Sight Sciences, Inc. Price & Performance (SGHT)

Ability to achieve current and long term strategic objectives value drivers, market opportunity and ability to enter new markets and capture market share. The continued adoption of the company's products by surgeons pricing strategy, product reimbursement coverage and strategy including the company's ability to achieve positive reimbursement coverage policies for TierCare, expectations regarding commercial momentum, account utilization and engagement, the company's pipeline of interventional glaucoma and dry eye technologies, the timing of the release of new product under development clinical trial strategy and results and the disposition of ongoing patent litigation. Forward looking statements are based on estimates and assumptions as of today are neither promises nor guarantees and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by these statements. A description of some of these risks and uncertainties can be found in the company's public filings with the Securities and Exchange Commission including in the Risk Factors section of its Annual Report on Form 10 ks and quarterly reports on Form 10 Q. The company undertakes no obligation to publicly update or revise any forward looking statements except as required by law, On this call, management refers to certain financial measures that were not prepared in accordance with generally accepted accounting principles.

In The United States including adjusted operating expenses. The company believes these non GAAP financial measures are important indicators of its operating performance because they exclude items that are unrelated to and may not be indicative of its core operating results. See the company's earnings release for a reconciliation of these non GAAP financial measures to the most directly comparable GAAP financial measures as well as additional information about the company's reliance on non GAAP financial measures. I will now turn the call over to Paul. Thanks, Sight. Earlier today, we reported our financial results for the fourth quarter of twenty twenty four. In the quarter, we generated total revenue of $19,100,000 a 2% increase compared to the same period in the prior year. Our results reflect the continued commitment and hard work of our team as we remain steadfast in our mission to be a leader in the development transformative interventional technologies that allow eye care providers to procedurally elevate the standards of care empowering people to keep seeing.

Our current products address significant unmet needs in glaucoma and dry Sight.

Two of the biggest markets in eye care. Effectively serving the physicians and patients in both of these markets with our innovative interventional technologies is our top priority. As we close out 2024, we were pleased to see progress on multiple fronts during the fourth quarter. We experienced an increase in surgical glaucoma ordering accounts, and revenue both sequentially and compared to the fourth quarter of twenty twenty three, as well as account reengagement momentum. We also made advancements towards our goal of achieving equitable market access with an increased number of claims reimbursed under commercial plans. The clinical highlights for our technologies included the publication of three year standalone clinical data demonstrated the long term effectiveness of Omni in managing primary open angle glaucoma and the publication of the Tier Care budget impact analysis, which showed a direct relationship between increased utilization of Tier Care in place of and total cost savings from a U. S. Payer perspective.

And finally, throughout 2024, we were disciplined in managing our expenses and improving working capital. Which contributed to a 62% reduction in net cash used for the year. As we enter 2025, we are focused on our key strategic initiatives, which include building commercial momentum in MIGS, our continued commitment to customer education and engagement establishing equitable reimbursement for Tier Care, publishing new clinical and cost data supporting the adoption and use of our portfolio of interventional technologies and progressing our robust pipeline including an upcoming next generation Omni release. We believe that 2025 will be a trans positive coverage and or payment decisions for TierCare. Which would be the first of its kind for interventional MGD treatments. We have started the year strong with our national sales meeting and the American Glove Sight We had enthusiastic engagement and buy in from our team and our clinician partners with respect to our strategic initiatives and how to drive the interventional mindset across eye care providers in both glaucoma and dry eye disease. We believe with the focus and execution of our internal teams, combined with a growing number of partnerships with KOLs across the industry, SiteSciences will continue to enable the paradigm shift procedural interventional care.

Diving into our Surgical Glaucoma segment, Although the MIGS market has been in flux for the last eighteen months, we now have improved visibility into the new market environment and we believe the comprehensive procedure performed with Omni will continue to be a market leading choice for surgeons. Glaucoma is a very serious disease and remains the world's leading cause of irreversible blindness. With an estimated eighty three million diagnosed primary open angle glaucoma patients worldwide. We believe MIGS will continue to play a critical role in controlling the disease in terms of both intraocular pressure and medication reduction. And Omni remains a clear leader in the MIGS category. In the fourth quarter of twenty twenty four, we generated 9% growth in surgical glaucoma revenue compared to the same period in the prior year and up 1% sequentially from the third quarter of twenty twenty four. In the face of the LCD related headwinds in MIGS procedures, our team worked with our surgeon partners who are adopting their treatment algorithms to align with the final Medicare LCDs.

As a reminder, these LCDs included the elimination of Medicare coverage in most states for multiple MIGS procedures that are completed at the same time as cataract surgery. With these restrictions, a surgeon must now choose one MIGS procedure at a time for these patients. Despite this dynamic environment, our hard work still resulted in important progress in several areas, including a sequential increase in ordering accounts, and positive momentum with account reengagement and utilization. After operating in this new MIGD environment during the last six weeks of the fourth quarter of twenty twenty four, we realized the headwinds were larger than initially anticipated. We estimate that the multiple MIGS claims build was roughly a mid teens per but we believe that Omni has had a higher utilization the overall market in these STACK procedures.

