RxSight Inc

Previous wording

We compete primarily in the IOL market in the U.S. The LAL is a premium IOL which is partially reimbursable under Medicare, and in some cases by private payors. Premium IOLs are sold at a higher price point than conventional IOLs, as they provide refractive correction of vision unlike a conventional IOL that only replaces the natural lens with a clear lens (which is the standard for Medicare reimbursement). Our RxSight system is approved in Mexico and Canada for improving uncorrected visual acuity by adjusting the LAL power to correct residual postoperative refractive error. We may selectively pursue commercial expansion in these or other geographies that accept these approvals in the future, with a priority on markets where we see significant potential opportunities. New approvals may also be sought in large foreign cataract markets with more complex regulatory processes such as Asia and Europe.

Current wording

We compete primarily in the IOL market in the U.S. The LAL is a premium IOL which is partially reimbursable under Medicare, and in some cases by private payors. Premium IOLs are sold at a higher price point than conventional IOLs, as they provide refractive correction of vision unlike a conventional IOL that only replaces the natural lens with a clear lens (which is the standard for Medicare reimbursement). Our RxSight system is approved in the U.S., Europe, Canada and Mexico for improving uncorrected visual acuity by adjusting the LAL power to correct residual postoperative refractive error. We may selectively pursue commercial expansion in these or other geographies that accept these approvals in the future, with a priority on markets where we see significant potential opportunities. New approvals may also be sought in large foreign cataract markets with more complex regulatory processes such as Asia and Europe.

Previous wording

Our commercial efforts began in 2019 and have been primarily focused in the United States, where we are building a “razor and razor blade” business model to drive new customer adoption and ongoing LAL volume growth. Our United States commercial organization includes a direct sales team of LDD sales personnel and LAL account managers, as well as clinical specialists, field service engineers and marketing personnel. Our sales efforts are concentrated on the roughly 4,000 U.S. cataract surgeons that perform 70%-80% of all premium IOL procedures. As of March 31, 2024, we had established an installed base of 732 LDDs in ophthalmology practices and, since our inception through March 31, 2024, surgeons have implanted over 117,000 LALs.

Current wording

Our commercial efforts began in 2019 and have been primarily focused in the United States, where we are building a “razor and razor blade” business model to drive new customer adoption and ongoing LAL volume growth. Our United States commercial organization includes a direct sales team of LDD sales personnel and LAL account managers, as well as clinical specialists, field service engineers and marketing personnel. Our sales efforts are concentrated on the roughly 4,000 U.S. cataract surgeons that perform 70%-80% of all premium IOL procedures. As of June 30, 2024, we had established an installed base of 810 LDDs in ophthalmology practices and, since our inception through June 30, 2024, surgeons have implanted over 141,000 LALs.

Previous wording

We intend to continue to make investments in our sales and marketing organization, primarily sales representatives, clinical applications specialists and technical service personnel to support new customers and upgrades and LAL account managers to facilitate adoption of use of our LALs among existing accounts. We will expand our marketing efforts with additional print and digital, social media and other customer tools to expand their local advertising. We will also continue to make significant investments in research and development and clinical expenses to make enhancements in our current products. Additionally, as a public company, we have incurred and expect to continue to incur increased costs for employee-related expenses, director and officer insurance premiums, audit fees (including costs for compliance with Section 404(b) of the Sarbanes-Oxley Act), legal fees, investor relations fees and fees to members of our board of directors and expenses for compliance with public-company reporting requirements. Because of these and other factors, we expect to continue to incur net losses and negative cash flows from operations in the near future.

Current wording

We intend to continue to make investments in our sales and marketing organization, primarily sales representatives, clinical applications specialists and technical service personnel to support new customers and upgrades and LAL account managers to facilitate adoption of use of our LALs among existing accounts. We will expand our marketing efforts with additional print and digital, social media and other customer tools to expand their local advertising. We will also continue to make significant investments in research and development and clinical expenses to make enhancements in our current products. Additionally, as a public company, we have incurred and expect to continue to incur increased costs for employee-related expenses, director and officer insurance premiums, audit fees, (including costs for compliance with Section 404(b) of the Sarbanes-Oxley Act), legal fees, investor relations fees, fees to members of our Board of directors, and expenses for compliance with public-company reporting requirements. Because of these and other factors, we expect to continue to incur net losses and negative cash flows from operations in the near future.

Previous wording

We regularly review several operating and financial metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate our business plan and make strategic decisions. We believe the number of LDDs installed and LALs implanted are indicators of our ability to drive adoption and generate revenue. We believe these are important metrics for our business. We may not yet be able to accurately assess seasonality and other trends, and we will continue to evaluate our business in the future using these and other financial metrics as we observe trends in our business.

