Iridex Corporation reaffirmed its 2026 financial outlook after reporting a nearly flat first quarter, with growth in its glaucoma product family and service revenue helping to offset a decline in retina product sales tied to international supply constraints and delayed regulatory approvals.

The Mountain View, California-based medical-device company, which develops and sells laser-based systems, delivery devices and procedure probes for ophthalmology, reported total revenue of $11.8 million for the quarter ended April 4, 2026. That compared with $11.9 million in the first quarter of 2025, a decline of 1%. The company said lower retina system sales weighed on the period, while higher glaucoma probe sales and service and other revenues provided partial offsets.

The main growth driver was the Cyclo G6 product family, Iridex’s glaucoma-focused platform. Revenue from Cyclo G6 products increased 14% to $3.6 million from $3.2 million a year earlier. The company sold 15,500 Cyclo G6 probes in the quarter, compared with 13,900 in the prior-year period, while sales of Cyclo G6 glaucoma laser systems were unchanged at 24 units.

Retina product revenue moved in the opposite direction. Iridex reported $5.8 million in retina product revenue, down from $6.6 million a year earlier. The company attributed the decline primarily to international supply constraints and delayed regulatory approvals, though it said U.S. retina sales were stronger. Other revenue rose by $0.2 million to $2.3 million, driven mainly by service revenue.

The product split underscored the company’s near-term earnings challenge: its glaucoma business is showing procedure-driven momentum, but the retina business remains exposed to supply timing, distributor markets and regulatory delays outside the United States. For a small public medical-device company, that mix can determine whether stable revenue is enough to support the broader profitability and cash-flow targets management has set for 2026.

Chief Executive Patrick Mercer said first-quarter results were in line with management’s expectations and supported the company’s plan to produce positive cash flow for the fiscal year. He said the U.S. glaucoma business delivered solid growth and that cost-structure improvements were progressing as planned. Management emphasized three priorities for the year: expanding G6 utilization, advancing regulatory approvals and continuing to improve gross margin.

Iridex reaffirmed full-year 2026 revenue guidance of $51 million to $53 million. The company said the outlook includes the impact of market disruptions from conflict in the Middle East, which are affecting product delivery timelines. Iridex also reiterated that adjusted operating expenses, excluding depreciation and amortization and stock compensation, are expected to be between $19 million and $19.5 million for the year. It continues to expect positive operating cash flow for fiscal 2026.

The reaffirmed outlook is notable because the first quarter contained several headwinds that could have raised concerns about the company’s ability to meet annual targets. Revenue was slightly lower year over year, gross margin contracted, and cash declined during the quarter. Management framed those pressures as partly seasonal and partly tied to timing issues that it expects to manage over the balance of the year.

Gross profit was $4.7 million, compared with $5.0 million a year earlier. Gross margin narrowed to 40% from 43%. Iridex said the decline was primarily due to higher manufacturing costs and increased product costs related to recent tariff developments, as the company continues a transition to lower-cost contract manufacturers. That manufacturing transition is central to management’s margin-improvement plan, but the latest quarter showed that the near-term cost environment remains difficult.

Operating expenses declined to $5.1 million from $5.3 million, a 4% reduction. The decrease reflected lower consulting costs, reduced deal-related legal expenses and savings from a general and administrative function transfer initiative announced in prior periods. The operating-expense trend helped narrow the company’s loss even as revenue was slightly lower and gross margin contracted.

Iridex reported a first-quarter net loss of $0.5 million, or $0.03 a share, compared with a net loss of $1.7 million, or $0.10 a share, in the year-earlier period. Loss from operations was $0.3 million, compared with $0.2 million a year earlier, while other expense improved significantly compared with the prior-year quarter. Non-GAAP adjusted EBITDA was $0.3 million, compared with $0.4 million in the first quarter of 2025.

The adjusted EBITDA result kept Iridex in positive territory on a non-GAAP basis, though below the prior-year level. For investors, the more important issue may be whether the company can convert expected second-half revenue and cost actions into cash generation. Iridex ended the quarter with $4.6 million in cash and cash equivalents, down from $6.0 million at the start of the fiscal year. The company said the $1.4 million cash decline was planned and reflected normal first-quarter seasonality, including payments related to annual compensation and year-end accrued expenses and liabilities.

Management said cash generation should improve sequentially through the remaining quarters and that the company expects to generate cash for the rest of the year. That expectation is a key part of the investment case after a period in which Iridex has focused on cost reductions, commercial execution and improved operating discipline. With a relatively modest cash balance, the company’s ability to meet its full-year cash-flow target could influence market confidence in the guidance more than the small year-over-year revenue decline itself.

