at least.

Is that the right way to think about it?

Ron Kurtz, CEO, RxSight: I think that's a reasonable way to think. Go ahead, John.

Shelly Tuchin, CFO, RxSight: Yeah. And I think in our guidance, we're thinking about that as well. You know, we expect the year to be more back end loaded with the trialing. You know? We don't know if BNL will come back into the market, how that's gonna work out with the FDA for them, but that that starts to wane, you know, in the fourth quarter.

David Sachs, Analyst, Needham and Company: Okay. Alright. So let's see. Just in terms of the premium market and and the macro environment, how much of an impact has kind of that and the stock market performance played into patients' willingness to pay for premium lenses? Talked about kind of the market softening in back half and you know, early early this year.

But, you know, what are you hearing from doctors in terms of, you know, patients' willingness to pay for for these procedures?

Ron Kurtz, CEO, RxSight: You know, I think that it's still early. We're still, you know, we're obviously reaching out to our customers and getting additional information. So I think that'll and, you know, those organizations are our customers are looking more analyzing more of their own data. You know, certainly, there's anecdotal reports that, you know, people might be more inclined to trade down if they're feeling less wealthy. And but at the same time, you know, I think that the this is something that, you know, our customers need to need to remind their patients that this is a once in a lifetime opportunity cataract surgery.

You can put it off for a little while, some patients may have decided to put it off as well, but at some point a cataract patient is going to proceed and this is their one opportunity to have flexibility in terms of glasses for the next twenty to twenty five years. So we certainly think that you know as you look at the constellation of things that people can that this population can apply their wealth to, this is the this is a an area that has extremely high value to them, and it and, you know, vision is continually rated as one of the highest value that people place.

David Sachs, Analyst, Needham and Company: Mhmm. Okay. Alright. And then so you you revised guidance to one sixty to one seventy, so just talk about the underlying assumptions specifically for utilization across mature accounts and and the new accounts that you've added?

Shelly Tuchin, CFO, RxSight: Yeah. I'll go ahead and take that. I think that, you know, in terms of the guidance, internally, of course, in our numbers, we did reduce the number of LDDs we expect to sell, but still said that we expect to sell more than the 305 that we sold in 2024. So we're still looking for that growth opportunity and the value it offers to patients as well as to doctors' financial practice. Economics, we did reduce the number of LALs more in that in that guidance as well.

We think that the second quarter should be informative in terms of the economic impact, and, you know, we do think some of the economic impact, you know, we haven't since we've been, you know, commercial in the last five years, and and I think overall in the economy seen this significant and sudden, impact to the economy and to the stock market. And so we're gonna see whether patients and, you know, other individuals are just saying, let's stop so I can assess where I'm at. Right? Versus, you know, are we going to have a long term impact in terms of patients being able to to do this. And so I think the second quarter is gonna be pretty informative relative to the shakeup in the markets as well as the continuing news on tariffs and and other macroeconomics as well.

And so for that reason, you know, we think the the year could be much more back end loaded, so we're cautious in the second quarter as well. You know, the guidance at the low end is you know, it assumes a pretty flat, flat year. Right? If you add in some additional LDDs overall. And, you know, our real contribution on the LAL front is, same store sales.

You know, we've got over a thousand installed LDDs and about 2,000 doctors trained, so that'll be the major driver. If you look at the low end of guidance, you're not getting much productivity from them. It's mostly from adding new customers. And we still found in the first quarter that the cohorts, you know, LDD installs '21 and prior '22 and '23, the number of LALs per LDD are very similar. It's been like that for quite some time.

They, you know, they all went down, but, really, right you know, very tight distribution between the three of them. What we have seen is that the '24, and it's just the first half of twenty four, you know, installs, are not growing as quickly as the '23 installs. And so that is, you know, largely a function of the market, we think, but it's something that we need to work with them very closely on and also develop the confidence of our of the new accounts that were installed in the second half of twenty four and in this quarter as well. So that's part of the overall look in the range of guidance, you know, particularly at the low end. It's, you know, assuming a very flat, you know, sequential, you know, growth of, you know, annualized over q four and q one overall.

So that's how we're looking at the guidance. And, you know, again, it's, you know, very focused when we look at the overall guidance in OpEx as well. While we cut the revenue guidance, we we did leave the gross margin guidance at 71 to 73%. And then in OpEx, we didn't drop as much to the bottom line from the sales and gross margin impact because we're very aware of the fact that in an environment, we've got about 200 people in the field right now, customer facing, that we wanna make sure that we're properly resourced to work just as intensely with our customers and, again, focus on education for them. So that's kind of an overall look at guidance and, where we're focusing our time and attention.

Did I answer that adequately for you, David?

