Sight Sciences Inc
For the period ended Jun 30, 2024. Filed Aug 2, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 2, 2024
SGHT$10.08+3.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-06.
0000950170-24-053572
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0000950170-24-090008
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 88 previous paragraphs and 100 current paragraphs.
62 unchanged; 24 reworded; 8 added; 0 removed; 2 previous and 6 current paragraphs rearranged.
Tables are not compared: 2 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
The availability of sufficient coverage and reimbursement for procedures involving our OMNI technology is fundamental to our business and prospects, with Medicare providing reimbursement for procedures that account for a majority of our sales revenues. As such, our business and results of operation are in material part dependent upon Medicare reimbursement policies applicable to OMNI procedures. Recent occurrences that could reasonably be expected to materially impact Medicare reimbursement for OMNI procedures include the following:
Current report
In May 2024, five of the seven Medicare Administrative Contractors (“MACs”), published proposed local coverage determinations (the “Proposed LCDs”) that, if finalized, will establish new Medicare coverage policies for certain minimally invasive glaucoma surgical procedures ("MIGS procedures") performed in these MACs' jurisdictions. Unlike the LCDs previously published and later withdrawn by these MACs in 2023, the Proposed LCDs do not characterize the OMNI procedure as investigational. If the Proposed LCDs are finalized and go into effect in their current form, Medicare coverage will remain available under the LCDs for MIGS procedures involving the OMNI technology. Each of the Proposed LCDs, if finalized in their current form, would adopt a non-coverage policy when an aqueous shunt or stent procedure is performed with another surgical MIGS procedure, such as canaloplasty or goniotomy, at the same time in the same patient eye. We expect this proposed non-coverage for multiple MIGS procedures, if finalized, may reduce overall MIGS procedure volumes. Given OMNI's comprehensive treatment of the conventional outflow pathway, we believe OMNI provides an effective single MIGS procedure option for cases that were previously treated with a combination of MIGS procedures, but we cannot assure you that the Proposed LCDs, if finalized, will not have an adverse impact on future OMNI sales and therefore adversely affect our business, financial condition and results of operations.
Current report
In July 2024, CMS issued the calendar year (CY) 2025 Hospital Outpatient Prospective Payment System (OPPS) and ASC Payment System proposed rule (the “Proposed Rule”) setting forth proposed Medicare payment rates for hospital outpatient and ASC services in 2025. Pursuant to the Proposed Rule, Current Procedural Terminology (CPT) code 66174, which is a code used to report procedures performed with our OMNI technology, was awarded device-intensive status for procedures performed in the ASC setting. If the final rule, which we expect will be issued in the fourth quarter of 2024, confirms device-intensive status for CPT code 66174, then Medicare facility reimbursement for such procedures performed in the ASC setting will increase by approximately $600 compared to 2024 ASC facility reimbursement amounts. We believe that such an increase in reimbursement, if finalized, would materially benefit us and our customers, and allow our OMNI technology to compete more effectively in the marketplace in 2025. Device-intensive designations are granted for a period of one year only and are based on CMS’ review of applicable claims data. If CPT code 66174 does not meet the eligibility criteria for device-intensive status in CY2025 or any subsequent calendar year, then Medicare reimbursement for this service when performed in the ASC will accordingly decrease at the start of the next year after device-intensive status is removed.
Current report
Revenue. Our Surgical Glaucoma revenue for the three months ended June 30, 2024 was $20.2 million, a decrease of $1.2 million, or 5.4%, from the prior year comparable period. The overall decrease in Surgical Glaucoma revenue was primarily attributable to a decrease in the number of OMNI units sold and a lower average selling price primarily due to product mix in the three months ended June 30, 2024. This decline in units sold was primarily driven by a decrease in unit utilization per ordering facility. Our Dry Eye revenue decreased 45.7% in the three months ended June 30, 2024 compared to the prior year comparable period primarily due to fewer new customers added in the period, which led to lower SmartHub revenue and fewer SmartLids purchased. The primary driver of fewer new customers added and lower units sold was due to the Company’s focus on the next phase of its commercial strategy for its Dry Eye segment which involves achieving market access.
