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DATE

Tuesday, Aug. 18, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Investor Relations - Trip Taylor
• Chief Executive Officer - Patrick Mercer
• Chief Financial Officer - Romeo R. Dizon

TAKEAWAYS

• Total Revenue -- $12.6 million, a 7% decrease from $13.6 million in the prior year period, reflecting lower retina product sales and temporary international commercial transitions.
• Cyclo G6 Product Family Revenue -- $3.9 million, representing 19% growth year over year driven by increased unit volumes and higher average selling prices in the United States.
• Cyclo G6 Probe Volume -- 17,700 units, a 35% increase from 13,100 units in the prior year period, driven by expanded physician adoption and increased platform utilization.
• Cyclo G6 Laser System Sales -- 18 units, compared to 35 units in the prior year period, due to order timing in the Europe, Middle East, and Africa region.
• Retina Product Revenue -- $6.5 million, compared to $8 million in the prior year period, reflecting international regulatory factors and commercial transitions.
• Other Revenue -- $2.2 million, which remained flat compared to the second quarter of 2025.
• Gross Margin -- 34.2%, compared to 34.5% in the prior year period, as favorable contributions from glaucoma probes were offset by softer retina system margins.
• Operating Expenses -- $5.3 million, a 5% decrease from $5.6 million last year, reflecting savings from the administrative function transfer initiative.
• Net Loss -- $1.3 million, or $0.07 per share, compared to a net loss of $1 million, or $0.06 per share, in the prior year period.
• Adjusted EBITDA -- A loss of $400,000, compared to income of $21,000 in the second quarter of 2025.
• Cash and Cash Equivalents -- $4.7 million, an increase of $100,000 from the previous quarter, driven by positive cash flow from operations.
• Full-Year Revenue Guidance -- $51 million to $53 million, excluding revenue from the Middle East region.
• Pro Forma Revenue Growth -- 1% to 5%, representing the expected growth range for 2026 on a comparable basis excluding Middle East revenue.
• Adjusted Operating Expense Guidance -- $19 million to $19.5 million, representing the company's expectation for the full year 2026.
• Safety Stock Inventory -- The company is deploying working capital to build inventory ahead of a headquarters relocation and international regulatory registration periods.
• US Glaucoma Performance -- Driven by three initiatives: customer targeting with MedScout, Local Coverage Determination tailwinds, and increased average selling prices for probes and systems.
• Japan Business Transition -- Distributor stocking ahead of a business transition resulted in increased purchases of MicroPulse P3 probes, endo probes, and PASCAL systems.
• China Market Dynamics -- Sell-through was affected by regulatory constraints and the distributor working through existing inventory levels.
• iPro GPO Partnership -- An expanded agreement adds EndoProbe handpieces to preferred pricing for more than 4,300 member practices and hospitals.
• UK Registry Progress -- The registry for MicroPulse therapy is advancing to support broader reimbursement and physician adoption in the United Kingdom.
• Glaucoma Outlook -- Management expects low-double-digit growth for the second half of 2026.
• Retina Outlook -- Management expects low-single-digit growth for the second half of 2026, supported by international regulatory approvals.

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RISKS

• Mercer stated, "We had headwinds due to the continued disruption in the Middle East," which impacted the company's retina portfolio performance during the quarter.
• Mercer noted that in the GmbH business, "competition persists for new console placements," affecting the overall volume of Cyclo G6 systems sold in Germany and Austria.
• Mercer warned that where distributors placed larger stocking orders this quarter, the company expects "a corresponding decline next quarter representing some continued choppiness in different regions globally."

SUMMARY

Management of IRIDEX Corporation (IRIX -4.07%) reported an inflection point in the company's financial profile, noting the generation of positive cash flow during the quarter. The company is currently executing a strategy to optimize its cost structure through a headquarters relocation and a multiyear transition of production to contract manufacturers. While the glaucoma business expanded through increased probe utilization and higher average selling prices, the retina segment experienced revenue declines associated with international commercial transitions and regulatory factors. Management maintained its full-year revenue targets and indicated an intentional increase in safety stock to ensure supply continuity during its operational transitions.

