Financial Report: Sight Sciences Projects Growth Amid Q4 Revenue Dip
Overview of Financial Results
Sight Sciences Inc. reported their financial outcomes for the fourth quarter of 2023, alongside the full-year results and projections for 2024. Despite a year-over-year (YoY) decline in Q4 revenue, the company anticipates growth in the latter half of 2024, driven by expected improvements in their Dry Eye and Surgical Glaucoma product lines.
Resilience and Advancements
Sight Sciences highlighted their resilience in surgical glaucoma sales and advancements in market access and coverage for their TearCare technology. As they navigate through reimbursement challenges and a patent infringement case, the company remains confident in their financial position and the potential for profitability without the need for additional equity capital.
Key Financial Takeaways
- Q4 revenue declined by 9% YoY to $18.8 million, with Surgical Glaucoma and Dry Eye revenues down 9% and 11% respectively.
- Gross margin stood at 85% in Q4, with operating expenses reduced by 20% YoY to $27.1 million.
- The company expects full-year 2024 revenue between $81 million and $85 million, with double-digit growth projected for the second half of the year.
- Clinical data and a budget impact model for TearCare are set to be published, potentially accelerating growth in 2025.
- Sight Sciences ended Q4 with $138.1 million in cash and cash equivalents, and $35 million in debt.
Company Outlook for 2024
- Sight Sciences foresees a decline in Dry Eye revenue in 2024 but anticipates accelerated growth in 2025.
- The company aims for a full-year 2024 revenue of $81 million to $85 million, with growth concentrated in the second half.
- Gross margins are expected to remain in the mid-80s percentile, despite anticipated increased overhead costs per unit.
- Adjusted operating expenses for 2024 are projected to be $107 million to $110 million, marking a slight decline from 2023.
Bearish Highlights
- Q4 2023 saw a decrease in total revenue, Surgical Glaucoma revenue, and Dry Eye revenue YoY.
- Dry Eye revenue is expected to further decline in 2024.
- Higher operating expenses are anticipated in Q1 2024 due to trial preparations for an ongoing patent infringement case.
Bullish Highlights
- Sales of surgical glaucoma products have remained resilient, with increased utilization observed in Q1 2024.
- The company has launched the Ergo series of the OMNI surgical system in Europe and published positive clinical data for TearCare.
- Sight Sciences is actively engaging with payers to establish market access and expects coverage policy wins in 2025.
Misses and Q&A Highlights
- The company reported a loss from operations of $11.1 million in Q4 2023 and a decline in total revenue and segment revenues for Surgical Glaucoma and Dry Eye.
- Sight Sciences is experiencing a recovery in all areas, with a return to normal ordering patterns and utilization, expecting to become a double-digit growing entity by 2025.
InvestingPro Insights
Sight Sciences Inc. (SGHT) has demonstrated both challenges and potential in its recent financial outcomes. The InvestingPro data and tips provide additional context to the company’s current financial health and future prospects.
InvestingPro Data
- Market Capitalization: 224.25 million USD, reflecting the company’s valuation in the market as of the latest data.
- Revenue Growth: An increase of 26.54% over the last twelve months as of Q3 2023, indicating a significant upward trend in the company’s sales.
- Price Total Return: A strong return of 60.28% over the last three months, showcasing a recent positive investor sentiment.
InvestingPro Tips
1. Sight Sciences holds more cash than debt on its balance sheet, providing them with a level of financial flexibility in managing their operations and investments.
2. Despite the strong returns over the past week and three months, analysts do not anticipate the company will be profitable this year, highlighting the importance of monitoring the company’s cost management and revenue generation strategies.
For readers looking to delve deeper into the financials and forecasts of Sight Sciences, there are additional InvestingPro Tips available. These tips can provide further insights into the company’s cash burn rate, volatility, and liquidity position. To explore these tips, visit the InvestingPro website.
