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Date

Tuesday, May 19, 2026 at 5 p.m. ET

Call participants

• Chief Executive Officer — Patrick Mercer
• Chief Financial Officer — Romeo R. Dizon

Takeaways

• Revenue -- $11.8 million, essentially flat versus the prior year and above the guidance communicated on the previous earnings call.
• G-Probe sales -- 15,500 G-Probes sold, up from 13,900 year over year, reflecting increased adoption in the glaucoma segment.
• Cyclo G6 product family revenue -- $3.6 million, representing 14% growth from $3.2 million last year, driven by higher domestic and international unit sales and increased average selling price in the United States.
• Retina product revenue -- $5.8 million, affected by a decline in international retina system sales; lower retina system sales partly offset by growth in other areas.
• Gross profit -- $4.7 million with a 40% gross margin, versus $5 million and a 43% margin previously; gross margin benefited by a 300 basis point sequential improvement from the prior quarter.
• Operating expenses -- $5.1 million, a decrease of 4% or $200 thousand compared to the same period last year, mainly due to lower general and administrative costs.
• Adjusted EBITDA -- $300 thousand, compared to $400 thousand in the year-ago period; non-GAAP basis referenced.
• Net loss -- $500 thousand or $0.03 per share, improved from a net loss of $1.7 million or $0.10 per share last year.
• Cash and cash equivalents -- $4.6 million as of April 4, 2026, reflecting a reduction of $1.4 million during the quarter.
• Backlog impact -- CEO Mercer stated, "$800 thousand" of revenue was backlogged at the end of the quarter, all in the retina category, with shipment expected in the following quarter.
• 2026 revenue guidance -- Company reaffirmed forecast of $51 million to $53 million, amounting to approximately 1%-5% pro forma growth; guidance excludes Middle East region revenue.
• Cost initiatives -- Relocation of certain general and administrative functions out of California achieved roughly 70% completion, resulting in ~$100 thousand quarterly savings, with a target of $165 thousand per quarter by year-end.
• Manufacturing transition -- Company initiated transition to third-party contract manufacturing, targeting full implementation by 2027 to support gross margin improvement.
• International headwinds -- Supply chain disruptions, ongoing Iran conflict, and regulatory delays particularly impacted revenue in Asia and the Middle East.
• Seasonality -- Management expects Q1 to represent approximately 22% of annual revenue and historically to be the lowest revenue quarter in the year.

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Risks

• Gross margin decreased by 3 percentage points compared to the prior year, primarily due to higher manufacturing costs and recent tariff developments.
• International revenue was adversely affected by geopolitical disruptions, regulatory delays, and supply chain constraints, especially in Asia and the Middle East.
• Retina system sales experienced a notable decline as stated in the call, impacting total revenue performance for the period.
• Cash and cash equivalents declined by $1.4 million during the quarter, with highest cash usage typically occurring in Q1 due to annual expense payments.

Summary

IRIDEX (IRIX +3.45%) reported fiscal first-quarter results for the period ended April 4, 2026, in line with its previous outlook, maintaining revenue stability despite operational and macroeconomic headwinds. The completion of cost efficiency initiatives contributed to a 4% year-over-year reduction in operating expenses, while the company maintained pricing discipline—raising average selling prices on both probes and systems in the United States. Strategic actions, such as advancing the transition to contract manufacturing and executing new commercial partnerships, signal ongoing efforts to drive margin expansion and broaden market reach. Management confirmed $800 thousand in retina backlog at quarter end, with shipment anticipated to support the next quarter’s topline. The company reaffirmed its annual revenue guidance, excluding the Middle East, and projects sequential improvements in cash generation for the remainder of the year.

