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Sight Sciences, Inc. (SGHT) Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 revenue was $21.4M, up 11% sequentially but down 9% YoY; gross margin held at 86%, net loss improved to $12.3M ($0.25) vs $14.8M ($0.30) last year, reflecting disciplined OpEx and improving utilization trends .
  • Guidance narrowed: FY24 revenue to $81–$83M (from $81–$85M) and adjusted OpEx to $107–$109M (from $107–$110M); management reiterated mid-80s GM and expects Q3 revenue down QoQ but slightly up YoY; Surgical Glaucoma expected to grow double-digit in 2H24 YoY .
  • CMS proposed device‑intensive status for CPT 66174 (OMNI procedure) would raise ASC facility payment by ~$600 (+29%) starting Jan 1, 2025 if finalized—potentially a meaningful 2025 tailwind; not yet final .
  • TearCare strategy pivot: announced a list price increase to $1,200 per SmartLids effective Oct 1, 2024 and is prioritizing market access after publication of 12‑month SAHARA RCT; mgmt expects a temporary dry eye revenue decline in 2H24 and return to growth in 2025 with coverage wins .
  • Cash burn improved to $9.1M (‑29% YoY), cash balance $118.2M, debt $35.0M; management reiterated path to cash flow breakeven without new equity .

What Went Well and What Went Wrong

  • What Went Well

    • Sequential commercial momentum in Surgical Glaucoma: utilization up 5% QoQ and active customers up 5% QoQ to 1,131; segment revenue +11% QoQ to $20.2M .
    • Potential reimbursement tailwind: CMS proposed device‑intensive status for CPT 66174, implying +$599 (+29%) ASC facility fee increase if finalized—CEO: “we are very pleased with this proposal” .
    • Operating discipline: adjusted OpEx fell 15% YoY to $26.6M; cash usage improved to $9.1M (vs $12.8M YoY); CFO reiterated confidence in cash flow breakeven without equity .

  • What Went Wrong

    • YoY revenue decline and pricing/ASP pressure: total revenue -9% YoY; Surgical Glaucoma -5% YoY on lower utilization and ASP vs prior-year comp .
    • Dry Eye headwinds: revenue -46% YoY to $1.1M as SG&A was reduced and focus shifted to market access; dry eye gross margin compressed to 46% on lower volumes .
    • FY24 revenue guide narrowed with lower top end to $81–$83M; dry eye revenue now guided to < $3M in FY24 (includes $2.1M YTD), reflecting expected volume impact from the Oct 1 price increase .

Financial Results

MetricQ2 2023Q1 2024Q2 2024
Revenue ($M)$23.47 $19.30 $21.37
Gross Margin %85.6% 86.0% 85.8%
Total Operating Expenses ($M)$35.28 $31.20 $30.996
Adjusted Operating Expenses ($M)$31.46 $26.60 $26.59
Net Loss ($M)$(14.75) $(16.20) $(12.33)
Diluted EPS ($)$(0.30) $(0.33) $(0.25)
Cash Used in Quarter ($M)$(12.8) $(10.8) $(9.1)
Cash & Equivalents ($M)$154.5 (as of 6/30/23) $127.3 (as of 3/31/24) $118.2 (as of 6/30/24)
Total Debt ($M)$35.0 (as of 6/30/23) $35.0 (as of 3/31/24) $35.0 (as of 6/30/24)

Segment breakdown

MetricQ2 2023Q1 2024Q2 2024
Surgical Glaucoma Revenue ($M)$21.40 $18.30 $20.24
Dry Eye Revenue ($M)$2.07 $1.00 $1.13
Surgical Glaucoma Gross Margin %88.6% 88% 88.0%
Dry Eye Gross Margin %54.8% 42% 46.5%

KPIs

KPIQ2 2023Q1 2024Q2 2024
Surgical Glaucoma Active Customers1,134 1,073 1,131
Dry Eye Lid Treatment Units Sold5,934 ~4,000 4,088
Dry Eye Active Customers370 288 277

