Sight Sciences, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Sight Sciences develops and sells ophthalmic medical devices in two segments: Surgical Glaucoma (OMNI and SION) and Dry Eye (TearCare). Amounts below are in U.S. dollars; financial statement amounts are in millions unless otherwise noted.
Financial performance
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $19.3 million | $18.8 million |
| Gross profit / gross margin | $16.5 million / 85.5% | $15.8 million / 83.8% |
| Operating expenses | $31.2 million | $33.3 million |
| Operating loss | $14.7 million | $17.6 million |
| Net loss | $16.3 million; $0.33 per share | $17.1 million; $0.35 per share |
| Cash used in operating activities | $9.8 million | $17.4 million |
| Cash and cash equivalents at period end | $127.3 million | $167.3 million |
Revenue increased 2.3%. Surgical Glaucoma revenue rose 5.3% to $18.3 million, while Dry Eye revenue declined 32.3% to $1.0 million. Segment gross margins were 87.9% for Surgical Glaucoma (86.4% prior year) and 42.1% for Dry Eye (54.0% prior year). Total gross margin improved, partly reflecting a prior-year inventory scrap expense; lower Dry Eye volume increased overhead costs per unit.
SG&A declined 7.4% to $26.6 million, mainly from lower personnel, marketing, consulting, recruiting, and sales-training costs, partly offset by higher legal expense and stock-based compensation. R&D was broadly flat at $4.6 million. Net loss improved despite a $2.0 million debt-extinguishment loss related to refinancing.
Liquidity, debt, and balance sheet
At March 31, 2024, the company reported $127.3 million of cash and cash equivalents, $152.1 million of current assets, $11.7 million of current liabilities, and $33.7 million of long-term debt, net of discounts and issuance costs. Debt principal was $35.0 million. Cash declined $10.8 million during the quarter.
In January, Sight Sciences refinanced its $35.0 million MidCap term loan with a $35.0 million initial draw under a Hercules senior secured facility of up to $65.0 million. The loan matures July 1, 2028, carries an initial floating rate of 10.85%, and has a 5.95% final payment fee. Additional borrowing is conditional in part on milestones and lender approval. The facility is secured by substantially all company assets, including material intellectual property, and includes minimum cash and revenue covenants. The company reported compliance with covenants at quarter end.
Management believes cash and available Hercules borrowings will fund operations for at least the next 12 months and the foreseeable future. However, the company has an accumulated deficit of $311.1 million, expects continued losses for at least several years, and may need additional financing if revenue, margins, or cost control fall short.
Outlook, risks, and unusual items
- Management plans continued investment in clinical studies, sales and marketing, education, market access, and product development, while pursuing disciplined spending and operating-cost efficiencies. No specific revenue or earnings guidance is provided.
- TearCare has no meaningful Medicare or private-payor reimbursement coverage for MGD procedures; patients typically pay out of pocket. Management expects Dry Eye gross margins to remain below Surgical Glaucoma margins in the near to medium term.
- In a patent case against Alcon and Ivantis, a jury returned a $34 million verdict on April 26, 2024, after the reporting period. The award comprises $5.5 million in lost profits and $28.5 million in royalties. Post-trial proceedings and appeal remain possible; the company says it cannot predict the outcome or reasonably estimate the financial impact. The verdict should not be treated as collected cash or a finalized award.
- The Hercules facility’s floating interest rate, secured collateral, and minimum cash and revenue covenants create financing and compliance risks. The company also flags reimbursement, competition, execution, intellectual-property, and future-financing risks.
- Management concluded disclosure controls were effective at a reasonable assurance level; no material change in internal control over financial reporting was reported during the quarter.
Important facts for investors to verify
- Whether Surgical Glaucoma growth and the decline in Dry Eye sales continue, and whether Dry Eye margins recover with higher volume.
- Cash burn, liquidity runway, access to conditional Hercules tranches, and ongoing compliance with loan covenants.
- Final court judgment, possible damages adjustments or remedies, appeals, litigation costs, and any eventual accounting or cash impact of the $34 million jury verdict.
- Progress on reimbursement and market access, particularly for TearCare, and the effect of any operating-cost reductions on growth initiatives.
- The cash-flow statement reports Q1 2024 net loss as $16.269 million, while the statements of operations and equity report $16.266 million; investors may wish to confirm this small filing discrepancy.