Q1 2025 Sight Sciences Inc Earnings Call

Okay.

Yeah.

Good day, and thank you for standing by.

Speaker Change: Welcome to the site Sciences first quarter 2025, earning results conference call. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question answer session to ask a question. During this session you will need to press star one one on your telephone you would dean here.

Speaker Change: Automated message advising your hand is raised to withdraw your question. Please press star one on one again.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: I'd now like to hand, the conference over to your first speaker today <unk> <unk> Jefferies Investor Relations. Please go ahead.

Alan: Thank you for participating in today's call presenting today are state Sciences, co founder and Chief Executive Officer, and Chief Financial Officer, Alan <unk>.

Speaker Change: Also in attendance.

Speaker Change: As Chief commercial officer.

Speaker Change: Earlier today <unk> Sciences released financial results for the first quarter ended March 31, 2025 and reaffirmed its revenue.

Speaker Change: <unk> operating expense guidance for full year 2025.

Speaker Change: A copy of the press release is available on our website at investors <unk> Sciences dotcom.

Speaker Change: 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 federal Securities laws.

Speaker Change: These forward looking statements include statements related to our 2025 revenue and adjusted operating expense guidance and the primary factors impacting our ability to achieve our guidance.

Speaker Change: The impact of tariff costs on our cost of goods sold our plans to expand our manufacturing lines traditional manufacturing locations and the expected timelines and related costs.

Speaker Change: Our ability to offset costs associated with tariffs and manufacturing expansion with adjustments to our cost structure.

Speaker Change: Our ability to achieve our current and long term strategic objectives and value drivers are.

Our market opportunity and ability to compete and capture market share.

Speaker Change: Adoption of our products by surgeons are product reimbursement coverage and strategy, including our ability to achieve positive reimbursement coverage decisions for tier care.

Speaker Change: Expectations regarding commercial momentum account utilization and customer engagement.

Speaker Change: Our pipeline of interventional glaucoma, and dry eye technologies, our clinical trial strategies and results and our investments in market development and research and development projects.

Speaker Change: 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 in these statements.

Speaker Change: A description of some of these risks and uncertainties can be found in our public filings with the Securities and Exchange Commission, including the risk factors section of its annual report on Form 10-K, and quarterly report on Form 10-Q.

Speaker Change: We undertake no obligation to publicly update or revise any forward looking statements except required by law.

Speaker Change: 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. We believe these non-GAAP financial measures are important indicators of its operating performance because they exclude items that are unrelated to and may not.

Speaker Change: Not be indicative of its core operating results.

Speaker Change: See our 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 our reliance on non-GAAP financial measures I will now turn the call over to Paul.

Paul: Thanks Anna.

Paul: Earlier today, we reported our financial results for the first quarter of 2025, including total revenue of $17 5 million.

Paul: And the dynamic Migs market, our solid results reflect the significance of our proven interventional technologies for our customers and patients and the consistency and hard work of our team to effectively serve eye care providers and their patients.

Paul: We remain focused on addressing the significant unmet medical needs and two of the largest markets in eyecare glaucoma and dry eye and committed to our mission to develop transformative intervention technologies that allow providers to procedurally elevate the standards of care empowering people to keep seeing.

Paul: As we discussed on our prior call our focus in 2025 is rooted in our key strategic initiatives, which include building commercial momentum in Migs through our continued commitment to customer education and engagement.

Paul: Establishing equitable reimbursement for tier care.

Paul: Publishing new clinical and economic data supporting the adoption and use of our portfolio of intervention technologies now.

Paul: Progressing our robust product pipeline, including our recent next generation omni release.

Paul: I would also like to address our tariff exposure considering the material tariff increases on all goods imported from China.

Paul: As most of our products are manufactured and assembled in China, We expect increases to our cost of goods sold starting in the second quarter of 2025 and throughout 2025 for as long as these tariffs remain in effect.

Paul: We expect to mostly offset the incremental tariff costs with reductions in our operating expenses.

Paul: Ali will cover these details and their associated financial impact in her prepared remarks shortly.

Paul: As part of our routine assessment of manufacturing operations, we have been evaluating additional manufacturing locations and are in the process of establishing third party manufacturing lines outside of China, which had lower our tariff costs over time.

Paul: In nine to 12 months, we expect a new manufacturing line to be available outside of China to produce our omni edge product.

Paul: We plan to phase in additional manufacturing capacity outside of China or other impacted product lines over the subsequent six to nine months.

Paul: Diving into our surgical glaucoma segment. The first quarter of 2025 marked the first full quarter in this new mix environment in which Medicare coverage in most states for multiple makes procedures that are performed at the same time. It's cataract surgery has been restricted in these regions Medicare limits coverage to only one makes procedure performed with <unk>.

Paul: <unk> surgery.

Paul: Our better than expected results in the first quarter. Despite these changes reinforce our belief that the comprehensive procedure enabled by omni we will continue to be a market leading treatment option in the Migs category.

Paul: We believe omni is performing well against the competition at or slightly above the levels, we expected due to omni as clinical efficacy surgeon preference our focus on our long term customer relationships.

Paul: And our expanding omni technology platform.

Paul: We will continue to adapt within this new mix environment and are actively optimizing our commercial approach.

Paul: In the first quarter of 2025 surgical glaucoma revenue was $17 1 million. We are encouraged to see only a slight decline in sequential ordering accounts, considering the migs restrictions and our account engagement efforts are gaining traction we.

Paul: We are confident that patient need and demand for glaucoma treatment will continue to grow in 2025 and beyond and we believe we are well positioned to benefit from the shift and surgeon adoption and utilization towards intervention mindset.

Paul: We are focused on advancing multiple strategic initiatives, including demonstrating the clinical benefits of earlier intervention with the comprehensive omni procedure engaging accounts around reimbursement clarity enhancing competitive counter selling <unk>.

Paul: Investing in targeted commercial resources.

Paul: Optimizing pseudo fake standalone omni market development strategy through refined patient targeting and selection and.

Paul: And expanding the use of our new product the omni edge.

Paul: I will now highlight our recent progress made against these initiatives.

Paul: We recently attended the annual meeting of the American Society of cataract, and refractive surgery or <unk>, a large industry event.

Paul: At <unk>, we hosted several events and spend time, highlighting the pseudo fake standalone unmet need.

Paul: We are excited by the growing interest in learning about earlier intervention with omni and we were pleased with the strong surgeon engagement and increased focus on interventional glaucoma.

Paul: We believe that Standalone intervention performed with omni can be effectively utilized for pseudo fake standalone glaucoma patients to potentially delay or avoid the need for riskier advanced future procedures. We.

Paul: We continue to make headway as a result of our team's engagement with surgeons and other customers on the advantages of omni for this patient population.

Paul: We believe we have trained approximately half of the mixed trains and urgent in the United States and we continue to add omni and Sai on train surgeons.

Paul: Our robust clinical data highlighting the efficacy and benefits of our omni technology supports our surgeon education and account engagement efforts.

Paul: Lastly, I want to briefly touch on our product pipeline we.

Paul: We recently launched our next generation omni edge, which is the latest evolution of our MX platform that is helping glaucoma surgeons effectively treat primary open angle glaucoma patients.

Paul: Surgeons are leveraging this technology to address the diverse needs of these patients, including combination cataract and standalone patients.

Paul: As well as mild moderate and severe patients.

Paul: In March we commenced a controlled release of our omni edge devices to select key opinion leaders before our formal launch at astra's two weeks ago.

Paul: We are pleased with the early reception from surgeons and their clinical outcomes.

Paul: Omni edge with true thing technology incorporates our proprietary motion synchronized viscoelastic delivery mechanism, whereby surgeon rotation of the control wheel results in predictable and reproducible visco elastic deployment, along every treat o'clock hour of Schlumpf Canal.

Paul: Omni edge is designed to deliver significantly more visco dilation than prior versions of the omni system, while maintaining the consistency and safety surgeons have come to trust in the omni platform.

Paul: The addition of omni edge is intended to accommodate varying physician preferences and patient needs in today's evolving migs marketplace.

Paul: With this product we are expanding our portfolio to supply surgeons with more options to support their patients.

Paul: Now I'll turn to our dry eye business, where we continue to advance our strategic initiatives.

Paul: As a reminder, our long term strategy is to be a pioneer in the estimated $3 billion core market for patients with moderate to severe <unk> gland disease or Mgd, who are candidates for an interventional procedure.

Paul: We've been intentional in executing our strategy beginning with developing best in class technology, followed by delivering superior long term clinical outcomes demonstrated through randomized controlled clinical trials.

Paul: We are now increasing customer advocacy and advancing our market access initiatives to establish equitable reimbursement for tier care with coverage policies <unk> payment decisions still expected to begin in 2025.

Paul: In the first quarter of 2025 dry revenue was <unk> 4 million our.

Paul: Our results for the first quarter of 2025, and our dry ice segment reflect our focus on market access and our new pricing.

Paul: We believe there is a significant unmet need within the <unk> patient population for an interventional treatment option and we continue to engage in meaningful conversations with payors to seek coverage and appropriate reimbursement for tier care.