The conference-call commentary added more detail to the quarter’s timing issues. According to the company’s remarks, about $800,000 of revenue was backlogged at the end of the quarter, all in the retina category, with shipment expected in the following quarter. Management also indicated that first-quarter revenue was above the guidance communicated with fourth-quarter results and that some of the timing impacts in the period may become incremental revenue opportunities later in the year.

Seasonality is another factor in the outlook. Management said the first quarter typically represents about 22% of annual revenue and is historically the lowest revenue quarter of the year. It described the second and fourth quarters as seasonally stronger than the first, with the fourth quarter typically the strongest quarter and the third quarter generally down sequentially from the second. That pattern supports the company’s argument that a flat first quarter does not necessarily undermine the full-year revenue range.

The glaucoma business remains the clearest source of momentum. Cyclo G6 probe volume increased by 1,600 units from the prior-year quarter, while system placements held steady. The company has positioned G6 as a procedure platform that can generate recurring probe sales as utilization expands. In management’s view, the probe growth reflects broader recognition among ophthalmologists of the product’s value proposition and its role as an alternative to incisional surgery for certain glaucoma patients.

In contrast, the retina business was affected by several external and operational factors. Iridex cited international supply constraints and delayed regulatory approvals in its press release. Management also discussed disruption in Asia and the Middle East, including product-delivery timing issues. Those pressures reduced first-quarter retina revenue despite strength in U.S. retina sales. The company’s ability to clear delayed shipments and resolve regulatory or supply bottlenecks will be important to achieving the full-year guidance range.

Iridex’s retina portfolio remains strategically important because it broadens the company’s ophthalmology platform beyond glaucoma. The company’s product line is used to treat glaucoma, diabetic macular edema and other retinal diseases, and its products are sold in the United States through a direct sales force and internationally through distributors in more than 100 countries. That international footprint creates opportunity but also leaves results sensitive to local approvals, distributor execution, supply logistics and geopolitical disruptions.

The company has also been taking steps to expand access to its retina technology. In April, Iridex announced a partnership with EyeProGPO designed to broaden member access to retina laser technology. While that partnership was not the primary driver of first-quarter results, it fits with management’s effort to improve commercial reach and utilization across its ophthalmology portfolio. The earnings report suggests that near-term retina recovery will depend less on demand creation alone and more on resolving fulfillment and approval delays.

Margin improvement remains a parallel priority. Iridex said it is transitioning production to lower-cost contract manufacturers, a multiyear initiative expected to support gross margin improvement as implementation progresses. Management said meaningful transfers began in the first quarter, with full implementation expected in 2027. The company’s first-quarter gross margin pressure, however, shows that benefits from the transition are not yet fully visible and that tariffs and manufacturing costs remain important variables.

Cost discipline helped offset some of those pressures. General and administrative expense fell to $1.6 million from $1.9 million, while total operating expenses declined despite modest increases in research and development and sales and marketing. The company has been working through savings initiatives that began in prior periods, including transferring certain general and administrative functions. Management said on the call that the relocation effort was roughly 70% complete and had produced about $100,000 in quarterly savings, with a target of $165,000 per quarter by year-end.

The company’s balance sheet remains tight but manageable if the cash-flow plan materializes. Current assets totaled $24.6 million at quarter-end, including $4.6 million of cash, $8.4 million of accounts receivable and $9.3 million of inventories. Current liabilities were $12.8 million. The inventory increase from the start of the fiscal year is consistent with management’s expectation that cash generation should improve as inventory is sold through and receivables are collected on higher revenue in later quarters.

For shareholders, the first-quarter report was therefore a mixed but largely guidance-preserving update. The negatives were clear: revenue declined slightly, retina sales were down, gross margin compressed and cash decreased. The positives were also material: glaucoma product revenue grew double digits, probe volume increased, operating expenses moved lower, the net loss narrowed sharply and the company maintained both its revenue guidance and positive operating cash-flow target.

The reaffirmed outlook shifts attention to execution in the next two quarters. Investors will likely watch whether the retina backlog converts into revenue, whether international approval and supply issues ease, and whether the manufacturing transition begins to stabilize or improve gross margin. They will also look for evidence that G6 probe demand can remain strong enough to offset volatility in systems and international retina sales.

Iridex’s results do not show a company accelerating rapidly, but they do show a company attempting to protect its 2026 plan through product-mix improvement and expense control. In the earnings context, the key point is that management held its annual targets despite a first quarter affected by retina weakness and cost pressure. The market’s assessment of the report will likely depend on whether investors view those headwinds as temporary timing issues or as signs that the path to sustained profitability remains narrow.