Sight Sciences(SGHT) - 2024 Q2 - Quarterly Report

Special Note Regarding Forward-Looking Statements This section outlines forward-looking statements, subject to risks and uncertainties, and not guarantees of future performance - This report contains forward-looking statements concerning the company's future financial condition, business strategy, and operational plans, which are subject to risks and uncertainties and are not guarantees of future performance[4] - Key areas covered include the ability to obtain and maintain reimbursement for products, competition, market expansion, impact of strategic realignment, and compliance with debt facilities[4] - The company cautions investors not to place undue reliance on these statements, as actual results may differ materially, and does not undertake any obligation to update them except as required by law[5] PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Unaudited financial statements show decreased assets, increased liabilities, and reduced net losses for H1 2024 compared to H1 2023 Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $118,177 | $138,129 | | Total current assets | $146,329 | $162,871 | | Total assets | $149,715 | $166,651 | | Liabilities & Equity | | | | Total current liabilities | $13,288 | $12,252 | | Long-term debt, net | $33,770 | $31,708 | | Total liabilities | $48,077 | $46,436 | | Accumulated deficit | $(323,385) | $(294,790) | | Total stockholders' equity | $101,638 | $120,215 | Condensed Consolidated Statements of Operations and Comprehensive Loss Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $21,370 | $23,471 | $40,635 | $42,296 | | Gross Profit | $18,345 | $20,090 | $34,816 | $35,867 | | Loss from operations | $(12,651) | $(15,187) | $(27,375) | $(32,754) | | Net loss | $(12,329) | $(14,754) | $(28,595) | $(31,821) | | Net loss per share | $(0.25) | $(0.30) | $(0.58) | $(0.66) | Condensed Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(19,254) | $(30,872) | | Net cash used in investing activities | $(197) | $(223) | | Net cash (used in) provided by financing activities | $(501) | $610 | | Net change in cash and cash equivalents | $(19,952) | $(30,485) | | Cash and cash equivalents at end of period | $118,177 | $154,515 | Notes to Condensed Consolidated Financial Statements Details business segments, accounting policies, a new $65.0 million loan, and a $34 million patent infringement jury award - The company operates in two reportable segments: Surgical Glaucoma (OMNI® and SION® products) and Dry Eye (TearCare® System)[17] - In January 2024, the company entered into a new loan agreement with Hercules Capital for up to $65.0 million, using the initial $35.0 million tranche to terminate its previous agreement with MidCap, recording a $2.0 million loss on debt extinguishment[30][31] - On April 26, 2024, a jury awarded the company $34 million in a patent infringement lawsuit against Ivantis and Alcon regarding the Hydrus Microstent, with the final judgment subject to post-trial briefings and potential appeal[38] Segment Revenue and Gross Profit (in thousands) | Segment | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | | Surgical Glaucoma | Revenue | $38,501 | $38,733 | | | Gross Profit | $33,869 | $33,927 | | Dry Eye | Revenue | $2,134 | $3,563 | | | Gross Profit | $947 | $1,940 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses H1 2024 revenue decline, strategic investments, Medicare policy impacts, and sufficient liquidity for 12 months Overview - The company's business is divided into two segments: Surgical Glaucoma (OMNI® and SION®) and Dry Eye (TearCare®)[59] - As of June 30, 2024, the company had $118.2 million in cash and cash equivalents and an accumulated deficit of $323.4 million[61] - The company anticipates lower demand and gross margin in the Dry Eye segment in the second half of 2024 due to a price increase effective October 1, 2024, with growth expected to return upon receiving positive payer coverage determinations in 2025[60] Factors Affecting Our Business and Results of Operations - The business is materially dependent on Medicare reimbursement policies for OMNI procedures[62] - In May 2024, five Medicare Administrative Contractors (MACs) published Proposed Local Coverage Determinations (LCDs) that, if finalized, would maintain Medicare coverage for OMNI procedures but adopt a non-coverage policy for combining certain MIGS procedures in the same eye, potentially reducing overall MIGS procedure volumes[63] - In July 2024, CMS issued a proposed rule for CY 2025 that would grant device-intensive status to CPT code 66174 (used for OMNI procedures), potentially increasing Medicare facility reimbursement in the ASC setting by approximately $600 and making OMNI more competitive[63] Results of Operations Q2 and H1 2024 saw revenue decreases but improved net losses due to reduced operating expenses year-over-year Comparison of Three Months Ended June 30, 2024 and 2023 (in thousands) | Metric | Q2 2024 | Q2 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $21,370 | $23,471 | $(2,101) | (9.0%) | | Gross Profit | $18,345 | $20,090 | $(1,745) | (8.7%) | | Total Operating Expenses | $30,996 | $35,277 | $(4,281) | (12.1%) | | Net Loss | $(12,329) | $(14,754) | $2,425 | 16.4% | Comparison of Six Months Ended June 30, 2024 and 2023 (in thousands) | Metric | H1 2024 | H1 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $40,635 | $42,296 | $(1,661) | (3.9%) | | Gross Profit | $34,816 | $35,867 | $(1,051) | (2.9%) | | Total Operating Expenses | $62,191 | $68,621 | $(6,430) | (9.4%) | | Net Loss | $(28,595) | $(31,821) | $3,226 | (10.1%) | Liquidity and Capital Resources - The company's primary sources of capital are product sales, debt financing, and historical equity placements, with cash and cash equivalents at $118.2 million as of June 30, 2024[90] - In January 2024, the company entered a new senior secured term loan facility with Hercules Capital for up to $65.0 million, drawing an initial $35.0 million to pay off a prior facility[90][91] - Management believes that current cash, cash equivalents, and available borrowings will be sufficient to fund operations for at least the next 12 months[90] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate exposure, with no material changes reported from the Annual Report - The company's primary market risk exposure is interest rate risk, with no material changes to this risk profile reported during the quarter[99] Item 4. Controls and Procedures Management confirmed effective disclosure controls and procedures as of June 30, 2024, with no material internal control changes - Management concluded that as of the end of the period, the company's disclosure controls and procedures were effective at a reasonable assurance level[100] - There were no changes in internal control over financial reporting during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, internal controls[101] PART II. OTHER INFORMATION Item 1. Legal Proceedings Refers to Note 6 for details on legal proceedings, including a patent infringement lawsuit, with no other material adverse cases - Details on legal proceedings are provided in Note 6 of the financial statements, which discusses the patent infringement lawsuit where the company received a positive jury verdict[102][38] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - The company reports no material changes to the risk factors previously disclosed in its Annual Report[103] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No material change in IPO proceeds use and no unregistered equity sales during Q2 2024 - There has been no material change in the planned use of proceeds from the company's IPO[104] - No unregistered equity securities were sold during the quarter ended June 30, 2024[104]