Our customers have been very supportive and are actively submitting claims to payers to demonstrate the unmet need real world utilization and significant value of our technology.

Paul: We continue to develop our clinical evidence with the progression of our three stage. The Harrow RCT a landmark trial that has demonstrated the effectiveness of tier care when compared with our leading prescription eyedropper stasis in stages, one and two.

Paul: We expect the results from the third and final stage, which assesses the durability of tier care treatment effect through 24 months will be published in 2025.

Paul: As we have worked to support coverage and payment for the tier care procedure. We have built a foundation with an established commercial infrastructure that is trained eye care providers at over 1500 facilities.

Paul: And performed over 65000 tier care procedures to date.

Paul: We are confident this meaningful and experienced customer base is capable of quickly ramping to meet demand if and when reimbursement determinations come.

Paul: We believe tier care can be a catalyst to drive growth and the robust dry eye opportunity.

Paul: Our continued ability to be a leader in addressing the unmet needs served by our innovative technology is a top priority for us and we are pleased with our achievements in the first quarter to solidify our position as we execute our strategic initiatives.

Paul: In our surgical glaucoma segment, we are building commercial momentum within the evolving migs market through surgeon education and engagement with our customers as well as developing the pseudo basic standalone market.

Paul: In dry eye, we have created an important foundation from which we can execute and appropriately scale following coverage <unk> payment decisions for <unk>.

Paul: I will now turn the call over to Ali to discuss our financial results and guidance for 2025.

Ali: Thanks, Paul in the first quarter of 2025 total revenue was $17 $5 million. This reflects a 9% decrease compared to the same period in the prior year.

Ali: Surgical glaucoma revenue for the first quarter of 2025 was $17 1 million a decrease of 6% compared to the same period in the prior year, primarily due to a decrease of 10% in account utilization.

Ali: This expected decrease with the result of the impact to the make market associated with the new Medicare LCD.

Ali: Ordering accounts were up 3% compared to the same period in the prior year and down only 3% compared to the fourth quarter of 2024, despite the mix restriction demonstrating our ability to maintain our customer base, albeit at slightly lower volumes.

Ali: Our dry eye revenue for the first quarter of $2025 4 million a decrease from $1 million in the same period in the prior year.

Ali: Expected decline was primarily due to fewer sparklet sales, resulting from our smart list price increase on October one 2024, which we enacted to more appropriately reflect the clinical efficacy and value of the tier care procedure.

Ali: Gross margin for the first quarter was 86% flat.

Flat relative to the same period in the prior year.

Ali: Notably we did not see an impact to first quarter gross margin from the tariffs as we used inventory purchased prior to the tariffs taking effect.

Ali: Total operating expenses for the first quarter or $29 million, a decrease of 7% compared to $31 2 million in the first quarter of 2024, primarily due to lower legal fees in the first quarter of 2025.

Ali: Adjusted operating expenses were $24 7 million for the first quarter, a decrease of 7% compared to $26 6 million in the same period in the prior year.

Ali: Our net loss for the first quarter was $14 2 million or 28 per share compared to a net loss of $16 3 million or <unk> 33 per share for the first quarter of 2024.

Ali: We ended the quarter with $108 $8 million of cash and cash equivalents and $40 million of debt, excluding unamortized discount and debt issuance costs.

Ali: Cash used was $11 6 million in the first quarter and included annual bonus payments.

Ali: We continue to focus on operational discipline and improving our working capital.

Ali: As a reminder, we have not received any monetary damages awarded in our successful Jerry trial verdict in our patent infringement case against outline.

Ali: We're awaiting the judges final order whether to confirm the jury's verdict established ongoing royalty damages and are determined any potential enhancements and the final ruling is subject to appeal.

Ali: Moving to our revenue outlook for full year 2025, we are reaffirming our revenue guidance of approximately 70% to $75 million. This guidance range takes into account the expected impacts to the mixed market. Following the effectiveness of the new Medicare LCD.

Ali: While we expect patient demand and need for treatment to continue to grow in 2025 and beyond we expect total claims build will be reduced in 2025 due to the multiple makes restriction.

Ali: Looking closer at the second quarter of 2025, we expect surgical glaucoma revenue to be down high single digits to low double digits compared to the same period in the prior year.

Ali: This revenue guidance range also assumes revenue of approximately $1 million for full year 2025 for our dry eye segment and does not contemplate achievement of reimbursement coverage and our payment decisions for care care in 2025.

Ali: While we outperformed our revenue expectations in dry eye in the first quarter of 2025, we expect revenue to be modest until these decisions are made.

Ali: I also want to expand on our tariff exposure, which is applicable only to our imported product and does not impact overhead or other cost of goods sold.

Ali: At the current 145%, China tariff rate and based on current revenue expectations, including product mix and related inventory on hand are surgical glaucoma segments unmitigated tariff exposure with increased the segment's cost of goods sold by between approximately $3 5 million and $4 5 million.

Ali: Full year 2025.

Ali: The impact is expected to be larger in the second half of 2025 versus the first half of 2020.

Ali: We expect dry eye cost of goods sold to also be negatively impacted as new inventory is purchased we will provide more visibility on impact to that segment, if dry eye revenue becomes more significant relative to our overall revenue.

Ali: As Paul mentioned, we have been working on additional third party manufacturing locations, which likely would take nine to 12 months to begin producing a portion of our volume starting with our omni edge product line the <unk>.

Ali: Cost to set up new manufacturing locations are relatively small and not material to our overall cost.

Ali: We expect our cost to manufacturer in these new locations will be similar to the cost incurred in our current manufacturing facility in each case after excluding the impact of tariffs.

We are also announcing improved adjusted operating expenses guidance expectations for full year 2025.

Ali: $101 million to $105 million, representing an increase of zero to 4% compared to 2024 versus our prior adjusted operating expenses guidance of $105 million to $107 million.

Ali: The expense reductions identified are the result of our ongoing focus on fiscal discipline throughout our business combined with additional expense controls put in place to mostly offset the cost of goods sold impacts associated with tariffs on our business.

Ali: The revised estimated 2025 adjusted operating expenses still include investments in studio Bacon, Standalone surgical glaucoma market development tier care market access and increased research and development project.

Ali: This guidance does not assume expansion of the commercial dry team in response to the achievement of positive reimbursement coverage and our payments Division.

We are proud of the progress made this quarter, both operationally and strategically and 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.

Speaker Change: Operator, please open the line for questions.

Speaker Change: Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on one of your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Speaker Change: Please stand by while a compounded the Q&A roster.

Speaker Change: Our first question comes from Tom Steffen from Stifel. Please go ahead.

Tom Steffen: Great. Good afternoon, everyone. Thanks for taking the questions.

Speaker Change: I'll start with surgical glaucoma.

Speaker Change: Paul Valley or credit for Matt.

Speaker Change: Maybe if you can talk to kind of mixed trends year to date and how omni in the market.

Speaker Change: Really tracking versus your expectations.

Speaker Change: And maybe to dig in there talk.

Speaker Change: Talk about share dynamics specifically.

Speaker Change: That youre seeing is doctors, obviously and pay now be forced to choose a single option.

Speaker Change: What otherwise would've been a stack procedure what are you seeing year to date specific to share dynamics and then I have a follow up.

Tom Steffen: Yeah, Tom ill handle that first and obviously.

Speaker Change: Sure I can jump in so as we've discussed previously while the number of patient in calendars continue to grow based on the prevalence of the disease state and glaucoma.

Speaker Change: Actual utilization is declining to your question on <unk>.

Speaker Change: The elimination of combo mix from five of the seven Max and so as we've discussed previously.

Speaker Change: Obviously, we were aware of this proposed change that went into effect in November of last year I think our team has done an outstanding job.

Speaker Change: Being in front of that communication to providers, making.

Speaker Change: Making them aware of the pending change and really engaging them on what their needs were for these patients and in many instances those needs really has been around the efficacy of the combined technologies and their accomplished complementary in nature.

Speaker Change: The comprehensive procedure enabled by by omni and so.

Speaker Change: While we've seen a net reduction.

Speaker Change: And the number of units of technology used in those procedures impacted by the combo Mig.

Speaker Change: We have seen.

Speaker Change: Results consistent with our expectation and guidance provided for the year as it relates to our ability to continue to retain position in physician practices and I think in particular, the comprehensive efficacy provided by omni is something that the providers are continuously.

Speaker Change: Turning to and so thus far we are pleased with our team's engagement and the market's continued reliance on omni and the treatment of <unk> patients.

Speaker Change: And we're going to continue to obviously amplify that messaging and position moving forward to both retain and take new share, but thus far in line with our expectations and consistent with our <unk>.

Speaker Change: Objectives always will continue to seek to do even better moving forward.

Speaker Change: And Tom just to add to that just to add to Matt's comments I think our team has been performing well in this new environment. While we believe strongly that surgeons should have all the flexibility in the world.

Speaker Change: First take care of their patients and this one migs environment Omni was designed from the beginning to be multimodal multi mechanistic its for its indication from the FDA. It's syndicated to perform two sequential procedures. If you will in one comprehensive procedure can alloplasty followed by <unk>.

