Good morning and thank you for your participation. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference call will be recorded. I would now like to turn the call over to Lee Roth. Mr. Roth, please go ahead.

Thank you Bridgette. Good morning and once again welcome to the LENSAR's second quarter 2021 financial results conference call. Earlier today, the company issued a press release providing an overview of its financial results for the quarter ended June 30, 2021 and this press release is available on the Investor Relations section of our website at www.lensar.com. Joining me on the call today is Nick Curtis, Chief Executive Officer of LENSAR, who will review the company's recent business and operational progress. Following his comments, Tom Staab, our Chief Financial Officer, will provide an overview of the company's financial highlights for the second quarter before turning the call back over to Nick for closing remarks and opening the line for your questions. Before we begin, I would like you that today's conference call will contain forward-looking statements, including statements regarding future results, unaudited and forward-looking financial information, as well as the company's future performance and/or achievements. These statements are subject to known and unknown risks and uncertainties which may cause the company's actual results, performance or achievements to be materially different from any future results or performance expressed or implied in this presentation. You should not place undue reliance on these forward-looking statements. For additional information, including a detailed discussion of the company's risk factors, please refer our documents filed with the SEC, which can be accessed on our website. In addition, this call contains time-sensitive information accurate only as of the date of this live broadcast, August 5, 2021. LENSAR undertakes no obligation to revise or otherwise update any forward-looking statements to reflect events or circumstances after the date of this live conference call. With that said, it's now my pleasure to turn the call over to Nick Curtis. Nick?

Thank you Lee and good morning to everyone listening. Thank you for joining us on our second quarter 2021 conference call. I am pleased to report that we have completed a very strong first of 2021 as the markets in which we operate continued their gradual recovery from the COVID-19 pandemic. Evidence of this recovery could be seen in procedure volumes in the second quarter which increased 70% on a worldwide basis, while in the U.S. it was up over 140% as compared to the second quarter of 2020. In addition to increasing procedure volumes, we are seeing an uptick in system placements as surgeons are once again beginning to invest in advanced technologies that can bring value to their practices by assisting in managing astigmatism and providing them with tools to manage better patient outcomes and practice efficiencies. In the second quarter we sold three systems and leased an additional four systems compared to only 4 four system sold in the second quarter of 2020. Increasing the number of systems shipped and installed is also an indicator of future new procedure volume. While these trends are certainly encouraging, we are fully aware of the fluidity of the situation, particularly in light of the Delta variant and it's effect in various regions across the world. Overall, we believe that the optimism displayed when we reported first quarter results in May was well founded and we remain enthusiastic about what the future holds for LENSAR. Last quarter, I talked about medical congresses beginning to return to in-person venues and specifically mentioned the American Society of Cataract and Refractive Surgeons or ASCRS which just recently took place at the end of July. While the meeting attendance was significantly below pre-COVID levels, quality content and the energy displayed by the attendees was there.…

Thank you Nick. Our second quarter 2021 financial results are included in our press release today but I would like to add a little color to those remarks. In short, it was a strong quarter for us as you look at revenue and procedure growth, gross margin, adjusted EBITDA and cash utilization. Specifically, revenue was $7.9 million compared to $5 million in the second quarter of 2020 and reflected a 57% increase quarter-over-quarter. The increase was primarily driven by increased procedure volumes and to a lesser extent lease placements. Procedure volume, particularly in the United States, exceeded pre-COVID levels as the company returned to its history of growth and market share expansion. In the second quarter of 2021, there were 30,966 procedure sold compared with 18,265 procedure sold in the second quarter of 2020, reflecting a 70% increase. Procedure growth in the second quarter 2021 increased in each of our three operating regions, that is the United States, EU and rest of world. But it was particularly robust in the United States showing over 140% increase from the second quarter of 2020. This percentage undoubtedly is impacted by the COVID-19 pandemic but importantly U. S. procedure growth was 44% over the second quarter of 2019. Our recurring revenue, which we define as all revenue other than laser system sales, totaled approximately 90% of our revenue for the three months ended June, 2021 compared to 78% for the three months ended June 30, 2020. Gross margin for the quarter was $4.5 million or 56% of total revenue, a significant increase from the $1.9 million and a gross margin percentage of 39% in the second quarter of 2020. The increase in our gross margin was attributable to the rate at which procedure revenue grew compared to system sales quarter-over-quarter. Research and development…

