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  Title	Q4 2024 Sight Sciences Inc Earnings Call
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  Published Date	March 6, 2025, 11:09 a.m.
  Summary	Unlock stock picks and a broker-level newsfeed that powers Wall Street. Upgrade Now Q4 2024 Sight Sciences Inc Earnings Call Thomson Reuters StreetEvents Thu, Mar 6, 2025, 12:09 PM 46 min read In This
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  Content	Unlock stock picks and a broker-level newsfeed that powers Wall Street. Upgrade Now Q4 2024 Sight Sciences Inc Earnings Call Thomson Reuters StreetEvents Thu, Mar 6, 2025, 12:09 PM 46 min read In This Article: SGHT +2.89% Participants Trip Taylor; Investor Relations; Gilmartin Group Paul Badawi; President, Chief Executive Officer, Co-Founder, Director; Sight Sciences Inc Alison Bauerlein; Chief Financial Officer, Chief Accounting Officer, Treasurer; Sight Sciences Inc Matthew Link; Chief Commercial Officer; Sight Sciences Inc Danielle Antalffy; Analyst; UBS Thomas Stephan; Analyst; Stifel Nicolaus and Company, Incorporated Frank Takkinen; Analyst; Lake Street Capital Markets David Saxon; Analyst; Needham & Company Inc. Phillip Dantoin; Analyst; Piper Sandler Companies Macauley Kilbane; Analyst; William Blair & Company Presentation Operator Hello and welcome to the Sight Sciences fourth-quarter 2024 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded. It is now my pleasure to introduce Trip Taylor, Investor Relations. Trip Taylor Thank you for participating in today's call. Presenting today are Sight Sciences' Co-Founder and Chief Executive Officer, Paul Badawi; and Chief Financial Officer, Ali Bauerlein. Also in attendance is Sight Sciences' Chief Commercial Officer, Matt Link. Earlier today, Sight Sciences released financial results for the fourth quarter and full year ended December 31, 2024 and initiated revenue and adjusted operating expense guidance for full-year 2025. A copy of the press release is available on the company's website at investors.sightsciences.com. I would like to remind everyone that comments made by management today and answers to questions will include forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include statements related to the company's anticipated financial performance; operating results, liquidity position and ability to achieve cash flow breakeven; 2025 revenue and adjusted operating expense guidance; and tariff impacts to gross margin; and the primary factors impacting our ability to achieve our guidance; ability to achieve current and long-term strategic objectives and 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 TearCare; 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 products 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-K 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. Story Continues Paul Badawi Thanks, Trip. Earlier today, we reported our financial results for the fourth quarter of 2024. In the quarter, we generated total revenue of $19.1 million, 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 of transformative interventional technologies that allow eyecare providers to procedurally elevate the standards of care, empowering people to keep seeing. Our current products address significant unmet needs in glaucoma and dry eye, two of the biggest markets in eyecare. Effectively serving the physicians and patients in both of these markets with our innovative interventional technologies is our top priority. As we closed 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 2023, as well as count re-engagement momentum. We also made advancements towards our goal of achieving equitable market access for our TearCare technology 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, which demonstrated the long-term effectiveness of OMNI in managing primary open-angle glaucoma, and the publication of the TearCare Budget Impact Analysis, which showed a direct relationship between increased utilization of TearCare in place of prescription medications and total cost savings from a US 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 through our continued commitment to customer education and engagement, establishing equitable reimbursement for TearCare, 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 transformational year for Sight Sciences as we expect to achieve initial positive coverage and/or payment decisions for TearCare, 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 Glaucoma Society Meeting last week. 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 eyecare 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, Sight Sciences will continue to enable the paradigm shift in procedural interventional care. Diving into our surgical glaucoma segment. Although the MIGS market has been in flux for the last 18 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 83 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 reductions, and OMNI remains a clear leader in the MIGS category. In the fourth quarter of 2024, 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 2024. In the face of the LCD-related headwinds in MIGS procedures, our team worked with our surgeon partners who were adapting 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 re-engagement and utilization. After operating in this new MIGS environment during the last six weeks of the fourth quarter of 2024, we realized the headwinds were larger than initially anticipated. We estimate that the multiple MIGS claims bill was roughly a mid-teens percent of total MIGS claims bill. But we believe that OMNI has had a higher utilization than the overall market in these stack procedures. This dynamic is factored into our 2025 revenue guidance. While in the short term, we do anticipate an industry-wide decline 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, re-engagement efforts with accounts highlighting reimbursement clarity, enhanced competitive counter selling, investments in targeted commercial resources, optimized pseudophakic standalone OMNI market development strategy through refined patient targeting and selection, and an upcoming new product launch. Additionally, there remains opportunity in continuing to train new surgeons and expand utilization, as we believe we have trained less than half of the MIGS-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 pseudophakic 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 tuberculectomy or a tube shunt. 