Q4 2023 Earnings Summary
- Expected Return to Double-Digit Revenue Growth: Sight Sciences anticipates a return to double-digit revenue growth in the second half of 2024 and into 2025, driven by increased utilization, recovery of accounts, and addition of new accounts, particularly in the Surgical Glaucoma segment.
- Resilient Customer Base and Steady Recovery in Utilization: The company is experiencing a steady recovery in individual accounts ordering and utilization, reflecting the resilience of its customer base and the critical clinical value of its OMNI Surgical System. This recovery indicates strong demand for its products despite previous reimbursement uncertainties.
- Progress in Securing Reimbursement Coverage for TearCare: Sight Sciences is actively engaging with payers to achieve equitable market access and reimbursement coverage for its TearCare technology in the Dry Eye market. They expect to begin receiving coverage decisions from payers starting in 2025, which could significantly expand the market opportunity and accelerate growth.
- Revenue Decline Expected in First Half of 2024: The company anticipates that the first half of 2024 revenue will be lower than the prior year, with the second quarter identified as the biggest challenge from a comparison perspective. This suggests potential difficulties in sustaining growth in the near term. ,
- Significant Decline in Dry Eye Revenue: Dry Eye revenue is expected to decline significantly in 2024 compared to 2023 due to the restructuring of the dry eye team, a strategic shift focusing on market access activities, and a reduction in new account additions. This decline could negatively impact overall revenue growth. ,
- Risk of Reimbursement Changes Affecting Guidance: The company's guidance assumes that the current reimbursement environment remains unchanged, with no new Local Coverage Determinations (LCDs) affecting coverage of their OMNI Surgical System. However, there is a risk that LCDs could be proposed again, which could limit reimbursement and adversely impact revenues. ,
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Revenue Growth Guidance
Q: How will you achieve double-digit growth in 2024 and 2025?
A: We expect to attain double-digit growth in the back half of 2024 and into 2025, primarily driven by increased utilization across our existing accounts, recovery of previously lost accounts, and adding new accounts. Utilization will be the primary driver, especially in both combo cataract and stand-alone markets. [1] [2] [3] -
Reimbursement and LCD Updates
Q: What's the status of reimbursement and expectations for LCDs?
A: Our 2024 guidance assumes the current operating environment continues without changes in LCD coverage, ensuring OMNI maintains broad access and coverage. We have engaged with MACs and are prepared with compelling clinical data, including new studies, to support our position if LCDs are proposed again. [7] [8] -
Competitive Landscape in Stand-alone Glaucoma
Q: How are you addressing competition in stand-alone cases?
A: We believe we're well-positioned due to OMNI's comprehensive nature and efficacy in treating glaucoma both in combination and stand-alone procedures. We're optimizing our commercial strategy to capitalize on opportunities, and we view additional entrants positively as they help shift the treatment paradigm towards minimally invasive interventions. [2] [9] -
Utilization Recovery
Q: Are accounts returning to previous utilization levels?
A: Early indicators show a steady recovery with accounts returning to natural ordering patterns. While it's early, we're seeing trends towards normal utilization as uncertainties from last year's LCDs have subsided, and we anticipate continued progress throughout the year. [0] [6] -
Dry Eye Business Outlook
Q: What's expected for TearCare revenue and reimbursement?
A: In 2024, we anticipate Dry Eye revenue to decline significantly, with most revenue coming from SmartLid consumables and minimal new account additions. We're actively engaging with payers to establish reimbursement, aiming for coverage policy wins in 2025, which would significantly enhance the business. [6] [7] -
Quarterly Revenue Cadence
Q: How should we think about Q1 revenue and stocking effects?
A: We expect the first half of 2024 to be down, with Q2 being the toughest comparison due to last year's record sales. For Q1, we anticipate a similar or slightly better performance compared to Q4, breaking the usual seasonal trend of Q1 being down sequentially. We haven't seen material changes in stocking levels yet. [4] -
Cash Flow and Operating Expenses
Q: How will spending cuts affect growth and cash flow?
A: We expect to achieve operating expense leverage by growing revenues while operating expenses grow at a lower rate. This approach, combined with slight improvements in gross margin, will help us progress towards cash flow breakeven, despite the spending cuts. [1]