Q4 2023 Rxsight Inc Earnings Call

Participants

Oliver Moravcevic; VP, IR; RxSight, Inc.

Ron Kurtz; President & CEO; RxSight, Inc.

Shelley Thunen; Assistant Secretary & CFO; RxSight, Inc.

Steve Lichtman; Analyst; Oppenheimer & Co.

Robbie Marcus; Analyst; J.P. Morgan Securities LLC

Ryan Zimmerman; Analyst; BTIG, LLC

Craig Bijou; Analyst; BofA Securities, Inc.

Patrick Wood; Analyst; Morgan Stanley & Co. LLC

Tom Stephan; Analyst; Stifel Financial Corp.

David Saxon; Analyst; Needham & Company, LLC

Presentation

Operator

Good day and thank you for standing by. Welcome to the RxSight fourth quarter 2023 earnings conference call. (Operator Instructions) Please be advised that today's call is being recorded. Now I'll turn the conference conference over to your speaker today, Oliver Moravcevic. Please go ahead.

Oliver Moravcevic

Thank you, operator. Presenting today are RxSight President and Chief Executive Officer, Ron Kurtz; and Chief Financial Officer. Shelley Thunen. Earlier today RxSight released financial results for the three months and full year ended December 31, 2023. A copy of the press release is available on the company's website.
Before we begin, I would like to inform you that comments and responses to your questions during today's call reflect management's views as of today, February 28, 2024, and will include forward looking and opinions statements, including predictions, estimates, plans, expectations, and other information. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties.
These risks and uncertainties are more fully described in our press release issued earlier today and in our filings with the Securities and Exchange Commission or SEC. Our SEC filings can be found on our website or on the SEC's website. Investors are cautioned not to place undue reliance on forward-looking statements. We disclaim any obligation to update or revise these forward-looking statements, but we'll also discuss certain non-GAAP financial measures.
Disclosures regarding these non-GAAP and GAAP financial measures, including reconciliations to the most comparable GAAP measures can be found in the press release. Please note that this conference call will be available for audio replay on our investor website. With that, I will turn the call over to our President and CEO, Dr. Ron Kurtz. Ron?

Ron Kurtz

Good afternoon, and thank you for joining us. In a moment, Shelley will be giving an update on RxSight's financial performance for both Q4 and full year 2023. For context, I wanted you to discuss key factors that we believe underlie the market success of light adjustable lens and can drive RxSight's performance over a sustained period the eye care field is at the forefront of many of the change drivers in medicine, most notably reduced reimbursements to doctors and practices from third party payers who are facing rising costs from an aging population for ophthalmic practices.
The major opportunity to offset these cuts began in 2005 when ophthalmologists were first able to charge patients directly for the additional costs associated with so-called premium intraocular lenses or IOLs that can reduce a person's dependence on glasses after cataract surgery growing from very low levels.
Premium cataract surgery now represents about 20% of the overall US cataract market and about 10% of the global market with premium procedures projected to double over the next 10 years. By providing anywhere from $1,500 to $5,000 in additional revenue per eye above and beyond the approximately $500 reimbursed by third party payers, participation in the premium IOL market has become essential for ophthalmic practices to remain viable and continue to serve all their patients.
Our sales efforts are concentrated on the roughly 4,000 US cataract surgeons who perform 70% to 80% of all premium IOL procedures, though the percentage of premium cases varies widely from doctor to doctor and practice to practice. One reason for this variability lies in the challenging clinical requirements for a broadly successful premium cataract procedure, namely the ability to deliver consistent high quality vision across a range of distances.
With the commercial growth of the LAL and early introduction of LAL+, an increasing number of doctors recognize the power of adjustability to achieve this level of performance in a way that has not been possible with fixed optic non-adjustable interocular lenses. With both the LAL and LAL+ doctors treat the actual refraction that is measured postoperatively rather than trying to predict a result preoperatively for the first time achieving basic level refractive results after cataract surgery.
The LAL platform of lenses delivers equivalent quality of vision to the gold standard monofocal IOLs, something that may not be possible with multifocal IOLs that reduce contrast vision and increase rates of visual symptoms such as glare and halo.
In fact, over the past 20 years, doctors have moved away from higher levels of multifocal quality, limiting the improvement in near vision for patients. In contrast, using the LAL platform, doctors and patients can customize vision in both eyes to optimize the quality of vision over a range of distances.
We believe that by tapping into these fundamental market forces, the LAL enables doctors to meet the vision goals of more of their patients as well as the financial goals of their practices in turn, driving our RxSight superior performance in Q4 and full year 2023, as Shelley will now review.