This dynamic is factored into our 2025 revenue guidance.

While in the short term, we do anticipate in total utilization of MIGS devices we are confident that we have identified a pathway from which we can generate positive momentum to maintain our leadership position. Keeping in mind that patient demand and need for glaucoma treatment will continue to grow in 2025 and beyond. We are focused on surgeon education on the clinical benefits of earlier interventions with the comprehensive omni procedure reengagement efforts with accounts highlighting reimbursement clarity, enhanced competitive counter selling, investments in targeted commercial resources, optimized pseudoFACIC standalone omni market development strategy, through refined patient targeting and selection and an upcoming new product launch. Additionally, remains opportunity in continuing to train new surgeons expand utilization. As we believe we have trained less than half of the mixed trained surgeons in The United States, and many surgeons still have not fully adopted MIGS as a standard of care for glaucoma patients. As a reminder, the pseudophacic standalone segment consists of patients three or more years out from prior cataract surgery.

Who may or may not have had a MIGS procedure at the time of cataract surgery but whose IOP is not well controlled on two or more medications. These later stage patients are at risk of disease progression and most are likely on their way to an invasive and complicated procedure. Like a trabeculectomy or a tube shot.

We believe that standalone intervention performed with Omni can be effectively utilized for these patients to potentially delay or avoid the need for the riskier advanced procedures and improve patient care. Our team has been engaging with our customers on the topic of Omni as an optimal treatment for this underserved patient population and the message has been resonating. Lastly, I want to briefly touch on our pipeline specifically our next planned product launch in the Omni family.

We are excited to introduce Omni Edge to market. Which is planned for the first half of twenty twenty five. The addition of OmniEdge is intended to accommodate varying physician preferences in patient needs in today's evolving MIGS marketplace. OmniEdge with intelligent visco delivery is designed to increase the amount of viscoelastic delivered with our patented motion synchronized to ensure the consistency reproducibility and safety surgeons have come to trust in the Omni procedure. With this product, we are reinforcing our commitment to best serving both our surgeon customers and the patients they care for. The addition of OmniEdge reflects our strong relationships with our customers, our ongoing dedication to enhancing our products, and our ability to rapidly respond to the evolving needs of the eye care community. Now I will turn to our dry eye business where we also continue to make solid progress on our strategic initiatives. Our fourth quarter results in dry eye reflect our focus on reimbursed market access and new pricing. Which went into effect 10/01/2024. We are dedicated to achieving equitable market access for CareCare as our top priority. And I am pleased with the advancements we are making toward this goal.

We are continuing to engage in meaningful conversations with payers supported by the positive results of the twelve month Sahara Sight along with the recently published budget impact analysis, which we believe will help support positive coverage and or payment decisions in 2025. We estimate there are over thirteen million U. S. Patients diagnosed with Mybomian Gland Disease or MGD. The leading cause of dry eye disease. Historically, treatment options for these patients have been dominated by prescription and over the counter eye drops Sight.

Which primarily focus on increasing tier volume in aqueous deficient patients. Because there is currently no reimbursed interventional treatment, that addresses the root underlying cause of MGD, we believe there is a significant unmet need Our long term strategy is to be a pioneer the estimated $3,000,000,000 core market for patients with moderate to severe MGD who are candidates for an interventional procedure. We have been highly intentional in executing our strategy beginning with developing best in class technology, followed by delivering superior long term clinical outcomes demonstrated through randomized clinical trials and now are advancing an effective market access strategy to establish equitable reimbursement for peer care. Our methodical approach has led us to the cost unlocking this multibillion dollar market opportunity this year. Clinically, the effectiveness of TRICARE was shown in the Landmark Sahara trial which evaluated treatment with TiaraCare compared with the leading prescription eye drop for Stasis. For patients with dry eye disease. Following the successful completion and publication of Phase one and Phase two of Sahara RCT, in 2023 and 2024 respectively we are pleased to announce patient visits for the third and final phase of Sahara which was designed to assess the durability and procedural treatment effect Tier Care through twenty four months were completed in October 2024.

We expect the results from this final phase of the Sahara RCT to be published in 2020 In December 2024, we announced the results of the Tier Care budget impact analysis which was published in the Expert Review of Ophthalmology Journal. The analysis projected over a two year period compared the financial impact of Tear Care to commonly prescribed dry eye medications. Key findings indicated that a 20% increase in market share of Tier Care compared to prescription dry eye medications would yield an estimated annual savings of $36.87 per member per year across all plan members in a hypothetical health plan with 1,000,000 covered lives.

The study also demonstrated a direct relationship between increased utilization of Tier Care in place of prescription medications and total cost savings. From a U. S. Payer perspective. We believe the budget impact analysis results are contributor to a manufacturer's formulary listing or reimbursement submission, and we are introducing the results of this analysis in our conversations with payers.