Current report
Gross Profit. Our total gross profit was $18.3 million in the three months ended June 30, 2024, a decrease of $1.7 million from the prior year comparable period. Our total gross margin for the three months ended June 30, 2024 increased to 85.8%, up from 85.6% in the prior year comparable period, primarily due to increased mix toward our higher gross margin Surgical Glaucoma segment, partially offset by declines in gross margin of both segments. Gross margin in our Surgical Glaucoma segment was 88.0% for the quarter ended June 30, 2024, a decrease from 88.6% for the prior year comparable period, primarily due to product sales mix. In our Dry Eye segment, gross margin decreased from 54.8% in the second quarter of 2023 to 46.5% in the second quarter of 2024, primarily due to product sales mix and higher overhead costs per unit due to lower volumes.
Current report
Research and Development Expenses. R&D expenses during the six months ended June 30, 2024 decreased $0.9 million, or 9.5%, to $9.0 million. The decrease was primarily driven by a $0.7 million decrease in clinical studies and general research and development expenses, as well as $0.6 million decrease in payroll expenses. These were partially offset by a $0.3 million increase in legal and stock-based compensation expenses.
Current report
Selling, General, and Administrative Expenses. SG&A expenses were $53.2 million for the six months ended June 30, 2024, a decrease of $5.5 million from the prior year comparable period. The decrease was primarily driven by a $5.9 million decrease in personnel expenses, including lower commissions during the current period. In addition, the Company saw a $2.2 million decrease in marketing expenses, including sales training and demos, a $1.1 million decrease in travel and entertainment expenses, and a $0.6 million decrease in facilities expenses. These decreases were partially offset by a $3.4 million increase in accounting and legal expenses, as well as a $1.4 million increase in stock-based compensation expenses.
Current report
Net Cash (Used in) Provided by Financing Activities.
Reworded paragraphs (24)
Previous wording
We sell OMNI and SION to facilities where ophthalmic surgeons perform outpatient procedures, such as ambulatory service centers ("ASCs") and hospital outpatient departments ("HOPDs"), which are typically reimbursed by Medicare or private payors for procedures using our products. We sell TearCare to ECPs. Currently, there is no meaningful reimbursement coverage by Medicare or private payors for meibomian gland disease ("MGD") procedures, including TearCare, and patients typically pay out-of-pocket for TearCare, although some payors may agree to provide case-based coverage outside of a formal policy. We are continuing our controlled commercial launch and are focused on our comprehensive, clinical data-driven long-term market development plan that aims to improve awareness and patient access to TearCare. We have dedicated meaningful resources to execute our commercial strategy as we reduce operating expenses and improve cost efficiencies to better align our operating structure for long-term, profitable growth. The overall success of our approach to eyecare to date is evidenced by over 230,000 estimated uses of Surgical Glaucoma products and their predicates in over 1,900 hospitals and ASCs in the U.S. and Europe, and over 55,000 estimated uses of TearCare in over 1,500 eyecare facilities in the U.S. through March 31, 2024.
Current wording
We sell OMNI and SION to facilities where ophthalmic surgeons perform outpatient procedures, such as ambulatory surgery centers ("ASCs") and hospital outpatient departments ("HOPDs"), which are typically reimbursed by Medicare or private payors for procedures using our products. We sell TearCare to ECPs. Currently, there is no meaningful reimbursement coverage by Medicare or private payors for MGD procedures, including TearCare, and patients typically pay out-of-pocket for TearCare, although some payors may agree to provide case-based coverage outside of a formal policy. We are continuing our controlled commercial launch and are focused on our comprehensive, clinical data-driven long-term market development plan that aims to improve awareness and patient access to TearCare. We have dedicated meaningful resources to execute our commercial strategy as we reduce operating expenses and improve cost efficiencies to better align our operating structure for long-term, profitable growth. The overall success of our approach to eyecare to date is evidenced by over 250,000 estimated uses of Surgical Glaucoma products and their predicates in over 2,000 hospitals and ASCs in the U.S. and Europe, and over 60,000 estimated uses of TearCare in over 1,500 eyecare facilities in the U.S. through June 30, 2024.