• CEO Mercer highlighted, "positive adjusted EBITDA for the first time in the company's recent history" during 2025, marking a notable shift in profitability trajectory.
• The company’s agreement with iPro GPO expands retina portfolio access to over 1,800 members, including practices and hospitals, enhancing sales prospects for PASCAL and IQ laser systems.
• Backlog of $800 thousand, specifically in retina, primarily resulted from regulatory and supply chain delays; management expects this backlog to be cleared in the following quarter.
• Cost-saving initiatives, including relocation efforts, contributed to approximately $100 thousand in savings during the quarter and are projected to reach $165 thousand per quarter as execution progresses.
• Management communicated that some first-quarter revenue was lost due to timing factors—stating this "represent incremental revenue opportunities for the balance of the year."

Industry glossary

• G-Probe: Disposable probe used with the Cyclo G6 system to treat glaucoma by delivering laser energy to reduce intraocular pressure.
• PASCAL: Pattern Scanning Laser, IRIDEX’s flagship system for retinal photocoagulation procedures targeted at various retinal diseases.
• EndoProbe: Device used in vitreoretinal surgery for endolaser treatment of retinal disorders.
• MedScout: IRIDEX’s data-driven marketing and outreach platform for identifying and targeting physicians or facilities to drive procedure adoption.
• MIGS: Minimally invasive glaucoma surgery; a surgical approach used for treating mild to moderate glaucoma.
• GPO: Group purchasing organization; an entity that helps healthcare providers aggregate purchasing to negotiate preferred pricing.
• ASB: Average Selling Price; the average price realized per unit sold, often tracked to assess revenue impact of pricing changes.

Full Conference Call Transcript

Patrick Mercer, IRIDEX's Chief Executive Officer Romeo Dizon, the company's Chief Financial Officer. Earlier today, Iridex released financial results for the quarter ended 04/04/2026. A copy of the press release is available on the company's website. Before we begin, I would like to remind you that management will make statements during this call that include forward looking statements within the meaning of federal securities laws are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 2 thousand.

Any statements made during this call that are not statements of historical fact including, but not limited to, statements concerning our strategic goals and priorities, products, and development matters, sales trends, and the markets in which we operate. All forward looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements. Accordingly, you should not place reliance on these statements. For a discussion of the risks and uncertainties associated with our business, please see our most recent Form 10-K and Form 10-Q filings with the SEC.

IRIDEX disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward looking statements whether because of new information, future events, or otherwise. This conference call contains time sensitive information and is accurate only as of the live broadcast. Today. 05/19/2026. And with that, I will turn the call over to Patrick.

Patrick Mercer: Good afternoon, everyone, and thank you for joining us. I am pleased to share our first quarter results and the continued progress we are making as we build on the positive momentum we delivered throughout last year. For context, before diving into Q1, I want to highlight some of the significant milestones we achieved last year. In 2025, we delivered positive adjusted EBITDA for the first time in the company's recent history and we also achieved positive cash flow from operations in Q4. These achievements represent a fundamental shift IRIDEX's financial profile and reflect the hard work completed to reposition the business for sustainable profitability going forward.

As a result of this work and our solid start to the year, we remain on track to be cash flow positive in 2026. We executed according to plan in Q1 despite several anticipated headwinds. Including the Iran conflict temporary supply chain constraints and extended timelines associated with certain regulatory approval. Against this backdrop, we delivered revenue of 11.8 million essentially flat year over year and above the guidance communicated on our last earnings call. Our highest margin business, G-Probes, was a clear bright spot during the quarter. Continued growth and adoption of our glaucoma solution underscore the strength of our clinical value proposition and the loyalty physicians have to the G6 Platform.

Internationally, We Operate In A Challenging Environment With Supply Disruptions Regulatory Delays, And Geopolitical Volatility, Particularly Impacting Revenue In Asia and The Middle East. Importantly, underlying demand remains solid. And we believe revenue and earnings would have been higher had we been able to fulfill certain orders that were backlogged at the end of the quarter. Looking ahead, supply chain conditions and regulatory processes are improving. And we continue to actively manage through these dynamics. As a result, we believe some of the timing relating impacts that affected our first quarter performance represent incremental revenue opportunities for the balance of the year.

