RxSight(RXST) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited condensed consolidated financial statements detail RxSight, Inc.'s financial position, operational results, equity changes, and cash flows, reflecting significant growth in assets and reduced net loss driven by a recent public offering Condensed Consolidated Balance Sheets As of June 30, 2024, the balance sheet reflects a substantial increase in total assets and stockholders' equity, primarily driven by a significant rise in cash and short-term investments following a public offering Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Items | June 30, 2024 (Unaudited) | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $24,445 | $9,692 | | Short-term investments | $208,839 | $117,490 | | Total current assets | $281,223 | $168,407 | | Total assets | $305,499 | $182,550 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $19,618 | $20,903 | | Total liabilities | $30,292 | $22,188 | | Total stockholders' equity | $275,207 | $160,362 | | Total liabilities and stockholders' equity | $305,499 | $182,550 | Condensed Consolidated Statements of Operations and Comprehensive Loss The statements of operations show substantial sales growth and improved gross profit for Q2 and the six months ended June 30, 2024, leading to a significant reduction in net loss compared to the prior year Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2024 | Q2 2023 | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Sales | $34,887 | $20,810 | $64,399 | $38,299 | | Gross Profit | $24,250 | $12,015 | $44,935 | $22,380 | | Loss from Operations | $(8,333) | $(13,625) | $(19,003) | $(26,720) | | Net Loss | $(6,079) | $(13,804) | $(15,179) | $(27,016) | | Net Loss Per Share (Basic & Diluted) | $(0.16) | $(0.40) | $(0.40) | $(0.82) | Condensed Consolidated Statements of Equity Total stockholders' equity significantly increased as of June 30, 2024, primarily driven by net proceeds from a public offering of common stock in May 2024 - In May 2024, the company completed a public offering, issuing 2,053,571 shares of common stock for net proceeds of $107.5 million after underwriting discounts and commissions[14][20] - Stock-based compensation expense for the six months ended June 30, 2024, was $10.8 million[14][51] Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2024, cash flows reflect improved operating cash usage and a substantial net increase in cash, primarily due to significant proceeds from financing activities Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(13,336) | $(25,310) | | Net cash used in investing activities | $(91,371) | $(43,970) | | Net cash provided by financing activities | $119,465 | $66,196 | | Net increase (decrease) in cash | $14,754 | $(3,081) | - Financing activities in the first half of 2024 were dominated by proceeds from a public stock offering of $108.1 million and proceeds from stock option exercises of $14.0 million[16] Notes to Unaudited Condensed Consolidated Financial Statements The notes provide essential details on the company's business, accounting policies, and significant events, including a May 2024 public offering and extended lease agreements for its California facilities - The company's business is the research, development, manufacture, and sale of light adjustable intraocular lenses (LAL/LAL+) and the associated Light Delivery Device (LDD) for cataract surgery[17] - In May 2024, the company completed a public offering, receiving net proceeds of $107.5 million, which management believes will be sufficient to meet operating requirements for at least the next 12 months[20] - Revenue from LALs is recognized upon customer notification of implantation, as they are generally held on consignment. LDD revenue is recognized at installation, with training and service revenue recognized over time[32][34] - In April 2024, the company entered into a new lease and amended two existing leases for its Aliso Viejo, CA facilities, extending the terms to January 2031[55][56][58][59] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's strong financial performance, driven by increased RxSight system adoption, improved gross margins, and a significantly strengthened liquidity position following a May 2024 public offering Key Business Metrics | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | LDDs Sold | 78 | 67 | +11 units | | LALs Sold | 24,214 | 12,622 | +11,592 units | | LDD Installed Base (End of Period) | 810 | 523 | +287 units | Q2 2024 vs Q2 2023 Performance (in thousands) | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Sales | $34,887 | $20,810 | 67.6% | | Gross Profit | $24,250 | $12,015 | 101.8% | | Gross Margin | 69.5% | 57.8% | +11.7 p.p. | | Loss from Operations | $(8,333) | $(13,625) | (38.8)% | - The company received net proceeds of approximately $107.5 million from a Public Offering in May 2024, significantly strengthening its liquidity position[100] - Management believes existing cash resources are sufficient to fund operations for at least the next 12 months and does not anticipate needing to raise additional capital to reach profit from operations[102] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate exposure on its substantial cash and short-term investments, with foreign currency exchange risk deemed minimal due to U.S. dollar-denominated operations - The company's primary market risk is interest rate risk on its $233.2 million in cash, cash equivalents, and short-term investments as of June 30, 2024[114] - Management believes a hypothetical 1.00% (100 basis points) change in interest rates would not have a material impact on the fair value of its marketable securities or its interest income[114] - Foreign currency exchange risk is minimal as the company has de minimis amounts of revenue and expenses denominated in currencies other than the U.S. dollar[115] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of June 30, 2024, the company's disclosure controls and procedures were effective at the reasonable assurance level[116] - There were no material changes in the company's internal control over financial reporting during the quarter ended June 30, 2024[118] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any legal proceedings that would materially adversely affect its business, financial condition, or results of operations - As of the filing date, the company is not a party to any legal proceedings that would have a material adverse effect on its business[120] Risk Factors The company faces significant risks including its limited operating history, reliance on the RxSight system, intense competition, intellectual property challenges, extensive regulatory compliance, supply chain dependencies, and common stock volatility - Business Risks: The company has a limited operating history, a history of net losses, and its success depends heavily on the RxSight system. It faces significant competition and must effectively train its sales force to drive growth[122][128][132] - Intellectual Property Risks: The company's success depends on its ability to obtain, maintain, and enforce patent protection for its technology. It faces risks of infringement claims and challenges to the validity of its patents[125][168][178] - Regulatory Risks: The business is subject to extensive government regulation by the FDA and other bodies, including requirements for premarket approval, quality systems (QSR/QMSR), and compliance with fraud and abuse laws. Failure to maintain compliance could result in significant penalties[126][203][211][216] - Third-Party Reliance Risks: The company depends on third-party, including single and sole source, suppliers for components of the RxSight system, making it vulnerable to supply disruptions, price fluctuations, and quality control issues[127][235] - Common Stock Risks: The stock price may be volatile. There is no guarantee of an active trading market. Future sales of a substantial number of shares could cause the stock price to fall[127][238][241] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities, no use of proceeds from registered securities, and no issuer purchases of equity securities during the period - There were no unregistered sales of equity securities or issuer purchases of equity securities during the reporting period[260] Other Information Several executives and directors have established Rule 10b5-1 trading plans for the future sale of company common stock under pre-determined conditions - Multiple insiders, including the CEO, COO, CCO, and two board members, have established Rule 10b5-1 trading plans for the future sale of company stock under pre-determined conditions[261] Exhibits The filing includes key exhibits such as new and amended lease agreements for company facilities and required certifications from the Principal Executive and Financial Officers - Key exhibits filed include a new lease and several lease amendments related to the company's corporate headquarters and manufacturing facilities[263] - Certifications by the CEO and CFO as required by Sections 302 and 906 of the Sarbanes-Oxley Act are included as exhibits[263][265]