We feel the combination of the strong clinical data from the Sahara RCT and the findings of this budget impact analysis create a compelling case for payers to establish coverage and or payment for treatments performed with TRICARE Sight an an appropriate reimbursement level.

We are encouraged that a number of CareCare claims have already been paid through commercial insurance. Our established commercial infrastructure have engaged with over 1,500 eye care who have invested in care care hubs and performed over 65,000 Tier Care procedures to date. This foundation will allow us to hit the ground running as reimbursement from Tier Care comes into place.

Our TierCare track record of significant eye care provider adoption along with the historic cash pay results validate the patient demand and clinical need for our We believe these early indicators suggest demand will grow following any positive coverage or payment decisions. This catalyst along with our commercial preparedness represents an opportunity for We've made significant progress in executing on our strategic initiatives and we remain confident in our business and in our ability to be a leader in addressing the unmet needs served by our innovative technologies. In Surgical Glaucoma, through our continued commitment to education and engagement with our customers, we remain focused on building commercial momentum in the new mixed market environment while also developing the pseudophageic standalone market for Omni. In dry eye, plan to continue working towards making CareCare the first mover and reimbursed interventional dry eye in 2025. For the millions of patients suffering from dry eye disease. I will now turn the call over to Ali to discuss our financial results and 2025 guidance. Thanks, Paul. Before I turn to the fourth quarter financial results, I want to reiterate that while we remain focused on improving our do so from a position of financial stability.

We are confident in our ability to support our goals moving forward and expect to achieve cash flow breakeven without the need to raise additional equity capital. Looking back to the fourth quarter of twenty twenty four, total revenue was $19,100,000 This reflects a 2% increase compared to the same period in the prior year.

Growth in Surgical Glaucoma revenue was offset by an expected decline in tier care revenue as our tier care price increase went into effect and we shifted our focus towards establishing reimbursement coverage and or payment decisions. Surgical glaucoma revenue fell short of our expectations primarily due to the new Medicare LCDs effective mid quarter. Which had a more pronounced impact on the fourth quarter surgical glaucoma revenue than expected. Search for glaucoma revenue for the fourth quarter of twenty twenty four was $18,800,000 up 9% versus the same period in the prior year. The increase was primarily driven by ordering accounts, increased by 7% and account utilization, which increased by 6%. Utilization decreased sequentially, and while we expected lower utilization in the fourth quarter compared to the third quarter due to the restriction of multiple MIGs, utilization was lower than anticipated. Eleven thirty eight customers ordered surgical glaucoma products in the fourth quarter, up 3% from the third quarter of twenty twenty four and up seven percent from the fourth quarter of twenty twenty three.

Our dry eye revenue for the fourth quarter of twenty twenty four was 300,000.0 a decrease from $1,600,000 in the same period in the prior year. The expected decline was primarily due to fewer SmartLid sales. Which was a result of our focus on the next phase of our commercial strategy for our dry eye segment which involves achieving reimbursed market access. Gross margin for the fourth quarter was 87% an increase compared to 85% in the same period in the prior year. Primarily due to increased surgical glaucoma product mix. Total operating expenses for the fourth quarter were 28,500,000.0 increase of 5% compared to $27,100,000 in the fourth primarily due to higher personnel related expenses. Partially offset by lower legal expenses in the comparative period. Adjusted operating expenses were $24,400,000 for the fourth quarter, an increase of 9% compared to $22,300,000 in the same period in the prior year.

Our net loss for the fourth quarter was $11,800,000 or $0.23 per share, compared to a net loss of $10,700,000 or $0.22 per share for the fourth quarter of twenty twenty three.

We ended the quarter with $120,400,000 of cash and cash [indiscernible] and $40,000,000 of debt, excluding debt discounts and amortized debt issuance costs. We generated $1,800,000 of cash in the fourth quarter, reflecting continued operational discipline and an improvement in working capital. Cash generated in the fourth quarter included a $5,000,000 drawdown under our This was an improvement compared to the $6,400,000 of cash used in the fourth quarter of twenty twenty three. Cash used in the twelve months ended 12/31/2024 was 17,800,000.0 compared to $46,900,000 in the full year of 2023. As a reminder, we have not received any monetary damages awarded in our success jury trial verdict in our patent infringement case against Alcon Sight. The final ruling is still pending the judge's whether to confirm the jury's verdict establish ongoing royalty damages and or determine any potential enhancements. And is subject to appeal. Moving to our revenue outlook for the full year 2025. Are initiating our revenue guidance of $70,000,000 to 75,000,000 This guidance range takes into account the impact to the MIGS market following the effectiveness of the new Medicare LCD. While patient demand and need for treatment We expect total claims billed will be reduced in 2025 due to the multiple MIGs restriction.

