Sight Sciences, Inc. (NASDAQ:SGHT) is an innovative eyecare technology company focused on developing and commercializing cutting-edge, interventional technologies that elevate the standard of care for patients. With a mission to empower eye care providers to procedurally improve patient outcomes, Sight Sciences has established itself as a leader in the surgical glaucoma and dry eye treatment markets.
Company History and Overview Sight Sciences was incorporated in the State of Delaware in 2010 and is headquartered in Menlo Park, California. The company was founded with the mission of developing transformative, interventional technologies that allow eye care providers to procedurally elevate the standards of care, empowering people to keep seeing. Since its inception, Sight Sciences has raised an aggregate of approximately $402.4 million in net proceeds from sales of its redeemable convertible preferred stock and common stock and borrowed $32.9 million of net proceeds under its term loans.
The company's initial product development efforts have focused on addressing two of the world's most prevalent and underserved eye diseases - glaucoma and dry eye disease. Through its two reportable operating segments, Surgical Glaucoma and Dry Eye, Sight Sciences has commercialized a portfolio of innovative technologies, including the OMNI Surgical System, SION Surgical Instrument, and the TearCare System.
The OMNI Surgical System is an implant-free, single-use device designed to enable ophthalmologists to perform a comprehensive, minimally invasive glaucoma surgery (MIGS) procedure to reduce intraocular pressure in adult patients with primary open-angle glaucoma. The SION Surgical Instrument is a complementary product to OMNI, providing ophthalmologists with a bladeless, manually operated device for use in goniotomy procedures. In the Dry Eye segment, the TearCare System is a proprietary, interventional technology intended to melt and facilitate the comprehensive removal of meibomian gland obstructions, addressing the leading cause of evaporative dry eye disease.
Sight Sciences' products are primarily sold through a direct sales model, which allows the company to provide intensive education, training, and customer service to eye care providers. This strategy has enabled Sight Sciences to differentiate its products and expand its addressable market by driving awareness and adoption of its innovative treatment solutions. As of September 30, 2024, the company's Surgical Glaucoma products have been used in an estimated 275,000 procedures across over 2,000 hospitals and ambulatory surgery centers in the U.S. and Europe, while the TearCare System has been used in over 65,000 procedures at more than 1,500 eyecare facilities in the U.S.
Sight Sciences does not currently operate any manufacturing facilities and instead contracts with third parties for its production requirements. The company derived over 90% of its total revenue from its Surgical Glaucoma segment, which was substantially all generated from sales within the U.S., as of September 30, 2024.
Financial Performance and Liquidity In the third quarter of 2024, Sight Sciences reported total revenue of $20.2 million, representing a 1% increase compared to the same period in the prior year. The company's Surgical Glaucoma segment generated revenue of $18.6 million, up 1% year-over-year, while the Dry Eye segment recorded revenue of $1.5 million, down 4% compared to the third quarter of 2023. However, the Surgical Glaucoma segment experienced an 8% sequential decline from Q2 2024, which was lower than expected. The company cited a slower than anticipated recovery from the local coverage determinations (LCDs) as a reason for the lower than expected surgical glaucoma revenue.
Gross margin for the quarter was 84%, down from 87% in the prior year period, primarily due to higher overhead costs per unit resulting from lower production volumes in both the Surgical Glaucoma and Dry Eye segments. Total operating expenses decreased by 8% to $28.1 million, driven by lower legal expenses. Adjusted operating expenses, which exclude certain non-recurring items, were $23.8 million, a reduction of 11% year-over-year.
The company reported a net loss of $11.1 million, or $0.22 per share, in the third quarter of 2024, compared to a net loss of $13 million, or $0.27 per share, in the same period of the prior year. The decrease in net income was primarily due to higher operating expenses, which were partially offset by higher investment income. Sight Sciences ended the quarter with $118.6 million in cash and cash equivalents and $35 million in debt, excluding debt discounts and amortized debt issuance costs.
For the full year 2023, Sight Sciences reported revenue of $81.06 million, a net loss of $55.55 million, operating cash flow of -$47.18 million, and free cash flow of -$47.98 million. In the most recent quarter (Q3 2024), the company generated operating cash flow of $0.60 million and free cash flow of $0.55 million.
The company's liquidity position remains strong, with a debt-to-equity ratio of 0.36 as of September 30, 2024. Sight Sciences has a $65 million senior secured term loan facility with Hercules Capital, Inc., of which $35 million was drawn as of September 30, 2024. The company's current ratio stands at 10.18, while its quick ratio is 9.74, indicating a robust short-term liquidity position.
For the full year 2024, Sight Sciences is maintaining its revenue guidance of approximately $81 million to $83 million. The company expects double-digit surgical glaucoma revenue growth in Q4 2024 compared to the same period in the prior year, as they regain commercial momentum. However, Sight Sciences acknowledged headwinds to Q4 revenue growth, including the slower than expected recovery in surgical glaucoma utilization in Q3 2024, and the impact of the LCD changes limiting combination MIGS procedures.
