Sight Sciences, Inc. (SGHT) Q1 2024 Earnings Summary
Executive Summary
- Q1 2024 revenue was $19.3M (+2% YoY), gross margin 86%, net loss of $16.3M (-$0.33 EPS); surgical glaucoma grew 5% while dry eye declined 32% .
- Management reaffirmed FY 2024 guidance: revenue $81–$85M and adjusted operating expenses $107–$110M; gross margin expected in the mid-80s .
- Sequential momentum: surgical glaucoma revenue +6% vs Q4; Q2 2024 expected to be “low double-digit” sequential revenue growth, despite YoY headwinds vs a tough comp .
- A $34M jury verdict against Alcon (willful infringement) is a potential catalyst; damages included $5.5M lost profits and $28.5M royalties; remedies and appeals remain pending .
- Street consensus from S&P Global was unavailable at time of analysis; estimate comparisons could not be provided (S&P Global data not retrieved).
What Went Well and What Went Wrong
What Went Well
- Surgical glaucoma utilization improved across existing accounts; revenue reached $18.3M (+5% YoY; +6% QoQ). “OMNI is positioned as an important MIG technology… our recovery trajectory [is] tracking to our expectations.” .
- Gross margin expanded to 86% (vs 84% prior year), driven by surgical glaucoma margin rising to 88% (benefiting from prior-year inventory scrap normalization) .
- Operating discipline: adjusted operating expenses declined 11% YoY to $26.6M; cash used fell to $10.8M vs $17.7M in Q1 2023, even including $3.2M debt restructuring costs .
- Legal win: jury found willful infringement; $34M damages awarded, reinforcing IP protection. “We have a duty… to safeguard our intellectual property portfolio, and we are pleased with the jury’s verdict.” .
What Went Wrong
- Dry eye revenue fell 32% YoY to $1.0M, reflecting reduced sales infrastructure and a strategic shift toward market access rather than new account placements .
- Overhead per unit increased due to lower production volumes, compressing dry eye gross margin to 42% (vs 54% prior year) .
- Lingering account attrition from 2H’23 LCD uncertainty (net ~6%) necessitates reengagement capacity; Q2 revenue expected below prior-year period due to tough comps, despite sequential growth guidance .
Financial Results
Segment breakdown (Q1 2024 vs Q1 2023):
KPIs across quarters:
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- “Our first quarter performance represents an encouraging start to the year… strong gross margins and disciplined expense management… 2024 is expected to be a foundational year for the next phase of Sight Sciences’ growth…” — CEO Paul Badawi .
- “We plan on achieving cash flow breakeven without the need to raise additional equity capital…” — CFO Alison Bauerlein .
- On surgical glaucoma: “Growth… driven primarily by increased utilization from existing accounts of OMNI and SION… we expect returning accounts to contribute toward further regaining momentum in the second quarter…” .
- On TearCare: “Our goal is to begin receiving positive coverage decisions from payers starting in 2025… early positive traction with our customers’ claims.” .
- On litigation: “The jury found that Sight Sciences’ asserted patents were willfully infringed and awarded monetary damages…” .
Q&A Highlights
- Guidance discipline: Despite momentum, management chose not to raise FY guide yet; seeks more consistent traction before revisiting .
- Q2 cadence: Expect “low double-digit” sequential revenue growth vs Q1; Q2 YoY lower due to tough comp; typical seasonality with stronger Q2/Q4 utilization .
- Dry Eye reimbursement: Early claims feedback encouraging; economic model suggests favorable reimbursement for providers and payers; broader promotion to be evaluated alongside market access .
- Account reengagement: Engagement positive; capacity build in sales organization to support utilization, new accounts, and surgeon training .
- Competition & pipeline: Healthy MIGS market; OMNI well positioned for combo cataract and stand-alone; pipeline includes intracanalicular scaffold (“Helix” stent in animals), sustained release programs with milestones later in 2024 .
Estimates Context
- Wall Street consensus (S&P Global) for Q1 2024 revenue/EPS and FY 2024 was unavailable at time of analysis due to data access limits; comparisons to Street estimates are not provided.
- Analyst tone suggested results/trajectory tracking toward high end of guide, prompting questions about why guidance was not raised .
Key Takeaways for Investors
- Sequential rebound in surgical glaucoma utilization should support “low double-digit” sequential revenue growth in Q2; H2 set up for double-digit YoY growth if utilization and account reengagement continue .
- Gross margins remain strong in the mid-80s, aided by surgical glaucoma mix; watch dry eye volume normalization to relieve overhead per unit pressures .
- The $34M patent verdict is a favorable legal milestone; timing and magnitude of any enhanced damages or remedies remain uncertain pending post-trial and appeals .
- Liquidity and debt profile improved with Hercules facility; management targets cash flow breakeven without equity raise, contingent on execution .
- Dry Eye is an option value for 2025+: SAHARA clinical evidence and budget impact analyses underpin payer discussions; early claims traction encouraging .
- Near-term trading: focus on Q2 sequential growth delivery, H2 visibility on double-digit YoY growth, and any updates on litigation outcomes or payer policy progress .
- Medium-term thesis: Dual-platform leverage (MIGS and Dry Eye) with expanding clinical evidence and market access initiatives positions SGHT to reaccelerate growth and improve operating leverage .