This guidance range also assumes revenue of approximate and does not contemplate achievement of positive reimbursement coverage and or payment decisions for our dry eye segment. Looking closer at the first quarter of twenty twenty five, we expect revenue to be down low to mid double digits compared to the same period in the prior year. This contemplates a full quarter impact of the multiple MIGS procedure restriction. I also wanted to briefly address our potential tariff in light of the recently implemented 20% tariff on all goods from China. A significant portion of our omni and Sight products Sight certain tier care system components are produced and assembled by a single manufacturing facility in China.

Although we do have a U. S.-based manufacturer to produce and assemble omni products, and have other supply arrangements for the production of certain Tier Care system components, estimated manufacturing costs for our other suppliers are currently higher than our China based manufactured including the 20% additional tariff.

We intend to continue monitoring this situation and assessing any appropriate remediation steps But we expect this will have an impact on our gross margin and results of operations in 2025 as long as the tariffs are in effect. We plan to work diligently to offset these incremental costs with other business adjustments. We are also initiating our guidance at expectations for full year 2025 adjusted operating expenses of $105,000,000 to $107,000,000 representing an increase of 4% to 6% compared to 2024. The expected increase includes investments in pseudophake stand alone glaucoma market development, Tier Care market access, and increased research and development projects. This guidance does not assume expansion of the commercial dry eye team and We remain focused on further penetrating and expanding the surgical glaucoma and dry eye market. As we execute and deliver our long term goals, and build for our future. Operator, please open the line for questions.

And our first question comes from the line of Danielle Antalffy with UBS.

Hey, good afternoon, guys. Thanks so much for taking the question. I had two questions, one on MIGS and one on Tier Care or on May, I'm sorry. But just how was market development on the standalone mix market going? I mean, I know that's a big are you've got a lot going on right now. But just curious about how you see that evolving taking 2025 off the table, more thinking about the long term trajectory and what heavy lifting needs to be done to get that market really going? And then just a follow-up on Tier Care.

Hi, thanks for the question. This is Matt. I'll take a stab and obviously Paul and Ali can weigh in. I think we see very good momentum Candidly capturing and sort of benefiting from a broader adoption of an interventional mindset along the entire continuum of glaucoma care. And I think it's really important to characterize that. While we participate in our focus in the surgical and procedural intervention side today, there's obviously other non surgical interventions that are very valuable that we hear in the community. And we think those are naturally benefiting our efforts and our messages around a broader adoption of interventional mindset in glaucoma surgery, both in combo MIGS and for the Sudepic stand alone market development efforts. And so our team has done a phenomenal job engaging incredible group of thought leaders who are truly passionate about this intervention building not just marketing materials, but curriculum focused on education, including as Paul referenced in the prepared remarks, some dedicated events and educational symposium at AGS. And so we're happy with where we are today in terms of establishing that effort. We know ultimately driving paradigm shift and mind shift and sort of procedural care takes time.

And so we're committed to working with our clinical partners and affecting that. And we expect it will continue to build out through the course of 'twenty five well into 'twenty six and beyond.

Okay.

And then I would just add to that just to Matt's point, developments like sustained release pharmaceuticals, like an increased awareness the benefits of SLT laser interventions potentially as a first line treatment over daily topical medications This is being discussed actively every day in the glaucoma community. So as those types of interventions also become more broadly adopted. I think it does help everybody. And just as Matt said, the interventional mindset will help drive Omni's growth in standalone intervention at an earlier stage. And just ultimately, it comes down to the clinical outcomes need to be there and I wanted to add that we did publish some very compelling three year standalone clinical data, real world evidence of how Omni performs in a pseudo phakic standalone glaucoma patient who had higher IOP and is on multiple medications in the hands of an average surgeon, the clinical results over a three year period are extremely compelling. So that will will also be helpful as we try to drive this interventional mindset.

Okay, got it. That is very helpful context. And then on Tier of Care, I mean obviously what we're looking for are the wins on the reimbursement side of things. I don't know if you can give any color on how many claims or what percentage of the claims are actually getting paid for And sort of give some milepost maybe on when I know broadly speaking you think you'll start seeing some acceleration through the end of this year, but I don't know if you can give any more color on what we should be watching out for there.

And that's it for me. Thanks. Yes. Thanks, Danielle. I'll take that. So we haven't disclosed any specifics on the claims, but we have said we've seen an increasing volume of claims and some [indiscernible] Early traction with specific payers who are now starting to regularly pay for these claims on a more consistent manner. But I will say that these claims, they are still being processed individually and there isn't that standardization yet. So we are really happy with the partners that we're working with that are diligently working with to get these claims submitted and working through the process to eventually establish coverage policies. And this is a really critical step towards establishing those reimbursement levels. So we feel like we are on track here. We've made good progress. We continue to see more and more work with these payers and more acceptance of peer care And then of course, we are also leveraging that recently published budget impact analysis and also upcoming will be the twenty four month Sahara data. So we feel like we're in a very good position We do expect to start getting some peer care policy or payment decisions in 2025. Of course, this will take multi years to have all coverage across most of the payer plan.

