RxSight, Inc. (NASDAQ:RXST) is a commercial-stage medical technology company dedicated to providing high-quality customized vision to patients following cataract surgery. The company's proprietary RxSight® Light Adjustable Lens system is the first and only commercially available premium cataract technology that enables doctors to customize and optimize visual acuity for patients after surgery.
Business Overview
RxSight's core product is the RxSight Light Adjustable Lens (LAL), a premium intraocular lens made of proprietary photosensitive material that changes shape in response to specific patterns of ultraviolet light generated by the company's Light Delivery Device (LDD). This allows doctors to fine-tune the lens after implantation to achieve the patient's desired visual outcomes.
The company's business model is centered around a "razor and razor blade" approach, where the LDD capital equipment is sold to ophthalmology practices, which then purchase the LAL lenses for use in procedures. RxSight has been focused on building out its LDD installed base, which stood at 732 units as of March 31, 2024, up 61% year-over-year and 10% sequentially. This installed base has driven strong utilization, with 20,218 LALs sold in Q1 2024, up 92% year-over-year.
Financials
RxSight reported annual revenue of $89.1 million in 2023, with a net loss of $48.6 million. The company's operating cash flow was negative $43.8 million, while free cash flow was negative $48.6 million.
In the first quarter of 2024, RxSight generated revenue of $29.5 million, up 69% year-over-year. LAL revenue was $19.9 million, representing 67% of total revenue and growing 92% year-over-year. LDD revenue was $8.7 million, up 35% year-over-year. Gross margin expanded to 70% in Q1 2024, compared to 59% in the prior-year period, driven by the higher-margin LAL revenue and continued cost reductions.
The company reported a net loss of $9.1 million in Q1 2024, an improvement from the $13.2 million net loss in the same period last year. RxSight ended the quarter with $125.4 million in cash, cash equivalents, and short-term investments.
Guidance and Outlook
For the full year 2024, RxSight is guiding for revenue of $132 million to $137 million, representing year-over-year growth of 48% to 54%. Gross margin is expected to be 68% to 70%, up from the previous guidance of 65% to 67%. Operating expenses are projected to be $126 million to $130 million, including $22 million to $25 million in non-cash stock-based compensation.
The company's strong first quarter performance and positive reception at the recent American Society of Cataract and Refractive Surgery (ASCRS) conference further support the vision to make adjustability the standard for premium cataract and lens replacement surgery. RxSight is focused on expanding its clinical knowledge base, driving rapid innovation, and pursuing international expansion opportunities.
Risks and Challenges
While RxSight has demonstrated impressive growth, the company faces several risks and challenges. The medical device industry is highly competitive, and RxSight competes with larger, well-capitalized companies in the premium intraocular lens market. The company's success is also dependent on its ability to obtain and maintain regulatory approvals, as well as its capacity to manufacture sufficient quantities of its products.
Additionally, RxSight relies on third-party suppliers, including single and sole source suppliers, for certain components and raw materials. Disruptions in the supply chain or the inability to obtain an adequate supply of these materials could have a material adverse effect on the company's business.
Liquidity
As of March 31, 2024, RxSight had $125.4 million in cash, cash equivalents, and short-term investments, providing the company with a strong liquidity position to fund its operations and growth initiatives. However, the company has a history of net losses and negative cash flows from operations, and it may need to raise additional capital in the future to support its continued expansion.
Conclusion
RxSight's Light Adjustable Lens technology is driving impressive growth, with strong adoption of its products and expanding gross margins. The company's focus on innovation, clinical education, and international expansion positions it well to capitalize on the significant market opportunity for premium intraocular lenses. While the company faces competitive and operational challenges, RxSight's unique adjustable lens solution and robust financial position suggest a promising future for the business.