Thank you Tom. We entered the public markets nine months ago into a unique an arduous environments. While we have certainly faced our share of challenges during this time, we have also made significant progress in all facets of our operations. This progress is a testament to the persistence, skill and commitment of our team as well as the strength of the technology in the LENSAR Laser System that we have developed and importantly our partnership with the physician networks that utilize our advanced technology. We will continue to position LENSAR as the advanced technology leader in the refractive cataract surgery space and look forward to the filing and regulatory clearance of ALLY. Our ALLY system has the potential to meaningfully and beneficially disrupt the cataract surgery market. ALLY represents a revolutionary advancement in cataract treatment. When available, ALLY will become an invaluable asset of the surgical practice that significantly improves procedure and patient flow efficiencies, enable the surgeons to provide consistent and better outcomes and a truly superior patient experience in the process. I am very appreciative of the reception received from the opthalmo community at ASCRS and grateful for the ongoing commitment and energy of our team. We look forward to updating you on the development of ALLY as we get closer to filing the 510(k).. I will now turn the back call back over to Bridgette and we look forward to your questions.

[Operator Instructions]. You have a first question from [indiscernible].

Hi. This is Jamie, on for rich. I believe that we were called on. Is that correct?

Yes. Jaime, go ahead. Nick and I are ready for your questions. It was hard for us to understand as well.

Hi guys. Congrats on a nice quarter. I guess I wanted to start just quickly on ALLY. You are pointing, the press release said obviously you are navigating some supply chain challenges. And Tom, to some of your comment here just around the material costs, I am curious, what is the risk that that does potentially impact, of course, your 1Q filing timeline and if there is any risk at all to that? How long should be potentially be thinking about that being delayed if supply chain challenges persist?

That's a great question, Jaime. We have we looking at this obviously very, very closely. And so we are doing quite a bit to mitigate that risk to the filing. We have been very creative in terms of going out and being able to acquire some of those parts in order to have our four prototypes built out of manufacturing and to be able to do the proper testing that we need to do to get to our FDA filing. And so, we are protecting that timeline to the filing in all ways humanly possible including being willing to pay more for parts that we get in order to be able to get those devices done. And so really, I don't see a risk to the filing. If there's any risk ongoing, we are placing orders now based on our commercial sort of your requirements. And so if there's any risk, it would be later on as it relates to how fast we can get the product out after we get the approval. But we are protecting the approval timelines. It's very important.

Okay. That's helpful. And I mean you talked about this at the recent ASCRS needing doing the demos, the feedback have been overwhelmingly positive. I am just curious if you could dive into that a little bit more, especially just around the reception to phaco-femto combination device? And just your commentary around some new sales prospects from competitive users on the current generation system. But curious what that looks like from an interest perspective at the demos, new surgeon and competitive surgeons versus existing surgeons?

So another insightful questions. So 40% of the surgeons that came and viewed the ALLY device were surgeons that were new to LENSAR. They were not currently LENSAR users or customers. And so, that was really encouraging and what was happening was, it was some word of mouth. We had fewer demos scheduled than what actually took place, number one, because there was word of mouth and doctors that had scheduled appointments were actually bringing other doctors to their demos. So there was a lot of excitement around that. Interestingly enough, because of the COVID fears, there were a fair number of doctors that at the last minute decided not to come to the meeting. And so we had some cancellations of existing appointments that had been set up as a result of them not attending the meeting at all. And yet, we more than doubled that in terms of people actually coming to the demonstrations. And so like I said, over 40% of the doctors were potential new users and then approximately 40% of the physicians were current LENSAR users and then I would classify 10% to 12% of sort of the other which would be like staff, administration, private equity practice operators, those type of folks that would be in roles to operate the business. And then we had some media and some folks from the in-surgery suite, that was about 2%. And so we have well over 100 in total. So that in some of the comments. I mean had to temper because some of the c comments were just like, first off, the room looked amazing and you could see the scale for the product. And when you could see the scale of the product and the flexibility as to how it fits in the room…

Got it. That's helpful Nick. And then just I guess my second set of questions is more around the back half outlook. I know you guys don't provide actual guidance. But could you give us a sense of how we should be thinking about the second half ramp? 2Q obviously came in better than we were thinking and just you know in light of some of the COVID Delta variant causing or re-emerging, I have to say and potential seasonality due to summer vacation. Just curious how you are thinking about the back half ramp, particularly from the procedure side but also just from capital outlook perspective as well?

Yes. It's interesting because up until COVID, it was a fairly predictable sort of a business and that the back half of the year and fourth quarter, just because cataract volumes are better globally are the highest in the fourth quarter. But typically, your third quarter is typically the weakest of the quarters and then your fourth quarter comes on very strong because of the numbers of surgeries that are being performed. This year is a little bit of a wild card, I think, because now not only do you have the variant but you also have the summer months coming in and vacations. And it's interesting that, for instance in Europe, despite the variant and whatnot, people are on vacation and they are on vacation in Europe in contact with our distributors and with other customers. So I would say, it's a bit of a wild card there in terms of the third quarter. You go ahead, Tom.

