RxSight(US:RXST)2023-08-07 20:16PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) RxSight, Inc.'s Q2 2023 unaudited financials show strong revenue growth, improved gross margins, and a strengthened balance sheet Condensed Consolidated Balance Sheets Balance sheet as of June 30, 2023, shows stronger financial position with increased assets, equity, and reduced liabilities | Balance Sheet Items (In thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $8,753 | $11,834 | | Short-term investments | $138,340 | $93,968 | | Total current assets | $180,445 | $134,555 | | Total assets | $195,261 | $150,164 | | Liabilities & Equity | | | | Total current liabilities | $16,565 | $17,237 | | Term loan, net | $19,589 | $40,169 | | Total liabilities | $38,073 | $60,262 | | Total stockholders' equity | $157,188 | $89,902 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company achieved strong sales growth and expanded gross margins for Q2 and H1 2023, reducing operating and net losses | Statement of Operations (In thousands) | Q2 2023 | Q2 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Sales | $20,810 | $11,360 | +83.2% | | Gross Profit | $12,015 | $4,788 | +150.9% | | Loss from operations | $(13,625) | $(15,792) | -13.7% | | Net loss | $(13,804) | $(16,732) | -17.5% | | Net loss per share (basic & diluted) | $(0.40) | $(0.61) | -34.4% | | Statement of Operations (In thousands) | H1 2023 | H1 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Sales | $38,299 | $20,301 | +88.7% | | Gross Profit | $22,380 | $8,549 | +161.8% | | Loss from operations | $(26,720) | $(32,370) | -17.5% | | Net loss | $(27,016) | $(34,328) | -21.3% | | Net loss per share (basic & diluted) | $(0.82) | $(1.25) | -34.4% | Condensed Consolidated Statements of Cash Flows Net cash used in operations decreased in H1 2023, with significant financing activities offsetting investing outflows | Cash Flow Summary (In thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(25,310) | $(29,808) | | Net cash (used in) provided by investing activities | $(43,970) | $28,985 | | Net cash provided by financing activities | $66,196 | $480 | | Net decrease in cash, cash equivalents and restricted cash | $(3,081) | $(357) | - Financing activities in H1 2023 were primarily driven by $54.1 million from a public offering and $30.5 million from at-the-market offerings, offset by a net $20.0 million repayment of the term loan31 Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the company's LAL and LDD business, significant capital raises, debt refinancing, and revenue recognition policies - The company raised approximately $53.6 million in net proceeds from a Public Offering in February 202340 - Through its At-The-Market (ATM) offering, the company sold 1.7 million shares for net proceeds of $29.9 million during the six months ended June 30, 202339 - On June 30, 2023, the company entered into a new $20.0 million loan agreement and used the proceeds, along with other cash, to prepay its existing May 2022 Term Loan, subsequently repaying the new loan in full on August 4, 20238889128 | Revenue by Product (In thousands) | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | LDD (including training) | $7,720 | $5,683 | $14,195 | $10,253 | | LAL | $12,411 | $5,349 | $22,806 | $9,453 | | Service, warranty, accessories | $679 | $328 | $1,298 | $595 | | Total | $20,810 | $11,360 | $38,299 | $20,301 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong Q2 2023 performance to its 'razor and razor blade' model, driving LDD and LAL sales, improving margins, and strengthening liquidity Business Overview and Key Metrics The company's 'razor and razor blade' model drives LDD adoption and LAL sales, with key metrics showing strong growth - The company's commercial strategy is a "razor and razor blade" business model focused on driving new customer adoption of the LDD system to generate ongoing LAL volume growth135 | Key Metrics | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | LDDs Sold | 67 | 49 | | LDD Installed Base (End of Period) | 523 | 294 | | LALs Sold | 12,622 | 5,400 | Results of Operations The company achieved significant year-over-year improvements in Q2 and H1 2023, with robust sales growth, expanded gross margins, and reduced operating loss | Financial Highlights (In thousands) | Q2 2023 | Q2 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Sales | $20,810 | $11,360 | 83.2% | | Gross Profit | $12,015 | $4,788 | 150.9% | | Gross Margin | 57.7% | 42.2% | +15.5 pts | | Loss from Operations | $(13,625) | $(15,792) | (13.7)% | | Financial Highlights (In thousands) | H1 2023 | H1 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Sales | $38,299 | $20,301 | 88.7% | | Gross Profit | $22,380 | $8,549 | 161.8% | | Gross Margin | 58.4% | 42.1% | +16.3 pts | | Loss from Operations | $(26,720) | $(32,370) | (17.5)% | - The increase in sales for Q2 2023 was driven by incremental sales of 7,222 LALs and 18 LDDs due to strong adoption of the RxSight technology159 - SG&A expenses increased by 26.8% in Q2 2023, primarily due to higher headcount, sales commissions, and marketing costs to support growth161 Liquidity and Capital Resources As of June 30, 2023, the company maintained strong liquidity, bolstered by equity offerings and debt prepayment, with sufficient capital for operations - As of June 30, 2023, the company had cash, cash equivalents, and short-term investments of $147.1 million173 - The company raised net proceeds of approximately $53.6 million from a public offering in February 2023 and has utilized an ATM facility, which was fully drawn down for gross proceeds of $50.0 million as of the report date175177 - On August 4, 2023, the company prepaid its Term A Loans in full, including accrued interest and fees, using cash from the ATM facility and cash reserves180 - Management does not anticipate the need to raise additional capital or incur additional debt in order to reach profit from operations184 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, RxSight, Inc. is exempt from providing disclosures on market risk - The company is not required to provide this disclosure as it qualifies as a smaller reporting company204 Item 4. Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2023, with no material changes in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023205 - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls206 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any legal proceedings expected to materially affect its business or financial condition - The company is not currently a party to any legal proceedings that would individually or in the aggregate have a material adverse effect on its business209 Item 1A. Risk Factors The company faces risks from limited operating history, RxSight system reliance, competition, supply chain, IP, regulations, and increased compliance costs - Business Risks: The company has a limited operating history, a history of net losses, and its success depends heavily on the RxSight system, facing significant competition and global economic conditions216221233 - Third-Party Reliance: The company depends on third-party, including single and sole source suppliers, for components of the RxSight system, making it vulnerable to supply disruptions and price fluctuations215450 - Regulatory Risks: The business is subject to extensive government regulation by the FDA and other bodies, where failure to obtain or maintain regulatory clearances, or potential product recalls, could harm commercial operations214363389 - Intellectual Property Risks: The company's ability to compete depends on its ability to obtain, maintain, and enforce patent and other intellectual property protection for its technology and products213297 - As of December 31, 2023, the company will be considered a "large accelerated filer" and will cease to be an "emerging growth company," which will result in the loss of certain reduced reporting requirements and increased compliance costs468471 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered equity sales, no use of registered proceeds, and no issuer purchases during the period - The company reports no unregistered sales of equity securities during the period501 Item 5. Other Information On August 4, 2023, the company fully prepaid its June 2023 loan with Oxford, primarily using cash from its ATM offering - On August 4, 2023, the Company prepaid all outstanding loans under its June 2023 LSA with Oxford, using cash primarily raised from its ATM Facility503