IRIDEX (IRIX) Earnings Call Q2 2026: G6-Wachstum und positiver Cashflow

Der Analystencall von IRIDEX zum zweiten Quartal 2026 hob den positiven vierteljährlichen Cashflow sowie das fortgesetzte Wachstum der Cyclo-G6-Produktlinie hervor, während schwächere Retina-Umsätze zu einem Rückgang des Gesamtumsatzes um 7 % führten. Das Management bestätigte seine Umsatzprognose für das Gesamtjahr und erwartet für die zweite Jahreshälfte, insbesondere für das vierte Quartal, eine stärkere Geschäftsentwicklung.

Wichtigste Erkenntnisse

• Der Umsatz im zweiten Quartal 2026 belief sich auf 12,6 Mio. US-Dollar, was einem Rückgang von 7 % gegenüber 13,6 Mio. US-Dollar im Vorjahreszeitraum entspricht, was hauptsächlich auf geringere Umsätze mit Retina-Produkten zurückzuführen ist.
• Der Umsatz der Cyclo-G6-Produktfamilie stieg im Jahresvergleich um 19 % auf 3,9 Mio. US-Dollar. Das Sondenvolumen erhöhte sich um 35 % auf 17.700 Einheiten, unterstützt durch eine höhere Auslastung und gestiegene durchschnittliche Verkaufspreise in den USA.
• Der Umsatz im Bereich Retina fiel vor dem Hintergrund internationaler Vertriebsumstellungen, regulatorischer Einschränkungen und zeitlicher Effekte bei den Lagerbeständen der Vertriebspartner von 8,0 Mio. US-Dollar auf 6,5 Mio. US-Dollar.
• IRIDEX erwirtschaftete im Quartal einen positiven Cashflow und schloss mit liquiden Mitteln in Höhe von 4,7 Mio. US-Dollar ab, was einem Anstieg von 0,1 Mio. US-Dollar gegenüber dem 4. April 2026 entspricht.
• Das Management bestätigte seine Umsatzprognose für 2026 von 51 Mio. bis 53 Mio. US-Dollar, ohne Umsätze im Nahen Osten. Die Spanne entspricht einem Pro-forma-Wachstum von etwa 1 % bis 5 % gegenüber 2025.
• Das Management erwartet, dass vorübergehende Investitionen in Sicherheitsbestände im Zusammenhang mit der Verlegung des Hauptsitzes die liquiden Mittel bis 2026 belasten werden, bevor die erhöhten Lagerbestände im Jahr 2027 abgebaut werden.

Wichtigste Finanzdaten

Geschäfts- und operative Entwicklung

Glaukom-Wachstum weiterhin durch Sonden getrieben

Das Sondenvolumen von Cyclo-G6 erreichte 17.700 Einheiten, ein Plus von 35 % gegenüber 13.100 Einheiten im Vorjahresquartal. Das Management führte das US-Wachstum auf die gezielte Einbindung von Ärzten über MedScout, die Erstattungsunterstützung durch Medicare-LCDs und höhere durchschnittliche Verkaufspreise für Sonden und Systeme zurück.

Das Wachstum war über die Regionen hinweg breit gefächert. Allerdings tätigten einige internationale Vertriebspartner, darunter Partner in Japan und Europa, vor den mit der Verlegung des Hauptsitzes verbundenen Registrierungssperrfristen größere Bestellungen. Ohne diese Vorab-Bestellungen lag das Sondenwachstum laut Management immer noch bei über 15 %.

Die Auslieferungen von Cyclo-G6-Systemen gingen von 35 auf 18 Einheiten zurück. Der Rückgang spiegelte den zeitlichen Verlauf von Bestellungen in Europa, dem Nahen Osten und Afrika wider sowie den Wettbewerbsdruck bei neuen Konsolenplatzierungen in den Geschäftsbereichen des Unternehmens in Deutschland und Österreich.

Retina-Umsätze sahen sich vorübergehendem Gegenwind ausgesetzt

Der Umsatzerlös im Bereich Retina sank auf 6,5 Mio. US-Dollar, da Vertriebsumstellungen, regulatorische Einschränkungen und das Bestandsmanagement der Vertriebspartner die internationalen Aufträge beeinträchtigten. In China musste der Vertriebspartner bestehende Bestände abbauen, während IRIDEX den Erneuerungsprozess der behördlichen Zulassung vorantrieb.