Shelley Thunen

Thank you, Ron, and good afternoon, everyone. consistent with our January pre-announcement ArcSight reported fourth quarter 2023 revenue of $28.6 million, up 78% compared to the year ago quarter. Growth was broad based reflecting both the continued expansion of our installed base of light delivery devices and a sharp increase in LAL procedure volumes.
The favorable trends we observed throughout 2023 continue to be driven by surgeons, growing recognition of the clinical and economic benefits provided by the RxSight system and the adjustability of our LAL technology.
In the fourth quarter of 2023, we sold 77 LDDs, up 35% compared to the year ago period. Fourth quarter 2023 LDD unit placements generated $10 million in revenue, representing a 52% year-over-year growth. We ended 2023 with an LDD installed base of 666 units, up 67% compared to year end 2022.
LAL sales continued to rise in the fourth quarter of 2023, reflecting surgeons and patients growing preference for the superior clinical performance of our adjustable IOLs. We sold 18,071 LALs in the period, up 98% from the fourth quarter of 2022.
These procedure volumes translated into LAL revenue of $17.8 million in the fourth quarter 2023, also up 98% compared to the year ago quarter. Higher LAL volumes during the fourth quarter also contributed to an increase in the LAL revenue mix with LAL revenue representing 62% of total revenue compared to 56% in the fourth quarter of 2022.
This change in mix, coupled with the sale of our LDD with a lower cost to manufacture and a higher average selling price, expanded our gross profit margin to 62% in the fourth quarter of 2023 compared to 46% for the fourth quarter of 2022. Fourth quarter SG&A expenses were $21.2 million, up 35% versus the prior year period.
This year-over-year increase in SG&A was primarily associated with increased expenses in sales and clinical personnel costs to support our growing installed base as well as our first year of SOX implementation, consulting, and audit cost. On a sequential basis, SG&A was up 11%, primarily due to an increase in sales, headcount and expenses related to the higher sales volume achieved in the fourth quarter.
Research and development expenses for the fourth quarter of 2023 was $7.3 million, representing an increase of 10% year over year. The change versus a year ago quarter was primarily due to increased headcount and associated increase in salaries and stock-based compensation on a sequential basis, R&D expenses remained relatively stable with a degree percent increase compared to the third quarter of 2023.
We reported a net loss in the fourth quarter of $9.2 million or a loss of $0.26 per basic and diluted share using weighted average shares outstanding of 36 million shares. In the year-ago quarter, our net loss was $15.6 million or $0.56 per share on a basic and diluted basis using a weighted average of 28 million shares.
Note also that stock-based compensation in the fourth quarter was $4.4 million, resulting in an adjusted net loss of $4.8 million, or $0.13 per basic and diluted shares. In the interest of time, I'll provide a brief recap of full-year 2023 results.
Revenue grew 82% to $89.1 million, driven by a 43% and 117% increase in LDD and LAL revenue, respectively. Our 2023 gross margin was 60% versus 44% in 2022. Total operating expenses were $103.9 million in 2023, representing an increase of 23% compared to operating expenses in 2022.
For the full year of 2023, we reported a net loss of $48.6 million or $1.41 per share versus a net loss of 66.8 million or $2.41 per share on a basic and diluted basis in 2022. Excluding [15 points, $7 million] in stock-based compensation expense and $1.8 million in loss on the full extinguishment net of our term loan in 2023, adjusted net loss was $31.1 million, or $0.90 per basic and diluted shares.
Moving to the balance sheet. We ended the year with no debt and $127.2 million in cash, cash equivalents, and short-term investments. During 2023 we raised $95.2 million net of fees and expenses from our at-the-market program and confidentially marketed public offering and paid off our $40 million term loan in full. Adjusted cash used from operations was $33.9 million in 2023, down from $59.5 million in 2022.
Finally, in our first year, as a large accelerated filer, we are proud to report that we had no material weaknesses are significant deficiencies in our SOX compliance, underscoring our commitment to financial integrity and operational excellence.
Turning to the 2024 guidance, consistent with the guidance we provided in January of this year, we continue to expect 2024 full year revenue to be in the range of $128 million to $135 million, implying year-over-year growth of 44% to 52%. We expect to see overall quarterly sequential growth with seasonality expected in the first and third quarters.
Typically, the first quarter tends to be softer sequentially for capital equipment. In our case, the LDD with continued sequential growth in LAL procedures, but lower sequential growth than the seasonally strongest quarters, which are the second and fourth quarters.
We expect our gross margin to expand to a range of 65% to 67%, reflecting a continued increase in revenue mix from higher margin LAL procedure volumes as well as gross margin benefit from our LDD with a higher ASP and lower cost to manufacture.
We continue to expect operating expenses to be between $125 million to $128 million, which represents an increase of 20% to 23% over the prior year and reflects ongoing investments we're making to establish a large and durable post-operative light treatment infrastructure to support sustained LAL procedure growth. Included in our cost primarily in operating expense is non-cash stock-based compensation expense of approximately $22 million to $25 million.
Before I turn the call back to Ron, I am pleased to announce in conjunction with this year's ASCRS meeting, we will be hosting an investor event on April 6 at 7 AM Eastern Time. Please stay tuned for more details from our investor relations team as the event date approaches. With that, I'll turn the call back to Ron.