But we can have significant revenue generated off of some key wins this year assuming that we can establish appropriate and fair reimbursement levels. Think we're in a really good spot and we're really excited about the CareCare opportunity and it really should be a catalyst for us this year. As we can show progress on some of those coverage or payment decisions. Okay. Thank you so much. Thank you. And our next question comes from the line of Tom Steffen with Stifel. Great. Hey, guys. Thanks for taking the questions. One on glaucoma and then one on dry eye.

I'll start with glaucoma.

Ali, appreciate the 1Q twenty twenty five guidance. But can you talk a bit just about surgical glaucoma trends year to date? Obviously, the LCDs were impactful.

And I think more disruptive than expected in 4Q.

But how has the market trended since then up until this point?

I mean, are trends showing signs of normalizing?

Are they worsening kind of as the year has progressed? Maybe if you can just talk about where we stand today on that front?

Yes, sure. So far, I think that we're tracking as expected in the first quarter. Obviously, there was more uncertainty around what people would do in response to the the effectiveness of the LCDs in the November. Seems like we've gotten to a point where there is more clarity around what people are doing after those MIGS restrictions have gone into place. And we feel like we have had good conversations with customers, good engagement across the community on where Omni fits into that treatment paradigm. And as you know, Omni is a very comprehensive procedure. And so being able to really position for the patients that need that type of treatment profile is really across the treatment paradigm of of glaucoma patients. So we feel like we're in a good spot. The first quarter has trended as it expected and obviously we have taken into account what we've seen quarter to date in terms of setting our guidance and setting directional guidance for the the first quarter as well.

Got it. That's helpful. And just a quick follow-up to that. I mean, talked about getting more clarity around sort of what doctors are doing with the restrictions in place. And maybe if you can elaborate a bit on that surgeon behavior, I guess, there having to decide between stents and canaloplasty or stents and goniotomy sort of the the decoupling. If you can elaborate on that, that'd be great. And then my Tier two question is just around kind of price. I mean, the increase on smart lids, it's obviously been out there for a little while now. I'm guessing your reimbursement efforts with ramping have been kind of part of your discussions with the dry eye customers. So maybe if you can talk about sort of surgeon feedback and receptivity to peer care potentially being a reimbursed product. I guess I'm just wondering if there's any pushback at all around taking something that's cash pay something that's lucrative for these doctors and introducing reimbursement to the equation, which I think ophthalmologists generally [indiscernible] in certain instances. Hopefully, that question makes sense. Thanks.

Tom, we're going to try to unpack that starting with the omni or the mix utilization and Interlook there's been a very clear response in the market, five of the seven MAX no longer allow for $1,000,000,000 of combo MIGs. Obviously, the providers have changed their practice pattern in accordance with that. I think the exciting thing here is, as we've stated multiple times, When you think about the core tenants and requirements of MiG surgery, safety, efficacy, the ability to treat a patient comprehensively accordance with the disease Omni fulfills all of those. And so that puts us in an incredible position I think, to continue to capture our fair share as the market goes through this transition and as Ali has already articulated, we see this play out in Q1, things are progressing.

In a manner consistent with our expectations. I think the other thing to then think about is not just the impact of the the elimination of combo MIGs, we'll experience this on a sort of a year over year comparison basis through the middle of Q4. But there's still an incredible unmet need in the market to continue to offer interventional procedures and technology to a wider range of glaucoma patients both at the time of cataract surgery and post cataract surgery. And so you yourself haven't been at AGS this past weekend. Understand that that's still an incredible unmet need. And so we among many still see the market as incredibly prepared to continue to grow and expand in we will continue to build on the demonstrated track record efficacy of Omni to fulfill that and make sure that we're meeting the needs of both physicians and their patients.

On the second Sight, as it relates to TierCare, and again, I want to make sure I'm trying to address all of the components of your question there. I think it's critically important when we talk about the transition to a cash pay environment I think as you and others are well aware, our providers have, I think really sought to provide these interventional type procedural technologies to these patients in need. And we've talked obviously about the massive unmet need in dry eye, myboomian gland disease, But the reality is even though that have done that effectively, represent a small fraction of the overall provider community of ECPs, eye care providers that are treating these patients, which is why it's so underserved. And so we have walked hand in hand with these providers and certainly with those top leaders, to both format a strategy to develop the clinical evidence including the Sahara RCT, and the economic requirements to make this a sustainable procedure in a reimbursed environment. And I'm excited to say that that partnership has continued through our discussions around the price increase that we implemented in the middle of last year That price increase is intended to reflect both the clinical and economic value that is being provided by the technology and the provider to the patient and to the system.

