Good morning, and thank you for your participation. At this time, all participants are in a 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 Cameron Radinovic of Burns McClellan. Mr. Radinovic, please go ahead.

Thank you, operator. Good morning and welcome to the LENSAR third quarter 2021 financial results conference call. Earlier this morning, the Company issued a press release providing an overview of its financial results for the quarter ended September 30, 2021. This press release is available on the Investor Relations section of the Company’s 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, Chief Financial Officer of LENSAR, will provide an overview of the Company’s financial highlights for the third quarter before turning the call back over to Nick for closing remarks. Today’s conference call will contain forward-looking statements, including those 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 the documents filed with the SEC, which can be accessed on the website. In addition, this call contains time-sensitive information that is accurate only as of the date of this live broadcast, November 8, 2021. LENSAR undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this live conference call. At this time, it’s my pleasure to turn the call over to Nick Curtis.

Thank you, Cameron. Good morning to everyone listening. Thank you again for taking the time today to join us on our third quarter 2021 conference call. We’re pleased by the strong results and consistent progress the Company has achieved in the third quarter of this year, as we strive to navigate the uncertain times of the COVID-19 pandemic. On the commercial front, we see the markets in which we operate continue to rebound from pandemic-related shutdowns. And to be more specific, we’ve returned to our historical performance of growing our business. This growth is in the backdrop of the lingering pandemic, which continues to weigh on the more certain predictability of our results, especially outside the U.S. and Europe, where the stopping and restarting of surgery is taking place. An important indication of this consistent aggregate growth overall can be seen in our procedure volume through the first three quarters of 2021, which represented a significant 35% growth over the first nine months of 2020, and even more importantly, an impressive 18% growth rate over the same period in 2019, evidence that we are, once again growing from our pre-pandemic operations, after a pause, due to all the implications and headwinds of the pandemic. In addition to growing our procedure volumes, we’ve also seen an increase in lease placements, which combined to drive 16% revenue growth over the third quarter 2020. We firmly believe that LENSAR’s current product, including Streamline and IntelliAxis Refractive Capsulorhexis is an evolutionary technology that addresses significant unmet needs in cataract surgery, which we expect will continue to be the most beneficial and useful technology platform in the market and remain a key driver of procedure and revenue growth. As I reported last quarter, our marketing team remains laser-focused and extremely active with LENSAR’s technology featured…

Thank you, Nick. Our third quarter 2021 financial results are included in our press release today, but I would like to add a little color to those written remarks. As Nick mentioned, it was a strong quarter for us as you focus the lens on top-line revenue, procedure growth and cash management, all while making consistent strides towards our upcoming 510(k) filing for ALLY in the first quarter of 2022. Specifically, revenue was $8.3 million in the third quarter of 2021, compared to $7.1 million in the third quarter of 2020 and reflected a 16% increase year-over-year. The increase was primarily driven by increased procedure volume 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, analyzing revenue at a deeper level, the United States continues to be a strong performing region for us. We have seen a significant increase in procedure growth in the third quarter of 2021, as compared to both, the 2020 and 2019 third quarters, thereby powering worldwide procedure growth in 2021, year-over-year. Also contributing to procedure growth are system placements, as system placement activity has increased recently in the United States. Accordingly, it appears system placements and procedures growth have rebounded the pre-pandemic levels, and we are in growth phase once again. The foundation of our existing business provides a nice launching pad for ALLY, a disruptive and novel combination system that incorporates all the technology features of our existing system. In the third quarter of 2021, there were a total of 30,765 procedures sold compared with 25,078 procedures sold in the third quarter of 2020, and 25,154 procedures sold in the third quarter of 2019, reflecting a 23% and 22% increase from both prior…