David Sachs, Analyst, Needham and Company: Yeah. No. That that was great. Thanks for that, Shelley. Maybe just to to follow-up on a a couple things you said, and and Ron, from an earlier answer you you gave, you you talked about March being flat versus January and February.

Shelly, you're you're you're talking about the second quarter being, you know, quote, unquote, informative. So I guess, you know, prior guidance assumed, you know, second and fourth quarters would see would be stronger as, you know, I'm assuming that means sequential growth off of the prior quarter. So just given, you know, first quarter played out, you know, how, I guess, you know, consumer sentiment, the market, etcetera, is playing out in in early second quarter, I guess, how are you thinking about the sequential cadence? Should we be thinking, you know, more flat? I don't know.

Any color you you can give there just relative to to kind of the prior comments you you talked about here?

Shelly Tuchin, CFO, RxSight: Yeah. I I do think we're being cautious about the second quarter. Typically, it's a nice up quarter from the first quarter, and it is our second strongest quarter. While we don't give quarterly guidance, I think that and I can't be that specific, relative to what I expect to the first quarter, but I do think that, you know, it's gonna be a more back end loaded year, and I'm being cautious about the second quarter. I don't wanna get over our skis.

You know, we're only a few days in at this point in time, so I don't think I have a lot of anything that's informative yet.

David Sachs, Analyst, Needham and Company: Yeah. Okay. Alright. That's fair. And then so on on last week's call, I I think I asked a similar question, but I I wanna revisit it here.

So, you know, you you've talked about the premium category being, you know, weak over the last few months, started in in the second half of twenty twenty four. So, you know, what's driving that assumption around LTV placements? You know, if the category is weaker, like, what's driving practices, appetite for the the LTV and and that capital purchase?

Ron Kurtz, CEO, RxSight: Maybe I'd go first, Shelley, and then we can fill in. So, you know, again, we think the the you know, that weakness is primarily on the consumer side, the patient side, and that certainly was impacted in Q1. On the other hand, we had a nice LDD quarter in Q1, and I think that underlies the, you know, the overall situation, the longer term situation that ophthalmic practices in The U. S. And other countries are facing, which is with the aging of the population, there's more pressure on national health systems, including Medicare obviously here, and that has led to progressive cuts in reimbursed services over the last twenty years and sequentially in the last few years in cataract surgery specifically, which is a, continues to be a major line item just because of the volume of procedures.

And so doctors, you know, that's a major portion of their practice revenue. They need to find additional sources. Other private pay procedures like LASIK and competitive procedures to LASIK appealing to a younger demographic are have have been much more severely impacted by the economic environment over the last couple of years. You know, we we've heard that LASIK volumes last year were the lowest that they were since the procedure was introduced in The US, And so that is not a has not been a viable alternative for practices to look for this additional revenue. And that's been why they've, you know, been interested in building their premium.

And the LAL is unique in the sense that we appeal disproportionately to patients who otherwise would be getting a monofocal IOL for which practices don't get any additional revenue, or a toric IOL where there's just a modest amount of additional revenue. Those account for about 75% of our procedures, and that's really what drives the ROI calculation for practices in acquiring an LDD so that they can offer LALs to their patients, you know, at the locations that they're seeing cataract patients at. And so that trend is not going to change that long term trend. So we still see practices continuing to invest and you know that's maybe somewhat lower because of the overall, but still, you know, we're we're we're seeing a a continued increase.

David Sachs, Analyst, Needham and Company: Mhmm. Okay. And then on the LAL side, kind of going back to, you know, the second quarter outlook, you know, IOLs are are placed on consignment, I believe, for you guys, at least for for other players, they are. So, you know, what level of visibility do you have into customers' case schedules into the second quarter? Like, do you do any survey customer surveys or anything like that?

Or, you know, how do you kind of gauge, you know, the the near term outlook?

Ron Kurtz, CEO, RxSight: Do you wanna take that, Shelley?

Shelly Tuchin, CFO, RxSight: Yeah. First of all, you know, we do, consign at the ASC, same as, all of our other competitors. So, you know, those the revenue recognition is at the time the ASC reports that the IOL has been implanted, same procedure as everybody else. You know, we don't survey a thousand people before the quarter, because, you know, it's one, not practical, and two, it's hard for a doctor to forecast because while your monofocal procedures could be scheduled out months in advance, in The US, there's a lot more ASC availability than there is, you know, perhaps in other countries where they're doing some ASC in some hospitals, and typically doctors will put their premium patients at the, beginning of the queue. They'll they'll figure out how to get them in quickly if they can, and it works for that.