• Patrick Mercer stated, "If there is 1 message I want to leave you with today, it is that IRIDEX has reached an important inflection point in its financial profile."
• The company reported that the relocation of its headquarters requires a new registration process and managing global registration blackout periods to secure the international supply chain.
• Management expects the PASCAL retina platform to secure MDR Approval in Europe in the first half of 2027.
• The company reported that 35% growth in Cyclo G6 probe volume was broad based, with increased demand from every operating region.
• The company added EndoProbe handpieces to its preferred pricing agreement with iPro GPO, which serves more than 4,300 member practices and hospitals.
• Management indicated that order timing in Europe, the Middle East, and Africa, along with competitive pressures, resulted in a step down in Cyclo G6 unit placements compared to the prior year.

INDUSTRY GLOSSARY

• ASPs: Average Selling Prices; the average price at which a particular product is sold.
• Cyclo G6: A laser system manufactured by IRIDEX specifically designed for the treatment of glaucoma.
• GPO: Group Purchasing Organization; an entity that helps healthcare providers realize savings by aggregating purchasing volume and using that leverage to negotiate discounts with manufacturers.
• IOP: Intraocular Pressure; the fluid pressure inside the eye, which is a key metric in managing glaucoma.
• LCDs: Local Coverage Determinations; reimbursement decisions made by regional Medicare Administrative Contractors.
• MDR: Medical Device Regulation; the European Union's regulatory framework for the safety and performance of medical devices.
• MedScout: A precision targeting platform used by commercial teams to identify and engage physician accounts with high potential for product utilization.
• MicroPulse: A proprietary laser technology that delivers therapeutic benefits while minimizing tissue damage.
• PASCAL: Pattern Scanning Laser; a sophisticated retina laser system used for photocoagulation treatments.

Full Conference Call Transcript

Operator: Okay. Name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 26 IRIDEX Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a Q&A session. To withdraw your question, press 1 again. It is now my pleasure to turn the call over to Trip Taylor, Investor Relations. Please go ahead.

Trip Taylor: Thank you, operator. Thank you all for joining us this afternoon. With me on today's call are Patrick Mercer, IRIDEX's Chief Executive Officer and Romeo R. Dizon, the company's Chief Financial Officer. Earlier today, IRIDEX issued a press release detailing our financial results for the quarter ended 07/04/2026, which is posted to the Investors section of our 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, which 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, product 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, should not place reliance on these statements. For a discussion of the risks and uncertainties associated with our business, please see the most recent Form 10-Ks 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 August 18, 2026. With that, I will pass the call to Patrick.

Patrick Mercer: Good afternoon, everyone, and thank you for joining us for our second quarter call. If there is 1 message I want to leave you with today, it is that IRIDEX has reached an important inflection point in its financial profile. We generated positive cash flow in the second quarter demonstrating the meaningful progress we have made over the past 2 years to fundamentally transform our cost structure, strengthen working capital management and create a more disciplined and sustainable business. As part of our activity to further improve the efficiency of the business, this month we began the process of relocating our headquarters.

This is a long anticipated cost cutting step and an important part of our broader effort to optimize our cost structure improve operational efficiency and align our infrastructure with the business we are building for the future. The headquarters move will require a new registration process and managing global registration blackout periods in order to secure our international supply chain and protect top line distributor revenue streams through the transition we are in the process of building safety stock inventory to maintain supply continuity. This project is being implemented in a careful coordination with our vendors and distribution partners all of whom are familiar with the special demands of medical device manufacturing. And particularly the necessary regulatory approvals.

We anticipate that the temporary working capital investment which impacted our second quarter cash flow, and will further impact our third quarter cash flow will enable us to achieve our 2026 revenue guidance, of $51 million to $53 million Cash flow from operations should be unaffected. But the increased deployment of working capital will reduce our cash on hand through 2026 without reversing and becoming a cash tailwind in 2027. As we work down the elevated inventory levels, and continue to more tightly manage our working capital.

We continue to rightsize the business with discipline and the positive cash flow we delivered in the second quarter is a proof point of our success and the growing financial strength of the business. I am pleased to announce that we have again reduced our operating expenses compared to the prior year period through our various cost savings initiatives. As mentioned previously, the relocation of our headquarters is ongoing and the multiyear shift to production to our lower cost third party contract manufacturers, continues to advance. We view both as becoming powerful drivers of improving gross margins ahead in 2027.

We believe some of the timing related impacts that affected our first half of 26 performance represent incremental revenue opportunities for the remainder of the year. Our focus in the back half of the year remains on strengthening our supply chain, building inventory ahead of our manufacturing transitions and advancing our international regulatory submissions. Now turning to our commercial performance in the quarter. Our glaucoma business once again delivered solid probe led growth this quarter. This continued growth in demand and utilization for this higher margin product is an encouraging indicator of the increasing utilization of our G6 platform. Demonstrating the increasing adoption of our technology by physicians.