In den USA nahm IRIDEX EndoProbe-Handstücke in sein iPRO GPO-Angebot auf und weitete damit Vorzugspreise auf mehr als 4.300 Mitgliedspraxen, ambulante Operationszentren und Krankenhäuser aus. Das Management erwartet zudem, dass PASCAL in der ersten Hälfte des Jahres 2027 die europäische MDR-Zulassung erhält.

Kostenreduzierung und Umstellung der Fertigung

Die Betriebsausgaben gingen um 5 % zurück, was hauptsächlich auf geringere Allgemeine- und Verwaltungskosten zurückzuführen ist. IRIDEX geht davon aus, den Umzug des Hauptsitzes im weiteren Verlauf des Jahres 2026 abzuschließen, und verlagert die Produktion weiterhin an kostengünstigere Auftragsfertiger. Das Management sieht beide Initiativen als potenzielle Treiber der Bruttomarge im Jahr 2027.

Prognose des Managements

IRIDEX bestätigte seine Gesamtjahresprognose für den Umsatz 2026 von 51 Mio. bis 53 Mio. US-Dollar. Der Ausblick schließt Umsätze im Nahen Osten aufgrund von Beeinträchtigungen im Zusammenhang mit dem andauernden Konflikt aus und impliziert ein Pro-forma-Wachstum von etwa 1 % bis 5 % gegenüber 2025, nachdem die Vorjahresumsätze im Nahen Osten herausgerechnet wurden.

Das Unternehmen behielt auch seine Prognose für die bereinigten Betriebsausgaben für 2026 von 19 Mio. bis 19,5 Mio. US-Dollar bei, einschließlich Abschreibungen und aktienbasierter Vergütung.

Für die zweite Hälfte des Jahres 2026 erwartet das Management ein Wachstum im niedrigen einstelligen Prozentbereich im Bereich Retina und ein Wachstum im niedrigen zweistelligen Prozentbereich im Bereich Glaukom. Im Einklang mit dem historischen Quartalsmuster des Unternehmens wird erwartet, dass Q4 deutlich stärkere Ergebnisse als Q3 liefern wird.

Risiken und Beobachtungsschwerpunkte

• Es wird erwartet, dass Käufe zur Aufstockung von Sicherheitsbeständen vor der Verlegung des Hauptsitzes zusätzliches Betriebskapital erfordern und die liquiden Mittel bis 2026 verringern werden.
• Produkterneuerungsregistrierungen und damit verbundene Sperrfristen könnten zu Schwankungen beim Angebot und bei der zeitlichen Auftragsabwicklung in den internationalen Märkten führen.
• Die Entwicklung im Bereich Retina bleibt Risiken durch Verzögerungen bei behördlichen Erneuerungen, Bestände der Vertriebspartner und ungleichmäßige internationale Umsetzung ausgesetzt.
• Wettbewerbsdruck beeinträchtigt weiterhin die Platzierungen von Cyclo-G6-Konsolen in Teilen Europas.
• Größere Lagerbestellungen von Vertriebspartnern in bestimmten Märkten könnten in Folgequartalen zu geringeren Käufen führen.
• Der Ausblick für das Gesamtjahr schließt Umsätze im Nahen Osten aufgrund der andauernden regionalen Störungen aus.

Höhepunkte der Fragerunde für Analysten

Das Management erwartet, dass der Umsatzerlös im Bereich Retina in der zweiten Jahreshälfte im Jahresvergleich im niedrigen einstelligen Prozentbereich wachsen wird, unterstützt durch behördliche Fortschritte, Chancen für PASCAL und US-Werbeaktivitäten rund um die Tagung der American Academy of Ophthalmology.

Bei den Glaukom-Sonden räumte das Management ein, dass internationale Vorab-Bestellungen das Volumen im zweiten Quartal vor den Registrierungssperrfristen erhöhten. Es wies jedoch darauf hin, dass das zugrunde liegende Wachstum nach Ausschluss dieser Bestellungen weiterhin über 15 % lag, und prognostizierte für die zweite Jahreshälfte ein Wachstum im niedrigen zweistelligen Prozentbereich.

Das Management erwartet zudem, dass sich die Umsätze von Cyclo-G6-Systemen im weiteren Jahresverlauf verbessern werden, wobei davon ausgegangen wird, dass Q4 das mit deutlichem Abstand umsatzstärkste Quartal des Unternehmens sein wird.