So we don't have a lot of visibility. It really, grows, you know, over the quarter as we get that visibility. Obviously, we are reaching out to our customers right now and saying, could you tell us, if they know how much, you know, of your volume decreased? And we did have some who increased, but in particular, the decrease was trialing, was it, you know, concerns about the economy, Things like that. We won't hit all 2,000.

You know, we'll hit the major customers as well. But we're primarily looking for the drivers and, more importantly, if they need some additional help from us. You know, we have 200 people in the field. They reach out constantly. It's a little different focus.

Right? You know, a lot of what we spend time with in the field is what we call value add. You know, we have two or three upgrades each year. They could be fairly minor, but it gives our folks an opportunity to go in and train and find out what the, customer needs. This is a bit more focused on their economics than their clinicals.

As we go into the second quarter, I think we'll know a little bit more. I think the other advantage as well is that, you know, we we have the LDD, and, you know, there's always this talk about lost sales from IOLs. Right? You know? You go in cycle count and, you know, find things are missing.

Well, you're not gonna be able to take revenue on that. But in fact, but we don't see a lot of this. The ASCs are good about reporting. They're consistent. And what we do have is the LDD because we have most of the LDDs, connected to us, in part because a lot of customers are submitting data into our registry.

And if there is a serial number that pops up as being treated, but the revenue hasn't been reported, we're able to go back to the customer. And so I think that that's important as well in terms of the cadence of what we learned during the quarter.

David Sachs, Analyst, Needham and Company: Okay. All right. And then maybe last one on the quarter, and and then we'll move on to other topics. So so, know, on last week's call, were some questions around the level of penetration in The US. So, you know, talk about what you're seeing among prospective customers and their volume profile.

Are you still seeing traction in that kinda higher volume cohort? I think you've sized around, like, 4,000.

Ron Kurtz, CEO, RxSight: Yeah. I I think we are. I think that if you look at, you know, obviously the, know, the initial customers that we focused on were customers that were more focused on premium. They could be higher volume or mid or even low volume, they're just, they were ones that, know, were more focused on premium. That typically includes many of the KOLs in the community, but there are still the vast majority of surgeons and practices who don't have access to an LVD and therefore our technology.

You know, there are about 10,000 doctors doing cataract surgery, and you know, while we've talked about that, those 4,000, the split is, it's not an eightytwenty rule, it's more of a, you know, maybe a sixtyforty or twothree, onethree rule. So there's still a lot of procedures because cataract is so distributed amongst surgeons in US. So there's a lot of surgeons that are out there that do a lot of cataract surgery that can offer the LAL, and we've been focused on those for quite a while, and so it's it's a you know we have those in our cohorts as well. And we can access those through you know surgeons through our traditional methodology, which is, you know, selling an LDD into the practice and having that be delivered within the practice. And then as I mentioned, you know, we do see, as we saw in LASIK, you know, business models developing over the last few years where alternative methods of delivering light treatments to patients are being developed where patients can have be seen by the ophthalmologist, have the surgery in the ophthalmologist's office, and then be referred to a third party to do the light treatment centers, at a light treatment center to do the light treatments subsequently and then going back to the surgeon.

While that's relatively small now, you know we have seen more interest in that and that's another way that we can introduce the technology to a wider group of surgeons.

David Sachs, Analyst, Needham and Company: Mhmm. And so that that business model that that you just talked about, I I think if if hopefully, I'm in in the right ballpark, but I I think there's, like, a couple in kind of the the middle of the country. But is do you do you envision that being more of a US business model, or or can that can you kind of replicate that OUS, or or are the dynamics just different internationally?

Ron Kurtz, CEO, RxSight: I think it depends on the country, and it it it's very market dependent. In The US, obviously, we're able to leverage the large number of optometrists who can do the LDD procedure and for whom this is really a natural part of their knowledge base. Optometry is pretty wide, widely distributed, but it's not in every country, and it also depends a little bit on the the pattern of urbanization in a country. We see this a little bit more in the, you know, the population centers of The U. S.

Where there's a lot of doctors within a smaller geographic zone and where it makes where that probably makes more sense, but those dynamics are also true in countries in Asia and Europe where we're focused internationally.

David Sachs, Analyst, Needham and Company: Okay. So I wanted to talk about international, so last week you talked about obtaining the CE mark in Europe, so what are the next steps or milestones for launching in Europe?

Ron Kurtz, CEO, RxSight: The they're very similar to, you know, to what we've gone through in The US. You know, in The US, of course, we had the benefit of having completed a clinical trial where there was, know, 15 or 20 experienced practices who had already gone through an extensive clinical trial, it was very, that was a natural transition. We have to establish that same clinical expertise in each market and you know that usually starts you know more slowly and that's what our focus will be initially building that clinical experience. In some geographies we've been able to start that where there's mechanisms to you know, get product into a country before full approval. That's true in some of the countries in Asia, and we've been able to leverage some historical approvals that we had in Europe as well.