And so that has been a partnership that we've been in lockstep through this entire process. And with our commercial infrastructure that remains in place, they've done an amazing job of continuing to engage those providers drive the advocacy to build awareness around the need for coverage in this procedure. And that's really the foundation of the progress we've seen and Ali spoke to earlier around the claims that have been submitted demonstrating the demand to both commercial payers and Medicare administrative contractors leading to what we have described as obviously progressively productive conversation. So I hope I've hit on sort of the key themes and elements to what you asked there, but certainly if there's something we didn't or Paul or Ali have something else, we can fill it in. I would just add on the the cash pay piece, Tom, I think we did early on when we began our journey to establish to be the pioneer in establishing reimbursed market access to these procedures because we felt that the millions of patients who couldn't afford to pay for these procedures that they should have access to them There was some resistance because it was a cash pay only market.

We didn't have the data that would credibly support reimbursement. Providers didn't yet really know what that reimbursed value might look like. And some eye care providers were doing just fine with cash pay and they had a patient population. That was happy and could easily afford to pay for these procedures. As Matt mentioned, that's that's a very small subset of providers and when we're successful with reimbursed access to TierCare Sight, There will continue to be a handful of providers who maybe prefer to stick with cash pay or a handful of patients who prefer a cash pay option for whatever reason, There are options for them.

But for the vast majority of this significant multibillion dollar market millions and millions of patients who are underserved today, pursue a strategy that will help those patients. Really helpful. Thanks, Paul. Thanks, Matt.

Thanks. Thank you. And our next question comes from the line of Frank Tacunen with Lake Street Capital Markets.

Great. Thanks for taking the questions. I was hoping I could start with a little bit more color around OmniEdge. Appreciate the initial remarks you made. And the prepared comments, but maybe take us a little bit deeper into what's left to be completed prior to that being launched, maybe specific patient cohorts you think are will particularly benefit from this device and then any changes around pricing? Yes. Hey, Frank. It's Paul.

Matt can talk about the launch and those other commercial considerations. But just from a development perspective, look, we've been the pioneers in the ab interno canaloplasty started this journey over a decade ago, with first iterations. OmniEdge represents don't know, the fourth or fifth generation of the omni technology advancement.

We've paid close attention to the market to the market needs, taking feedback from our surgeons along the way, and we've been carefully and iteratively embedding that feedback into our technologies to improve not just the safety and efficacy, but also the usability of of the technology. So we've been increasing the volume of viscoelastic very carefully, very methodically. To ensure first and foremost that we maintain safety We want to offer surgeons the control because that control and reproducibility translates into reliable safety and MEGS is a safety first segment.

And I mentioned all of this because there are other products either on the market or in development which have taken a different path. That's been core to our development thesis is safety first, and let's increase the volume of viscoelastic, which increases the level of canal visco dilation, which could theoretically increase efficacy but we want to prove it out very carefully and very methodically. So we're excited about OmniEdge. But it really is yet another round of iteration in our pursuit of maximizing the safety and efficacy of our omni platform. Matt, do you want to talk about No, I'd just say, not necessarily Edge, specifically, but Omni has created a category and validated category based on a long history of safety and efficacy in a robust body of clinical evidence, we're excited not just with OmniEdge, but really pursuing more of an Omni Family approach to the portfolio to be able to meet the many varied needs and preferences of physicians and patients. And so the great news is Omni Ergo, which is in the market today, has achieved and sustained a very strong number two position in the overall mix marketplace because of its comprehensive efficacy and ability to address a wide range of patient needs from mild to moderate, moderate to approaching severe.

But there's an opportunity, as Paul described, given the long history of iterative advancement and development in the internal know how that is uniquely belongs to site sciences, we have the ability I think now to be more collaborative with providers and look at providing a range of tools that allow them to treat patients differently. And so this is again another area that we're excited is happening in concert and partnership. With providers and we're excited to introduce OmniEdge to the market. We think it will fulfill some unique needs. We're also excited about what's going to come beyond OmniEdge as we continue to move to Omni Family forward.

Okay. That's helpful. And then maybe just for my second one on the dry eye business. Obviously, a lot of commentary around hopefully policy establishment this year. Maybe talk about the months and quarters following policy establishment, how quickly do you think it could ramp from there? My sense is just given the familiarity with the product, hopefully that could be a relatively quick ramp, but maybe talk about that and then any incremental commercial investments that might follow?

Yes, great question. And a lot of this will have to do with what types of wins we get, how many covered lives and what regions that what pricing. So that is one of the reasons why when we set guidance here, we're not going to try and predict what is that win, when does it happen, what's the size of that, what's the pricing of that until we actually see it happen. So we've been very prudent in our guidance strategy for revenue on dry eye but we do expect those wins to come in 2020 And at that point, once we see individual wins, we can start quantifying what that means in terms of a potential revenue ramp and But what I think is really important to understand is that we do already have a small team of dry eye sales and marketing and efforts that we have been doing to create knowledge around tear care over the last few years.