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're excited to introduce [OMNIEdge] to market, which is planned for the first half of 2025. The addition of OMNIEdge is intended to accommodate varying physician preferences and 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 delivery system 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 surging 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 eyecare 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 October 1, 2024. We are dedicated to achieving equitable market access for TearCare 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 12-month SAHARA study, 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 13 million US patients diagnosed with meibomian 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 eyedrops, which primarily focus on increasing tear 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 within this patient population. Our long-term strategy is to be a pioneer in the estimated $3 billion 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, we're advancing an effective market access strategy to establish equitable reimbursement for TearCare. Our methodical approach has led us to the cusp of unlocking this multi-billion-dollar market opportunity this year. Clinically, the effectiveness of TearCare was shown in the landmark SAHARA trial, which evaluated treatment with TearCare compared with the leading prescription eyedrop or stasis for patients with dry eye disease. Following the successful completion and publication of Phase 1 and Phase 2 of the SAHARA RCT in 2023 and 2024, respectively, we are pleased to announce that patient visits for the third and final phase of SAHARA, which was designed to assess the durability and procedural treatment effect of TearCare through 24 months, were completed in October 2024. We expect the results from this final phase of the SAHARA RCT to be published in 2025. In December 2024, we announced the results of the TearCare 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 TearCare to commonly prescribed dry eye medications. Key findings indicated that a 20% increase in market share of TearCare 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 million covered lives. The study also demonstrated a direct relationship between increased utilization of TearCare in place of prescription medications and total cost savings from a US payer perspective. We believe the Budget Impact Analysis results are a 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 TearCare at an appropriate reimbursement level. We are encouraged that a number of TearCare claims have already been paid through commercial insurance. Finally, on dry eye, our established commercial infrastructure has engaged with over 1,500 eyecare facilities who have invested in TearCare hubs and performed over 65,000 TearCare procedures to date. This foundation will allow us to hit the ground running as reimbursement from TearCare comes into place. Our TearCare track record of significant eyecare provider adoption, along with the historic cash pay results, validate the patient demand and clinical need for our product. 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 significant growth inflection. We've made significant progress in executing on our strategic initiatives, and we remain confident in our business and in our continued ability to be a leader in addressing the unmet needs served by our innovative technologies. In surgical glaucoma, through a continued commitment to education and engagement with our customers, we remain focused on building commercial momentum in the new MIGS market environment while also developing the pseudophakic standalone market for OMNI. In dry eye, we plan to continue working towards making TearCare 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. Alison Bauerlein Thanks, Paul. Before I turn to the fourth-quarter financial results, I want to reiterate that while we remain focused on improving our strategic and operational initiatives, we 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 2024, total revenue was $19.1 million. 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 TearCare revenue as our TearCare 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. Surgical glaucoma revenue for the fourth quarter of 2024 was $18.8 million, up 9% versus the same period in the prior year. The increase was primarily driven by ordering accounts, which 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. 1,138 customers ordered surgical glaucoma products in the fourth quarter, up 3% from the third quarter of 2024 and up 7% from the fourth quarter of 2023. Our dry eye revenue for the fourth quarter of 2024 was $0.3 million, a decrease from $1.6 million in the same period in the prior year. The expected decline was primarily due to fewer SmartLids 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 $28.5 million, an increase of 5% compared to $27.1 million in the fourth quarter of 2023, primarily due to higher personnel-related expenses, partially offset by lower legal expenses in the comparative period. Adjusted operating expenses were $24.4 million for the fourth quarter, an increase of 9% compared to $22.3 million in the same period in the prior year. Our net loss for the fourth quarter was $11.8 million, or $0.23 per share, compared to a net loss of $10.7 million, or $0.22 per share for the fourth quarter of 2023. We ended the quarter with $120.4 million of cash and cash equivalents; and $40 million of debt, excluding debt discounts and amortized debt issuance costs. We generated $1.8 million 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 million drawdown under our term loan. This was an improvement compared to the $6.4 million of cash used in the fourth quarter of 2023. Cash used in the 12 months ended December 31, 2024, was $17.8 million compared to $46.9 million in the full-year 2023. As a reminder, we have not received any monetary damages awarded in our successful jury trial verdict in our patent infringement case against Alcon. The final ruling is still pending the judge's determination whether to confirm the jury's verdict, establish ongoing royalty damages and/or determine any potential enhancement and is subject to appeal. Moving to our revenue outlook for the full-year 2025. We are initiating our revenue guidance of $70 million to $75 million. 