But that the bulk of that work is is gonna be done in 2025 and and into 2026.

David Sachs, Analyst, Needham and Company: Okay. And so you you just mentioned some, I guess, regulatory dynamics, and and you talked about some countries in Asia. China is obviously the largest market in Asia. So are are you in front of the Chinese FDA or, you know, any any more color on which countries in in Asia that you're specifically, you know, I guess looking to get approval over the next, you know, call it twelve, twenty four months?

Ron Kurtz, CEO, RxSight: So we've what we've said is that, you know, the folk our focus is on the 20 markets, countries where premium IOLs are well established and where we can leverage that already existing interest and customer base. Those include the major countries in Asia, Japan, China, Korea, as well as some of the, you know, also significant Southeast Asian countries that are that that also have established markets. And, you know, we're pursuing regulatory approval in all of those. Similarly, you know, in in Europe, you know, there's there the major countries in Europe are where we'll focus our initial, you know, clinical commercial efforts for the same reasons, the size of the market.

David Sachs, Analyst, Needham and Company: Okay. Okay. So maybe just a a follow-up on on China, acknowledging you, you know, you're you're not confirming it here today. But, you know, theoretically so China does VBP. So, you know, if and when you do get approval in China, would that, you know, VBP program work into kind of when you can launch?

Would you need to wait until the next round of VBP, or are there ways to get in, you know, under I mean, I guess, the existing bids? How would that work?

Ron Kurtz, CEO, RxSight: Yeah. I think that, you know, some of that remains to be seen, but, know, typically, new technologies don't go directly into VBP. They'll and that will be a, you know, that can be a benefit as well. And so, know, I think it's still ahead of us, but we're, you know, we are getting some experience in the China market through our efforts in Hong Kong, and I think that, you know, as you said, that's a exciting market. Right now it's a little little bit in turmoil, but if you look at the demographics of that market, it's a market that we think is going to be highly conducive to the LAL.

It's patients, a large fraction of patients who've had previous corneal refractive surgery. They have high degrees of myopia, which makes it more difficult for them to have highly predictive refractive results. The LAL is now, you know, we have the widest range of dioptic powers going down from negative two diopters all the way up to 30 diopters. Those lower range lenses are much more common in Asian, in the Asian demographic. And so I think that there's a lot of, and there, and the the general, I would say, precision based medicine that is practiced in Asia is also conducive to our technology.

David Sachs, Analyst, Needham and Company: Mhmm. Okay. Alright. Maybe a a handful for Shelley in the remaining minutes. So on the gross margin, you talked historically about, you know, you do have a path to 85% plus at scale.

In '25, you're guiding to just over a point of margin improvement at the midpoint. So what's driving that pace of margin expansion currently kind of excluding potential impacts from tariffs at this point?

Shelly Tuchin, CFO, RxSight: Yes. We are excluding impact from tariff in our ASP and just a little bit of tariff impact in our cost of sales. But, also, you've gotta also look at the factor of how much inventory we carry, and that's because we can sign. So on the LAL, typically, you know, first in, first out is six, seven, eight months depending on our production levels. So the first half will really be, about costs that we already know.

LDD, it's about, you know, two months. Right? It's a very fast turn. So we do know know some of our costs in terms of cost of sales, but, you know, primarily, we're we're looking at at mix and, you know, some, you know, cost impact on the LAL primarily. The LDD is primarily pretty fixed because it's material.

David Sachs, Analyst, Needham and Company: Okay. Alright. Well, let's see. We have just a minute left, so maybe I'll just kick it over to you guys. Like, any anything you wanna leave investors with, you know, relative to the first quarter, how you're thinking about the the year ahead, would would love to hear that.

Ron Kurtz, CEO, RxSight: And maybe I would just say that, you know, we definitely have some transitory effects that that have affected us in in q one, but the long term long term trends for the technology and for the company are quite positive. We're focused on, you know, measures that address both short term and long term trends, driving, you know, educational initiatives both in the ophthalmic and optometric communities, driving alternative access models, continued product development initiatives to drive utilization, and then of course as we talked about laying the groundwork for international growth. So I think all, you know, positive in the long term, and we're obviously addressing the situation that we're in currently.

David Sachs, Analyst, Needham and Company: Great. Well, Ron and Shelley, thanks so much for joining us this year again, and thank you for everyone who tuned in. We'll wrap there, and have a great rest of the day.

Shelly Tuchin, CFO, RxSight: Good. Thank you very much, David.

Ron Kurtz, CEO, RxSight: Thank you.

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