On the operations front, we again reduced our operating expense compared to the prior year period as we continue to drive efficiencies across the organization. We are pleased to report that the relocation of certain general and administrative functions out of California again delivering quarterly savings starting in Q1 26. We also remain on schedule to relocate our headquarters later this year. Which is expected to reduce our fixed cost base by approximately 600 thousand on an annualized basis. Additionally, our multiyear initiative to transition production to lower cost third party contract manufacturers is underway. With meaningful transfers initiated in the first quarter.

Full implementation is expected to be completed in 2027 and this transition will drive gross margin improvement as we progress through the year. And into next year. Turning now to our commercial performance in the first quarter. Starting with our glaucoma business. In total, in the first quarter, we sold 15.5 thousand G-Probes versus 13.9 thousand in the prior year period. This represented growth in the competitive glaucoma market which is a testament to the strength of our value proposition and physician loyalty to the G6 platform. Utilizing MedScout to target G6 adopters with average utilization continues to be our most effective strategy. Our MedScout platform continues to be a valuable tool for targeted outreach.

Here we are focused on 2 groups. The 1st are those who already have G6 systems, and are average users, And the 2nd are high volume facilities that do not currently perform MicroPulse procedures. With the mid utilization accounts, we focus on education, working with physicians to expand their patient selection criteria, to treat patients earlier in the glaucoma severity continuum. With the 2nd group, the focus is also on education with particular focus on the efficacy of TLC patients who have already had a mixed procedure.

Speaking of mixed, Medicare LCD introduced last year are creating tailwinds for us, including expanding our target segments and supporting earlier adoption of G6 therapy for both the mild to moderate and post-MIGS glaucoma patients. Combined with our updated sweep speed, procedural techniques, and clinical data demonstrating the IOP lowering efficacy of the procedure. We believe we are well positioned to drive sustainable growth in this business throughout 2026. Pricing discipline also supported our Q1 performance. As our ASP increases on both probes and systems in The U. S, carried over from 2025.

This is indicative of enhanced recognition of the value proposition of our procedure and the growing recognition among ophthalmologists of G6 as a safe, effective alternative to incisional surgery. On the system side, we saw 24 G6 units in the quarter, in line with the prior year period. Unit placement has remained steady year over year and physician relocations continue to drive dedicated system acquisitions at new practice sites. This steady growing installed base provides a solid foundation for driving incremental probe utilization as we execute on our commercial strategy. Turning to our international glaucoma business, performance was mixed across regions. As we navigated a number of operational and macroeconomic challenges.

In Europe, Middle East, and Africa, we conducted multiple high impact G6 symposiums and clinical trainings that reinforced our value proposition in multiple countries including Russia's Saudi Arabia, Egypt, and Poland. UK registry product is moving forward as planned. The engagement from the clinical community has been strong and we believe this positions us well for continued adoption in the region. In Germany, G6 probe sales remained stable with existing customers and we believe our German market utilization is well positioned to absorb incremental volume as we work through distributor transitions in the country. In Asia, we navigated ongoing volatility throughout the year. Demand of our products remained stable, but challenging economic conditions created some headwinds for our commercial execution.

In Japan, we restored G-Probe inventory Following Prior Regulatory Challenges. Which Was A Meaningful Positive Development For The Region. However, Macro Headwinds From A Weekend Continue To Persist. And We Are Monitoring The Macro Environment Closely And Expect Conditions To Improve Over Time. In Latin America and Canada, we saw stable G-Probe performance with users being led by Peru and Mexico. Additional focus is being placed on Canada, Brazil, and Argentina to leverage the sizable installed base of G6 system. Turning to our retina portfolio. Our strategic priorities remain focused on 3 areas. Driving The U. S. PASCAL upgrade cycle expanding international PASCAL adoption, and obtaining regulatory clearances for our next generation platforms to leverage our established global distribution footprint.