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 will continue to grow in 2025 and beyond, we expect total claims billed will be reduced in 2025 due to the multiple MIGS restriction. This guidance range also assumes revenue of approximately $1 million for the full year 2025 for our dry eye segment 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 2025, 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 restrictions. I also wanted to briefly address our potential tariff exposure in light of the recently implemented 20% tariff on all goods from China. A significant portion of our OMNI and SION products and certain TearCare system components are produced and assembled by a single manufacturing facility in China. Although we do have a US-based manufacturer to produce and assemble OMNI products and have other supply arrangements for the production of certain TearCare system components, the estimated manufacturing costs for our other suppliers are currently higher than our China-based manufacturer, including the 20% additional tariff. We intend to continue monitoring the 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 expectations for full-year 2025 adjusted operating expenses of $105 million to $107 million, representing an increase of 4% to 6% compared to 2024. The expected increase includes investments in pseudophakic standalone surgical glaucoma market development, TearCare market access and increased research and development projects. This guidance does not assume expansion of the commercial dry eye team in response to the achievement of positive reimbursement coverage and/or payment decision. We remain focused on further penetrating and expanding the surgical glaucoma and dry eye market as we execute and deliver on our long-term goals and build for our future. Operator, please open the line for questions. Question and Answer Session Operator (Operator Instructions) Danielle Antalffy, UBS. Danielle Antalffy I had two questions, one on MIGS and one on TearCare or on OMNI, I'm sorry. But just how is market development on the standalone MIGS market going? I mean I know that's a big opportunity here, and I know you guys are -- you've got a lot going on right now. But just curious about how you see that evolving. I'm 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 TearCare. Matthew Link Thanks for the question. This is Matt. I'll take a stab and obviously, Paul and Ali can weigh in. Look, 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 are focused on the surgical and procedural intervention side today, there's obviously other nonsurgical interventions that are very valuable that we hear about 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 pseudophakic standalone market development efforts. And so our team has done a phenomenal job engaging an 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 a paradigm shift in mind shift and sort of the 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 '25 well into '26 and beyond. Paul Badawi I would just add to that, just to Matt's point, developments like sustained release pharmaceuticals, like an increased awareness of 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 just wanted to add that we did publish some very compelling three-year standalone clinical data, real-world evidence of how OMNI performs in a pseudophakic standalone glaucoma patient who had high 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 also be helpful as we try to drive this interventional mindset. Danielle Antalffy That is very helpful context. And then on TearCare, 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 mileposts 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. Alison Bauerlein 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 nice 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 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 TearCare. And then, of course, we are also leveraging that recently published budget impact analysis and also upcoming will be the 24-month SAHARA data. So we feel like we're in a very good position. We do expect to start getting some TearCare policy or payment decisions in 2025. Of course, this will take multi-years to have all coverage across most of the payer plans, but we can have significant revenue generated off of some key wins this year, assuming that we can establish appropriate and fair reimbursement levels. So I think we're in a really good spot, and we're really excited about the TearCare 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. Operator Tom Stephan, Stifel. Thomas Stephan Great. Hey guys. Thanks for taking my question. One on glaucoma and then one on dry eye. I'll start with glaucoma. Ali, I appreciate the 1Q '25 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. Alison Bauerlein Yeah, 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 effectiveness of the LCDs in the middle of November. It 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 important. But we really continue to see OMNI use across the treatment paradigm of glaucoma patients. So we feel like we're in a good spot. The first quarter has trended as expected. And obviously, we've taken into account what we've seen quarter-to-date in terms of setting our guidance and setting directional guidance for the first quarter as well. Thomas Stephan Got it. That's helpful. And as a quick follow-up to that. I mean you 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, they're having to decide between stents and canaloplasty or stents and goniotomy, sort of the decoupling. If you can elaborate on that, that would be great. And then my TearCare question is just around kind of price. I mean, the increase on SmartLids, 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 TearCare potentially being a reimbursed product. And 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 may cringe at in certain instances. Hopefully, that question makes sense. Thanks. Matthew Link Tom, we're going to try to unpack that, starting with the OMNI or the MIGS utilization. And so look, there's been a very clear response in the market, five to seven max no longer allow for billion of combo MIGs. And obviously, the providers have change their practice pattern in accordance with that. I think the exciting thing here is, as we stated multiple times, when you