In our retina business, we faced a number of market dynamics and operational execution challenges that affected commercial activity during the quarter. We are actively addressing these factors and remain focused on strengthening execution improving performance and positioning the retina business for sustainable, profitable growth. Total revenue for the quarter was $12.6 million. Cyclo G6 probe volume rose 35% year over year and G6 product family revenue increased 19%. A direct reflection of expanding physician adoption of our non incisional approach and increased utilization of the G6 platform. The breadth of this growth is encouraging as it came from every region in which we operate.

The year over year revenue decline in our overall business was driven entirely by retina and by a set of temporary commercial transition and regulatory related factors. Internationally rather than by any change in the fundamental demand of our products. Starting with glaucoma for the quarter, Cyclo G6 probe volume totaled 17.7 thousand units, a 35% increase from 13.1 thousand units sold in the prior year period in the U.S., 3 initiatives are driving strong growth customer targeting with MedScout. LCD tailwinds and increased ASPs. Our primary growth driver in glaucoma this quarter continued to be increased utilization of the G6 platform with particularly strong momentum in probe volumes.

Through MedScout, we have become increasingly targeted in how we identify and engage physicians with the greatest opportunity to expand utilization. We are focused on 2 key segments, existing G6 accounts with moderate utilization, where there is an opportunity to increase procedure volume, and high volume glaucoma practices that have not yet incorporated MicroPulse therapy into their treatment protocols. In both segments, our commercial team is working directly with physicians through education focused on appropriate patient selection clinical outcomes, and the efficacy and versatility of the procedure. This targeted approach is helping us move beyond simply placing systems and toward driving greater utilization of the installed base. We are also seeing continued tailwinds from the Medicare LCDs implemented last year.

Which have supported broader consideration of MicroPulse therapy across the glaucoma treatment continuum. Our commercial organization is using these reimbursement developments as an important educational opportunity working with physicians to highlight the procedure's ability to lower IOP while providing a non incisional repeatable treatment option which we believe this combination of clinical education reimbursement support, and growing physician experience is helping expand the role of G6 therapy within glaucoma treatment pathways. The 3rd contributor to glaucoma revenue growth was another increase in U. S. Average selling prices for both probes and systems. The continued improvement in ASPs reflects the value physicians place on MicroPulse therapy and the clinical utility of the G6 platform.

Importantly, as we increase utilization within the installed base, we believe the combination of higher probe volumes and increased ASPs provides an attractive foundation for continued growth in the glaucoma business. On systems, we placed 18 Cyclo G6 units during the quarter versus 35 in the prior year period. That step down was driven largely by order timing in Europe, Middle East and Africa, together with ongoing competitive pressures on new console placements in our GmbH business. Moving to the international glaucoma business, In Europe, Middle East and Africa, our UK registry is progressing nicely and engagement from the clinical community has remained strong.

We believe the data generated through the registry will be an important step in supporting broader reimbursement for micropulse therapy in the UK. Expanded reimbursement would improve access for patients increase physician adoption, and over time drive greater utilization of the installed G6 base and increased probe volumes. We believe this positions us well for continued growth in the UK and broader adoption across the region. In GmbH, Germany and Austria operations again performed well, as we continue to reclaim business previously handled by our former distributor. The main soft spot in the region remains G6 console sales. Where competition persists for new console placements.

In Asia, our distributor partner began stocking inventory ahead of the coming business transition in Japan which increased purchases of MicroPulse P3 probes endo probes and PASCAL systems. In Latin America and Canada, G6 probe sales held steady driven primarily by Brazil, where our distributor increased inventory in preparation for our upcoming business. In Canada, we are seeing the commercial focus and initiatives implemented last quarter delivered stable results. Taken together, glaucoma growth was broad across our international regions this quarter, which reinforces how durable our value proposition is globally. Now turning to our retina portfolio.

Our strategy remains focused on 3 pillars: advancing the PASCAL upgrade cycle domestically expanding PASCAL's international footprint, and securing regulatory clearances for our next generation platforms. That will allow us to leverage our global distribution network We remained encouraged by the opportunity for our retina business and customer demand remains strong. That said, during the quarter, we confronted the market and operational execution dynamics that impacted sales during the quarter. We are actively addressing these factors and are confident we are implementing long term solutions that will improve our execution and distributor sell through. Since our last earnings call, we took an important step to broaden access to our retina product portfolio domestically.