Ron Kurtz

Thank you, Shelley. While we are pleased with the strong finish to 2023, we're also thrilled about the journey ahead, particularly inspired by the opportunity to achieve our ambitious goals, which will leverage the immense talent and creativity of both the RxSight team and our clinical partners like any new clinical capability adjustability requires both a financial and intellectual investment.
But as I noted earlier, the benefits to patients and practices are clear as we celebrate the 75th anniversary of the intraocular lens in 2024. It's essential to recognize the eye care community's investments in innovation. This commitment has ushered in advancements from which we all benefit today, highlighting the importance of adopting change over maintaining the comfort of the status quo.
We look forward to highlighting this mutual commitment to continued innovation at the 50th anniversary meeting of the American Society of Cataract and Refractive Surgery in Boston in April, when our clinical partners will present more data on the latest advances in adjustable IOL technology and practice with that, I'll ask the operator to open the call for questions.

Question and Answer Session

Operator

(Operator Instructions) Steve Lichtman, Oppenheimer.

Steve Lichtman

Thank you. Good evening, guys. So just a few questions. First of all, on LAL+, given its ability to provide more near vision out of the box, do you see it as a door opener for surgeons who perhaps in the past I would not have looked at LAL?

Ron Kurtz

Well, Steve, thanks for the question. I think it's important to note, as we presented in our doctors have presented at various meetings that the LALI itself provides a great distance and near vision high. And so we're starting from a very high level. The LEO plus does provide earlier a return of near vision. And so doctors now have two adjustable tools and over time, we'll decide how they're going to use them. I think that for any doctor who, for whatever reason hasn't adopted adjustable technology yet, it's certainly another reason for them to adopt the technology and design and make this available to their patients.

Steve Lichtman

Great. So how should we think about the relative growth of LDD sale versus LAL sales in your '24 guidance?

Shelley Thunen

Well, we don't break out in our guidance the quantity of LALs and LDDs. I think what you've seen in the last several years is LAL revenue goes up faster than LDD revenue. And of course, that's just a natural evolution of a razor razor blade model. And on. That's very consistent with how we have performed.
And it's really because of two reasons. One is, of course, we're adding new customers with our sales of the LDD as well as the fact that part of our impetus for growth is to get further and embedded in each one of our existing accounts and increase their usage. So normalized, we would expect just like we saw last year that LAL revenue will accelerate faster than LDD revenue.