think about sort of the core tenets and requirements of MIGS surgery, safety, efficacy and the ability to treat a patient comprehensively in accordance with the disease, OMNI fulfils 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, as 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 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 having 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, and we will continue to build on the demonstrated track record efficacy of OMNI to fulfil that and make sure that we're meeting the needs of both physicians and their patients. On the second side, as it relates to TearCare, 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 types of procedural technologies to these patients in need. And we've talked obviously about the massive unmet need in dry eye, meibomian gland disease specifically. But the reality is even those that have done that effectively represent a small fraction of the overall provider community of ECPs, eyecare 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 thought leaders to both formulate 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. And 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 and 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 conversations. 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 as something else, we can fill it in. Paul Badawi I would just add on 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 eyecaree 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 a very small subset of providers. And when we're successful with reimbursed access to TearCare, 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 multi-billion-dollar market and millions and millions of patients who are underserved today, we've decided to pursue a strategy that will help those patients. Operator Frank Takkinen, Lake Street Capital Markets. Frank Takkinen Thanks for taking the questions. I was hoping I could start with a little bit more color around OMNIEdge. I appreciate the initial remarks you made in 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 maybe changes around pricing? Paul Badawi 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 segment, started this journey over a decade ago with first iterations. OMNIEdge represents, I 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 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 MIGS 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 viscodilation, 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? Matthew Link No. I would just say, not necessarily Edge specifically, but OMNI has created a category and validated the category based on a long history of safety and efficacy and 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 2 position in the overall MIGS 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 and the internal know-how that is uniquely belongs to Sight 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, but we're also excited about what's going to come beyond OMNIEdge as we continue to move the OMNI family forward. Frank Takkinen 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. Alison Bauerlein 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 and 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 2025. And at that point, once we see individual wins, we can start quantifying what that means in terms of a potential revenue ramp and expense ramp, those types of things. 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 TearCare over the last few years. And that commercial infrastructure has created a base of 1,500 eyecare providers that have invested in hubs, and they've done 65,000 TearCare procedures to date. So we have done a lot of work to establish training on TearCare, understanding of when TearCare 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 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 size of that specific win, what's the region. But we do have that base to build from that should allow us to go fast. Matthew Link Ali, maybe just add one more thing is that in addition to the critical investment in our commercial infrastructure, current guidance includes committed investments already underway for operational infrastructure as well to support the business and scale. So I think we've taken a sort of prudent approach to this, not getting out in front of the necessary investment, but ensuring the critical infrastructure is in place to support those early wins. Frank Takkinen Thanks for taking the questions. Operator David Saxon, Needham & Company. David Saxon If I could just start with a clarifying question on TearCare ASPs and sorry if I missed 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 first question is just on gross margin. So just back of the envelope math, I'm getting to like 84% for surgical gross margin post-tariff. Is that a good way to think about the year? And then for dry eye, I didn't hear you mention any impact there. So are there any factors that would impact dry eye gross margin as we go through 2025? Alison Bauerlein Yeah. 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 the 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 SmartLids that are at that appropriate level based on the clinical value of the TearCare procedure. Does that make sense? David Saxon Yes. No, that's super clear. Alison Bauerlein 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 existing inventory of product 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 cost, 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 the P&L in 2025. David Saxon Okay. That's very clear. And then hopefully, what can be considered my second question, just on the competitive landscape, there's another kind of canaloplasty/trabeculotomy 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 would be helpful. Paul Badawi Yes. I'll add a few comments David, and maybe Matt can add some as well. Over the years, we've seen a number of new entrants into the viscodilation category. As I remarked previously, we've been at this for a decade. We believe OMNI has a very strong position as the pioneer in this category. As we described with OMNIEdge and future iterations of OMNI and the family of products we're developing, we expect to continue to stay far ahead of any new entrants. So we've seen this in the past. I think the one you're referring to is from a company that 