Thank you, Tom. The end of the third quarter marks LENSAR’s first full year as a public company. While no one could have predicted the challenging environment that would have weighed us as we became a public company, I can proudly say that our team has squarely faced each challenge head-on, having found a way to not only persevere, but thrive in doing so. Our team has made tremendous progress by continuing to grow our revenue quarter-over-quarter in one of the most uncertain times in our industry, while maintaining our commitment to continuous improvement with in support of creating superior outcomes for surgeons and patients and are nearing the doorstep to deliver ALLY, creating great anticipation within the Company, as well as the opthalmo community. With this team, we believe we have the right plan and are well positioned for growth in both market expansion and disruption with the current LENSAR laser platform, and the near future our ALLY Adaptive Cataract Treatment System. I have no doubt that ALLY has the potential to establish LENSAR as a leader in the premium, as well as conventional cataract surgery market, ALLY will optimize the entire cataract treatment process for both patients and surgeons having the ability to customize each treatment in a way that improves both, procedure and patient flow, while providing a superior outcome creates an overall experience that other technologies will be hard-pressed to match. We look forward to further updates as we get closer to our filing. I’ll now turn the call back over to the operator, and we look forward to your questions.

[Operator Instructions] Your first question comes from the line of Danielle Antalffy of SVB Leerink.

Hey. Good morning, guys. Thanks so much for taking the question. Congrats on a strong quarter.

Hi, Danielle.

Hi. So, I just a few questions from me, first on the dynamic of returning to pre-COVID levels. I was just curious, obviously this has been an earnings season where we’ve heard a lot of companies talk about hospital staffing shortages, and not just within the hospital, but across the healthcare industry, healthcare worker shortages. So, just curious what you’re seeing there. It seems like you’ve been able to grow and return to pre-COVID levels despite that. Would love to hear some commentary around that and what you’re seeing as we head into -- or we’re already a month into Q4? And then, I have a few follow-ups.

So, Danielle, I think the good news is that it for us is that cataract patients and cataract surgery, it doesn’t go away. So, during the pandemic if there’s slowdowns and people can’t have surgery, the fact is it just creates a backlog of cataract patients that are trying to get into the system. And when you exacerbate other things like, since they’re -- they don’t go away, they don’t get better either. They continue, the patient’s vision continues to degenerate. And so, what we have seen is that patients are motivated to try to get back. There are some capacity issues specific to doctors being able to get enough surgery times, particularly in like the open access facilities. Most of our procedures are performed in outpatient ambulatory surgery centers rather than inpatient hospital. Although, there are surgeries that are done there as well, but most of the surgeries are done in an outpatient ambulatory surgery center. And so, while there are capacity issues in open access and hospital-based, the surgeon owned facilities, you have a little more control over that patient in-flow. But, there’s no doubt that there are capacity issues and issues we’ve seen as well with practices having enough personnel to support and to be able to continue the throughput. Fortunately, for us, our systems are well-utilized. And with the systems being well-utilized and with the benefits of surgeons have been receiving -- I think patients are anxious to go ahead and have these types of procedures that we’re able to help with.

Yes. That’s helpful. Okay. Good to hear. And then, just on system utilization, just curious about the trends you are seeing there. It sounds pretty positive. I don’t know if there’s any color you can give beyond what you said in the prepared remarks and just now.

So, two things. One is that because we’re a smaller overall commercial group, we spend a fair portion of our time not trying to convince people that they should be doing femtosecond laser assisted surgery, but because we have a more nuanced technology and our core feature technologies can be used to really address a big unmet need with higher efficiencies than the competitive systems out there, we spend most of our time with people who have found value in femtosecond laser assisted surgery. And so therefore, when we do get into trials and subsequent conversions, our ramp-up times there are faster from a learning curve perspective. And so, we’re able to get that utilization. I think that as people get more comfortable with managing astigmatism, as routine to cataract surgery, and as we continue to talk about that and demonstrate results that physicians are getting with the system that sort of feeds into that growth as well. And we see that it becomes an invaluable tool to the practices and they want to do more procedures with it.

Okay, great. And last question for me on ALLY, it sounds like you guys are on track, which is great. Would love to hear if you’re -- I know this is anecdotal, but what you’re hearing from current LENSAR users? And what’s the level of interest you’re hearing from surgeons for ALLY? Thanks so much.

So, I would say that I couldn’t be more pleased or more excited with anticipation as we get towards ALLY launch. I think that what we’ve seen is that people that heretofore are not that interested, maybe in femtosecond laser assisted cataract surgery, see the utility with ALLY is being so efficient in getting right into the operating room. And certainly, physicians that are really into laser cataract surgery, femtosecond laser cataract surgery, we’ve just seen tremendous enthusiasm in people, they want to talk about it and having the opportunity to really meet with a lot of different surgeons in a lot of different forums and presenting their people are very interested. So, we’re really excited about where we’re going here.