Previous wording
Revenue in our Surgical Glaucoma segment for the three-months ended March 31, 2024 and 2023 was $18.3 million and $17.3 million, respectively, with gross margins for the same periods of 87.9% and 86.4%, respectively. Revenue in our Dry Eye segment for the three-months ended March 31, 2024 and 2023 was $1.0 million and $1.5 million, respectively, with gross margins for the same periods of 42.1% and 54.0%, respectively. Given the earlier stage of TearCare’s commercial development, we expect our Dry Eye segment’s gross margins to be lower than our Surgical Glaucoma segment’s gross margins for the near- and medium-term due to the allocation of fixed labor and overhead costs to the segment's cost of goods sold. In the first quarter of 2024, approximately 95% of our revenuewas generated from customers in the U.S.
Current wording
Revenue in our Surgical Glaucoma segment for the six-months ended June 30, 2024 and 2023 was $38.5 million and $38.7 million, respectively, with gross margins for the same periods of 88.0% and 87.6%, respectively. Revenue in our Dry Eye segment for the six-months ended June 30, 2024 and 2023 was $2.1 million and $3.6 million, respectively, with gross margins for the same periods of 44.4% and 54.4%, respectively. Given the earlier stage of TearCare’s commercial development, we expect our Dry Eye segment’s gross margins to be lower than our Surgical Glaucoma segment’s gross margins for the near- and medium-term due to the allocation of fixed labor and overhead costs to the segment's cost of goods sold. In addition, we expect lower demand and related gross margin in the Dry Eye segment in the second half of 2024 due to our increase in dry eye pricing effective October 1, 2024, which we believe will have a significant negative impact on cash-pay volumes. We expect TearCare procedure revenues will return to a growth trajectory upon receipt of positive payer coverage determinations that provide for sufficient and equitable reimbursement. We currently anticipate that we and our customers will begin receiving these coverage and payment determinations in 2025. In the first two quarters of 2024, approximately 95% of our revenuewas generated from customers in the U.S.
Previous wording
further demonstrate our products’ clinical effectiveness and safety to potential customers, patients, payors and regulators including establishing OMNI and SION as the standards of care of interventional glaucoma treatment among MIGS-trained surgeons, develop the standalone MIGS market, and pursue coverage and equitable reimbursement for TearCare;
Current wording
further demonstrate our products’ clinical effectiveness and safety to potential customers, patients, payors and regulators including establishing OMNI and SION as standards of care of interventional glaucoma treatment among MIGS-trained surgeons, developing the standalone MIGS market, and pursuing coverage and equitable reimbursement for TearCare;
Previous wording
To date, our primary sources of capital have been private placements of redeemable convertible preferred stock, debt financing agreements, the sale of common stock in our IPO, and revenue from the sale of our products. As of March 31, 2024, we had an outstanding term loan balance of $35.0 million (excluding debt discount and amortized debt issuance costs), cash and cash equivalents of $127.3 million and an accumulated deficit of $311.1 million.
Current wording
To date, our primary sources of capital have been private placements of redeemable convertible preferred stock, debt financing agreements, the sale of common stock in our IPO, and revenue from the sale of our products. As of June 30, 2024, we had an outstanding term loan balance of $35.0 million (excluding debt discount and amortized debt issuance costs), cash and cash equivalents of $118.2 million and an accumulated deficit of $323.4 million.
Previous wording
We believe there are several important factors that have impacted and that will continue to impact our business, financial condition, and results of operations. Except as described in Part II, Item 1A, "Risk Factors," of this Quarterly Report, there have been no material changes to such factors from those described in our Annual Report under the heading "Factors Affecting Our Business and Results of Operations."