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, 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, which can be disruptive for a period of time. We continue to try to innovate quickly, listen to the market, respond to our surgeon needs, and stay as far ahead as we can. Matthew Link I'd say comments from here. As Paul said, there's a long history of products attempting to enter this segment of the market and disrupt. We've seen trialing. That certainly has been contemplated in our expectations for the year. Going back to prior conversations around Edge and an evolving family of OMNI products, there is no company in the space that better understands the requirements for these procedures in Sight Sciences, and we'll continue to lean heavily into that. We'll continue to invest in that. We'll continue developing iterative technological advancements and partnerships with clinicians to fulfill that. So far, we've been rewarded, and we expect we will continue to be. Alison Bauerlein 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 the MIGS restrictions, this dynamic competitive MIGS environment that we're in and, of course, the uncertainty on the timing of the TearCare reimbursement wins. So we think that we've set appropriate guidance that takes into account those factors and allows us to perform effectively this year. Operator Matthew O'Brien, Piper Sandler. Phillip Dantoin This is Phil on for Matt. One on cadence. I know you said the first quarter is expected to be down by low double digits. Is the assumption that Surgical Glaucoma can show growth in the second half of the year? If that's the case, what's driving that assumption? Alison Bauerlein Yeah. 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 growth over the fourth quarter will depend on exactly where we are within that range of guidance. We do expect that these MIGS restrictions is an 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 that about 50,000 procedures will be removed from the claims data, which is something that impacts the entire industry. This is not specific to OMNI. Of course, we think we have a slightly outsized impact on our percentage of stacked procedures performed. But the industry itself is not growing faster than that inherent headwind that we have for 2025. Now, we do expect that as we get into 2026, it will get back to fundamentals. How is the overall market growing in terms of patients, in terms of surgical MIGS procedures, and then also how are we developing that pseudophakic standalone opportunity. So those are the things we are looking to, and inherent in guidance is that we expect Surgical Glaucoma to be down in 2025 compared to 2024. Hopefully, that helps. Phillip Dantoin No, that's very helpful. Then, there is just one quick one on the standalone opportunity compared with the combo. I was just curious if you're seeing as much pressure from these LCD changes on that front? Or is it a little bit better than your combo business? Alison Bauerlein To be clear, the standalone market opportunity right now is relatively small. That's still a small 10% or so of claims billed for MIGS is done on a standalone basis, and about 90% is done in combination with the cataract procedure. So the vast majority of the volume is still happening in combination with cataracts. 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 medication to a patient. So that is really the focus there. There are no restrictions of doing multiple MIGS, stacked MIGS on a standalone basis explicitly in the guidance. The focus is on restrictions in combination with cataracts 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. Operator Macauley Kilbane, William Blair. Macauley Kilbane This is Macauley on for Margaret. Added during the quarter ahead of our expectations. It was good to see that the ordering accounts were up by 7% -- Paul Badawi Macauley, we can't hear you clearly. Sorry, I don't know if other people can hear but we were not able to hear the question clearly. Macauley Kilbane Do you hear me? Paul Badawi That's better. Macauley Kilbane Just wondering if you experienced any backlog of surgeons once the LCD became effective in November. Ali, I know you touched on it a bit, but I wanted to double down on what's implied in the guide on utilization versus adding new facilities, especially as we look at that first quarter guide. Alison Bauerlein Yes. 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 restrictions on multiple MIGS. We do expect to be able to grow our ordering accounts, but we don't provide specific guidance on that. Macauley Kilbane Okay. Fair enough. Then I know the Alcon infringement case is still ongoing here, but I saw there was a status update earlier this week. So maybe 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 additional cash, whether that be more geared towards expanding the commercial infrastructure versus accelerating some R&D initiatives? Alison Bauerlein Yeah, sure. The most recent update is that the parties did not resolve the dispute as part of the court order mediation process that was recently concluded. So we are now back to waiting for the judge to make a final ruling and to either confirm the jury's verdict, establish any ongoing royalty damages and/or determine any potential enhancements. And of course, all of that is still subject to appeal. We will await the court's decision. We don't have timing. This is all in the court's decision when they decide to rule. And then, of course, because it's subject to appeal, this process could continue to stretch out. We'll continue to provide updates as we have them. In terms of cash utilization, as we said earlier, we believe we are properly funded without needing any equity capital to reach our break-even goals. We are always 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 pseudophakic 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 med tech company with goals of growing over time and really being a true leader in the space. Operator All right. Thank you. And I'm showing no further questions. With that, I'll hand the call back to CEO, Paul Badawi, for any closing remarks. Paul Badawi Thank you for attending today's call. We appreciate your interest in Sight Sciences and look forward to updating you on our progress in the future. Thank you. Operator Ladies and gentlemen, thank you for participating. 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