Your next question comes from the line of Ryan Zimmerman of BTIG.

Hey. Good morning. Thanks for taking the questions. Congrats on the quarter. I just want to ask a few for me. The pricing trends on the procedure ASPs seem to have held up pretty nicely this quarter. And Nick or Tom, just want to get your perspective on kind of where you think those pricing trends can go over time, whether it’s with the existing system today, or if you think about ALLY in the market?

You mean -- hi Ryan, first of all. Thanks for getting on the call and your questions today. Are you -- do you mean trends in procedure pricing based on volume…?

Yes. I’m referring, Nick, to the consumable component. So, kind of how you think about that price -- and just so I think about your recurring revenue and the procedure numbers, as we’ve tracked kind of that blended ASP. I just wanted to get your thoughts about where that could go potentially over time, or if you expect it to hold steady?

So, given the environment and given the value that is -- that we believe we’re delivering here from an efficiency and an outcome perspective, I don’t really feel like there is pressure to bring prices down as it relates to procedures. I mean, the reality is, is that we provide a real value there and our system, given how we communicate with the preoperative devices and we’re able to increase the throughput for the surgeon in the present system and the practice. I think, people feel that they’re getting a fair value for what’s being delivered. I think, going forward with ALLY that’ll take that and bring it into like a whole another level. I mean, just procedure times alone, as I mentioned, being able to cut procedure times up to two-thirds and addressing it right in the operating room and not having to reprep the patient and whatnot. I feel like, the value delivery there, the value proposition increases even more. So, I don’t feel like we’re going to see pressure in that regard from a pricing perspective. We’re priced fairly, and we’re delivering a good value.

And the other thing I would say, Ryan, is with the return back to system placements, and this is not pricing, but actually volume, it takes a little while for the systems to -- for the surgeons to be trained on systems. But, as we had a hiatus with the pandemic, and we weren’t placing as many systems or selling as many systems, now that we’re getting back to current levels, we would expect the procedure volume to start to increase as we get past these learning curves.

Right. So, Nick, just to that point. I mean, given the value that ALLY will bring, do you think you could take some price potentially, whether it be through systems or a consumable, just given how efficient the system is obstructed [ph] today?

Yes. I do believe that over time, particularly when people see the value that it delivers, number one. And number two, like how it’s kind of tag along on something, Danielle, brought up, how the efficiency relates to the use of personnel. I think, that will also play a role in this because people will be able to, in essence, better utilize the personnel that they have. And because we’re right in the operating room and you’re switching from one procedure to the next, without having to transport the patient or prep that way. So, I do believe that it strengthens the overall value proposition and potentially how and what they’d be willing to pay for that.

Okay. Got it. And then, just one last for me. Tom, on the margin, I appreciate you calling out some of the dynamics around ALLY kind of impacting the margin this quarter. How do you think about that recovery and how long that could or could not last potentially into 2022, just on the margin side?

Well, I think that as we transition our manufacturing operations and start building ALLY units, you are probably going to see that, because there’s a learning curve associated with -- well there’s just changing the infrastructure for our manufacturing for the new system. And then, there’s a learning curve with building the ALLY unit. We’ve been manufacturing the current system for quite some time. And so, our manufacturing folks I mean it’s an art for them at a science and they do it very quickly. They should get up to speed on ALLY but, we would expect much better margins on ALLY as we increase the volumes and hopefully we get past some of the pandemic cost concerns, but I would say that you’re probably looking a certainly the fourth quarter and first quarter of 2022, and maybe into the second quarter of 2022, that we’ll have a little bit of pressure on margins.

Okay. I appreciate you to taking the questions. Thank you.

Yes. Thanks Ryan.

I’m showing no other questions at this time, sir.

Thank you. Okay. So, I guess, thank you for joining our call today, and I really appreciate everyone’s continued interest in LENSAR. We look forward to updating you as we make further progress, and as we get closer to the filing and launch of ALLY.