In The United States, surgical retina was a standout performer driven by continued strong demand for SLx Tx and LIOs. This category exceeded expectations for the quarter and demonstrated the underlying strength of our surgical platforms. Medical retina continued to perform strongly, particularly PASCAL, benefiting from a robust pipeline of leads generated at the American Academy of Ophthalmology annual mean Q4. It is worth noting that PASCAL continues to be firmly established as our flagship system in The U. S. Market. We are seeing a consistent trend of existing PASCAL customers upgrading to our newer platforms.

And newly graduating ophthalmologists are selecting PASCAL systems due to our efforts to ensure PASCAL is the preferred system used in university and training programs. On the commercial front, we announced an important partnership with iPro GPO in early April. This agreement expands access to our retina laser portfolio to their more than 1.8 thousand members including ophthalmology practices ambulatory surgery centers, and hospitals in The United States. Through this partnership, iPro GPO members receive preferred pricing on our PASCAL laser platform IQ 32 and IQ 77 lasers, and the Oculight SLx laser. This adds to our existing Cyclo G6 contract with Ipro GPO and represent a significant commercial milestone.

Beyond contract status reinforces the credibility of our check technology enables a more streamlined sales process for our team and customers. While expanding the addressable market for our retinal laser system. We believe this partnership will be an important driver of retina systems placements in the coming quarters. Turning to international retina, in Europe, Middle East, Africa. Lack of MDR approval continues to constrain PASCAL growth in Europe. Mildly offset by the launch of the new IRIDEX PASCAL in Africa. In Germany, EndoProbe cells are gaining traction, in line with plan, as we take over business from our previous distributor. In Asia, China experienced some challenges during the quarter, including EndoProbe supply constraints that materially impacted sell through.

We have been working with our manufacturing partners and these issues should be resolved this month. In Japan, large Pascal orders were deferred to Q2 due to regulatory delays associated with electrical safety testing. This is a timing item not a demand concern, and we expect the order to ship in the current quarter. In Latin America and Canada, PASCAL and medical retina cells came below expectations impacted in part by seasonal summer holiday slowdown. As we look ahead to the remainder of 2026, our strategic priorities remain clear and focused. For the full year 2026, we are reaffirming our revenue guidance of $51 million to $53 million.

As a reminder, this guidance excludes revenue from the Middle East region and represent approximately 1% to 5% pro forma growth versus 2025. I am proud of the sustained execution we have demonstrated across all 4 of our 2025 commitments revenue growth, cost reduction, positive adjusted EBITDA, and positive cash flow from operations in Q4. The foundation is set for continued progress in 2026, Now I will hand the call over to Romeo to discuss our financial results. Thank you, Patrick.

Romeo R. Dizon: Good afternoon, everyone. You for joining us today. As we noted in our press release and in Patrick's comments, our total revenues for 2026 were 11.8 million basically flat with 11.9 million reported in 2025. Revenue was in line with our expectations and the guidance we provided with our Q4 results. The decrease in revenue was primarily driven by a decrease in retina system sales, partially offset by an increase in glaucoma probe sales and service and other revenues. Retina product revenue was $5.8 million compared to $600 thousand in the prior year period, driven primarily by lower sell through of retina system sales internationally.

Total product revenues from the Cyclo G6 product family was $3.6 million representing growth of 14% year over year compared to $3.2 million in the prior year quarter. Increase is attributable to both an increase in units sold domestically and internationally and an increase in ASB domestically. Other revenue increased $200 thousand to $2.3 million in 2026 compared to $2.1 million in 2025, driven primarily by the increase in service and other certain legacy product revenues. Profit in 2026 was $4.7 million or a 40% gross margin, a decrease of $300 thousand compared to $5 million or a 43% gross margin, in the prior year period.