Current wording

We regularly review several operating and financial metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate our business plan and make strategic decisions. We believe the number of LDDs installed and, LALs implanted are indicators of our ability to drive adoption and generate revenue. We believe these are important metrics for our business. We may not yet be able to accurately assess seasonality and other trends, and we will continue to evaluate our business in the future using these and other financial metrics as we observe trends in our business. Our quarterly and annual financial results may fluctuate as a result of a variety of factors many of which are outside our control.

Previous wording

We believe the number of LDDs sold in each quarter and our LDD installed base at the end of each period are important metrics as they represent an installed base into which we can sell our LALs.

Current wording

We believe the number of LDDs sold in each quarter and our LDD installed base at the end of each period are important metrics as they represent an installed base into which we can sell our LALs. We also believe the number of LALs sold (reported as implanted in a patient) in each quarter is an important metric indicative of adoption and utilization of our RxSight system.

Previous wording

We believe the number of LALs sold (reported as implanted in a patient) in each quarter is an important metric indicative of adoption and utilization of our RxSight system. During the quarter ended March 31, 2024, we had increased LDD sales of 10 and increased LAL sales of 9,695 when compared to the quarter ended March 31, 2023 from strong adoption of our RxSight system by practices and doctors combined with an increased LDD installed base.

Current wording

During the quarter ended June 30, 2024, we had increased LDD sales of 11 and increased LAL sales of 11,592 when compared to the quarter ended June 30, 2023 from strong adoption of our RxSight technology by practices and doctors combined with an increased LDD installed base.

Previous wording

For the three months ended March 31, 2024 and 2023, revenue from contracts with customers consisted of the following (in thousands):

Current wording

For the three and six months ended June 30, 2024 and 2023, revenue from contracts with customers consisted of the following (in thousands):

Previous wording

For the three months ended March 31, 2024 and 2023 we did not have any one customer who individually accounted for more than 10% of revenue.

Current wording

For the three and six months ended June 30, 2024 and 2023 we did not have any one customer who individually accounted for more than 10% of revenue.

Previous wording

Our LDD, as is typical of many medical device capital equipment products, has a low gross margin, as the material cost of the LDD is significant, representing greater than 50% of the total cost to manufacture. In addition, we do not mark up our LDD substantially, as LDDs, as sold, generate LAL procedures. Our LAL gross margin is higher, with low material cost but high fixed overhead costs. As our manufacturing volume of the LAL increases, we expect the gross margin may improve significantly.

Current wording

Our LDD, as is typical of many medical device capital equipment products, has a low gross margin, as the material cost of the LDD is significant, representing greater than 50% of the total cost to manufacture. In addition, we do not mark up our LDD substantially because LDDs, once sold, generate LAL procedures. Our LAL gross margin is higher, with low material cost but high fixed overhead costs. As our manufacturing volume of the LAL increases, we expect gross margin may improve significantly.

Previous wording

Sales increased by $12.0 million, or 68.7%, to $29.5 million for the three months ended March 31, 2024, from $17.5 million for the three months ended March 31, 2023. The increase in total sales was primarily due to the incremental increase of 9,695 LALs and 10 LDDs sold during the period, resulting from strong adoption of our RxSight system by practices and doctors.

Current wording

Sales increased by $14.1 million, or 67.6%, to $34.9 million for the three months ended June 30, 2024, from $20.8 million for the three months ended June 30, 2023. The increase in total sales was primarily due to the incremental sales of 11,592 LALs and 11 LDDs from strong adoption of our RxSight system by practices and doctors.

Previous wording

Cost of sales increased by $1.7 million, or 23.9%, to $8.8 million for the three months ended March 31, 2024, from $7.1 million for the three months ended March 31, 2023, primarily due to the increase in the number of LALs and LDDs sold during the period. Gross margin increased to 70.1% in the three months ended March 31, 2024, from 59.3% for the three months ended March 31, 2023 primarily due to favorable product mix from a greater percentage of revenue from LAL sales, reduced costs of producing our LALs, primarily due to higher production volumes and increased margins on our LDD due to lower material costs.

Current wording

Cost of sales increased by $1.8 million, or 20.9%, to $10.6 million for the three months ended June 30, 2024, from $8.8 million for the three months ended June 30, 2023, primarily due to the increase in the number of LALs and LDDs sold during the period. Gross margin increased to 69.5% in the three months ended June 30, 2024, from 57.8% for the three months ended June 30, 2023 primarily due to improved operating leverage, favorable product mix from a greater percentage of revenue from LAL sales, and increased margins on our LDD due to lower material costs.