Speaker Change: Rebecca lot of me, which helps the surgeon comprehensively address the diseased outflow pathway in the eyes. So and this one migs market I think omni has a strong competitive position and very strong product market fit.

Speaker Change: Got it that's great and a quick follow up.

Speaker Change: First are there any efforts ongoing to reverse the stacking component of the LCD and then my second question.

Speaker Change: Just on competition.

Paul Valley: Paul any thoughts on.

Speaker Change: The new competitors in Migs, notably with new worlds via $3 60.

Paul Valley: Been out there.

Paul Valley: For a little longer now so what are you seeing on the competitive side with that product. Thanks.

Paul Valley: Yes, I'll start.

Paul Valley: For you to feel free to add.

Paul Valley: In terms of data supporting multiple Migs, we have heard of.

Paul Valley: Multiple efforts underway that are.

Paul Valley: Multiple efforts to collect clinical data.

Paul Valley: On those combinations of procedures that should hopefully show that.

Paul Valley: Doing.

Paul Valley: Addressing multiple sources of outflow resistance is better than addressing one or two addressing all three now you can address all three with omni if you take advantage of all of these functionality, but some surgeons prefer to take advantage of some of that functionality and per perhaps.

Paul Valley: Deliver a permanent implant in combination with omni.

Paul Valley: That's another way of addressing all three points of resistance. So.

Paul Valley: Hopefully those efforts are successful we've heard about them, we're not actively participating in them, but we do we do support the effort.

Paul Valley: We will see we will see what that data looks like I think it'll it'll need to be compelling to support multiple mixed procedures as you can imagine.

Paul Valley: As it relates to competitive entrants. This is not anything new Tom you've been following site for a while and the mixed space for a while it's a very dynamic environment a number of products have been introduced recently over the past few years, we've seen a number of new entrants.

Paul Valley: As it relates to our specific category of can Alloplasty trabecular <unk> circumferential non implantable ankle surgery, we've been innovating in this area for well over a decade.

Paul Valley: With the omni edge, it's yet another great.

Paul Valley: Addition to our portfolio, we listened to the market I think we do a great job of.

Paul Valley: Of engaging with our surgeons.

Paul Valley: Listening to their feedback and turning around elegant technology that meets their needs and patient's needs and so we're not sitting idle worst and we're staying ahead of the category continuing to push it as far as we can take it.

Paul Valley: We've seen again, we've seen other entrants come in we haven't seen anything that we believe is truly disruptive.

Paul Valley: In terms of the proven safety efficacy and usability of the omni surgical system today, and where we will continue to take it tomorrow.

Paul Valley: Okay.

Paul Valley: Thank you.

Paul Valley: One moment for our next question.

Paul Valley: Yeah.

Speaker Change: Our next question comes from Danielle <unk> from UBS. Please go ahead.

Speaker Change: Hi, This is angela on for Danielle.

Angela: And I have a few questions.

Angela: First one can you talk about the reimbursement mechanics on my sense is competitive devices.

Angela: Devices like stents, just trying to get a sense of how that will look going forward in a <unk> environment and then.

Angela: One follow up.

Speaker Change: Yeah. So the reimbursement dynamics really are unchanged on a competitive front. There always has been the mass majority of procedures have been done not in our stacks procedure, but as separate migs procedures being performed either in combination with cataract or on <unk>.

Speaker Change: <unk> alone basis for a single makes procedure being performed on a patient at the time. So if you recall the market data that we estimate is that there are are there where before the restrictions went into effect about 85% of the market done on a single mix basis and about 15% where are we.

Speaker Change: We saw that combination prestige are being done with multiple Mig so from that perspective.

Speaker Change: Reimbursement dynamic for the mass majority of the market is the same of course now in that with the single makes restriction that provider must choose which makes procedure. They believe it's correct for that patient. So that provider is seeing reduced economics, where in that scenario before they were getting.

Speaker Change: Some reimbursement for that single mixed procedure, and then 50% of the second Migs procedure.

Speaker Change: In terms of specific reimbursement dynamics that vary based on what product. It used in the combination, but we do feel like we are.

Speaker Change: We have a proper reimbursement for the procedure and we can compete effectively against our peers.

Speaker Change: <unk> on our clinical efficacy and our overall value proposition to the market.

Speaker Change: Thanks, Andy that's helpful and then any update on the progress of Ta reimbursement wins.

Speaker Change: I was wondering if you can give us color on may be anything trackable like number of lives now covered.

Speaker Change: <unk> successfully involved anything like that that you're thinking.

Speaker Change: So certainly we would love to provide any details as we have them. However, we do not have any covered lives at this point for care care. So we do have an established code we have been having individual claims paid.

Speaker Change: As we work through this process with payers, but no coverage determinations have been made by any payer we are continuing to have.

Speaker Change: Great conversations with both commercial payers as well as some Medicare administrative contractors and we still feel like we should have some either payment decisions or coverage policy decisions. This year that would allow us to really start pursuing.

Speaker Change: That's reimbursed market for care care for this compelling interventional procedure. So we do feel like we are on track, but we do not have a win yet.

Speaker Change: To discuss publicly.

Speaker Change: Okay. Thank you so much I'll go back into the queue.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Joe when Wells from Citi. Please go ahead.

Anthony: Actually Anthony on for Joanne.

Speaker Change: Taking our questions.

Anthony: Can you talk about.

Anthony: Just briefly are you seeing any.

Anthony: <unk> for that product just given you can't stack anymore with LCD and are able to provide what the cyan revenue was.

Anthony: First start in the first quarter revenue.

Thomas Revenue. It is a modest portion of our total revenue in that business, so the mass majority is omnipotent.

Speaker Change: Sion, in general, is a complementary product. It's meant for, you know, surgeons who are looking for a more straightforward procedure, maybe they need less efficacy than they can get with Omni. So that's really the target market for Sion.

Speaker Change: It has seen similar trends overall to Omni in terms of as we've seen the business grow and change over time associated with these reimbursement changes so there hasn't been a material shift.

Speaker Change: in our revenue mix between Omnion Sion, but Sion is a good option for certain accounts and sometimes leaves to future Omnion usage as accounts get more comfortable doing things.

Speaker Change: Yes, it's complimentary. It's an important category in glaucoma surgery. There's maybe a simplified mix, you have three kind of mainstream mechanisms.

Speaker Change: Trebekulotomy or Goniotomy, that's where we have saw on Canaloplasti or Canaloplasti followed by Trebekulotomy where we have Omnia and then their stents.

Speaker Change: And so we believe, obviously strongly, that Omni offers the surgeon and patient the most comprehensive alphoprocedure.

Speaker Change: in terms of up to 360 degrees of canal velocity and for back a lot of me.

Sion, as Ali mentioned, it's a more straightforward procedure.

Speaker Change: Preprable for some surgeons who are looking for something either more straightforward or

Speaker Change: A patient that might be more mild in disease and doesn't necessarily need the, you know, comprehensive procedure profile of Omni.

that makes sense. And then on tariffs.

Speaker Change: I recognize it's pretty early in the year, but we're going to have to four and a half. It's appropriate for 2026 to

Speaker Change: Danielis Adder, I should think about that moving forward with the mitigation strategies.

Yeah, so great question, going into 2026.

Speaker Change: That's where our commentary on our new manufacturing locations is more relevant so we do expect that to have that additional facility up and running

Speaker Change: within 19 to 12 months from now, so really we expect...

relatively minor impacts to Grossmargin in 2026.

Speaker Change: We will also face in our other impacted product lines in the the first and second quarter next year so the impact again assuming that these tariffs stay in effect at the current rate.

Speaker Change: would still be rather modest in 2026 as we shift to alternative manufacturing locations.

Great. Thank you.

Thank you.

Speaker Change: Our next question comes from Frank Takkinen, from Lake Street, Capital Markets. Please go ahead.

Frank Tacketing: Hey, thanks for taking the questions. I was open to start on one related to reimbursement. I know last year you were potentially up for device intensive. I believe that's coming up again this year in the in the July timeframe. Any thoughts around whether or not you may qualify for device intensive for the 2026 year.

Frank Tacketing: Yeah, we aren't going to speculate today on whether we'll see device intensive. Obviously, that's something that we all will see in July as a proposed rule and then a final rule in the November timeframe, which would then be effective January 1st. But I will say is that we still have strong conviction that our device should qualify for device intensive given the cost of the procedure and the overall economic. So we still feel strongly on that this is an active project for us.

Frank Tacketing: that were engaged in, but we really can't speculate on whether that will be achieved or not.

Speaker Change: Okay, that's fair enough. And then maybe just one on the outlook for the year. Obviously came a little bit ahead of street expectations for the first quarter. Congrats on that. And then maybe talk to kind of Caden Singh of revenue and I apologize if this has came up and jumping between a couple calls, but any help on Caden Singh of revenue would be helpful for my.

Speaker Change: Yeah, sure. Happy to take that. And as you said, we are pleased with the start to the year. We do think that we started strong here. We expect to continue to

Bauerlein, Paul Badawi, Unknown Executive, Philip Taylor

Speaker Change: Typically, the third quarter is a small step back from the second quarter and then, you know, a little bit higher seasonality in the fourth quarter as well.