Steve Lichtman

Okay. Got it. And then I guess just lastly for now, you're guiding to sales growth in '24, obviously well above OpEx growth. What are you assuming in terms of growth of the customer facing salesforce? Are you growing the salesforce on either the LAL or LDD side this year?

Shelley Thunen

We expect the LDD sales force to remain relatively stable. Maybe we would add one or so, but our territories are well covered by our existing salesforce, which numbers about 20. On the LAL salesforce we add some and this is really just dependent on depending on how their territories evolve how many existing customers they have to support.
But we'll continue to add on people, but not at a torrid place like we did when we initially created the sales force where we tend to add the most people in our clinical sales force. And those folks are responsible for training doctors, both in the OR on use of our injector every you know, IOL manufacture has one that's a little bit different as well as on tax and the OR, they can have pretty high turnover, sometimes is some ASCs.
And then also they train on the use of the LDD, both for the doctor, the optometrists and often for technicians, and they partner a lot with our LAL salesforce. You bring up procedure volumes in our existing customers, but that's where you tend to see the most additions in sales and marketing.

Steve Lichtman

That's helpful. Thanks, Ron and Shelley, and congratulations on the quarter.

Operator

Robbie Marcus, JPMorgan.

Robbie Marcus

Okay, great. Thanks for taking the questions. Congrats on a nice quarter again. And maybe to start, and now you're getting of a fairly significant size and one of your competitors missed the consensus IOL numbers today. The question is really at what point do you think doctors are starting to make the decision whether to go with RxSight versus other competitors that may have a bigger bundle because of the better clinical and selling benefits of the LAL?

Ron Kurtz

I thank you for the question, Robbie. I think doctors always want to do what's best for their patients fundamentally, that's their intent. They want a happy patient, both for selfish reasons, but also just quality of their own lives. And so they're really motivated to deliver the best clinical results possible and they're going to make their decisions based on that.
So our our focus is really providing one, providing the best clinical results, but then presenting it to doctors and practices that haven't yet adopted the LAL that data and that information so that they can make their own decisions and be confident in what they're offering. So and I think that that it's not necessarily an either or decision. It's a it's more of a decision of them making the choice to be able to offer this technology to their patients.

Shelley Thunen

Robbie, I'd also like to add that, you know, in our latest customer survey that we had a third party conduct and the results are very similar to the previous two years, about 44% patients as reported by our doctors would have would not have gotten anything other than a monofocal lens.
So in that case, we've grown our practice and in theory in a growing market, we're still very small and then the balance come from toric lenses and other PC IOLs. So I think it's good to know that, you know, about 66% of the volume is coming from other alternatives that might have been taken about, you know, most of those from toric lenses where they're upselling, but a significant amount from PC IOLs as well.

Robbie Marcus

Great. Really helpful. And maybe one just on balance sheet and cash usage, you still have a pretty healthy cash balance right now. You're burning cash, though. I imagine that will continue to decrease cash usage as you continue to grow here. But how are you thinking about your positioning and the potential to reach cash flow breakeven? Thanks a lot.

Ron Kurtz

Yeah, thank you. And you know, we have said previously that we'll continue to reduce our cash use throughout 2024 as compared to 2023 and also to expect that cash is heaviest in the first quarter just because we pay year-end bonuses and on we get material in and those things get paid in January, but you should see decreases throughout the year. We have also said, and we continue to say that we have adequate cash to get to cash flow breakeven with a healthy balance sheet.

Shelley Thunen

Very clear. I appreciate it. Thank you.

Operator

Larry Biegelsen, Wells Fargo.

Hey, guys. Thanks for taking the questions. This is Simran on for Larry. I just wanted to start off on your 2024 outlook. I know you're not providing and LAL versus LDD mix explicitly, but how are you thinking about LDD utilization in 2024? And we're conservatively forecasting a small step down, but any reason utilization can't grow year over year?

Shelley Thunen

Yes, I think the utilization is a nice metric just in that anybody can calculate it, but it will vary throughout the year. You know, if you have new because we calculated as the number of LALs implanted in a quarter divided by the LDD installed base in the previous quarter.
If you have a very heavy LDD placement quarter in a seasonal quarter, for LALs, you might see a little bit of a step down, but overall, our goal is to increase that on units. And but if we get very high on LDD sales that can mute it a little bit while we don't guide on that on, as I mentioned to Steve's question that we expect LAL revenue to grow faster than LDD revenue.