Full Transcript – Sight Sciences (SGHT) Q4 2023
Operator: Ladies and gentlemen, thank you for standing by and welcome to the Sight Sciences Fourth Quarter 2023 Earnings Results. [Operator Instructions] And please be advised that today’s conference is being recorded. I would now like to turn the conference over to your speaker today, Trip Taylor with Investor Relations.
Philip Taylor: Thank you for participating in today’s call. Presenting today are Sight Sciences Co-Founder and Chief Executive Officer, Paul Badawi; Chief Financial Officer, Ali Bauerlein; and Chief Commercial Officer, Matt Link. Earlier today, Sight Sciences released financial results for the 3 months and full year ended December 31, 2023 and initiated guidance for full year 2024. A copy of the press release is available on the company’s website at investors.sightsciences.com. I would like to remind everyone that comments made by management today and answers to questions will include forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include statements related to the company’s anticipated financial performance, operating results and liquidity position, current and long-term strategic objectives, market opportunity, business and commercial strategy, product reimbursement strategy, clinical trial results and costs associated with pending litigation. Forward-looking statements are based on estimates and assumptions as of today, are neither promises nor guarantees and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by these statements. A description of some of the risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements on this call can be found in its public filings with the Securities and Exchange Commission, including in the Risk Factors section of the company’s annual report on Form 10-K and quarterly reports on Form 10-Q. The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law. On the call, management may refer to financial measures that were not prepared in accordance with generally accepted accounting principles in the United States, including adjusted operating expenses. The company believes these non-GAAP financial measures are important indicators of its operating performance because they exclude items that are unrelated to and may not be indicative of its core operating results. See the company’s earnings release for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures as well as additional information about the company’s reliance on non-GAAP financial measures. I will now turn the call over to Paul.
Paul Badawi: Thanks, Trip. I’m extremely proud of the progress we made in both the fourth quarter and full year 2023. This year has reinforced the importance of our mission to develop transformative interventional technologies that allow eye care providers to procedurally elevate the standards of care, empowering people to keep seeing. 2023 was a pivotal year for us as we executed on key strategic initiatives. We are very pleased to have accomplished several milestones throughout the year, including enhancing our executive team with proven high-growth med tech leadership experience, with the additions of Ali Bauerlein, our Chief Financial Officer; and Matt Link, our Chief Commercial Officer. Both Ali and Matt have integrated seamlessly into their roles and have been vital to our many organizational enhancements. Following their hires, we realigned our structure to be more effective and laid the foundation for the next level of scale over the coming years. We also expanded the body of long-term clinical evidence supporting our technologies. Importantly, we announced the publication of long-term clinical data in a leading peer-reviewed journal, including 2-year follow-up data from the ROMEO study, 3-year follow-up data from the GEMINI 2 study and 6-month data from the SAHARA RCT. We believe differentiated long-term clinical data will help us drive coverage, equitable reimbursement and commercialization success over time. In 2023, we generated revenue growth in the mid-teens. Our gross margins improved to all-time highs and we significantly reduced our operating expenses and cash usage in the face of reimbursement uncertainty while maintaining focused spend on critical areas. In a major development late in December, we were pleased with the withdrawal of the finalized LCDs from 5 Medicare administrative contractors, or MACs, that were scheduled to go effective in late January 2024. These MACs had previously identified certain MIGS procedures as investigational for glaucoma management in patients over the age of 18, including canaloplasty in combination with trabeculotomy ab interno [ph] which is a procedural description associated with our OMNI surgical system. Throughout the process, we work closely with all key stakeholders, including national and state societies, congressional offices, medical device associations and hundreds of MIG surgeons to help educate the MACs and CMS about the importance of MIG procedures involving our OMNI system and the long-term clinical evidence available. We executed this multipronged approach to challenge the LCDs while navigating new and complex dynamics with our surgeon customers resulting