Current wording
We believe there are several important factors that have impacted and that will continue to impact our business, financial condition, and results of operations. Except as described in Part II, Item 1A, "Risk Factors," of this Quarterly Report, except as described below, there have been no material changes to such factors from those described in our Annual Report under the heading "Factors Affecting Our Business and Results of Operations."
Previous wording
We currently derive the majority of our U.S. revenue from the sale of our OMNI and SION products to ASCs and HOPDs and our TearCare products to ECPs. To date, the revenue from our Surgical Glaucoma segment has accounted for over 90% of our total revenue, substantially all of which was generated from sales within the U.S. Our Surgical Glaucoma customers place orders based on their expected procedure volume and reorder as needed, typically on a biweekly, monthly or bimonthly basis. Our TearCare customers typically purchase a TearCare System which consists of one or more TearCare SmartHubs TM (“SmartHubs”), multiple single-use TearCare SmartLids®
Current wording
We currently derive the majority of our U.S. revenue from the sale of our OMNI and SION products to ASCs and HOPDs and our TearCare products to ECPs. To date, the revenue from our Surgical Glaucoma segment has accounted for over 90% of our total revenue, substantially all of which was generated from sales within the U.S. Our Surgical Glaucoma customers place orders based on their expected procedure volume and reorder as needed, typically on a biweekly, monthly or bimonthly basis. Our TearCare customers typically purchase a TearCare System which consists of one or more TearCare SmartHubs TM (“SmartHubs”), multiple single-use TearCare SmartLids® (“SmartLids”) and other accessories. After utilizing their initial inventory, customers can reorder SmartLids as needed. No single customer accounted for 10% or more of our revenue for the six months ended June 30, 2024 and 2023.
Previous wording
We calculate gross margin as gross profit divided by revenue. Our gross margin has been and we believe it will continue to be, affected by a variety of factors, including differences in segment gross margins, changes in average selling prices, product sales mix, production and ordering volumes, manufacturing costs, product yields, and headcount. In general, we expect our gross margins to increase over the long term to the extent our production and ordering volumes increase and as we spread the fixed portion of our overhead costs over a larger number of units produced. We intend to use our design, engineering and manufacturing know-how and capabilities to further advance and improve the efficiency of our suppliers’ manufacturing processes, which we believe will reduce costs and increase our gross margins. Our gross margins could fluctuate from quarter to quarter as we transition to new suppliers, introduce new products, and adopt new manufacturing processes and technologies.
Current wording
We calculate gross margin as gross profit divided by revenue. Our gross margin has been and we believe it will continue to be, affected by a variety of factors, including differences in segment gross margins, changes in average selling prices, product sales mix, production and ordering volumes, manufacturing costs, product yields, and headcount. In general, we expect our gross margins to increase over the long term to the extent our production and ordering volumes increase and as we spread the fixed portion of our overhead costs over a larger number of units produced. We intend to use our design, engineering and manufacturing know-how and capabilities to further advance and improve the efficiency of our suppliers’ manufacturing processes, which we believe will reduce costs and increase our gross margins. Our gross margins could fluctuate from quarter to quarter as our product mix varies, we transition to new suppliers, introduce new products, and adopt new manufacturing processes and technologies.
Previous wording
Research and Development Expenses. R&D expenses during the three months ended March 31, 2024 was flat compared to the three months ended March 31, 2023. A decrease of $0.3 million in payroll expenses was offset by a $0.4 million increase in professional and outside services.
Current wording
Research and Development Expenses. R&D expenses during the three months ended June 30, 2024 decreased $0.9 million, or 17.3%, to $4.3 million. The decrease was primarily driven by a $0.7 million decrease in clinical studies and general research and development expenses, as well as a $0.4 million decrease in payroll expenses.
Previous wording
Selling, General, and Administrative Expenses. SG&A expenses were $26.6 million for the three months ended March 31, 2024, a decrease of $2.1 million from the prior year comparable period. The decrease was primarily driven by a $3.0 million decrease in personnel expenses, including lower commissions during the current period. In addition, the Company saw a $1.0 million decrease in marketing expenses, a $0.5 million decrease in consulting and recruiting expenses, and a $0.5 million decrease in sales training, events, and demo expenses. These decreases were partially offset by a $2.7 million increase in legal expenses and a $0.9 million increase in stock-based compensation.