For dry eye revenue in Q4 2024, Sight Sciences expects it to be less than $0.5 million, due to the expected significant negative impact on cash pay procedure volumes following a price increase effective October 1, 2024. The company has revised its guidance for full year 2024 adjusted operating expenses to approximately $104 million to $106 million, down from the prior range of $107 million to $109 million, representing a decrease of 4-6% compared to 2023. This reflects the company's continued focus on disciplined spending and operational efficiency to support its long-term growth objectives.
Market Dynamics and Competitive Landscape The medical device industry in which Sight Sciences operates is highly competitive, with the company facing challenges from both established players and new entrants. Competitors include companies such as Glaukos, AbbVie/Allergan, Novartis, Alcon, Johnson & Johnson, Nova Eye Medical, and New World Medical, among others.
One significant development that impacted Sight Sciences' Surgical Glaucoma segment in 2024 was the publication of final local coverage determinations (LCDs) by five of the seven Medicare administrative contractors (MACs). These LCDs, which became effective in mid-November 2024, confirmed continued Medicare coverage for cataract surgery procedures performed with a single MIGS procedure, including both canaloplasty and goniotomy procedures using Sight Sciences' OMNI technology. However, the LCDs also adopted a non-coverage policy when an aqueous shunt or stent procedure is performed with another surgical MIGS procedure, such as canaloplasty or goniotomy, in the same patient eye. Sight Sciences estimates that approximately 10% of total MIGS codes billed in the six months ended June 30, 2024, were done in combination with another MIGS code, which could have a short-term impact on the overall MIGS device market growth rate.
In the Dry Eye segment, Sight Sciences continues to focus on its comprehensive, clinical data-driven long-term market development plan aimed at improving awareness and patient access to the TearCare System. The company is currently pursuing a three-pronged strategy, which includes developing best-in-class technology, delivering superior long-term clinical outcomes supported by randomized controlled trials, and executing an effective market access strategy to establish equitable reimbursement.
Sight Sciences' Strategy and Future Outlook Sight Sciences is dedicated to its mission of developing transformative, interventional technologies that enable eye care providers to procedurally elevate the standard of care and empower people to keep seeing. The company's strategic priorities include:
1. Strengthening commercial execution and driving further adoption of its clinically differentiated surgical glaucoma technologies, including OMNI and SION. 2. Advancing its work toward achieving equitable market access for the TearCare System, leveraging the clinical and health economic data to drive policy and payment decisions. 3. Investing in research and development to expand its pipeline of innovative, interventional eye care solutions, with a focus on both glaucoma and dry eye disease. 4. Enhancing its organizational capabilities and infrastructure to support significant pipeline development, scale, and profitable growth over the coming years.
Sight Sciences has established direct commercial operations in the United Kingdom and Germany, and sells OMNI in several other countries through distributors. The company believes OMNI's comprehensive procedure profile positions it well in a "one MIGS" environment, despite the recent headwinds related to Medicare coverage determinations limiting combination MIGS procedures.
In the Dry Eye segment, while the company has seen a small volume of TearCare claims paid by commercial and Medicare payers, it is still in the early stages of achieving equitable market access. The company is focused on pursuing coverage and reimbursement from payers to drive adoption of the TearCare System.
To support its strategic initiatives and future growth, Sight Sciences has strengthened its executive leadership team by hiring new executives, including an Executive Vice President of Research and Development and an Executive Vice President of Operations.
As Sight Sciences navigates the evolving market dynamics, the company remains confident in its ability to execute on its strategic initiatives and deliver long-term value for its shareholders. With a strong balance sheet, a portfolio of proven technologies, and a dedicated team of industry veterans, Sight Sciences is well-positioned to capitalize on the significant opportunities in the interventional eye care market.
Risks and Challenges While Sight Sciences has demonstrated progress in both its Surgical Glaucoma and Dry Eye segments, the company faces several risks and challenges that investors should be aware of:
1. Reimbursement uncertainty: Access to adequate coverage and reimbursement for procedures involving Sight Sciences' products is critical to their adoption and utilization by patients and eye care providers. Changes in reimbursement policies by Medicare, Medicaid, or private payers could have a material adverse effect on the company's business.
2. Competition and pricing pressures: The medical device industry is highly competitive, and Sight Sciences faces the risk of emerging technologies, products, or treatments that could offer superior safety, effectiveness, or cost-effectiveness compared to its offerings.
3. Supply chain disruptions: Sight Sciences relies on a limited number of third-party manufacturers, some of which are single-source suppliers and located outside the U.S. Disruptions in the supply chain or tariff-related issues could impact the company's ability to meet customer demand.
4. Regulatory and compliance risks: As a medical device company, Sight Sciences is subject to extensive government regulation, which could delay or prevent the commercialization of its products or result in significant compliance costs.
5. Intellectual property challenges: The company's success depends in part on its ability to protect its intellectual property and defend against infringement claims. Litigation related to intellectual property rights could be time-consuming and expensive.
Despite these risks, Sight Sciences remains focused on executing its strategic plan and driving long-term growth. The company's commitment to innovation, strong clinical outcomes, and dedication to improving patient care position it well to navigate the challenges and capitalize on the significant opportunities in the interventional eye care market.