Announcing the addition of our EndoProbe handpieces to our existing product offering with iPro GPO. That agreement now gives us more than 4.3 thousand-member practices ambulatory surgery centers, and hospitals across the country preferred pricing on EndoPro, building on the PASCAL IQ 32, IQ 577, Oculight TX. And Cyclo G6 platforms already available through that channel. We see this as a meaningful expansion of the value we offer retina specialists and ophthalmic providers and another lever supporting our US retina business going forward. Turning to international retina. Abroad, retina results were inconsistent and we are taking steps to ensure we are executing commercially and operationally to satisfy the strong demand from our global customer base.

In Europe, Middle East and Africa, we expect PASCAL's to secure MDR Approval In Europe in the first half of next year and we anticipate meaningful demand once that certification is complete. In China, sell-through was impacted by regulatory constraints as well as the need for our distributor to work through existing inventory before placing additional orders. We are actively progressing the regulatory renewal process and expect these factors to normalize over the coming quarters. In Latin America and Canada, Pascal sales resumed following previous market challenges and we anticipate continued momentum and growth throughout the remainder of the year.

As we turn to the rest of 2026, our priorities remain focused on commercial and operational execution in conjunction with continued expense management to drive positive cash flow from operations for the year In alignment with these priorities, we are reaffirming our full year revenue guidance of $51 million to $53 million To reiterate, that range excludes revenue from the Middle East region and on a comparable basis reflects 1% to 5% pro forma growth against 2025. The cadence of international ordering has had a meaningful effect on our results this quarter. In some markets, that sets up incremental opportunity as previously deferred backlog shifts and the product reregistration tied to our relocation are completed.

In others, where distributors placed larger stocking orders this quarter, we expect a corresponding decline next quarter representing some continued choppiness in different regions globally. I will now hand the call over to Romeo to take you through the financials.

Romeo R. Dizon: Thanks, Patrick, and good afternoon, everyone. As Patrick noted, as detailed in our press release, total revenue for the second quarter of 2026 was $12.6 million down 7% from $13.6 million in the second quarter of 2025. The year over year decline stemmed mainly from lower retina product sales, which were partly offset by continued growth in glaucoma probe sales, Turning to the components. Retina product revenue was $6.5 million versus 8 million in the prior year period. As Patrick noted, the decline was driven entirely by temporary headwinds. Including international commercial transitions and regulatory related factors. Underlying global demand for our core products remain robust and fundamentally intact.

Total product revenue for the Cyclo G6 product family was $3.9 million representing growth of 19%. year over year compared to $3.3 million in the prior year quarter. Growth is attributed to both an increase in unit volumes both in the U.S. And internationally, and an increase in ASP domestically. Other revenue was $2.2 million essentially flat compared to $2.2 million in the second quarter of 2025. Gross profit in the second quarter was $4.3 million translating to a gross margin of 34.2%, relatively flat with $4.7 million or 34.5% in the prior year period. Favorable contribution from our higher margin glaucoma probes was largely offset by softer retina systems margins.

And by a number of cost pressures in the quarter. We continue to view our transition to lower cost third party contract manufacturers as a meaningful driver of gross margin improvement over the balance of the year and in 2027. Operating expenses were $5.3 million in the quarter of 2026, down $300 thousand or 5%, compared to $5.6 million in the second quarter of 2025. That reduction was driven primarily by lower general and administrative expenses reflecting savings from the administrative function transfer initiative we have highlighted in prior periods. Progress on that initiative continues, and we remain on schedule to complete our headquarters relocation later this year.

Net loss was $1.3 million, or $0.07 per share for the second quarter of 2026, compared to a net loss of $1 million, or $0.06 per share in the same period of the prior year. Non GAAP adjusted EBITDA for the second quarter of 2026 was a loss of $400 thousand for the quarter compared to a non GAAP adjusted EBITDA income of $21 thousand in the second quarter of 2025. We ended the quarter with cash and cash equivalents of $4.7 million as of 07/04/2026, an increase of $100 thousand compared to 04/04/2026.

As Patrick emphasized, we were pleased to deliver positive cash flow in the quarter a meaningful marker of the financial discipline now driving the business achieved through disciplined cost control and improved working capital even as we build safety stock for certain distributors ahead of our relocation. Across the remaining quarters, expect quarterly cash generation to build sequentially as we sell through inventory and collect receivables on higher revenue However, we anticipate a temporary reinvestment of operating cash flow into advanced inventory procurement This proactive buffer secures our international supply chain and protects top line distributor revenue streams while we transition to our new production facility. Turning to guidance, we are reaffirming our 2026 guidance.