Current wording
Selling, General, and Administrative Expenses. SG&A expenses were $26.7 million for the three months ended June 30, 2024, a decrease of $3.4 million from the prior year comparable period. The decrease was primarily driven by a $2.9 million decrease in personnel expenses, including lower commissions during the current period. In addition, the Company saw a $0.7 million decrease in marketing expenses, a $0.7 million decrease in travel and entertainment expenses, and a $0.3 million decrease in facilities expenses. These decreases were partially offset by a $0.8 million increase in accounting and legal expenses, as well as a $0.5 million increase in stock-based compensation expenses.
Previous wording
Investment Income. Investment income was $1.6 million for the three months ended March 31, 2024, a decline of $0.2 million from the prior year comparable period. The decline was due to lower investment balances during the current year.
Current wording
Investment Income. Investment income was $1.5 million for the three months ended June 30, 2024, a decline of $0.3 million from the prior year comparable period. The decline was due to lower investment balances during the current year.
Previous wording
Interest Expense. Interest expense decreased $0.1 million, due to a lower lending rates associated with the refinanced debt agreement during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
Current wording
Interest Expense. Interest expense decreased $0.2 million, due to lower lending rates associated with the refinanced debt agreement during the three months ended June 30, 2024 compared to the three months ended June 30, 2023.
Previous wording
Other Expense, Net. Other expense, net was expense of $0.0 million for both the three months ended March 31, 2024 and 2023.
Current wording
Other Expense, Net. Other expense, net was expense of less than $0.1 million for both the three months ended June 30, 2024 and 2023.
Previous wording
Revenue. Revenue for the three months ended March 31, 2024 was $19.3 million, an increase of $0.4 million, or 2.3%, from the prior year comparable period. The overall increase in Surgical Glaucoma revenue was primarily attributable to an increase in the number of OMNI and SION units sold in the three months ended March 31, 2024. This growth in units sold was driven by a growth in the number of facilities ordering OMNI and SION and an increase in unit utilization per ordering facility, partially offset by a lower average selling price due to product mix. Our Dry Eye revenue decreased 32.3% in the three months ended March 31, 2024 versus the prior year comparable period primarily due to fewer new customers added in the period, which led to lower SmartHub revenue and fewer SmartLids purchased, partially offset by a higher average selling price for SmartHubs. Surgical Glaucoma sales represented 94.8% and 92.1% of our total revenue generated in the three months ended March 31, 2024 and 2023, respectively.
Current wording
Revenue. Revenue for the six months ended June 30, 2024 was $40.6 million, a decrease of $1.7 million, or 3.9%, from the prior year comparable period. The overall decrease in Surgical Glaucoma revenue was primarily attributable to a decrease in the number of OMNI units sold in the six months ended June 30, 2024. This decline in units sold was primarily driven by a decrease in unit utilization per ordering facility and a lower average selling price primarily due to product mix. Our Dry Eye revenue decreased 40.1% in the six months ended June 30, 2024 versus the prior year comparable period primarily due to fewer new customers added in the period, which led to lower SmartHub revenue and fewer SmartLids purchased, partially offset by a higher average selling price for SmartHubs.
Previous wording
Cost of Goods Sold. Cost of goods sold was $2.8 million during the three months ended March 31, 2024, a decrease of $0.2 million from $3.0 million in the prior year comparable period. Our Surgical Glaucoma cost of goods sold decreased $0.2 million as compared to the prior year comparable period. The decrease was primarily driven by product sales mix and a one-time prior year inventory scrap expense. Dry Eye cost of goods sold decreased $0.1 million in the three months ended March 31, 2024 compared to the comparable period in 2023, primarily driven by lower sales volumes and product mix.