And that commercial infrastructure has created a base of 600 eye care providers that have invested in hubs and they've done six five thousand care care procedures to date. We have done a lot of work to establish training on peer care, understanding of when a tier care would be appropriate and then driving those cash pay procedures. So that foundation, I do think, will allow us to hit the ground running as we get reimbursement into place. So I think we are in a very good spot. There is huge need for this type of treatment option for patients. We know that patients struggle with dry eye drops and that there are it's adherence challenges around that. And this is a really unique opportunity for them. And if it is covered, as a reimbursed product, a really great way to solve the major problem of dry eye. So I think we are in a good spot. Again, it will come down to what is the specific win what's the region, but we do have that base to build from that should allow us to go fast.

I'll have to add one more thing is that in addition to the critical investment in our commercial infrastructure, current guidance includes committed investments already underway for operation think we've taken a sort of prudent approach to this, not giving out in front of the necessary investment, ensuring the critical infrastructures in place to support those early wins. Okay.

Helpful. Thanks for taking the questions.

Thank you. And our next question comes from the line of David Saxon with Needham and Company.

Great. Hi, Paul and Ali. Thanks for taking my questions. If I could just start with a clarifying question Care ASPs and sorry if I missed, but this, but the ASP looks to be like under 300 on a unit basis. So is that just volume discounting? Or how should we think about kind of the go forward realized pricing Relative to the $1,200 list price, And then my my first question is just on gross margin. So just back of the envelope math, I'm getting to like 84% for Surgical gross margins post tariff. Is that a good way to think about the year? And then for dry eye, I think here you mentioned any impact there. So are there any factors that would impact dry eye gross margin as we go through 2025?

Yes. So let me make sure I get all those questions. Answered. Here. So first, just starting with ASP on the dry eye side. So as we said, we established new pricing effective October 1 and that list price was about $1,200 Of course, there are some discounts off of that as we work with our partners But the ASP for new purchases is still relatively high in the 1,000 range.

However, there are some historical sales that were already committed under contracts that continue at the lower prices for the next couple of quarters.

So that volume is still occurring. Per contractual requirement. So that's where you see lower average ASP associated with those contractual requirements. But what we're really working with our partners on reimbursed access that all is focused on the higher pricing smart lids that are at that appropriate level based on the clinical value of the CheahCare procedure. Does that make sense?

Yes. No, that's super clear.

Okay. So on the tariff side, I think your math might be a little much in terms of our impact. So just thinking through it, only a portion of our cost of goods sold is actually our bill of materials. So of course only that bill of materials that is coming directly from China would have an impact associated with the tariff charge. And of course, I would also note that this is something that will phase in over time because we already do have exist inventory of products that that does not have a tariff associated with it. We are also actively engaged with our partners to try and reduce that impact of the tariff, whether that's renegotiations of costs, supply chains and looking at specific components all of that is in progress as well as looking at our medium to long term planning on where product is manufactured So we think that we will be able to mitigate most of the tariff impact with the actions that we're taking. But there should be some modest impact to to the P and L in 2020.

Okay.

That's very clear.

Thanks for all that color, Ali. And then hopefully, what can be considered my second question, just on the competitive landscape, there's another canaloplastytrabeculotomy device that just launched, I think, this past weekend. So kind of how are you thinking about Omni volumes with that new product launching is there anything baked into guidance That'd be helpful. Thanks so much.

Yes. I'll just add a few comments, David, and maybe Matt can add some as well. We've over the years, we've seen a number of of new entrants into the visco dilation category as a had remarked previously we've been at this for a decade. So we believe Omni has a very strong position as the pioneer in in this category and as we described with OmniEdge and future iterations of Omni and the family of products we're developing, we expect [indiscernible] So we've seen this in the past. I think the one you're referring to is from a company that has also released a visco delivery device two years ago that we saw these things get introduced There will be some trialing. That trialing can be disruptive for a period of time.

It's not new. Again, we've seen it in this category for a while, but we've also seen how strong the omni product market fit is to date, So again, we haven't seen any clinical evidence It's just like the products that were released quickly prior haven't seen clinical evidence, haven't really seen strong labels, haven't seen usability haven't seen any cases. So all of this is TBD, but if and when these things appear, there will be trialing. That trialing can be disruptive for a period of time.

And we continue to try to innovate quickly, listen to the market, respond to our surgeon needs and stay as far ahead as we can. [indiscernible] you asked the question, was it as Paul said, there's a long history of products attempting to enter this segment of the market in this rough, we've seen trialing. That certainly has been contemplated in our expectations for the year. Going back to prior conversations around Edge and evolving family of Omni products, There is no company in this space that better understands the requirements for these procedures and site sciences and we'll continue to lean heavily into that.

Continue to invest in that. We'll continue to develop iterative advancements in the technology in part rewarding. We we will continue to be.

And just to follow-up on the guidance comment there. Our approach to guidance here was to put a prudent guidance range in place that took into account both the impact of these MIGs restrictions, this dynamic competitive MIGs environment that we're in and a course the uncertainty on timing of the Tier two reimbursement win. So we think that we've set appropriate guidance that takes into account those factors and allows us to perform effectively this year.

