Sight Sciences(SGHT) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements The unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, show a decrease in total assets to $129.7 million from $142.8 million at year-end 2024. The company reported a net loss of $14.2 million for the quarter, an improvement from a $16.3 million loss in the same period last year. The net loss was primarily driven by operating expenses exceeding gross profit. Cash and cash equivalents decreased by $11.6 million during the quarter to $108.8 million, mainly due to cash used in operating activities Condensed Consolidated Balance Sheets (Unaudited) As of March 31, 2025, the company's total assets were $129.7 million, a decrease from $142.8 million at the end of 2024. This was primarily due to a reduction in cash and cash equivalents. Total liabilities decreased to $52.1 million from $55.3 million, mainly from a reduction in accrued compensation. Consequently, total stockholders' equity declined to $77.6 million from $87.5 million Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $108,768 | $120,357 | | Total current assets | $126,906 | $139,774 | | Total assets | $129,680 | $142,839 | | Total current liabilities | $12,122 | $15,468 | | Long-term debt, net | $39,583 | $39,356 | | Total liabilities | $52,052 | $55,316 | | Total stockholders' equity | $77,628 | $87,523 | Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) For the three months ended March 31, 2025, revenue was $17.5 million, a 9.1% decrease from $19.3 million in the same period of 2024. Gross profit also decreased to $15.1 million from $16.5 million. The company reduced its loss from operations to $13.9 million from $14.7 million year-over-year. The net loss for the quarter was $14.2 million, or ($0.28) per share, compared to a net loss of $16.3 million, or ($0.33) per share, in Q1 2024 Q1 2025 vs. Q1 2024 Performance (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $17,508 | $19,265 | | Gross Profit | $15,094 | $16,472 | | Loss from Operations | $(13,859) | $(14,723) | | Net Loss | $(14,154) | $(16,266) | | Net Loss Per Share | $(0.28) | $(0.33) | Condensed Consolidated Statements of Cash Flows (Unaudited) For the first quarter of 2025, net cash used in operating activities was $11.6 million, an increase from $9.8 million in the prior year period, primarily due to changes in operating assets and liabilities, including a significant decrease in accrued compensation. There were no cash flows from investing activities. Net cash provided by financing activities was minimal at $16,000. This resulted in a net decrease in cash and cash equivalents of $11.6 million, ending the period with $108.8 million Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(11,605) | $(9,786) | | Net cash used in investing activities | $0 | $(117) | | Net cash provided by (used in) financing activities | $16 | $(942) | | Net change in cash and cash equivalents | $(11,589) | $(10,845) | Notes to Condensed Consolidated Financial Statements (Unaudited) The notes detail the company's business segments (Surgical Glaucoma and Dry Eye), significant accounting policies, and liquidity situation, noting a history of losses and an accumulated deficit of $360.5 million. Key disclosures include details on the $40.0 million outstanding debt under the Hercules Loan Agreement, a positive $34 million jury verdict in a patent lawsuit against Alcon that is not yet final, and segment performance showing Surgical Glaucoma as the primary revenue driver - The company operates in two segments: Surgical Glaucoma (OMNI® and SION® products) and Dry Eye (TearCare® System)[29] - As of March 31, 2025, the company had an accumulated deficit of $360.5 million and expects to incur additional losses. Management believes current cash is sufficient for at least the next 12 months[30][31] - In January 2024, the company entered into a loan agreement with Hercules Capital for up to $65.0 million; as of March 31, 2025, $40.0 million was outstanding[52][59] - The company was awarded a $34 million positive jury verdict in a patent infringement lawsuit against Alcon/Ivantis in April 2024. The judgment has not yet been entered and is subject to appeal[67] Segment Performance - Q1 2025 vs Q1 2024 (in thousands) | Segment | Revenue (Q1 2025) | Revenue (Q1 2024) | Gross Profit (Q1 2025) | Gross Profit (Q1 2024) | | :--- | :--- | :--- | :--- | :--- | | Surgical Glaucoma | $17,114 | $18,257 | $14,816 | $16,048 | | Dry Eye | $394 | $1,008 | $278 | $424 | | Total | $17,508 | $19,265 | $15,094 | $16,472 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the 9.1% year-over-year revenue decline in Q1 2025, attributing the 6.3% drop in Surgical Glaucoma revenue to reimbursement changes and competition, and the 60.9% drop in Dry Eye revenue to a strategic price increase that reduced demand. Despite lower revenue, the net loss improved due to reduced operating expenses, particularly a $2.9 million decrease in legal costs. The company ended the quarter with $108.8 million in cash and believes it has sufficient liquidity for the next 12 months, supported by its existing cash and the Hercules debt facility Results of Operations Total revenue for Q1 2025 decreased by $1.8 million (9.1%) to $17.5 million compared to Q1 2024. Surgical Glaucoma revenue fell 6.3% due to lower OMNI unit sales, impacted by Medicare reimbursement restrictions. Dry Eye revenue fell 60.9% due to a price increase and a strategic shift away from cash-pay models. Gross margin improved slightly to 86.2% from 85.5%. Operating expenses decreased