Current wording
Cost of Goods Sold. Cost of goods sold was $5.8 million during the six months ended June 30, 2024, a decrease of $0.6 million from $6.4 million in the prior year comparable period. Our Surgical Glaucoma cost of goods sold decreased $0.2 million as compared to the prior year comparable period. The decrease was primarily driven by product sales mix and a one-time prior year inventory scrap expense. Our Dry Eye cost of goods sold decreased $0.4 million in the six months ended June 30, 2024 compared to the prior year comparable period, primarily driven by lower sales volumes and product mix.
Previous wording
Gross Profit. Our total gross profit was $16.5 million in the three months ended March 31, 2024, an increase of $0.7 million from the prior year comparable period. Our total gross margin for the three months ended March 31, 2024 increased to 85.5%, up from 83.8% in the prior year comparable period. Gross margin in our Surgical Glaucoma segment was 87.9% for the quarter ended March 31, 2024, an increase from 86.4% for the prior year comparable period, primarily due to a one-time prior year inventory scrap expense. In our Dry Eye segment, gross margin decreased from 54.0% in the first quarter of 2023 to 42.1% in the first quarter ended March 31, 2024, primarily due to lower sales and higher overhead costs per unit due to lower volumes.
Current wording
Gross Profit. Our total gross profit was $34.8 million in the six months ended June 30, 2024, a decrease of $1.1 million from the prior year comparable period. Our total gross margin for the six months ended June 30, 2024 increased to 85.7%, up from 84.8% in the prior year comparable period. Gross margin in our Surgical Glaucoma segment was 88.0% for the six months ended June 30, 2024, an increase from 87.6% for the prior year comparable period, primarily due to a one-time prior year inventory scrap expense. In our Dry Eye segment, gross margin decreased from 54.4% in the six months ended June 30, 2023 to 44.4% in the six months ended June 30, 2024, primarily due to product sales mix and higher overhead costs per unit due to lower volumes.
Previous wording
Loss on Debt Extinguishment. Loss on debt extinguishment was $2.0 million for the three months ended March 31, 2024 as compared to $0.0 million in the three months ended March 31, 2023. The increase in the current year is driven by the Company's loss on the termination and settlement of the MidCap Term Loan.
Current wording
Loss on Debt Extinguishment. Loss on debt extinguishment was $2.0 million for the six months ended June 30, 2024 as compared to $0.0 million in the six months ended June 30, 2023. The increase in the current year is driven by the Company's loss on the termination and settlement of the MidCap Term Loan.
Previous wording
Net cash used in operating activities for the three months ended March 31, 2024 was $9.8 million, consisting primarily of a net loss of $16.3 million, partially offset by a net change in our operating assets and liabilities of $0.5 million and non-cash charges of $6.0 million. The net change in our operating assets and liabilities was primarily due to a $2.1 million increase in accrued and other current liabilities and a $1.0 million decrease in inventory. Other noncurrent liabilities decreased by $1.4 million, driven by the $2.1 million settlement of the final payment fee under the MidCap Term Loan Agreement. In addition, we had a $1.4 million decrease in accounts receivable, while accrued compensation increased by $0.5 million. The non-cash charges primarily consisted of $4.5 million related to stock-based compensation, $1.0 million noncash loss on the extinguishment of debt, and $0.2 million of noncash operating lease expense.
Current wording
Net cash used in operating activities for the six months ended June 30, 2024 was $19.3 million, consisting primarily of a net loss of $28.6 million, as well as a net change in our operating assets and liabilities of $1.4 million, partially offset by non-cash charges of $10.7 million. The net change in our operating assets and liabilities was primarily due to a $5.7 million increase in accounts receivable and a $1.3 million decrease in other noncurrent liabilities. Accrued and other current liabilities increased $1.9 million, while both inventory and prepaid expenses and other current assets increased by $1.2 million. In addition, accrued compensation increased by $0.9 million and accounts payable increased by $0.6 million. The non-cash charges primarily consisted of $8.8 million related to stock-based compensation expense, $1.0 million of noncash loss on the extinguishment of debt, $0.4 million of depreciation and amortization and $0.3 million of noncash operating lease expense.