Speaker Change: We do expect as we continue to make progress on pseudo-fake stand-alone that will see some tailwinds associated with that and then of course from a more competitive, the easiest comfort for us is the fourth quarter since we already had half a quarter of the multiple mid-stacking.

Speaker Change: Impact built into that baseline. And then of course, as we've said multiple times, guidance includes the million dollars for dry eyes, so that is also an opportunity as we, you know,

Speaker Change: plan to have these market access, coverage and or payment decisions this year. If those are material in nature, those will be opportunities for us to accelerate that revenue growth in that channel as well.

Got it. That's helpful. I'll stop there. Thank you.

David Bauerlein, Paul Badawi, Paul Badawi, Paul Badawi,

Thank you.

Speaker Change: Our next question comes from Macauley Kilbane, from William Blair, please go ahead.

Speaker Change: Hey everyone, this is Macauley on from Margaret tonight. Thanks for taking our questions. I wanted to double down on the tear care question from earlier and I obviously understand pair decisions can take time but you guys have been out in front of this for over a year, your plus if not more and at least from our perspective, the data seems pretty clear from the budget analysis. So I guess, you know, I appreciate you saying, you know, conversations have been positive, but is there one?

Speaker Change: One or two points that, you know, they're pushing back on, or I guess what's left and kind of making that final jump to get coverage here.

Hey Macaulay, this is Paul. Yeah.

Speaker Change: We feel strongly we're having quality conversations and they're progressing nicely, it does take time, but again, those conversations are progressing. We're, as Ali mentioned, speaking with...

Speaker Change: Smaller regional commercial plans, larger national plans as well as a handful of Macs.

We continue to believe we are going to.

have successful coverage and repayment decisions this year.

We've been...

Speaker Change: Stating that, we're continuing to state that, and those conversations, the quality of those conversations and the fact that they are progressing despite the fact that they do take time, are progressing nicely.

Speaker Change: We're trying to do something pretty significant here, as you can imagine, to create a category and pioneer.

Reimbursed M.G.D. Procedure. This is a disease.

that is growing in prevalence. It's a serious problem.

Speaker Change: There is no meaningful reimbursement today. Patients need access to this.

Speaker Change: And the data needed to create reimbursement in a category that pretty much doesn't exist as significant and we have that data and the conversations with payers, they're responding very well to that data. That's why these conversations are progressing the way that they're progressing.

Speaker Change: We're not surprised that they're responding very well to the data, but we're pleased. We're not surprised because we spoke with employers prior to executing the Sahara RCT.

Speaker Change: We spoke with a variety of different payers and a variety of different medical directors all from different backgrounds.

Speaker Change: and we asked them, we said patients need access to a treatment that addresses the root underlying cause of this prevalent problematic condition.

Speaker Change: What clinical data do you need to see that if we are able to bring it to you?

Will Result in Successful Coverage and Payment Decision.

Speaker Change: They helped us design the blueprint for the Sahara RCT and so we've been able to share not only the published phase one and phase two data that's extremely compelling comparing us and demonstrating superiority to a dry, I standard of care.

Speaker Change: But also now we've been able to share with them our phase three data. It's in the process of being published but we have we've been able to share it with payers. We discussed it at the recent AFC RS.

Speaker Change: Conference, the high level data, and the phase three data is also very compelling. So while these things do take time, I think all of us should be confident that we are progressing nicely and as we had hoped.

Speaker Change: Yeah, Macauley, this is Matt, I'll just add, first of all, I appreciate the question because I think it underscores an interest and enthusiasm for what this opportunity represents and we certainly share that enthusiasm.

Speaker Change: In addition to Paul's comments, I think what's really important about the timing is first of all, the timing is still in line with our expectations as we enter the year in terms of how these conversations are progressing. The other thing is when you're thinking about timing, it's not just the...

Speaker Change: Completion and publication of the data that Paul mentioned, it's also then going into the market and demonstrating demand.

Speaker Change: and that there's a need for this intervention and patience, and that's reflected through claims admitted by providers, and we've talked about some pocketed success in terms of individual claims being processed, and one of the things we want to continue to...

Speaker Change: Emphasize is, equally, if not more important, are the claims and process.

and these are claims that are submitted. [inaudible]

Speaker Change: Often times denied, required to go through multiple levels of appeals. We've had remarkable

partnership from our clinical advocates, surgeons and providers.

Speaker Change: working with our commercial team and our market access team. In many instances, that process can take in excess of 180 days and we start to think about this timeline.

Speaker Change: It's consistent with what our expectations were coming into this, and we continue to create the appropriate...

Speaker Change: Upward pressure and awareness on the need for positive coverage decisions through the efforts of our commercial and market access team. So appreciate the interest excitement and as

Speaker Change: Alison mentioned earlier, we're very much excited to come back and be able to announce positive cover decisions later in the year.

Speaker Change: No, that's great and really appreciate the thorough response from both of you there and then maybe just to follow up on the guidance.

Speaker Change: and sorry if I missed some of this alley but at least from our perspective the active facilities decline was a bit more than you know we had modeled in the quarter so was there anything to call out this quarter specifically or how to think about you know those accounts are covering throughout the remainder of the year and then is there anything factored into guidance as we think about pricing especially as edge becomes a larger contributor throughout the year. Thanks.

Again, for taking the questions.

Speaker Change: Yeah, sure, no problem. And just at the high level, first, I would say that—

This was in line with our expectations.

Speaker Change: We knew that there would be some accounts in this process and we're talking pretty small net numbers here in terms of accounts. We are really proud of the fact that we still saw an increase year over year of 3% in accounts.

Unknown Executive, Philip Taylor

Speaker Change: The bigger driver here is going to be increasing utilization in particular the pseudo-fake standalone opportunity as well as the combination cataract opportunity. These are the ones that are going to drive revenue more so than adding accounts that we have.

Speaker Change: The large majority of the accounts in terms of ones that are doing high volume mig and really we just need to drive higher utilization as the primary focus.

Now on the second question, I'm pracing.

Speaker Change: We aren't going to comment specifically on our pricing strategy but with on the edge it will be priced at a premium to Ergo but really there's nothing specific. Thank you very much.

Speaker Change: that you need to really factor into your model. We'll see how launch goes here. So far it's been very positively received, but we know that some accounts still prefer Ergo as well. So we will see a mix in the business that is

Speaker Change: You know, now two product options in our portfolio that based on position preference they can choose what's right for them. [inaudible]

Great, thanks again, Alan. Yeah.

Thank you.

Speaker Change: Our next question comes from David Saxon, from Needham Incump and Company. Please go ahead.

A $1,200 list price.

I guess one is that in the Rape Hall Park.

and then two, you know, is that across all 75?

Speaker Change: Active Accounts or some of those accounts kind of under the legacy pricing schedule and then all of the follow-up.

Speaker Change: Yes, so we still have a portion of our volume that are under the prior cash pay business that we had about a thousand smart lids sold in the period we don't break out the specifics between the different areas, but we did see

An increasing portion of…

Speaker Change: Smart Liz used for under the new pricing for reimburse claims submission. So we feel like we're in a good spot. Obviously you see that translating into our first margin on the dry eyesight, but we would expect that to continue to improve over time as we see an increase mix there.

Speaker Change: Okay, great. Thanks for that. And then I just wanted to ask on, you know, some of the competitive launches out there, specifically this canalopathy launch. So, you know, our checks.

suggested it's ramping fairly quickly, so wondering what's baked into guidance in terms of that launch.

If you're seeing it show up in only volumes.

Speaker Change: and then, you know, maybe more importantly, you know, what are your thoughts on...

Speaker Change: You know, how much is trialing versus more durable share shifts? Thanks so much.

Speaker Change: Yeah, it's Matt, I'll talk about that one. So we had line of sight and visibility to this product launch prior to the start of the year and so certainly took that into consideration in setting.

Speaker Change: The operating plan in guidance for, I'd say at this stage, nothing about that is unchanged.

Speaker Change: There was a soft launch, and I believe you're referring to the new world product. There was a soft launch.

Speaker Change: prior to the most recent meeting ASURS, where we actually have to speak briefly.

Speaker Change: And so we were able to get some feedback on the product.

Ab.

Speaker Change: There was certainly discussion of that at the meeting. I think what I'm most pleased about coming out of that meeting is affirmation of on these positions in the market as a market leader in this category, the creator of this category.

Speaker Change: The product that has the product label is supported through multiple publications for comprehensive clinical efficacy and even through conversations with clinicians and in different settings.

Speaker Change: throughout the course of the meeting where this topic was being discussed. I'm the continues to be identified as the product that is.

Speaker Change: Easiest for surgeons to use, safest, most reproducible in the hands of surgeons based on the technical sophistication and obviously the iterative advancements the companies made and so that's really give us a strong confidence that we continue to move through the year that while there may be some additional competitive trialing, we're confident that we can continue to execute our plan for the full year. Our team is fully engaged as we've referenced multiple times, we also have the benefit of the recent launch of Omni Edge.