Great, thank you. And just to clarify on the phasing of sales throughout the year, it sounds like we should expect sequential growth quarter over quarter throughout 2024, including Q1.

Shelley Thunen

What we did guide is to sequential growth with seasonality and where we said specifically that we would expect continued sequential growth despite seasonality in our LAL revenue.

Okay, perfect. And just in terms of your international business, how has the launch in Canada been progressing relative to your expectations? And will there be any contribution from new geographies in 2024?

Ron Kurtz

So Canada has gone very well. We're very pleased with the rollout in Canada, and that continues to go well. I think it's a good marker for the importance that international will play over time. And we're certainly considering other markets that we think will be a particularly attractive to the LAL. And we'll be talking more about those as the year progresses.

Great. Thank you.

Operator

Ryan Zimmerman, BTIG.

Ryan Zimmerman

Hey, good afternoon. Thanks for taking the question. Congrats on a very strong year. I wanted to start first with at the LDD -- the capital salesforce and you guys are leaving that salesforce unchanged. Is there a point at you reach kind of a peak sales rate quarter in terms of LDD unit, just based on simply capacity? And even if the demand is there and where are we at relative to maybe a peak capacity in your view from the LDD salesforce?

Shelley Thunen

Yes, I think that, you know, as we look at the LDD salesforce, you know, these folks have developed a territory now. As you know, they typically start with their highest volume customers customers that they know better. But, you know, their efforts are really enhanced by our marketing efforts.
The ability to get out shows and we do about 80 tabletop shows a year out in the tear in the territory and also they coupled the LAL salesforce on new accounts as well as potential new accounts. And so, you know, we'll add people if we see it's necessary. But typically with capital equipment people, you kind of get the opposite effect if you cut down their territories and because they've already put the money in and that doesn't work real well.
But we'll always keep that ahead of ourselves, but we don't think like doubling the sales force just automatically double doubles on the placements. I think just continued market acceptance and knowledge about the LDD. And then talking to peers, both have chosen one on one starts to -- we've seen that momentum build through the last several years.

Ron Kurtz

Yeah, just to reiterate, Shelley -- I'm sorry, Ryan. I was just going to reiterate the LAL account team has grown and they are involved with capital equipment sales as well to a lesser degree but they do receive part of their compensation from them.

Ryan Zimmerman

And then second question for you, Ron, bigger picture, we think about the growth of the premium segment here and you talked about kind of where we're at today, about 20% in the US, 10% globally. And the expectations are that that goes to two.
When you think about those market forces that you talked about, I mean, is there any reason to think that that cadence from A to B is not evenly distributed over the next, call it 5 to 10 years? Is there anything in airline that accelerates it or maybe hockey sticks it, if you will, on the later half of that timeframe? Just trying to think about kind of the broader adoption in the premium segment here as you guys continue to grow.

Ron Kurtz

Well, I mean, obviously, we hope to be part of that driver by providing clinicians with the tools that they can use to give their patients high quality vision with very high consistently consistency. And so I think that that has been a factor in holding back, not all clinicians, but a number of clinicians from participating, more widely in this market.
And also an important component of our technology is that it involves optometry in a very meaningful way and they are a huge part of the eyecare community that And up to now has had a relatively minor role in a premium cataract surgery. So I think that those two factors are ones that will help to drive the overall market and buy and obviously fuel our growth as well.

Ryan Zimmerman

Understood. Thank you.

Operator

Craig Bijou, Bank of America.

Craig Bijou

Good afternoon, guys. Thanks for taking the questions. So just wanted wanted to ask on maybe some utilization trends at the individual practices. I know you guys have talked about seeing adoption maybe faster job adoption with the newer surgeons, faster utilization relative to some of the surgeons that were added a couple of years ago. And so what I wanted to know is that still kind of what you're seeing is that would you expect for '24? And maybe just the your color from you on why you do think that's the case, why a newer adopter is going to move faster, ramp faster with the LALs?