Vollständiges Transkript des Analystencalls

Vollständiges Transkript der Telefonkonferenz

Ausführungen des Managements

Operator

Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 2026 IRIDEX Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn the call over to [ Tripp Taylor ], Investor Relations. Please go ahead.

Unknown Executive

Thank you, Operator, and thank you all for joining us this afternoon. With me on today's call are [ Patrick Mercer ], IRIDEX's Chief Executive Officer, and Romeo Dizon, the company's Chief Financial Officer. Earlier today, IRIDEX issued a press release detailing our financial results for the quarter ended July 4, 2026, to the investor section of our website. Before we begin, I'd 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 1995.

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, you 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-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, August 18, 2026. With that, I'll pass the call to Patrick.

Patrick Mercer

Good afternoon, everyone, and thank you for joining us for our second quarter call. If there is one 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 two 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 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 right-size 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 multi-year shift of production to 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 2026 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 roughly 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. 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 17,700 units, a 35% increase from 13,100 units sold in the prior year period. In the U.S., three 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 two key segments: existing G6 accounts with moderate utilization, where there's 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 campus ] is focused on the treatment of glaucoma, 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 install base.

We're 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. 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 third contributor to glaucoma revenue growth was another increase in U.S. average selling prices for both probes and systems. 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 U.K. 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 U.K. 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 U.K. 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, EndoProbes, 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 deliver 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 three pillars: advancing the PASCAL upgrade cycle domestically, expanding [ PASCAL FGAL's ] international footprint, and securing regulatory clearances for our next-generation platforms that will allow us to leverage our global distribution network. We remain encouraged by the opportunity for our retina business, and customer demand remained 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 4,300 member practices, regulatory surgery centers, and hospitals across the country preferred pricing on EndoProbe, building on the PASCAL IQ532, IQ577, 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 U.S. 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 to secure MDR approval in Europe in the first half of next year. 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're 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 roughly 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 re-registration 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'll now hand the call over to Romeo to take you through the financials.

Romeo Dizon

Thanks, Patrick, and good afternoon, everyone. As Patrick noted and as detailed in our presentation, 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 components, retina product revenue was $6.5 million versus $8.0 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 remained 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 is $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 probe 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 into 2027. Operating expenses were $5.3 million in the second quarter of 2026, down $0.3 million, 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've 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 $1.0 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 $0.4 million for the quarter, compared to a non-GAAP adjusted EBITDA income of $21,000 in the second quarter of 2025. We ended the quarter with cash and cash equivalents of $4.7 million as of July 4, 2026, an increase of $0.1 million compared to April 4, 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, we 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 distributed revenue streams while we transition to our new production facility. Turning to guidance, we are reaffirming our 2026 guidance 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 2025 Middle East revenue, the guide implies 2026 growth of 1% to 5% over 2025. We are also reiterating our expectation for adjusted 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'm 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're 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. I will turn the call over to the operator for questions.

Operator

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

Fragen und Antworten

Scott Henry

First on retina, it sounds like there's 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 require a pretty significant boost in the second half? So even if we forget about the full year, do you expect second half '26 to be higher than second half '25?

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 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 U.S., 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 in customer engagement coming out of that meeting.

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 and 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, you know, 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's our largest by quite a bit, generally speaking, Q4.

Scott Henry

Okay. And then shifting to glaucoma, 17,700 probes was a lot for Q3, biggest quarter of the last five quarters or six quarters 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

No, I wouldn't say it's a new normal. We do expect low double-digit growth for the second half of the year. If you back out, so we did have Japan place some orders, heavier orders to manage the blackout period. And if you, not just Japan, but in Europe, we had some of that too to support the blackout periods. But if you back that out, we still had over 15% growth, which is, if we get that at the back half of the year, we'll be very happy with. So there was some, I'll call it lumpiness due to the pre-orders to cover the blackout period, but with that backed out, we still had really good growth.

Scott Henry

Okay, and also, final question, 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?

Patrick Mercer

We believe it's going to 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 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 approval that U.K. registry will once we get that approval there for reimbursement that will help boost some sales there so that hurt us this quarter but we do expect those numbers to increase over the second half of the year.

Scott Henry

Okay, great. Thank you for taking the questions.

Patrick Mercer

Thank you. And thank you all for joining us.

Operator

Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.