Gross margin decreased primarily due to the increased in overall manufacturing cost including increased product costs associated with the recent tariff development. On a sequential basis, first quarter gross margins improved 300 basis points compared to fourth quarter 25 gross margins. Operating expenses were $5.1 million in the 2026 a decrease of $200 thousand or 4% compared to $5.3 million in 2025. The decrease was primarily attributable to lower general and administrative expenses driven by reduced consulting costs, reduced deal related legal expenses, and cost savings realized from the general and administrative transfer initiative discussed in prior period in Q4, we announced that we were relocating certain G&A functions out of California commencing in the 2026.

We have achieved about 70% of this initiative and have realized approximately $100 thousand in savings in the 2026. Scott of our expected quarterly benefit of approximately $165 thousand. We will update you on our progress on our next call. Loss from operations was $300 thousand an increase of $100 thousand compared to a loss from operations of $200 thousand in 2025. Other expense net was $100 thousand in the 2026 primarily consisting of interest and amortization of loan expenses. Other expense net was $1.5 million in 2025, due primarily to costs associated with a note payable settlement.

Consequently, net loss was $500 thousand or $0.03 per share, in the 2026 compared to a net loss of $1.7 million or $0.10 per share in the same period of the prior year. Non GAAP adjusted EBITDA for the quarter of 26 was $300 thousand compared to non GAAP adjusted EBITDA of $400 thousand for the 2025. Cash and cash equivalents as of 04/04/2026, were $4.6 million, a decrease of $1.4 million in the quarter. As we guided on our last call, in general, our cash usage is highest in the first quarter of the fiscal year, resulting from payments of accrued compensation, and other year end accrued expenses and liabilities.

For the remainder of the year, we expect to generate cash, and for the quarterly cash generation to improve sequentially as we sell through inventory and collect receivables on increased revenues. Cumulatively, this will result in positive cash flow for fiscal year 2026. Total operating expenses contained a favorable trend in Q1 26, reflecting the sustained impact of cost reduction initiatives implemented beginning in 2024. Our first quarter performance confirms that we are on track for 2026. The sequential revenue decline we saw in Q1 was anticipated as consistent with the normal seasonality we see in our business, and we managed to reduce our net loss despite the lower revenue.

As Patrick mentioned, we are reaffirming our 2026 guidance We expect to generate revenue of $51 million to $53 million. As a result of market disruption from the ongoing conflict in The Middle East, this guidance does not include revenue from that region. On a pro forma basis, adjusted to exclude Middle East revenue in 2025, guidance represents 2026 growth of 1% to 5% compared to 2025. We also want to reiterate the seasonality we experienced in our business. Q1 on average represents ~22% of our annual revenue, and is the lowest quarterly total revenue for the year.

From the total dollar perspective, second and fourth quarters are seasonally stronger than the first with the fourth quarter being the strongest quarter of the year and the third quarter is generally a sequential decline from the second quarter. We are also reiterating our tax expectation for adjusted operating expenses, which exclude depreciation, amortization, and stock compensation to be in the range of $19 million to $19.5 million for the full year 2026. We also continue to expect to generate positive operating cash flow for the full year 2026. And with that, I will turn the call back to Patrick.

Patrick Mercer: Thank you, Romeo. As I reflect on the first quarter, I am encouraged by the progress we are making on our strategic initiatives. Our U. S. Glaucoma business delivered solid growth in a competitive environment. Our cost structure improvements are flowing through as planned and our manufacturing transition is underway and on track to drive meaningful margin expansion. We remain confident in our ability to deliver on our priorities for 2026. These priorities are clear, Expand our G6 utilization through effective targeting advanced regulatory approvals internationally, to unlock new geographies or our retina systems and continue to transition to lower cost contract manufacturers to drive gross margin improvement.

We will now turn the call over to the operator for your questions.

Operator: Thank you. We will now begin the Q&A session. If you have dialed in and would like to ask a question, please press *1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press *1 again. If you were called upon to ask your question and are listening via loud speaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. And your first question comes from the line of Scott Henry from AGP. Your line is now open.