Ron Kurtz

Thanks for the question, Craig. I think maybe I'll take the broader question and ask Shelly to pontificate more about the future. But the it's not it's kind of understandable that as time goes on, two things happened. One, we get better at initiating customers. We have we've learned our processes, we've refined our processes and they have the customers themselves have experienced by curiously through their through their friends and competitors at the LAL experience. And so it's just a better process for them.
The second is, I think, a little bit the characteristic of people who are adopting not at the initial rollout but a little bit later, still early, but a little bit later in the process. And those those people, as you typically see in an adoption curve tend to be a little bit more and thoughtful about what they're trying to achieve. They're more focused on getting an ROI as soon as possible. Obviously, so they're more likely to once they are convinced of the value of the technology to implement that a little bit more quickly.

Shelley Thunen

Yeah. The only thing I would add is that, you know, our goal has become standard of care in the first place, we need to become standard carriers inside of each individual account. And there's been a few customers we haven't gotten there yet, and that's why it's so important for us to continue to penetrate our existing customers, and we're just not at that level yet. And so that is, you know, a major and this is for our LTL salespeople in our clinical personnel as well. So we would expect it, and it's certainly our goal to continue to get further penetrated in each account.

Oliver Moravcevic

Thank you, guys. And maybe just to follow up on that. When you think about in a individual practice, are you guys obviously So you just mentioned it's not standard of care yet we or only with a few practices, what is that percentage or penetration? Is that trending above the 20% of the broader market for premium? Maybe just a little bit of color on how you see in individual practice evolve in terms of percentage of IOLs that they're using LALs for?

Shelley Thunen

I think that does for the customer and I have to tell you that is not information that we ask customers on quarterly or even an annual basis on what we do look at it, trends by account and trends by doctor. And so our clinical and account managers, which are LAL personnel, looked at each one of the accounts that they're responsible for on a weekly or monthly basis.
And if they see something up or down they're going to talk to the practice if they're down, maybe doctors on vacation, if they're, you know, they're trying to find out, you know, what's driving it. What can we do to continue to drive it for you.
So we really, you know, go bottoms up in the account, but we do know over all if we talk to a particular customer that they'll say to us if they're very heavily penetrated, hey, I'm using you for 50% of my premium cases or I'm using you for 80% and other people aren't saying that yet, so I would say mostly it's anecdotal overall. Ron, would you add anything to that?

Ron Kurtz

The only thing I would add is that and it goes to the previous question I think a little bit is that overall, while the earlier customers may be getting up to speed more quickly, all of our customer cohorts are continuing to grow and that it's that's driven by all the factors that we've already discuss the pulling in patients from the monofocal category by the realizing that the technology can also provide excellent range of vision and extending it into that realm of their practices as well.
So I think it's a adding adding additional doctors within the practice once the infrastructure is there to support them. So are just a number of factors that help to drive adoption within a practice. And our team is looking at all of those, both the internal team and of course, the R&D team here as well.

Craig Bijou

Great. Thanks for taking the questions.

Operator

[Patrick Wood, Morgan Stanley].

Patrick Wood

Amazing. Thank you. Just two quick ones from me. I guess maybe to jump off on the kind of the health of the customer and the practice side of things. I mean, I guess US refractive is probably down 20% in Q4. Trifocal and ITO has been a little sluggish as a market. How much more opportunity is there for you today, given to your point, you're still additive to a practice given 44% also going from monofocal to LAL. How much more of an opportunity is there to help the practice improve their economics, given the environment seems a little trickier than it has been in the past?

Ron Kurtz

Well, thanks for the question, Patrick. I think that we always have to remember that the market is complex in private pay and we don't want to conflate the refractive the other corneal refractive markets or that are generally a younger population, much more sensitive to overall economic factors than the patients who are the demographic for our technology, which quite frankly, have done quite well over the last five years and are probably there they're sitting on the bulk of the wealth in our country.
So I think that that that potential is still very strong and the underlying desire of patients in that demographic to maintain their functionality, their their ability to participate in work and leisure activities at the same levels through great eye sight and without glasses. That's a that's a that's a durable trend.
And is that demographic, of course, is growing as the population ages. So I think that while the the PC IOL market may have, we might have seen or some people have reported a flattening of that. The overall premium market continues to grow. Obviously, we're a part of that, but the toric market continues to grow. And I think both of those are indicative of this drive to quality of vision, and we can't underestimate that, that patients really do value quality of vision.