by 7.2% to $29.0 million, driven by a $2.0 million reduction in SG&A, which led to a smaller loss from operations of $13.9 million Results of Operations Comparison (in thousands) | Metric | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $17,508 | $19,265 | $(1,757) | (9.1)% | | - Surgical Glaucoma | $17,114 | $18,257 | $(1,143) | (6.3)% | | - Dry Eye | $394 | $1,008 | $(614) | (60.9)% | | Gross Profit | $15,094 | $16,472 | $(1,378) | (8.4)% | | Total Operating Expenses | $28,953 | $31,195 | $(2,242) | (7.2)% | | Loss from Operations | $(13,859) | $(14,723) | $864 | 5.9% | - The decrease in Surgical Glaucoma revenue was primarily driven by lower OMNI unit utilization due to restrictions on multiple MIGS procedures by several Medicare Administrative Contractors (MACS)[131] - The decrease in Dry Eye revenue was due to lower demand following a price increase effective October 1, 2024, as part of a strategy to achieve reimbursed market access[131] - SG&A expenses decreased by $2.0 million, primarily driven by a $2.9 million reduction in legal expenses[136] Liquidity and Capital Resources The company's primary sources of liquidity are its cash reserves, product sales, and a debt facility with Hercules Capital. As of March 31, 2025, the company had $108.8 million in cash and cash equivalents and $40.0 million in outstanding debt. Management asserts that these resources are sufficient to fund operations for at least the next 12 months. The Hercules loan agreement provides for up to $65.0 million in total financing, with additional tranches available contingent on performance milestones or lender approval, though the company does not expect to meet the upcoming milestone - As of March 31, 2025, the company had cash and cash equivalents of $108.8 million and an outstanding term loan balance of $40.0 million[117][145] - Management believes existing cash and available borrowings will be sufficient to fund operations for at least the next 12 months[145] - The Hercules Loan Agreement provides for a total facility of up to $65.0 million. An additional $10.0 million tranche is available through September 2025, but the company does not anticipate achieving the required performance milestones[148][149] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure is to interest rate fluctuations, which affects its cash equivalents and its floating-rate debt under the Hercules Loan Agreement. Management states that due to the short-term nature of its investments and the current terms of its debt, a hypothetical 1% change in interest rates would not have a material impact on its financial statements - The company's main market risk is interest rate risk related to its cash, cash equivalents, and the floating-rate Hercules Loan Agreement[161] - A hypothetical 100 basis point (1.0%) change in interest rates is not expected to have a material impact on the financial statements[163] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025. There were no material changes to the company's internal control over financial reporting during the quarter - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[165] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[166] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company refers to Note 6 of the financial statements, which details its patent infringement lawsuit against Ivantis, Inc. and Alcon. A jury awarded the company $34 million in damages in April 2024, but the final judgment has not been entered and is subject to appeal. No other material legal proceedings are reported - Details on legal proceedings are provided in Note 6, Commitments and Contingencies[168] - The company received a positive jury verdict of $34 million in its patent lawsuit against Alcon/Ivantis, but the judgment is not yet final and is subject to appeal[67] Item 1A. Risk Factors The company highlights its significant reliance on third-party, single-source suppliers, with a substantial portion of its products manufactured in China. This exposes the company to geopolitical risks and tariffs. The U.S. tariff on products from China, currently at 145%, is expected to increase costs and negatively impact gross margins. While the company is exploring manufacturing alternatives outside of China, this process is costly and time-consuming - The company relies on a limited number of third-party manufacturers, many of which are single-source suppliers[171] - A substantial portion of products, including OMNI, SION, and TearCare SmartLids, are produced by a single manufacturer in China, creating significant concentration risk[171] - A U.S. tariff of 145% on products imported from China, effective February 2025, will increase product costs and negatively impact gross margins[173] - The company is evaluating additional manufacturing locations outside of China to mitigate tariff and supply chain risks, but expects the majority of production to remain in China through 2025 and into 2026[174] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period. There has been no material change in the planned use of proceeds from its Initial Public Offering (IPO) in July 2021 - There has been no material change in the planned use of proceeds from the company's IPO[180] - There were no unregistered sales of equity securities or issuer repurchases of equity securities during the quarter[181][182] Item 5. Other Information During the three months ended March 31, 2025, none of the company's directors or officers adopted, terminated, or modified a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement in Q1 2025[186]