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2024$81–$85M $81–$83M Narrowed (lowered top end)
Adjusted Operating ExpensesFY 2024$107–$110M $107–$109M Narrowed (lowered top end)
Gross MarginFY 2024Mid‑80s% Mid‑80s% Maintained
Dry Eye RevenueFY 2024No numeric range; expected significant decline < $3M; includes $2.1M YTD New numeric disclosure (negative)
Q3 Revenue (directional)Q3 2024N/ADown QoQ vs Q2; slightly up YoY New directional update
Surgical Glaucoma Revenue (2H)2H 2024 vs 2H 2023Double‑digit YoY growth expected Double‑digit YoY growth expected Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’23 and Q1’24)Current Period (Q2’24)Trend
LCD/coverage environment for OMNILCDs withdrawn; extensive payer engagement and long‑term data (GEMINI 2) to support coverage Proposed LCDs did not restrict OMNI/SION; utilization and accounts improved sequentially Improving clarity/normalizing demand
Device‑intensive status for CPT 66174Not highlighted previouslyCMS proposed device‑intensive status; ASC facility fee +$599 (+29%) if finalized for 2025 Potential 2025 tailwind
Utilization and account re‑engagementRecovery plan post‑LCD; focus on utilization first, then accounts Ordering account utilization +5% QoQ; active accounts +5% QoQ to 1,131 Improving sequentially
Dry Eye market access (SAHARA, economic models)SAHARA 6‑ and 12‑month data highlighted; budget impact model at ISPOR; coverage efforts underway for 2025 12‑month SAHARA published; price increase to $1,200 effective Oct 1; early claims paid; targeting 2025 policy wins Pivot to reimbursement; near‑term revenue decline
Cash burn and liquidityQ4 cash use $6.4M; new credit facility; focus on OpEx leverage Q2 cash use $9.1M (‑29% YoY); CFO expects continued improvement; $118.2M cash Improving cash discipline
Litigation (Alcon/Hydrus)Positive jury verdict $34M; next steps pending; potential remedies subject to court Verdict reiterated; awaiting final ruling; subject to appeal Watch for legal resolution

Management Commentary

  • CEO on momentum and coverage clarity: “With increasing clarity on coverage eligibility, thousands of surgeons can continue to routinely use our OMNI technology… focus on expanded use cases, reengaging existing customers… and training new surgeons” .
  • CEO on device‑intensive status: “We are very pleased with this proposal from CMS… would be a meaningful development that would enhance our value proposition from a facility economic perspective” .
  • CEO on Dry Eye strategy: “We intend to ensure [TearCare’s] value is appropriately distributed… by pioneering market access for interventional dry eye procedures” .
  • CFO on cash and breakeven: “We plan on achieving cash flow break even without the need to raise additional equity capital” .

Q&A Highlights

  • Growth cadence and comps: Management expects double‑digit Surgical Glaucoma growth in 2H24; Q3 revenue down QoQ but slightly up YoY; recovery primarily utilization‑driven with account adds building through the year .
  • Cash burn trajectory: Expect continued improvement in 2H24 and into 2025 while investing in glaucoma and building dry eye market access teams; 2025 dry eye investments are incremental as coverage wins materialize .
  • Stand‑alone OMNI and facility fees: ~85% OMNI in combo cataract vs ~15% stand‑alone (company estimate); proposed fee increase applies to CPT 66174 broadly and could be a tailwind if finalized .
  • Dry Eye claims and pricing: Early claims paid at reasonable rates but very early days; $1,200 SmartLids price informed by clinical and economic evidence; payer coverage decisions targeted for 2025 .

Estimates Context

  • We attempted to retrieve Wall Street consensus estimates via S&P Global for Q2 2024, but the request was not accessible at this time. As a result, we cannot quantify beats/misses vs consensus for revenue or EPS this quarter. S&P Global consensus values were unavailable at time of analysis (tool limit).
  • Implications: Without consensus, we anchor on company guidance and trajectory—sequential growth, narrowed FY24 revenue guide, and maintained mid‑80s margin outlook suggest stabilization in Surgical Glaucoma and a deliberately compressed Dry Eye near term ahead of 2025 coverage catalysts .

Key Takeaways for Investors

  • Sequential recovery in Surgical Glaucoma is intact; utilization and active accounts improved QoQ, supporting the outlook for double‑digit YoY growth in 2H24 .
  • Guidance was narrowed on both revenue and adjusted OpEx—signaling discipline and visibility; Q3 seasonal softness vs Q2 is expected, but YoY growth should resume .
  • Potential 2025 catalyst: if CMS finalizes device‑intensive status for CPT 66174, OMNI economics improve meaningfully at the facility level (+29% ASC payment), potentially accelerating adoption next year .
  • Dry Eye is a deliberate near‑term drag as SGHT pivots to market access and raises price to $1,200; early payer dialogues/claims plus SAHARA and economic models position TearCare for a coverage‑driven reacceleration in 2025 .
  • Cash runway remains solid ($118.2M cash; $35.0M debt) with improving quarterly cash usage; management targets cash flow breakeven without equity raises .
  • Legal optionality: a $34M jury verdict against Alcon (subject to court rulings/appeal) remains an unmodeled potential source of value/catalyst .
  • Near‑term trading setup: watch for final CMS rule (late Q4 2024), Q3 seasonality impact, and any incremental signs of OMNI share/stand‑alone growth; medium‑term thesis hinges on 2025 reimbursement tailwinds (OMNI facility fees + TearCare coverage) and sustained OpEx leverage .

Other Relevant Press Releases (Q2 2024)

  • Sustainability report published (June 10) — governance and ESG disclosures (e.g., 40% board female representation target, supply chain initiatives). While not financial, it may support corporate governance perception among investors .

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