from the potential implications of these LCDs and our customers’ preparations to adhere to potential coverage restrictions. Even with the reimbursement uncertainty, sales of our surgical glaucoma products proved very resilient. We believe this is a testament to the clinical efficacy of the comprehensive OMNI procedure as surgeons rely on its IOP and medication reduction capabilities to treat their patients. Again, we are thankful that our team and other industry stakeholders were steadfast in their alignment on the important role OMNI plays in treating their glaucoma patients. We will continue to advocate to ensure that there is equitable patient access to this critical technology. Coverage decisions are heavily governed by compelling long-term clinical data. We provided the MACs with a significant body of peer-reviewed, long-term clinical evidence throughout the process which was further strengthened by the publication of our GEMINI 2 study in December. Favorable results from this prospective multicenter study demonstrated sustained and clinically significant IOP reduction of 29% from baseline at 36 months and clinically significant IOP-lowering medication reduction with 74% of the study patients medication-free at 36 months. The prospective 3-year clinical outcomes in the GEMINI 2 trial confirm and extend the previously published 12-month data from the original GEMINI trial. GEMINI 2 included 66 patients across 11 participating sites. And any patients who are not already medication-free from the OMNI procedure underwent medication washout at the 2-year and 3-year end points so that the IOP lowering effect of the OMNI procedure could be isolated and assessed. There is demonstrated consistency with clinical outcomes across all published OMNI studies and this longer-term prospective multicenter trial data further supports the need for continued access to OMNI technology. We believe that new MIGS LCDs may be proposed in the future. While we are uncertain as to the timing and process that would be followed, if new LCDs are finalized, we are confident our body of published high-quality, long-term data, including the GEMINI 2 study, supports continued coverage of procedures enabled by OMNI for the appropriate patient population. We also plan to publish additional clinical data throughout 2024 that will further strengthen the body of evidence illustrating OMNI’s clinical efficacy and we believe will support favorable coverage determinations. We look forward to continued engagement with the MACs, CMS and other stakeholders to ensure glaucoma patients and their physicians maintain appropriate and equitable access to medically reasonable and necessary MIGS procedures and technologies. Looking ahead, we are working to reengage those accounts impacted by the LCDs, drive increased utilization and train new surgeons. Despite the uncertainty associated with the LCDs, we have minimal employee attrition in the fourth quarter and we are now backfilling those roles in the first quarter. As expected, given the fourth quarter LCD uncertainty, the surgeon training funnel was lighter than our historical average to end the year. We are still in the early stages of regrowing the funnel as surgeons now have visibility on coverage. We are confident in our ability to recapture accounts lost, add new accounts and surgeons and improve utilization over time. Our main commercial focus is increasing utilization across our customer base and reengaging with accounts that have not ordered OMNI over the past 2 quarters due to the reimbursement uncertainty. The changes we made to our commercial organization in the fourth quarter of 2023 are already proving beneficial in this regard. We believe we have a solid foundation in place to efficiently drive strong growth over the long term, including our anticipated return to double-digit revenue growth in the second half of 2024 and into 2025. I want to close our Surgical Glaucoma discussion by touching on our recent European launch. In February, we initiated the European launch of the Ergo series of the OMNI surgical system. Following its U.S. launch in March 2023, the Ergo series has been broadly adopted due to its improved ergonomics and an optimized cannula tip that provides gentle and precise access to Schlemm’s canal. We believe these design features will be invaluable to our European partners. Turning now to our Dry Eye business. Our TearCare technology provides a clinically proven, safe and effective procedural intervention for patients suffering from evaporative dry eye disease which is a multibillion-dollar annual U.S. market opportunity with over 11 million patients diagnosed. Interventional dry eye procedures with TearCare address the root underlying cause of evaporative dry eye disease and we believe TearCare represents a major advancement providing patients with a more comprehensive, consistent, fast-acting and long-term dry eye treatment. As discussed on our last call, we have streamlined our commercial focus and taken measures to reduce the commercial spend within our dry eye business and strategically shift some of that spend towards building out our market access and payer team that is