Speaker Change: which is, again, part of a multi-generational, generational effort now on the platform to continue to advance our surgical sophistication and precision to meet the varied needs of our surgeon customers. So, we're certainly going to stay on top of the competitive dynamics, but have every reason to believe we remain on track for the years.

Great. Thanks so much.

Speaker Change: Thank you. I am showing no further questions at this time. I will now pass it over to Paul Badawi for close remarks.

[inaudible]

Speaker Change: Thank you all for attending today's call. We appreciate your interest in Sight Sciences and we look forward to updating you on our progress in the future. Thank you.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Thank you for your time, and I'll see you in the next video.

Thank you very much.

Insert Audio Title Microsoft Word 97-2003 Document MSWordDoc Word.Document.8

and Leigh Tppausten, sociologists. www.theuluf.nu.edu

Speaker Change: Hans Ulmer, one of the founders of Telegraf Bank, Daniel Planga, Advanced Innovator, Heinz Moritz, Researcher Professor Professor Uber, David Bradley, Questionable Management Professor

David Bauerlein, David Bauerlein, Joseph Conway, Matthew Link, Thomas Stephan, Joseph Conway, Matthew Link, Thomas Stephan, Joseph Conway, Michael

David Bauerlein, David Saxon, Frank Takkinen, Paul Badawi, Philip Taylor, Macauley Kilbane

Good day and thank you for standing by.

Welcome to the Sight Sciences, 1st quarter, 2025, earning results.

Speaker Change: Conference Call. At this time, our participants are in listen only mode. After the speakers presentation, there will be a question and a succession.

Speaker Change: To ask a question during this session, you need to press star 11 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.

Speaker Change: Please be advised that today's conference is being recorded. I would now like to hand a conference over to you for a speaker today. Hannah Jeffries, Investor Relations, please go ahead.

Speaker Change: 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,

Speaker Change: Also in attendance is Sight Sciences Chief Commercial Officer, Matt Link

Speaker Change: Earlier today, Sight Sciences released financial results for the first quarter and it March 31st, 2025, and reaffirmed its revenue and reduced its adjusted operating expense guidance for full year 2025.

Speaker Change: 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 federal securities laws.

Speaker Change: These forward-looking statements include statements related to our 2025 revenue and adjusted operating expense guidance and the primary factors impacting our ability to achieve our guidance.

Speaker Change: The impact of tariff costs on our costs of goods sold are plans to expand our manufacturing lines to additional manufacturing locations and the expected timelines and related costs, our ability to offset costs associated with tariff and manufacturing expansion with adjustments to our cost structure. [inaudible]

Speaker Change: Our market opportunity and ability to compete and capture market share, the continued adoption of our products by surgeons, our product reimbursement coverage and strategy, including our ability to achieve positive reimbursement coverage decisions for tear care.

Expectations regarding commercial momentum, account utilization, and customer engagement.

Speaker Change: Our pipeline of interventional glaucoma and dry eye technologies are clinical trial, strategies and results and are investments in market development and research and development projects.

Speaker Change: 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 in these statements.

Speaker Change: A description of some of these risks and uncertainties can be found in our public filings with the Securities and Exchange Commission, including the Risk Factor section of its annual report on Form 10K and quarterly report on Form 10Q.

Speaker Change: We undertake no obligation to publicly update or revise any forward-looking statements except required by law.

Speaker Change: 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.

Speaker Change: We believe 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.

Speaker Change: See our 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 our alliance on non-GAAP financial measures. I will now turn the call over to Paul.

Thank you.

Paul: Earlier today, we reported our financial results for the first quarter of 2025, including total revenue of 17.5 million.

Paul: In a dynamic mix market, our solid results reflect the significance of our proven interventional technologies for our customers and patients, and the consistency and hard work of our team to effectively serve I care providers and their patients.

Paul: We remain focused on addressing the significant unmet medical needs in two of the largest markets in I care, glaucoma and dry eye and committed to our mission to develop transformative interventional technologies that allow I care providers to procedurally elevate the standards of care, empowering people to keep seeing.

Paul: As we discussed on our prior call, our focus in 2025 is rooted in our key strategic initiatives, which include building commercial momentum and migs, through our continued commitment to customer education and engagement.

Establishing Equitable Reimbursement for Tier Care

Paul: Publishing new clinical and economic data supporting the adoption and use of our portfolio of interventional technologies.

Paul: and progressing our robust product pipeline, including a recent next-generation omni-release.

Paul: I would also like to address our tariff exposure, considering the material tariff increases on all goods imported from China.

Paul: As most of our products are manufactured and assembled in China, we expect increases to our cost of goods sold starting in the second quarter of 2025 and throughout 2025, for as long as these tariffs remain in effect.

Paul: We expect to mostly offset the incremental tariff costs with reductions in our operating expenses.

Paul: Allie will cover these details and their associated financial impact in her prepared remarks shortly.

Paul: As part of our routine assessment of manufacturing operations, we have been evaluating additional manufacturing locations and are in the process of establishing third-party manufacturing lines outside of China, which should lower our tariff costs over time.

Paul: In nine to twelve months, we expect a new manufacturing line to be available outside of China to produce our Omni Edge product.

Paul: We plan to phase an additional manufacturing capacity outside of China for our other impacted product lines over the subsequent six to nine months.

Paul: Diving into our surgical glaucoma segment, the first quarter of 2025 marked the first full quarter in this new mix environment, in which Medicare coverage in most states for multiple mix procedures that are performed at the same time as cataract surgery has been restricted. In these regions, Medicare limits coverage to only one mix procedure performed with cataract surgery.

Paul: Our better than expected results in the first quarter, despite these changes, reinforce our belief that the comprehensive procedure enabled by Omni will continue to be a market leading treatment option in the mixed category.

David Bauerlein, Paul Badawi, Paul Badawi, Paul Badawi, Paul Badawi

Speaker Change: We believe Omni is performing well against the competition, add or slightly above the levels we expected due to Omni's clinical efficacy, surgeon preference, our focus on our long term customer relationships, and our expanding Omni technology platform.

Paul: We will continue to adapt within this new MIG's environment and are actively optimizing our commercial approach.

Paul: In the first quarter of 2025, surgical glaucoma revenue was 17.1 million. We are encouraged to see only a slight decline in sequential ordering accounts, considering the mix restrictions, and our account engagement efforts are gaining traction.

Paul: We are confident that patient need and demand for glaucoma treatment will continue to grow in 2025 and beyond and we believe we are well positioned to benefit from the shift in surgeon adoption and utilization toward an interventional mindset.

Paul: We are focused on advancing multiple strategic initiatives, including demonstrating the clinical benefits of earlier interventions with the comprehensive omni procedure, engaging accounts around reimbursement clarity,

Enhancing Competitive Counter-Selling, Investing in Targeted Commercial Resources [inaudible]

Paul: Optimizing pseudo-fake standalone Omni Market Development Strategy through refined patient targeting and selection, and expanding the use of our new product, the Omni Edge.

Paul: We recently attended the annual meeting of the American Society of Cadaractin Refractive Surgery, or Askress, a large industry event.

Speaker Change: At ASCRIST, we hosted several events and spent time highlighting the pseudo-fake extantolone on METNIDE.

Paul: We are excited by the growing interest in learning about earlier intervention with Omni and we were pleased with the strong surge in engagement and increased focus on interventional glaucoma.

Paul: We believe that standalone intervention performed with Omni can be effectively utilized for pseudo-fake standalone glaucoma patients to potentially delay or avoid the need for risk your advanced future procedures.

Paul: We continue to make headway as a result of our team's engagement with surgeons and other customers on the advantages of Omni for this patient population.

Paul: We believe we have trained approximately half of the mixed-trained surgeons in the United States, and we continue to add Omniancyon-trained surgeons.

Paul: A robust clinical data highlighting the efficacy and benefits of our omni-technology supports our surge in education and accounting engagement efforts.

Paul: Lastly, I want to briefly touch on our product pipeline. We recently launched our next generation Omni Edge, which is the latest evolution of our mixed platform, that is helping glaucoma surgeons effectively treat primary open angle glaucoma patients.

Paul: Surgeons are leveraging this technology to address the diverse needs of these patients, including combination cataract and stand alone patients, as well as mild, moderate and severe patients.

Paul: In March, we commence the controlled release of our Omni Edge devices to select the opinion leaders before our formal launch at Askress two weeks ago.

Paul: We are pleased with the early reception from surgeons and their clinical outcomes.

Paul: Omni-Edge, with trussing technology, incorporates a proprietary motion synchronized visco-elastic delivery mechanism, whereby surgeon rotation of the control wheel results in predictable and reproducible visco-elastic deployment along every 3 to clock hour of slum's canal.

Paul: OmniEdge is designed to deliver significantly more visco dilation than prior versions of the Omni system, while maintaining the consistency and safety surgeons have come to trust in the Omni platform.

Paul: The addition of Omni Edge is intended to accommodate varying physician preferences and patient needs and today's evolving makes marketplace.

Paul: With this product, we are expanding our portfolio to supply surge into with more options to support their patient.