Previous wording

SG&A expenses increased by $7.1 million, or 43.5%, to $23.3 million for the three months ended March 31, 2024, from $16.3 million for the three months ended March 31, 2023. This increase was primarily attributable to an increase in selling and marketing costs of $4.8 million mainly due to increased salaries from increased headcount of 22, increased sales commissions, incentive bonuses and employee benefits of $2.4 million, $0.6 million of increased stock-based compensation expense, $0.9 million in additional marketing study costs, and new customer acquisition costs, in each case when compared to the three months ended March 31, 2023. General and administrative expenses increased $2.2 million due to increased personnel expenses of $0.7 million, $0.4 million of increased audit and audit related costs related to operating as a public company (including SOX 404(b) compliance work in the three months ended March 31, 2024) and increased stock-based compensation of $0.4 million, in each case when compared to the three months ended March 31, 2023.

Current wording

SG&A expenses increased by $6.1 million, or 33.2%, to $24.3 million for the three months ended June 30, 2024, from $18.2 million for the three months ended June 30, 2023. This increase was primarily attributable to an increase in selling and marketing costs of $4.0 million mainly due to increased salaries from increased headcount of 37, increased sales commissions, incentive bonuses and employee benefits of $2.1 million, $0.8 million of increased stock-based compensation expense, $0.3 million in additional post market study costs, and new customer acquisition costs, in each case when compared to the three months ended June 30, 2023. General and administrative expenses increased $2.0 million due to increased personnel expenses of $0.6 million, $0.2 million of increased costs related to operating as a public company for Sarbanes-Oxley compliance and increased stock-based compensation of $0.8 million, in each case when compared to the three months ended June 30, 2023.

Previous wording

Research and development expenses increased by $0.8 million, or 11.4%, to $8.0 million for the three months ended March 31, 2024, from $7.2 million for the three months ended March 31, 2023. This increase was primarily attributable to $0.3 million due to increased salaries from increased personnel expenses and $0.3 million from increased stock-based compensation.

Current wording

Research and development expenses increased by $0.9 million, or 12.0%, to $8.3 million for the three months ended June 30, 2024, from $7.4 million for the three months ended June 30, 2023. This increase was primarily attributable to $0.8 million due to increased facility costs and $0.3 million from increased stock-based compensation.

Previous wording

Other income (expense), net, increased by $1.7 million to income of $1.6 million for the three months ended March 31, 2024, compared to expense of $0.1 million for the three months ended March 31, 2023. The increase was primarily due to decreased interest expense of $1.5 million from extinguishment of term loan due to the repayment of the term loan in 2023 and increased interest income of $0.2 million from higher interest rates earned on short-term investment balances.

Current wording

Other income (expense), net, was income of $3.8 million for the six months ended June 30, 2024, as compared to expense of $0.3 million for the six months ended June 30, 2023, The increase was primarily due to decreased interest expense of $3.1 million and $0.3 million loss from extinguishment of term loan due to the repayment of the Oxford term loan in 2023 and increased interest income of $0.7 million from higher interest rates earned on higher short-term investment balances.

Previous wording

As of March 31, 2024, we had cash, and cash equivalents of $32.6 million and short-term investments of $92.7 million. For the three months ended March 31, 2024, and 2023, our loss from operations was $10.7 million and $13.1 million, respectively. We had an accumulated deficit of $603.7 million as of March 31, 2024.

Current wording

As of June 30, 2024, we had cash, cash equivalents and short-term investments of $233.2 million. For the six months ended June 30, 2024, and 2023, our loss from operations were $19.0 million and $26.7 million, respectively. We had an accumulated deficit of $609.8 million as of June 30, 2024.

Previous wording

We believe that our current cash, cash equivalents and short-term investments through the date of filing of this report will be sufficient to fund our operations for at least the next 12 months. Although, based on our current planned operations, we do not anticipate the need to raise additional capital or incur additional debt in order to reach profit from operations, as the same may be disclosed in the Company’s future Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q filed with the SEC, we may be required to raise additional capital through public or private equity offerings or debt financings, credit or loan facilities or by entering into partnerships or a combination of one or more of these funding sources in order to meet our liquidity requirements. We may also opportunistically seek to raise capital under advantageous circumstances from time to time in order to support the expansion of our sales and operations in the U.S. and internationally and to pursue other business opportunities. If we determine that we need to raise additional funds, which may not be available to us when needed or on terms that we deem to be favorable. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we are unable to maintain sufficient financial resources, our business, financial condition and results of operations will be materially and adversely affected, including potentially requiring us to delay, limit, reduce or terminate certain of our product discovery and development activities or future commercialization efforts.

