Q2 2024 Earnings Summary
- Sight Sciences expects a return to double-digit Surgical Glaucoma revenue growth in the second half of 2024, driven by increased OMNI utilization and customer base expansion. The company is well-positioned for growth in 2025 and beyond, with the potential device-intensive status for CPT code 66174, which could result in a 29% increase in Medicare's ASC facility payment rate, enhancing OMNI's value proposition and accelerating growth.
- The company is confident in achieving reimbursement coverage for TearCare at the increased price of $1,200 per set of SmartLids, reflecting the clinical and economic value demonstrated in the SAHARA RCT and budget impact models. This is expected to lead to strong Dry Eye revenue growth in 2025, acting as an accelerant for overall growth.
- Significant improvements in cash burn, with cash usage reduced from $75 million in 2022 to $9 million in Q2 2024, and the expectation to continue improving over H2 2024 and into 2025. The company aims to achieve cash flow break even without raising additional equity capital, indicating strong financial discipline and sufficient funding to reach its goals.
- Dependence on payer reimbursement for TearCare introduces risk. The company's Dry Eye segment revenue is expected to decrease due to the price increase to $1,200 per set of TearCare SmartLids effective October 1, 2024, which the company anticipates will have a significant negative impact on cash pay volumes in the second half of 2024 before potential growth in 2025. Additionally, discussions with payers are still in the early stages, with very small overall claims paid to date, indicating uncertainty in achieving reimbursement and impacting adoption rates.
- Reimbursement uncertainties could affect future growth. Improvements in facility reimbursement for the OMNI technology are still pending final approval, expected in late October or early November 2024. Any delays or unfavorable decisions regarding the proposed increase in reimbursement could adversely impact the company's revenue and growth plans in the Surgical Glaucoma segment.
- Lack of specific financial guidance suggests uncertainty. The company has not provided specific targets for 2025 guidance, cash burn, or the revenue level required to achieve cash flow break-even, which may indicate financial uncertainty and potential challenges in strategic planning.
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2025 Growth Expectations
Q: Are you maintaining double-digit growth expectations for 2025?
A: Management is confident in continuing to gain share and grow the market, aiming for double-digit growth in 2025 and beyond, especially with TearCare as an accelerant. However, they are not prepared to provide specific guidance yet. -
Cash Flow Break-Even
Q: What's the revenue run rate needed to achieve cash flow break-even?
A: They haven't provided a specific target but have made substantial improvements, reducing cash usage significantly from about $75 million in 2022 to around $9 million this quarter. They feel properly funded to reach their goals. -
Cash Burn and Leverage
Q: Expectations for cash burn improvement in the second half of 2024?
A: Management expects to continue improving cash burn in H2 2024 and into 2025, focusing on efficient spending while investing in key commercial and R&D activities. Dry eye investments will increase in 2025 as market access wins occur. -
TearCare Reimbursement
Q: Update on TearCare reimbursement volumes and payer conversations?
A: They're still early in getting claims paid for TearCare, with a low level of claims being paid at reasonable rates. Conversations with commercial payers are positive and driven by strong clinical data and health economic models like SAHARA Phase I and II. -
OMNI Procedure Mix and Adoption
Q: What's the mix of OMNI usage in stand-alone vs. combination procedures, and expectations for adoption with updated facility fees?
A: Approximately 85% of OMNI procedures are in combination with cataract surgery, and 15% are stand-alone. The proposed facility fee increase is pending approval and applies to the broader code, not specifically stand-alone. Management is optimistic about the stand-alone market's growth. -
TearCare Pricing and Reimbursement Confidence
Q: How did you arrive at the $1,200 price for TearCare, and are you confident payers will reimburse at this level?
A: The $1,200 price is based on strong clinical evidence and health economic analyses. Management feels good about payer discussions and believes the data supports the price point, though they acknowledge it's early in the process.