Paul: Now, I'll turn to our dry eye business, where we continue to advance our strategic initiatives.

Paul: As a reminder, our long-term strategy is to be a pioneer in the estimated $3 billion core market for patients with moderate to severe mybomian gland disease, or MGD, who are candidates for an interventional procedure.

Paul: We have been intentional in executing our strategy, beginning with developing best-in-class technology, followed by delivering superior long-term clinical outcomes, demonstrated through randomized controlled clinical trials.

Bauerlein, Paul Badawi, Unknown Executive, Philip Taylor

Paul: We are now increasing customer advocacy and advancing our market access initiatives to establish equitable reimbursement for tear care with coverage policies and or payment decisions still expected to begin in 2025.

Paul: In the first quarter of 2025, dry eye revenue was 0.4 million.

Paul: Our results for the first quarter of 2025 in our dry eye segment reflect our focus on market access and our new pricing.

Paul: We believe there is a significant unmet need within the MGD patient population for an interventional treatment option and we continue to engage in meaningful conversations with payers to seek coverage and appropriate reimbursement for care care.

Paul: Our customers have been very supportive and are actively submitting claims to payers to demonstrate the unmet need, real world utilization, and significant value of our technology.

Paul: We continue to develop our clinical evidence with the progression of our three-stage Sahara RCT, a landmark trial that has demonstrated the effectiveness of tear care when compared with a leading prescription eye dropper stasis in stages one and two.

Paul: We expect the results from the third and final stage which assesses the durability of care care treatment effect through 24 months will be published in 2025.

Paul: As we have worked to support coverage and payment for the tear care procedure, we have built a foundation with an established commercial infrastructure that has trained eye care providers at over 1,500 facilities and performed over 65,000 tear care procedures to date.

Paul: We are confident this meaningful and experienced customer base is capable of quickly ramping to meet demand if and when reimbursement determinations come.

Paul: We believe peer care can be a catalyst to drive growth and the robust dry eye opportunity.

Paul: Our continued ability to be a leader in addressing the unmet needs served by our innovative technologies is a top priority for us and we are pleased with our achievement through the first quarter to solidify our position as we execute our strategic initiatives.

Paul: In our surgical glaucoma segment, we are building commercial momentum within the evolving mix market through surgeon education and engagement with our customers, as well as developing the pseudo-fake standalone market.

Paul: In dry eye, we have created an important foundation from which we can execute an appropriately completely scale following coverage and or payment decisions for character.

Paul: I will now turn the call over to Ali to discuss our financial results and guidance for 2025.

Ali: Thanks, Paul. In the first quarter of 2025, total revenue was 17.5 million. This reflects a 9% decrease compared to the same period in the prior year.

Ali: surgical glaucoma revenue for the first quarter of 2025 with 17.1 million, a decrease of 6% compared to the same period in the prior year, primarily due to a decrease of 10% in account utilization.

Ali: This expected decrease was the result of the impact to the mixed market associated with the new Medicare LCD.

Ali: Ordering accounts for up 3% compared to the same period in the prior year and down only 3% compared to the fourth quarter of 2024, despite the MiG's restriction, demonstrating our ability to maintain our customer base, albeit as slightly lower volume.

Ali: Our dry eye revenue for the first quarter of 2025 was 0.4 million, a decrease from 1 million in the same period in the prior year.

Ali: This expected decline was primarily due to fewer smart-led sales resulting from our smart-led price increase on October 1, 2024, which we enacted to more appropriately reflect the clinical efficacy and value of the tier fair procedure.

Ali: Gross Margin for the first quarter was 86%, flat relative to the same period in the prior year.

Ali: Notably, we did not see an impact to first quarter gross margins from the tariffs as we used inventory purchase prior to the tariffs taking effect.

Ali: Total operating expenses for the first quarter were $29 million, a decrease of 7% compared to $31.2 million in the first quarter of 2024, primarily due to lower legal fees in the first quarter of 2025.

Ali: Adjusted operating expenses were 24.7 million for the first quarter, a decrease of 7 percent compared to 26.6 million in the same period in the prior year.

Ali: Our net loss for the first quarter was 14.2 million or 28 cents per share compared to a net loss of 16.3 million or 33 cents per share for the first quarter of 2024.

Ali: We entered the quarter with 108.8 million of cash and cash equivalents and 40 million of debt, excluding unamortized discount and debt issuance costs.

Ali: Cashews was 11.6 million in the first quarter and included annual bonus payment.

Ali: We continue to focus on operational discipline and improving our working capital.

Ali: As a reminder, we have not received any monetary damages awarded in our successful jury trial verdict in our patent infringement case against Alconn.

Ali: We are awaiting the judge's final order whether to confirm the jury's verdict, establish on-going road to damages, and or determine any potential enhancement, and the final ruling is subject to appeal.

Ali: Moving to our revenue outlook for full year 2025, we are reaffirming our revenue guidance of approximately 70 to 75 million. This guidance range takes into account the expected impact to the big market following the effectiveness of the new Medicare LCD.

Ali: While we expect patient demand and need for treatment to continue to grow in 2025 and beyond, we expect total claims bill will be reduced in 2025 due to the multiple makes restriction.

Ali: Looking closer at the second quarter of 2025, we expect surgical glaucoma revenue to be down high single digits to low double digits compared to the same period in the prior year.

Ali: This revenue guidance range also assumes revenue of approximately 1 million per full year 2025 for our dry eye segment and does not contemplate achievement of reimbursement coverage and or payment decisions for your care in 2025.

Ali: While we outperformed our revenue expectations in dry eye in the first quarter of 2025, we expect revenue to be modest until these decisions are made.

Ali: I also want to expand on our tariff exposure, which is applicable only to our imported products and does not impact overhead or other costs of goods sold.

Ali: At the current 145% China tarot rate and based on current revenue expectations, including product mix and related inventory on hand.

Ali: Our surgical glaucoma segment's unmitigated tariff exposure would increase the segment's cost of goods sold by between approximately 3.5 million and 4.5 million for full year 2025.

Ali: The impact is expected to be larger in the second half of 2025 versus the first shot of 2025.

David Bauerlein, David Bauerlein,

Speaker Change: We expect trii cost a good soul to also be negatively impacted as new inventory is purchased. We will provide more visibility on impacts to that segment if trii revenue becomes more significant relative to our overall revenue.

Paul Valley: As Paul mentioned, we have been working on additional third-party manufacturing locations which likely would take nine to twelve months to begin producing a portion of our volume starting with our omnipede product line.

Paul Valley: The costs to set up new manufacturing locations are relatively small and not material to our overall cost.

Paul Valley: We expect our cost to manufacture in these new medications will be similar to the cost incurred in our current manufacturing facility in each case after excluding the impact of terror.

Paul Valley: We are also announcing improved adjusted operating expenses guidance expectations for full year 2025.

Paul Valley: of 101 to 105 million, representing an increase of 0 to 4% compared to 2024, versus our prior adjusted operating expenses guidance of 105 to 107 million.

Paul Valley: The expense reductions identified are the results of our ongoing focus on fiscal discipline throughout our business combined with additional expense controls put in place to mostly offset the cost of good sold impacts associated with tariffs on our business.

Paul Valley: The revised estimated 2025 adjusted operating expenses still include investments in pseudo-baked standalone surgical-blow-coma market development, peer-care market access, and increased research and development project.

Paul Valley: 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.

Paul Valley: We are proud of the progress made this quarter both operationally and strategically and 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.

Speaker Change: Thank you. At this time, we will conduct a question and answer session as a reminder to ask a question you need to press star 111 on your telephone and wait for your name to be announced. To withdraw your question, please press star 111 again.

Please stand by while I compare the Q&A roster.

Speaker Change: Our first question comes from Tom Stephan from Stiffle. Please go ahead.

[inaudible]

Speaker Change: Great, good afternoon, everyone. Thanks for taking the questions. I'll start with surgical glaucoma.

Speaker Change: Paul Valley, or maybe if you can talk to kind of mixed trends.

Year to date, and how I'm the in the market.

Speaker Change: are really tracking versus your expectations. And maybe to dig in there, you know, talk about share dynamics.

Speaker Change: specifically, you know, that you're seeing as doctors obviously may now be forced to choose a single option and, you know, what otherwise would have been a stack procedure. What are you seeing your to date specific to shared dynamics, and then I have to follow them.

Speaker Change: I'll handle that first and obviously Paul are I can jump in so as we've just got previously

Speaker Change: while the number of patient encounters continue to grow based on the prevalence of the disease in glaucoma.

Speaker Change: Actual Utilization is declining to your question on the elimination combo mix from five.

Speaker Change: of the seven Macs. And so as we've discussed previously, obviously we were aware of this proposed change that went into effect in November of last year.

Speaker Change: I think our team is on an outstanding job of being in front of that communication to providers.

Speaker Change: making them aware of the pending change and really engaging them on what their needs were for these patients and in many instances those needs really center around the efficacy of the combined technologies in their complimentary nature of sense and say the conference of procedure enabled by Omni. And so...

Speaker Change: while we've seen a net reduction in the number of units of technology used in those procedures impacted by the combo mig.