Current wording

We believe that our current cash, cash equivalents and short-term investments through the date of filing of this report will be sufficient to fund our operations for at least the next 12 months. Although, based on our current planned operations, we do not anticipate the need to raise additional capital or incur additional debt in order to reach profit from operations, as the same may be disclosed in the Company’s future Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q filed with the SEC, we may be required to raise additional capital through public or private equity offerings or debt financings, credit or loan facilities or by entering into partnerships or a combination of one or more of these funding sources in order to meet our liquidity requirements. We may also opportunistically raise capital under advantageous circumstances from time to time, such as the Public Offering, in order to support the expansion of our sales and operations in the U.S. and internationally and to pursue other business opportunities. If we determine that we need to raise additional funds, which may not be available to us when needed or on terms that we deem to be favorable. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we are unable to maintain sufficient financial resources, our business, financial condition and results of operations will be materially and adversely affected, including potentially requiring us to delay, limit, reduce or terminate certain of our product discovery and development activities or future commercialization efforts. If we raise additional funds by issuing equity securities, our stockholders may experience dilution.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2024, was $9.3 million, consisting primarily of a net loss of $9.1 million and a change in operating assets and liabilities of $4.7 million, partially offset by non-cash stock-based compensation of $4.7 million and depreciation and amortization of $1.1 million.

Current wording

Net cash used in operating activities for the six months ended June 30, 2024, was $13.3 million, consisting primarily of a net loss of $15.2 million and a change in operating assets and liabilities of $7.5 million, partially offset by non-cash stock-based compensation of $10.8 million and depreciation and amortization of $1.9 million.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2023, was $17.8 million, consisting primarily of a net loss of $13.2 million and a change in operating assets and liabilities of $7.7 million, partially offset by non-cash stock-based compensation of $3.3 million.

Current wording

Net cash used in operating activities for the six months ended June 30, 2023, was $25.3 million, consisting primarily of a net loss of $27.0 million and a change in operating assets and liabilities of $5.3 million, partially offset by non-cash stock-based compensation of $7.3 million and depreciation and amortization of $1.9 million.

Previous wording

Net cash provided by investing activities for the three months ended March 31, 2024, was $24.3 million, consisting of net maturities of short-term investments of $26.2 million partially offset by purchases of property and equipment of $2.0 million.

Current wording

Net cash used in investing activities for the six months ended June 30, 2024, was $91.4 million, consisting of net purchase of short-term investments of $87.9 million and purchases of property and equipment of $3.5 million.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2023, was $48.4 million, consisting primarily of net purchases of short-term investments of $47.6 million and purchases of property and equipment of $0.7 million.

Current wording

Net cash used in investing activities for the six months ended June 30, 2023, was $44.0 million, consisting of net purchases of short-term investments of $41.4 million and purchases of property and equipment of $2.6 million.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2023, was $65.3 million consisting primarily of proceeds from issuances of common stock from our public offering of $54.1 million, proceeds from issuances of common stock for at-the-market offerings of $11.1 million and proceeds from stock options exercised of $0.8 million.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2024, was $119.5 million consisting primarily of proceeds from issuances of common stock from the Public Offering of $108.1 million, proceeds from issuance of common stock from stock option exercises of $14.0 million partially offset by tax payments for employee stock compensation of $2.1 million.

Previous wording

Our management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, (“GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, which may affect our future financial statement presentation, financial condition, results of operations and cash flows. Our significant accounting policies are more fully described in the notes to our financial statements included in our Annual Report on Form 10-K filed with the SEC on February 28,

Current wording

Our management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, which may affect our future financial statement presentation, financial condition, results of operations and cash flows. Our significant accounting policies are more fully described in the notes to our financial statements included in our Annual Report on Form 10-K filed with the SEC on February 28, 2024. We believe that the accounting policies we use are critical to the process of making significant judgments and estimates in the preparation of our financial statements and understanding and evaluating our reported financial results.

Previous wording

Uncertain macroeconomic conditions including recent inflationary pressures and the rise in interest rates have created significant uncertainty in the U.S. economy and capital markets, which is expected to continue through 2024 and beyond and could negatively impact our financial results and liquidity.

Current wording

Uncertain macroeconomic conditions including recent inflationary pressures and the rise in interest rates have created significant uncertainty in the U.S. economy and capital markets, which is expected to continue through the remainder of 2024 and beyond and could negatively impact our financial results and liquidity.