We continue to expect revenue in the range of $51 million to $53 million As a reminder, given the market disruption for the ongoing conflict in the Middle East, that outlook excludes revenue from the region. On a pro forma basis that strips out 2020, 2025 Middle East revenue, the guide implies 2026 growth of 1% to 5% over 2025. We are also reiterating our expectation for operating expenses which include depreciation and amortization and stock compensation to be in the range of $19 million to $19.5 million for the full year of 2026. I will now pass the call back to Patrick for his closing remarks.

Patrick Mercer: Thanks, Romeo. Looking back on the second quarter, I am energized by the continued broad based strength of our glaucoma franchise. And above all, by our demonstrated ability to manage the business to positive cash flow. Our cost discipline keeps translating into stronger cash generation and both our manufacturing transition and our headquarters relocation remain firmly on course to deliver meaningful additional margin improvement as the year unfolds. Our priorities for 2026 remain firmly in place, growing G6 utilization and adoption globally securing international regulatory approvals to open up new geographies for our retina systems and completing the move to lower cost contract manufacturers to increase gross margin.

The foundation we built is solid, Our path to sustained profitability is clear. And we are excited about what lies ahead. We appreciate your continued support of IRIDEX and we look forward to sharing our progress with you again next quarter. Now we will turn the call over to the operator for questions.

Operator: Our first question comes from the line of Scott Henry. Please go ahead.

Scott Henry: Thank you, and good afternoon. Just a couple of questions. First, on retina, it sounds like there is a lot of moving parts domestically and international. The question is, do you expect retina to grow year over year if I look at the full year, which would that would require a pretty significant boost in the second half. So, you know, even if we forget about the full year, do you expect second half 2026 to be higher than second half 2025? Thank you.

Patrick Mercer: Yes. Thank you, Scott, for the question. We expect the second half of the year for retina to show low single digit growth. We have several important tailwinds you know, as we advance international regulatory approvals, we expect that to broaden our addressable market and improve overall performance. Particularly with our flagship product, Pascal. And in The US, on the back half of the year, we expect momentum as we head into the American Academy of Ophthalmology meeting. We plan on implementing our annual promotion programs, which really help us with the sale of the capital equipment and really drive and customer engagement coming out of that meeting. We had some tailwinds.

You know, those are the tailwinds that we see. We had headwinds due to the continued disruption in the Middle East. We had some sell through delays in China due to some stocking orders. Previously for the tariffs. And just managing our relocation in those subsequent inventory management for the blackout periods due to our headquarter relocation. But we do again expect the second half to generate low-single-digit growth for retina.

Scott Henry: Okay. And would you expect historically, the fourth quarter is a lot stronger than the third quarter. Would you expect that to be the case? This year as well?

Patrick Mercer: Yes. Most definitely. it is our it is our largest by quite a bit, generally speaking, Q4.

Scott Henry: Okay. And then shifting to glaucoma, 17.7 thousand probes was a lot for Q2, you know, biggest quarter of the last many years by far, Do you think there was any inventory build there among your customers? I mean, should we expect that to normalize back to more typical levels? Or is this a new normal?

Patrick Mercer: I would not say it is a new normal. We do expect low double digit growth for the second half of the year. If you back out some-- we did have Japan place some orders heavier orders to manage the blackout period. And if you have not just Japan, but in Europe, we had some of that too. Those support the blackout periods. But if you back that out, we still had over 15% growth. Which was if we get that at the back half of the year, we will be very happy with.

So there was some, I will call it, lumpiness due to you know, the preorders to cover the blackout period, but with that backed out, we still had really good growth.

Scott Henry: Okay and also, final question. You know, the system sold, 18, on the other hand, was a little bit of a lower number. Would you expect that to jump back higher in the second half of the year? How should we think about that 18 as far as a go forward number?

Patrick Mercer: We believe it is gonna be much higher towards the back end of the year. We are again, Q4 is our largest quarter, and that includes system sales as well. So we expect that number-- those numbers to be higher as we move forward. We did have some slowness in Europe, Middle East, and Africa. That, you know-- waiting on that approval. That UK registry will once we get that approval there, for reimbursement, that will help boost sales there. So that hurt us this quarter, but we do expect those numbers to increase over the second half of the year. Okay. Great. Thank you for taking the questions. Thank you.

Operator: And thank you all for joining us. Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.