Speaker Change: We have seen results consistent with our expectation and guidance provided for the year as it relates to our ability to continue to retain position, infosition practices and I think in particular the comprehensive efficacy provided by Omni is something that the providers are continuously turning to and so thus far we are pleased with our teams engagement in the markets continued reliance on Omni and the treatment of mixed patients.

Speaker Change: and we're going to continue to obviously amplify that messaging and position moving forward to both retain and take new share, but thus far in line with our expectations and consistent with our...

Speaker Change: Objectives always will continue to seek to do even better moving forward.

Speaker Change: And Tom, just to add to that, I just to add to Matt's comments, I think our team has been performing well in this new environment while we believe strongly that surgeons should have all the flexibility in the world to...

Speaker Change: Best Take Care of their Patients in this one-mixed environment. Omni was designed from the beginning to be multimodal, multi-mechanistic. It's for its indication from the FDA. [inaudible]

Indicated to perform to sequential [inaudible]

Speaker Change: Procedures, if you will, and one comprehensive procedure, Canaloplasty, followed by Trebekia Latomy, which helps the surgeon comprehensively address the disease downflow pathway in the eyes. So in this one mixed market, I think Omni has a strong competitive position and very strong product market fit.

Speaker Change: the stacking component of the LCDs. And then my second question is just on competition. You know, Paul, any thoughts on the new competitors and migs. [inaudible]

Speaker Change: Notably with New World's V360, that's been out there for a little longer now so you know what are you seeing on the competitive side with that product, thanks.

Speaker Change: Yeah, I'll start and feel free to add. In terms of data supporting multiple nigs, we have heard of...

Speaker Change: Multiple efforts underway that are, yeah, multiple efforts to collect clinical data on those combinations of procedures that should, you know, hopefully show that.

Speaker Change: doing, you know, addressing multiple sources of outflow resistance is better than addressing one or two, addressing all three. Now you can address all three with omni if you take advantage of all of omni's functionality, but some surgeons prefer to take advantage of some of that functionality and perhaps

Deliver of a permanent implant in combination with Omni.

Speaker Change: That's another way of addressing all three points of resistance.

Speaker Change: Hopefully, those efforts are successful. We've heard about them. We're not actively participating in them, but we do support the effort. We will see what that data looks like. I think it will need to be compelling to support multiple mixed procedures as you can imagine.

Speaker Change: As it relates to competitive entrance, this is not anything new Tom, you've been following site for a while in the make space for a while, it's a very dynamic environment, a number of products.

Speaker Change: have been introduced recently. Over the past few years we've seen a number of new

as it relates to our specific...

Speaker Change: Category of Canaloplasty, Tribeculotomy, Circumfrontial, Non-Implantable Angle Surgery. We've been innovating in this area for well over a decade. We are, you know, with the Omni Edge. It's yet another great...

Speaker Change: In addition to our portfolio, we listen to the market. I think we do a great job of engaging with our surgeons. Listening to their feedback and turning around elegant technology that meets. [inaudible]

Speaker Change: Their needs and patience needs and so we're not sitting idle we're staying you know we're staying ahead of the category continuing to

Push it as far as we can take it.

Speaker Change: We've seen, again, we've seen other entrants come in, we haven't seen anything that we believe is truly disruptive in terms of the proven safety efficacy and usability of the Army surgical system today and where we will continue to take it tomorrow.

Thank you.

One more for our next question.

Unknown Speaker 0

Speaker Change: Our next question comes from Danielle Antalffy, from UBS, please go ahead.

Hi, this is Angela on for Danielle.

and I have a few questions.

Speaker Change: The first one, can you talk about the reimbursement mechanics for omnivethic competitive mixed devices like stands, just trying to get a sense of how that will look going forward in a one-nigs environment and then one follow-up.

Frank is that there are [inaudible]

or there were before the restrictions went into effect. [inaudible]

Speaker Change: About 85% of the market done on a single big basis in about 15% where we saw that.

Speaker Change: combination procedure being done with multiple makes. So from that perspective,

Speaker Change: You know, the reimbursement dynamic for the mass majority of the market is the same. Of course, now in the, with the single MIGs restriction, the provider must choose which MIGs procedure they believe is correct for that patient. So, the provider is seeing reduced economics where in that scenario before they were getting...

Speaker Change: You know, some reimbursement for the single mix procedure and then 50% of the second mix procedure.

Speaker Change: feature. In terms of, you know, specific reimbursement dynamics, that varies based on, you know, what product is used in the combination, but we do feel like we are, you know, we have a proper reimbursement for the procedure, and we can compete effectively against our peers.

Speaker Change: based on our clinical efficacy and our overall value proposition to the market.

Unknown Speaker 0

Speaker Change: Thanks, Ali, that's helpful. And then any update on the progress of tier-care reimbursement wins. I was wondering if you can give us color on maybe anything trackable like number of lives now covered or max successfully enrolled anything like that that you're tracking.

Speaker Change: Certainly, we would love to provide any details as we have them. However, we do not have any covered lives at this point for caregivers. So we do have an established code. We have been having individual claims paid as we work through this process with payers, but no coverage.

Speaker Change: Determination has been made by any payer. We are continuing to have—

Break Conversations with...

Speaker Change: both commercial payers as well as some Medicare administrative contractors and we still feel like we should have some either payment decisions or coverage policy decisions this year that would allow us to really start pursuing this reimbursed.

Speaker Change: Market for the compelling interventional procedure. So we do feel like we are on track, but we do not have a win yet to discuss publicly.

Speaker Change: Okay, thank you so much. I'll go back into the queue.

Thank you.

Joanne Wells: Our next question comes from Joanne Wells from City. Please go ahead.

Joanne Wells: I think this is actually happening on for Joanne, so taking our questions. Can we talk about just Sion briefly? Are you seeing any talent for that product just given you can't stack into more of the LCDs and are able to provide what Sion revenue was as percent of this sort of revenue?

Speaker Change: Yeah, so we don't break it out specifically. It's within obviously our total surgical glaucoma revenue. It is a modest portion of our total revenue in that business, so the mass majority is omnique.

Speaker Change: Sion, in general, is a complementary product. It's meant for, you know, surgeons who are looking for a more straightforward procedure, maybe they need less efficacy than they can get with Omni.

So that's really the target market for Scion.

Speaker Change: It has seen similar trends overall to Omni in terms of as we've seen the business grow and change over time associated with these reimbursement changes. So there hasn't been a material shift.

Speaker Change: in our revenue mix between Omni and Sion. But Sion is a good option for certain accounts and sometimes leaves to future Omni usage as accounts get more comfortable doing things.

Speaker Change: Yes, it's complimentary. It's an important category in glaucoma surgery. There's maybe the simplified megs, you have three kind of mainstream mechanisms.

Speaker Change: Trebeculotomy or Goniotomy, that's where we have Sion, Canaloplasty or Canaloplasty followed by Trebeculotomy, where we have Omnia and then there's Stent.

Speaker Change: and so we believe, obviously strongly, that Omni offers the surgeon and patient the most comprehensive alphoprocedure.

Speaker Change: in terms of up to 360 degrees of canal velocity and forbeculotomy.

Sion, as Ali mentioned, it's a more straightforward procedure.

Speaker Change: Preprable for some surgeons who are looking for something either more straight forward or...

Speaker Change: A patient that might be more mild in disease and doesn't necessarily need the, you know, comprehensive procedure profile of Omni.

Speaker Change: Thank you for watching. Please subscribe to my channel. I upload weekly. Please like and share this video.

that makes sense. And then on tariffs.

Speaker Change: I recognize it's pretty early in the year, but we're going to have to four and a half. It's appropriate for 2026 to

Speaker Change: Annualize that, or I should think about that moving forward with the mitigation strategies.

Yeah, so that great question going into 2026.

Speaker Change: That's where our commentary on our new manufacturing locations is more relevant so we do expect

Speaker Change: within nine to 12 months from now. So really, we expect relatively minor impacts to gross margin in 2026. We will also phase in our other impacted product lines in the first and second quarter next year. So the impact, again, assuming that these tariffs stay in effect at the current rate.

Speaker Change: would still be rather modest in 2026 as we shift to alternative manufacturing locations.

Great. Thank you.

Thank you.

Frank Tacketing: Our next question comes from Frank Takkinen, from Lake Street Capital Markets, please go ahead.

Frank Tacketing: Hey, thanks for taking the questions. I was open to start on one related to reimbursement. I know last year you were potentially up for device intensive. I believe that's coming up again this year in the in the July timeframe. Any thoughts around whether or not you may qualify for device intensive for the 2026 year.

Frank Tacketing: Yeah, we are going to speculate today on whether we'll see device intensive obviously that's something that we all will see in July as a proposed rule and then a final rule in the November time frame which would then be effective January 1st. What I will say is that we still have strong conviction that our device should qualify for device intensive given the cost of the procedure and the overall economic.

Speaker Change: Okay, that's fair enough, and then maybe just one on the outlook for the year. Obviously came a little bit ahead of street expectations for the first quarter. Congrats on that and then maybe talk to kind of Caden Singh of revenue and I apologize if this has came up and jumping between a couple calls, but any help on Caden Singh of revenue would be helpful for my.