Analyst (Scott Henry): Thank you, and good afternoon. A lot of information in there. Just to get started, on the Retina line, 1 of the lighters lighter quarters we have seen in a while is that a lot to do with the international headwinds? Anything else there? And when we think about full year 2026, I know last year was a strong retina year. Should we be thinking about that comp making the 2026 kind of a negative year over year move for retina revenues?

Patrick Mercer: Hi, Scott. Thank you for your question. You know, with first quarter, we ran into some regulatory delays that hurt us internationally. Particularly on Pascal There were orders that did not ship to Japan because of that. There were other orders that did not ship due to a material issue with our EndoProbes. That issue has been resolved, and we are gonna ship the product this month. The regulatory issues have been resolved. So going forward, we do not see these as issues at all. In fact, you know, our PASCAL in The US performed very well and so did our surgical retina. So going forward, we do not expect anything different.

You know, we still see the Pascal upgrade cycle to be ongoing both international and in The US. You know, we have engaged hospitals and universities for graduating ophthalmologists to start using our PASCAL systems. And, you know, particularly with this iPro GPO partnership, we see things improving over Q1. Q1, we got snagged by a few challenges and supply chain and regulatory issues, but those hopefully will be behind us. We feel strong that certainly, you know, moving forward, they will be.

Analyst (Scott Henry): Okay. Great. And you mentioned you had some backlog at the end of the quarter. I did not hear, but did you quantify the amount of that? And should that have a favorable impact on Q2? And also was that backlog was that in the retina section? Or was it in G6?

Patrick Mercer: That backlog was around $800 thousand and it was all retina. And we did not we anticipated the EndoProbe backlog. We did not anticipate the regulatory. We would hoped to get that over the finish line. But as you know, with regulatory items, some of those things are up to the bodies of those countries. But going forward, we look for we look for that revenue to ship this quarter. And yes.

Analyst (Scott Henry): Okay. Great. And then, you know, shifting gears to G6. The system sold was flat year over year. You think you can grow that total systems sold in 2026? Or you know, will the focus be more on the probes, which did you know, very well? In the quarter.

Patrick Mercer: Yeah. You know, we think we will grow the system somewhat but we are really focused on driving probe utilization and driving particularly those more moderate patients in the U.S., there is 2.1 million moderate patients, and we are just scratching the surface there. And with our MedScout targeting that we are going after where we can see you know, who is doing what procedures We are gonna continue to focus on utilization and selling more probes. Certainly, we are setting up new accounts, and we look for those numbers to remain in line with our expectations and our plan. But our real-- our real objective is to drive probe utilization.

And, you know, I want to-- 1 reminder is we, in The US particularly, we increased ASP on both the probes and the systems. So we saw growth from obviously, the ASP, but also from units as well. And we are excited about that. We feel really good about our glaucoma business going throughout the rest of the year.

Analyst (Scott Henry): Okay. Great. Final question. Gross margin was up sequentially in Q1. But last year, it did dip in those middle quarters. How should we think about gross margin in Q2 and Q3 relative to what we saw this quarter? Thank you.

Romeo R. Dizon: Hi, Scott. This is Romeo. Thanks for the question. Yeah. Basically, going forward now, we have the last couple of quarters, we have been studying the reserves for the contract manufacturing transition of products. So we figured those part costs. We would expense them there. that is why the margins were lower. But given even with the continued increase in our production cost, I think they have normalized to the high 30s, low 40s just to really dependent on the product and region mix as well, which helped this quarter.

Analyst (Scott Henry): Okay. Great. Thank you for the color, Romeo, and thank you for taking the questions. Thanks, Scott.

Operator: That concludes our Q&A session. I will now turn the conference back over to Patrick for closing remarks.

Patrick Mercer: Thank you for your time today. We look forward to updating you on future calls. Thank you.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect. Thank you.