The other thing I would say, Jaime, is if we had this call on July 1, right, we would have been extremely optimistic about what the back half looks like. However you have now the CDC recommending masks indoors and things have changed pretty radically from a regulatory perspective associated with COVID. And so when we give guidance, we want to be confident in that guidance. And frankly, the external environment is so up in the air, to Nick's comments, that it's very difficult to predict what the latter half is going to look like. We were thinking that we were coming out of the pandemic and things are back to normal, at least in the United States. Hopefully, that continues. But the rest of the world operations are certainly being dragged down by the pandemic. And who can predict what's going to happen, whether it be in the United States or the rest of the world.

I do want to say that we are putting a lot of emphasis in the United States because that's where we have direct presence. That's where we have obviously we are right on the pulse of what's going on here. We still haven't been able to travel to some of these other areas and in some of those in-person meetings. I will have a better feel as we exit the summer because to see whether some of the outside U. S. meetings actually take place. When you think about it, the ASCRS is being sort of one of those. There's the DOC meeting in Germany being another one of those. If those meetings take place then that obviously looks a little more optimistic there. If those meetings don't take place, then from an in-person venue perspective it begins to potentially show. We do have systems, like I said and since we have lots of activity in the U.S. and we have got system placements and sales going there, we remain fairly bullish in terms of the U. S. and that's where we are putting a lot of our efforts.

Got it. I guess maybe any sort of things you seen in the marketplace within the last couple of weeks? Tom, to your point, you are saying July 1 was a little bit more of a clear picture of maybe what the second half could look like. But now that things are starting to change, is there any sort of trends that you would call out that you have maybe seen in the last couple of weeks since the beginning of the quarter started that might be able to kind of help give us a sense of how we should be thinking about the cadence?

So we would come back, Jamie, would come back to like the first in-person meetings and typically like when you have the in-person meetings and you have a fair number, even though the attendance was significantly down at ASCRS, there still were thousands of people and many of the users that attended the meeting several thousand people. So typically, what we see then is that your volume drops off in a week. If you are looking at it on a week-by week-basis and then everybody gets back to work and it starts up again. And so everybody's busy and they are scheduling their surgeries. Overall cataract surgery volumes, so when you look at overall cataract surgery volume, forget LENSAR for a moment, overall cataract surgery volumes are down and almost 60% of the doctors have some capacity issues being able to schedule surgery time. But the interest level in premium procedures for all the obvious reasons, from the patient having come out wearing masks and fogging glasses and having not maybe spent like they have done, all of those things, reimbursement pressures as well as overall cataract volumes down are keeping people pretty motivated to do procedures and to do procedures that fall into our sweet spot, particularly since we are providing the more efficiencies and outcomes related to astigmatism management or whatnot. So I would say, we are seeing it, not unexpectedly, we have a meeting, the volume goes down that week meaning people go back to work. It gets, we are busy again.

The one thing I will say, Jaime, to Nick's point, it's very volatile. You had the holiday. You had the meeting. We haven't seen any drastic change in procedure volume. However I am somewhat cautious about continuing our system placement going forward until we have better visibility. Certainly outside the United States, it's been weak and weak because of the pandemic. Inside the United States, it came back or was coming back. I don't know with the Delta variant whether we will see that continuation of system placements because we just can't predict what's going to happen. Things were certainly tightening up and the restrictions are getting heavier than what they were.

I will be able to give you a much better outlook in terms of that as we get through the next couple of months through the quarter because of, let's say, all the activity that we have sort of jammed up. So I will be able to give you some indication as to whether some of those things came to a halt or whether they are progressing through and doctor's are following through. That, to a great degree, is going to give us an idea as to the sentiment that's existing out there.

All right. Thank you so much. That's helpful. And then just, Tom, lastly on the gross marking and I will hop back in queue. Similar sort of questioning on how to potentially think about that in the back half since you came in better than we expected. Is that kind of a jump off point? Or is there any reason to believe that might actually get down from the second quarter since it was so strong?

Well, once again, our gross margin percentage was heavily influenced by the higher procedure revenue versus capital revenue. And I would consider that to continue. I think the mid 50%s of gross margin percentage is probably what I would predict without any better information in regards to system placements in the latter six months. So I would say that the first half and the second quarter percentages around the mid 50%s is what I would expect.

Okay. Great. Thanks so much.

And there are no further questions at this time, presenters. I will now turn it back to Mr. Nick Curtis for closing remarks. Thank you.

Thank everyone for attending the call today and your continued interest in LENSAR. We really look forward to updating you as we continue to make progress and approach the filing and the launch of ALLY. We appreciate your attention today.

Thank you so much, presenters. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and have a wonderful day. You may all disconnect.