Patrick Wood

That's helpful. I guess I meant more that the clinics themselves have been losing some of the patients on the refractive side and a little bit more sluggish on the other side. And therefore, you can help them with that because your business is obviously additive to them. I guess I was coming at it more from the clinic angle.

Ron Kurtz

Yeah, absolutely. I mean, I think that's an argument that our sales force is making that as the eye as the corneal refractive business goes up and down ebbs and flows with the economy, certainly focusing on the premium IOL business, particularly one that provides a high quality vision is a much better long-term investment.

Patrick Wood

That's super helpful. And then follow on I know it must be hard for you guys to get this kind of data. Your Do you have any sense for how often you're getting bilateral implantation because obviously for some patients, monovision, if they're not familiar with, it can be a good and sometimes it can be a bad fit, do you know how often you're getting implanted, say with the need of our trifocal simultaneously?

Ron Kurtz

I think that that's pretty unusual. We don't have firm numbers, but when we we do have a large data registry, which has over last time it was reported on it was over 800 subjects. And in those patients, about 90% were bilateral -- so -- the LAL -- bilateral LAL. And presumably some of those some of the residual patients you either were only had monocular cataract, which is certainly possible or they had previous cataract surgery in one eye possibly with a monofocal IOL or with a different premium IOL.
There are you beginning to see some talks from doctors which are which are you talking about? And using the LAL with a perhaps a PC IOL, but I think with the addition of LAL+, that's probably going to be less important.

Patrick Wood

That's helpful. Thank you for taking the questions.

Operator

Tom Stephan, Stifel.

Tom Stephan

Great. Hey, guys. Thanks for taking the questions. First one on LAL costs for me, Ron, I guess over time or once the full LAL+ launch is in motion and it was there a way we should be thinking about the split between legacy LAL and LAL+, I guess just trying to get a better sense for what level of impact you anticipate LTL plus having on the business relative to the legacy ones? And then I have a follow-up.

Ron Kurtz

Well, obviously, we want to have a positive impact to we went and introduced it. But I think people have recognized or increasingly recognize that the LAL delivers it exceptionally high quality vision and can be used with a blended vision approach to provide a range of vision, and that works really well.
We see, again in our registry data that approximately 90% of patients are seeing 2020 at distance and able to read J2, at near, which is about 5.5, so it's the size of the footnote on a page. So I think that that's a great solution to the extent that doctors felt that, gee, they wanted to have a more immediate near vision and they might they might have not considered an LAL in a particular patient. I think the LAL+ is going to give them additional motivation to use to get the benefits of adjustability. And they're they're all there are a lot of them as we've talked about.

Shelley Thunen

The other thing I'd point out is both the LAL and LAL+, which we really just call our LAL platform are both priced at $1,000 per eye, for IOL. And so we wouldn't see any mix change due to pricing.

Ron Kurtz

I'm sorry. Just the intent there is that we want the doctor to and the patient to choose the best LAL for their for their case.

Tom Stephan

Perfect. That makes sense. And then a quick follow-up to shifting gears just on Europe, Ron, could you maybe compare and contrast US and European markets, just as we tried to think about your ramp in the US in the context of I guess what's to come in Europe down the line? Maybe you could talk to the competitive landscape, regulatory and the other key factor? Thanks.

Ron Kurtz

Well, I think that it's always hard to generalize about a whole continent. There are there are a number of countries in Europe and they each have that in each one has individual market characteristics. So we don't necessarily look at it as a as Europe. We look at it as specific markets within Europe. They do how they do for the most part share a regulatory process, which has gotten more complicated over, especially over the last year or so.
And so but overall, it's a large market well, see a market and ultimately, patients are gone are driven by the same motivations as they are everywhere else. They want to have high-quality vision and excellent range of vision. And I think that ultimately there'll be a number of very attractive markets for the LAL.