now in place. We are actively working in 2024 to drive equitable market access for dry eye patients who can benefit from an interventional procedure with TearCare. Importantly, our market access team has significant experience establishing reimbursement for new and innovative technologies and procedures. In 2024, we are focused on leveraging our foundational work with commercial payers and MACs to advocate for coverage of interventional eyelid procedures enabled by TearCare. The publication of our compelling SAHARA 6-month RCT data and budget impact model are the focal points of our discussions with payers. These discussions will be ongoing throughout the year and beyond and coverage decisions will be subject to payer standard policy update time lines. Our goal is to begin receiving coverage decisions from payers starting in 2025 as we pursue this large market opportunity. At that point, we will expand TearCare commercialization in geographies where coverage has been established. The publication of successful 6-month results of the SAHARA RCT, comparing TearCare to Restasis, the market-leading dry eye therapeutic for the treatment of dry eye disease, was published in clinical ophthalmology in December. Data from the RCT shows the TearCare technology successfully delivered clinically and statistically significant improvements in every sign and symptom at all measured time points over a 6-month period. TearCare was also superior to Restasis and the improvement of tear film breakup time, the study’s primary objective endpoint and a key measure of aqueous retention, tear stability and the tear film’s ability to protect the ocular surface. This trial was designed with feedback from medical directors of insurance companies to demonstrate safety, efficacy and long-term performance which are important in their coverage determinations. We believe the data generated by this trial is a critical building block for TearCare and offers the most robust validation of TearCare’s clinical efficacy to date. In closing, we have incredible interventional technologies within both our Surgical Glaucoma and Dry Eye businesses that elevate the standard of care and improve treatment paradigms for millions of patients. We value the solid foundation we have built over the past decade and all of the learning and know-how we have acquired along the way. We have many things to be excited about this year, in particular, as 2024 is a transformational year for us. In our Surgical Glaucoma segment, we expect to publish additional long-term, large-scale real-world data on the differentiated clinical efficacy of OMNI, including disease severity outcomes, ethnic minorities outcomes and stand-alone outcomes. In addition, we are conducting a meta-analysis based on all OMNI clinical studies and are also starting a multinational OMNI RCT, further demonstrating our long-standing commitment to generating market-leading clinical evidence. We believe we are well situated, if any LCDs may return and we remain critically focused and actively engaged with the payers and our many societies on our OMNI market access strategy, based on our differentiated technology, efficacy and clinical data. We saw the resiliency of our customer base and sales in the fourth quarter and we are now seeing increased utilization in the first quarter. This is an encouraging indicator of the return to growth we expect to deliver in the second half of the year. We expect OMNI to continue to take share in the combo cataract market and continue to lead the growth of the growing stand-alone market. In our Dry Eye segment, we also expect to soon publish our SAHARA 1-year RCT results which continue to show the superior benefits of TearCare versus Restasis in the treatment of dry eye disease. We plan to also publish a compelling budget impact model this year, showing the health economic impact and system savings for TearCare versus Restasis. This year, we also expect to start seeing claims paid for TearCare, a critical step in our journey to ultimately establish broad coverage for TearCare and for TearCare to become a leading interventional treatment in dry eye. With so many important catalysts on our horizon and a strong experienced team in place, we are very well positioned to reliably execute our plan and create value. We are particularly excited about the rest of this year as we continue to build and optimize our business, return to high growth and drive towards profitability. I’ll now turn the call over to Ali to discuss our financials.
Financial Performance and Guidance
Before diving into the fourth quarter financial results, Sight Sciences aims to provide a comprehensive overview of their financial standing and future projections. The company has achieved significant milestones and strategic initiatives while maintaining a strong focus on financial stability and growth.
Revenue Trends and Market Position
Sight Sciences has navigated challenges and opportunities in the market, demonstrating resilience in their sales performance and strategic positioning. The company’s focus on innovative technologies and clinical excellence has set them apart in the ophthalmic medical device sector.