Previous wording
Net cash used in operating activities for the three months ended March 31, 2023 was $17.4 million, consisting primarily of a net loss of $17.1 million and a net change in our operating assets and liabilities of $4.2 million, partially offset by non-cash charges of $3.9 million. The net change in our operating assets and liabilities was primarily due to a $1.0 million increase in accounts receivable and a $1.0 million increase in inventory to support the continued growth of our operations. We had a $0.9 million decrease in accounts payable, while accrued compensation and accrued and other current liabilities decreased by an aggregate of $3.7 million, primarily driven by the timing of payments on invoices and bonuses. The non-cash charges primarily consisted of $3.5 million related to stock-based compensation, $0.2 million of noncash operating lease expense, $0.1 million of depreciation, and $0.1 million of accretion of debt discount and amortization of debt issuance costs.
Current wording
Net cash used in operating activities for the six months ended June 30, 2023 was $30.9 million, consisting primarily of a net loss of $31.8 million and a net change in our operating assets and liabilities of $7.7 million, partially offset by non-cash charges of $8.7 million. The net change in our operating assets and liabilities was primarily due to a $3.0 million increase in accounts receivable and a $2.0 million increase in inventory to support the continued growth of our operations. We had a $0.2 million increase in accounts payable, while accrued compensation and accrued and other current liabilities decreased by an aggregate of $4.5 million, primarily driven by the timing of payments on invoices and bonuses. The non-cash charges primarily consisted of $7.3 million related to stock-based compensation, $0.5 million of noncash operating lease expense, $0.3 million of depreciation, and $0.3 million of accretion of debt discount and amortization of debt issuance costs.
Previous wording
Net cash used in investing activities for the three months ended March 31, 2024 and 2023 was $0.1 million and $0.1 million, respectively, in both cases for purchases of property and equipment.
Current wording
Net cash used in investing activities for the six months ended June 30, 2024 and 2023 was $0.2 million and $0.2 million, respectively, in both cases for purchases of property and equipment.
Previous wording
Net cash used in financing activities in the three months ended March 31, 2024 was $0.9 million, consisting primarily of the costs associated with the refinancing of the outstanding term loan agreement. Net cash used in financing activities in the three months ended March 31, 2023 was $0.2 million, primarily relating to taxes paid on the net share settlement of restricted stock units, partially offset by proceeds from stock option exercises.
Current wording
Net cash used in financing activities for the six months ended June 30, 2024 was $0.5 million, consisting primarily of the costs associated with the refinancing of the outstanding term loan agreement. Net cash provided by financing activities for the six months ended June 30, 2023 of $0.6 million, which primarily relates to the exercise of common stock options and proceeds from employee stock plan purchases, partially offset by taxes paid on the net share settlement of restricted stock units.
Previous wording
As of March 31, 2024, we had cash and cash equivalents of $127.3 million, an accumulated deficit of $311.1 million and $35.0 million outstanding under our term loan agreement (before debt discount) with Hercules. Based on our current planned operations, we expect our cash and cash equivalents and additional borrowings available under the Hercules Loan Agreement will enable us to fund our operations for at least the next 12 months and the foreseeable future.
Current wording
As of June 30, 2024, we had cash and cash equivalents of $118.2 million, an accumulated deficit of $323.4 million and $35.0 million outstanding under our term loan agreement (before debt discount) with Hercules. Based on our current planned operations, we expect our cash and cash equivalents and additional borrowings available under the Hercules Loan Agreement will enable us to fund our operations for at least the next 12 months and the foreseeable future.
