Sight Sciences, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed March 24, 2022. This is an annual report, not a standalone fourth-quarter earnings report. The filing does not provide clear Q4-only financial results.
Business context
Sight Sciences develops and sells ophthalmic medical devices. Its Surgical Glaucoma segment sells the OMNI Surgical System for glaucoma procedures; its Dry Eye segment sells the TearCare System for evaporative dry eye disease associated with meibomian gland dysfunction. FY2021 revenue was heavily concentrated in OMNI. The company completed its IPO in July 2021, receiving approximately $252.2 million in net proceeds.
Key financial results
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | $49.0 million | $27.6 million | +77.1% |
| Gross profit | $40.3 million | $18.4 million | +118.9% |
| Gross margin | 82.4% | 66.7% | +15.7 percentage points |
| Operating expenses | $91.8 million | $50.6 million | +81.4% |
| Operating loss | $51.5 million | $32.2 million | Loss widened |
| Net loss | $63.0 million | $34.7 million | Loss widened 81.5% |
| Net cash used in operating activities | $52.5 million | $32.2 million | Cash burn increased |
- Segment revenue: Surgical Glaucoma $46.5 million, up 78.8%, and 95% of total revenue; Dry Eye $2.5 million, up 50.0%, and 5% of revenue.
- Segment gross margins: Surgical Glaucoma 86.1%, versus 72.8% in 2020; Dry Eye 13.1%, versus negative 30.5% in 2020. TearCare’s SmartHub pricing was intended to support adoption, limiting segment margin.
- Cash and liquidity: Cash and cash equivalents were $260.7 million at year-end, versus $61.5 million. Management expected available cash and borrowing capacity to fund planned operations for at least 12 months from issuance of the financial statements.
- Debt: $35.0 million principal outstanding under the secured MidCap term loan; its balance-sheet carrying amount was $32.7 million after discounts and issuance costs. The effective interest rate was 12.94%; the $5.0 million revolver was undrawn. The company reported covenant compliance at year-end.
- Other financial items: Interest expense was $4.4 million. Other expense of $6.9 million was primarily due to fair-value changes in preferred-stock warrants, which converted to equity at the IPO. Basic and diluted net loss per share was $2.36.
Material changes and management commentary
- Revenue growth was attributed mainly to more facilities ordering OMNI and increased utilization per facility. OMNI had more than 750 active ordering facilities and about 1,500 trained surgeons by year-end.
- Moving primary OMNI production to a lower-cost Asian contract manufacturer helped lift Surgical Glaucoma gross margin. The company planned to add a U.S.-based high-volume manufacturer in 2022.
- R&D expense rose 76.2% to $15.6 million; SG&A rose 82.5% to $76.2 million, reflecting commercial expansion, higher headcount and stock compensation, and public-company and IPO-related costs.
- COVID-19 continued to disrupt elective procedures, customer access, and clinical and commercial activity. The filing describes cancellations amid Delta and Omicron waves, including into early 2022.
- Management expects net losses and negative operating cash flows for the foreseeable future, with continued investment in clinical trials, commercial capabilities, market access, and product development. The filing gives no specific revenue or earnings guidance.
Outlook, risks, contingencies, and unusual items
- OMNI represented 95% of FY2021 revenue, creating significant product concentration. The company also cautions that long-term clinical outcomes are not yet established and that adoption depends on clinical evidence, physician training, and reimbursement.
- TearCare had no formal Medicare or private-payor coverage policy at year-end; adoption relied substantially on patient-pay sales and case-by-case reimbursement efforts. The company is pursuing additional clinical evidence and broader coverage.
- In December 2021, the FDA cleared an expanded TearCare indication. In February 2022, the FDA raised concerns about marketing the legacy TearCare system without 510(k) clearance; the company reported conducting a voluntary recall of that legacy system. The cleared new version was not included in the recall and remained on the market.
- Manufacturing relies on third parties and certain single-source suppliers; disruption, transition delays, or supply constraints could affect sales. OMNI production was concentrated with a China-based manufacturer at the time described.
- The company had filed a patent-infringement lawsuit against Ivantis concerning the Hydrus Microstent. As of the filing, the outcome and potential financial impact could not be estimated. No trial date had been set.
- Management concluded disclosure controls and procedures were ineffective at year-end because of a material weakness involving insufficient experienced accounting personnel, complex GAAP accounting, segregation of duties, and financial-close reviews. Remediation efforts were underway; the auditor did not provide an opinion on internal-control effectiveness.
- The independent auditor issued an unqualified opinion on the financial statements. The company reported a $153.0 million accumulated deficit and a full valuation allowance against deferred tax assets.
Important facts for investors to verify
- Whether OMNI revenue growth and utilization continue, given the high dependence on one product and the elective-procedure market.
- Progress in resolving the legacy TearCare recall, and whether the cleared version gains clinical acceptance and reimbursement coverage.
- Cash burn relative to the stated liquidity runway, debt service and covenants, and the transition to additional OMNI manufacturing capacity.
- Results and timing of ongoing clinical trials, regulatory submissions, and reimbursement initiatives for both products.
- Whether the company remediates the disclosed material weakness and improves its disclosure controls.