Speaker Change: Yeah, sure. Happy to take that. And as you said, we are pleased with the start to the year. We do think that we started strong here. We expect to continue to

Bauerlein, Paul Badawi, Unknown Executive, Philip Taylor

Speaker Change: Typically the third quarter is a small step back from the second quarter and then you know a little bit a higher seasonality in the fourth quarter as well [inaudible]

Speaker Change: We do expect as we continue to make progress on pseudophagic stand alone that we'll see some tailwinds associated with that and then of course from a more compressive the easiest.

Speaker Change: Comp for us is the fourth quarter since we already had half a quarter of the multiple mix stacking impact built into that baseline. And then of course as we've said multiple times.

Speaker Change: Guidance includes the million dollars for dry eyes, so that is also an opportunity as we plan to have these market access coverage and or payment decisions this year.

Speaker Change: If those are material in nature, those will be opportunities for us to accelerate that revenue growth in that channel as well.

Got it. That's helpful. I'll stop there. Thank you.

Unknown Speaker 0

Thank you.

Speaker Change: Our next question comes from Macauley Kilbane, from William Blair, please go ahead.

Speaker Change: Hey everyone, this is Macauley on from Margaret tonight, thanks for taking our questions. I wanted to double down on your care question from earlier and I obviously understand pair decisions can take time but you guys have been out in front of this for over a year, your plus if not more. And at least from our perspective the data seems pretty pretty clear from the budget analysis so I guess.

Speaker Change: You know, I appreciate you saying, you know, conversations have been positive, but is there one or two points that, you know, they're pushing back on or I guess what's left and kind of making that final jump to get coverage here?

Amy Macauley, Paul, yeah.

Speaker Change: We feel strongly we're having quality conversations and they're progressing nicely. It does take time. But again, those conversations are progressing.

Speaker Change: Smaller regional commercial plans, larger national plans as well as a handful of Macs.

We continue to believe we are going to...

have successful coverage and repayment decisions this year.

We've been...

Speaker Change: stating that, we're continuing to state that and those conversations, the quality of those conversations and the fact that they are progressing despite the fact that they do take time or progressing nicely. We're trying to do something pretty significant here as you can imagine to create a category and pioneer.

Reimbursed M.G.D. Procedure. This is a disease.

That is growing in prevalence. It's a serious problem.

Speaker Change: There is no meaningful reimbursement today. Patients need access to this.

Speaker Change: and the data needed to create reimbursement in a category that pretty much doesn't exist as significant and we have that data and conversations with payers. They're responding very well to that data. That's why these conversations are progressing the way that they're progressing.

Speaker Change: We're not surprised that they're responding very well to the data, but we're pleased. We're not surprised because we spoke with the taxpayers prior to executing the Sahara RCT.

Speaker Change: We spoke with a variety of different payers and a variety of different medical directors all from different backgrounds.

Speaker Change: And we asked them, we said, patients need access to a treatment that addresses the root underlying cause of this prevalent problematic condition.

Speaker Change: What clinical data do you need to see that if we are able to bring it to you?

Will Result in Successful Coverage and Payment Decision [inaudible]

Speaker Change: They helped us design the blueprint for the Sahara RCT, and so we've been able to share not only the published phase one and phase two data that's extremely compelling comparing us and demonstrating superiority to a dry ice standard of care.

Speaker Change: But also now we've been able to share with them our phase three data. It's in the process of being published, but we have if we've been able to share it with payers, we discussed it at the recent AFC RS.

Speaker Change: Conference, the high level data and the phase three data is also very compelling. So while these things do take time, I think all of us should be confident that we are progressing nicely and as we had hoped.

Speaker Change: Yeah, I'm Macauley. This is Matt. I'll just add first of all, I appreciate the question because I think it underscores an interest and enthusiasm for what this opportunity represents and we certainly share that enthusiasm.

Speaker Change: In addition to Paul's comments, I think what's really important about the timing is herself. The timing is still in line with our expectations as we enter the year in terms of how these conversations are progressing. The other thing is when you're thinking about timing, it's not just the...

Speaker Change: Completion and publication of the data that Paul mentioned, it's also then joined into the market in demonstrating demand.

Speaker Change: and that there's a need for this intervention in patience, and that's reflected through claims submitted by providers, and we've talked about some pocketed success in terms of individual claims being processed, and one of the things we want to continue to...

Speaker Change: Emphasizes, equally, if not more important, are the claims and process.

Speaker Change: and these are claims that are submitted. Oftentimes denied, required to go through multiple levels of appeals. We've had remarkable partnerships from our clinical advocates, surgeons and providers.

Speaker Change: working with our commercial team and our market access team. In many instances, that process can take in excess of 180 days when you start to think about this timeline.

Speaker Change: It's consistent with what our expectations were coming into this and we continue to create the appropriate. Thank you very much.

Speaker Change: upward pressure and awareness on the need for positive coverage decisions through the efforts of our commercial and market access team. So appreciate the interest, excitement and as

Speaker Change: Alison mentioned earlier, we're very much excited to come back and be able to announce positive coverage decisions later in the year.

Speaker Change: No, that's great and really appreciate the thorough response from both of you there and then maybe just to follow up on the guidance.

Speaker Change: and sorry if I missed some of this alley but at least from our perspective the active facilities decline was a bit more than you know we had modeled in the quarter so was there anything to call out this quarter specifically or how to think about you know those accounts for covering throughout the remainder of the year and then is there anything factored into guidance as we think about pricing especially as edge becomes a larger contributor throughout the year. Thanks.

Again, I'm taking the questions.

Speaker Change: Yeah, sure, no problem. And just at a high level, first, I would say that…

This was in line with our expectations.

Speaker Change: We knew that there would be some accounts in this process and we're talking pretty small net numbers here in terms of accounts. We are really proud of the fact that we still saw an increase year over year of 3% in accounts.

Unknown Executive, Philip Taylor

Speaker Change: The large majority of the accounts in terms of ones that are doing high volume mig and really we just need to drive higher utilization as the primary focus.

Now, on the second question, I'm pracing.

Speaker Change: We aren't going to comment specifically on our pricing strategy, but with on the edge it will be priced at a premium to Ergo, but really there's nothing specific. Thank you.

Speaker Change: that you need to really factor into your model. We'll see how launch goes here so far. It's been very positively received.

Speaker Change: But we know that some accounts still prefer Ergo as well. So we will see a mix in the business that is now two product options in our portfolio that based on position preference, they can choose what's right for them.

Great. Thanks for going, Alison. Yeah.

Thank you.

Speaker Change: Our next question comes from David Saxon from Needham Inc., Inc., please go ahead.

David Saxon: Great. Good afternoon, Paul Ellie and Matt. Thanks for your team, my questions and apologies I've been juggling some calls, but I wanted to start with dry eyes, so by my math at least it looks like you shipped around like 235 under the...

$1,200 list price.

I guess one is that in the right ballpark.

and then two, you know, is that across all 75?

David Saxon: Active Accounts, or some of those accounts kind of like the legacy pricing schedule and then all of the follow-up.

David Saxon: Yeah, so we still have a portion of our volume that are under the prior cash pay business that we had about a thousand smartlets sold in the period we don't break out the specifics between the different areas, but we did see [inaudible]

An increasing portion of...

David Saxon: SmartLiz used for under the new pricing for reimburse claims submission. So we feel like we're in a good spot. Obviously you see that translating into our gross margin on the dry eyesight, but we would expect that to continue to improve over time as we see an increased mix there.

Unknown Executive, Philip Taylor

Unknown Speaker

Okay, great. Thanks for that. And then…

David Saxon: I just wanted to ask on, you know, some of the competitive launches out there, specifically this Canaloplasty launch. So, you know, our checks.

suggested it's ramping fairly quickly, so wondering what's baked into guidance in terms of that launch.

if you're seeing it show up in on the volumes.

Speaker Change: and then, you know, maybe more importantly, you know, what are your thoughts on, you know, how much is trialing versus more durable share shifts. Thanks so much.

Speaker Change: Yes, it's Matt, I'll talk to that one. So we had line of sight and visibility to this product launch prior to the start of the year and so certainly took that into consideration in setting.

Speaker Change: The operating plan in guidance for a year, and I'd say at this stage, nothing about that is unchanged.

Speaker Change: There was a soft launch and I believe you're referring to the new world product. There was a soft launch.

Speaker Change: prior to the most recent meeting ASURS, where we actually have chance to speak briefly. And so we were able to get some feedback on the product.

There was certainly discussion of that at the meeting.

Speaker Change: I think what I'm most pleased about coming out of that meeting is affirmation of Omni's position in the market as a market leader in the category the creator of the category.

Speaker Change: The product that has the products label is supported through you know multiple publications for comprehensive clinical efficacy and even through conversations with clinicians and in different settings.

Speaker Change: throughout the course of the meeting, where this topic was very topic of being discussed. Omni continues to be identified as the product that is...

Speaker Change: The company has made and so that certainly gives us strong confidence as we continue to move through the year that while they.