Previous wording
Our obligations under the Hercules Loan Agreement are guaranteed by us and our future subsidiaries, subject to exceptions for certain foreign subsidiaries. Our obligations under the agreement are secured by substantially all of our assets, including our material intellectual property. Additionally, we are subject to customary affirmative and negative covenants, including covenants that limit or restrict the ability of us to, among other things, incur indebtedness, grant liens, merge or consolidate, make investments, dispose of assets, make acquisitions, pay dividends or make distributions, repurchase stock and enter into certain transactions with affiliates, in each case subject to certain exceptions. We are also subject to certain minimum cash and revenue covenants under the Hercules Loan Agreement. To date, our primary sources of capital have been private placements of redeemable convertible preferred stock, debt financing agreements, the sale of common stock in our IPO, and revenue from the sale of our products. Since our inception, we have raised an aggregate of approximately $402.4 million in net proceeds from sales of our redeemable convertible preferred stock and common stock and borrowed $32.9 million of net proceeds under our term loans.
Current wording
Our obligations under the Hercules Loan Agreement are guaranteed by us and our future subsidiaries, subject to exceptions for certain foreign subsidiaries. Our obligations under the agreement are secured by substantially all of our assets, including our material intellectual property. Additionally, we are subject to customary affirmative and negative covenants, including covenants that limit or restrict the ability of us to, among other things, incur indebtedness, grant liens, merge or consolidate, make investments, dispose of assets, make acquisitions, pay dividends or make distributions, repurchase stock and enter into certain transactions with affiliates, in each case subject to certain exceptions. We are also subject to certain minimum cash and revenue covenants under the Hercules Loan Agreement.
Previous wording
Our corporate headquarters are located in Menlo Park, California, where we lease approximately 11,000 square feet of office, research and development, engineering and laboratory space pursuant to a lease that commenced on August 1, 2021, and expires on October 31, 2026. We also lease approximately 2,040 square feet of office space, which is primarily used by our commercial leadership team, in Southlake, Texas, pursuant to a lease that commenced on April 30, 2019. The lease was amended in April 2024, extending the lease expiration date to May 15, 2026.
Current wording
Our corporate headquarters are located in Menlo Park, California, where we lease approximately 11,000 square feet of office, research and development, engineering and laboratory space pursuant to a lease that commenced on August 1, 2021, and expires on October 31, 2026.
Previous wording
An accounting estimate is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements. We believe that the assumptions and estimates associated with stock-based compensation has the greatest potential impact on our condensed consolidated financial statements. Therefore, we consider this to be a critical accounting estimate.
Current wording
An accounting estimate is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements. We believe that the assumptions and estimates associated with stock-based compensation expense have the greatest potential impact on our condensed consolidated financial statements. Therefore, we consider this to be a critical accounting estimate.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
Cost of Goods Sold. Cost of goods sold was $3.0 million during the three months ended June 30, 2024, a decrease of $0.4 million from $3.4 million in the prior year comparable period. Our Surgical Glaucoma cost of goods sold decreased less than $0.1 million as compared to the prior year comparable period. The decrease was primarily driven by lower sales volumes and product sales mix. Our Dry Eye cost of goods sold decreased $0.3 million in the three months ended June 30, 2024 compared to the comparable period in 2023, primarily driven by lower sales volumes and product mix.
Current report — wording carried from elsewhere
Loss on Debt Extinguishment. Loss on debt extinguishment was $0.0 million for both the three months ended June 30, 2024 and 2023.
Current report — wording carried from elsewhere
Comparison of the Six Months Ended June 30, 2024 and 2023 (dollars in thousands)
Current report — wording carried from elsewhere
Investment Income. Investment income was $3.2 million for the six months ended June 30, 2024, a decline of $0.4 million from the prior year comparable period. The decline was due to lower investment balances during the current year.
Current report — wording carried from elsewhere
Interest Expense. Interest expense decreased $0.3 million, due to lower lending rates associated with the refinanced debt agreement during the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Current report — wording carried from elsewhere
Other Expense, Net. Other expense, net was expense of $0.1 million and $0.0 million for the six months ended June 30, 2024 and 2023.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
(“SmartLids”) and other accessories. After utilizing their initial inventory, customers can reorder SmartLids as needed. No single customer accounted for 10% or more of our revenue for the three months ended March 31, 2024 and 2023.
Previous report — wording carried elsewhere
Net Cash Used in Financing Activities.