Tom Stephan

That's great. Thanks, again.

Operator

David Saxon, Needham.

David Saxon

Great. Good afternoon, Ron and Charlie. Thanks for taking my questions and apologies if any of these have been asked. And Shelley, maybe I'll start with you. I know we talked about patents a couple of months ago. You have a couple expiring in '26, I believe. But can you remind us what those ones are and then when the kind of quote-unquote key patents expire and generally how you feel about the IP portfolio? And then I'll have a quick couple of follow.

Shelley Thunen

Yeah, I'm going to have Ron answer that question.

Ron Kurtz

Hey, David. So I don't know that I would identify any specific patent as a key patent. We've got a very large patent portfolio that we've expanded over the years as we continue to develop and further develop this technology. And so as things come off patent, there's there's things that are there's there's a whole slew of things that replaces them on underlying your question, I think though is an assumption that that IP. is a is somehow critical for us.
And I don't want to minimize the importance of intellectual property. Of course, we take it very seriously, and we have an excellent program to maintain and expand our portfolio. But I'm yes, there are a number of barriers to entry to this technology. And I wouldn't put IP at the top of it, I'd say yes, the number one barrier is this is just technically really hard to do to adjust the lens after it's been implanted in the human body with the precision of making glasses is really difficult. And I think that it took us a long time to do it.
I wish anybody luck to trying to in their quest to do it as well. And then obviously over the last several years, we've built it's a commercial footprint, which we're expanding and with that comes a whole education of the field and and a building of expectation on the part of clinicians as to what what does it what does adjustability? What are the measures of adjustability? What are the requirements for adjustability?
And we keep advancing those. And that same process, of course, is going on on the regulatory front, where we continue to move the technology forward and there, thereby educate the regulators. And so there are just several layers of barriers.

David Saxon

Okay, perfect. Thanks for that, Ron. And then a couple for probably Shelley. Gross margin was flat sequentially. So can you help us with the drivers there? I think mix was better in the fourth quarter, so anything there? And then on international, have you talked about what percent of revenue is coming from international? And then what pricing is in Canada, Mexico, and Germany? Thanks so much.

Shelley Thunen

Okay, good. Thank you very much. Yeah, our mix between LAL and LDD. in the third and the fourth quarter was very similar on and therefore, also our gross margin was similar. I think we were perhaps intimating is that we would hope we'd have a little bit more increase in gross margin and the fact that we were selling on the LTD with a higher ASP and lower costs throughout the entire fourth quarter.
And I just have to say, you know, and I think we've talked about this before is that there are always period costs in those period costs, particularly on the LAL, our things like the consumption and the ordering of glasses and cartridges and other accessories from from customers.
They're not a one for one relationship and we don't charge separately for those on as well as just period costs for things like inventory reserves and you know, on things like that, both on the LAL and LDD side, scrap on the LDD., it just happens quarter to quarter. So the period costs tend to have a minor impact on margins, but they can vary quarter by quarter, and we saw a little bit of that in the fourth quarter, but that's quite usual.
And then I think your next question was what percent of revenue are we getting from international? And that would just be Canada in our case. And no, we don't break it out. It has remained relatively steady in terms of their contribution on on a quarterly basis, but growing throughout 2023. But it's not significant relative to the overall, but it's a great market for us.
And then I think your third question was pricing in Canada and on. We do use a distributor that changes our ASP internally a little bit. But again, it's not predominant in terms of our overall LDD volume and LAL volumes. But the absolute pricing to the end-user customer in Canada, it's a bit higher than it is in the US. One, they're, you know, in the earlier stage of adoption buy more often they do expect to pay more just because of product introductions, lower volume, and things like that.

David Saxon

Okay, great. Thank you so much.

Operator

All right. Thank you. This concludes the question-and-answer session. I would now like to turn to Ron Kurtz, CEO, for closing remarks.

Ron Kurtz

Thank you for your time and attention today. We appreciate your interest in RxSight and look forward to updating you on our progress in future quarters. Goodbye.

Operator

All right. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.