Great.

Thanks so much for all the color.

Thanks. Thank you. And our next question comes from the line of Matthew O'Brien with Piper Sandler. Hey, this is Phil on for Matt.

Thanks for taking our questions. One on cadence.

I know you said the first quarter is expected to be down low double Sight.

Is the assumption that surgical glaucoma can show growth in the second half of the year And if that's the case, what's driving that assumption? Thank you.

Yes. So that's not inherent in the guidance range provided that there would be growth in the back half. Of course, the easiest comp for us will be the fourth quarter, but where we fall in that that growth over the fourth quarter will depend on on exactly where we are within that range of guidance.

So we do expect that this MIGS restriction impact that affects the entire market. This is a 15% or so impact associated with these claims that cannot be performed While the patient visits are still occurring, the number of MiGs claims being billed will be reduced by that. Our estimates are about 50,000 procedures will be removed from the claims data. And so that is something that impacts the entire industry. This does not specific to Omni. Of course, we think we have a slightly outsized impact just on our staff procedures that were performed But the industry itself is not growing faster than that inherent headwind that we have for 2025.

Now we do expect as you get into 2026, it's going to get back to fundamentals. How is the overall market growing in terms of patients, in terms of surgical mix procedures, and then also how are we developing that pseudobacic standalone opportunity. So those are the things that we are looking to and inherent in guidance that we do expect surgical glaucoma to be down in 2025 compared to 2024. Hopefully that helps. No, that's very helpful. And then just one quick one on the standalone [indiscernible] pressure from these LCD changes on that front or is it a little bit better than your combo business?

To be clear, that the standalone market opportunity right now is relatively small. That's still a small 10% or so of claims [indiscernible] is done on a standalone basis and about 90% is done in combination with a cataract procedure. So mass majority of the volume is still happening in combination with cataract. Now, of course, the standalone opportunity is many multiple size of the combo cataract market but we have to develop that market opportunity. So the focus here is more around creating that interventional mindset with surgeons to think about intervening instead of just giving another med to medication to a patient. So that is really the focus there. There is no there are no restrictions of doing multiple MIGs stacked MIGs on a standalone basis explicitly in the guidance. The focus is on [indiscernible] that multiple MIGs cannot be performed at the same time as cataract surgery. So they are kind of separate and different dynamics. From that perspective.

Very helpful. Thanks so much.

Thank you. Our next question comes from the line of Macaulay Culbeng with William Blair.

Hi, everyone. This is Macaulay on for Margaret. Thanks for taking our questions. Out of our expectations was good to see with ordering accounts up 7%. So Hey, McAuley, we can't.

Sorry, I don't don't know if other people can hear him clearly. We're not able to hear the question clearly. No, his audio going in and out. Hey, everyone, do you have me?

That's better.

Apologies about that. Just wondering if you experienced any backlog of surgeons once the LCB became effective in November. And Ali, I know you touched on it it a bit, but wanted to double down on what's implied in the guide on as we look at that first quarter guide?

Yes. So I mean, we don't provide that specific level of detail. Obviously, we are focused on increasing our accounts and increasing our utilization over time. Now utilization will be the most challenged in 2025 out of those two because of the the restrictions on multiple mix. So, we do expect to be able to grow our ordering accounts, but we don't provide specific guidance. On that.

Okay, fair enough. And then no, the Alcon infringement case is still ongoing here, but saw there was a status update earlier this week.

So maybe just remind us where we are in that process the base case scenario maybe for monetary damages, And if that does hit the balance, in the next few quarters, the balance sheet in the next few quarters here, where would you prioritize that cash, whether that be more geared towards expanding the commercial infrastructure, versus accelerating some R and D initiatives?

Yes, sure. So, the most recent update is that we did not resolve the parties did not resolve the dispute as part of the court order mediation process that was recently concluded. So we are still we are now back to waiting for the judge to make a final ruling and to either to confirm the jury's verdict, establish any ongoing royalty damages and or determine any potential enhancements. And course, all of that is still subject to appeal. So, we will await the court's decision We don't have timing. This is all in the court's decision of when they decide to rule. And then of course, because subject to appeal, this process could continue to stretch [indiscernible] So we'll continue to provide updates as we have them. In terms of cash utilization, as we said earlier, we do believe we are properly funded without needing any And we always are looking for the right things to invest in across the organization and that is typically as you would expect commercial expansion as we have success in dry eye, as we look at Tudo Fakik market development, as we look at our pipeline and look at ways to continue to innovate, those are the things that we would be focused on as you would expect from any MedTech company with goals of growing over time and really being a true leader in the space.

All right. Thank you. And I'm showing no further questions. So with that, I'll hand the call back over to CEO, Paul Badawi for any closing remarks. Thank you for attending today's call. We appreciate your interest in Sight and we look forward to updating you on our progress in the future. Thank you.

Ladies and gentlemen, thank you for participating. This does conclude today's program and you may now disconnect.